Thursday, February 04, 2016

A rocky road for multinationals amid China´s slowdown - Sara Hsu

Sara Hsu
Sara Hsu
China´s farewell to double-digit growth is causing multinational companies headaches, also in the services industry where China is heading to, writes financial analyst Sara Hsu in the Diplomat. Now the downturn seems manageable, but she sees a rocky way ahead.

Sara Hsu:
However, the road ahead looks rocky. Multinationals have attempted to maintain profitability despite slowing revenue growth. Profits have declined most starkly in the manufacturing sector. Multinationals that had been faced with rising costs in the eastern coastal regions of China reaped the gains of moving to China’s interior, but this practice has been exhausted. Rather than focusing on conquering new markets or relocating to low-cost regions, multinationals have to do the hard work of improving managerial and productive efficiency. 
Meanwhile, service sector MNCs are unable to participate extensively in Chinese markets, since services sectors such as the financial and telecommunications sectors remain relatively closed off to foreign companies. It is not clear when these industries will be further opened up, despite the intentions of the Chinese leadership to increase output in the services sector. Unlike the manufacturing sector, tertiary industry has not made much room for foreign competition due to existing inefficiencies and government protection, and there is no guarantee that this will change in the near future. 
China holds many prospects for multinationals, as urbanization and consumer demand increase. The country continues to grow at a faster clip than most of the rest of the world.  
As conditions change, business strategies and processes must become more sophisticated than ever to compete. Businesses seeking to reach consumers in lower-tier cities, for example, may be assisted by local partners in order to gain traction in these less accessible locations. Multinationals must increasingly compete in marketing and selling products, as well as in creating new products, to compete against domestic Chinese firms. Investing in sectors that the government currently favors is necessary, as long as foreign competition is embraced. 
China will likely continue to be an important base for multinationals, even though all low-hanging fruit has been picked, at least until the service sector is liberalized. The country’s connectivity to the rest of Asia, its large and increasingly sophisticated urban consumer base, and its potential growth preserve China’s attractiveness to multinationals, even in the face of somewhat waning economic activity. To survive, these businesses will have to bring their A-game to China’s increasingly challenging business sphere.
More at the Diplomat.

Sara Hsu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more experts on managing your China risk? Do check out this list.  

Tuesday, February 02, 2016

China´s economy lacks direction - Arthur Kroeber

Arthur Kroeber
Arthur Kroeber
China´s economy might not be in acute trouble, she is certainly lacking directing, says economist Arthur Kroeber in the Irish Times " China is unlikely to collapse, but it does risk losing its way."

The Irish Times:
Dragonomics economist Arthur Kroeber said the 11 per cent plunge on the stock markets in the early days of the year certainly gave the impression that the Chinese economy was in serious trouble and the lack of clear direction in President Xi Jinping’s economic reforms was problematic. 
“Today China is a country without a clear economic direction, and this shows up in a steadily slowing rate of private investment. The fault for this lies squarely with Xi. We have no idea whether Xi understands what modern markets require, or how he hopes to reconcile their demands with the Leninist-Confucianist paternalism he is busy imposing on the rest of society. China is unlikely to collapse, but it does risk losing its way,” said Kroeber.
More in the Irish Times.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more financial experts at the China Speakers Bureau? Do check out this list.    

Is Facebook a WeChat clone? - William Bao Bean

William Bao Bean
William Bao Bean
Chinese companies have often been blamed for copying Western innovation and patents. But now China takes the lead in mobile innovations, the argument seems to go the other way. Many of the features we know from WeChat we see now popping up at Facebook. Innovator William Bao Bean discusses whether Facebook has become a WeChat clone.

William Bao Bean is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more innovation experts at the China Speakers Bureau? Do check out this list. The year of the monkey is going to be the year of eight disruptive Chinese innovations. Read out list here.
Earlier William Bao Bean discussed earlier the rather revolutionary way Tencent, the mother company of WeChat, has organised its operation. You can hear his contribution here.

Monday, February 01, 2016

Chinese buy more than ever overseas - Rupert Hoogwerf

Rupert Hoogewerf
Rupert Hoogewerf
While the luxury goods suffer from the anti-graft crackdown, what the Chinese buy, they buy increasingly abroad, says China Rich List founder Rupert Hoogewerf at the presentation of his eleventh Hurun Best of the Best Awards 2015, a benchmark for the luxury sector, according to the Shanghai Daily.

Shanghai Daily:
Hurun Report Chairman and Chief Researcher Rupert Hoogewerf said, “The government’s crackdown on luxury gifting continues to have its effect, with luxury gifting down a further 5 percent year on year, taking it to 30 percent over two years. Travel retail continues to change the dynamics of luxury in China, with 7 out of 10 luxury goods bought by Chinese now being bought overseas.” 
Consumer electronics, led by Apple, was the gift of choice, overtaking LV and last year’s Number One Hermes, which dropped down to seventh. Moutai shoots back into Top 10 after two year ‘holiday’. Red wine had a poor year, dropping down to third place in the preferred gift. Watches rose to second place, although especially for watches worth less than 20,000 yuan. Overall spending crept back up to the levels of two years ago. 
The Hurun China Business Confidence Index, an index measuring the confidence in the economy going forward two years, rose for the second consecutive year: 3 out of 10 are highly confident in the economy going forward. 
Chinese luxury consumers continue to be extremely busy, away on business trips for 8 days a month on average, whilst super rich are away for 11 days a month. 6.4 percent away for more than 20 days a month. Despite this, they take 8 and 12 days of holiday respectively, one more than last year. Chinese New Year is preferred time to travel, followed by October Golden Week and the summer holidays. The Peninsula Hotel replaced the Shangri-La as China’s preferred hotel brand. The Mandarin Oriental improved the fastest, rising to second place.
More in the Shanghai Daily.

Rupert Hoogewerf is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request list.

Are you looking for more luxury good experts at the China Speakers Bureau? Do check out his list.  

When in China, do not follow your gut feeling - William Bao Bean

William Bao Bean
William Bao Bean
Many foreign companies fail when they try to enter the China market. According to William Bao Bean, a partner at Shanghai venture capital firm SOSV, dealing with over 120 startups per year, that is because they follow too often the instincts they take along from their home market. Wrong, he tells in the South China Morning Post.

The South China Morning Post:
Why is it so hard for overseas companies to succeed in China? 
The biggest challenge for overseas companies in China is not the Chinese government, regulations or laws. When you’re a company coming into China from the United States, Europe or Southeast Asia, you’re entering a completely different market. 
Think about it like this – when you learn how to do something, you might spend 10,000 hours and become an expert. You develop a gut instinct. But once you go into a market that’s different, like China, your gut instincts are wrong. 
One of the reasons major US internet companies have failed in China is because people making the decisions often have their instincts tell them what to do, as opposed to the data they have.
More in the South China Morning Post.

William Bao Bean is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more experts to help you deal with the China risks? Do check out this list.  

Friday, January 29, 2016

How Tencent is erasing its middle management - William Bao Bean

William Bao Bean
William Bao Bean
Erasing the middle management and organizing competition internally: those are two features in new revolutionary corporate structures in China. Haier and Tencent have made big inroads. Innovation expert William Bao Bean discusses Tencent and how their organization works.

William Bao Bean is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.

Are you looking for more innovation experts at the China Speakers Bureau? Do check out this list.

What 8 innovations from China can you expect in 2016.

Thursday, January 28, 2016

The fallout of the China-Iran deal - Sara Hsu

Sara Hsu
Sara Hsu
The world should carefully watch the new ten-year deal of US$600 billion between Iran and China, writes Sara Hsu in the Diplomat. The two new kids at the block is likely to change the international power balance.

Sara Hsu:
China’s aims in relations with controversial foreign regimes are most often to promote economic ties that serve its self-interest rather than to choose a preferred political ideology. Even as China has maintained genial relations with the West, the nation has been criticized for doing business with dictators that engage in atrocious human rights violations. China’s policy has been “noninterference in internal affairs.” Although regular trade relations with violent regimes may be necessary to supply goods to the people, trade in weapons and nuclear materials supports violence and can be easily viewed as interference in internal affairs. 
Moreover, Iran’s commitment in fighting terrorism can be called into question. The U.S. State Department has repeatedly accused Iran of supporting terrorism, including Hezbollah and the Syrian army under President Bashar al-Assad. Terrorism has been viewed as a tool of the state since 1979, after the launch of Iran as an Islamic Republic. Iran has used terrorism to weaken rival governments, influence disputes outside its borders, and to intimidate or use as political leverage. While certainly relations in the Middle East are complex and often hostile, Iran’s use of terrorism against a multitude of parties renders it a questionable ally against terrorism. 
Whether China’s relations with Iran are a threat to the West can be viewed from different perspectives, but the real threat of violence stemming from Iran must be taken seriously. As a key stop on China’s One Belt One Road, Iran’s importance to China seems healthy, but the sales of weapons or nuclear material in particular cast a shadow over this partnership. As China becomes increasingly influential on the world stage, this relationship will likely be more deeply scrutinized.
Sara Hsu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more political experts at the China Speakers Bureau? Do check out this list.

Monday, January 25, 2016

8 Chinese innovations that might disrupt your industry in the year of the ape

apeLooking back at the demand from our clients at the China Speakers Bureau over the past few years, we see a distinct development into the future, into the year of the ape.

When we started our operations, many companies and organizations were looking for solutions to enter the often murky China markets. How to deal with consumers, governments, competitors and questions related to the country's developing economy?

Many of the larger and middle-sized foreign companies now have their operations going in China, often hired and employed Chinese staff, and got a better handle on the country. And China itself has entered an area of normality that would have been unthinkable ten years ago, despite regular complaints from foreign companies. 

But the perceived challenges, are now of a different dimension. China is becoming an innovative nation, offering disruptive technologies, unsettling traditional industries. And while most disruption took place in China itself, the relatively slow economic growth is forcing Chinese companies to look to the rest of the world. That change reflects profoundly in the demands we get from our clients.

And gaining a market share in countries where established internet companies are already present might not be easy for Chinese companies. 

Here we offer you an overview of the top-8 Chinese innovations that might disrupt your industry in the years to come, and where China has already made huge advances.
  1. Mobile payments, wiping credit card and banking services away; Alipay has 80% of the market, based on Alibaba's giant following. Can it be copied elsewhere?
  2. Online mapping services, offering discounts, payment services and reservation models.
  3. Chatting services develop into profound platforms, offering a wide range of services. WeChat is changing traditional marketing and their features are already being cloned by Facebook Messenger
  4. The Chinese style of organizing successful companies: the end of the middle management (Haier, Tencent, Huawei) and a strong focus on consumers.
  5. insurance: P2P models are taking over old-style insurance models
  6. Crowdfunding: larger internet companies have taking over VC-style and traditional bank lending in China. Can this trend develop also outside China?
  7. Self driving electric cars: traditional car companies are losing their competitive edge, while internet companies in both the US and China are fighting to conquer the markets first.
  8. The Internet of Things: Huawei has become the fastest growing for handsets and other mobile connections, taking on now Samsung and Apple successfully.
In the coming months we will flesh out some of the subjects here, and offer suggestions for speakers who can cover these disruptive developments. Otherwise, we wish you all the best in the upcoming year of the ape.

Ian Johnson interviews HK bookseller Bao Pu on his colleagues and business

Ian Johnson
Ian Johnson
Disappearing Hong Kong publishers have put them on the international agenda. Journalist Ian Johnson got the opportunity to interview HK publisher Bao Pu on his critical books about China and his kidnapped colleagues for the New York Review of Books.

Ian Johnson:
One of your first big coups was publishing Zhao Ziyang’s secret memoirs in 2005.  How did you do it? 
I had been brokering manuscripts by Party cadres who had been victims of the system. I was negotiating with the old Communist Party cadres who had Zhao Ziyang’s recordings. It was a complicated process to convince the cadres to agree to do this. They had the tapes. They wanted to know who would publish. So eventually I said I would. They said, Do you know how to do publishing? So I published a few books to prove that we could. That’s how we did it. We did poetry books and intellectual books. It was all professionally done—just to convince them. 
And then after you published the secret journals, a lot of people got in touch with you. You published analyses of political reform in the 1980s, a biography of the reformerChen Yizi, and memoirs of reform-minded generals, such as Qiu Huizuo, and Ding Sheng. 
In the mainland many former officials or their families had grievances against the Party, so I thought maybe it’s time to preserve it. 
Publishing these kinds of books seems increasingly sensitive with the recent kidnappings of employees of a Hong Kong publisher. Are you worried you’ll be next? 
They’re in a different business. They’re selling a product, and whatever sells they’ll sell. I was irritated by the media because they kept grouping all independent publishers together in one “banned books” category. But booksellers just publish whatever they want [without regard to facts]. Truth and fabrication are different. 
How do you make sure your books are accurate? 
Most importantly, I insist that authors of non-fiction use their real names; no pen names. Even though there is risk, they must be willing to take the risk and responsibility for their writing. I find people who know the subject in question to edit and fact-check. I have a Cultural Revolution guy. A guy who does early Mao. Others. 
And the books are printed in Hong Kong. Have any been shipped to the mainland? 
That’s difficult to do. People buy them in Hong Kong and carry to the mainland, but this has become tougher recently because of stronger border controls. This has hurt our sales.  
You’ve been publishing fewer books in recent years. Last year, you published only three books. Why have you scaled back? 
The main problem is the new generation doesn’t want to know. They don’t know about the Mao era or who Deng was. Another big problem is there aren’t interesting manuscripts. 
Why? 
The hongerdai [the “second red generation”—the children of the founding generation of Communist leaders] are liberated under Xi Jinping. In the past they had grievances, but now they feel that this is the best time for their interests: “We don’t want to rock the boat.”
Much more in the New York Review of Books.
Bao Pu


Ian Johnson on what spiritual values the Chinese are looking for

Ian Johnson is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more experts on political change at the China Speakers Bureau? Do check out this list.

Friday, January 22, 2016

Fight against capital outflows delays reforms - Sara Hsu

Sara Hsu
Sara Hsu
China has faced a record outflow of capital since the end of 2015. Efforts to stop that outflow, maybe needed, delay severely the planned liberalization of the financial markets, writes financial analyst Sara Hsu in the Diplomat. "The rate of change is dissatisfying to those calling for reform."

Sara Hsu:
Chinese regulators have attempted to curb legal capital outflows from banks, requiring banks to rigorously check corporate business transactions. Furthermore, although a large percentage of capital outflows are legal due to significant openness of the capital account, remaining capital controls continue to give rise to illegal capital outflows. Regulators have been cracking down on illegal cross-border outflows disguised as trade transactions. This battle will likely continue as long as China’s economy remains weak and exchange rate expectations remain negative. 
The fight against economic fragility has in important ways prolonged the reform process, especially the turn toward financial liberalization. Should interest rates be set low to improve economic conditions, or set high to reduce capital outflows? Should the exchange rate be allowed to fluctuate on speculative forces, or should instability be the controlled? Ironically, the same forces that prevail upon the RMB to depreciate would give exports a significant boost, pumping up the real economy. Despite some analysts’ beliefs that China has depreciated to buoy exports, this does not seem to be the ultimate aim. China does appear to be headed away from a manufacturing and export-based economy, but slowly. Exchange rate liberalization is occurring, but at a microscopic pace in spite of IMF’s exhortations to liberalize faster. 
The rate of change is dissatisfying to those calling for reform and shocking to those who demand greater stability. These contradicting forces may last through the year as China restructures and finds a healthier balance between market and government control.
More in the Diplomat.

Sara Hsu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Get in touch or fill in our speakers´ request form. 

Are you looking for more stories by Sara Hsu? Do check out this list.