Weblog with daily updates of the news on a frugal, fair and beautiful China, from the perspective of internet entrepreneur, new media advisor and president of the China Speakers Bureau Fons Tuinstra
Wall Street Journal's wealth editor Wei Gu discusses with luxury goods veteran Francis Gouten the current slowdown in luxury good sales, and how brands should refocus. Since only a wealthy 3 percent of the Chinese buyers have a passport, Milan and Paris should focus on them, not the large masses. Without giving discounts.
Foreign milk companies are gearing up for the China market. But they should not underestimate the potential competition by domestic companies, tells business analyst Shaun Reinto Reuters. "They can have the best of both worlds."
Reuters:
China's infant formula market is expected to grow to $25 billion by 2017, Euromonitor data shows, as more mothers join the workforce and spend less time breastfeeding. Food safety concerns have so far played in favor of global firms like Nestle SA, Danone SA, Abbott Laboratories and Mead Johnson Nutrition Co..
Local companies are now fighting back by espousing foreign safety standards - Bright Dairy and Food Ltd, for example, sources the raw materials for its Pure Canterbury brand from New Zealand, while China Mengniu Dairy Co Ltd this week struck a deal with Danone.
"I wouldn't underestimate the power of Chinese brands to go upmarket and gain the trust of Chinese consumers, but forging these international ties is key," said Shaun Rein, managing director of China Market Research Group.
"They can have the best of both worlds - the safety and quality of the product, but also the local know-how, marketing, sales and distribution."
+China Weekly Hangout
Tapping into China's market might seem attractive, but is not also that easy. The China Weekly Hangout discussed on January 30 the danger of foreign firm failing in China. Featuring panelist +Richard Brubaker of Collective Responsibility and +Andrew Hupert, expert on conflict management in China. Moderation: +Fons Tuinstra of the +China Speakers Bureau. Including references to Apple, Mediamarkt, Foxconn and many others.
Today's +China Weekly Hangout was unfortunately aborted, as our main guest +Dee Lee (Inno) from Inno in Guangzhou could not jump all the barriers to enter the hangout. But his exceptional story - with his hotline, he negotiated an end to a strike of 4000 workers this week - is worth to be told, so we give the subject a second run tomorrow, on Friday 24 May.
The hangout is live broadcasted on YouTube, here and on our event page. We start at 10pm Beijing Time, 4pm CEST and 10am EST.
The participants of yesterday will be invited again, and others are kindly requested to go to our event page. Please only do so, if you intend the participate in the hangout.
Others can watch the YouTube clip, or can during the event send questions and remarks via Twitter and Google+ (add hashtag #CWHCWH).
And we keep our fingers crossed for less technical problems tomorrow. We are working with emerging technology, and often working with people from behind China's firewall. But we will get there.
The +China Weekly Hangout is, if possible, a weekly feature where we discuss current affairs in China with an international audience. Moderator +Fons Tuinstra of the +China Speakers Bureau gives here a short introduction.
Next week, we discuss the question what Chinese tourists want, exceptionally earlier than our normal hangouts, on the request of participants in New Zealand and Australia. You can read our announcement here.
US chocolate maker Hershey currently has two percent of the China market, and is small compared to bigger players like Mars and Nestle. Business analyst Shaun Rein explains at the Wall Street Journal the China premium chocolate market is growing 20% per year, but domestic competition is making life tough. But Hershey wants a market share of 27% by 2017.
Personal space is scarce in China, reason why many Chinese see their PC and mobile devices as their most personal space, writes sociologist Tricia Wangin 88-bar.com. While other academics argue the PC is a shared object, Tricia Wang points at the many advertisements selling PC's as a personal object.
Tricia Wang:
I’ve seen people more attached to their computers and mobile phones because that is the ONLY space that they can claim is entirely theirs. Apartments are small, space is crowded, sometimes rooms have to be shared, in-laws come over any time – everyone is nosy – but the digital tool is their object.
Even migrants who buys a PC are very attached to it and have strict rules around sharing it because it is considered a personal space.
Take a walk in any electronics mall or on Taobao and you’ll see ads that sell computers as a personal object. It just isn’t true that a computer won’t sell if isn’t advertised as a shared object.
Once a week the China Weekly Hangout discusses current affairs in China with international participants on different continents. Moderator Fons Tuinstra, also president of the China Speakers Bureau, explains the idea in a new introduction. An overview of earlier hangouts, you can find here.
China's top officials have asked their fellow citizens to behave when they travel and refrain from spitting and loud talking. Author Zhang Lijia puts spitting in a historical perspective, and believes bad habit decreased, and can disappear, she told BBC News.
Zhang Lijia:
Of course, there’s the force of habit. I actually much prefer my new neighbourhood of Wine God Village. The streets are full of life and energy; people are friendly. And it is authentic. Some of my neighbours have indeed brought their habits from their village where the social norms are looser. Another reason for their uncaring behaviour, I suppose, is that they feel that they are not accepted or respected by the locals. Beijing is not their city. So why should they care?
Spitting is the most notorious among the uncivilized Chinese manners and has made its way into travel literature. In his Riding the Iron Rooster, travel writer Paul Theroux wrote about the Chinese: “Spat all the time. . . You expected them to propel it about five yards, like a Laramie stockman sitting over a fence. But no they never gave it any force. They seldom spat more than a few inches from where they stood. They did not spit out, they spit down."
Overall, spitting has become much less a problem. As a former champion of spitting competitions, I used to spit a great deal. When I was a worker at a rocket factory, we used to have spitting competitions when we were bored. We would line up and see who could shot the furthest or hit a certain spot with force and accuracy. Theroux would have changed his lines if he had seen us! In those days, most parts of China were pretty dirty. So it didn’t really matter if you added some dark yellow bits here and there. But the changed living environment and the realization of its unpleasantness – especially the foreplay – have transformed me. If I can change, anyone can.
The indispensable Chinafile asked some of its authors to list what is going right in China, after many obvious stories about what is going wrong. Danwei-founder Jeremy Goldkorn submitted a pretty long list, and this is how it starts.
Jeremy Goldkorn:
I’ll answer this question with an off-the-cuff and very personal list. Some may say these points are not actually good things, or that China isn’t actually doing these things well, or that the outcomes will not be copacetic. One of the very negative things about China is that if you look deep enough into any feel-good story, you’ll find something wrong or rotten, but this is a list of positives, so I won’t qualify my point with an acknowledgement of the counter arguments. Here goes:
- Continuing to lift millions and millions of people out of poverty (that’s the big one).
- A culture of hard work, thrift, and diligence that emphasizes the importance of education.
- The fapiao, a state-issued invoice system that is a work of genius which allows a massive more-or-less unregulated informal economy to thrive and still contribute taxes to the state.
- Investing in Africa, seeing developing countries as potential markets rather than basket cases.
- Dreaming big.
- Infrastructure.
- Increasingly professional emergency response systems for bird flu scares, earthquakes etc.
The China art market is maturing, as the Art Basel's first Hong Kong art show took off. WSJ wealth editor Wei Gu discusses with Kate Cary Evans, founder of Art Radar Asia, the latest trends in China's art, as prices are falling, opening up for more investors.
The Hurun Best-Selling Chinese Artists 2013, a ranking based on the sales volume of their work at public auction in 2012, was released by the Hurun Research Institute on May 9. Data for the list were provided by Artron.net, a professional artwork portal in China.
"The artists on this list represent last year's best-selling artists from 5000 years of Chinese history," said Rupert Hoogewerf, chairman and chief researcher of Hurun Report. "What is remarkable is that 34 of the Top 100 are alive today."
Among the listed 100 artists, 76 finished their works after the foundation of People's Republic of China in 1949. Among the top ten, nine are traditional Chinese ink painters, with Zhou Chunya being the only one still alive -- and also the only non-Chinese ink painter.
Total sales of the top 100 artists reached US$4.1 billion; the threshold to be listed is US$10 million.
Apart from art, also education is high on the investment agenda of China's wealthy. The China Weekly Hangout discussed in February with HKU lecturer +Paul Fox, and former NYU Shanghai lecturer +Andrew Hupert whether education in China is a goldmine or a black hole, both for the students, and the educational institutions.
Location makes a difference for successful industries, but government can help, argues NYU economist Heleen Mees against New York Times columnist Paul Krugman. In Post-Syndicate, she explains why China's growth model makes sense, and uses the trade explosion province of Yunnan as an illustration.
According to Mr Krugman, it is often merely an accident where an industry locates. Silicon Valley owes its existence in large part to two young men named Hewlett and Packard, who started a company out of their garage. New York is New York because of a river, which mainly serves tourist boats these days. But even though it is mostly chance that determines where a particular industry locates, it doesn’t mean that you can’t lend chance a helping hand. And that is exactly what the Chinese government is doing with its large-scale investments in infrastructure, and to a somewhat lesser extent with its investment in housing.
Yunnan, one of the poorest provinces of China that is mostly known for its cuisine, saw international trade explode in the first quarter of 2013, rising by almost 50% compared to the previous year, while exports throughout China rose by a modest 13%. The most significant gains in Yunnan's trade came in the mechanical and electronic sectors, neatly fitting the new trade theory. It is hard to imagine that mountainous Yunnan, which is not located on the Chinese coastline but is bordering Tibet, Laos and Vietnam instead, would have experienced the same growth without the central governments’ years of investing in Yunnan’s infrastructure.
That is not to say that China’s growth model has no drawbacks. It obviously has. The smog in China’s metropolis is smothering large swaths of the population, even though the air pollution in Delhi is often worse. Food scandals are undermining consumer confidence. Environmentalists are raising alarm bells about the central government’s plan to build a series of hydropower dams in the Nu, China’s last free flowing river. The project may force tens of thousands of ethnic minorities in Yunnan to relocate. These are serious issues that the Chinese leadership needs to address.
That being said, within the framework of the new trade theory, China’s investment-led growth model makes more sense than western economists give it credit for.
