China Herald: 02/01/2009

Saturday, February 28, 2009

Global China Chat on consumer confidence in China

Friday, February 27, 2009

Can foreign brands survive a price war in China?

One of the key tools for competition in China is the price war. I have been writing a bit more about this strategy in the past, and so when I learned about foreign restaurants and other retailers starting a price was intrigued. The Forexpros:

When they entered the Chinese market -- many of them in the 1990s -- Western consumer brands sought to set themselves apart from their local competitors by charging more and presenting the mark-up as the price to be paid for better quality and service.
But now under pressure in their home markets and in a bid to shore up sales, foreign retailers are jumping into a price war in China to secure their share of the growth of the world's third-largest economy.

The article mentions only two companies, Carrefour and McDonalds, but suggests others - including domestic competitors - are following. This could potentially become a fascinating shoot-out, where foreign companies have to prove that they have been adding advantages in terms of managing the supply chain and logistics, that much they can beat domestic competition. I'm nog convinced right away.

Group purchases turn to cars - Sam Flemming

Sam Flemming

Internet users organize themselves already for years to get offline better deals, even to get their cars through "group purchase". Sam Flemming reports on his weblog about his colleague making this big ticket purchase with 55 others.
His colleagues describes how potential buyers force the prices down:

The last step is to meet at a predetermined time at the car dealer to pick up the cars. At the dealer, the members of the group finally meet each other face-to-face for the first time.
It may seem that the group car purchase has ended, but in fact though the purchase process is over the after-purchase communication between the members is only just beginning.
Through the group purchase process, group members become familiar with each other, and, as they are all owners of the same kind of car, they tend to interact even more than normal netizens. Many group purchase group members continue to visit their QQ group, sharing their experiences with their new cars. Group members will often organize together again to purchase accessories and upgrades, or meet for offline activities. Once the group purchase is over, the group leader’s leadership position and influence continues on. When group members encounter problems with their cars, they often out of habit seek out the group leader, and future group purchases and offline activities are often organized by the group leader.

A "must know" lesson for anybody who wants to sell in China.

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Sam Flemming is also a speaker at the China Speakers Bureau. When you need him at your conference, do give us a call.

Chinese collectors push up value artists - Rupert Hoogewerf

Rupert Hoogewerf by Getty Images via Daylife

The Chinese artist Zhang Xiaogang has become the country's more valuable artist, says China Rich List producer Rupert Hoogewerf in Bloomberg:

Works by Zhang, known for his somber, gray-hued paintings of Chinese families, fetched a combined $44.1 million at art auctions last year, followed by Yue’s $30.5 million and Zeng’s $30.1 million, according to Rupert Hoogewerf, Hurun’s Shanghai- based publisher. Works by the top 50 artists on Hurun’s list sold a combined $410 million at auction last year. Artists on the list averaged 57.5 years of age.

While in the past mainly foreign collectors determined the art market in China, now also the Chinese investors have started to move, says Hoogewerf. That interest might possibly help this Chinese market from dropping too fiercely, along with the global financial crisis.

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Rupert Hoogewerf is a speaker at the China Speakers Bureau. When you are interested in having him at your conference, do get in touch.

Thursday, February 26, 2009

Insurances issues at the CCTV fire

Image by rudenoon via Flickr

Of course, this is a minor issue in the light of the moral damage being done to CCTV and the loss of life, but the Economic Observer comes with an nice story that illustrates the shift from a planned economy into a market economy, as CCTV is trying to get compensated for the fire at the TVCC building earlier this month.
Getting a government or its institution insured was no issue when China was a planned economy. The central government had anyway access to the funds of the ministry of finance, so there would be no reason to get commercial insurances in place.
Times have changed an now the media arm of the central government insured the burnt down building for a about 1.5 billion Renminbi, insured by the People's Insurance Group, possibly another arm of the central government (although I could be mistaken here).
Now, the February 9 fire was caused by CCTV employees and the media company had already to admit that failing management oversight was one of the root causes. Now, in insurance land that is a nono: you should maintain the story that you were fighting the fire, even if you were caught with the tools that caused the fire in your hands.
I have been talking in the past to factory owners in asbestos cases who knew they were at odds with both science and common knowledge by claiming asbestos did not kill, but if they would have done otherwise, they would have been unable to claim damage on their insurance.
That is what makes the story nice: not only the question who is going to pay for the damage, but even more, who is using what kind of argument to duck the financial responsibility.

Wednesday, February 25, 2009

Retail sales of luxury good in Shanghai strong - Paul French

Paul French by Fons1 via Flickr

Retail sales of luxury products in Shanghai have remained strong, tells retail analyst Paul French the Financial Times in an article about the Japanese shopping mall Takashimaya, who decided to open stores in Shanghai, despite the global economic crisis.
Paul French:

“There are still a lot of people that want brands,” he said, noting that the Takashimaya store will target the top end of the market.
“Valentine’s day was massive this year,” he said, noting that the combination of Christmas, the Chinese new year and Valentine’s day had helped sustain luxury sales.

French mirrors an optimism on consumer sales, that was also part of Shaun Rein's story yesterday, indicating the 60 percent of the Chinese consumers expect to spend more in 2009 compared to 2008.
But setting up a foreign department store in Shanghai is certainly not an instant success, Paul French warns as he recalls earlier failures.

But making a success of department store retailing at the top end of the market can be difficult in China, Mr French notes, pointing to the failure of Lane Crawford, the Hong Kong luxury retailer, which closed its flagship Shanghai store two years ago. Marks and Spencer, the UK mid-market retailer, has also struggled with its new Shanghai store, the first M&S on the mainland.

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Paul French is also a speaker at the China Speakers Bureau. When you need him at your conference, do get in touch.

Tuesday, February 24, 2009

Most consumers expect to spend more in 2009 - Shaun Rein

Shaun Rein by Fons1 via Flickr

Sixty percent of hundreds of Chinese consumers interviewed in six cities by Shaun Rein's CMR expect they will spend more compared to 2008. That is one of the conclusions Shaun Rein will share during the Global China Chat on consumer confidence on Monday. That could mean that 40 percent is not spending more.
Consumers do make an exception for their expenditure on cars and real estate: those industries seem to have a problem.
Consumers, Shaun Rein says, would rather delay purchases, because they expect prices might go down, from an overall decline of consumer confidence seems no reason.

More details in the press release on the Global China Chat by the China Speakers Bureau.

Monday, February 23, 2009

Global China Chat on consumer confidence in China

Shaun Rein by Fons1 via Flickr

Monday 2 March at 5 PM Beijing times (6 PM Tokyo time, for Europe, 10 AM CET) consumer analyst Shaun Rein of the leading research bureau CMR will participate on the first Global China Chat, this time on consumer confidence in China by the China Speakers Bureau.
Shaun Rein is one of the leading voices on China's emerging middle class and with him we will discuss how the current economic crisis is affecting the Chinese consumers.
Register at our event reminder to get timely access to our China Global Chat.

Climate changed on climate change - Charles McElwee

Charles McElwee by Fons1 via Flickr

The visit of secretary of state Hillary Clinton to Beijing has profoundly changed the climate on climate change, writes environmental lawyer Charles McElwee, one day after the visit on his weblog. He quotes Clinton:

Now, historically, as you know, the United States had the largest carbon footprint. But in the last year, China has surpassed us, and that is because of your growth. And I laugh with some of your officials. The United States, and certainly the Obama administration, we want China to grow. We want the Chinese people to have a very good standard of living. What we hope is that you won’t make the same mistakes we made, because I don’t think either China or the world can afford that.

And McElwee's take on this:

The cooperation stuff is great; the more cooperation the better. There needs to be a second track, however, that is getting down to the brass tacks with China about the commitments the US and China will make at Copenhagen. There were some hints that these discussions have begun or will begin soon. At a online chat yesterday moderated by Tsinghua University Professor Qi Ye, Clinton said that “we hope to work together in the lead-up to Copenhagen at the end of this year, with a new climate treaty.”...
Time is of the essence. Certainly the issue of climate change has been raised to a top agenda item on the US-China discussion list. Perhaps it is seems ungrateful to express any concern at this point, but I just hope there is sustained engagement on the commitment issue. If the commitment track negotiations are put on the same footing as the “cooperation” track, then they will proceed at the glacial SED pace. We don’t have much time left.

More at his weblog.

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Charles McElwee is a speakers at the China Speakers Bureau. When you are interested in having him at your conference, do let us know.

China: stability at all costs - Arthur Kroeber

Arthur Kroeber by Fons1 via Flickr

China will keep on buying US treasuries, even against all odds. Arthur Kroeber, managing editor of the China Economic Quarterly, tells the Financial Times:

“China’s default policy is to pursue stability at all costs. They do not want to rock the boat when things are unstable.”

Secretary of State Hillary Clinton wanted to make sure that, despite domestic misgivings, China will keep on supporting the US economy. She seems to have gotten that support.
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Arthur Kroeber is also a speaker at the China Speakers Bureau. When you are interested in having him at your meeting, do get in touch.

Friday, February 20, 2009

Most sought speakers - February 2009

Andrew Leung by Fons1 via Flickr

It is that time of the month again and at the global offices of the China Speakers Bureau we have been compiling the top-10 of most sought speakers. Most surprising and highest newcomer is professor Andrew Leung from London, who joined us last month and can now be found at the eight place.
Otherwise, we see remarkable few shifts in the top-10 compared to the listing in January (between brackets). Two additional speakers moved into the top-10, Rupert Hoogewerf and Tom Doctoroff, but in our listings they have never been very far away from the top-10.
Is there a certain stability coming into our rankings? In the coming months we have planned some major marketing efforts, and of course we hope that those efforts will make a difference.

The top-10 most sought speakers in February (January in brackets)
1. Shaun Rein (1)
2. Zhang Lijia (2)
3. Jeremy Goldkorn (7)
4. William Bao Bean (4)
5. Victor Shih (3)
6. Tom Doctoroff (-)
7. Arthur Kroeber (8)
8. Andrew Leung (-)
9. Jasper Becker (9)
10. Rupert Hoogewerf (-)

Thursday, February 19, 2009

Reinventing the TV in China

Marc van der Chijs by Fons1 via Flickr

Mike Walsh of CASBAA did a nice job in summerizing the online video industry in China, looking indepth at how China is different and how it might influence the way the outside world looks at TV. "TV, just not as you know it".
Not surprisingly, most of the leading voices who explain what is happening belong to the China Speakers Bureau: Kaiser Kuo, Jeremy Goldkorn, Sam Flemming and Marc van der Chijs. Enjoy.

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At the China Speakers Bureau we are happy to provide you with leading voices on the changes taking place in China. Do let us know of you need our help.

Expected: law use rights reforms - Amy Sommers

Amy Sommers by Fons1 via Flickr

As a part of China's green efforts a major change in the country's land use rights are expected, writes Shanghai-based lawyer Amy Sommers in the Green Buildings Blog, republished here.
When China opened up its country for business, foreign companies could typically get a lease of the ground for up to 70 years, leaving open the question what would happen afterward. For industrial and commercial property was up to 50 years, and especially in Shenzhen, where the development started, questions were being asked.
Amy Sommers, Partner at Squire, Sanders & Dempsey, LLP, now has the beginning of good news:

With respect to Land Use Rights (LUR) for residences, the Property Law has now clarified that the contracts will definitely be extended; the only question is the price. As I understand it, the government is considering a couple of different alternatives. One would include using an annual property tax approach, similar to what we have in the US, which would then generate regular revenue streams. However, whether to take this approach or to use some hybrid of it and the payment of 'grant fees' remains to be sorted out.

Most likely local governments - who now make most of their revenue from land use rights, more than on tax revenue - have to be convinced that this practice, common in the US and large parts of Europe, should be introduced in China too.

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Amy Sommers belongs to the China Speakers Bureau with leading speakers on all China-related issues. When you need her at your conference, let us know.

Wednesday, February 18, 2009

China's internet offers better investment options - William Bao Bean

William Bao Bean by Fons1 via Flickr

As the shake out of industries takes place under the global financial crisis, internet companies in China are becoming more attractive for investments, says William Bao Bean of the SoftBank China & India Holdings (SBCI) to Interfax.
The market has been too expensive in the past few years, but now that is changing:

However, the price adjustment brought about by the global economic downturn will alter this, he said.
"It has taken longer for the global economic downturn to influence China than other countries. I think in the next three to five months, we'll see some good investment opportunities as the market shakes out," he said....
Gaming and e-commerce are the most promising online sectors for investment, according to Bean, because they do not rely so heavily on advertising as a source of revenue when compared with other Internet sectors.

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William Bao Bean is also a speaker at the China Speakers Bureau. When you need him at your conference. Do let us know.

Glass tycoon become China's biggest giver - Rupert Hoogewerf

Rupert Hoogewerf by Getty Images via Daylife

Cao Dewang, a glass tycoon from Fujian province, has become China's biggest giver in charity, Hurun publisher Rupert Hoogewerf writes The Shanghai Daily. Cao Dewang wants to run the Fujian Charity Federation and would be number 102 on Hurun China Rich List last year with total assets of 6.5 billion Renminbi.

If the foundation is approved by state authorities, it would be the first to be based entirely on stocks, the Fujian Charity Federation said.

The fund would be used to provide school grants, disaster relief, subsidies for the poor and financial support to religious groups around the country, said the report, which did not say how the shares would be turned into cash....

Cao dropped out of school when he was 14 and went on to earn 700,000 yuan in 1986, three years after he began operating a glass workshop in Fujian's Fuqing City. The shop was later developed into the Fuyao Group, which went public in Shanghai in 1993.

Commercial Rupert Hoogewerf is also a speaker at the China Speakers Bureau. When you want him at your meeting or conference, do let us know.

Tuesday, February 17, 2009

The shock for the migrant workers - Victor Shih

Victor Shih by Fons1 via Flickr

2009 will be a troubling year, professor Victor Shih tells USA Today. Especially for millions of migrant workers who have lost their jobs in export oriented industries and hang on in lesser paying jobs, or return home to rural life.

For those who go home and stay, Shih says, rural life will come as a shock. "These young people were farmers, but they have lived in big cities, and their expectations are now a lot higher."

Monday, February 16, 2009

Mixed crisis messages from the Yangtze delta

Danwei has a nice interview with Malcolm Moore of The Telegraph, who is currently cruising Jiangsu and Zhejiang province, providing a rather nuanced picture of the "economic crisis" in China. He notes that even the changes in China's export provides both winners and losers, while the story of the "millions of migrant workers" that have been dismissed equally deserves a better look.

One myth that I think we have debunked is that there are millions of migrants being fired and spoiling for a fight. It's true that a large number of migrants have returned to the countryside, but the ones we spoke to, everywhere we went, said it was an economic choice. They think they will be better off, in terms of quality of life, inland.
goldkorn_1" style="border: medium none ; display: block;">Danwei's Jeremy Goldkorn
The wage gap has closed, the cost of living is far cheaper, and they can be with their friends and family.
The inability of many factories to pay overtime wages in the downturn seems to have been the final straw. They may have got a raw deal, but then migrants have always been treated badly. The ones who have been rioting are the ones who weren't paid.
Overall, I've seen the wisdom and speed of the government policies to kick-start the economy and I'optimistic.

More at Danwei.

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Making sense out of China's economic development is an art in itself. At the China Speakers Bureau we have a range of speakers who can help you in the process. Do you need them? Let us know.

Polo lost the fight against pirates - Shaun Rein

Shaun Rein by Fons1 via Flickr

Counterfeits might be part of life in China, but some companies win, while Polo lost, tells Shaun Rein Bloomberg. Hong Kong operator Dickson Concept loses after twenty years its "Polo" license, as the company takes control in Asia itself.
Unlike other brands, Polo did not defend its brand in China effectively.

Piracy has damaged Polo’s brand in China and its conservative image has led it to lose market share to rivals such as Ermenegildo Zegna SpA, Gucci Group NV, Louis Vuitton and Prada SpA, said Shaun Rein, managing director of China Market Research Group in Shanghai. “A lot of consumers have told us: Why buy a real Polo shirt if it looks the same as a fake one?”
“Ralph Lauren wasn’t doing as well as it should have in China and Hong Kong even before the financial crisis and it’s doing worse now,” he added. “It has a very ‘old’ image which is not what the Chinese consumers aspire to.”

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Shaun Rein is one of the leading speakers at the China Speakers Bureau. When you need him at one of your conference, do get in touch.

Friday, February 13, 2009

Government to withdraw from media?

Image via Wikipedia

Danwei reports on a statement by the governmental control body for print publications, the General Administration for Press and Publications (GAPP), picked up by the China Youth Daily, suggesting the government will withdraw from the Chinese media by 2010.
Media in China are all owned by government entities, although they have increasingly been financing themselves through advertisements. It reads:

"By the end of 2010, all for-profit news media and publishing entities will be decoupled from the government institutions they are affiliated with and transformed into separate companies. The government will no longer place restrictions on them in terms of ISBN numbers, publication licenses, and content."

It is not the first time, those suggestions emerge, and it is certainly not sure it will happen this time, nor does it say how government control would be executed in the future. The idea of the GAPP announcing its own liquidation would be perhaps a step too far.

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China's media are changing very fast, although it is very hard to figure out in what direction. At the China Speakers Bureau we have leading authorities able to give you a hand in sensing the current media climate. Do let us know if you

Jasper Becker by Fons1 via Flickr

need them.

The pitfalls of celebrity marketing - Shaun Rein

Shaun Rein by Fons1 via Flickr

A pot smoking Michael Phelps illustrates now celebrities change from brand ambassadors into liabilities, especially in China where audiences tend to be less forgiving, writes Shaun Rein in Forbes.

But brands like Omega and Visa that support Phelps are finding their image in China truly damaged, because attitudes towards drug use are much more conservative there than in the U.S. As one 34-year-old Beijing woman said, "I've lost all respect for Phelps, even though he's a great athlete."

China has seen a long range of celebrity scandals, from Christian Dior's Sharon Stone, who blames the Tibet issue on bad karma. Shaun Rein:

Of course, celebrity endorsements do work sometimes, for instance for Nike with Michael Jordan and Tiger Woods. Those relationships work because they make sense. People wear Air Jordans because they think they'll help them play basketball just a little bit like Mike. People use Nike golf gear to hit that ball a little bit straighter and farther, a little more like Tiger does.

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Shaun Rein is a speaker at the China Speakers Bureau. When you are interested in having him as a speaker, do get in touch.