"Build Your Dreams" in BYD - Helen Wang

Warren Buffett via Wikipedia

Warren Buffett visited this week China's electric car maker BYD in Shenzhen, where he invested 230 million US dollar to buy ten percent of the company. BYD stands for "Build Your Dream", recalls Helen Wang on her weblog, one of many dreams in China.
Helen Wang:

It does not take much research to discover that BYD are the initials of the Chinese charactersBi Ya Di, which does not mean anything but sounds foreign or Western. Many Chinese companies use Western-sounding names to make their companies or product brands sound modern, or to imply their businesses have Western connections.

Despite some nationalistic tendencies among Chinese youths, most of China’s upwardly mobile middle class consumers favor Western brands because of their quality and reputation. A recent article in Harvard Business Review reveals that only 45 percent of Chinese consumers prefer local brands, down from 57 percent three years before.

More at Helen Wang's weblog.

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Helen Wang by Fantake via Flickr

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Zong Qinghou, richest man in China - Rupert Hoogewerf

  Hurun by Fantake via Flickr

Zong Qinghou, founder of China's largest soft drink producer Wahaha, has become the richest man of China in 2010, announced Rupert Hoogewerf or Hurun, maker of the China Rich List today, according to AFP. Zong not only gained financial, but also politically by taking on the French former partner Danone.
The announcement comes as China's rich gather at a dinner by US-billionaires Bill Gates and Warren Buffet in Beijing for their Chinese equals. Zong will be one of them.
According to AFP:

Zong, 65, leapt 11 places to top the Hurun Rich List, said Rupert Hoogewerf, founder of the Shanghai-based Hurun Report, which publishes the annual list of the richest Chinese with personal wealth of at least 150 million dollars.

Zong's climb up the rankings comes a year after French food giant Danone ended its long-standing feud with Wahaha, by agreeing to sell its 51 percent stake in their joint ventures.

Danone had accused Zong of breaching an agreement after he set up an entire production and distribution network in parallel to the French firm's joint ventures with Wahaha.

The whole list will only be published in October.

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Our September 2010 newsletter is out

Zhang Lijia by Fantake via Flickr

Are you preparing for the next holiday in China? In terms of speakers on China our September 2010 newsletter is out and might give you some inspiration. You can view it here. 

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• China Manufacturing Sector Improves (online.wsj.com)

All is not rosy in China's real estate - Shaun Rein

Shaun Rein by Fantake via Flickr

Although an acknowledged bull when it comes to the real estate in China, Shaun Rein admits in his latest Forbes column the industry faces huge dangers too. Three to be precise:

First, there simply is not enough low- and middle-income housing, because developers build luxury apartments where the fattest margins are...

Second, building quality homes in the middle of nowhere does no good without cheap and convenient transportation, so China actually needs to invest more, not less, as many argue, in infrastructure. Many bears like Prof. Michael Pettis of Peking University fret that China is relying too heavily on infrastructure investment for its growth gains and is becoming like Japan in the 1990s. Such analysis surprisingly fails to take into account the differences between China's and Japan's spending and the fact that many Chinese are still heartbreakingly poor while Japan's quality of life is arguable higher than America's...

Also, while no economy is bubble-free

China's economy is still starting from a low point, and its market remains inefficient overall. More than 400 million people are shifting from agricultural lives to urban ones, and they will need more homes and a change in economic structuring. Companies are investing in all that... China has very real economic challenges to face. However, these challenges do not threaten a systemic collapse.

Much more at Forbes.

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Nike shifts focus to China for sales - Shaun Rein

Image via CrunchBase

Nike, the world's largest manufacturer of athletic shoes, is shifting its attention for sales to Asia and especially China. With success, tells Shaun Rein BusinessWeek:

Chief Executive Officer Mark Parker is counting on China and emerging markets to provide the most growth over the next five years as Nike gets 65 percent of sales outside North America. The company has widened its lead in China over Adidas AG by expanding in cities beyond Beijing and Shanghai, said analyst Shaun Rein.

“As consumers are getting whttp://www.china-speakers-bureau.com/profiles/940592.htmlealthier here they are buying special items for the gym, for the weekend, for going out,” Rein, managing director of China Market Research Group in Shanghai, said in a phone interview today. “Nike are doing the best because they have the best brand loyalty.”

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Why the bears are wrong on China - Arthur Kroeber

Arthur Kroeber Fantake via Flickr

Negative sentiments are out on China in the West again, but economic analyst Arthur Kroeber explains in the Sinica Podcast, lead by Kaiser Kuo, why those bears are wrong. "China is still different."
Most of th€e bears are Western critics, who have no clue about China, Kroeber argues. It is a complex, closed system, where efficiency does not have the same value as in developed nations, he says. "The country still has enough tailwind, as it still have to move 400, 500 million people into the economy. When China can compare to any country, it would be Japan in the 1960.
Many more interesting observations in the Sinica Podcast.

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China's rich give differently - Rupert Hoogewerf

Rupert Hoogewerf via Flickr

China's rich give also part of their wealth away, says Rupert Hoogewerf of the China's rich list at the eve before Bill Gates and Warren Buffet hit the stage in Beijing in the New York Times. But they do it in a different way.
While the rich in the US have been increasingly vocal on how they give their increasing fortunes to charity. China's rich have been fairly silent on the initiative to get more millionaires behind the Gates-Buffet initiative. But that does not mean China's wealthy are sitting on their capital, says Rupert Hoogewerf or Hurun of the China Rich List.

“The Chinese have been very generous for a long period of time,” Rupert Hoogewerf, who publishes Hurun Report, said by telephone. “The difference has been that they do it between families, and don’t publicize it. What we’re seeing now is a new era of transparency.”

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Bull Shaun Rein takes on bear Andy Xie at CNBC

Image by Getty Images via @daylife

Is there a bubble in China waiting to burst, for example in real estate? No, says Shaun Rein to Andy Xie in a debate at CNBC. Xie argued that real estate prices in China were overvalued 100 percent. Wrong says Rein.
"Our research show that 60 percent of the people in second and third tier cities are willing to buy property, up from 30 percent not so long ago," tell Shaun Rein. "There is a lot of liquidity in the market."



Introductory opening exchanges can be found here

Shaun Rein by Fantake via Flickr

Concluding remarks here.


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Huawei under US scrutiny - Wendell Minnick

Wendell Minnick via Flickr

Eight Republican senators have taken on China's electronic firm Huawei, the alter ego of the US giant Cisco. The eight accuse Huawei in a letter of US departments of having ties with Iran, the Taliban and the People's Liberation Army (PLA), writes Wendell Minnick in Defense News:

China’s largest networking and telecommunications equipment provider, Huawei is looking to bid for subcontracts offered by Sprint Nextel, a supplier to the Pentagon and U.S. law enforcement agencies. The Chinese firm’s effort is being spearheaded by Amerilink Telecom, a Kansas-based company whose chairman is retired U.S. Navy Adm. William Owens. The former vice chief of the Joint Chiefs of Staff warned in his 2000 book about a rising military threat from Beijing, but more recently has developed business ties with Chinese firms.



If Huawei wins, it could “present a case of a company, acting at the direction of and funded by the Chinese military, taking a critical place in the supply chain of the U.S. military, law enforcement, and private sector,” the letter says. “We are concerned that Huawei’s position as a supplier of Sprint Nextel could create substantial risk for U.S. companies and possibly undermine U.S. national security.”

The letter is yet another step in the increased military tension between China and the US, documented by Wendell Minnick for Defense News.
More in his weblog.

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'Fat China' scores in most-sought speakers for September 2010

Paul French by Fantake via Flickr

Some remarkable changes in our monthly top-10 of most-sought speakers. While most of the listed speakers hold on to their position in the list, Paul French has entered the triumvirate of top-3 speakers at number 2, clearly a success related to his latest book Fat China: How Expanding Waistlines are Changing a Nation, where he identifies obesity as a new key problem China has to face in the decades to come. For China's health care yet another Gargantuan dilemma, caused by the advertisement industry, claims French.
Many other thought-leaders on China seem to prefer to stick other - undeniable giant - challenges has to face, but setting the agenda by re-framing China's challenges in such a way certainly seems to appeal to clients.
Shaun Rein, as usual, has been extremely active in the mainstream media in debating China-related issues, so he still remains very much at the top.
Good news is also the appearance of a new speaker, Helen Wang, who entered the first ranking right away at the 8th position. Her book, The Chinese Dream, on China's middle class is not yet available, so we have good expectations she might hang on to a top position in the months to come. All too often, when new speakers do not trigger off enough response among mainstream media., clients or otherwise, they often leave this top-10 as fast as they came in.
Wendell Minnick, with his special focus on China's military might, did not face that fate. As the military tensions increase in Asia, the Bureau Chief of Defense News in Taiwan solidly hangs on to the 9th position.
Without further delay, let's turn to the full top-10 of most-sought speakers of September 2010. (August 2010 in brackets).

Helen Wang by Fantake via Flickr

1. Shaun Rein (1)
2. Paul French  (7)
3. Kaiser Kuo (2)
4. William Bao Bean (-)
5. Tom Doctoroff (4)
6. William Overholt (6)
7. Arthur Kroeber (3)
8. Helen Wang (-)
9. Wendell Minnick (8)
10. Jasper Becker (9)

Are you looking for these or other speakers on China-related issues? Do get in touch.

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iPad a winner for Apple in China - Shaun Rein

Image via Wikipedia

Apple's iPad has arrived today in China and, says Shaun Rein in the Wall Street Journal, that is a smart move of the US company, as customers are waiting eagerly.

Shaun Rein, managing director of China Market Research Group, says the iPad could give Apple a boost. “I see the iPad as a major win for Apple in China,” he said. “There’s not much competition in the market” and consumers say “they can’t wait for it.”

Though there is significant interest in Apple products in China, the company’s release of the iPhone has been lackluster compared to its release in other markets, in part because it took so long to officially launch the device here. In the more than two years between the U.S. iPhone launch its official launch in China, the gray market for iPhones—including millions of iPhones that were hacked and packaged with pirated software—became well-established....

Apple launched the iPad in China “fairly quickly after launching it globally. It’s not like people have had years to go and jailbreak them,” Rein said.

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Shaun Rein

r conference, do get in touch.

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Internet, a feedback system for the government - Jeremy Goldkorn

Jeremy Goldkorn by Fantake via Flickr

China's governments, central, provincial and local, are using the internet increasingly to listen what is happening in their huge country. So, internet analyst and Danwei.org owner Jeremy Goldkorn was not amazed when the central government started a website, allowing its citizens to talk directly to them, he tells CNN.

"The government has been aware of the power of the internet for some time and it has become a major way for the Party to gauge public opinions," said Jeremy Goldkorn, founder of the popular China media website Danwei.org.

Goldkorn cited two much-publicized live Internet chat sessions between netizens and Hu and Wen.

"Although politically incorrect messages will surely be censored on this board, there may still be a genuine feedback mechanism even for those posters," Goldkorn said.

The website was launched last week by the People's Daily, the official newspaper of the Communist party.
More at CNN.

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Please pay Chinese doctors more - Shaun Rein

Shaun Rein by Fantake via Flickr

One of the root causes for corruption in China is that government officials, doctors and others get a very low pay. Shaun Rein describes in Forbes why the idea of ending up in a Chinese hospital sometimes keeps him awake at night:

Why is there so much corruption in China's health care system? Part of the problem is that doctors make so little. A brain surgeon named Dr. Xie at a famous hospital complained to me that he officially made only $400 a month, which is less than many factory workers now get. Doctors can't make money legally, he lamented. Some 95% of hospitals are state-owned, and the government caps consultations at $2 to $3 even for the country's most famous doctors, so that even peasants can afford to see the best ones.

Patients keep on paying their doctors bribes, so they can get the best possible help. While in the industry, salaries are going up, in hospitals and in government wage developments do not keep up with those developments and inflation. Keeping the costs low for patients, is one of the reason hospitals cannot pay a decent salary. Shaun Rein gives the examples of the San Francisco police department and the Singapore government, where decent salaries halt corruption and improve the quality of the services. Shaun Rein:

There was shock last year when one official's diary detailing his sexual escapades hit the Internet. People were shocked not that he had taken bribes to pay for weekly visits to hookers but that those bribes had totaled only $10,000 over many years. They thought the amount would be much greater.

More arguments in Forbes.

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How Ebay failed in China - Helen Wang

Jack Ma of Alibaba

In the slipstream of the most recent Yahoo-Alibaba brawl Helen Wang recalls the long-standing tradition of failure Yahoo's ecommerce site Ebay had in China. From an excerpt of her upcoming book "The Chinese Dream" in Forbes.
The struggle started in 2004:

In 2004, I visited Alibaba at its headquarters in Hangzhou. It is located on a campus of three ten-story buildings in the northeastern part of Hangzhou, about a ten-minute taxi drive from West Lake. In the lobby, a flat panel TV was streaming video clips of Jack Ma speaking at various public events where his admirers, most of them in their twenties, were cheering him like a rock star. While visiting Alibaba’s headquarters in Hangzhou, I felt the same “insanely great” energy of entrepreneurship as I felt in Silicon Valley. When I asked a senior manager at Alibaba whether the company was worried that it would be bought by eBay, I was blown away by the answer: “We will buy eBay!”

As we know now, Ebay failed that epic struggle, that is still going on. Helen Wang:

First, eBay failed to recognize that the Chinese market and the business environment are very different from that of the West. EBay sent a German manager to lead the China operation and brought in a chief technology officer from the United States. Neither one spoke Chinese or understood the local market. It was eBay’s biggest mistake. Second, because the top management team didn’t understand the local market, they spent a lot of money doing the wrong things, such as advertising on the Internet in a country where small businesses didn’t use the Internet. The fact that eBay had a strong brand in the United States didn’t mean it would be a strong brand in China. Third, rather than adapt products and services to local customers, eBay stuck to its “global platform,” which again did not fit local customers’ tastes and preferences.

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Helen Wang

Helen Wang is a speaker at the China Speakers Bureau. When you need her insights at your meeting of conference, do get in touch.

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Why Yahoo cannot ignore China - Paul Denlinger

Paul Denlinger by Fantake via Flickr

China's leading eCommerce site Alibaba.com is in another spat with its largest shareholder Yahoo (neatly summarized here in the Wall Street Journal) because it started to recruit advertisers on the mainland. Business analyst Paul Denlinger explains in the Business Insider why Yahoo has to reclaim lost ground in China.

Things were fine as long as the two companies didn't enter each other's territory: For Alibaba, this was the China market and for Yahoo , this was everywhere else. (Yahoo has a significant presence in Hong Kong, and commands more than 95% of all traffic in Taiwan through Yahoo 's acquisition of Kimo in 2000, and Yahoo founder Jerry Yang's Taiwan roots.)

Alibaba is entering the global market, taking on Yahoo outside China. So, Yahoo entering China, led by its current headquarters in Singapore, is unavoidable, writes Paul Denlinger.

That's a mighty big hole. With China's economic dynamo, it's impossible to sell a real ad package if China is not included. This is why Yahoo needs to move into ad sales in China. 

But the problem, from the Chinese government's perspective, is that the ad sales center is based in Singapore, which is not a part of China. When Google skedaddled out of Beijing to Hong Kong in March, it could at least claim that Hong Kong was a part of China, and that it had not in fact left China, even though Hong Kong is not covered by the Great Firewall of China which censors content in the PRC.

But that is not the case with Singapore, which China recognizes as a sovereign nation, even though more than 70% of its population are ethnic Chinese. And diplomatically, China and Singapore, along with the other countries of Southeast Asia, have been going through some rough patches lately.

In short:: Yahoo is not only taking on Alibaba, but also the Chinese government, warns Paul Denlinger.
More at the Business Insider.

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Helen Wang joins China Speakers Bureau

Helen Wang by Fantake via Flickr

Author and consultant Helen Wang has joined the China Speakers Bureau. Born in Hangzhou and since twenty years living in the US, she has become a leading expert on China's middle class. Her book "The Chinese Dream" will be published shortly.
Her Chinese roots and American experience puts her into an excellent position to explain the rise of this new economic force in China, both its chances and its challenges.
Helen Wang has previously at a prestigious think tank, Institute for the Future, and consulted for Fortune 500 companies including Apple Computer, Oracle, and Bank of America.
Her book "The Chinese Dream" is expected next month.

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Unemployed students at an overheated labor market - Shaun Rein

Shaun Rein by Fantake via Flickr

Higher education in China is lagging behind, forcing 25 percent of its graduates to stay unemployed, while companies have a hard time to find qualified employees to deal with its economic growth, writes Shaun Rein today in Forbes. One of the country's more serious conundrums as unrest among its students is growing, traditionally one of China's sources of social unrest - not the farmers,

Shaun Rein:

Class sizes are too big, teachers teach by rote, and students are not given the interdisciplinary liberal arts education they need... Rather, students typically focus on a single discipline, like accounting, for their entire four years of college, leaving them unable to adjust to a global business environment that demands flexible thinking. They are bright and eager, but unprepared to work effectively for a global corporation..

My own firm, the China Market Research Group, is actively hiring but simply can't grow as fast as we want and as the market is demanding. For every thousand résumés we receive, we find perhaps two candidates who are qualified. Our standards are extremely high, but many multinationals are facing the same problem.

China's education system needs to change and change fast if China is going to prevent social instability and ensure a steady transition from low-cost manufacturing to a more service-oriented economy.

More in Forbes

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China's Baidu as a game-changer - Kaiser Kuo

Kaiser Kuo Fantake via Flickr

China's companies have mostly been seen as intelligent copy-cats of their Western competitors at best, certainly no innovators. China's largest search engine Baidu.com proves it can be a game-changer, says its director international communication Kaiser Kuo in an interview with Inventorspot.
Baidu opened up for third party application developers and is already getting one third of its revenue from that source. In its Box Computing Open Platforrm (BCOP) it offers a searchable application library.

"I think the idea of working with third party resource providers, whether it’s just structured data or actual applications, is something that other search engines will inevitably want to do." Google, for instance "has already been providing some information directly in search results – things like weather – and I think it’s likely that other search engines will begin offering other resources directly on results pages as well," notes Kuo.

As Americans have experienced stateside with Google, search engine algorithms are always evolving to anticipate the needs of searchers - and for Baidu "it's a natural, logical outgrowth of our desire to connect people directly to what they're looking for online - and for developers - to provide them (greater) opportunities for conversions," asserts Kuo.

Much more in Inventorspot.

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Hu Jintao, China's most prominent diabetes patient - Paul French

Paul French by Fantake via Flickr

President Hu Jintao is China's most prominent diabetes patient, but with 120 million obese - and counting - he is certainly not alone, tells Paul French, co-author of Fat China, to Jeremy Goldkorn of Danwei TV. Chinese are getting more of everything and lost control of their diet, just like people in the West, only later. "We would have loved to blame McDonald's or KFC for it," says Paul French, "but we cannot."

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Fat China! Paul French talks about obesity in China from Danwei on Vimeo.

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Chinese want to be rich, not middle class - Shaun Rein

Shaun Rein by Fantake via Flickr

Many observers wrongly assume Chinese want to be middle class, like the Americans once were. They are wrong, explains Shaun Rein in the Wall Street Journal. Chinese want to be rich.

While investment by global brands has traditionally been highest in Tier 1 cities, explains Shaun Rein, managing director of the China Market Research Group, these days, most growth is happening in Tier 3 cities — defined as medium-size cities such as Dalian that are highly entrepreneurial. And it’s luxury that sells.

“The concept of an emerging middle class in China is a myth, says Rein. “In the U.S., blue-collar workers are happy to shop at Macy’s [department store] for life. Here everyone wants to be rich. It’s why middle-class brands like Marks & Spencer and Calvin Klein haven’t done well.”

Louis Vuitton has 17 thriving stores in Tier 2 (in developed capital cities such as Chengdu) and Tier 3 cities in China. That’s a good measure of the “luxury readiness” of smaller Chinese cities. Swarovski crystal can be be found in about 200 shops spanning 35-40 Tier 1 through Tier 4 cities (such as Jinhua). Luxury brand consumption is linked directly to the development of cities and commercial real estate, specifically malls and shopping centers.

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Graduate unemployment a temporary problem - Zhang Juwei

Zhang Juwei by Fantake via Flickr

China export industry might be suffering from labor shortage, but its large number of university graduates find it hard to get a job. A temporary problem, says deputy director Zhang Juwei of the Chinese Academy of Social Sciences (CASS) in Business Week, although he is not underestimating the current problem.
In Business Week:

Already, the government is claiming a small victory of sorts, with the Education Ministry announcing recently that the rate of employment for recent graduates rose from 68 percent in 2009 to 72.2 percent this year. "As the economic structure changes, more suitable jobs for graduates will be created," says Zhang Juwei, deputy director at the Institute of Population and Labor Economics at the Chinese Academy of Social Sciences. Although Zhang may be right, that scenario is little comfort to the more than 25 percent of recent grads still hunting for work.

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Zhang Juwei is a speaker at the China Speakers Bureau. Do you want to share his insights at your conference or meeting? Do get in touch.

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Celebrity endorsements are not trusted in China - Jeremy Goldkorn

Jeremy Goldkorn by Fantake via Flickr

A Lady Diana lookalike in underwear used on Chinese advertisements shocked at least the British part of the world, but Danwei's Jeremy Goldkorn tells The Guardian that is it business as usual as far as it concerns China.
In The Guardian:

Jeremy Goldkorn, who runs the Beijing-based media website danwei.org(a partner of the Guardian) says using images of stars on products without their knowledge has been popular since 2003, when several real estate developers claimed Bill Clinton as a spokesman. The current US president has proved no less commercially-minded, apparently taking a break from governing to plug the "Blockberry Whirlwind" smartphone(not, of course, to be confused with the BlackBerry Storm).

The misuse of these celebrity endorsements is so widespread in China, few consumers take them serious anyway, says Goldkorn.

Luckily Chinese consumers don't take the ads at face value. "I don't think Chinese people really trust celebrity endorsements anyway – but they can make a product stand out from the crowd. That's why companies continue to do it," says Goldkorn.

And affronted western stars should spare a thought for their Chinese counterparts. When Muzimei shot to fame for her graphic sex blog, entrepreneurs were swift to use her name for products without her permission. The condoms and underwear might have been predictable. But few would relish lending their name to a rat poison.

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Jeremy Goldkorn is a speaker at the China Speakers Bureau. When you need his insights at your meeting or conference, do get in touch.

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