Friday, February 16, 2018

My nostalgic view on Spring Festival - Zhang Lijia

Zhang Lijia
Much of China and many Chinese have become wealthy. But just a few decades ago, remembers author Zhang Lijia of "Socialism Is Great!": A Worker's Memoir of the New China Spring Festival was the only moment in the year where food was abundant. At her website, she looks with a nostalgic view at those poorer times.

Zhang Lijia:
Happiness glistened on our front door. Printed in gold on red shiny paper, the large character ‘fu’, meaning happiness or good fortune, shows a person knelt before an altar, prying for happiness. The character was stuck upside down, fu dao, in word-playing tradition to ensure that fu would arrive – dao – at our home. Behind the door, our whole family, dressed in our best outfits, gathered for the annual reunion dinner. Mine was a new cover, made of floral patterned cotton, for my padded Chinese jacket, and a pair of leather shoes instead of padded cotton slippers. 
In keeping with tradition, Nai first brought in a fish cooked in soy sauce and announced: “We have fish every year,” then put it aside for later consumption. In Chinese, yu, or fish, sounds like the character for surplus or abundance. In such wordplay lie hopes for a prosperous year ahead. 
At Ma’s insistence, Nai sat opposite the door, in the seat reserved for the most honourable person. Ordinarily she didn’t even sit at the table but ate her tiny portion in the kitchen, like a servant. Ma then stood up, raising a little porcelain cup with teardrops engraved around the edge. “A lot has happened this year. I retired, Little Li took over my job and I am trying to get another one.” 
“Yes, go for the Confucius Temple job,” cut in my father who had rushed back for the festival. “Deng Xiaoping said, ‘whether white or black, a cat is a good cat so long as it catches the rat.’ I say a job is a good job so long as it pays.” Pleased with his remarks, he voiced them loud enough for the whole building to hear. 
Ignoring her husband, Ma continued her speech. “‘Sesame stalks put forth flowers notch by notch’. I wish our lives will get better and better. Cheers!” 
Our cups and glasses clinked in the air. I drank tea since I was allergic to alcohol while everyone else downed a type of white liquor, the firewater that soon turned their faces red. Even my brother Xiaoshi was helping himself. He was tall for his age, but painfully skinny, as if forgetting to grow horizontally. Some of his naughty friends were already whistling for him outside our window. It was Nai who made him sit down and eat. 
“Eat, eat, I have loads more,” Nai urged, with an ear-to-ear smile that revealed her deep dimples. 
With plenty of materials to work with, Nai and Ma had cooked the best New Year banquet for years: chicken soup; sweet and sour fish shaped like a squirrel; a ‘lucky reunion’ stew in a clay pot; stir-fired green vegetables; and Nai’s specialty, the ‘lion’s head’ – a dish of minced meatballs. Food is always the thread that binds Chinese families close together. As our appetites rose with the steam, our chopsticks seized their targets with speed and precision. Spring Festival was the only time we could enjoy food without limit.
More at Zhang Lijia's website.

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Thursday, February 15, 2018

What's the deal with Alibaba's new retail? - Tom Doctoroff

Tom Doctoroff
Supermarkets in China (and where not) have been unfriendly for innovation - to put it mildly. But Alibaba's HEMA's supermarkets, starting the so-called "new retail", are causing a revolution, writes marketing guru Tom Doctoroff in AdAge. 25 Stores are functional and dozens more will be open soon.

Tom Doctoroff:
Until recently, China's grocery retail scene was primeval. Customer service was an oxymoron. A walk down the aisles of locally managed chains such as LianHua, HaiHang and Bubugao is a depressing experience, with ultra-bright lighting, wilted produce and scowling employees. Due to operational rigidity and cultural tone deafness, no international hypermarket—Carrefour, Walmart or Tesco—has achieved broad scale. 
Hema, on the other hand, oozes customer-centricity. In-store restaurants build a sense of in-store community. Layouts are easy to navigate and address Chinese sensibilities—for example, live produce is put near the entrance. In the U.S., the closest equivalent might be Whole Foods, though it's worth noting that Alibaba debuted its Hema brand before Amazon bought Whole Foods. 
Traditional retailers haven't tried to create an emotionally appealing brand, while Hema has. The brand name Hema Xiansheng means "boxed/packaged freshness and liveliness," while it also sounds like the phrase "Mr. Hippo." Hema uses a personified hippopotamus as its mascot. Its advertising is also more adventurous than other supermarket brands. Hema had a pop-up "Seafood Art Exhibition" in Shanghai, in an aquarium-style glass house, where consumers could check out expensive seafood products such as Boston lobster and Alaskan king crab. 
What will make Hema resonate? For one, it provides multi-level reassurance. China is the ultimate low-trust society. Economic, social and political interests remain unprotected by impartial institutions. Food, specifically, is dangerous stuff. The fear of contamination has been acute since 2008, when six babies died and several hundred fell ill from tainted milk powder. Parents pay 300 percent premiums for imported infant formula. In this context, Hema's transparency is manna from heaven. QR code displays reveal the origin of every product—where it was made, where it's from—as a guarantee of quality. 
The Hema purchase process also introduces new levels of "seamless product trial." Rather than piling goods into a cart and handing over cash over to a surly worker at the cash register, shoppers can "graze and pay" as they go. Imagine a woman enticed by a tropical fruit she may serve at a dinner party. With Alipay, she can buy just one, take a bite, and buy ten more later if the product passes muster. Or she can order online for delivery just before the event. 
Finally, the supermarket opens new worlds of discovery. Hema's multidimensional online-and-offline experience turns shoppers to connoisseurs of the exotic. Buyers are instantly provided information about, say, a novel dessert's provenance or recipe ideas for unusual seafood dishes. In China, a nation obsessed with sending pictures of food through cell phones, culinary adventurism is tantamount to lifestyle elevation. Given the ubiquity of social media platforms WeChat and Weibo, cuisine is translated into "face"—that is, currency of social advancement. "Showing you know" is a weapon in China's competitive battlefield of life.
More in AdAge.

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Wednesday, February 14, 2018

In China, politics is crucial for business - Shaun Rein

Shaun Rein
China has become a politicized society, and countries and businesses can only ignore politics at their own peril. That is one of the key messages of political analyst Shaun Rein's book The War for China's Wallet: Profiting from the New World Order, and at the China Economic Review, he explains how that - in his view - works.

The China Economic Review:
Q: The overriding message of The War for China’s Wallet is that brands need to have a real understanding of Chinese politics to succeed in today’s China. Why is that? 
A: China’s market has always been big for multinationals. But a lot of brands haven’t thought about the political risk implications of doing business in China, and that’s why I wrote the book. What we’ve seen in the last three to five years is that the Chinese government is using economic carrots and sticks to punish and rewards countries, and increasingly companies. For instance, in the last month you’ve seen how Marriott called Taiwan a separate country [on its website], and what did China’s government do? They handed out punishment, with a massive hammer. They blocked all of Marriot’s websites in China for one week. That’s a massive amount of loss of revenue. 
So, the thrust of the book is: China is increasingly using economic punishments and rewards, and how do companies adjust to that? Do you kiss ass, like Cambodia has done? Do you go completely against China, like India has done? Or do you go somewhere in the middle, somewhere I like to call the ‘warm partner’ category? That’s countries like Canada, the UK and France. Those countries will be nice to China, but they’ll also stand up to it, and that’s probably where you want to be. 
Q: How can companies avoid being caught up in a political furore in China? 
A: It’s not easy, frankly. Your employees, from the top to the bottom, now have to become political, almost State Department-like analysts. You can’t just rely on PR people to deflect anger. You have to start at the very beginning, understanding that China wants to be a superpower—you have to listen to what it wants or be punished. 
It’s not an easy thing, because if you take the example of Cambridge University Press from the UK, they bowed down to China and blocked a lot of articles and books on their websites at the government’s request. But then the backlash came in the West, with people saying that CUP was censoring its content. So, you kind of have to play that middle line. You have to weigh money vs. morality. 
Some companies, like Apple, are shameless. Tim Cook stands up at the World Internet Conference in Wuzhen and says that China has a flowering internet ecosystem, and doesn’t even mention censorship. That’s mealy-mouthed and pathetic. But he does that because Apple makes so much money in China and they have their entire supply chain here. 
If multinationals are going to hedge, you can’t invest too much in China. You can’t have your entire growth strategy in China only. You can’t have your sales and your production in China. And this is bad, this is killing me because I’m a China consultant who doesn’t have operations elsewhere, but that’s what you need to do.
Much more at the China Economic Review.
Shaun Rein at Amcham
Shaun Rein 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.

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Shaun Rein at the Hong Kon Foreign Correspondents' Club in December 2017

Tuesday, February 13, 2018

How China overtook in global IT innovation - Kaiser Kuo

Kaiser Kuo
In less than 15 years China changed from a copy-cat factory floor of the world into a leading innovation platform, says former Baidu communication director Kaiser Kuo to India Today. When the perception of China as a copy-cat nation still persists, it is the time to change, he says.

India Today:
In India, the impression that China can produce only cheap imitations is widespread. If anything, China's story warns of the dangers of complacency in such assumptions. "I don't think anyone would have foreseen 15 years ago that four of the 10 biggest internet companies would be Chinese," says Kaiser Kuo, who worked with Baidu until 2016. Kuo says there is a misplaced perception that only China is blocking foreign competition to enable the rise of its giants. "Twitter was blocked in 2009, Google didn't pull out until March 2010, but even by then these companies were far behind their competitors," he says. 
There are lessons from China's digital economy that question conventional wisdom on innovation, Kuo says. Even America's story shows the importance of government in creating the right conditions. "The mythology of Silicon Valley forgets the extent to which defence department expenditures played a role. The internet is a primary example. The state has been smart in China in knowing when to get out of the way, in setting the tax policies, in encouraging recruitment, in putting in place the infrastructure and in bringing back the Chinese entrepreneurs."...
It is clear that the rise of digital China is changing conventional wisdom on what it takes to innovate. As Kuo puts it, "Indians, like Americans, have this idea that freedom of expression is a necessary condition for innovation to happen. What's dangerous is if you think it's a sufficient condition to make people innovate." China is rewriting the rulebook, and India will ignore this transformation at its peril.

More at India Today.

Kaiser Kuo 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.

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China's success factor: skipping the middle management - William Bao Bean

William Bao Bean
In the search for answers to the question why Chinese companies do so well, corporate analyst William Bao Bean sees one key difference with Western competitors: many Chinese companies skipped the middle management and organized internal structures fundamentally different, he explains in VentureBeat.

VentureBeat:
On the ground level of management, according to SOSV’s William Bao Bean, “China has performed well without middle management because they have innovated a distributed management model within a company as opposed to the hierarchical western model. Companies like Tencent aren’t run top-down: they are made of hundreds of ‘small companies’ within a large platform, each with its on product manager that acts as a CEO. Western companies are a giant pyramid while Chinese companies are many pyramids grouped together to make a larger one.”
More in VentureBeat. 

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Monday, February 12, 2018

Why Beijing and the Vatican are eager to close a deal - Ian Johnson

Ian Johnson
Despite fierce opposition, both the Vatican and the central government in Beijing seem very eager to sign a deal on reestablishing diplomatic relations. Journalist Ian Johnson, who broke the story end January, and author of The Souls of China: The Return of Religion After Mao tries to figure out why both a so eager to push ahead, he tells at PRI. The real issue for both is about social control, he says.

PRI:
 The Vatican has centuries of experience in China. It was Jesuit priests who first established a permanent place for Christianity in China starting in the 16th century. Francis is the first Jesuit to become pope, and he appears eager to heal the divide running through Catholicism in China by normalizing relations between the Vatican and Beijing. 
Those diplomatic ties were severed in 1951, soon after the communists took control of the mainland. Life for Chinese Catholics has been complicated, to say the least, ever since. For the Chinese government, re-establishing diplomatic relations with the Vatican would be a victory for public diplomacy. But the real motivation for Xi and his government is about social control, says Ian Johnson. 
“Beijing just issued new regulations on religion that call for even tighter control on religion,” says Johnson, author of “The Souls of China: The Return of Religion After Mao.” 
“This is not really a socially reform-minded administration that’s willing to open up or take a gamble. I think if a deal presents itself, that’s great. They’ll do it. But if not, they’re probably happy to walk away.” 
Another attractive possibility for Beijing in all this is related to Taiwan, which China considers a renegade province. The Holy See is one of just 20 states with diplomatic ties to Taiwan. If normalizing the relationship with mainland China coincided with breaking the Vatican’s recognition of Taiwan, that would be something Xi could celebrate. 
For his part, Francis would like to heal the rift running through Catholic life in China. He'd also like to grow the church in that country. There are an estimated 10-12 million Catholics in China. By comparison, Protestants — and this is a low estimate — number around 60 million there. 
Legally, China does recognize Catholicism as one of the country’s five official religions. The authorities in Beijing even help appoint some Catholic bishops in China. This has long been a sticky issue for the Vatican. 
In recent weeks, the pope has shown he is willing to be flexible on this issue. Papal authorities asked two underground Chinese bishops to resign and make way for candidates approved by the Chinese government. 
“Many Catholics don’t feel comfortable going to the officially recognized Catholic Church, because many of those bishops and the priests under them, who they appointed, were not approved by Rome,” Johnson says. 
“Some people think, ‘I’m not being loyal. I’m not being a good Catholic. I’m not being loyal to the pope if I go to these official churches.’” 
“It’s a difficult situation, and it slows the growth of the religion,” Johnson adds.
 More at PRI 

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"Trade war" is actually business-as-usual between US and China - Kaiser Kuo

Kaiser Kuo
The US bans Huawei and solar panels. China 'investigates' sorghum. Is a trade war developing between China and the US. Not so fast, says political analyst Kaiser Kuo, and former communication director for Baiduat Wired. What we see according to him is just business as usual.

Wired:
Not everyone sees the recent round of actions as an escalation. Kaiser Kuo, host of the China-focused podcast Sinica, says the IP investigation and other actions are typical of the trade disputes between the US and China. Kuo says Beijing probably sees things like blocking Huawei from the US as retaliation against China over a cybersecurity law that requires technology companies to host their data in China. Apple is moving its Chinese customers’ iCloud data to a government controlled cloud hosting company to comply with the law.
More in Wired. Kaiser Kuo 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.

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Star Wars missing a following in China - Ben Cavender

Ben Cavender
Box office revenue for Star Wars: The Last Jedi, was beaten by a local romantic movie, showing US movies do not automatically win in China. US classics to not have the following in China, they have at home, says business analyst Ben Cavender to CNBC. 

CNBC:
"[T]his is a franchise which has always struggled in China ... the cult following just doesn't exist," Ben Cavender, principal at consultancy China Market Research Group, told CNBC. He attributed the less-than-outstanding performance of "The Last Jedi" at the Chinese box office to the lack of "generational awareness" among Chinese consumers of the franchise. The first three films in the series, which first began in 1977, were never shown in theaters on the mainland. In fact, the first Hollywood film shown theatrically after the Cultural Revolution was "The Fugitive" — which coincidentally also starred "Star Wars" actor Harrison Ford — in 1994. 
In order to tackle that lack of awareness ahead of the mainland release of "The Force Awakens" two years ago, Disney carried out large-scale marketing campaigns that included positioning 500 white-armored stormtroopers on the Great Wall to drum up hype around the film. 
Disney also recruited popular Chinese singer Lu Han to star in a themed music video ahead of the mainland release of "The Force Awakens" back in 2016. 
This year, cast and crew members of "The Last Jedi" — including actress Daisy Ridley, actor Mark Hamill and director Rian Johnson — attended a premiere at Shanghai Disney Resort some two weeks ahead of the film's mainland release to drum up support. 
Meanwhile, the relative popularity of the latest "The Ex-File" sequel could also be due to Chinese consumers becoming more attached to local "story-driven" films, Cavender said, citing the outperformance of "Wolf Warrior 2" last year.
More at CNBC.

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Cross-border e-commerce: tough to realize opportunities - Andy Mok

Andy Mok
Cross-border e-commerce offers huge opportunities, not only for China but for SME's globally. Realizing those opportunities will not happen by itself, but needs huge efforts, says business consultant Andy Mok in a commentary for state-broadcaster CGTN.

Andy Mok:
But China offers more than just a proven model. It also provides an enormous market for e-commerce businesses around the world. According to the General Administration of China Customs (GACC) cross-border e-commerce turnover increased 80.6 percent from a year earlier to 90.24 billion yuan last year with imports skyrocketing 116.4 percent to 56.59 billion yuan. With rising incomes, urbanization and increasing outbound travel, demand for a greater variety of products and services from around the world will only continue to increase in China. 
However, realizing these opportunities will take much effort. For example, cross-border e-commerce transactions are typically smaller than traditional import-export deals. According to the GACC, Chinese customs handled 660 million manifests for e-commerce trade in the past year, 8.4 times as much as for conventional imports and exports. On Nov. 11, China's Singles' Day online shopping festival, Chinese customs processed a total of 16.2 million orders, about 187 orders per second. Thus, customs agencies around the world must be ready for a much higher volume of transactions to process. 
More generally, fully realizing the potential of cross-border e-commerce will require a coordinated implementation of the e-commerce triad of online platforms, logistics and finance involving governmental entities, businesses and other organizations. Because of the inherently multilateral nature of cross-border e-commerce, the establishment of a framework, guidelines and standards and mechanism for evolution and refinement of these elements is crucial. 
The First Global Cross-Border E-Commerce Conference, co-hosted by the World Customs Organization and GACC, set an important milestone for what will likely be one of the most powerful trade, economic development and poverty alleviation opportunities in the history of mankind.
More at CGTN.

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What about cybersecurity for self-driving cars? - Mark Schaub

Mark Schaub
China is diving fast into self-driving cars. But while cybersecurity has become a major issue in IT, in the combination of self-driving cars, cybersecurity is not getting the attention it deserves, says Shanghai-based lawyer Mark Schaub on the China Law Insight, focusing on the legal risks and the actions the Chinese government did take.

Mark Schaub:
Beginning late 2017, China appears to have sped up its efforts to establish a regulatory regime for self-driving cars but still lags slightly behind other leading jurisdictions. 
The importance of government policy on self-driving cars is clear. Government has three main roles in regulating the development of self-driving cars. Firstly, it will need to balance the interests of the public with those of the industry; secondly, the government will have a role to facilitate greater collaboration within the industry; and thirdly, government will have a responsibility to establish and ensure a safe information-sharing environment. [22] As such the Chinese government’s efforts to establish a regulatory regime for self-driving cars is very welcome. 
In addition, industry can also play an important role in the development of policies for self-driving cars in this fast moving environment. Examples include the Alliance of Automobile Manufacturers and the Association of Global Automakers which published the Framework for Automotive Cybersecurity Best Practices in January 2016 which is referenced by the US NHTSA Best Practice. It is likely that the Chinese auto industry will in the near future also play a more active role in the evolution of China’s regulatory regime for self-driving cars. This will include in particular the creation and formation of guidelines.
A thorough international overview at the China Law Insight.

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Thursday, February 08, 2018

Location is key, also for economists - Shaun Rein

Shaun Rein
Chinese New Year is ahead and economists have their predictions about the country's economy ready. Much of their gloomy prospects Over-investment, too much debt, bubbly markets, faked data, Ponzi-like financial structures) depends on their location, observes business analyst Shaun Rein, author of The War for China's Wallet: Profiting from the New World Order, according to Bloomberg. Those located in China tend to get the uptick in the economy better than those observing China from afar.

Bloomberg:
That negativity is a sharp contrast to the majority opinion held closer to Beijing or Shanghai. There, booming consumption, a pickup in global trade, and an increasingly innovative private sector are fueling bets that China’s generation-long economic miracle still has plenty of room to run, albeit at a slower rate than the average gross domestic product growth of almost 10 percent a year since the early 1980s. “I find it scary how many self-proclaimed US based China experts w real influence have barely lived in China, barely speak Chinese and barely have a clue …” tweeted Shaun Rein, Shanghai-based founder and managing director of China Market Research Group and author of The War for China’s Wallet, on Dec. 26. Later he was on Twitter again, wagering that the “same tired group of China’s watchers will predict China’s collapse for the 40th year in a row… and they’ll be wrong for the 40th time but western media will keep quoting them breathlessly as experts.”
It's almost time for New Year's Predictions on China's economy - my prediction? Same tired group of China's watchers will predict China's collapse for the 40th year in a row... and they'll be wrong for the 40th time but western media will keep quoting them breathlessly as experts
More in Bloomberg.

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Wednesday, February 07, 2018

The 2018 Tencent Report - Matthew Brennan

Matthew Brennan
Tencent is one of the world's largest and most influential IT companies, but very few know what the company looks like. WeChat expert Matthew Brennan made for China Channel the Tencent Report, a short introduction to the company.

Matthew Brennan 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.

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