It was Queen Elizabeth II who first publicly used the term “annus horribilis” (before that it was considered to be in poor taste to refer to certain parts of anatomy in public). She was, of course, referring to the miserable year that she had in 1992, where most of her children parted company with their spouses and her house (Windsor Castle) caught fire. More recently, the Economist referred to the year 2008 as the Wall Street’s annus horribilis – at the end of which, of Wall Street’s five big securities firms, only Goldman Sachs and Morgan Stanley still remain in recognizable existence.
The Chinese started the year 2008 with great expectation and anticipation. After all 2008 should have been a lucky year - an “annus mirabilis”, as all years, months and days which include the number “8” are expected to be. However, the year had merely commenced when tragedy struck in the form of the worst snow storm ever witnessed by China, with millions of workers stranded on the road, trains and railway stations and unable to make the almost mandatory trip back home for the Chinese new year. The snow had hardly melted and the workers barely resumed their roles in turning the economic wheel of China, when the earth trembled viciously in Sichuan province, and destroyed thousands of lives, and hundreds of thousands of home and livelihoods.
China did have its day in the sun when it unveiled the opening ceremony of the Olympics on the 8th day of the 8th month of 2008 and dazzled the world with its technical prowess and cultural richness. As widely expected, it brought down the curtain two weeks later with the largest haul of gold medals - even though their favourite 110 metres hurdles runner, Liu Xiang, broke the nation’s heart by limping away from the track nursing an ankle injury.
The glow of national pride was blindingly bright and many thought that it had changed China for ever. But then the “melamine” tragedy struck, a grim reminder of the hazard of greed overshadowing a sense of right and wrong. Thousands of children in China were hospitalized as they developed kidney stones as a result of drinking milk which was contaminated with melamine – an industrial chemical which found a new revenue stream as an aid to showing a high protein level reading, even when the milk has been diluted.
Already hurting at the monumental collapse of their stock market, the financial sentiment further deteriorated as all hell broke loose on Wall Street. Initially the economists and the government shrugged off the threat and felt reasonably secure and “decoupled”. However when the American consumers stopped buying the toys made in Guangdong province in South China, and workers were seen arguing for their unpaid wages, a realization dawned that this would be as much a Chinese crisis as an American one. China’s exports actually declined by 2.2% in November 2008 – first decline seen in the last 7 years.
Today, gloomy economists are speculating whether China (along with India) will be one of the worst affected economies from the credit crunch. Particularly China, which depends so heavily on exports (accounting for 37% of its GDP). How it is going to run those factories and pay the wages when the orders dry up as American consumers either do not have money or do not feel inclined to spend it. Will it be able to find alternative routes to maintain the growth? Will the traditionally thrifty Chinese (with 25% household savings rate) want to hoard even more when they see the gloom in the West? The car sales in China have already seen a negative growth in recent months. Consumers are reluctant to buy houses, an activity that added significantly to economic growth in the last decade.
That China will slow down and that the current crisis signals the end of the uninterrupted double digit growth which made China the cynosure and envy of the world is not disputed now. However, will it merely decelerate to a more modest, but still a healthy growth, while continuing on the path of striving for a better life for its citizens, or will it derail and cause ruin and mayhem. So far the government has been responsive. Interest rate has been reduced as many as five times in the last 5 months to stimulate lending and borrowing. The government has also announced that it will spend as much as 4 trillion yuan (US $ 586 billion) over the next couple of years to stimulate demand. A mammoth amount is planned to be spent on infrastructure projects, including adding 41,000 kms of railroad by 2020 and providing six million jobs on the way. However, this alone is unlikely to suffice to ensure a continued ride for the Chinese on the train to economic prosperity. To continue on the joy ride, the Chinese economy will need a nimbleness and openness with which it can reinvent itself and wean itself from the export dependence that it has been flourishing on so far.
Written by Ashok Sethi
Ashok.set@gmail.com
Tuesday, December 30, 2008
Thursday, December 18, 2008
China's lower-tier markets get a fillip
Published in South China Morning Post, November 24, 2008
Moving to lower tier markets
Concomitant with the spread of economic prosperity from large cities and coastal areas of China to inland and lower-tier cities, the market for consumer products is also expanding to wider geographical areas. While the sword of current economic crisis hangs perilously over China, there are indications to suggest that the economic measures initiated by the Chinese government to stimulate domestic demand (particularly the plan to spend 4 trillion yuan or 586 billion dollars in the next 2 years) will actually accelerate the spread of consumer products to lower tier cities and rural China. For marketing companies, this is an opportunity to move resources and investments in lower tier cities to secure a firm position in these markets of ever increasing importance.
Penetrating China
According to a survey done by AmCamb Shanghai among its members in 2007, 40% of the surveyed companies had no presence in the lower tier markets. Even successful companies like McDonald’s only operate in less than 200 of the over 600 main cities and 20,000 towns in China – not to mention the countless villages which dot the country. The fact remains that the companies operating in the big cities are only scratching the surface the four top cities only account for 3% of the population – in fact the total urban population together is only 45% of the population of China. It is not surprising, therefore, that the most successful companies in China are those who have been able to penetrate the lower tier and rural markets of China.
Though the transition from the large metros to the lower-tier and rural markets is imperative for growth, it is not always easy to implement. The lower tier cities and rural areas differ significantly from the large cities in many ways – not only in lower incomes but also in terms of the profile of the consumers, the way we can access them, the retail infrastructure, consumers’ media habits and the way they think and make brand choices. Marketers need to carefully decide their expansion strategies, and modify their marketing tactics in sync with the local consumer preferences, lifestyle and habits.
Financial crisis and China
In the meanwhile, as the world bemoans its financial woes, after some debate, a consensus has emerged among the economists about the potential impact on the Chinese economy. China, most now opine, can not escape unscathed from the global financial mess. The official figures also suggest a slow down (GDP growth of 9.9% in the first 3 quarters of this year, 2.3% lower than the same period last year) and a shadow of nervousness over job cuts and future uncertainty mars the mood of the Chinese consumers.
The biggest worry comes from the likely impact on Chinese exports. China is the factory of world, and its low priced products sit smugly on the shelves of Walmart in America, from where the consumers have been scooping them into their super sized shopping baskets with a flourish and getting past the tills with their over stretched credit cards. With American consumers losing their jobs, seeing their houses plummet in value, and their credit cards less yielding, the Chinese products seem to sit longer on the shelves, and the orders for factories in Guangdong seem to be approaching a drought.
In anticipation of further accentuation of the impact on growth, the Chinese government is naturally and logically hastening to stimulate the domestic demand. Last month the State Council announced that China will spend a generous 4 trillion yuan over the next two years to offset adverse global economic conditions by boosting domestic demand. This money will be spent on 10 major areas – which include rural infrastructure, build more affordable housing, including rural housing, transport, raising average incomes – particularly in rural areas.
While all these measures are targeted at stimulating the overall domestic demand, their effect is likely to be even stronger in lower tier markets, including rural markets. In essence, the importance of lower tier markets in China has received a big boost from the global economic crisis. This stimulus package will give a fillip to the lower tier markets in a number of ways:
- Firstly, it will provide employment opportunities related to the investment in infrastructure and other accelerated economic activities in rural China. It is estimated that investment in railway construction alone will create 6 million jobs.
- Secondly, the government plans to spend on poverty relief and try to raise the income of the lower income groups to raise their consumption ability, thereby facilitating another objective of the Chinese government – that is narrowing the ever increasing urban rural income divide.
- Thirdly, it will improve physical access to lower tier and rural markets through construction of new and improved road and railways infrastructure and hence ease the expansion of distribution networks. l
- Lastly, by providing low cost housing, it will increase the disposable income available to lower tier residents.
While the stimulus package would boost the overall economy, it would also ensure that the benefits accrue more to the lower income consumers, and those who are away from the more accessible large cities, and thereby paving the way for faster expansion of consumer goods to lower tier markets.
Written by Ashok Sethi, TNS China
Moving to lower tier markets
Concomitant with the spread of economic prosperity from large cities and coastal areas of China to inland and lower-tier cities, the market for consumer products is also expanding to wider geographical areas. While the sword of current economic crisis hangs perilously over China, there are indications to suggest that the economic measures initiated by the Chinese government to stimulate domestic demand (particularly the plan to spend 4 trillion yuan or 586 billion dollars in the next 2 years) will actually accelerate the spread of consumer products to lower tier cities and rural China. For marketing companies, this is an opportunity to move resources and investments in lower tier cities to secure a firm position in these markets of ever increasing importance.
Penetrating China
According to a survey done by AmCamb Shanghai among its members in 2007, 40% of the surveyed companies had no presence in the lower tier markets. Even successful companies like McDonald’s only operate in less than 200 of the over 600 main cities and 20,000 towns in China – not to mention the countless villages which dot the country. The fact remains that the companies operating in the big cities are only scratching the surface the four top cities only account for 3% of the population – in fact the total urban population together is only 45% of the population of China. It is not surprising, therefore, that the most successful companies in China are those who have been able to penetrate the lower tier and rural markets of China.
Though the transition from the large metros to the lower-tier and rural markets is imperative for growth, it is not always easy to implement. The lower tier cities and rural areas differ significantly from the large cities in many ways – not only in lower incomes but also in terms of the profile of the consumers, the way we can access them, the retail infrastructure, consumers’ media habits and the way they think and make brand choices. Marketers need to carefully decide their expansion strategies, and modify their marketing tactics in sync with the local consumer preferences, lifestyle and habits.
Financial crisis and China
In the meanwhile, as the world bemoans its financial woes, after some debate, a consensus has emerged among the economists about the potential impact on the Chinese economy. China, most now opine, can not escape unscathed from the global financial mess. The official figures also suggest a slow down (GDP growth of 9.9% in the first 3 quarters of this year, 2.3% lower than the same period last year) and a shadow of nervousness over job cuts and future uncertainty mars the mood of the Chinese consumers.
The biggest worry comes from the likely impact on Chinese exports. China is the factory of world, and its low priced products sit smugly on the shelves of Walmart in America, from where the consumers have been scooping them into their super sized shopping baskets with a flourish and getting past the tills with their over stretched credit cards. With American consumers losing their jobs, seeing their houses plummet in value, and their credit cards less yielding, the Chinese products seem to sit longer on the shelves, and the orders for factories in Guangdong seem to be approaching a drought.
In anticipation of further accentuation of the impact on growth, the Chinese government is naturally and logically hastening to stimulate the domestic demand. Last month the State Council announced that China will spend a generous 4 trillion yuan over the next two years to offset adverse global economic conditions by boosting domestic demand. This money will be spent on 10 major areas – which include rural infrastructure, build more affordable housing, including rural housing, transport, raising average incomes – particularly in rural areas.
While all these measures are targeted at stimulating the overall domestic demand, their effect is likely to be even stronger in lower tier markets, including rural markets. In essence, the importance of lower tier markets in China has received a big boost from the global economic crisis. This stimulus package will give a fillip to the lower tier markets in a number of ways:
- Firstly, it will provide employment opportunities related to the investment in infrastructure and other accelerated economic activities in rural China. It is estimated that investment in railway construction alone will create 6 million jobs.
- Secondly, the government plans to spend on poverty relief and try to raise the income of the lower income groups to raise their consumption ability, thereby facilitating another objective of the Chinese government – that is narrowing the ever increasing urban rural income divide.
- Thirdly, it will improve physical access to lower tier and rural markets through construction of new and improved road and railways infrastructure and hence ease the expansion of distribution networks. l
- Lastly, by providing low cost housing, it will increase the disposable income available to lower tier residents.
While the stimulus package would boost the overall economy, it would also ensure that the benefits accrue more to the lower income consumers, and those who are away from the more accessible large cities, and thereby paving the way for faster expansion of consumer goods to lower tier markets.
Written by Ashok Sethi, TNS China
Wednesday, November 19, 2008
Financial crisis with Chinese characteristics
Observing the process of rolling jiaozi (Chinese dumplings) is an interesting experience. A long and thick strand is extracted from the pile of dough, broken into little pieces, each piece rolled into a thin pancake skin and stuffed with ground meat, chopped green vegetables, or egg. These little parcels are finally steamed, boiled or fried and served steaming hot with a dip of vinegar and optional chillies and mashed garlic. While observing the process and enjoying a portion of jiaozi and last week in a small roadside shop near Xizang Road in Shanghai, I was somehow reminded of the packaging of sub-prime loans into delicious looking structured investment vehicles, which were steamed into respectability by the credit agencies and picked up by the financial community with as much relish as I was raising the jiaozi to my mouth.
As if reading my thoughts, the restaurant owner who was rolling jiaozi, broke my reverie with a sudden question, “How is the financial crisis affecting India?” Given the universality of basic education in China, the level of general awareness (though not necessarily the degree of appreciation of the issues) tends to be high. It was not a surprise, therefore, that the dumpling roller from a village in Shandong province seem familiar with the global meltdown and curious about how it is affecting the world. His dumpling business in downtown Shanghai, however, he felt was not particularly vulnerable to the global crisis of confidence.
The mood elsewhere in China, however, is somber and in fact had been since the beginning of this year. According to a newspaper report, the number of people seeking psychological counseling in Beijing has doubled since the beginning of the year, and 85% of these are worried about possible job loss.
The stock prices started tumbling earlier this year and wiped out over half the value of most large companies listed on the Shanghai stock exchange and the savings of many who were enticed to the market by its heady ascent. Once a favorite pastime of the urban Chinese, including retired government workers and grizzled grandmothers, betting on the stock market has turned out be a regrettable indulgence.
The first Chinese victims of the current global financial crisis are the migrant workers who power the exports of cheap toys, garments, shoes and other such products to the Western world. Toy factories in Guangdong province of China are already closing and workers forced to go back to the villages they came from and again face the subsistence existence based on a tiny plot of land. Many, however, are likely to come back to the cities and seek employment in more export-proof industries of China.
Among the general Chinese population, the consumer confidence index is down from a high of 100.8 in October 2007 to 91 in September 2008 (a moderate decline when compared to the plunge in the US consumer confidence from 61.4 to 38 in just a month as reported by the Conference Board). Thrifty by nature and not afflicted by the profligate habits of their American counterparts, the confidence dip in China has not so far translated into a drastic tightening of purse strings or a cataclysmic reduction in consumption. However, the Chinese brow is also writ with worries about the future, queues outside popular and premium restaurants are getting shorter, and the shopping bags carried around luxury shopping malls seem lighter.
According to the latest data, the Chinese economy grew 9% in the third quarter of 2008, a dazzling performance compared to a 0.5% decline in Britain but a poor fizzle as compared to a blistering 11.9% growth in the same period of 2007 in China. When it did grow at this scorching pace, the talk was often of “overheating” and the government often voiced concern and attempted to rein the economic horse on steroids. But this strain has made a sudden reversal, and the People’s Bank of China cut interest rate for a second time in three weeks to reinvigorate the economy.
While not fully immune to the global virus of uncertainty and anxiety, the Chinese definitely show a higher resistance and resilience. While a relatively healthy and vibrant economy still growing at a 8%+ clip definitely helps, it is the Chinese psyche which possibly also contributes strongly to this feeling. As my colleague Eric Tai remarked “The Chinese have a saying –“Weiji jiu shi zhuanji” or “opportunity arises from crisis”. This positive thinking will definitely help the Chinese tide over the crisis with greater aplomb and the Chinese resilience should help cushion some the pain caused by unrestrained greed and excesses of the Western financial establishment.
Written by Ashok Sethi, TNS China
As if reading my thoughts, the restaurant owner who was rolling jiaozi, broke my reverie with a sudden question, “How is the financial crisis affecting India?” Given the universality of basic education in China, the level of general awareness (though not necessarily the degree of appreciation of the issues) tends to be high. It was not a surprise, therefore, that the dumpling roller from a village in Shandong province seem familiar with the global meltdown and curious about how it is affecting the world. His dumpling business in downtown Shanghai, however, he felt was not particularly vulnerable to the global crisis of confidence.
The mood elsewhere in China, however, is somber and in fact had been since the beginning of this year. According to a newspaper report, the number of people seeking psychological counseling in Beijing has doubled since the beginning of the year, and 85% of these are worried about possible job loss.
The stock prices started tumbling earlier this year and wiped out over half the value of most large companies listed on the Shanghai stock exchange and the savings of many who were enticed to the market by its heady ascent. Once a favorite pastime of the urban Chinese, including retired government workers and grizzled grandmothers, betting on the stock market has turned out be a regrettable indulgence.
The first Chinese victims of the current global financial crisis are the migrant workers who power the exports of cheap toys, garments, shoes and other such products to the Western world. Toy factories in Guangdong province of China are already closing and workers forced to go back to the villages they came from and again face the subsistence existence based on a tiny plot of land. Many, however, are likely to come back to the cities and seek employment in more export-proof industries of China.
Among the general Chinese population, the consumer confidence index is down from a high of 100.8 in October 2007 to 91 in September 2008 (a moderate decline when compared to the plunge in the US consumer confidence from 61.4 to 38 in just a month as reported by the Conference Board). Thrifty by nature and not afflicted by the profligate habits of their American counterparts, the confidence dip in China has not so far translated into a drastic tightening of purse strings or a cataclysmic reduction in consumption. However, the Chinese brow is also writ with worries about the future, queues outside popular and premium restaurants are getting shorter, and the shopping bags carried around luxury shopping malls seem lighter.
According to the latest data, the Chinese economy grew 9% in the third quarter of 2008, a dazzling performance compared to a 0.5% decline in Britain but a poor fizzle as compared to a blistering 11.9% growth in the same period of 2007 in China. When it did grow at this scorching pace, the talk was often of “overheating” and the government often voiced concern and attempted to rein the economic horse on steroids. But this strain has made a sudden reversal, and the People’s Bank of China cut interest rate for a second time in three weeks to reinvigorate the economy.
While not fully immune to the global virus of uncertainty and anxiety, the Chinese definitely show a higher resistance and resilience. While a relatively healthy and vibrant economy still growing at a 8%+ clip definitely helps, it is the Chinese psyche which possibly also contributes strongly to this feeling. As my colleague Eric Tai remarked “The Chinese have a saying –“Weiji jiu shi zhuanji” or “opportunity arises from crisis”. This positive thinking will definitely help the Chinese tide over the crisis with greater aplomb and the Chinese resilience should help cushion some the pain caused by unrestrained greed and excesses of the Western financial establishment.
Written by Ashok Sethi, TNS China
Thursday, October 30, 2008
Imagine – a Unicef luxury watch!
Defining luxury goods
While there could be many ways of defining luxury goods, possibly one key element of all the definitions will be that the functional benefit that the consumer gets out of buying luxury, though substantial, normally does not commensurate with the price paid, and the deficit is made up by emotional gratification. While emotional gratification also constitutes an important part of delivery in mass market products, the difference is that for mass market products the balance of delivery is tilted towards functional benefits, whereas for luxury products the balance gets skewed in favour of emotional payoffs.
If this premise is accepted, we need to explore whether it is possible to expand the range of emotional gratification that the consumer may get from spending a large sum of money, which does not offer commensurate functional gratification. The emotions that the luxury goods marketers have traditionally been exploiting have been prestige, class and exclusivity. Luxury advertising often portrays its users as being unique, belonging to an exclusive clique and admired and fawned upon by others.
New emotional gratifications
Human beings are complex animals and have a range of emotional needs. While needs for prestige and admiration are well established, and it is also known that consumer is willing to pay to satisfy these needs, it should be possible to go beyond these into new areas of gratification. I hypothesise that it is possible to go beyond these clichéd emotional gratifications and persuade the consumer to pay luxury prices for a range of products and services, offering newer types of emotional gratifications.
These needs include a need to feel responsible, helpful and leading a worthwhile existence. “Giving back” to the society is an often theme heard among those who have made it and feel that they owe something. I present below three new avenues for luxury goods. These avenues, I feel, will not only lead to profits for companies who explore these, but will also contribute to the good of society.
Green luxury
More and more hybrid cars are getting sold in the developed world. Sold at a significant premium, functionally they offer little more (in fact a little less, some will argue) as compared to the conventional gas guzzlers. However, the purchase is fueled by (pun intended) a need to prove (to oneself as well as others) of being a responsible consumer. More extreme is the example of cars run on fuel cells whose only emission is pure water – which in spite of the enormous cost is finding retail customers in the US and is considered by some to be the ultimate environmental status symbol. As environmental awareness increases, consumers are keen to reduce their carbon footprints and are willing to pay more for products and services which are environmentally friendly. Luxury good opportunities exist in areas of personal vehicles, energy solutions and green homes as also for a range of products and services which espouse environmentally friendly production and distribution methods.
Responsible luxury
The 2006 film Blood Diamonds created awareness about conflict diamonds and made one wonder whether the beautiful stones you are sporting are tinted in the blood of innocent people who are exploited and killed for profiteering and diamond money. RugMark is an international nonprofit organization which randomly inspects the looms of companies that agree to employ adults only and provides a child-labor free certification for rugs. With cost pressures and competition, companies have been going out of their way to cut costs. While doing that some have also fallen to the temptation of cutting corners. Luxury goods buyers will pay a premium for the emotional satisfaction that their joy of owning the product which is not produced at the cost of exploitation of others. Luxury good buyers will pay more for consumption for products certified to be made ethically and responsibly.
Charitable luxury
While charity balls is not a new concept, a charity Louis Vuitton handbag is. Unicef attempts to raise money by selling products under its brand but offers little more than New year cards, some trinkets and toys. The challenge for luxury goods manufacturers is to sell more to the buyer and make them indulge in frequent purchases. In doing that they need to find new appeals and draws. While on the face of it, the concept of luxury handbags while the poor are starving may be repellant, but the combination of the two is practical and offers a win-win situation for the buyer, the seller, and the poor. I feel that there is scope for selling luxury goods, with the sales linked to donations for the needy. In doing that, we will enrich the emotional satisfaction of the buyers and also contribute to charity (meeting the emotional needs of the rich and the functional needs of the poor!)
Written by Ashok Sethi TNS China
While there could be many ways of defining luxury goods, possibly one key element of all the definitions will be that the functional benefit that the consumer gets out of buying luxury, though substantial, normally does not commensurate with the price paid, and the deficit is made up by emotional gratification. While emotional gratification also constitutes an important part of delivery in mass market products, the difference is that for mass market products the balance of delivery is tilted towards functional benefits, whereas for luxury products the balance gets skewed in favour of emotional payoffs.
If this premise is accepted, we need to explore whether it is possible to expand the range of emotional gratification that the consumer may get from spending a large sum of money, which does not offer commensurate functional gratification. The emotions that the luxury goods marketers have traditionally been exploiting have been prestige, class and exclusivity. Luxury advertising often portrays its users as being unique, belonging to an exclusive clique and admired and fawned upon by others.
New emotional gratifications
Human beings are complex animals and have a range of emotional needs. While needs for prestige and admiration are well established, and it is also known that consumer is willing to pay to satisfy these needs, it should be possible to go beyond these into new areas of gratification. I hypothesise that it is possible to go beyond these clichéd emotional gratifications and persuade the consumer to pay luxury prices for a range of products and services, offering newer types of emotional gratifications.
These needs include a need to feel responsible, helpful and leading a worthwhile existence. “Giving back” to the society is an often theme heard among those who have made it and feel that they owe something. I present below three new avenues for luxury goods. These avenues, I feel, will not only lead to profits for companies who explore these, but will also contribute to the good of society.
Green luxury
More and more hybrid cars are getting sold in the developed world. Sold at a significant premium, functionally they offer little more (in fact a little less, some will argue) as compared to the conventional gas guzzlers. However, the purchase is fueled by (pun intended) a need to prove (to oneself as well as others) of being a responsible consumer. More extreme is the example of cars run on fuel cells whose only emission is pure water – which in spite of the enormous cost is finding retail customers in the US and is considered by some to be the ultimate environmental status symbol. As environmental awareness increases, consumers are keen to reduce their carbon footprints and are willing to pay more for products and services which are environmentally friendly. Luxury good opportunities exist in areas of personal vehicles, energy solutions and green homes as also for a range of products and services which espouse environmentally friendly production and distribution methods.
Responsible luxury
The 2006 film Blood Diamonds created awareness about conflict diamonds and made one wonder whether the beautiful stones you are sporting are tinted in the blood of innocent people who are exploited and killed for profiteering and diamond money. RugMark is an international nonprofit organization which randomly inspects the looms of companies that agree to employ adults only and provides a child-labor free certification for rugs. With cost pressures and competition, companies have been going out of their way to cut costs. While doing that some have also fallen to the temptation of cutting corners. Luxury goods buyers will pay a premium for the emotional satisfaction that their joy of owning the product which is not produced at the cost of exploitation of others. Luxury good buyers will pay more for consumption for products certified to be made ethically and responsibly.
Charitable luxury
While charity balls is not a new concept, a charity Louis Vuitton handbag is. Unicef attempts to raise money by selling products under its brand but offers little more than New year cards, some trinkets and toys. The challenge for luxury goods manufacturers is to sell more to the buyer and make them indulge in frequent purchases. In doing that they need to find new appeals and draws. While on the face of it, the concept of luxury handbags while the poor are starving may be repellant, but the combination of the two is practical and offers a win-win situation for the buyer, the seller, and the poor. I feel that there is scope for selling luxury goods, with the sales linked to donations for the needy. In doing that, we will enrich the emotional satisfaction of the buyers and also contribute to charity (meeting the emotional needs of the rich and the functional needs of the poor!)
Written by Ashok Sethi TNS China
Friday, August 8, 2008
Why can’t they be more like us?
Fearing the polluted air, the American Olympic cycling team arrived in Beijing wearing masks. The West continues to wonder why China can not fix its problems, and think and behave like them. President Bush’s address to the world on the eve of the Beijing Olympics raises some important questions…
On behalf of the United States of America, I congratulate the Chinese people and leadership for the impressive preparation they have made for hosting the 2008 Olympics. But while I say this, I must also urge the Chinese to learn more from the great nations of the world – particularly America.
We run a benign state, providing generous loans to our citizens, to buy houses which are larger than their incomes would allow, to live in a comfort that they can not afford. We allow them to live from month to month, borrowing from one credit card to repay the debt of another, to continue to flourish in an end less circle of debt fuelled luxury. The Chinese citizens are deprived of these benefits and need to pay 30% down payment for their apartment, and provide income certificates to apply for a mortgage.
I acknowledge that our poor are now facing unheard hardship, including facing the threat of losing their 4 bedroom sub-urban mansions, Most glaringly their very livelihood is threatened as they are unable to afford the gasoline to drive their 3 gas-guzzling sedans to work. The Chinese poor live in villages on their farms and struggle to feed their families and provide them with clean drinking water.
America has been tottering on the verge of recession, lost trillion of dollars in ingeniously crafted collateralized debt obligations and its legendary manufacturing enterprises are making losses in billions of dollars. China’s economy, on the other hand, staged a record growth of 11.4% in 2007 and managed to grow at 10.4% in the first half of 2008, despite the chaos that we inflicted on the world.
We take natural disasters in our stride, neglecting hurricane Katrina till the man made disaster overshadowed the natural one. Chinese, also frequently blessed with nature’s fury, fly their Prime minister to Sichuan within two hours of the being struck with an earthquake, and mobilize the entire nation to bring succor and comfort to the afflicted.
Our citizens quake to step after dusk in downtown streets of Chicago, New York and other great American cities, because of fear of getting mugged, stabbed or raped. The Chinese youth roam freely and happily in Shanghai, Beijing and Chengdu, while solemn faced Chinese policemen patrol in total oblivion of their merriment.
Our citizens have freedom – freedom to sell sub-prime mortgages, freedom to buy them, freedom to disguise them as respectable debt instruments, freedom to give them as AAA ratings, freedom to gamble (absolute luxury, when they can lose so much in the financial markets), freedom to buy guns (to escape from it all, if nothing else works), freedom to bomb Iraq (to share and divide the misery that we feeling our own country). The Chinese enjoy none of this freedom and are tightly controlled by a draconian regime with a misguided determination to protect its citizens from harming themselves.
While in most areas we want the Chinese to become more like us, there is one area where we want to retain our unique position and unassailable lead. We are the largest emitter of greenhouse gases in the world. Unfortunately this is one area in which China is becoming more and more like us. But our position as number 1 polluter is unshakable. We will not let the Chinese poor benefit from electricity, motorized transport or air travel. As we steadfastly refuse to sign the Kyoto protocol, we are determined to use all our power to prevent the Chinese from enjoying an excessive lifestyle which threatens the world with dire consequences of global warming.
I wish a great success for the Olympics and hope that they will change China for the better.
Written by Ashok Sethi
Ashok.set@gmail.com
On behalf of the United States of America, I congratulate the Chinese people and leadership for the impressive preparation they have made for hosting the 2008 Olympics. But while I say this, I must also urge the Chinese to learn more from the great nations of the world – particularly America.
We run a benign state, providing generous loans to our citizens, to buy houses which are larger than their incomes would allow, to live in a comfort that they can not afford. We allow them to live from month to month, borrowing from one credit card to repay the debt of another, to continue to flourish in an end less circle of debt fuelled luxury. The Chinese citizens are deprived of these benefits and need to pay 30% down payment for their apartment, and provide income certificates to apply for a mortgage.
I acknowledge that our poor are now facing unheard hardship, including facing the threat of losing their 4 bedroom sub-urban mansions, Most glaringly their very livelihood is threatened as they are unable to afford the gasoline to drive their 3 gas-guzzling sedans to work. The Chinese poor live in villages on their farms and struggle to feed their families and provide them with clean drinking water.
America has been tottering on the verge of recession, lost trillion of dollars in ingeniously crafted collateralized debt obligations and its legendary manufacturing enterprises are making losses in billions of dollars. China’s economy, on the other hand, staged a record growth of 11.4% in 2007 and managed to grow at 10.4% in the first half of 2008, despite the chaos that we inflicted on the world.
We take natural disasters in our stride, neglecting hurricane Katrina till the man made disaster overshadowed the natural one. Chinese, also frequently blessed with nature’s fury, fly their Prime minister to Sichuan within two hours of the being struck with an earthquake, and mobilize the entire nation to bring succor and comfort to the afflicted.
Our citizens quake to step after dusk in downtown streets of Chicago, New York and other great American cities, because of fear of getting mugged, stabbed or raped. The Chinese youth roam freely and happily in Shanghai, Beijing and Chengdu, while solemn faced Chinese policemen patrol in total oblivion of their merriment.
Our citizens have freedom – freedom to sell sub-prime mortgages, freedom to buy them, freedom to disguise them as respectable debt instruments, freedom to give them as AAA ratings, freedom to gamble (absolute luxury, when they can lose so much in the financial markets), freedom to buy guns (to escape from it all, if nothing else works), freedom to bomb Iraq (to share and divide the misery that we feeling our own country). The Chinese enjoy none of this freedom and are tightly controlled by a draconian regime with a misguided determination to protect its citizens from harming themselves.
While in most areas we want the Chinese to become more like us, there is one area where we want to retain our unique position and unassailable lead. We are the largest emitter of greenhouse gases in the world. Unfortunately this is one area in which China is becoming more and more like us. But our position as number 1 polluter is unshakable. We will not let the Chinese poor benefit from electricity, motorized transport or air travel. As we steadfastly refuse to sign the Kyoto protocol, we are determined to use all our power to prevent the Chinese from enjoying an excessive lifestyle which threatens the world with dire consequences of global warming.
I wish a great success for the Olympics and hope that they will change China for the better.
Written by Ashok Sethi
Ashok.set@gmail.com
Thursday, August 7, 2008
Moral Debate in China
Despite repeated aftershocks, the dust is slowly settling on the devastation of the Sichuan earthquake and the Chinese media coverage has shifted its focus to celebrating the Olympics. In all the heart-rending destruction and devastation, there are two episodes from the earthquake which generate a quizzical smile. The first of these is the story of Fan Meizhong, a school teacher who ran for his life when the quake struck, leaving his students behind. Fortunately, his school remained standing and none of his students were hurt. However, the aggravating fact was that he later, in a fit of candidness, admitted to abandoning his wards and defended his action as guided by his own sense of morality and the natural instinct of self-preservation. He proclaimed that he loved his life and that he would not sacrifice it for anyone. Only safety of his daughter (not even his mother) could induce him to sacrifice his own life. Expectedly this proclamation elicited a huge hue and cry from the general public. Nicknamed “Run Run Fan” in light of his action, faced swift condemnation and was fired from his job. Not only that, it even prompted the Ministry of education to issue a new State ethics regulation, which says that protecting the students is a moral obligation of the teachers.
While Fan’s detractors have been more numerous as well as more strident, the media has not been devoid of a few who have dared to praise him for his honesty. Fan could have kept quiet and possibly lived with a nagging feeling of guilt throughout his life. But he chose to publicly expunge it and in a way proclaim his innocence while admitting his guilt.
The second incident is perhaps even more intriguing. Jiang Xiaojuan, a 30 year old police woman in Jiangyou city in Sichuan province and a mother of a six month old child, breastfed six children who lost their mothers in the earthquake. Caught in the act by a press photographer, Jiang expectedly faced profuse showers of praise and approval. Clearly this was a unambiguous case of selfless compassion, of a member of the police force behaving with uncharacteristic tenderness and care. While most agreed to this, what caused the debate among the Chinese was her subsequent promotion to assistant commissioner of public security for the city. While her action was clearly commendable, the resultant promotion, the Chinese public felt, was not justified - as compassion alone, however heart-felt and moving it may be, is not an adequate criteria for elevation to a senior position in the police department.
The Western media and political leaders are obsessed with what they see as absence of democracy and free speech in the China. Some even go to the absurd length of saying that the country suffers from a moral vacuum. The lively and open debate around the Run Run Fan and Jiang Xiaojuan shows that it there is spirit of debate and moral discussion which is alive and vibrant in China – it is just that the issues that the West considers as the core of morality are perhaps not the same as the ones that excite debate and passion among the Chinese. West needs to resist the temptation of judging every country and every person by the single minded view of Western morality and democratic ideals. The Sichuan earthquake revealed a profile of the country which is compassionate, considerate and reflective. There is a sense of balance and intense reflection on what is right and wrong. Recognizing such a mindset, the West needs to let go, relax and let China find its own path at its own pace.
While Fan’s detractors have been more numerous as well as more strident, the media has not been devoid of a few who have dared to praise him for his honesty. Fan could have kept quiet and possibly lived with a nagging feeling of guilt throughout his life. But he chose to publicly expunge it and in a way proclaim his innocence while admitting his guilt.
The second incident is perhaps even more intriguing. Jiang Xiaojuan, a 30 year old police woman in Jiangyou city in Sichuan province and a mother of a six month old child, breastfed six children who lost their mothers in the earthquake. Caught in the act by a press photographer, Jiang expectedly faced profuse showers of praise and approval. Clearly this was a unambiguous case of selfless compassion, of a member of the police force behaving with uncharacteristic tenderness and care. While most agreed to this, what caused the debate among the Chinese was her subsequent promotion to assistant commissioner of public security for the city. While her action was clearly commendable, the resultant promotion, the Chinese public felt, was not justified - as compassion alone, however heart-felt and moving it may be, is not an adequate criteria for elevation to a senior position in the police department.
The Western media and political leaders are obsessed with what they see as absence of democracy and free speech in the China. Some even go to the absurd length of saying that the country suffers from a moral vacuum. The lively and open debate around the Run Run Fan and Jiang Xiaojuan shows that it there is spirit of debate and moral discussion which is alive and vibrant in China – it is just that the issues that the West considers as the core of morality are perhaps not the same as the ones that excite debate and passion among the Chinese. West needs to resist the temptation of judging every country and every person by the single minded view of Western morality and democratic ideals. The Sichuan earthquake revealed a profile of the country which is compassionate, considerate and reflective. There is a sense of balance and intense reflection on what is right and wrong. Recognizing such a mindset, the West needs to let go, relax and let China find its own path at its own pace.
Wednesday, May 21, 2008
The tremors that moved the nation
It was in the my office on the 28th floor of Finance Square in Shanghai, where I sat with a concept test brief in my hand, in deep contemplation on how to add value to the research design, when my cogitation was interrupted by the tinkling of the blinds against the windows. Before I could get time to puzzle about why the blinds were moving inside the building with all the windows tightly sealed, I realized that it was not just the blinds but the whole building which seem to have broken into a gentle dance. If my colleagues were frightened at the realization that we were experiencing an earthquake, they did a great job of disguising their fear and with great aplomb and composure we started shuffling down the stairs to evacuate the building (including me, with the research brief still in my hand). The tremors were persistent and I kept on feeling the building’s sway right till our dreadfully slow descent to the 20th floor. After that, while the earth seemed to have steadied itself, the legs had acquired a momentum of their own and I kept feeling the sway for quite some time to come.
Finally out of the building, we were puzzled at the strange occurrence – Shanghai has almost never had an earthquake and it was the first time that most of us experienced the trembling of the building and having to evacuate it under the fear that it will collapse on top of us. While engaged in animated discussion, some irritated and some relieved with the unexpected break in the office monotony, little did we realize the tragedy that had taken place more than a thousand kilometers away in Sichuan province. While the Finance Square kept standing and did not bury us in its steel and mortar blocks, 900 school children in Dujiangyan city near the provincial capital Chengdu, were not as fortunate. Nor were thousands of other children and adults, who could not escape their schools, factories and homes in time and were trapped under plies of rubble. Gradually the magnitude of the disaster unfolded in front of us, numbing us with grief and stupefaction.
While natural disasters are inescapable and we have little choice but to stoically and philosophically accept their tragic consequences, the subsequent human ineptitude and neglect which often compounds the misery is definitely preventable. Fortunately, China’s response was in sharp contrast to the apathy of the Generals of Myanmar when faced with the devastating cyclone which struck the country a few weeks ago. Chinese Premier Wen Jiabao was in Sichuan within hours of the earthquake. With a megaphone in hand and moist eyes, the nation saw him addressing the victims in a tremulous voice, offering condolences, reassurance and hope. It was clear in the days to come that the country mobilized every possible resource to rescue those who were still alive under the rubble and offer relief and succour to those who suffered the most.
It was a tragedy that touched the hearts of the people throughout the country. In an overwhelming wave of sympathy, the people are reaching for their wallets, donating blood, volunteering to work in the affected areas, even offering to adopt the children who lost their parents.
It will be a while before China can forget the tragedy that struck it out of the blue and traumatised the nation. Those who lost their loved ones, their homes or livelihoods will possibly live the rest of their lives with indelible physical and emotional scars. However, it will also be a while before China and the world can forget the efficiency, promptitude and compassion with which China dealt with the tragedy. It is reassuring to see that it is not only the Chinese mind which has transformed the country into an economic powerhouse, which deserves praise, but that its heart is also in the right place.
Finally out of the building, we were puzzled at the strange occurrence – Shanghai has almost never had an earthquake and it was the first time that most of us experienced the trembling of the building and having to evacuate it under the fear that it will collapse on top of us. While engaged in animated discussion, some irritated and some relieved with the unexpected break in the office monotony, little did we realize the tragedy that had taken place more than a thousand kilometers away in Sichuan province. While the Finance Square kept standing and did not bury us in its steel and mortar blocks, 900 school children in Dujiangyan city near the provincial capital Chengdu, were not as fortunate. Nor were thousands of other children and adults, who could not escape their schools, factories and homes in time and were trapped under plies of rubble. Gradually the magnitude of the disaster unfolded in front of us, numbing us with grief and stupefaction.
While natural disasters are inescapable and we have little choice but to stoically and philosophically accept their tragic consequences, the subsequent human ineptitude and neglect which often compounds the misery is definitely preventable. Fortunately, China’s response was in sharp contrast to the apathy of the Generals of Myanmar when faced with the devastating cyclone which struck the country a few weeks ago. Chinese Premier Wen Jiabao was in Sichuan within hours of the earthquake. With a megaphone in hand and moist eyes, the nation saw him addressing the victims in a tremulous voice, offering condolences, reassurance and hope. It was clear in the days to come that the country mobilized every possible resource to rescue those who were still alive under the rubble and offer relief and succour to those who suffered the most.
It was a tragedy that touched the hearts of the people throughout the country. In an overwhelming wave of sympathy, the people are reaching for their wallets, donating blood, volunteering to work in the affected areas, even offering to adopt the children who lost their parents.
It will be a while before China can forget the tragedy that struck it out of the blue and traumatised the nation. Those who lost their loved ones, their homes or livelihoods will possibly live the rest of their lives with indelible physical and emotional scars. However, it will also be a while before China and the world can forget the efficiency, promptitude and compassion with which China dealt with the tragedy. It is reassuring to see that it is not only the Chinese mind which has transformed the country into an economic powerhouse, which deserves praise, but that its heart is also in the right place.
Monday, May 12, 2008
Chinese ratatouille
The Chinese new year of the rat has been a turbulent one so far. Right at the start of the year, many Chinese who work in cities, away from home, could not make the mandatory journey back home, a victim of mayhem in transportation as a result of the worst snow to hit China in over 50 years. As soon as the snow thawed and a semblance of normality was restored, the age old issue of Tibet raised its troublesome head again. Not a positive press for China in the year of the rat - the year in which China will don the mantle of the Olympic host and bask in the glory of their achievements as the world gazes with awe and amazement.
The bite of the snow still gnaws, and the counter allegations and invective on Tibet still ring in the air, encouraging reflection on the state of the nation and the challenges it faces on the march to fulfill its ambition to become a moderately prosperous society (xiao kang shui ping, in Chinese). While fueling the improvement of the rural living conditions in countryside through remittances from the urban workplace, the migrant workers continue to lead a miserable existence in the cities. Subject to quetionable contracts, some times below legal wages, and little paid leave and social welfare, the workers provide the cheap labour at the country’s economic engines in its factories and construction sites. The relatively well heeled urban dwellers often look at them with fear as the “haves” often look at the “have-nots”.
In spite of the harsh existence that this group ekes out, they are still responsible for bringing money to the otherwise impoverished countryside. The Chinese government is paying special attention to this, as evident in their development plan, embodied by the slogan of a “new countryside”.
While the rural residents are learning to cope with these basic challenges and the urban folks face the ordeal of rising prices. The Consumer Price Index touched 8.7% in February this year, an 11 year high. For the first quarter as a whole the inflation stood at 8%, a 5.3% increase over the same period last year. Apart from domestic disasters such as the snow storm and the blue ear disease afflicting the porcine population, international rise in grain prices is also contributing to the rising food prices.
At the same time rising real estate prices are making housing more and more inaccessible. Buying houses, is a new way of spending new money in China – just 15 years ago there were no houses to be bought, nor was there much money to buy them. But now buying a house has become a de rigueur pre mating condition and the steadily rising price line is converting many young Chinese into fang nu (house slaves) as a result of having burdened themselves with frightening mortgages. The alternative is forced bachelorhood, if they couldn’t muster up the courage to take the loan (even if they did muster up the courage to ask the hand of the loved one in marriage!).
While the real estate was in the ascendance in the just concluded year of the pig, its flight paled into insignificance when compared to the 96.7% increase in the Shanghai composite index. For the 136 million Chinese who climbed onto the stock bandwagon, buying houses became a lot easier with this gift from the financial markets. However the many others who balked at what they saw as the irrational exuberance of the market, rued the fact that they did not have the courage to haul their hard earned savings to the nearest brokerage. However with the over 40% decline that the market has seen from the dizzy heights of the peak in 2007, they are now congratulating themselves at their foresight.
In spite of the fact that the issues confronting the Chinese are weighty, they have much to look forward to and bring back a cheer in the lives. Of course they will beam with pride when they will host the Olympics this year. In fact the pride is already on display as are the marvellous facilities, including the Bird’s Nest stadium and The Water Cube several months ahead of the schedule.
The new apartments in the cities may stretch the bank accounts of the young Chinese who rush to acquire them, but they offer distinctly improved living conditions from the old and cramped houses they inhabited earlier. The new owners are enjoying the modern acquisition and converting their homes into sanctuaries of comfort and privacy. The stores are brimming with goods to furnish the apartment and make it an exclusive abode, making its owners glow with pride.
The new middle class created as a result of entrepreneurship and well paying jobs from multinationals and Chinese companies bulging with corporate profits, are aspiring to a lifestyle of the Western elite. They visit bars, sip red wine, enjoy gourmet food, watch Hollywood films (including Ratatouille, dubbed into Chinese) and plan for holidays abroad. The chilling frost which heralded the year of the rat has done nothing to dampen the optimism and the enthusiasm of the urban Chinese who plan to continue the celebration into the year and many more to come. The year of the rat represents the start of a new cycle in the Chinese calendar – and perhaps for China too as it gets ready to stage the Olympics. Rat is believed to embody qualities of being quick witted, nimble and charming. “Rats” like to be in the thick of action, are sociable and are never late for a party – qualities which will undoubtedly be on display in Beijing during the Olympics.
The bite of the snow still gnaws, and the counter allegations and invective on Tibet still ring in the air, encouraging reflection on the state of the nation and the challenges it faces on the march to fulfill its ambition to become a moderately prosperous society (xiao kang shui ping, in Chinese). While fueling the improvement of the rural living conditions in countryside through remittances from the urban workplace, the migrant workers continue to lead a miserable existence in the cities. Subject to quetionable contracts, some times below legal wages, and little paid leave and social welfare, the workers provide the cheap labour at the country’s economic engines in its factories and construction sites. The relatively well heeled urban dwellers often look at them with fear as the “haves” often look at the “have-nots”.
In spite of the harsh existence that this group ekes out, they are still responsible for bringing money to the otherwise impoverished countryside. The Chinese government is paying special attention to this, as evident in their development plan, embodied by the slogan of a “new countryside”.
While the rural residents are learning to cope with these basic challenges and the urban folks face the ordeal of rising prices. The Consumer Price Index touched 8.7% in February this year, an 11 year high. For the first quarter as a whole the inflation stood at 8%, a 5.3% increase over the same period last year. Apart from domestic disasters such as the snow storm and the blue ear disease afflicting the porcine population, international rise in grain prices is also contributing to the rising food prices.
At the same time rising real estate prices are making housing more and more inaccessible. Buying houses, is a new way of spending new money in China – just 15 years ago there were no houses to be bought, nor was there much money to buy them. But now buying a house has become a de rigueur pre mating condition and the steadily rising price line is converting many young Chinese into fang nu (house slaves) as a result of having burdened themselves with frightening mortgages. The alternative is forced bachelorhood, if they couldn’t muster up the courage to take the loan (even if they did muster up the courage to ask the hand of the loved one in marriage!).
While the real estate was in the ascendance in the just concluded year of the pig, its flight paled into insignificance when compared to the 96.7% increase in the Shanghai composite index. For the 136 million Chinese who climbed onto the stock bandwagon, buying houses became a lot easier with this gift from the financial markets. However the many others who balked at what they saw as the irrational exuberance of the market, rued the fact that they did not have the courage to haul their hard earned savings to the nearest brokerage. However with the over 40% decline that the market has seen from the dizzy heights of the peak in 2007, they are now congratulating themselves at their foresight.
In spite of the fact that the issues confronting the Chinese are weighty, they have much to look forward to and bring back a cheer in the lives. Of course they will beam with pride when they will host the Olympics this year. In fact the pride is already on display as are the marvellous facilities, including the Bird’s Nest stadium and The Water Cube several months ahead of the schedule.
The new apartments in the cities may stretch the bank accounts of the young Chinese who rush to acquire them, but they offer distinctly improved living conditions from the old and cramped houses they inhabited earlier. The new owners are enjoying the modern acquisition and converting their homes into sanctuaries of comfort and privacy. The stores are brimming with goods to furnish the apartment and make it an exclusive abode, making its owners glow with pride.
The new middle class created as a result of entrepreneurship and well paying jobs from multinationals and Chinese companies bulging with corporate profits, are aspiring to a lifestyle of the Western elite. They visit bars, sip red wine, enjoy gourmet food, watch Hollywood films (including Ratatouille, dubbed into Chinese) and plan for holidays abroad. The chilling frost which heralded the year of the rat has done nothing to dampen the optimism and the enthusiasm of the urban Chinese who plan to continue the celebration into the year and many more to come. The year of the rat represents the start of a new cycle in the Chinese calendar – and perhaps for China too as it gets ready to stage the Olympics. Rat is believed to embody qualities of being quick witted, nimble and charming. “Rats” like to be in the thick of action, are sociable and are never late for a party – qualities which will undoubtedly be on display in Beijing during the Olympics.
Thursday, March 20, 2008
The Eclectic Chinese
A holiday to sweep the tombs
Chinese traditionally bury the dead. However, after the enlightened communists took reign of the country, they very rationally declared that the priority for the land is for the living and not the dead. Chinese were told to cremate the dead, burials were banned as was the erection of tombs. Given this, it seemed surprising when earlier this month, the Chinese government declared Tomb-sweeping day to be a new holiday in China. Along with the Tomb-sweeping day, holidays were also declared for two other traditional festivals of Dragon Boat festival and Mid-Autumn festival. Are the Chinese re-discovering their traditions? After years of efforts to obliterate the traditional shackles, is the Chinese government now encouraging the people to celebrate their traditions? What makes it even more surprising is the fact that these holidays will replace the three day holiday observed for the May Day celebration – an occasion of symbolic importance to socialism, whose ideals the Chinese government still claims to espouse.
The three day May Day holiday was, in fact, used to be extended into a “golden week” by adding the intervening days to the weekend (the additional holidays compensated for by working on the preceding or following weekend). Before this declaration, China observed three “golden weeks” in a year – three week long holidays for the Chinese New Year, the National Day in October and the May Day celebration. This has been the policy since 1999, when the Chinese government decided that the citizens must get an opportunity to spend their new wealth and in the process further boost the economy. Now China retains two of these golden weeks, but has substituted the third with three one-day holidays for traditional festivals.
Rediscovering the traditions
The Chinese government, as one would expect, is governed more by practical logic than tradition or sentiment. The real reason for this change perhaps lies in the fact that the three golden weeks had started to create a mayhem by the en masse movement of millions of Chinese . The populace takes the opportunity to get out of their homes, visit their families or go for vacations. This causes an immense strain on transportation (most painfully witnessed during the Chinese new year, when thousands were stranded because of snow cased disruption) and other services, and people started complaining about the exorbitant prices, traffic snarls and poor service during these weeks. Additionally, for a country so dependent on foreign trade, it is perplexing as well as vexing for its international trade partners when they see the frenetic trade coming to an abrupt halt as often as three times a year.
However, apart from the rational, there are also emotional factors guiding the change. The Chinese, with their new found wealth and prosperity, now have a reason for celebration and pride. Embracing the old traditions, and practising the associated rituals with openness and confidence is a part of that resurgence of national pride. Chinese today not only want acknowledgment for their economic success, but they also wish to be applauded for their history and traditions. Chinese have set up Confucius Institutes in 50 countries, sent their terracotta warriors for display in the British Museum - all in an attempt to demonstrate that not only is this a country of extraordinary manufacturing prowess and technology, but also has a cultural richness which deserves noticing and appreciation.
Embracing the West
Not only does China seem to be rediscovering its own traditions, it seems to be embracing the ones from the West with equal gusto and enthusiasm. Christmas celebrations begin early and cut-out figures of Santa Claus started appearing in shop windows of departmental stores from the middle of November. The silver bells, figures of reindeers, elves and snowmen jostle each other in almost a chaotic, almost desperate representation of the Christmas spirit. In a rousing finale, large pictorial displays of Christmas scenes appear in office buildings and a Christmas tree with twinkling lights, encircled with gold paper covered pots of poinsettia embellish the entrance of every office or hotel.
For a country of atheists, this celebration of a Christian festival with such enthusiasm is perhaps baffling. However, Christmas in China is not about religion, but a modern paean to consumption and fun. Masses of people throng the streets, visit bars and haunt the stores for discounted products. Chinese celebration of Christmas, is a typical example of how China embraces the West to its own advantage and adapts it to selectively pick its best from their own point of view. So no Christmas cake or plum pudding – we prefer our dumplings (according to a TNS survey, Chinese consider no food in the world to be anywhere near their own) and no midnight mass – religion has no part to play here. But shopping, gifting, drinking and merry making is embraced with zest and passion.
The marketing challenge of understanding the Chinese consumer
Neither burdened with strong traditions and rituals, nor under the blind sway of the West, Chinese are behaving in an eclectic way in deciding what to embrace and what to discard. Their decisions are based on practical logic, commerce and now also a sense of national pride. For marketers it is essential to understand how the Chinese weigh several, often contradictory, arguments and pulls to make the decision. This is as true for which festivals to celebrate as it is for which products and brands to adopt. Only keeping a hand permanently on the Chinese consumers’ complex pulse can guide the marketers in the right direction.
Chinese traditionally bury the dead. However, after the enlightened communists took reign of the country, they very rationally declared that the priority for the land is for the living and not the dead. Chinese were told to cremate the dead, burials were banned as was the erection of tombs. Given this, it seemed surprising when earlier this month, the Chinese government declared Tomb-sweeping day to be a new holiday in China. Along with the Tomb-sweeping day, holidays were also declared for two other traditional festivals of Dragon Boat festival and Mid-Autumn festival. Are the Chinese re-discovering their traditions? After years of efforts to obliterate the traditional shackles, is the Chinese government now encouraging the people to celebrate their traditions? What makes it even more surprising is the fact that these holidays will replace the three day holiday observed for the May Day celebration – an occasion of symbolic importance to socialism, whose ideals the Chinese government still claims to espouse.
The three day May Day holiday was, in fact, used to be extended into a “golden week” by adding the intervening days to the weekend (the additional holidays compensated for by working on the preceding or following weekend). Before this declaration, China observed three “golden weeks” in a year – three week long holidays for the Chinese New Year, the National Day in October and the May Day celebration. This has been the policy since 1999, when the Chinese government decided that the citizens must get an opportunity to spend their new wealth and in the process further boost the economy. Now China retains two of these golden weeks, but has substituted the third with three one-day holidays for traditional festivals.
Rediscovering the traditions
The Chinese government, as one would expect, is governed more by practical logic than tradition or sentiment. The real reason for this change perhaps lies in the fact that the three golden weeks had started to create a mayhem by the en masse movement of millions of Chinese . The populace takes the opportunity to get out of their homes, visit their families or go for vacations. This causes an immense strain on transportation (most painfully witnessed during the Chinese new year, when thousands were stranded because of snow cased disruption) and other services, and people started complaining about the exorbitant prices, traffic snarls and poor service during these weeks. Additionally, for a country so dependent on foreign trade, it is perplexing as well as vexing for its international trade partners when they see the frenetic trade coming to an abrupt halt as often as three times a year.
However, apart from the rational, there are also emotional factors guiding the change. The Chinese, with their new found wealth and prosperity, now have a reason for celebration and pride. Embracing the old traditions, and practising the associated rituals with openness and confidence is a part of that resurgence of national pride. Chinese today not only want acknowledgment for their economic success, but they also wish to be applauded for their history and traditions. Chinese have set up Confucius Institutes in 50 countries, sent their terracotta warriors for display in the British Museum - all in an attempt to demonstrate that not only is this a country of extraordinary manufacturing prowess and technology, but also has a cultural richness which deserves noticing and appreciation.
Embracing the West
Not only does China seem to be rediscovering its own traditions, it seems to be embracing the ones from the West with equal gusto and enthusiasm. Christmas celebrations begin early and cut-out figures of Santa Claus started appearing in shop windows of departmental stores from the middle of November. The silver bells, figures of reindeers, elves and snowmen jostle each other in almost a chaotic, almost desperate representation of the Christmas spirit. In a rousing finale, large pictorial displays of Christmas scenes appear in office buildings and a Christmas tree with twinkling lights, encircled with gold paper covered pots of poinsettia embellish the entrance of every office or hotel.
For a country of atheists, this celebration of a Christian festival with such enthusiasm is perhaps baffling. However, Christmas in China is not about religion, but a modern paean to consumption and fun. Masses of people throng the streets, visit bars and haunt the stores for discounted products. Chinese celebration of Christmas, is a typical example of how China embraces the West to its own advantage and adapts it to selectively pick its best from their own point of view. So no Christmas cake or plum pudding – we prefer our dumplings (according to a TNS survey, Chinese consider no food in the world to be anywhere near their own) and no midnight mass – religion has no part to play here. But shopping, gifting, drinking and merry making is embraced with zest and passion.
The marketing challenge of understanding the Chinese consumer
Neither burdened with strong traditions and rituals, nor under the blind sway of the West, Chinese are behaving in an eclectic way in deciding what to embrace and what to discard. Their decisions are based on practical logic, commerce and now also a sense of national pride. For marketers it is essential to understand how the Chinese weigh several, often contradictory, arguments and pulls to make the decision. This is as true for which festivals to celebrate as it is for which products and brands to adopt. Only keeping a hand permanently on the Chinese consumers’ complex pulse can guide the marketers in the right direction.
Wednesday, March 19, 2008
The China Opportunity
The Unknown India
What do the Chinese think about India? Well, they don’t. 398 urban Chinese were asked to associate 24 attributes with 14 nations, including the US, Japan, Korea and India. 58% of the people associated no attribute whatsoever with India. By no stretch of imagination is India a salient nation in the mind of today’s Chinese. Among the younger generation, at best, it brings up image of excellence in software. Some envy the facility of Indians with the English language and wonder whether English is the mother tongue of many Indians. The older generation, particularly the taxi drivers, spontaneously start humming “awala hoon” on the discovery that their fare hails form India, bringing memories of a time when Raj Kapoor’s Awara was perhaps one of the five films that the Chinese government allowed its citizens to watch in a year.
A missed opportunity
The obscure status of India in the Chinese minds is a missed opportunity for India. There is much that India could achieve by raising their profile among the contemporary Chinese, as they gaze at the external world with awe and bewilderment and whose view of the world is yet to fully crystallize. It is the appropriate time to invest in creating a clear image and a distinctive identity for India, and by doing so, benefit from the momentum of the fastest growing economy in the world. While there are many areas of opportunity, the following do stare prominently as the ones that India is particularly well suited to exploit.
Tourism
34.5 million Chinese visited a place outside China in 2006 – not even a small fraction of these visited India. To the Chinese today, the most attractive tourist destinations are the European countries such as France, Italy and the UK as also Australia.
How can India start to attract the Chinese tourists? There is a seed of a perception which could be exploited - according to a survey of Chinese attitudes towards different countries, while as a country with rich culture and traditions, the Chinese are proud of their own place – India and UK are at the second place. This perception of culture and tradition could be built upon to attract the Chinese tourists. While the Chinese material needs are being satisfied, little sustenance is available for their spiritual needs. Yoga is already a bond (albeit still a weak one today) which attracts the Chinese to India, as thousands of Chinese have taken to yoga it all its forms and exotic variants. These elements of Indian tradition and culture could be effectively marketed to attract a fair share of the Chinese tourists.
Software
In the field of computer hardware and software, US is the clear leader in the Chinese minds – but India is rated next – though a distant next. However, a foundation already exists for India to exploit this image with a mild recognition that the Chinese give to Indian software expertise. Perhaps this is one area that the Indian software companies are already acknowledging and have taken steps to exploit. Infosys, TCS and Satyam have set up development centres in China and are gearing up to carve a share in the huge domestic Chinese software market. Chinese service industry is still in a primitive state in China and to grow and enhance its quality, software is perhaps one of the more important tools that it needs. Indian companies are in a good position to carve out a niche for themselves in this market – provided they build further on the existing image, make their presence felt in China and invest in learning about the needs of the Chinese industry.
Managerial expertise
While the economic growth of China is clearly because of policies of the Chinese government, the Indian acceleration is perhaps in spite of the Indian government. The Indian growth is clearly attributable to the private sector and their ability to efficiently exploit both the domestic opportunities and the export potential of Indian services. On the other hand, the big corporations of China are still largely state owned behemoths. The growth in the size and profitability of Chinese companies and the huge Chinese banks, is not because of their skills and innovation, but because of their monolithic position coupled with increasing money in the hands of the Chinese consumers. Few Chinese have heard of the Tata’s and their purchase of global companies and brands or the Ambani’s who seem to be expanding their skills to touch every area of Indian life. A knowledge in China of the proficiency of Indian private enterprise and the skills and expertise of the Indian manager, will create a huge opportunity for Indian talent and businesses.
Entertainment
Karishma (translated into Chinese as Qi Ji or miracle) has been on the air on several Chinese television channels. A few other Indian serials have also hit the Chinese television. The most popular Asian cultural imports in China are, however, Korean. Korean films, television drama and music are a rage in China (as they are in many other Asian countries). Korean films and drama, offer plots of family intrigue and romance, that are quintessentially Indian, indicative of the fact that Indian storylines and plots are likely to appeal to the Chinese audience. In fact Indian entertainment industry, given their experience and expertise could even develop special programmes for the Chinese audience. India is in a better position to do this than any other country - both in terms of the technical prowess and creativity, as well as their ability to understand what will move their Asian neighbours.
Education
While India has always prided itself on its education institutions, the irony is that Indian students are coming to China for higher education in medicine and there is practically no reverse flow. Indian Institute of Science at Hyderabad gets more MBA applications from Asia than any other management school other than Harvard. Indian Institutes of Management and Indian Institutes of Technology are often rated as among the best in their class globally – a fact that India could gain tremendously by advertising to the Chinese. Chinese are travelling all over the world in quest of higher education, often enrolling themselves at poor quality institutions in obscure locations. While it is true that India is hardly able to meet the demand of its own citizens for high quality higher education, attracting international students is sorely required to raise the profile of Indian education. India needs to actively market its education institutions in China. While success may be limited in the short run, the long term potential is extremely attractive.
Need to create the Indian image and identity
Chinese do not have a high opinion of Indian products. For quality products they look up to Germany, the US and Scandinavian countries. When it comes to perfumes and luxury products, they think of France and for consumer electronics Japan and Korea dominate their thinking. However, India has a foundation of an opinion which could serve as a basis for creating a unique image and identity for India and what it can offer to China. India stands to gain immensely from embarking upon this effort – or in omitting to do so faces an enormous opportunity cost of further growth and international prominence.
What do the Chinese think about India? Well, they don’t. 398 urban Chinese were asked to associate 24 attributes with 14 nations, including the US, Japan, Korea and India. 58% of the people associated no attribute whatsoever with India. By no stretch of imagination is India a salient nation in the mind of today’s Chinese. Among the younger generation, at best, it brings up image of excellence in software. Some envy the facility of Indians with the English language and wonder whether English is the mother tongue of many Indians. The older generation, particularly the taxi drivers, spontaneously start humming “awala hoon” on the discovery that their fare hails form India, bringing memories of a time when Raj Kapoor’s Awara was perhaps one of the five films that the Chinese government allowed its citizens to watch in a year.
A missed opportunity
The obscure status of India in the Chinese minds is a missed opportunity for India. There is much that India could achieve by raising their profile among the contemporary Chinese, as they gaze at the external world with awe and bewilderment and whose view of the world is yet to fully crystallize. It is the appropriate time to invest in creating a clear image and a distinctive identity for India, and by doing so, benefit from the momentum of the fastest growing economy in the world. While there are many areas of opportunity, the following do stare prominently as the ones that India is particularly well suited to exploit.
Tourism
34.5 million Chinese visited a place outside China in 2006 – not even a small fraction of these visited India. To the Chinese today, the most attractive tourist destinations are the European countries such as France, Italy and the UK as also Australia.
How can India start to attract the Chinese tourists? There is a seed of a perception which could be exploited - according to a survey of Chinese attitudes towards different countries, while as a country with rich culture and traditions, the Chinese are proud of their own place – India and UK are at the second place. This perception of culture and tradition could be built upon to attract the Chinese tourists. While the Chinese material needs are being satisfied, little sustenance is available for their spiritual needs. Yoga is already a bond (albeit still a weak one today) which attracts the Chinese to India, as thousands of Chinese have taken to yoga it all its forms and exotic variants. These elements of Indian tradition and culture could be effectively marketed to attract a fair share of the Chinese tourists.
Software
In the field of computer hardware and software, US is the clear leader in the Chinese minds – but India is rated next – though a distant next. However, a foundation already exists for India to exploit this image with a mild recognition that the Chinese give to Indian software expertise. Perhaps this is one area that the Indian software companies are already acknowledging and have taken steps to exploit. Infosys, TCS and Satyam have set up development centres in China and are gearing up to carve a share in the huge domestic Chinese software market. Chinese service industry is still in a primitive state in China and to grow and enhance its quality, software is perhaps one of the more important tools that it needs. Indian companies are in a good position to carve out a niche for themselves in this market – provided they build further on the existing image, make their presence felt in China and invest in learning about the needs of the Chinese industry.
Managerial expertise
While the economic growth of China is clearly because of policies of the Chinese government, the Indian acceleration is perhaps in spite of the Indian government. The Indian growth is clearly attributable to the private sector and their ability to efficiently exploit both the domestic opportunities and the export potential of Indian services. On the other hand, the big corporations of China are still largely state owned behemoths. The growth in the size and profitability of Chinese companies and the huge Chinese banks, is not because of their skills and innovation, but because of their monolithic position coupled with increasing money in the hands of the Chinese consumers. Few Chinese have heard of the Tata’s and their purchase of global companies and brands or the Ambani’s who seem to be expanding their skills to touch every area of Indian life. A knowledge in China of the proficiency of Indian private enterprise and the skills and expertise of the Indian manager, will create a huge opportunity for Indian talent and businesses.
Entertainment
Karishma (translated into Chinese as Qi Ji or miracle) has been on the air on several Chinese television channels. A few other Indian serials have also hit the Chinese television. The most popular Asian cultural imports in China are, however, Korean. Korean films, television drama and music are a rage in China (as they are in many other Asian countries). Korean films and drama, offer plots of family intrigue and romance, that are quintessentially Indian, indicative of the fact that Indian storylines and plots are likely to appeal to the Chinese audience. In fact Indian entertainment industry, given their experience and expertise could even develop special programmes for the Chinese audience. India is in a better position to do this than any other country - both in terms of the technical prowess and creativity, as well as their ability to understand what will move their Asian neighbours.
Education
While India has always prided itself on its education institutions, the irony is that Indian students are coming to China for higher education in medicine and there is practically no reverse flow. Indian Institute of Science at Hyderabad gets more MBA applications from Asia than any other management school other than Harvard. Indian Institutes of Management and Indian Institutes of Technology are often rated as among the best in their class globally – a fact that India could gain tremendously by advertising to the Chinese. Chinese are travelling all over the world in quest of higher education, often enrolling themselves at poor quality institutions in obscure locations. While it is true that India is hardly able to meet the demand of its own citizens for high quality higher education, attracting international students is sorely required to raise the profile of Indian education. India needs to actively market its education institutions in China. While success may be limited in the short run, the long term potential is extremely attractive.
Need to create the Indian image and identity
Chinese do not have a high opinion of Indian products. For quality products they look up to Germany, the US and Scandinavian countries. When it comes to perfumes and luxury products, they think of France and for consumer electronics Japan and Korea dominate their thinking. However, India has a foundation of an opinion which could serve as a basis for creating a unique image and identity for India and what it can offer to China. India stands to gain immensely from embarking upon this effort – or in omitting to do so faces an enormous opportunity cost of further growth and international prominence.
Tuesday, March 11, 2008
A Porcine Issue
China Daily, the leading English language daily newspaper in China, reported some time ago that a hog weighing more than 1,040 kg was crowned the “king of pigs” in Ningxiang County, Hunan province over the weekend. To the best of my recollection, PG Wodehouse, while describing the adventures of the Empress of Blandings, never really mentioned her precise weight, but it would perhaps be a fair assumption that Lord Emsworth would have been proud of this achievement, if his own sow had reached such heights (or weights, to be more precise).
The story on the fattest pig is not the only porcine story in the Chinese papers. In fact, pig and pork have been extremely salient in china for some time. China’s consumer price index (CPI) jumped 4.7% in 2007, with the price of food showing particularly ballistic tendencies. Specifically pork prices almost doubled last year due to short supply and mounting feedstuff costs. Apart from rising prices for grain used as feed, blue ear disease - also known as porcine reproductive and respiratory syndrome - killed a large number of pigs nationwide last year. As a result, the Chinese farmers, despite their love for pigs and their meat, were less enthusiastic in rearing them than in the past. The central and local governments plan to launch a concerted effort to rekindle their enthusiasm for raising pigs and boosting pork supplies. China is on a comfortable and steady growth path and maintaining stability – whether it is in currency valuation, consumer incomes, political climate or pork prices – is of the essence.
The year of the golden pig
Ironically the scarcity of pigs came in the year of the pig (there was no shortage of chicken in the year of the rooster in 2005, and no shortage of dragons is expected in the year of the dragon in 2012) – though rat population hopefully would be contained in the year of the rat which started this February. In Chinese tradition, each year is cyclically assigned one of the 12 animals, each of whom are believed to bestow some specific benedictions and character idiosyncrasies on the humans born in that specific twelve month period. The year of the pig is one of the more cherished ones and thought to bring luck, prosperity and ampleness (like itself). A person born this year is likely to be intelligent, honest, courageous, gallant, and sincere. They are good implementers can be relied on to see things through. They also tend to be popular and make lasting friendship and are good neighbors.
The years also rotate through five elements of metal, wood, water, fire and earth – and when pig and metal (gold really) coincide (as it was believed to have happened this year) the floodgates of fortune are expected to open like never seen before (or only seen 60 years ago, as that is when it would have occurred before).
It was under this expectation, that the youth of China timed their sexual activity to ensure the arrival of their off-springs in this auspicious period. It is reported that this year saw the birth of a lot more babies than the previous years. Of course, none thought about the pressure it will bring to the lives of the Chinese obstetricians, who were getting used to an easy life, thanks to China’s one child policy. Similarly, the supply of maternal beds and other wherewithals related to child birth are also reported to be strained. On the happier side, figures indicate that the companies manufacturing diapers, baby foods and other goods of “little” interest upped their advertising and reaped generous rewards.
The marketing opportunity
Marketing companies often struggle with the extent to which they need to balance their global strategies with the subtleties of local culture and traditions. The fervent communist era in China and the cultural revolution did its best to liberate the Chinese from the shackles of their traditions and beliefs. However, the interest in Chinese Zodiac, the strong beliefs about lucky and unlucky numbers (most Chinese buildings do not number the 4th floor, as number 4, because of the similarity of its Chinese pronunciation with death, is believed to bring misfortune) and the increasing enthusiasm with which Chinese traditional festivals are celebrated, seems to suggest that companies will be well advised to take cognizance of the traditions, and develop their marketing campaigns to take advantage of the consumer interest in these. The more marketing savvy companies in China are already launching special communication and marketing campaigns around traditional festivals. The festival related marketing activities are likely to receive a further boost from the recent government decision to declare three additional holidays for the Chinese festivals of Tomb-sweeping day, Dragon Boat festival and Mid-autumn festival.
The fattest pig in China
While marketing companies deliberate on appropriate strategies to win the hearts of the Chinese consumers, it is reported that the owner Xiao Shahong of the Chinese “king of pigs” apparently declined an offer to part with her precious animal, at a record of more than 50,000 yuan ($6,730). It is befitting that the prized pig is preserved, loved and cherished while the Chinese just finished celebrating the last few months of the year symbolized by it.
The story on the fattest pig is not the only porcine story in the Chinese papers. In fact, pig and pork have been extremely salient in china for some time. China’s consumer price index (CPI) jumped 4.7% in 2007, with the price of food showing particularly ballistic tendencies. Specifically pork prices almost doubled last year due to short supply and mounting feedstuff costs. Apart from rising prices for grain used as feed, blue ear disease - also known as porcine reproductive and respiratory syndrome - killed a large number of pigs nationwide last year. As a result, the Chinese farmers, despite their love for pigs and their meat, were less enthusiastic in rearing them than in the past. The central and local governments plan to launch a concerted effort to rekindle their enthusiasm for raising pigs and boosting pork supplies. China is on a comfortable and steady growth path and maintaining stability – whether it is in currency valuation, consumer incomes, political climate or pork prices – is of the essence.
The year of the golden pig
Ironically the scarcity of pigs came in the year of the pig (there was no shortage of chicken in the year of the rooster in 2005, and no shortage of dragons is expected in the year of the dragon in 2012) – though rat population hopefully would be contained in the year of the rat which started this February. In Chinese tradition, each year is cyclically assigned one of the 12 animals, each of whom are believed to bestow some specific benedictions and character idiosyncrasies on the humans born in that specific twelve month period. The year of the pig is one of the more cherished ones and thought to bring luck, prosperity and ampleness (like itself). A person born this year is likely to be intelligent, honest, courageous, gallant, and sincere. They are good implementers can be relied on to see things through. They also tend to be popular and make lasting friendship and are good neighbors.
The years also rotate through five elements of metal, wood, water, fire and earth – and when pig and metal (gold really) coincide (as it was believed to have happened this year) the floodgates of fortune are expected to open like never seen before (or only seen 60 years ago, as that is when it would have occurred before).
It was under this expectation, that the youth of China timed their sexual activity to ensure the arrival of their off-springs in this auspicious period. It is reported that this year saw the birth of a lot more babies than the previous years. Of course, none thought about the pressure it will bring to the lives of the Chinese obstetricians, who were getting used to an easy life, thanks to China’s one child policy. Similarly, the supply of maternal beds and other wherewithals related to child birth are also reported to be strained. On the happier side, figures indicate that the companies manufacturing diapers, baby foods and other goods of “little” interest upped their advertising and reaped generous rewards.
The marketing opportunity
Marketing companies often struggle with the extent to which they need to balance their global strategies with the subtleties of local culture and traditions. The fervent communist era in China and the cultural revolution did its best to liberate the Chinese from the shackles of their traditions and beliefs. However, the interest in Chinese Zodiac, the strong beliefs about lucky and unlucky numbers (most Chinese buildings do not number the 4th floor, as number 4, because of the similarity of its Chinese pronunciation with death, is believed to bring misfortune) and the increasing enthusiasm with which Chinese traditional festivals are celebrated, seems to suggest that companies will be well advised to take cognizance of the traditions, and develop their marketing campaigns to take advantage of the consumer interest in these. The more marketing savvy companies in China are already launching special communication and marketing campaigns around traditional festivals. The festival related marketing activities are likely to receive a further boost from the recent government decision to declare three additional holidays for the Chinese festivals of Tomb-sweeping day, Dragon Boat festival and Mid-autumn festival.
The fattest pig in China
While marketing companies deliberate on appropriate strategies to win the hearts of the Chinese consumers, it is reported that the owner Xiao Shahong of the Chinese “king of pigs” apparently declined an offer to part with her precious animal, at a record of more than 50,000 yuan ($6,730). It is befitting that the prized pig is preserved, loved and cherished while the Chinese just finished celebrating the last few months of the year symbolized by it.
Thursday, February 28, 2008
New slogans for the new times
The 17th National Congress of the Communist Party of China took place in Beijing late last year, with over 2000 delegates attending from all over the country. In his two and a half hour address to the delegates, President Hu Jintao described several important achievements as well as several significant challenges facing China today. The speech clearly exhibits the pride that China feels in its achievements as well the candid concern for the current issues and problems. However, it was interesting to see that while China has made immense strides in many spheres, the tradition of the rhetoric and the use of slogans is firmly in place. Of course, the old slogans have been replaced by the new. The current rage propounded by President Hu Jintao is “harmonious society”. Some time ago when the government abolished the agricultural tax, the move was accompanied by a slogan of “new countryside”. Also talked about for quite some time is China’s ambition to achieve a “moderately prosperous society” (xiao kang). President Hu added a few more in this congress – scientific outlook on development (implying balanced and sustainable development) and socialism with Chinese characteristics (implying that China is different and outsiders should stop telling it what it should do!).
Slogans or biayo yu as they are called in Chinese, have been integral to life in China since the communists took over in 1949. In fact during the earlier days of communism, the country was practically wired up through public address systems which incessant broadcast of slogans, exhortations, party doctrine and even threats. Prominent slogans from that time are – down with imperialist running dogs, suppress counter revolutionaries, serve the people. From time to time new slogans made their way and the one which really changed the country and paved the way for rapid economic strides was the one proclaimed by Deng Xiao Ping when he said “to get rich is glorious” (or words to that effect).
With the opening up of China to the rest of the world in 1978, the scale and shrillness of slogans substantially decreased. Over a period of time political slogans have been replaced by commercial advertising and messages of indoctrination gave way to messages of inducement of unspeakable joys of consumption or unthinkable relief on usage of various products. Coming from the tradition of sloganeering, it was not surprising that the initial advertising often resembled the tone and form of traditional slogans. Even now a large proportion of advertising seen on the Chinese television comprises models holding the brand to the camera and ecstatically recounting its virtues.
It was thought that the Chinese consumer is a simple soul and can not understand the subtlety of soft advertising which attempts to endear the brand through use of emotions or clever creative devices. Direct communication of the benefits in unambiguous terms was considered the safe route of communication. As a result while advertising in many other markets is as much entertainment as brand communication and attempts to engage the consumer through subtle creative devices, in China it is often a direct onslaught with the core benefit – often repeated several times within the same advertisement.
However, research done in China shows that this direct route does not have to be the one that an advertiser needs to embrace to succeed. Emotional advertising works and so does humour, endorsement or any of the other genres of advertising practiced elsewhere. The success of advertising in China, as elsewhere, depends on the ability of the advertisement to address the key consumer concerns, to overcome the deterrents for use and offer persuasive motivations for adoption of the brand. It also depends upon the extent to which the advertising portrays a social imagery that the target group can identify with and its ability to reflect consumer culture and aspirations.
It is interesting that it is not only the commercial world which is changing its attitude and strategy of communication. The Chinese government’s adoption of the one-child policy in late 1970’s was accompanied by strident and heavy handed communication. The slogans at that time included – “one less child is one less tomb”, “have less children and more piggies” or even "houses toppled, cows confiscated, if abortion demand rejected". In an effort to reflect the modern times, the National Population and Family Planning Commission in early August decided to begin replacing offensive slogans with new, more gentle communication. The new messages revolve around positive motivations of "healthy childbearing," "reproductive health," "rearing better children," and "care for girls," and focus on expressions like "life," "health," and "happiness". The new kinder messages like "Mother Earth is too tired to sustain more children" and "Both boys and girls are in parents' hearts" reflect the changing mood of the nation and a population which is demanding and getting more and more respect, consideration and a distinct voice.
Slogans or biayo yu as they are called in Chinese, have been integral to life in China since the communists took over in 1949. In fact during the earlier days of communism, the country was practically wired up through public address systems which incessant broadcast of slogans, exhortations, party doctrine and even threats. Prominent slogans from that time are – down with imperialist running dogs, suppress counter revolutionaries, serve the people. From time to time new slogans made their way and the one which really changed the country and paved the way for rapid economic strides was the one proclaimed by Deng Xiao Ping when he said “to get rich is glorious” (or words to that effect).
With the opening up of China to the rest of the world in 1978, the scale and shrillness of slogans substantially decreased. Over a period of time political slogans have been replaced by commercial advertising and messages of indoctrination gave way to messages of inducement of unspeakable joys of consumption or unthinkable relief on usage of various products. Coming from the tradition of sloganeering, it was not surprising that the initial advertising often resembled the tone and form of traditional slogans. Even now a large proportion of advertising seen on the Chinese television comprises models holding the brand to the camera and ecstatically recounting its virtues.
It was thought that the Chinese consumer is a simple soul and can not understand the subtlety of soft advertising which attempts to endear the brand through use of emotions or clever creative devices. Direct communication of the benefits in unambiguous terms was considered the safe route of communication. As a result while advertising in many other markets is as much entertainment as brand communication and attempts to engage the consumer through subtle creative devices, in China it is often a direct onslaught with the core benefit – often repeated several times within the same advertisement.
However, research done in China shows that this direct route does not have to be the one that an advertiser needs to embrace to succeed. Emotional advertising works and so does humour, endorsement or any of the other genres of advertising practiced elsewhere. The success of advertising in China, as elsewhere, depends on the ability of the advertisement to address the key consumer concerns, to overcome the deterrents for use and offer persuasive motivations for adoption of the brand. It also depends upon the extent to which the advertising portrays a social imagery that the target group can identify with and its ability to reflect consumer culture and aspirations.
It is interesting that it is not only the commercial world which is changing its attitude and strategy of communication. The Chinese government’s adoption of the one-child policy in late 1970’s was accompanied by strident and heavy handed communication. The slogans at that time included – “one less child is one less tomb”, “have less children and more piggies” or even "houses toppled, cows confiscated, if abortion demand rejected". In an effort to reflect the modern times, the National Population and Family Planning Commission in early August decided to begin replacing offensive slogans with new, more gentle communication. The new messages revolve around positive motivations of "healthy childbearing," "reproductive health," "rearing better children," and "care for girls," and focus on expressions like "life," "health," and "happiness". The new kinder messages like "Mother Earth is too tired to sustain more children" and "Both boys and girls are in parents' hearts" reflect the changing mood of the nation and a population which is demanding and getting more and more respect, consideration and a distinct voice.
Wednesday, February 20, 2008
Guanxi on the Net
From China to Spain
Tuangou.es is a team buying website in Spain. Consumers who want to buy a particular product, register on the website, the group of consumer interested in the same product then flexes its muscle and wrings the retailer’s arm to secure unimaginable bargains. Tuangou.es is managed by Sonia who lives in Alicante in Southern Spain. However you will not find the word “tuangou” in the Spanish dictionary – nor in fact in the Catalan or any of its variations heard in Spain. You will, however, be able to locate “tuan” and “gou” separately in a Chinese dictionary, meaning “group” and “buy” respectively, which have come together to mean group buying, which combines the power and reach of internet with the bargaining power of a group.
Tuan gou (team buying in Chinese), emerged from China in online chat-rooms, and graduated to more organized websites, such as 51tuangou.com and www.teambuy.com.cn. Tuangou marries innate Chinese propensities for social-networking and haggling in a contemporary bundle to the advantage of the consumer. This has now spread to Spain, indicative of the fact that not only are the Chinese consumers exploiting the power of the Internet to the hilt, they are also setting trends and examples for the rest of the world to follow.
The power of Internet in China
Xu Jinglei, a popular Chinese actress and film director, has the world’s most visited blog (sina.com.cn/m/xujinglei) with 86.97 million clicks in 18 months. Blogging is popular in China as it allows an easy avenue for expression, which has traditionally been hard to find in China. Blogging has caught the imagination of the Chinese who use it to express their views, share their feelings and express their personality. Not surprisingly, the Chinese government felt compelled to make some efforts to contain this phenomenon. In an attempt to tighten its grip on bloggers, it demanded that they register in their own names – a move that the authorities quickly reversed on facing the crying protestations from the blogging sites and the bloggers.
Currently a little over 10% of the Chinese population has access to the internet. However this translates into over 130 million internet users, making China the home to the second largest group of internet users in the world. The penetration in the big cities, rivals that of the Western world and internet has gradually become an integral and all-pervasive part of the lives of the urban Chinese. Today the Chinese buy on the net, sell on the net, watch movies and television on the net, seek employment on the net and look for romance and marriage on the net. The recent stock market boom is greatly fuelled by millions of Chinese betting their savings through their accounts on the net.
Need for information
The explosion of the net and the overwhelming acceptance from the Chinese populace needs to be seen in the context of the enormous amount and the incredible pace of change which has taken place in the Chinese society. Change implies an increase of opportunities, a multiplication of choices and the concomitant need for information and advice to exercise these choices. Unlike the countries which developed gradually over a longer period of time, the traditional Chinese information systems could not keep pace with the change. The traditional information network and media was anyway designed to pass the party doctrines to the citizens, and inculcate values of moderation and conformity, not to inform them about how they can improve their consumption of product and services. In other societies, consumption and choice is guided by experience of others, word of mouth, and experience passed down in families and friends. Today multitudes of Chinese are going abroad on holidays, buying automobiles, buying apartments, and have no one to turn to for information and advice in their immediate family of close circle of friends who have done these before. It is not surprising then that the internet fills this vacuum and takes the role of the source of information and the guide.
Implications
To the marketers, the phenomenon of internet offers both an opportunity and a challenge. Clearly no manufacturer can afford to be missing from the net – and that holds true whether the company is a manufacturer of a consumer electronics, household cleaners or a provider of financial services. The presence on the net is required to inform about the products, to advertise their advantages and to encourage user feedback. With the advent of Web 2.0, the flow of information between the manufacturer and the consumer has truly become a two-way phenomenon, and manufacturers need to tap into the enormous bag of consumer creativity and power for innovation. Companies are already using the net to encourage user contribution to the development of the brand, its communication and the product portfolio. The net offers the opportunity to use the consumers, not merely to test products and brands, but to participate in their creation.
Guanxi for sale
It is amazing how China adopts the new while retaining old habits and practices. Guanxi is a much touted concept, and refers to the Chinese predilection for depending upon relationships and connections to move files and get things done. Gaunxi is now for sale on the internet through websites that puts you in touch with the person who could get your child into the best kindergarten in the locality, help in getting an approval secured or a payment expedited or any other similar tasks, both dubious and legitimate, where your normal, unaided efforts may be expected to face difficulties. The opportunities offered by the net are only limited by your imagination – and possibly, your scruples.
Tuangou.es is a team buying website in Spain. Consumers who want to buy a particular product, register on the website, the group of consumer interested in the same product then flexes its muscle and wrings the retailer’s arm to secure unimaginable bargains. Tuangou.es is managed by Sonia who lives in Alicante in Southern Spain. However you will not find the word “tuangou” in the Spanish dictionary – nor in fact in the Catalan or any of its variations heard in Spain. You will, however, be able to locate “tuan” and “gou” separately in a Chinese dictionary, meaning “group” and “buy” respectively, which have come together to mean group buying, which combines the power and reach of internet with the bargaining power of a group.
Tuan gou (team buying in Chinese), emerged from China in online chat-rooms, and graduated to more organized websites, such as 51tuangou.com and www.teambuy.com.cn. Tuangou marries innate Chinese propensities for social-networking and haggling in a contemporary bundle to the advantage of the consumer. This has now spread to Spain, indicative of the fact that not only are the Chinese consumers exploiting the power of the Internet to the hilt, they are also setting trends and examples for the rest of the world to follow.
The power of Internet in China
Xu Jinglei, a popular Chinese actress and film director, has the world’s most visited blog (sina.com.cn/m/xujinglei) with 86.97 million clicks in 18 months. Blogging is popular in China as it allows an easy avenue for expression, which has traditionally been hard to find in China. Blogging has caught the imagination of the Chinese who use it to express their views, share their feelings and express their personality. Not surprisingly, the Chinese government felt compelled to make some efforts to contain this phenomenon. In an attempt to tighten its grip on bloggers, it demanded that they register in their own names – a move that the authorities quickly reversed on facing the crying protestations from the blogging sites and the bloggers.
Currently a little over 10% of the Chinese population has access to the internet. However this translates into over 130 million internet users, making China the home to the second largest group of internet users in the world. The penetration in the big cities, rivals that of the Western world and internet has gradually become an integral and all-pervasive part of the lives of the urban Chinese. Today the Chinese buy on the net, sell on the net, watch movies and television on the net, seek employment on the net and look for romance and marriage on the net. The recent stock market boom is greatly fuelled by millions of Chinese betting their savings through their accounts on the net.
Need for information
The explosion of the net and the overwhelming acceptance from the Chinese populace needs to be seen in the context of the enormous amount and the incredible pace of change which has taken place in the Chinese society. Change implies an increase of opportunities, a multiplication of choices and the concomitant need for information and advice to exercise these choices. Unlike the countries which developed gradually over a longer period of time, the traditional Chinese information systems could not keep pace with the change. The traditional information network and media was anyway designed to pass the party doctrines to the citizens, and inculcate values of moderation and conformity, not to inform them about how they can improve their consumption of product and services. In other societies, consumption and choice is guided by experience of others, word of mouth, and experience passed down in families and friends. Today multitudes of Chinese are going abroad on holidays, buying automobiles, buying apartments, and have no one to turn to for information and advice in their immediate family of close circle of friends who have done these before. It is not surprising then that the internet fills this vacuum and takes the role of the source of information and the guide.
Implications
To the marketers, the phenomenon of internet offers both an opportunity and a challenge. Clearly no manufacturer can afford to be missing from the net – and that holds true whether the company is a manufacturer of a consumer electronics, household cleaners or a provider of financial services. The presence on the net is required to inform about the products, to advertise their advantages and to encourage user feedback. With the advent of Web 2.0, the flow of information between the manufacturer and the consumer has truly become a two-way phenomenon, and manufacturers need to tap into the enormous bag of consumer creativity and power for innovation. Companies are already using the net to encourage user contribution to the development of the brand, its communication and the product portfolio. The net offers the opportunity to use the consumers, not merely to test products and brands, but to participate in their creation.
Guanxi for sale
It is amazing how China adopts the new while retaining old habits and practices. Guanxi is a much touted concept, and refers to the Chinese predilection for depending upon relationships and connections to move files and get things done. Gaunxi is now for sale on the internet through websites that puts you in touch with the person who could get your child into the best kindergarten in the locality, help in getting an approval secured or a payment expedited or any other similar tasks, both dubious and legitimate, where your normal, unaided efforts may be expected to face difficulties. The opportunities offered by the net are only limited by your imagination – and possibly, your scruples.
China's View of the World
In 1773, King George III dispatched Lord McCartney as his ambassador to China to present himself at the court of the Qing Emperor, Qianlong. Emperor Qianlong, widely considered as an enlightened ruler, dismissed the ambassador by saying, “As your ambassador has seen for himself, we possess all things. I set no value in objects strange and ingenious and have no use for your manufactures”. It is not without reason that the Chinese name of the country means the “middle country”. Chinese have traditionally considered their place right at the centre of the universe and historians and commentators often ascribe to the Chinese attributes of an enormous self-pride, bordering on xenophobia. However, if there is one attribute which a modern historian will ascribe to China, it is “change”. China has changed beyond recognition since Deng Xiao Ping opened its doors to the external world, while at the same time proclaiming that “to be rich is glorious”. The change is not only evident in gleaming new highways and sky caressing towers, but also in the people’s minds. TNS set about to investigate the contemporary urban Chinese view of the world, and also their own place in it.
World leadership
On the criteria of economic development and world leadership the US towers above all countries in the Chinese minds. Chinese clearly acknowledge America as an economic powerhouse, a world leader and an influential country – far ahead of any other country, including their own. As an economic power they place China at the third place, just a little behind Japan. However as a “world leader” and an “influential country” the Chinese place their own country at the No. 2 slot, after the US, but far ahead of any other country. It is evident that the Chinese are proud of what they have achieved (justifiably so, if you look at the 8%+ growth rate for 20 years in succession) and clearly place China far ahead of any other as a country “with a fast growing economy”.
The Chinese do not have a high association of any country other than their own as “peaceful”. The Scandinavian countries come next – though at a significant distance from China. Only 9% consider the US as “peaceful” – the same as the UK. Japan, a country against which China still harbors historical grudges, is rated even poorer.
German machinery and American computers
On the commercial front, the Chinese have the highest opinion of Germany - with a 38%association with “a country which makes excellent quality products” . US has the second highest association (33%). Japan and Scandinavian countries also do well, followed by Korea, China itself and UK.
US industry is seen to excel in many areas – ranging from quality of high tech products (No. 1 position), health care products (No. 1), and quality of drinks (No. 1 again). Germany is seen to make the best automobiles and machinery. Despite all the trouble facing the American automobile industry, Chinese still hold the American automobiles in high regard – next only to the ones made by the Germans.
But when it comes to perfumes and luxury products, no country can match the allure of France – a perception which extends to personal products in general and in fact also garments (though Chinese feel they themselves make pretty good garments).
In the field of computer hardware and software, US is the clear leader – with no other country anywhere near it (India a distant second in software). In general, American products have a perception of being technologically advanced, innovative and modern. Germans and the Japanese do better on products with good craftsmanship, good detailing and products with a long life. Quite understandably, the Chinese consider themselves as the country offering products with the best value for money (followed by Japan, and the US not doing too badly at No. 3 slot).
Fashion leader and trend setter
America is seen to combine the best of science and art, and is not only seen as a centre of technological excellence but also as fashion leader and a trend setter. US is far ahead of anyone else in producing good popular music and good movies and drama. Chinese express their appreciation of this by lapping up the pirated DVDs and downloading from free file share sites – though not as the US would like them to express - by paying the full price that the Americans normally pay.
Not only science, technology and art, the Chinese recognize American excellence in education and sports. American Universities are considered as the best, with UK not far behind.
While in pop art, the US reigns supreme, when it comes to serious art and culture, it is France which takes the place of pride, and specifically on the quality of museums, UK takes the top spot. As a country with rich culture and traditions, the Chinese are proud of their own place – India and UK are a distant second.
The Chinese feel that the US is the best country in the world to go and work in (China included). However, much to the relief of the anti-immigration American lobby, most Chinese still prefer to settle and finally retire in their own country. They would, however, like to visit America as tourists – though in this US competes strongly with several other destinations such as France, Australia , Scandinavia and Italy.
Cuisine and people
In spite of the fact that the Chinese consume large quantities of Kentucky Fried Chicken and McDonald’s burgers (or perhaps because of it!), the Chinese do not hold the American cuisine in a high esteem. On this aspect, Chinese show extreme patriotism, though some have positive associations with French food.
Finally, there is one area that the Chinese men need to seriously work on. Only 12% of Chinese women consider men from their own country as handsome (Japanese men rate the worst here). Many more Chinese women seem to be drawn towards the French, the British and the Italians (all above 20% association). However, the Chinese men are most drawn to their own women (40%), though some acknowledge the charms of the French ladies (23%). With a serious gender imbalance coupled with the poor evaluation from their women, Chinese men may find attracting suitable spouses an uphill task.
Based on an online research among 398 Chinese, aged 18-44 and living in key tier 1 and tier 2 cities of China. The research was conducted by TNS, the largest marketing information provider in China, and the second largest research agency in the world.
Written by Ashok Sethi. Ashok is the regional director methodology and analytics for TNS and is based in Shanghai.
World leadership
On the criteria of economic development and world leadership the US towers above all countries in the Chinese minds. Chinese clearly acknowledge America as an economic powerhouse, a world leader and an influential country – far ahead of any other country, including their own. As an economic power they place China at the third place, just a little behind Japan. However as a “world leader” and an “influential country” the Chinese place their own country at the No. 2 slot, after the US, but far ahead of any other country. It is evident that the Chinese are proud of what they have achieved (justifiably so, if you look at the 8%+ growth rate for 20 years in succession) and clearly place China far ahead of any other as a country “with a fast growing economy”.
The Chinese do not have a high association of any country other than their own as “peaceful”. The Scandinavian countries come next – though at a significant distance from China. Only 9% consider the US as “peaceful” – the same as the UK. Japan, a country against which China still harbors historical grudges, is rated even poorer.
German machinery and American computers
On the commercial front, the Chinese have the highest opinion of Germany - with a 38%association with “a country which makes excellent quality products” . US has the second highest association (33%). Japan and Scandinavian countries also do well, followed by Korea, China itself and UK.
US industry is seen to excel in many areas – ranging from quality of high tech products (No. 1 position), health care products (No. 1), and quality of drinks (No. 1 again). Germany is seen to make the best automobiles and machinery. Despite all the trouble facing the American automobile industry, Chinese still hold the American automobiles in high regard – next only to the ones made by the Germans.
But when it comes to perfumes and luxury products, no country can match the allure of France – a perception which extends to personal products in general and in fact also garments (though Chinese feel they themselves make pretty good garments).
In the field of computer hardware and software, US is the clear leader – with no other country anywhere near it (India a distant second in software). In general, American products have a perception of being technologically advanced, innovative and modern. Germans and the Japanese do better on products with good craftsmanship, good detailing and products with a long life. Quite understandably, the Chinese consider themselves as the country offering products with the best value for money (followed by Japan, and the US not doing too badly at No. 3 slot).
Fashion leader and trend setter
America is seen to combine the best of science and art, and is not only seen as a centre of technological excellence but also as fashion leader and a trend setter. US is far ahead of anyone else in producing good popular music and good movies and drama. Chinese express their appreciation of this by lapping up the pirated DVDs and downloading from free file share sites – though not as the US would like them to express - by paying the full price that the Americans normally pay.
Not only science, technology and art, the Chinese recognize American excellence in education and sports. American Universities are considered as the best, with UK not far behind.
While in pop art, the US reigns supreme, when it comes to serious art and culture, it is France which takes the place of pride, and specifically on the quality of museums, UK takes the top spot. As a country with rich culture and traditions, the Chinese are proud of their own place – India and UK are a distant second.
The Chinese feel that the US is the best country in the world to go and work in (China included). However, much to the relief of the anti-immigration American lobby, most Chinese still prefer to settle and finally retire in their own country. They would, however, like to visit America as tourists – though in this US competes strongly with several other destinations such as France, Australia , Scandinavia and Italy.
Cuisine and people
In spite of the fact that the Chinese consume large quantities of Kentucky Fried Chicken and McDonald’s burgers (or perhaps because of it!), the Chinese do not hold the American cuisine in a high esteem. On this aspect, Chinese show extreme patriotism, though some have positive associations with French food.
Finally, there is one area that the Chinese men need to seriously work on. Only 12% of Chinese women consider men from their own country as handsome (Japanese men rate the worst here). Many more Chinese women seem to be drawn towards the French, the British and the Italians (all above 20% association). However, the Chinese men are most drawn to their own women (40%), though some acknowledge the charms of the French ladies (23%). With a serious gender imbalance coupled with the poor evaluation from their women, Chinese men may find attracting suitable spouses an uphill task.
Based on an online research among 398 Chinese, aged 18-44 and living in key tier 1 and tier 2 cities of China. The research was conducted by TNS, the largest marketing information provider in China, and the second largest research agency in the world.
Written by Ashok Sethi. Ashok is the regional director methodology and analytics for TNS and is based in Shanghai.
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