Thursday, April 05, 2018

Mixed chances for a political backlash against US companies - Ben Cavender

Ben Cavender
The trade war between China and the US is heating up, raising fears for a political backlash against US firms in China. Business analyst Ben Cavender feels it will vary very much according to the position of companies in China, he tells Reuters.

Reuters:
The highest profile corporate casualty was South Korean conglomerate Lotte Group, which saw its plans for mega shopping complexes indefinitely suspended and nearly all of its Lotte Mart stores in China shut for much of the year over alleged fire safety issues. Ben Cavender, an analyst at Shanghai-based China Market Research Group, said U.S. businesses in China such as Starbucks were more firmly entrenched in the country, making them less likely to receive similar treatment. 
“A lot of the brands are employing Chinese workers, essentially they’re Chinese companies in their own right,” he said. However, he warned that everyday consumption goods could nonetheless be hit. “You can see consumers saying we’re not going to buy a Ford , or a GM product, and we’re going to buy a European product or a Chinese product instead,” he said.
More in Reuters.

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Foreign brands can both over-localize and under-localize - Shaun Rein

Shaun Rein
For foreign brands working on the China market is tough, says business analyst Shaun Rein, author of The War for China's Wallet: Profiting from the New World Order. They can both over-localized and under-localize, he tells Hicom-Asia. Some of the pitfalls for foreign companies.

Hicom-Asia:
HI-COM:  In your experience, what have been the most common misconceptions about China held by foreign companies? 
Shaun Rein: Companies entering China can over-localize or under-localize.  When I say over-localize, what I mean is that they can forget their core brand, their core DNA, and the result is that they have no clear direction or strategy when launching in China.  One example is [Mattel’s] Barbie.  When Barbie launched in China, they opened a Barbie themed store and Barbie themed cafĂ©, avenues they had never pursued elsewhere in the world.  The result was that Barbie’s China entry appeared a bit confusing.  In another sense however Barbie under-localized; the outfits for Barbie sold in China were too ‘sexy’ and didn’t fit the local taste of young Chinese girls who generally prefer fashion that is more ‘cute’ and girly. 
Another misconception foreign companies often hold when entering China is thinking there is no need for a local mainland Chinese on the management team.  Companies would be well advised to have a local Chinese on their team and empower this individual to be able to guide and steer strategy.  This local representative knows better than anyone the unique political, regulatory and consumer dynamics that are at play in China and can help steer or pivot your company as needs be. 
HI-COM:  When it comes to a successful China market entry, what would you say are the critical elements companies should be aware of? 
SR:  Understanding what consumers want through undertaking ongoing research that has regular feedback loops.  Consumer preferences and channels can change so quickly in China that it is vital to closely monitor what is happening on a quarterly, if not daily, basis.  Understand that e-commerce as a distribution channel is huge here.  You need to also get the right manager that is aware of government policies and can help you pivot strategies as needs be.  Politics and the market are so intrinsically tied in China, creating a unique ecosystem that is not found elsewhere in the world.
More at Hicom-Asia.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more branding experts at the China Speakers Bureau? Do check out this list. 

Monday, April 02, 2018

The forgotten left-behind children - Zhang Lijia

Zhang Lijia
Very slowly the dreadful verdict of China's approximately 30 million left-behind children on the country-side is slowly getting more coverage. Journalist Zhang Lijia, preparing a book on the issue, summarizes the problems for the New York Times. Why have they been forgotten?

Zhang Lijia:
And while urban children have thrived academically in recent decades, that has not been the case for their rural cousins, especially those who have been left behind. A study by Stanford University researchers, in collaboration with Chinese academics, found that children in the countryside were much less likely to complete high school. Those with both parents having left for the city perform markedly worse in school than those having one parent around, and boys are affected more than girls.
Other factors contribute to low academic achievement in rural China — notably, poor teaching standards and facilities at rural schools, and prohibitively high tuition costs (only nine years of school is free). But the crucial factor is the absence of parents.
Even children from the countryside who move to the cities with their parents are unlikely to get a good education. In recent years, restrictions on migrants to the cities have been easing. But in most cities, migrant parents still have great difficulty sending their children to good local schools because they need documents such as a resident permit, job and rental contracts, proof that taxes have been paid and so on. 
Several sensational stories in recent years have brought attention to the problem of left-behind children. Among them, in June 2015, four left-behind siblings committed suicide together by swallowing pesticide in Guizhou Province
In response, in 2016 the government called for better social services to protect such children. But on my recent visits to the countryside, in interviews with children and parents, it’s clear that a great deal more needs to be done. Rural education and village-level social services still lag. And migrants must be allowed to send their children to good local schools in urban areas where they work — and not substandard, makeshift schools for migrant kids. 
Without effectively addressing the problems facing left-behind children and providing for the needs of rural youths, the vaunted “Chinese Dream” will remain unfulfilled for much of the country.
More at the New York Times.

Zhang Lijia is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.

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How KPMG Hong Kong got itself into serious problems - Paul Gillis

Paul Gillis
Beida accounting professor Paul Gillis describes on his weblog how auditor KPMG Hong Kong got itself into trouble for signing off papers on China Medical, a company convicted in 2012 for looting US$400 million from its investors. Problem: KPMG Hong Kong was not really in charge and now the Hong Kong legal system caught up with this omission.

Paul Gillis:
Matt Miller of Reuters has an interesting update on the troubles KPMG is having in Hong Kong with a failed US listed Chinese company. In my view the problems are of its own making. 
KPMG Hong Kong was the auditor of China Medical Technologies Inc., which failed after management was charged by the US Securities and Exchange Commission with looting over $400 million from the company. The company was put into liquidation in 2012 in the Cayman Islands, where it was incorporated. 
Actually, KPMG Hong Kong was not the auditor, and that is the problem. Several years ago I wrote about KPMG’s labeling problem where they had a practice of using Hong Kong letterhead to sign audit opinions on audits done by KPMG Huazhen, KPMG’s China affiliate. To me, this was like a Wenzhou shirt maker sewing a made in Italy tag on a shirt made in China.   ... 
KPMG Hong Kong is in a terrible place. They signed off on an audit without doing one. The Hong Kong Institute of CPAS (HKICPAs), regulator of Hong Kong accountants, should investigate this violation of auditing standards, but I think it is unlikely they will.  The HKICPAs is a feckless regulator and is unlikely to pursue a case against a Big Four firm, especially a case that relates to a company not listed in Hong Kong. There are legislative proposals to strengthen audit regulation in Hong Kong, but the proposals will likely have no effect on this case. 
KPMG was the most egregious at mislabeling their audit work, but all of the Big Four in Hong Kong have had this problem, which I believe came about because the firms failed to recognize the importance of respecting their legal structure. While the China member firms of the Big Four have generally been managed from Hong Kong since the early 2000s, they have always been separate legal entities.
More at the Chinaccountingblog.

Paul Gillis is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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VPN cat-and-mouse game will continue - Matthew Brennan

Matthew Brennan
China's internet authorities have strengthened the rules on VPN's - popular tools to jump the country's online censorship. Nevertheless, getting online with a VPN is still relatively easy, says internet expert Matthew Brennan to The News Lens, but he is not giving a guarantee that will still be the case in one year time.

The News Lens:
There have been many fears that China would tighten its VPN enforcement in the past – with rumors circulating of bans on Jan. 11 and Feb. 1 – but this one is backed up by official statements. The MIIT announcement came less than two weeks after the state-run Global Times denied that a ban was in the works, quoting a “China Telecom staff member.” 
WeChat expert and frequent technology commentator Matthew Brennan told The News Lens that these moves should come as no surprise: “The Chinese government's stance with regard to enforcing sovereignty over its citizens’ use of the internet has been consistent. This will become a game of cat and mouse between an increasingly sophisticated firewall and VPN service providers.” 
A ban would be excellent news for the approved VPN providers, who happen to be the three state-run telecom companies, China Telecom, China Unicom and China Mobile, who advertise direct links to the outside world, a service geared towards corporate clients... 
While privacy from prying Communist Party eyes has already been compromised, censorship will not be absolute. The restricted use of VPNs and which sites are blocked varies widely depending on location, the level of political tension, and a host of other reasons, and there is no reason to believe that this will change. 
As Brennan said, “Right now, it's still relatively easy for anyone who is determined to do so to jump over the firewall. Whether that's still the case in a year's time, we'll have to wait and see.”
More in the News Lens.

Matthew Brennan is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form. 

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How lagging China became a frontrunner in mobile payments - Ben Cavender

Ben Cavender
Cash was king, not so long ago in China. But as wealth and the middle class increased, mobile payments had an advantage, says business analyst Ben Cavender. Because other payment tools like cards did not have a solid footprint, eager smartphone users adopted mobile payments quickly, he tells That's Magazine. But: “Realistically, I don’t think cash will go away entirely, but it will certainly be relegated to a less important role.”

That's Magazine:
According to official data, China’s mobile payment transactions reached RMB81 trillion over the first 10 months of 2017, an increase of almost 30 percent compared to the total amount recorded in 2016 (RMB58.8 trillion). 
Ben Cavender, principal at China Market Research (CMR), believes that besides the added convenience for consumers and merchants, timing has played a critical role in propelling the Middle Kingdom and its 1.4 billion citizens ahead of the rest of the world in mobile payment adoption. 
“The growth of China’s middle-class population coincided with the rising popularity of smartphones,” he explains from his Shanghai office. “People who didn’t previously own any electronic goods suddenly have iPhones in their hands. It’s their primary tool and initiation point for technology, whereas in the West, a lot of older consumers who grew up with their desktops and laptops still primarily use those for their online activities.”... 
Since its introduction in 2004, Alipay has always been the preferred payment solution for any Taobao or Tmall purchases. For nearly a decade, Alipay enjoyed almost a total monopoly in China’s electronic payment game until WeChat Pay came along in 2013. 
Competition heated up when Tencent collaborated with the CCTV Spring Festival Gala to launch WeChat Red Envelope on Chinese New Year’s Eve of 2015. The infamous publicity stunt resulted in 1 billion hongbao transactions across the nation, making the platform a formidable opponent to Alipay. 
With WeChat being China’s dominant instant messaging platform, Cavender says its offerings resonate with how today’s Chinese consumers use the internet and social media, hence its ‘stickiness’ makes it slightly easier to integrate with people’s daily lives... 
Credit card companies and many Westerners’ ingrained habit of using cards as their primary payment option have prevented mobile payments from taking off, according to ... Cavender.  In a country where Visa, Mastercard and American Express still have yet to fully penetrate through the masses, Chinese consumers were able to easily move on from cash and plug themselves directly into the ecosystem that Alipay and WeChat Pay have created. 
The downside of this arrangement, Cavender points out, is that tech companies are not held to the same fiduciary standards that traditional financial institutions follow: “At the end of the day, your money is being handled by companies whose main objective is to sell you all sorts of services. There’s definitely a conflict of interest [that works against consumers].” 
By signing up for WeChat Pay or Alipay, users are not only giving Tencent and Alibaba instant access to their online shopping behaviors, but also their offline spending habits too, not to mention their personal identity information and how much savings they have in their bank accounts... 
But for many countries, an entirely cashless economy is still a long ways away. In China, for instance, cash still makes up a significant chunk of the Chinese economy – 66 trillion yuan in 2016, according to a central bank payments report. Though the number has been decreasing in recent years, completely eliminating cash will be difficult in practice, CMR’s Cavender says. “Realistically, I don’t think cash will go away entirely, but it will certainly be relegated to a less important role.”
More in That's Magazine.

Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Both Alipay and WeChat Pay can survive in China - Matthew Brennan

Matthew Brennan
Much attention goes to the epic battle between China's internet giants Alibaba and Tencent. But WeChat expert Matthew Brennan does not see why one of their payment systems, Alipay and WeChat Pay, should defeat the other. He sees room enough for both, he tells That's Magazine.

That's Magazine:
At present, China’s two major players in the mobile payment space, Alipay and WeChat Pay, hold about 54 and 40 percent of the market share respectively, according to a 2017 iResearch report. China Channel cofounder Matthew Brennan attributes their dominance to the strengths of their parent companies, ecommerce giant Alibaba, and Tencent, the world’s most valuable social network conglomerate... 
Brennan adds, “Both platforms, however, have successfully adapted themselves into the virtual world and into the offline economy… at the end of the day, I don’t think it’s about one winning or losing, as both are well-equipped to thrive in the market.” 
The US might be the world’s largest economy, but when it comes to mobile payment, the Chinese are way ahead. China’s total mobile payment transaction revenue was 50 times more than their American counterparts in 2016. Meanwhile, 52 percent of Chinese say less than 20 percent of their monthly transactions are conducted with bills and coins, according to the ‘2017 Mobile Payment Usage in China’ study published by China Tech Insights. 
Credit card companies and many Westerners’ ingrained habit of using cards as their primary payment option have prevented mobile payments from taking off, according to Brennan...  In a country where Visa, Mastercard and American Express still have yet to fully penetrate through the masses, Chinese consumers were able to easily move on from cash and plug themselves directly into the ecosystem that Alipay and WeChat Pay have created.
More at That's Magazine.

Matthew Brennan is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Friday, March 30, 2018

In China, branding and politics get in each others way - Shaun Rein

Shaun Rein
When brands enter China, they not only have to figure out what their demanding customers want but also have a good look at politics, argues business analyst Shaun Rein, author of The War for China's Wallet: Profiting from the New World Order, in a wide-ranging interview at Knowledge CKGSB.

Knowledge CKGSB:
Q. One of the key arguments in your book, The War for China’s Wallet, is that Chinese consumers can be mobilized to reward or punish brands based on a country’s relationship with China. The most striking example recently has been South Korea. How worried should brands be about this trend? 
A. Brands need to be very worried. They need to understand the geo-political situation better now than at any time before. Five, ten years ago, you basically had to understand: what did the Chinese consumer want, what types of products or services, what’s the right marketing communications strategy? But now, it’s very clear that China is using its economic wallet and its muscle to reward and punish other countries—and, increasingly, companies—to ensure that they adhere to its political wants. 
Q. What practical measures can brands take to protect themselves from this? 
A. It’s not easy, frankly. I think there are a couple of things. They can, first and foremost, show from the very beginning that they’re friends of China. In the book, I used the example of Yum! BrandsKFC. They have always shown the everyday Chinese people that they respect the culture, respect the people. And they have done it by creating egg-and-milk food programs for poor schoolchildren throughout the country. That’s really important, because when there was South China Sea tension a year ago, sales in some parts of China for KFC dropped dramatically. But they rebounded after a month or two, because at the end of the day, the consumer realized KFC is a friend of China, and that’s a really important thing. 
Secondly, you probably need to join associations. No single company can push back against the Chinese government, so you need to form blocks of 20, 100, 200 companies. Then, if one of them gets attacked, they can unify together and say: ‘Hey, wait a minute. This is not this company’s problem, this might be a government issue, don’t punish us.’ 
Q. How can brands from countries that generally enjoy a positive image among Chinese consumers take advantage of this without making themselves vulnerable? 
A. It’s tough. I think iconic brands that represent a country are dangerous. It’s better to be affiliated, but not too representative. For example, Costa Coffee customers don’t always know it’s British. 
Right now, Harrods is doing fabulously well, because for Chinese, when they go [to London], it’s a destination. If you go to the UK, you have to shop at Harrods. The risk though, for Harrods especially, is that if there ever is tension between China and the UK, Harrods will be the first thing to get hit. Costa Coffee won’t be. It’s Toyota, it’s KFC, it’s Starbucks, it’s Apple… It’s good to show you’re from a certain country, but it’s also not good to emphasize it too much. 
Q. Is there a chance this approach will become less effective if used too often? 
A. That’s a great question. I think Chinese consumers don’t view it as propaganda, but rather as pride in the country. I think it’s a strategy that they can employ over the next 10-20 years, and it’s not going to make a difference. Even when we interview Chinese who were educated abroad and they come back, they still get really worked up. 
The bigger risk is: will China go too far and cause too much worry for other governments, to the extent that that they do band together and they push back? Maybe they don’t band together in ASEAN, but maybe they band together in TPP. There are all these new organizations that are popping up. China needs to worry about that, that they don’t oversell their economic power.
More at Knowledge CKGSB. 

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form. 

Are you looking for more branding experts at the China Speakers Bureau? Do check out this list. 
 

Wednesday, March 28, 2018

How state and religion are intertwined in China - Ian Johnson

Ian Johnson
In China power and religion are intertwined, argues journalist Ian Johnson, author of The Souls of China: The Return of Religion After Mao and you cannot understand China without knowing its religion. At the UC San Diego School of Global Policy and Strategy, he explains how religion moved from apparently irrelevant to crucial in today's China. Why religion is not going away, as many intellectuals have thought.

Ian Johnson is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Monday, March 26, 2018

Western fashion brands fail on China's millennials - Shaun Rein

China's millennials are increasingly defining the country's consumer space, and Western fashion brands fail to appeal to them, says business analyst Shaun Rein, author of The War for China's Wallet: Profiting from the New World Order, to the South China Morning Post. Brands like Marks&Spencer failed because they focused on the middle-class, he says.

The South China Morning Post:
The London-based retailer struggled to make a mark in China’s high-street fashion scene, despite a growing retail market in China and a fondness from consumers towards many other traditional British brands. 
“One of their problems is they tried to sell to a middle-class consumer by creating middle-class brand positioning,” says Shaun Rein, managing director of China Market Research and author of The War for China’s Wallet: Profiting from the New World Order. “Most brands that do that in China fail.” 
Marks&Spencer failed to cater to consumer tastes by offering styles that were too “middle class, suburban, UK housewife”, Rein says. Sizes for Asian body types were also not considered. Meanwhile, at locations such as Marks & Spencer’s brick and mortar stores in Beijing and Shanghai, Chinese consumers could go right next door to H&M to shop the youthful and more on-trend styles that reflect one of China’s biggest emerging markets: millennials. 
Another problem for Marks & Spencer is how Chinese shoppers perceive value. Rein says Chinese consumer behaviour is defined by what he calls the “CMR Hour Glass Shopping Model”, meaning they shop both at the top and the bottom of the spending scale. 
“Anything that’s not great value – it doesn’t give them prestige, it doesn’t give them status, it’s not an aspiration – is something that Chinese don’t want unless it’s dirt cheap,” he says. “So they’ll go out and buy very expensive lipstick but they’ll buy the cheapest garbage bags because they don’t want to spend money on garbage bags. 
“Things in the middle like Marks & Spencer or Macy’s just sort of die because their products are not cheap, but they’re not good enough value either.”... 
Macy’s, meanwhile, is still in China in a partnership to sell through Tmall that started in 2015, even though it has been struggling with brand positioning and product assortment and had to cut short its first attempt at launching an online point of sale in 2012. 
“It is a great retailer in the US, but the name had no resonance here,” Rein says of Macy’s. “And it was selling Ralph Lauren – but you can buy Ralph Lauren directly here, either online or in stores, so what’s the point of going to Macy’s for Ralph Lauren?”
Marketing and advertising are also critical for a company’s long-term success, Rein says, and he thinks many brands can do a lot better. 
“They go to the same five celebrities too often,” he says. “They all go to Jackie Chan, to Zhang Ziyi, to Angelababy, so the problem is you have these guys that are representing 10 or 20 different companies, but consumers don’t know who they’re representing any more. They might affiliate them with one brand and one brand only.”
More at the South China Morning Post.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more branding experts at the China Speakers Bureau? Do check out this list.

China's International deals shrank in 2017 - Rupert Hoogewerf

Rupert Hoogewerf
Overseas mergers and acquisitions by Chinese companies went down in value over 2017, says a report by Hurun. Especially the real estate and energy industries went down, says Hurun chief researcher Rupert Hoogewerf to Global Times. Retail, technology and manufacturing did relatively well.

Global Times:
In 2017, M&A deals by Chinese companies fell 1.7 percent year-on-year to 400, said the report. 
Among these deals, 312 disclosed the amount of investment, which was 960 billion yuan ($152.11 billion), down 28 percent year-on-year. The value of the top 100 M&A deals slumped 37 percent to 880 billion yuan. 
The manufacturing industry had the largest number of M&A deals in 2017, followed by technology, retail, energy, mineral, public services, medical, financial services and property, the report noted. 
Compared with 2016, the energy and real estate sectors had the biggest declines in transaction numbers, while manufacturing, technology and retail had the largest gains, Rupert Hoogewerf, chairman and chief researcher of the Hurun Report, was quoted as saying in the report. 
The largest deal involved a consortium led by property developer Vanke, Bank of China Group Investment and venture capital firms Hopu Investment and Hillhouse Capital Group, which acquired 78 percent of Singapore-based logistics company GLP Group for 104 billion yuan. 
The US was still the hottest destination for Chinese investors in 2017, with 16 investments. But the number of M&A deals fell 14 compared with 2016, according to the report. The report said that the Belt and Road initiative has offered new opportunities for Chinese companies. In 2017, the transaction volume of M&A deals in countries and regions along the Belt and Road routes surged 25 percent year-on-year to 240 billion yuan. By 2030, investment is estimated to reach 30 trillion yuan.
More in the Global Times

Rupert Hoogewerf is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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China's carefully measured response to Trump's trade war - Arthur Kroeber

Arthur Kroeber
Unlike the bully-like approach of Donald Trump, China has sent a carefully calibrated messages, trying to avoid a devastating trade war, says renowned economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know® to the South China Morning Post and the Washington Post. China has more cards up its sleeves, he suggests.

The Washington Post:
Hours after Trump’s announcement, China’s Commerce Ministry gave the first indication of potential targets for retaliation, which it linked to Trump’s earlier move to impose tariffs on steel and aluminum imports. 
It said it has compiled a list of 120 products worth nearly $1 billion, including fresh fruit and wine, upon which it would impose a 15 percent tariff if the two countries fail to resolve their trade differences “within a stipulated time.” It added that a 25 percent tariff on other goods, including pork and aluminum, could be imposed “after further evaluating the impact of U.S. measures on China.” 
Arthur Kroeber, managing director of Gavekal Dragonomics, said Beijing was sending a “carefully calibrated” message that it will stand up to Trump, while trying not to escalate the spat into a confrontation that could seriously threaten the global trading system. “The larger part of China’s strategy, though, is to position itself as the good guy in the global economy, protecting the rules of the game from Trump’s lawless attacks,” he said.
The South China Morning Post:
Arthur Kroeber, research head and co-founder of Gavekal Dragonomics, said China surely has “an equally specific, but longer”, list of targets ready to go when Washington finally unveils its Section 301 tariff list. 
“The strength of this response was carefully calibrated to send a clear message that Beijing will stand up to the US, but will not try to escalate the spat into a confrontation that could seriously threaten the global trading system,” Kroeber said.
More in the South Morning Post and the Washington Post. Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more strategic experts at the China Speakers Bureau? Do check out this list.

How startups can avoid Facebook and Google - William Bao Bean

William Bao Bean
Startups are mostly at the mercy of quasi-monopolies like Facebook, Google, Tencent or Alibaba. William Bao Bean, managing director of Shanghai-based SOSV tells in this elevator talk how his no.1 accelerator helps them to avoid spending money on those giants to get access to an audience, creating a win-win situation.

William Bao Bean is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more experts on innovation at the China Speakers Bureau? Do check out this list.

Tuesday, March 20, 2018

Engagement with China is the only way forward - Kaiser Kuo

Kaiser Kuo
China veteran Kaiser Kuo looks back at the ups and down in the relationship between China and the US. Engagement is the only way forward, he says. Despite turns in the wrong direction, "not all the gains (of the past) have by any means been erased, he says at SupChina.

Kaiser Kuo:
Writing about this now, in the year 2018, and just a week or so after the state constitution was amended to remove term limits, it’s hard perhaps to remember what things looked like in the mid-2000s, before the decidedly illiberal turn that most China-watchers would date to roughly 2009. But at that time, a fair-minded assessment of political liberalization in China (again, by a standard that didn’t look at full democratization as the sine qua non of “political reform”) would have concluded that engagement had indeed moved China in the desired direction. 
China had become substantially more deliberative and participatory. Civil society (if we use NGOs as a proxy for its health) was looking quite robust. The public sphere, which had simply never existed in China prior to the advent of the internet, was doing well. Internet censorship, especially compared with the years after 2013, was not nearly as severe. Many new media outlets — sure, ultimately state-controlled but operated mainly on market principles, and featuring quite aggressive investigative reporting — were flourishing. Rule of law, especially in the commercial sphere and in such areas as intellectual property protection, made significant gains in this period. Experiments in village-level democratic elections were under way in many provinces. 
Engagement with the U.S. was certainly not the only factor in this, but drawing China into global trade regimes, permitting and encouraging more exchange at all levels (in business, in state-to-state, mil-to-mil, people-to-people, etc.) most assuredly did facilitate this progress. Still, credit is due to the Chinese leaders who encouraged this (Deng Xiaoping, Jiang Zemin and Zhu Rongji, Hu Jintao and Wen Jiabao) and, of course, to the ultimately irrepressible internal dynamic. 
In the years since, we’ve tended to focus on how much of this has eroded, how much backsliding we’ve seen. That there has been movement in the “wrong” direction (I happen to think, anyway, that it’s the wrong direction) is not really deniable. But not all the gains have by any means been erased. 
It worries me that right now we’re so quick to condemn proponents of engagement, and to draw the conclusion that China under the CCP is simply doomed to increasingly rigid authoritarianism. There have been chills and tightenings in the past; there’s no reason to assume that this will be substantially different. It may last longer, and it may be more forceful, but how we (the U.S. and other Western powers) react to it will most certainly be one factor in how long it lasts and how deep it goes. 
Engagement remains our wisest general policy predisposition when it comes to China. The alternative is, to me, a reckless and shortsighted path. It may not yield everything we want, but it will move the ball down the field. And it may not feel as good, as Barack Obama once said. Speaking in Oslo after being awarded the Nobel Peace Prize (whatever you may think of the wisdom of that award!), he defended engagement, saying, “I know that engagement with repressive regimes lacks the satisfying purity of indignation.”
More in SubChina. Kaiser Kuo is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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How learning English liberated me - Zhang Lijia

Zhang Lijia
Journalist Zhang Lijia, author of Lotus: A Novel on prostitution in China, explains how learning English learned her how to free herself from the constraints of the past when she worked at a factory worker in Nanjing.

Zhang Lijia is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request list.

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Liu He: supporter of Xi's state-driven economic agenda - Arthur Kroeber

Arthur Kroeber
The appointment of Liu He as president Xi Jinping's economic top man has started speculations on his political direction, including a restart of reforms. We should not expect Liu to divert too much from the state-driven economic agenda Xi has already set out in the past few years, says leading economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know® to the New York Times.

The New York Times:
 Those expecting a sweeping opening of China’s economy are likely to be disappointed, some experts warn. While Mr. Liu is considered an able policymaker, his main mission will be to implement Mr. Xi’s vision of an economy that serves the interest of the party and the Chinese state, and not the other way around. 
Mr. Liu is “a steady pair of hands who has apparently managed many economic issues competently over the past couple of years,” said Arthur Kroeber, managing director of Gavekal Dragonomics, an independent economic research firm. 
But, Mr. Kroeber added, “the direction of economic policy under Xi has become quite clear over the past few years: state capitalism, with a large role for strengthened or consolidated state-owned enterprises, co-optation of private companies to serve state agendas.” 
Mr. Liu’s appointment helps advance a push by Mr. Xi to consolidate the regulatory bodies that oversee the world’s No. 2 economy. This goal was apparent last week, when the congress approved a sweeping reshuffling of government that merged many separate agencies into a smaller number of superministries.
More in the New York Times.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Monday, March 19, 2018

The future of China's millennials - Tom Doctoroff

Tom Doctoroff
A new generation is emerging to set their mark on China. Marketing veteran Tom Doctoroff looks at the relative newcomers, and how they differ from past generations, for state-owned TV station CGTN. "Post-90s are proudly patriotic, they want to see a strong China,” he says.

CGTN:
Tom Doctoroff, senior partner at brand and marketing consultancy firm Prophet, refers to the Post-90s generation as being pragmatic “doers.” And there is a reason for why this group of millennials plays stock in the here and now, he says. 
“It’s a double-edged sword, because on one hand they grew up in a period of rising affluence. But they also became adults in a period of economic insecurity, so they don’t have a hundred percent faith that the future is going to be stable.” 
And if this group of millennials ends up taking a role in government? How will they lead? 
Doctoroff says one can take comfort in the fact that the structure of Chinese society is as it has always been, and because of this, millennials respect it and its authority. 
“China is still a Confucian society, the relationship between the individual and society is not fundamentally changing. So nobody’s looking to blow up the system,” he says. 
That said, what this new connected generation can bring to the leadership table is balance, driven from their international experiences, Doctoroff says. He expects this group to bring about further reforms in the service sector, and also hopes that they can bring about a more flexible and responsive government. 
And this is where Chinese millennials differ slightly from that of the West – where millennials there are profoundly individualistic and think they are the basic unit of the society, Doctoroff says. 
“So people are trying to navigate the system here [in China] as opposed to American millennials where they are trying to shape the system so it’s really quite different.”... 
In a nutshell, Doctoroff says the interests of China’s New Era and its new generation of Chinese are aligned, citing the post-90s as an increasingly patriotic generation. 
“I think Chinese patriotism in this New Era is only going to grow, but I also think the Chinese are pragmatic; they don’t want to take over the world,” he says. 
Doctoroff commends the government’s efforts in their focus on innovation and the Internet plus strategy, citing China’s economic development program as something that is already liberating the creative energies of many. 
However, he says that there are too many technological barriers for young Chinese to discover the world and truly engage with it. 
“And I think that this is a mistake because again the millennials, post-90s are proudly patriotic, they want to see a strong China,” he says. 
“I do not think there is a risk that there’s going to be a rebellion, if say, Facebook were available, or if they could read the New York Times via a virtual private network. So I do think it’s time to loosen up a little bit without losing control,” Doctoroff adds. 
That being said, he has a question for this generation of millennials. “How much of this is a life-stage – the fact that they are currently young, relatively free, unmarried – and how much of this is a true generational shift?” 
Doctoroff says he is not entirely certain that this group can keep up with their passion as they enter the next stage of life, for instance getting married and having the burden of caring for a family, as well as the financial burden of owning an apartment. 
“Can you stop the urge to reinterpret convention based on your own passion, as the demands of survival and  living reassert themselves? That, I am not a hundred percent sure,” he says.
More at CGTN.

Tom Doctoroff is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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