10/10 is a failure

After 9 years of painstakingly trying to hire ambitious, well rounded, enthusiastic, hard working, creative-thinking young people with common sense, straight out of university, I must conclude that there are none in China.

It's not their fault either. Which is the saddest thing.

I have watched with paternal love the rapid career development of a number of interns that worked in the company I ran in my early years in China. Plucked from university with maybe only one or two of the traits above, they thrived in an open, free, creative environment, acquiring the missing skills over time to ultimately become very successful as a result.

Despite the modernisation and globalisation of so much in China, the Middle Kingdom continues to teach children a SINGLE outcome/conclusion to any question or any given situation.

They are not taught about:
1. The process that led to the outcome
2. Any possible alternative outcomes

And heaven forbid any child who might question, challenge or try to dig deeper into the reasons or rationales.

So, you end up with millions of kids that are simply programmed to pass exams (albeit often with very high grades). But these new young people in the People's Republic are woefully ill equipped for a working life, requiring "join the dots" instruction and a new "tool kit" of thinking that we employers must provide.

I suspect that only International companies notice this issue, as the Chinese State Owned Enterprises and local private companies probably like their junior staff to simply do what they are told, and not question why.

But in a world where the designing/creation process is becoming far more important/value-add than the production/manufacturing process, China needs to think seriously about teaching its children to think.

Happiness

I was asked by a recent British visitor to Shanghai if the Chinese were happy?

The Western press maintains a deep suspicion of China because it is a communist, single party state with restrictions on free speech and a draconian one-child policy. The logical assumption in the eyes of the West must therefore be that the Chinese people are deeply unhappy with their lot, and dream of one day living the life of a typical British person...

Here are some typical middle-class lifestyle comparisons that highlight that the opposite should actually be true:

THEIR HOME:
British: One house, big mortgage
Chinese: Two or three apartments (all worth more that the British family's end of terrace), and maybe only one of their properties has a mortgage

THEIR CAR:
British: Two cars, one old, one on credit
Chinese: One car, new, paid in cash

THEIR HOLIDAY:
British: Two weeks in Spain (if air traffic control are not on strike)
Chinese: Multiple short breaks throughout the year visiting various Chinese cities, plus one or two longer trips a year to South East Asia, Australia or Europe. Cruises are also now proving popular...and gambling trips to Macao or Singapore are too.

THEIR SAVINGS:
British: Start their careers with £25,000 of student loans, and spend the first 15 years of their working life mired in credit card debt
Chinese: Save all their life

THEIR CHILDREN:
British: Two kids, state school
Chinese: One kid, private school, and university fully funded by parents & grand parents

EATING OUT:
British: Once or twice a month. More a treat now than it used to be
Chinese: Two or three times a week. A way of life


Yes, there are some major issues in China. The healthcare system is still inconsistent and expensive. The air & water quality are not what they should be. But walking down a street in any of China's major cities, the majority of people are smiling, laughing and enjoying their life.

Now let me ask you the same question...are the British happy?

Developing Country? Not any more

Looks like an airport doesn't it? But this is actually China's newest railway station built on a green field site west of Shanghai's domestic Hong Qiao airport. Planning intelligently, as is China's way, the station is connected to a brand new second terminal that was built at the same time. Called Hong Qiao hub, this has to be the most advanced transportation interchange in the world with seamless connection from plane to elevated motorway network to trains.

Ah yes. I nearly forgot to mention the trains...













Chinese made, travelling 350 kph (about 260 mph) on purpose built, elevated tracks. At only £30 for a family of three to travel first class the equivalent distance of London to Birmingham in less than 40 minutes, this puts the UK's Network Rail to shame (along with most other developed countries).

And this is not some white elephant "demonstration line" like the Shanghai Maglev. No - this is part of some more joined up thinking by China's forward-looking government to create a grid of the world's longest highspeed railway track connecting Shanghai in the East, Beijing in the North, Chengdu in the West and Hong Kong in the south. Oh, and its all nearly finished!

Still developing? I don't think this term is appropriate anymore.

Reactive, or Prioritising?

One week ago, 58 people died when a Shanghai apartment building caught fire. The cause of the fire was shoddy renovation work being carried out by unlicensed workers, but the wider consequence of the fire has been immediate:

• My apartment building has suddenly got fire prevention and fire emergency posters highlighting the precautions to avoid fires and the emergency actions to deal with the discovery of a fire
  

• My office building now has smart new signs to show the locations of the fire extinguishers and fire evacuation lighting is being installed
  

A cynic might say that this is another example of China's reactionary government which tends to only take a problem seriously once it has made headlines (SARS, Baby Milk, Food Standards, Coal Mine disasters, etc).

But a more sympathetic view is that China has SO many things to fix, and SO many things on its "to do" list that it really can't win.

China's airports, China's railways, China's urban planning are all as good as anywhere in the world (and arguably the best). China is clearly focussing its considerable efforts and cash reserves on initiatives and projects that regenerate, create future wealth potential and catch up with the basic structural infrastructure that the developed economies built over 100 years ago.

So having pondered on this, I am of the view that this terrible tragedy is probably more a victim of the latter than the former. However, as China matures it needs to realise that the country's "software" needs to catch up with the "hardware"...and this starts at school. Only a fundamental reassessment of what is taught, and how it is taught, in Chinese schools will start the sea change of social responsibility and accountability that this country needs so badly. Common sense curriculum items such as fire prevention, road safety and sex education (all seemingly absent currently) would be a good start.

Will it happen? Maybe one day. But sadly not as quickly as the time it takes to build another new airport.

Two Worlds in One - but for how long?

The picture below, taken in the recently opened luxury brand mall San Li Tun North in Beijing, captures the unique consequence of rapid economic growth in China today


WIth the backdrop of a pristine Armani store, an elderly couple enjoy evening Tai Chi, seemingly unaware that their surroundings have changed unrecognisably in just a few short years. I suspect that this couple have been performing Tai Chi in this street for decades, but they, and millions others like them, have largely missed the wave of prosperity sweeping the country. With their savings wiped out by inflation in the 1990's, many elderly Chinese resent the changes that have transformed their country and remember fondly the days when everyone was equal.



But for good or for bad, those days are now a fading memory for some and mere history book stuff for the wealthy young target audience of Armani. Gradually, sights like this will be lost from urban China as the older generations pass away, and China's traditional social group activities like Tai Chi become irrelevant.

China will be poorer as a result, no matter how wealthy the county becomes.

Creative 4 Times More Important than Media Plan

I read this week that a study in the US had established that the quality of advertising creative work is 4 times more important than the media plan in driving sales. I wonder if this same “4 x” score applies to China?

It amazes me the quantity of appalling ATL Creative work I see in this country with seemingly enormous media budgets behind them. One current example is for China Union Pay that I have seen as a 48 sheet outdoor ad, print ad and now in my apartment lift in Shanghai – see pic. The creative idea is weak to start with but the execution/perspective/retouching is terrible (worse that I would ever consider presenting to a Client as a visual, let alone Final Artwork).

And China Union Pay should know better. They are one of a number of state owned/state invested companies that have ambitions far beyond The Great Wall of Mediocrity, in an outside world where this quality of creative would be ridiculed.

John Solomon from Enovate, a Youth Marketing Research Company in China (www.enovatechina.com) was saying at an event this week that there was a shift to quality appearing in the China youth, so maybe there hope yet for Chinese companies to realise that “quality” starts with decent creative work!

Chinese Buying Apples

The Chinese are buying Apples. Not the round green or red ones, but the thin silver ones. Yes - the first affordable Apple device for the Chinese masses has arrived: the iPad

These were the queues outside the huge, sleek, spartan Apple store in Beijing yesterday. Pitched cleverly (or coincidentally?) at about a months salary for a young Chinese White collar worker, the iPad has everything the urban image-concious Chinese wants;
- it is eye-catching, saying "look at me" (at least for a few weeks until everyone has one!)
- it is stylish (and so, by implication, are it's buyers)
- it is an overt display of international/Western consumption
- it is an exclusive brand....

....ahhhhh, here lies the quandry for Apple. How mass can a brand become before it ceases to be aspirational?

So far Apple have been able to avoid this dicotomy around the world due to the innovation factor. But in China perception is everything - and Apple runs a serious risk of loosing the elite image that it has crafted (fallen into?) by the previous "grey import only" availability and more recent high cost of it's now officially available products.

Louis Vuitton and other icon brands have been able to maintain their exclusivity by remaining priced for the few. Apple has taken a brave step into China's mass Market - only time will tell if it will come back to bite them.

Warwick or Wuxi...I'm not sure?

I have just enjoyed a brilliant week living on the Campus of Warwick University where I am studying for an MBA.

What struck me the most was the sheer number of Chinese students. With no exaggeration, it appears to be almost one in two of the early returnees for the new school year are Chinese. Even the Costcutter Supermarket has a Chinese food aisle to cater for the specialist needs of the new Warwick student demographic.

The funniest thing I have noticed, however, is that you never see just one Chinese student. They are always in pairs or groups, and these are always exclusively Chinese groups. Whilst I have some sympathy for these youngsters being far away from home and wanting to be close to their Middle Kingdom comrades, it remains a trait of the Chinese to not fully integrate into other societies.

This is a shame. The Chinese have so much to give, but also so much to learn from, the rest of the world. For a Chinese student to get the maximum benefit from their UK University education, they should avoid creating little "China Towns" on Campus, and should instead become a part of modern, multi-cutural, embracing Britain - at least for their two or three years.

We would all benefit from the increased interaction, and it would help ensure that China, and more importantly the Chinese, become better understood as they prepare to take centre stage.

FAT RATS

When I first came to China, I was quickly made aware of the “guanxi” business model whereby business people in China like to cooperate with friends and family in order to gain some “personal benefit” from the transaction. Typically, this would be about 10% of the value of the deal, which would be paid in cash or kind (luxury item, holiday, car, etc).

Whilst this habit is culturally ingrained in Chinese society, 8 years ago it was not a major barrier to business in advertising and marketing. Back then, the Marketing Directors of the International companies trading in China were still ex-pats who played the game with a straight bat, awarding work fairly to the most deserving agencies.

However, times have changed. Now, the marketing directors of most International companies are Chinese, who have climbed the internal ranks. Wielding the power of the marketing budgets that they now control, some have become “Fat Rats”.

No longer satisfied with the occasional 10% they may have been able to skim off the budget of a local field marketing program or some other small scale project still under their control when they were Brand Managers, these purse holders have changed the rules of the game. The new rules play out as follows:

• Client briefs agency

• Agency presents proposal and budget

• Client doubles budget

• Agency implements the work to the original budget

• Client receives the balance in cash or kind

Only the local agencies are prepared (and able) to play by these rules. With the restrictions of Sarbanes-Oxley, the Foreign Corrupt Practices Act and various other legal governance that the global advertising networks must abide by, an increasing amount of business will become untouchable in China.

There is only one solution, and that is the hands on involvement of the C-Suite in major marketing procurement decisions. I realise that many of these guys feel that they have no need to get their hands so dirty anymore. But the reality is that the financial laws that restrict us agencies from playing these games also apply to these big multi-national corporations.

It is time for some heads to be pulled out of the sand in China. Addressing this issue at the highest level will remove both mediocrity and financial waste from these firms’ Chinese marketing initiatives at a stroke.

So much food, but nothing to eat

The Chinese love their food. And now they can't stop talking about it...

From rumours of bio-engineered 6 wing chickens to 100kg pigs fattened in just 50 days, the Chinese chattering classes are seriously worried about what they are putting in their mounths.

And it seems nothing is safe. Even Fish and Prawns are said to be swimming in hormones to promote growth. And fruit is said to be coloured (inside and out) and sweetened.

One of my previous blogs talked about the exodus of the smartest Chinese to other countries...this is one of the reasons

Nose in Front

The image below tells us so much about Chinese society and culture.
Everyone is driven by their own self interest and desires, and it
would be rare to see allowances or provisions for others along the way.


Whereas an intelligent assessment of the situation pictured would be
to wait, and to allow another car to pass in front to ease the flow,
this would require a gesture so alien to the culture that it cannot be
done; Lose face by letting another person have any priority or
preference over you?


The result, a 30 minute log jam for the drivers (only finally
resolved by face-immune Police) and an amusing yet telling scene of
China for me.

China's Latest Export: Rich Chinese People

In the lift in my Shanghai apartment building is a Focus Media LED screen which usually displays ads for luxury cars, villa, holidays and banking services. However, what caught my eye today was an ad to leave China - forever! 700,000 rmb (about US$100,000) for Canadian residency.

It seems that the days of the "returning Chinese" are over. 8 years ago they were returning in droves...born in China, educated and trained overseas, and then returning to China in the early 2000's to make their fortune. Now, it seems, the smart money is looking for the financial security, quality education, healthcare and pollution-free alternatives of Australia, Canada and USA. With wife and kid in tow, these newly rich Chinese are off - for good.

This is not some short term fad. This is a growing trend. And it will become an increasingly worrying one for the Chinese government. Not only is this a flight of wealth, but also a brain drain. Unfortunately for China, it seems that not even the Great Wall will be able to stop this exodus.

UPSIDE DOWN CHINA

I was enjoying a very fine pizza at HuTong Pizza in HouHai, Beijing this evening when I observed a fascinating truism about modern China...it is upside down!

Sitting next to us was a table consisting of three generations of a Beijingnese family: Grandama, Daughter and her husband, their child, and her friend.

THE GRANDMOTHER was bewildered by the whole experience. She clearly failed to understand why her middle class daughter had brought her down a dirty little side street into an old and run down HuTong to sit on hard wooden chairs to eat a round piece of hard bread with stuff on it. She also clearly was struggling with the concept of a knife and fork (but to be fair, I also prefer my fingers for pizza!)

THE MOTHER was also a little wary, but obviously her husband is a pizza fan so she was going along with the plan. However, the green carton of Kraft Parmesan cheese was a step too far. Why was there something on the table that smells of old socks, and what should she do with it? For advice she turned to her 10 year old...

THE DAUGHTER and her friend were in their element. Clearly knowing immediately that this was cheese, and that this should be sprinkled on top of the pizza, she showed her mum, then deftly picked up a slice of the pizza and popped it in her mouth. All washed down with a glass of iced Coke, clearly this generation knows what it wants, and wants what it likes.


Surely, there has never before been a country that has created such an upside down understanding of the world, nor one where respect appears to go to the youngest, rather than to the oldest. Knowledge is power.

Reaction versus Anticipation

After 8 years here, I continue to be intrigued and amazed by China's reaction to events rather than anticipation of events. This happens at all levels of society, from the government leaders to workmen. Even if by anticipating any given problem the amount of work would obviously be less, the preferred and default solution is to do nothing until the problem has arisen.

There are a number of examples of this which come to mind:
• China's resolution to the housing bubble, where instead of carefully considered economic policies over a number of years there has been multiple large boots applied to the neck of the problem over the last few weeks
• China's stance on Iran and North Korea (why worry about what MIGHT happen when it hasn't?)
• China's driving test. A key part of the test is to measure your physical strength and your reaction times. This is to be sure that you are fully qualified to react, rather than to anticipate. (I don't recall being asked about the shortest stopping distances from any given speed?)
• Building roads. I drove to Suzhou on Saturday and 15 km stretch of the 5 year old A30 motorway between Sonjiang and Qingpu was almost undrivable due to subsidance. A crew of workman were digging up one 10 metre stretch in an effort to smooth one lumpy bit.

I have a theory about all this. It comes down to the controlling culture instilled by Mao which continues to be present in government, state-owned business and all state-owned services such as education. Everyone is told what to do, with little or no opportunity (nor encouragement) to find a better way. Consequently, with nothing to gain from suggesting that something could be improved, why improve it?

This, I believe, is also why China has become a nation that copies rather than creates. Gone is the creative spark that brought us gunpowder, paper, the compass and the clock. And until China changes the way that its children are taught and finally has the courage to empower its People, nothing will change.

David King
Shanghai, 17th May 2010

IKEA: no kitchen knives for 6 months!

So, there I was in IKEA this afternoon ready to invest in a fine new set of kitchen knives. But no! The Shanghai Public Security Bureau has decreed that no knives should be sold for the duration of the Shanghai EXPO.

Clearly, Shanghai's undesirables wishing to obtain a kitchen knife for reasons other than vegetable chopping will have to revert to one they may already have in their collection, rather than select from the latest Swedish designs.

Better City, Better Life...unless you want to prepare fresh ingredients for cooking!

David King
Shanghai, 3rd May 2010

Yellow: The New White?

Throughout my childhood, youth and adulthood in the UK, white goods were always white. And white they seemed to stay. But since moving to China in 2002 I have noticed that every white appliance I have purchased has quickly turned an ugly shade of yellow.

When shopping last weekend for a new fridge, I was surprised to hear that it seems to be an accepted reality in China that ALL white goods ALWAYS turn yellow. Indeed, my Chinese wife was genuinely surprised when I told her that in some countries White Goods actually stay White!

I find it sad that the Chinese have for so long been at the receiving end of poor quality standards that they now have this as an acceptable benchmark. If the American and Korean manufacturers of the yellow White Goods that reside in my China home were to ship this sort of rubbish to the UK they would very quickly have a major recall on their hands. But not in China...and that is a real shame.

David King
Shanghai, 2nd May 2010

A Smart Buy? Or a Slippery Slope

I was intrigued this month to receive a leaflet in the post that reminded me of Littlewoods catalogues in the UK back in the 1970’s. It contained pictures of the very latest computers, cameras and mobile phones, but at amazingly affordable prices. How was this possible? Simply pay 12 equal instalments and receive the latest iPod, camera, smart phone or computer today, without having to save up first! This in China - a country which has boasted one of the highest savings rates in the world, and where the notion of debt for any purchase other than a house is still viewed with disdain by most people over the age of 30.

What does this tell us about today’s China? Actually it reveals more than you might think:

1. SELF CONFIDENCE. Never before has there been a generation of Chinese more certain of their destiny. There is a universal belief that China will regain it’s rightful place as the most powerful and important country on the planet – a position it has previously held for thousands of years (apart from the unfortunate hiccup of the last three hundred years).

2. TODAY, NOT TOMORROW. In the eight years that I have lived and worked as a marketeer in China it has all been about tomorrow, not today (and certainly never about yesterday). Well, it seems tomorrow has finally come with China no longer willing to wait for the trappings of success.

3. DISPOSABLE VALUES. The traditions and values that have helped make the People’s Republic of China what it was and is are disposable when they do not suit the aspirations of these same People.

And who is behind such a polar shift in Chinese values? None other than the Bank of China, who proudly head up their supporting website with a special “Smart Buy” logo (http://www.boc.cn/sdbapp/cmg/ )

So what this REALLY tells us about China is that these changes are permanent. This is a sea change. The many generations of cautious, prudent savers are being replaced by a new generation of spoilt, flashy debtors. And this is the same generation that already has unrealistic expectations of life resulting from the “Little Emperor” effect of the one child policy, where 6 adults dote and provide for every whim of every child. These young adults with an unbridled appetite for gain with no pain will no doubt lap up this new way to buy the latest “must have” gadget, ensuring the success of this and the inevitable clone credit schemes which the other banks (and switched on retailers?) are already crafting/launching.

Congratulations China. You have started down the same slippery slope that got the rest of the world into the mess we are still clearing up. Until now, I really did believe that China might just tread a new path.

David King
Shanghai, 25th April 2010