Paying the ultimate price

After the China high speed rail crash tragedy over the weekend, I was not surprised to see that 3 high-ranking officials of China Railways were immediately fired. Whilst this very visible action from the government may go someway to appeasing the masses, it is not the correct reaction. Instead, China should shut down its high speed rail network until every inch of track has been walked, every power unit checked and every signal/safety device tested.

With all honesty, I do not believe that the train crash on Saturday can be said to have been a surprise. Mired in corruption allegations from the start, this visually impressive show-piece of Chinese infrastructure has had a series of embarrassing breakdowns in the last few weeks and so there was a degree of inevitability about Saturday's disaster.

Whilst corruption has doubtless played a part in what is increasingly looking like shoddy construction, it is not the only factor. China has "acquired" immense knowledge and capability almost overnight in many high tech industries, without the accompanying due process of trial, error, learning and refinement. As a result, I believe there is less of an appreciation of the complexities and risks associated with applying this technology. This shallow understanding therefore leads to a blasé approach to construction and maintenance, with a corresponding stretching of safety margins and tolerances.

45 people have now paid the ultimate price on Saturday. I pray that their deaths are motivating enough to ensure that the necessary steps are taken to ensure this will never happen again. But in a country of 1.4 billion and where life is still cheap, I fear that nothing will really change.

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.

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.

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

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