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.