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.