Ged Carroll

Category: china | 中國 | 중국 | 中華

Ni hao – this category features any blog posts that relate to the People’s Republic of China, the Chinese communist party, Chinese citizens, consumer behaviour, business, and Chinese business abroad.

It is likely the post will also in other categories too.  For example a post about Tong Ren Tang might end up in the business section as well. Inevitably everything is inherently political in nature. At the moment, I don’t take suggestions for subject areas or comments on content for this category, it just isn’t worth the hassle.

Why have posts on China? I have been involved in projects there and had Chinese clients. China has some interesting things happening in art, advertising, architecture, design and manufacturing. I have managed to experience some great and not so great aspects of the country and its businesses.

Opinions have been managed by the omnipresent party and this has affected consumer behaviour. Lotte was boycotted and harassed out of the country. Toyota and Honda cars occasionally go through damage by consumer action during particularly high tensions with Japan.

I put stuff here to allow readers to make up their own  minds about the PRC. The size of the place makes things complicated and the only constants are change, death, taxes and the party. Things get even more complicated on the global stage.

The unique nature of the Chinese internet and sheltered business sectors means that interesting Galapagos syndrome type things happen.

I have separate sections for Taiwan and Hong Kong, for posts that are specific to them.

  • Weiying + more news

    China’s Tencent and Weiying Take $85 Million Stake in Korea’s YG Entertainment | Variety – China is the market for a lot of Korean TV. Gaining soft power through culture is part of the government’s aspirations – this deal makes both political and business sense. Korean production companies have found that their shows are often blocked by Chinese regulators. Instead the best way around this has been licensing the formats for a remake locally, which offers modest payments. Whether it is good for Korea in the longer term is another matter.

    China has a number of problems on its hands before it can replicate Korea’s success. China has a warped production model that works on patronage and ever bigger budgets and returns. Great for doing a large scale fight scene, not so good for romantic dramas. China hasn’t managed to build up a bench of likeable stars with international appeal in the same way that Korean has managed in a consistent manner. The desire of the government propaganda department blunts the appeal of dramas. Weiying will struggle to give China the kind of soft power that Korea and Japan enjoy respectively abroad. More on Korea related topics here.

    Discover Vietnam’s most chosen brands | Kantar Worldwide – well done Unilever. Unilever is especially interesting because of its success with both Vietnamese urban and rural consumers. However Nestle is a high-performing number 4. Unilever’s competition isn’t P&G, but local brands Musan and Vinamilk.

    How Akira sent shockwaves through pop culture and changed it | Dazed Digital – still an amazing film. I remember seeing it at the 051 cinema in Liverpool, some time before 1994 and it blew me away. It wasn’t just an engaging story but a well thought out future. Architecture wasn’t just new and shiny like Star Trek, but there were new and old side-by-side like London or Hong Kong. It was the future cyberpunk Japan that author William Gibson mirrored in his own early books. The impact of Akira encouraged me to watch more anime, when then led to my love of Ghost In The Shell.

    Tumblr is now blocked in China | Techinasia – surprised it hadn’t happened already given its meme and porn driven nature

  • June 2016 research slides

    Here is a copy of the slides that I pull together (when I have the time) of publicly available data that would be of use. This is the June 2016 research slides.

    Google search volumes

    This month I have some new data around search which came from disclosures at Google I/O in terms of search volumes. We talk about social as if search has gone out of style but its growth is still staggering. This is now driven by mobile device penetration and adoption as computing devices on the go. It also speaks to the wider number of questions that search now answers. It used to be that search answered with ‘facts’ found online. It then became more contextual with shortcuts that gave you the weather forecast or a foreign exchange rate. Mobile moved this on further to items like local recommendations.

    Partly through the search box, but also by more meta detail about the device doing the searching and its location to within a few metres due to GPS and cell tower triangulation. Voice interaction has also started to impact search volume. Image driven search still seems to be an area that could drive much more potential search volume, that would be valuable for commerce.
    Google global search volume
    Looking at global search revenue over time, Google’s monopoly position becomes immediately apparent. It is amazing how Bing and Yahoo! haven’t managed to grow market share but just transfer value from one to the other. In the Chinese market, Sohu has been obliterated with Baidu search. But one does have to wonder about the value of web search, when so much internet usage now happens in the WeChat eco-system.
    Global Search Revenues
    More details about me here.
    Slide20

    Full presentation

    Full presentation available for download as a PDF on Slideshare and you can find more research related posts here.

  • Competition in logistics + more

    Failure of competition in logistics market – The EU thinks this website is the key to fixing its weak e-commerce market — Quartz – surely there is some arbitrage play for ‘trumpeting’ deliveries in and out to take advantage of lowest cost parcel routing? Given the amount of parcel carriers why is there a failure of market competition in logistics. I suspect that gathering data on this by the EU is the first step; in a similar way to what happened on mobile roaming rates. More Europe-related posts here

    WeChat failed to go global | Techinasia – the thing I took away from this foreign campaigns was how similar they were to what I would have expected a foreign company to do in China. I suspect that they weren’t localised enough and Tencent didn’t think about a compelling hook

    Housing crisis in China’s ‘Silicon Valley’: Huawei, other hi-tech giants head for cheaper cities as rising costs deter talents – also provides opportunities for start-ups to take up staff that don’t want to make the move

    Nokia could cut up to 15,000 jobs | Telecom Asia – not surprising there would have been a lot of overlap between them

    Adidas to Return Mass Shoe Production to Germany in 2017 | Business of Fashion – isn’t likely to be traditional adidas models like the Gazelle or Superstar as designs are adapted for the robot production line that Adidas intends to use

    Why Huawei is suing Samsung over cellphone patents – Recode –  the amount of redactions in this document is interesting. The optics of the court case are trying to position Huawei as an innovator. Huawei will win in the Chinese court filling. The US one could be more interesting. If Huawei is considered to be abusing its position it could find itself in an EU court case though

    A new study shows how government-collected “anonymous” data can be used to profile you — Quartz

    Even Apple is acknowledging that the “iPads in education” fad is coming to an end | Quartz – which has to be worrisome for tablets in business surely?

    Why Big Apps Aren’t Moving to Swift (Yet)

  • The New Nokia

    The New Nokia can rise from the ashes of the old. Microsoft finally let go of its licence for the Nokia brand license on May 19, 2016.
    Slide03
    There is a lot of logic to this move:

    • Microsoft has already written down the full value of the business acquisition
    • It has got the most valuable technical savvy out of the team and moved it into the Surface business
    • It removes problematic factories and legacy products

    For the businesses that have acquired the rights to use the Nokia name and the factories the upsides are harder to see.

    The factories may be of use, however there is over supply in the Shenzhen eco-system and bottlenecks aren’t usually at final manufacture, but in the component supply chain.

    There is still some brand equity left in the Nokia phone brand. I analysed Nokia along with a number of other international Greater China smartphone eco-system brands using Google Trend data.
    Slide06
    There has been a decline in brand interest over the past 12 months for Nokia of 37%
    Slide07
    Nokia still has comparable brand equity to other legacy mobile brands such as BlackBerry and Motorola
    Slide08
    The brand equity is comparable to other value mobile brands. Honor; Huawei’s value brand has had a lot of money and effort pumped into it to achieve its current position.
    Slide09
    But it’s brand equity doesn’t stack up well against premium handset brands from Greater China. The reason for this is that smartphone marketing and fast moving consumer goods marketing now have similar dynamics – both are in mature little differentiated markets. Brands need to have deep pockets  and invest in regular advertising to remain top-of-mind across as large an audience as possible. Reach and frequency are more important than social media metrics like engagement.

    In addition to advertising spend needs to be put into training and incentivising channel partners including carriers.

    They are entering a hyper-competitive market and it isn’t clear what their point of advantage will be. Given the lock down that Google puts on Android and commoditised version of handset manufacture, the best option would be to look for manufacturing and supply chain efficiencies  – like Dell did in the PC industry. But that’s easier said than done.

    Garnering the kind of investment required to seriously support an international phone brand is a hard sell to the finance director or potential external investors.

    Slide13
    Growth is tapering out.
    Slide14
    The average selling price is in steady decline
    Slide16
    This is partly because the emerging markets are making the majority new phone purchases.
    Slide15
    Consumers in developed markets are likely holding on to the their phones for longer due to a mix economic conditions and a lack of compelling reason to upgrade.
    Slide12
    All of the consumers that likely want and can afford a phone in developed markets have one. Sales are likely to be on a replacement cycle as they wear out. Manufacturers have done a lot to improve quality and reliability of devices.

    Even the old household insurance fraud standby of dropping a phone that the consumer was bored with down the toilet doesn’t work on the latest premium Android handsets due to water-proofing.
    Slide20

    More information

    The answer to the question you’ve all been asking | Nokia – Nokia’s official announcement
    Gartner highlights a more challenging smartphone sector for Nokia than when it “quit” in 2013 | TelecomTV
    Nokia is coming back to phones and tablets | The Verge
    So the Nokia brand returns.. with a Vengeance | Communities Dominate Brands

    Supporting data slides in full

  • Smart home is stuck + more ideas

    The smart home is stuck – Recode – interesting analysis on the nascent smartphone market. Will we move beyond Nest, Hue light bulbs and IP security cameras? Will consumers see utility in the modern smartphone and be ready for the upgrade cycle. Or will smart home is stuck morph into just a fad like 3D TV sets? More on the web of no web here as the internet meets the real world in ways that make the technology invisible and integral to everyday life.

    New Chinese online payment rules take HK e-shoppers by surprise | HKEJ Insight – looks like controlling capital flight measures. It represents a serious cramp in Alipay and WeChat Pay opportunities. There also must be come work around as these services are expanding abroad to meet the needs of high spending Chinese travellers.

    Xiaomi opens stores | Shanghai Daily – interesting pivot in distribution channels. Previously Xiaomi was famous for popularising flash sales online of its handsets a bit like Drop.com do now. Its model now looks closer to that pursued by the likes of Huawei and Apple in China. It will also be interesting if Xiaomi uses these stores to sell its range of home appliances alongside handsets

    Why a staggering number of Americans have stopped using the Internet the way they used to – The Washington Post – Nearly one in two Internet users say privacy and security concerns have now stopped them from doing basic things online — such as posting to social networks, expressing opinions in forums or even buying things from websites, according to a new government survey released Friday (paywall). All of which belies the influence that social platforms seem to have in shaping popular opinion and building grass roots groups. There is obviously a missing piece between consumer behaviour and this research. I am not quite too sure what it is though.