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.

  • Chinas Coming War With Asia

    Chinas coming war with Asia – provocative title

    Chinas Coming War With Asia: where do I start with a book title this inflammatory? I went to the trouble of reading the book twice before starting this review. In the end, the only conclusion I can come to is ‘Policy Faultlines in East Asia’ doesn’t have the same ring to it.

    Chinas coming war with Asia is one of those books that you shouldn’t judge too harshly by its cover, but by Jonathan Holsag’s writings.
    Untitled

    About the book

    Holsag marshals a huge range of facts and opinions within the book. If you want to have a basic understanding of the modern Chinese state, then this book is a good primer.

    He provides insight into the Chinese Communist’s Party’s policy cornerstone of territory maximisation. They were happy to put off their agenda for tactical advantage, but never gave up on their goals. China’s neighbours have similar inflexible policy goals. There is is no win-win solution. This is very interesting given the treaty

    Time has brought increased pressures. A fight for resources to fuel further growth and water rights conflicts. Relative declines in economic growth also fuels nationalistic politics. In China, nationalistic sentiments in citizens grew with prosperity. It has become convenient for politicians to tap into nationalistic sentiments.

    Holsag doesn’t attempt to provide a solution for de-escalation of these edges. His book only provides a macro-level understanding of the countries involved. For the reader who wants to understand Asia, Holsag’s book is an excellent primer.  More on Chinas Coming War With Asia by Jonathan Holsag. More book reviews here.

  • Topless model + more things

    Twist ending of moving company’s sexy topless model ad has a silver lining 【Video】 | RocketNews24 – one of the better 15 second spots I’ve seen involving a sexy topless model. This is one of the few times that you will see the words sexy topless model in one of my posts.

    IBM, Ustream-BM, we can’t believe Ustream is now owned by IBM • The Register – this feels a bit Yahoo!-esque as a deal. U-stream is a solid video streaming platform and I am not convinced IBM is a good custodian

    25% of US companies in China are planning to leave, says AmCham survey – this is interesting as the Chinese government is trying to jump start domestic consumption. The argument China would make is that these people will lose out. However, the wider tonality of the government towards foreigners and western culture in general. There is a stronger tone of Han nationalism. More China related posts here.

    Weibo to copy Twitter, abolish 140-character limitw – Tech in Asia – paid up members are a relatively small group of influencers, celebrities and brands. Chinese people have been doing long Weibo posts for years as graphic files. It was a central part of the content strategy that we were doing for CIVB when I led a digital team in Hong Kong.

    Why Google Quit China—and Why It’s Heading Back | The Atlantic – interesting that Western European government intervention is cited as a justification in this.

    Music Geeks Are Retrofitting Old iPods to Keep the Perfect MP3 Player Alive | Motherboard – its the iPod I wished Apple made. I have got a couple of them from eBay.  It would be great if we could also have an LTE compatiable version of the Nokia 6310i to use as a modem for my laptop and as as an app free weekend phone.

  • Habbo + more things

    Growing up Habbo: My so-called life in the first social network for teens | The Kernel – gen-y journeys in computing. Memories of Habbo Hotel as an online experience and social network. Habbo Hotel gets forgotten in its role as a social network.

    Chinese luxury shoppers increasingly turning online: KPMG | Shanghai Daily – interesting move to online purchases for luxury products

    NTT Docomo planning to increase handset prices – so it can provide discounts to users who use less data. Which begs the question is there a ‘peak data’ point’, a limit at which phone services reach in terms of consumer desire for mobile computing versus phone services? More Japan related content here

    Intel Raises Tech Worries About Sales in China and the Cloud | WSJ – (paywall)

    Jawbone Raises $165 Million at Half Its Last Valuation – The New York Times – Jawbone, the once-hot wearable technology start-up, said on Friday that it had raised $165 million in funding at a valuation of $1.5 billion, or roughly half the amount that the company was valued at as recently as 2014, continuing a burgeoning trend of start-ups raising money at lower values than before. (Paywall)

    Apple To Start Charging For iTunes Radio – BuzzFeed News – Apple would have to pay me to listen to Zane Lowe, not the other way around

    Japan business leaders urge real globalisation – FT.com – Central to a globalised psychology, he says, is an acceptance that you are in business for the customers, something missing when Japan first started spreading its sales forces across the globe

    Tackling the Tiers in China – Anyone who has any interest in China will already know that hundreds of millions of Chinese people are entering the middle classes and that hitherto unknown cities in the lower tiers

    Nest Thermostat Glitch Leaves Users in the Cold – The New York Times – dumb is good. Trying to buy a dumb TV at the moment

  • Cool tools & things that made last week

    Kevin Kelly’s Cool Tools website has a podcast series, this episode on great tips

    Cool Tools is a direct descendant of The Whole Earth catalogue. Kelly started his career helping Stewart Brand edit the last few editions of the Whole Earth catalogue. He was then an editor for follow on projects including the Whole Earth Review and The WELL (Whole Earth eLectronic Link). More Kevin Kelly related stuff here.

    For the right content Chinese audiences will watch longer form branded content, Pepsi’s Bring Happiness Home campaigns are designed to tap into Lunar New Year celebrations and this February ushers in the year of the monkey. This is a beautifully made short film about the different portrayals of the Monkey King over time.

    There is a new Monkey King film due out with an awesome looking trailer

    The X-Files has a new teaser out for the six-part TV series reboot, more over at a microsite which seems to be strangely appropriate. I enjoyed the original series just at the start of my internet usage at college and watched series one of The X Files on a Casio TV with a postage stamp sized LCD screen.

    The campaign: Zwitsal is a well-known baby brand in the Netherlands. For many parents and carers, it has associations with the first formative years of a baby’s life.

    The aim was to use Zwitsal’s famous fragrance and team it with Robijn laundry (both cleaners and conditioners) to produce a unique highly-emotive new product that would extend the reach of both brands.

    Nostalgia and the power of smell was the focus of the brand campaign which used bloggers and Facebook to engage and harness the sharing power of socially engaged mothers.

    The results: The campaign, which ran over ten months, saw over 3.5 million people engage with it on Facebook (average engagement rate 8.4%), 137,752 YouTube video views, 23,861 online views and an 11% uplift in sales.

  • The smartphone market and Huawei

    It is hard for anyone reading the media to believe that Huawei’s rise in the smartphone market was anything short of miraculous. In reality the roots of this rise go back at least six years. Back in 2010, Huawei was already shipping 3,000,000 smartphones. However since that time, the year-on-year percentage growth in consumer devices shipped by the company reduced from 82 per cent year-on-year growth to about 8 per cent growth in 2014.  This growth was initially driven by less sexy products like feature phones for China Mobile, DSL routers and 3G/LTE dongles.
    Huawei numbers
    In fact if we go back further to 2007, feature phones drove a 757 per cent growth in consumer devices shipped.

    2010 is quite crucial, Huawei Consumer Devices suffered a 32 drop in year-on-year growth in revenue / device going from $56 per device in 2009 to $38 in 2010. The margins per device then began to climb again during period from 2010 – 2014.

    January’s numbers discussed at CES don’t give us the total numbers of devices shipped by Huawei, but only smartphone numbers, so I haven’t calculated revenues for 2015, but they would represent a significant upswing from the 20+% growth enjoyed in previous years.

    Reading the Huawei coverage one would believe that the growth is being driven by developed markets and premium devices, but the truth according to the numbers found seem to be less clear. In between the years 2014 and 2015, the percentage revenue derived from Western Europe dropped from 11.3% to 10%, even as overall revenues grew. Much of this is driven by Southern European markets that had been hit hardest during the 2008 recession. It will be interesting to see how Huawei looks to crack Germany, the UK, France and the US.

    So what does this all mean?
    Huawei smartphones and watches are firstly just the most visible aspect of the company and not likely even the most profitable. Huawei equipment likely runs at least part of the internet network that brought you this page. They power mobile networks around the world (outside the US). They provide storage (very large boxes of hard disks) to banks and businesses around the world.

    Huawei Consumer Device numbers are reflective of wider technological change. In the space of the nine years that I looked, you could see the peak of the feature phone business, where Huawei was predominantly a domestic supplier. The rise of the mobile dongle to fill the gaps in free wi-fi networks and the rise of the smartphone/phablet which negated some of the mobile working laptops did around email, but also acted as tethered modems reducing the need of dongles.

    Huawei’s numbers are indicative of a successful fast follower strategy. Huawei learned the smartphone trade by first of all making badge engineered Android phones for T-Mobile. It then went out on its own. Each generation of phone improved in terms of industrial design and they built a direct to consumer channel over time.

    Xiaomi’s direct-to-consumer e-commerce strategy was transformative in the Chinese market and something that Huawei replicated with the Honor brand. Huawei hasn’t tried to build services in the same way that Xiaomi has and hasn’t ventured as deeply into the smart home.

    In terms of device numbers the company has successfully managed to displace both Samsung and Xiaomi in markets, but despite the ‘premium positioning’ it has taken a while to build the average revenue per device (ARPD). If the 20 billion dollar annual revenue announced at CES, only represents smartphone devices, then the ARPD (of $188) is still less than a third of what Apple enjoys with the iPhone.

    The smartphone market like dongles and DSL modems before it is moving rapidly towards maturity and lower growth. It will be interesting to see where Huawei’s business strategy goes next.

    How I got the data?
    The data quoted is based on numbers given out in Huawei’s annual reports from 2006 – 2014 and the Huawei Consumer Device press room where Consumer Device started to break out some of their own numbers. The types of numbers talked about vary from year to year. You can see a copy of my collated and calculated numbers here. When converting CNY to US dollars, I assumed an exchange rate of 1 yuan is 15 cents.

    More information
    Huawei annual report page
    Huawei Ships 108 Million Smartphones in 2015, Contributing to Annual Revenue Exceeding $20 Billion USD
    Total order value of Huawei Consumer in Western Europe exceeds 2 billion dollars
    Huawei Consumer Business Group Announces 1H 2015 Financial Performance
    Huawei Consumer Business Group Announces 2014 Financial Performance
    Huawei Consumer Business Group Announces Q3 2014 Financial Results
    Huawei Consumer Business Group Announces 1H 2014 Business Performance
    Huawei Consumer Business Group Ranked Third in Global Smartphone Shipments in 2013