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.

  • 2014 crystal ball gazing: how did I do?

    2014 crystal ball gazing

    2014 crystal ball gazing was a culmination of thinking that I have been doing on where digital is going. For the past few years I have been thinking about where digital is going and what it all means. At the end of last year here were my projections. I do realise that putting my 2014 crystal ball gazing out there may make me luck very foolish, I guess you can make up your own mind.

    Drone deliveries

    Amazon won’t do drone delivery in 2014 – Whilst trials of drone deliveries have been ongoing and drones seem to be getting more mainstream thanks to companies like DJI Amazon hasn’t done deliveries yet. In addition, the FAA in the US started to regulate commercial drone usage, which is likely to slow down adoption in the short term, while providing a stable legal framework of operation in the longer term.

    Small data

    Small data – Not so much an explicit interest in smaller data sets for meaningful things, but the Hortonworks IPO had an almost Netscapean quality to it with shaky revenue streams and a healthy share price bounce when it came to market. It also made Silicon Valley nervous as companies were concerned about negative perceptions toward the big data ‘sector.

    O2O

    Offline to online integration – O2O seems to be a bigger thing in China and other east Asian markets with ‘mobile search keywords’ put into adverts and TV programmes for years. The QRcode seems to be a uniquely Asian form of integration largely abandoned by western developers – mainly because they didn’t seem to use them in as imaginative a manner compared to Tencent et al. Lower power Bluetooth beacons are still experimental. Weve the joint company set up by the UK wireless carriers to provide contextual data about consumers to integrate online and offline marketing is running at a loss and has abandoned peripheral business opportunities in mobile wallets/ m-payments.

    Programmatic

    Algorithmic display advertising – there are a number of ways in which greater data is being brought to bear on programmatic ad spend but algorithms weren’t the biggest thing shaping the market this year. Major brands seem to have developed a distrust of the agency trading desks and the lack of transparency into market data. Instead of giving agencies an unfair advantage and allowing them to play both sides of the trade, they are bring the trading desk in-house.

    Mobile ad formats

    Mobile display advertising gets a radical reduction in formats – at the time I wrote this prediction, I had been concerned about clickthrough rates and mistaken clickthroughs, so I considered a reduction in mobile formats to just the ones that worked best like the page takeover. I didn’t forsee a bubble economy driving mobile display revenues around games apps. This may come to a head soon as western consumers seem to be less open to downloading to new apps according to research by Deloittes.

    Content marketing

    Content marketing on OTT platforms – WeChat has evolved in leaps and bounds with some amazing campaigns coming out in China, Burberry has worked with Tencent to push the envelopes on their campaigns and have included live webcasts. We haven’t seen so much of this happening with campaigns aimed at western consumers, but one brand springs to mind Vivienne Tam who ran a super model contest on the platform including a voting function and a special blog covering activity around New York Fashion Week as a separate tab on the account – all in English.

    China going global

    Chinese technology brands will finally be successful outside China – It’s still early days, but we’ve seen Lenovo and other Chinese brands demolish Samsung’s share of the smartphone market in the developing world. WeChat has expanded into India, Spain and South East Asia. OnePlus and Xiaomi have started selling direct in Europe, Singapore, Indonesia, Malaysia and Hong Kong. Alibaba had a monster IPO and Baidu bought into fast start-ups like Uber.

    Consumer privacy

    Privacy issues won’t change much with consumers – Back at the end of last year I didn’t expect the Snowden story to continue to echo onwards. On the surface things didn’t seem to change with consumers, but there has been sufficient consumer interest that technology vendors are addressing (some) consumer privacy needs much to the chagrin of the law enforcement/military industrial complex. This privacy experience hasn’t been universally enjoyed (depending on country regulations) but things are changing.

    Tech workers

    Technology company workers are the new bankers – the tech worker bus protests that started at the end of December 2013 mushroomed, so by August 2014 Westboro Baptist Church got involved. Uber’s surge pricing and Snapchat’s frat boy CEO were just some of the lightning rods that made the tech sector look like vintage Wall Street.

    Immersion

    The rise of immersion – When I wrote my predictions I felt that I had been cheated out of the cyberpunk future that I had been promised and saw it as a major opportunity. Virtual reality had lost out in the 1990s when cumbersome helmet displays would disorientate you and cause you to throw up as the visuals and movement created dissonance partly due to a lack of computing power. Now we’ve seen cyberpunk author Neal Stephenson the chief futurist at one VR company, Facebook own another and companies like Zeiss and Samsung enter the fray. Together with advances in AR post-Google Glasses we are likely to see major innovations beyond gaming in the web-of-no-web.

    Machine programming

    Machine learning will threaten to disrupt programming – while machine learning is making an increased amount of noise in the tech media it is being seen as a leap forward in artificial intelligence rather than as an alternative strategy to traditional application programming. Skype adopted for their latest language training.

    Hyper-competition

    A race to the bottom will bring out hyper-competition in mobile semiconductor suppliers – the mobile market did race to the bottom which has made a major dent in Samsung and Huawei’s marketshare. Mediatek and Hi-Silicon are producing innovative silicon that has pushed phone performance forward. However rather than being a race to the bottom on pricing, Qualcomm has been taken to task by the Chinese government and Qualcomm admitted in its own financial documents that there at least some partners who weren’t paying them licence fees.

    How do you think I did on 2014 crystal ball gazing?

    More information
    2014: just where is it all going? | renaissance chambara 

  • H P security research + more

    H-P Security Research

    The mystery of North Korea’s cyber threat landscape | H P Security Research – interesting whitepaper by H P Security on North Korea’s cyber warfare capabilities (PDF) – Not the most sophisticated but clever use of more limited toolkits according to H P Security. More security related content here.

    China

    Hardware never sleeps in China’s most exciting city | Techinasia– Shenzhen, in some ways I am not surprised

    China factory sector growth slows | RTHK – interesting that this is the official figure rather than the more volatile and less representative HSBC PMI figure. No real steer on seasonality at play however

    Consumer behaviour

    Muhammad is the most popular boys’ name in the UK | Quartz – the perils of research-led PR can be seen in the way the data has been interrogated

    TED Talks Aren’t Making My Generation Smart – They’re Making Us Stupid | VICE – yep

    60-70% of global consumers are “very positive” about private label products, Nielsen’s report shows – interesting move. Retailers brands are now the promise of quality and FMCG are commoditised? May make feature based marketing like Colgate-Palmolive look much smarter in retrospect

    Media

    TV 3.0 is already here – I, Cringely – how do telcos get rewarded?

    How Flash Games Shaped the Internet – The Atlantic – interesting essay which also explains the challenges that Windows 8 faced with one experience to rule them all

    Skeletor Is Waging a Twitter Takeover of @Honda. Here Are the Best Moments So Far | Adweek – love it

    Rentrak Completes Acquisition of Kantar Media’s U.S.-Based Television Measurement Assets – PR Newswire – WPP gets significant minority share in Rentrak. Interesting that the shares are restricted

    Technology

    Samsung readies its first Tizen smartphone for launch in India – cheapens brand perception of Tizen, but also shows how much leaner its code must be. Unfortunately Samsung has altered the UI from Meego so its just the same as Galaxy phones

    Manufacturers’ interest in EL as light source starting to brighten | Asahi Shimbun – it depends on the use case, but very interesting

  • Shenzhen ecosystem

    It is hard to believe that the Shenzhen ecosystem was built over just a few decades. Just over 30 years ago China moved from a period of cultural isolation to gradually opening up to the commercial world beyond its borders. The place to naturally start this was in Guangdong province close to the then British colony of Hong Kong. A small fishing village grew to become the workshop of the world. The growth of Shenzhen was driven by investment from multi-nationals and overseas Chinese. One of the earliest industrial areas was called Overseas Chinese Town or OCT. OCT has changed from manufacturing to retail and offices for the creative industries in the former factory buildings.

    Hong Kong had built up capability and expertise in light manufacturing and clothing from the 1950s through the 1970s. It is still important for supply chain intermediaries. This was the ‘golden age’ of Hong Kong. This is how many of the Hong Kong oligarchs made their first fortunes; which they then invested overseas, in China and into the Hong Kong real estate market.

    Globalisation had started after the second world war. But the opening up of China threw it into overdrive. Hong Kong industrials moved manufacturing plants for clothing, shoes, toys, plastic goods and electrical appliances to China.

    They were joined by Taiwanese electronics manufacturers and then multinationals from Europe, America and Japan. Hong Kong clothing manufacturers provided China supply chain expertise to western retailers like Walmart.

    The Shenzhen ecosystem was built on manual production. The deft fingers of Chinese women workers allowed a lot more precision than Japanese pick-and-place machines. Which meant a lot more flexibility in manufacturing using the Shenzhen factories. You wouldn’t have an iPhone if you used pick-and-place robots on the production line.

    Electronics manufacturing

    At first, these companies were used to fatten the wallets of customers who took on the marketing and distribution of electronics in the West. The dirty secret about many PC and laptop designs was they were standard underneath. Then this cost saving was passed on to the customer as people like Dell went for close to lowest price operator based on a direct mail / online direct ordering and cut out the channel.

    Finally that wasn’t enough, and most of the laptop and PC resellers make no money. Instead the main people to profit from these sales were Microsoft which licensed it’s Windows operating system and Intel which provided the majority of compatible micro-processors capable of running Windows-compatiable applications. In the PC industry there is usually just two or three profitable manufacturers and one of them is Apple. Historically it was Dell, then Hewlett-Packard and now it is likely to have be Lenovo.

    Shrinking PC-esque computing power into the palm of one’s hand was inevitable with the rise of flash storage and Moore’s Law facilitating power-efficient processors. The challenge is battery technology, packaging and industrial design.  Apple pushed the envelope with suppliers. Hon Hai and other manufacturers installed hundreds of CNC machines to fabricate thousands of metal phone chassis. These radical changes in manufacturing capability were opened up to lower tier manufacturers raising the standard of fit and finish immeasurably over a few years.

    Now Xiaomi and Lenovo product handsets that have better build quality than many Samsung and HTC handsets. The performance is good enough (again thanks to Moore’s Law) and the handsets run the same applications. Sony, HTC and Samsung handsets look as marooned as Sony’s Vaio PC range in the Windows eco-system.

    Shenzhen’s ecosystem has been a great leveller of manufacturing and industrial design capabilities with Apple at the leading edge of what’s possible from an industrial design and materials technology.

    More information
    Shenzhen Government Online – this loads slow like they are phoning the pages in from 2002, but is informative
    The smartphone value system – An earlier piece I wrote about the challenges of the Android eco-system

  • A laser cut record & things that made last week

    Laser cut record

    A frickin’ laser-cut record. How awesome is this? Back in the day there were efforts to use laser pick-ups to read vinyl records in a way that wouldn’t affect the records over time. Dragging a diamond tipped needle through a groove was viewed as destructive. The first prototype was demonstrated publicly in 1977.

    An American company called Finial demonstrated a commercial product. But its business no longer made sense and eventually the intellectual property was picked up by Japanese company ELP Japan. ELP Japan build laser turntables to order. The laser cut record turns this philosophy on its head. The record is no longer a valuable artefact, but something that can be replicated over and over again.

    A simple but delightful Japanese Vine. Simple but amazingly cute gerbil with a priceless reaction when its human stops stroking it. I remember petting the dog that I owned at the time and eliciting a similar reaction of why stop. This seems to be a reaction that’s hardwired in; a sudden stop in grooming by another might indicate that they sense danger and consequently I should be on alert.

    A totally awesome Japanese game for the Sony PlayStation featuring Godzilla and all manner of kaiju. The odd thing about this Bandai Namco game is that it is for the PS3 rather than the PS4 which is gaining the lions share of console sales. One can only guess that this was a project that massively overshot its initial launch date?

    A smooth jazz version of Van Halen’s Running With The Devil, which seems to use studio stems of this rock classic. It works amazingly well, which says a lot about Van Halen’s songwriting and general musicianship

    Finally a video of park life in Beijing. It is hard to emphasise the amount of smoking that happens in China, so this video shows you instead. More related content here.

  • Chinas massive foreign reserves + more

    No easy fix for Chinas massive foreign reserves | SCMP – Chinas massive foreign reserves surplus presents a similar challenge to what Japan faced in the 1970s and 1980s. China massive foreign reserves will likely be used to try and reinforce its existing hegemony. We are already seeing state banks giving mobile network providers negative interest loans to buy Huawei equipment, software and services. Funds will be made available for sovereign debt capture, strategic technology acquisitions and undermining the US dollar as a defacto word reserve currency. This means that US treasury bonds will be less attractive to China. It also explains why it has laid the foundation for a ‘Euroyuan’ market alongside the ‘Eurodollar’ market in the financial district of London.  (paywall)

    Richemont H1 profits down 23pc – Luxury Daily – looking at this they were hit by a slowdown in APAC and the increase in Japanese sales tax

    China’s 24-hour online shopfest explodes into life with $2 billion spent in first hour | Techinasia – 11/11 is remembrance day in many western countries but in China it is singles day, a made up festival to drive online sales

    Foreigners buying from Japan get free stuff?! But not all buyers are impressed | Rocketnews – the UK is too cynical and jaded

    Michael Douglas | Canali – I love this content that Canali have done with Michael Douglas

    Masque Attack: All Your iOS Apps Belong to Us | FireEye Blog – iPhone users, enterprises are a security weak spot for you

    Obama says FCC should reclassify the internet’s regulatory status – Vox – this is huge. Seriously.

    Meet Shingy, AOL’s “Digital Prophet” | The New Yorker – how the fuck haven’t I managed to blag a job like that?

    Uber is recruiting 50,000 veterans as drivers | The Verge – the sub header is ‘are they being taken for a ride’ as sub prime Uber driver debt mounts

    HKTV eyes second test after problems in first round | Hong Kong Economic Journal Insight – reading this gives you an appreciation of how much of an achievement the likes of RTE Player and BBC iPlayer achieve

    A major misconception about Facebook visibility – Campaign Asia – tips: mirror audience language and semantics, have opinions

    We’re seeing a very different Microsoft — Gigaom Research – a very different Microsoft: one that is willing to partner, willing to accept the new economics of mobile, and learning how to coax customers to its web services with premium features instead of absolutist tactics.

    Juniper shrinks its MX monster router onto a USB stick • The Register – really interesting development, I wonder what’s the minimum hardware it could run on?

    Tech giants who encrypt comms are unwittingly aiding terrorists’, claims ex-Home Sec Blunkett – odd the way this is a consistent message from politicians, it feels like softening up for regulation in the UK that will look more like China’s harmonising the internet. It could be good for PRs involved in reputation management – only a matter of time before censorship is a service purchased like media relations. Expect innovation and digital competitiveness to suffer as the UK loses out to other EU countries. Google HQ in Germany or Ireland anyone?

    prosthetic knowledge — ABB Robots Katana Fight – we’ll look back on this clip as history when we’re all cut down to size by katana wielding terminators

    Adidas China Social Campaign Report | Resonance China – interesting work done including trying to encourage behavioural change amongst groups of young women’s social interactions in the real word – positioning sport as a competitor activity to spa treatments, eating out or shopping

    ‘Smart factories’ could revolutionize production | Shanghai Daily – interesting move as China tries to move up the value chain and deal with the demographic time bomb

    Parallel car imports | Shanghai Daily – interesting action. This will be competition for imported and made-in-country but foreign brands of cars like Mercedes. Will the parallel cars be looked after by the dealer networks? I remember in the UK, BMW disliked servicing parallel imported cars from Belgium and other countries

    Middle East authorities are cracking down on audio that gets you “high” | Quartz – like something straight out of a William Gibson novel

    GT Bankruptcy Provides Rare Look at Apple’s Relationship With Suppliers | Re/code – can imagine ‘put on your big boy pants’ being quoted in business schools for years to come

    CBSN – Live Streaming Video News Channel – CBS News – interesting direct from TV to online transfer of news, I wonder if the ad revenues will stack up? More media related content here.