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.

  • O2O (online to offline) big in China

    My friend Sam Sun used to flag up O2O as the most important trend he saw when we worked together on mainland Chinese campaigns. O2O means online-to-offline. An integration of digital marketing tactics with marketing to drive retail footfall.

    O2O in China

    In China, there is real consumer demand for this type of marketing. Tencent surveyed WeChat users and found out that 13 per cent of them would prefer to have O2O adverts in their moments (think a stream of friends Tumblr accounts or Facebook’s news feed).
    wechat_moments_advertising_consumer_preference

    There is a whole eco-system that the Chinese can tap into.

    QRcodes have greater customer acceptance in Asia than in Europe, where despite the efforts of Pepsi and other brands to encourage consumer adoption, it has been tepid at best. QRcodes are often confused for barcodes and take-up is a fraction of that in other countries like Japan. By comparison here is the picture of a real estate advert on the table of a Chinese fast food restaurant in Shenzhen.
    Ridiculiously small QRcode on these property ambient ads

    In-store wi-fi in the UK is often clunky, poorly run by a major carrier like EE or a specialist provider like The Cloud. By comparison, in China, Tencent’s WeChat provides a turnkey solution for retailers, restaurants and bars to provide wi-fi and build their social following in a relatively painless manner for the consumer. (Though the software used by the retailer needs regular updating to keep up with Tencent’s ambitious development of the platform).

    On the face of it however China isn’t the most promising market for O2O. It is a vast, diverse country, which makes it hard to build a truly national network of retail outlets. It has a dominant e-commerce platform this is more like eBay than an Amazon in that it doesn’t compete directly with its merchants. Secondly, the cost of labour and the huge funds available to internet companies mean that building a logistics network is more likely to succeed than it would do in a more expensive country like the UK or US.

    O2O in the west

    Contrast this with the west, where Scott Galloway predicts Amazon’s demise because of the unsustainable cost of its product delivery system. Galloway hypothesises that ad-hoc logistics networks based on the sharing economy a la Uber and clicks and mortar businesses like Tesco offer a better alternative. Apparently doing the warehousing towards the edge is more cost beneficial than the Amazon model.

    In the west, we seem to be on the cusp of a range of technologies that could make indoor location, identity and marketing a whole lot easier.

    Hong Kong developers Green Tomato, have used ultrasonic signals and low power Bluetooth to allow applications to interact with their surroundings from sports check-ins to shopping mall navigation.

    Low power Bluetooth beacons have been experimented with by retailers for encourage mobile augmented shopping and by organisations including Japanese Railways to aid indoor navigation. CSR and other companies have talked about using wi-fi as an indoor navigation aid. Further out quantum technology offers highly accurate GPS type location finding within buildings. All of this technology has the potential to further move O2O further forwards, if the user experience is made sufficiently simple and seamless. In the meantime the humble QRcode soldiers on connecting consumers and retailers in Asia.

    More information

    WeChat Adds Wi-Fi Solution to Public Accounts | Technode
    China consumers voice their preferences for WeChat Moments ads | Resonance China
    Proposes new indoor requirements and revisions to existing E911 rules | FCC
    New indoor positioning system lets you do Batman-like echolocation on your phone | ExtremeTech
    CSR claims it will be able to fix your indoor location accurately | VentureBeat
    UK military creates quantum compass that could be the successor to GPS | ExtremeTech
    JR Rolls Beacon Navi for Tokyo Station | Wireless Watch Japan – interesting internal navigation application of beacon (low power Bluetooth technology)
    WiFi Chip Tracks Indoor Location | EE Times
    Five examples of how marketers are using iBeacons | Econsultancy
    Mapping Our Interiors – NYTimes.com – interesting business model by IndoorAtlas
    Grindr – Lisa Page – HyperIsland – really interesting insights on LBS design
    Green Tomato Limited

  • UK pirate notice programme + more

    MPAA Considered Pulling Out of UK Pirate Notice Program | TorrentFreak – Both Vaizey and Luke felt that if notices only started going out in the months preceding the May 2015 general election that would be an unwelcome development. A delay on notice-sending until the fall of 2015 was preferred all round – the UK pirate notice programme shows how media piracy is a vote-losing political hot potato. What the MPAA needs is a better idea, like what iTunes did for music piracy, rather than the UK pirate notice programme. More related content here.

    Personal tracking and online identity – 31C3 – from the CCC conference watch this and have a serious think about the quantified self etc. The security implications of this are quite frightening

    Xiaxue.blogspot.com – Everyone’s reading it.: The Big Gushcloud Exposé – interesting Singapore blogger ad network spat. Singapore has an odd bloggersphere due to its unique laws governing media. However, influencers have been quick to monetise their work with brands

    How the Graft Crackdown is Rippling Through China’s Economy | WSJ – (paywall)

    The Battle for Space | Slate – really interesting overview of space technology

    Apple expands its social presence with new iTunes Tumblr blog | 9to5Mac – social publishing

    The tao of Lei Jun, founder of Xiaomi | Techinasia – interesting business model. Software and services are the Gillette razors, the phone is the Gillette shaver handle. And Lei Jun comes across as a bit of a dick; ok a lot of a dick

    Morgan Stanley Analysts Try GoPro, Discover Their Lives Are Boring | WSJ – just brilliant content. Not everyone has a life worthy of the X Games, but does raise questions about the GoPro as a mainstream consumer product over the long term (paywall)

    Google eyes Android to be built directly into cars | Shanghai Daily – is it ready for this? More importantly, what will be the security and safety related safeguards, given that you need your brakes to work at all times?

  • Chinadroid

    The modern mobile eco-system was built in the factories of China, in particular Shenzhen. But two mobile eco-systems exist: China and the rest of the world, hence Chinadroid.
    Downtown Shenzhen
    Chinadroid: These are phones that use the Android Operating System but have not gone through official channels for compatibility (CTS) or do not have a Google Mobile Services (GMS) license.

    A couple of scenarios are playing out to drive Chinadroid handsets:

    • Virtually no Android handset in China has access to Google services including the app store. Baidu estimates that are over 386 million active Android handsets in China, using different app stores and web services.  Some of these have a very different look-and-feel like Cyanogen or MIUI – Xiaomi’s flavour of Android
    • A second scenario is where smaller manufacturers don’t get Google to play ball and get them onboard with a GMS licence for those handsets that they do sell outside China. Google historically hasn’t bothered to scale to address the international aspirations of these tier two and tier three handset makers. Their product is probably being used across the developing world, from the Nigerian merchants with their suitcases of phones flown from Hong Kong to the virgin mobile markets of Burma or Laos. The big challenge with these secondary players is that they are market makers and not having them registered means that Google doesn’t get the full benefit of being able to onboard these people on to the internet and hooked into the Google eco-system
    • Will the Chinadroid situation drive a completely new OS system (like SailfishOS) with Chinese characteristics? Doing their own operating system has a lot of technical challenges, but it may be done for security reasons

    More information
    The Shenzhen Market Mini-Guide | Medium
    China now has 386 million active Android users | Techinasia
    The rise of the Shenzhen eco-system
    The smartphone value system
    Google I/O: who is Google trying to disrupt?

  • 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