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.

  • Performance per watt & other things

    Performance per watt

    Is Moore’s Law Less Important to the Tech Industry? – NYTimes.com – the problem is that it’s hard to focus on performance per watt and define the difference. Software has as big an issue on performance per watt Way before this, the speed bumps were having less and less impact, partly due to poorly written software, you actually saw the lengthening of the product upgrade cycle on PCs years ago when people wouldn’t upgrade from XP and internet-enabled machines where perfectly adequate even when they were six years old (paywall)

    Business

    The US’s western states are guzzling water so fast they don’t realize they’re running out | Quartz – Bectel et al would probably be a great stock buy around about now

    China Manufacturing Gauge Rises to 18-Month High on Stimulus  – Bloomberg – interesting since this data is focused on private sector SMEs, rather than SOEs (state-owned enterprises) that have benefited from government stimulus

    China Voice: More Internet companies should go abroad – Xinhua – these firms face limited (but growing) regulatory barriers in their overseas expansion while foreign firms effectively blocked from the Chinese Internet, especially as it becomes clear that some really are viewed as national champions. I wonder if results outside China will be harmonised as well?

    Consumer behaviour

    Apple’s iPad Problem | Slate – and those that do have a third device don’t need to replace it that often, especially since the iPad seems robust and perfectly adequate doing what it does, so the replacement cycles will be slower

    What Type of Sharer Are You? Improve Your Social Media With Our Quiz – the study is link bait but they do have some good links to interesting academic research

    Design

    Yves Béhar sells his design agency to Chinese PR firm BlueFocus | VentureBeat – BlueFocus is looking more and more like the kind of fully rounded business Martin Sorrell should be worried about

    Daring Fireball: More Amazing Xiaomi/Apple Design Coincidences – John Gruber’s Jobs-esque dis ‘Xiaomi copies with some degree of taste; Samsung has no taste‘.

    Indonesia

    Indonesia 101 | PixelBits – great rundown on Indonesia from a start-up perspective

    Legal

    China regulator determines Qualcomm has monopoly: state-run newspaper | Reuters – from Bill Bishop’s Sinocism newsletter – how do Qualcomm’s planned China royalty rates compare with those it charges in Japan and Korea? And is the possible fine assessed against China revenue or global revenue? I have heard it might be the latter, which could be significantly larger than what shareholders expect

    Qualcomm delivers blowout Q3, but cuts outlook over China woes | ZDNet – The Chinese government regulatory issues were well known if not well understood, however it was interesting that some Chinese clients feel that they don’t need to pay Qualcomm….

    How the Hammer Falls as China Nails Corruption – Caixin – interesting that the investigating body site is seen as a source and the audience goes there directly disintermediating news outlets

    Marketing

    Facebook Downplays Billion-Dollar App Ad Business | Re/code – the number of apps on there is quite scary

    Waggener Edstrom launches WE Infinity analytics platform | PR Week – how does this match against Vocus etc – more related content here

    WhatsApp, The Anti-Marketing Growth Phenomenon – GrowthHackers – its more like the product being the marketing rather than ‘anti-marketing’ per se

    Online

    Google has run away with the web search market and almost no one is chasing | Quartz – not terribly surprising, search is hard and it is difficult to move a customer away unless you have something radically better

    Chinese Social Media Shrinks by 7% During Internet Crackdown – China Digital Times (CDT) – As Chinese authorities stage a crackdown on “rumor mongering” — the number of people visiting social websites dropped by 20.4 million, or 7.4 percent, to 257 million. How much of these were real accounts and how much were bots?

    Retailing

    Top Retail Websites’ Load Times Still Slowing | Marketing Charts – this beggars belief

    BBC News – Five ways Aldi cracked the supermarket business – some of these things like store layout and bursts of unusual items are similar to Morrisons and Kwik Save

    Security

    Monetising user information without the privacy outrage – canvas fingerprinting

    Forensic scientist identifies suspicious ‘back doors’ running on every iOS device | ZDNet – you can probably bet that this is also true in other devices

    Technology

    U.K. Cabinet Office Adopts ODF as Exclusive Standard for Sharable Documents – ConsortiumInfo.org – Microsoft would have been pissed a few years ago, now with the new management in place, who knows

    Web of no web

    Razer Integrates WeChat into its Nabu Wearable, Says Should Hit U.S. for Under $100 | Re/code – really like the messenger link and cross platform nature, now if they could make it more reliable than Nike’s Fuelband (on my second one in four months)

  • Apple and IBM and other things

    Apple and IBM

    IBM and Apple just not that big a deal – I, Cringely – probably the most level-headed analysis of the Apple and IBM deal that I have seen so far

    IBM and Apple: Catharsis | Asymco – Horace on the long view of the Apple and IBM deal

    Apple and IBM team up to conquer the enterprise market, and crush Microsoft, Blackberry, and Android – I am less convinced of the Apple and IBM deal given Global Services trouble in meeting SLAs, would I want them providing AppleCare?

    Business

    Huawei Announces 2014 H1 Operating Performance – Huawei Press Center – interesting that smart devices were given such a prominent placement. Smart devices could also cover mobile broadband and there is no indication of contribution to profit of smartphones

    GE has no business being in retail finance so it’s making a steady exit | Quartz – it makes sense to offload consumer debt

    Internal memo: Microsoft to cut off all ‘external staff’ after 18 months, imposing mandatory 6-month break – GeekWire – this is an interesting move. I wonder how might it affect PR and marketing agencies?

    Mini-Microsoft: 18,000 Microsoft Jobs Gone… Eventually? – a perspective from inside Microsoft

    Yahoo’s Mayer: ‘We are not satisfied with our Q2 results’ – Media news – Media Week display advertising business fell 8% last quarter, to $436 million (£436 million), compared with the same quarter a year ago, as it continues to lose ground to the market leaders Google and Facebook.

    Overall, Yahoo’s revenue fell 4% last quarter, year on year, to $1.08 billion, operating income dropped 72% to $38 million (£22 million), largely attributed to one-off restructuring costs, and net earnings for the second quarter were down 19%, to $270 million (£158 million) – I have a lot of love for the Big Purple, but in the internet world lightning doesn’t strike twice

    Consumer behaviour

    Air Force research: How to use social media to control people like drones | Ars Technica – you’re all sheep

    Single Mom Used OKCupid To Make Friends | Social Networking Watch – interesting move and interesting trust dynamics

    How I stay informed… — Product Club — Medium – Tom Coates on how he stays informed

    Economics

    Welcome to the Everything Boom, or Maybe the Everything Bubble – NYTimes.com – so potentially we have a bubble in all countries in all classes of assets, what happens when it goes pop? Or is this a devaluation of currency across the global and if so why isn’t this seen as inflation?

    Ideas

    Rethinking Cold War America: An Interview with Fred Turner | Henry Jenkins – well worth a read

    Marketing

    Microsoft Will Climb Past Yahoo In Digital Ad Share | WSJ – blame Carol Bartz and Carl Icahn, they fucked it up when they didn’t give Jerry Yang a chance to do it right and didn’t manage to sell the business outright

    Why Do We Treat PR Like a Pink Ghetto? – The Cut – interesting US perspective on things. Interesting that diversity doesn’t make it into the article at all

    Two Rail Operators Selling Rights to Advertise on Bullet Trains – Caixin – great ambient advertising opportunity

    Edelman confirms Rui Chenggang held shares in Pegasus while at CCTV – ahh, this could get messy. Bill Bishop in his Sinocism newsletter pointed out that Rui flamed Starbucks Forbidden City branch on CCTV while Starbucks was an Edelman client. Edelman then bought Pegasus where Rui was a shareholder. The question is will China make this coincidence into an issue making 2=2=5? Will the backwash from all this hit Starbucks or other Edelman clients as well?

    Is a PR Crisis Brewing For Edelman in China? – Advertising Age – so they may not be compliant at the moment. What does this mean for other large agencies in China and will this delve into some of the more interesting media buying strategies out there?

    Online

    WeChat first: a new frontier in China beyond Android and iOS – interesting how WeChat’s app constellation is fostering new start-ups, the question is will WeChat kill them the way Facebook turned the screw on its own ecosystem

    Baidu launches search engine for Brazil | PCWorld – interesting expansion by Baidu

    Taiwan

    HTC ‘selfie phone’ to be launched in Q4: report – only a good 18 months after the Huawei Ascend P6 and probably several other handsets that I can’t remember

    Web of no web

    Future Drama – IBM anticipates Google Glass(holes), from 2000 – interesting thought experiment by IBM which nails some of the issues with Google Glass. More related content here.

    Wireless

    Messaging, Notifications, and Mobile – AVC – mobile OS have real power through control of notification

    Qualcomm to face strong competition in China’s 4G chip market | WantChinaTimes – which explains why Qualcomm is trying to play nice with the government

    MediaTek No. 3 global supplier of smartphone chips in Q1|WantChinaTimes.com – 1. Qualcomm 2. Apple 3. MediaTek 4. Samsung 5. Spreadtrum

    New MediaTek Chip Aimed at High-End Phones | Re/code – LTE, 2K video, 64-bit

  • Smartphone value system

    Benedict Evans in his post Unbundling innovation: Samsung, PCs and China compared the value system of smartphone industry to the PC industry where value began to be hollowed out and the market became commoditised.

    Evans claims that this hollowing out of the value system is already happening to Samsung. Part of the challenge is that so much of the design of the hardware layer in phones comes from reference designs by component manufacturers like Qualcomm and reference design work done by manufacturers like Foxconn. Globalisation outsourced hardware design innovation, a plus side of this is that there is a whole eco-system in southern China that can support anyone who wants to make a branded handset building on experience gained working with major technology brands. The downside that there is little room to add to the value system beyond brand marketing.

    As he quite rightly points out some businesses are looking to take control of their business by building beyond hardware and into the service stack to try and move up the value system.

    A number of manufacturers put their own UI over Android like HTC’s Sense UI and Huawei’s Emotion UI. Whilst these contributed to a handset personality, they didn’t provide true value system  differentiation. Facebook even tried to get in on the act with Facebook Home, but the user experience left something to be desired according to reviewers.

    Manufacturers tried to add applications in their phones, which competed with Google’s own application stack. At the present time, no Android manufacturer has come up with a killer application for their brand of phone, mainly because they replicated Google’s efforts and with the exception of Samsung, the application wouldn’t be sufficiently ubiquitous – particularly if it was some sort of communications platform like say Whatsapp.

    Meanwhile, Google hasn’t been sitting quietly on the sidelines but has been using its power within the community to exasperate commoditisation by combatting manufacturers efforts at software customisation. This process has been rolled further into the Android efforts with strict guidance on Android Wear devices. All of this may feel quite similar to Microsoft Windows around about the time of their dispute with Netscape.
    The ultimate budget phone shootout: Xiaomi Redmi vs Huawei Honor 3C vs Motorola G.
    Deeper innovation requires a fork in the Android OS and a break with some if not all of the services. This break has been forced on Chinese manufacturers anyway as consumers wouldn’t be able to access Google’s maps, email or search. Which is the reason why Xiaomi’s MIUI, Jolla’s Sailfish OS and CyanogenMod have an opportunity to work with phone manufacturers.
    Charles' Jolla phone
    However, the ironic aspect of this is that any of these platforms became too successful they would wield as much power as Google does at the moment.

    A sweet spot for hardware manufacturers would be a hetreogenuous OS environment, all of which will run Android-compliant applications. In order for this to work, you would need an equivalent of POSIX compliance for Unix-type operating systems for these mobile OS’ and a way of ensuring that platform innovation didn’t ossify either the OS or the internet services supporting it.

    Where does Apple fit into all this?
    DSCF6958
    Could the HTC One have been built without manufacturers having invested in milling machines after the introduction of the iPhone 5 aluminium monocoque chassis? Apple’s process innovations / popularisation of production techniques opens up opportunities for the wider Android community. This is because of Apple’s focus on materials innovation as well full integration of the services and software stack.

    This lends weight to a viewpoint that Apple has in some respects has become a ‘fashion brand’ as one of my colleagues put it, think a watchmaker rather than say a fashion house like Louis Vuitton and the analogy has a certain amount of merit. This also implies that when thinking about the iPhone the value decision lifts itself out of the economic rational actor. However there are also shifting costs. You don’t buy a DSLR camera, you buy into a system since the camera needs lens in order to work. Applications (particularly paid for applications) play a similar role, as do services.  There is an inherent switching cost away from iPhone, this is lower when switching platform from Andrioid to iPhone and practically none existent for many users upgrading their Android handsets.

    So in many respects Apple sits apart from this in the same way that the Mac sat within, yet apart from the PC industry.

    More information
    Unbundling innovation: Samsung, PCs and China
    Android and differentiation | renaissance chambara
    Messaging’s middleware moment | renaissance chambara
    The folly of technology co-marketing budgets | renaissance chambara
    HTC One – gsmarena

  • Social platform moves

    Over the past few years things have been set in motion that are changes that are driving  social platform moves and users:

    • The rise of smartphones. I have owned a smartphone for the past decade and a phone / PDA combo for a decade and a half. Originally I had a Nokia 6600 smartphone that nestled in the hand and used a joystick for navigation, but it took the touch screen of the iPhone and Samsung Galaxy to really blow up the smartphone market. An internet computer in the palm of your hand allows the user to use micro-moments of time to message or browse content
    • The rise of mobile messaging. By 2006, I had used Skype and Yahoo! Messenger on a mobile phone, but these were legacy networks that moved from the desktop on to other devices. At the time, messaging was more about presence, was a person accessible or not when I would go to call them; rather like Novell’s directory was used with early IP telephony office networks
    • The pitfalls of truly open social. Blogging had warning signs of what could happen with social that was too open. Heather Armstrong of dooce.com had been fired in 2002 for saying the kind of things online that would have made typical Facebook wall content. Secondly, Facebook moved from being the preserve of your classmates to including: parents, grandparents, siblings, work colleagues or curious HR people

    Younger and not so young people are seeing the benefit of instant messaging that is designed around mobile devices in a wider social platform moves. OTT messaging services like Kakao Talk and WeChat allow for group discussions allowing ad-hocratric decisions like what film to watch at the cinema to be made on the fly.

    Probably just as important was that the lack of a legacy base in the applications allowed them to be designed mobile first, providing a focused elegant user experience.
    engagement
    All of this provided a compelling use case, which also meant increased engagement at the experiences of desktop-orientated social networks.

    In Korea, Facebook has made slow steady progress, helped mostly by a security breach at local network Cyworld. In comparison, KakaoTalk came from nowhere to 90% penetration of the Korean market. This change has also happened in China, it is hard to understand how fast traditional networks like Sina Weibo and Kaixin001 have been left behind by Weixin (WeChat).

    “This is a new phase for social media in China,” said Hu Yong, a journalism professor at Peking University. “It is the decline of the first large-scale forum for information in China and the rise of something more narrowly focused.”

    In reality Sina Weibo hasn’t been social media in the way we understand it in the west. Most of the accounts tend towards passive consumption, Weibo acts like a stream of news. This makes it hard to estimate how many accounts were ‘real’ and how engaged the audience was. Anecdotal evidence suggested that riends still used Sina Weibo to get celebrity gossip and news but moved to private channels for interaction.  The New York Times considered this shift in China to be one of an issue to do with freedom of speech rather than a broader social movement towards conversations closer to the ’email’ age.

    More information
    An Online Shift in China Muffles an Open Forum – NYTimes.com

  • Brand collaborations in Hong Kong

    I started to think about brand collaborations in Hong Kong. On of the more unusual aspects of marketing in Hong Kong is the amount of co-marketing brand collaboration deals done and the unusual nature of these tie-ups. For instance last year I saw high-end Japanese streetwear brand Neighborhood have it’s brand on Coke Zero cans and worked on a ‘midnight rider’ influence programme.
    Coke Zero x Neighborhood limited edition cans
    This was used by Coke Zero to promote nighttime cycling. (It would be cooler and Hong Kong looks spectacular at night.) It also fits in with Neighborhood having been influenced by motorcycle culture. The programme was more Schwinn meets Easy Rider than Rapha style pelotons.
    Untitled
    Meanwhile McDonalds is usually better known for tie-ins with Sanrio character franchises. However, now it is running a promotion with Chinese personal care brand Walsh. Think of Walsh as similar to Cussons in the UK. With certain breakfast dishes, consumers get a bottle of body wash free. Beyond encouraging product trial I don’t get the brand collaborations like this which seem to happen regularly in Hong Kong.

    Here is the TV advert being run to support the promotion. And no, I can’t really make that much sense of the synergies either, but it seems to work. More on marketing here.