Category: innovation | 革新 | 독창성 | 改変

Innovation, alongside disruption are two of the most overused words in business at the moment. Like obscenity, many people have their own idea of what innovation is.

Judy Estrin wrote one of the best books about the subject and describes it in terms of hard and soft innovation.

  • Hard innovation is companies like Intel or Qualcomm at the cutting edge of computer science, materials science and physics
  • Soft innovation would be companies like Facebook or Yahoo!. Companies that might create new software but didn’t really add to the corpus of innovation

Silicon Valley has moved from hard to soft innovation as it moved away from actually making things. Santa Clara country no longer deserves its Silicon Valley appellation any more than it deserved the previous ‘garden of delights’ as the apricot orchards turned into factories, office campus buildings and suburbs. It’s probably no coincidence that that expertise has moved east to Taiwan due to globalisation.

It can also be more process orientated shaking up an industry. Years ago I worked at an agency at the time of writing is now called WE Worldwide. At the time the client base was predominantly in business technology, consumer technology and pharmaceutical clients.

The company was looking to build a dedicated presence in consumer marketing. One of the business executives brings along a new business opportunity. The company made fancy crisps (chips in the American parlance). They did so using a virtual model. Having private label manufacturers make to the snacks to their recipe and specification. This went down badly with one of the agency’s founders saying ‘I don’t see what’s innovative about that’. She’d worked exclusively in the IT space and thought any software widget was an innovation. She couldn’t appreciate how this start-ups approach challenged the likes of P&G or Kraft Foods.

  • Calvert design & things that caught my eye this week

    Margaret Calvert at the Design Museum: signs in tune with their times | Financial Times – Calvert was responsible for signage across all aspect of UK life. Her work also influenced traffic signs across the former British Empire including

    • Hong Kong
    • Mauritius
    • Pakistan
    • Singapore
    • United Arab Emirates

    It has taken decades for Margaret Calvert to get the full recognition that she deserved. Calvert defined the design language of the UK I have lived in. It created a system and common sense in modern life. It is quite shocking that sexism held back recognition of Calvert’s full role in it.

    Hong Kong protestors built small brick arches to slow down police vehicles. At the time I didn’t understand why; but the Design Museum has explained it – Brick arches – Design Museum More on design here.

    Growing up in the 1980s the immortal letters DX7 seemed to be in every music performance. It’s sound is iconic.

    Jalopnik partners with an automotive engineer to try and work out how the Changli electric vehicle is made for a ludicrously low price. The design process is fascinating. Don’t let the toy town aesthetics of the vehicle fool you. A lot of thought has done into the vehicle. In particular there were some really interesting engineering hacks in the product design that other automotive designers could learn from. Despite all the talk about China automating and using robotics on the shop floor, the vehicle has got a fair bit of manual work in the manufacturing process.

    Record marketplace Discogs celebrates 20 years online here: Discogs 20th Anniversary: Thank You for 20 Years! Discogs has completely shaken up and democratised record collecting. Knowledge that used to be hard earned is now a couple of clicks away as Discogs is part eBay and part Wikipedia.

  • North Face + more things

    From Supreme to Gucci: How North Face uses big-name collaborations to drive ‘brand heat’ – GlossyTim Hamilton, North Face’s head of global creative, said it typically does two collaborations per year, at most. In addition to its upcoming collab with Gucci, North Face has an ongoing collab with Supreme that started in 2015. And it released collabs with athletic brand Brain Dead and MM6, the sportswear line of Maison Margiela, in August.  Hamilton said the brand’s collaborations typically require a lead time of 1-2 years and are almost always manufactured and produced by North Face. The MM6 collab, for example, began with discussions between Hamilton and the Margiela design team in 2019. – This lead-up time probably explains the balance in their collabs between hype and steadier brands. Hence no Virgil Abioh or Yeezy deal with North Face. Abioh has flirted with Canadian technical brand Arcteryx; which is owned by Chinese sports and outdoor clothing conglomerate Anta – who have a lot of cash. It is interesting that nothing has come from Abioh’s visual love letter so far.

    Op-Ed | New Balance Collabs Are Second to None This YearNew Balance places an emphasis on “aligning with brands that are authentic in their space and have substance behind their message.” New Balance’s roster of collaborators represent a wide range of aesthetics, communities, and subcultures, meaning the brand can speak to a variety of consumers based on what product has been matched with which collaborator. In a sense, putting together a New Balance sneaker collaboration is like a game of exquisite corpse. “We’re able to keep product executions and stories fresh while creating different followings for each type of partnership,” – you could argue that adidas and Nike’s deals with Yeezy and Off-White relegate adidas and Nike to little more than original equipment manufacturers (OEMs). But New Balance also doesn’t have the deep pockets to go up against adidas and Nike head-on. That lack of deep pockets also affects North Face as well. I am surprised that the North Face and New Balance haven’t collaborated, though part of the issue maybe New Balance’s Danner Boots business. This competes somewhat with North Face’s boots business, but they have a very different aesthetic appealing to a different audience. North Face is owned by VF Corporation with sister brands Dickies, Timberland and JanSport. This means that brand collabs for North Face are probably complex politically.

    A millennials love affair: China’s second-hand luxury goods market booms | Reuters – yes Chinese like new things like new apartments. Yes but: Chinese luxury consumers have become more sophisticated. Chinese consumers have travelled and seen the pre-owned market like Milan Station and BRAND OFF in Hong Kong and Japan respectively. In absolute terms middle class wages are lower in China still than the US; yet this isn’t reflected in luxury product pricing

    Alibaba Takes Over China’s Top Hypermart Chain for $3.6 Billion – Bloomberg – interesting that Alibaba is working on an offline retail strategy

    Robert Lighthizer Blew Up 60 Years of Trade Policy. Nobody Knows What Happens Next. — ProPublica – I am not normally interested in publishing about politics, but this article on US trade policy is an interesting starting point to think about the current debacle

    Revisiting Lyn Collins’ “Think About It” – Micro-Chop – great essay. Its also good to see how the edits of Ultimate Breaks and Beats played a role in popularising the ‘think’ break

    Hong Kong walks: discovering traditional, trendy Tai Hang | Financial Times – it makes me ‘home sick’ as Hong Kong island was my home for a while

    Baaaa for business: Princess Diana’s iconic sheep sweater is back | Financial Times – its interesting that luxury brands are now raiding not just archives but childhood memories for cues. Also the convoluted customer journey outlined in the article for the original purchase via a bridesmaid’s mother

    Debate over vegan ‘sausages’ and ‘burgers’ heats up ahead of EU vote | Financial Times – unsurprising given the size of the beef and pork industries in the European Union

    WPP back on hunt for deals, says chief | Financial TimesRead’s challenge is to win back investors who think agency holding groups are struggling with multiple structural tests: cost-cutting and clients taking business in-house, competition from consultancies such as Accenture, and waning clout as middlemen in digital ad markets dominated by Google and Facebook. WPP’s share price is 65 per cent lower than its 2017 peak, and has fallen more than a third since the pandemic battered the economy. The three-year decline is a more severe than at rivals such as Omnicom and Publicis. Meanwhile, investors have flocked to the simpler growth story of adtech providers such as The Trade Desk, which this year has soared to almost three times WPP’s market value on a tiny fraction of its revenues. The £2bn market capitalisation of Sir Martin’s S4 Capital, a digital-only advertising group, is almost a quarter of WPP’s value even though it generated less than three per cent of its £12.4bn sales in the year to June 30.  – a number of things from this interview. The Trade Desk has a lot of heat around it, WPP attempted to do this with Xaxis but has got little credit. Read tried to spin that Accenture and WPP have sweet spots at different points in the economic cycle. Hence the comment about Accenture being good at cutting marketing costs.

    Mr Read’s pitch is that WPP has combined its traditional creative strength with the tech expertise to build ecommerce platforms for clients such as Sainsbury’s, and become the single biggest integrator of Adobe’s software. “Our goal is to be to revenue growth what Accenture is to cost reduction,”

    Chinese-Americans campaign for Trump on WeChat | Financial Timesit is becoming increasingly difficult to organise on WeChat, not only because of the looming US ban but also because of Chinese censorship. Simple WeChat filters for sensitive terms such as “democracy” can detect articles about US politics. Sometimes when Mr Ming sends articles to his groups, those with Chinese-registered phone numbers on their WeChat accounts cannot receive the links, no matter where they are in the world. Ms Wen, who used WeChat in 2016 to organise a door-knocking campaign for Mr Trump, was glad to shift away from the platform this year. “I know it is completely surveilled. Nowadays I mostly use Telegram,” she said, referring to the encrypted messaging app. – interesting move to Telegram, mirrors what I saw in my Hong Kong friend network after the Hong Kong National Security law was passed

    Google’s new ‘hum to search’ feature can figure out the song that’s stuck in your head – The Verge – now this is clever

    The future of fashion week? Look to Shanghai | Vogue BusinessShanghai Fashion Week, which pioneered digital pivots like live streaming, returns today as a largely physical event, featuring around 90 brands across a number of venues, including its main stage in fashionable shopping district Xintiandi and emerging designer platform Labelhood

    How to steer clear of discounts this holiday season | Vogue Business“Markdowns have almost single-handedly ruined our industry,” says Hewitt. “They train the consumer not to buy in-season because they can come back in three months and get a discount. It’s a vicious cycle.” – during the 2008 recession Rolex reputedly bought back watches in its retail and wholesale channels. And then recycled them

    Kibbles & Bytes #1122: Apple Releases Four iPhone 12 Models and the HomePod mini – Don Mayer nails the assessment of 5G in the latest edition of his newsletter.

    Why a new generation of challenger brands need to rethink how to challenge | A Little West of Centre – Blands. That’s what Ben Schott, writing for Bloomberg, coined them. And what a coining it is. The new generation of humble, conscious, in-it-to-sell, underdog companies, sporting D2C models, consumer champion narratives, minimalist aesthetics, affordable luxury positionings and post-choice selling techniques (this is THE mattress, that is THE toothbrush).

    Sony Launches SR Display: You Can See 3D Pictures Without Wearing 3D Glasses – Gizchina.com – really interesting technology

    Indonesia’s central bank hints burglary in e-wallet playerconsumers should look at the track record of providers before using them to save large amounts of money. Indonesia’s total e-wallet transaction value size is expected to reach US$15 billion by 2020, according to a recent report by The Asian Banker

    Problem Solved #13: A lesson in tackling bloody taboos from Bodyform | The Drumthe result was to present the viewer with flame-engulfed apartment of a perimenopausal women; a monster ripping at an endometriosis sufferer’s uterus; a ‘flood gate’ moment following an unexpected sneeze; a woman who has chosen not to have children; and the often-turbulent journey of trying to conceive

    Diane von Furstenberg: Interview | Vanity FairThe iconic wrap dress, designed in 1974 and sold more than 15 million times since, made von Furstenberg an overnight sensation and began a dialogue with women that she has maintained ever since, in a large part through admirable philanthropic efforts, including the annual DVF awards. Now she’s taking that dialogue to the podcast, a medium she champions for its value in shifting the focus away from appearance.

    British Airways Avoids Huge £180 Million Data Breach Fine for Hack That Compromised the Personal Details of Over 400,000 Customers – good for BA given airlines are haemorrhaging cash at the momen. I am worry about the message that this sends to large corporates and customer data

    Shenzhen — Justin McGuirk – pretty much nails how I found Shenzhen over the decade that I visited regularly. More on Shenzhen related posts here.

    Facial recognition data leaks are rampant in China as Covid-19 pushes wider use of the technology | South China Morning Post – interesting that this is being collected by non-state actors such as property management companies and schools as well as the state bodies

    iPhone 12 launching without earbuds or wall chargers is compared to eating without chopsticks in China | South China Morning Post – I was expecting this as Chinese consumers are value orientated, brands focus on ‘client delight’ and there is a culture of free gifts with products. So taking items out of the box and the green explanation won’t wash

    Beijing 1986: portraits of a forgotten China | Financial Times – amazing photos from 1986.

    Shenzhen/Huawei: the other Bay Area | Financial TimesThe impression of military manoeuvres by alternative means was reinforced by Tencent, another Shenzhen resident. It was among big Chinese social and video platforms including iQiyi and Weibo, that simultaneously cancelled the livecast of Apple’s iPhone 12 launch – a small example of the nexus between the Chinese government, corporate decision-making influenced by the government and an undercurrent of Han nationalism

  • Amazon returns + more things

    Hidden cameras and secret trackers reveal where Amazon returns end up | CBC News – interesting aspect of Amazon’s business model. It does make me wonder how much of a drag is returns on Amazon’s business? Retail returns are usually running at 10 percent of products bought. With e-tailing; this rate is thought to be as high as 40 percent according to the programme. That sounds like an extremely high rate of returns. Back when I was in college 25 percent was quoted as a returns rate for catalogue businesses.

    Inside Palantir, Silicon Valley’s Most Secretive Unicorn“Where you get into trouble is when the software gets so complicated that you have to send people in to manage it,” said one former CIA official who is complimentary of Palantir. “The moment you introduce an expensive IT engineer into the process, you’ve cut your profits.” Palantir, it turns out, has run headlong into the problem plaguing many tech firms engaged in the quest for total information awareness: Real-world data is often too messy and complex for computers to translate without lots of help from humans – to be fair enterprise software companies have always sold a good deal of smoke and mirrors in terms of over-exaggerated claims – sounds a lot like IBM’s Watson in this respect

    Apple’s New 5G IPhones May Be Left on the Shelf | Yahoo! Finance – 5G lacks a killer app for consumers

    Exposure to TV ads up 15% during height of lockdown – Even children were watching more broadcast TV and exposed to a greater volume of advertising in the weeks following the lockdown in March.

    Alibaba Group – investors day presentations – some interesting insight into Chinese e-tailing, retailing and internationalisation of these models

    Blockbuster Chinese games said to boycott Huawei and Xiaomi app stores over revenue tax | South China Morning Posttwo Chinese gaming startups, Lilith Games and miHoYo, said they won’t sell their would-be autumn hits via app stores pre-installed on smartphones made by Huawei and Xiaomi. Instead, they’ve opted for stores charging smaller fees or none at all—including Apple’s App Store, which levies the same 30% charge in China as it does everywhere else. While the duo didn’t say outright they were unhappy about the 50% rule set by the Chinese Android stores, many gamers and developers see them as the good guys stepping up against tech’s behemoths

    How to Monitor Facebook Pages – Meltwater Help Center – now allows users to monitor Facebook pages that they’re in charge of. The limit is 50 specific Facebook pages. It pulls out the Facebook analytics data into a Meltwater interface

    European Semiconductor Sales Drop, Global Sales Rise – EE Times Europe – not surprising given the disruptions to manufacturing

    Google Chrome remains China’s most popular web browser, even with Google search and other apps blocked | South China Morning Postconsumer backlash against some domestic browsers can be attributed to their aggressive user acquisition tactics, such as being deliberately difficult to uninstall. But he said that a shift in consumer tastes might also play a role. When Chinese internet companies first started designing websites and applications in the late 90s, the minimalist aesthetic was unpopular, he said a friend told him at the time. “Chinese consumers wanted stores where all the merchandise was crammed onto the shelves at maximum capacity, with narrow aisles where people were just bumping into one another,” he said. “It felt like plenitude.” “Those early design preferences endured for a surprisingly long time online, and I think there’s still a much higher tolerance for it than we’d see in the US or other Western countries,” he added. “I think as consumers get more sophisticated, though, they’re looking for a retail experience that doesn’t feel like a fire sale all the time.”

    Opinion: How Can Luxury Brands Successfully Price In The Post-COVID World?In these challenging times of lockdowns and demand contraction, luxury brands have increased – even more than usual – the prices of their bestselling products to offset part of the compression of margins due to the pandemic. Take for instance, Chanel which earlier this year confirmed it had brought the prices up of its iconic handbags (11.12, 2.55, Boy, Gabrielle) ranging between 5 and 17 percent in euros and Louis Vuitton which also raised the prices of some of its products in March and May. It is not a surprise that brands like Chanel, Louis Vuitton, Hermès and Dior, whose handbags are products that are considered iconic and perceived by consumers as investment pieces, can be more bold in increasing prices to protect their margin. But not all companies have such strong brand positioning and therefore cannot raise their prices so easily.

    Bulgari CEO Jean-Christophe Babin: “Millennials Don’t Want Formal Luxury.” | Luxury Society – I suspect that this is across age cohorts but the blend of streetwear and luxury is a key sign of it

    Is online advertising subprime? Contagious – interesting thought experiment

    South Korean Activists Accuse China of Using Huawei to Hack Their Election | Daily Beast – of course Samsung is looking to pick up 5G smartphone and infrastructure sales from Huawei….

    New info about Facebook-Instagram deal delays antitrust report: source | CNBC – it will be interesting to see what comes out

    Axios China – Top German official hushed up report on China’s influence – not terribly surprising when you read books like Hidden Hand. More China related posts here.

    The end of the American internet — Benedict Evans – more precisely. The end of Americans being the dominant users and culture on the internet

    Brussels drafts rules to force Big Tech to share data | Financial Times – grab the popcorn

    State of AI Report 2020 – interesting report on the hype

    The great uncoupling: one supply chain for China, one for everywhere else | Financial TimesUntangling supply chains that have built up over a generation is a complex and difficult task and the multinational companies which sell into the Chinese market will stay and even expand. But if companies that once used the mainland to make goods for export do decide to depart in significant numbers, it will represent a major reversal of five decades of economic integration between the US and China

  • Easy growth trap + more things

    Luxury Brands Must Avoid This Easy Growth Trap | Jing DailyChina has been reporting significant growth rates in the luxury sector recently, and many global luxury brands have been counting on China to be their silver lining. However, this recent growth has, to a large extent, been driven by repatriation (meaning sales that customers would otherwise have made during overseas travels). With travel routes to Europe and the US closed, Chinese luxury customers have been shopping domestically, which has driven the luxury demand inside Mainland China. Yet, this strong increase in demand in China could not offset the drastic decline in demand in both Europe and the US, at least during the second quarter of 2020. As such, many brands across categories like luxury cars, high-end jewelry, watches, and luxury fashion are sitting on enormous inventories and are looking at empty stores – Jing Daily were warning of the easy growth trap in discounting but their description of the market at the moment is very interesting. I suspect that the luxury sector is already well aware of this. The have seen department stores fall into the easy growth trap. Luxury brands have historically gone to extreme lengths to avoid the easy growth trap. Reputedly, during the last recession Rolex is alleged to have bought excess products from its dealers and the grey market to recycle, rather than discount. More on luxury and retailing.

    AI in Marketing: Myths vs. Reality – Techerati – Johnny Bentwood articulates a more reasonable assessment of AI. Badging everything ‘AI’ wonder technology is the easy growth trap of the tech sector. We’ve been here before

    Teens are turning themselves into Gucci models on TikTok | DazedLuxury is interesting because here brands really have meaning. The Gucci brand has history and meaning that comes from their behaviours and their products – rather than merely from how they have spent their ad budget in the past. Their Northern Soul homage in 2017 is just one example of the brand’s authenticity, energy and creative eye. For Gucci, it’s vital their brand continues to be culturally relevant, so they need to participate in TikTok. First, their #AccidentalInfluencer Grans in fur coats (with 8m views) showed they understood the grammar of TikTok and then the #GucciModel Challenge invites – no, demands – people play along. As Gucci makes fun of themselves they convey strong messages and have 26m views already. One thing I particularly like is how they use the audio by Lachlan Watson, star of the Netflix hit ‘Chilling Adventures of Sabrina’. This is the antithesis of the glossy spreads Gucci and others place in the top magazines and balances their marketing with authenticity which suits TikTok so well – Simon over at Great TikTok creative

    ‘It’s Ridiculous.’ Underfunded FTC and DOJ Can’t Keep Fighting the Tech Giants Like This – Big Technology 

    China’s middle-class dream of a second home in Malaysia dashed by coronavirus and geopolitical tensions | South China Morning Post“Most of these Chinese individual investors are not prepared – financially or psychologically – for the risks of overseas investment,” Zhao said. “They have experienced only economic growth and a booming property market on the mainland for decades, and they lack the funds and risk awareness to deal with the downside [of the economic cycle].” – the belt and road initiative isn’t all plain sailing

    ‘Funnel juggling’ is the answer to marketing effectiveness – Marketing WeekFor the long work, in most Uber countries there are a series of brand campaigns that push the emotional benefits of travel. Inevitably and rather cleverly the focus is on the top of the benefit ladder; or, in Uber’s case, the end of the journey, when it delivers you to your destination and the emotional benefit that awaits. In the US, for example, the brand uses TV, outdoor and digital media to associate Uber with these moments. It’s mass-market, it’s emotional, it’s brand-focused and it asks nothing of the consumer other than to see Uber as more than a ride-sharing service. 

    I have no idea what the split in Uber’s marketing spend actually is but I will bet about half of the money in any country also goes on the short of it.

    Gucci’s Gaming Garments | Gartner for Marketing – Chinese princelings….

    Cinnabon in the Oven | Gartner for Marketers – processed foods are the new eating out

    Public Image Decline of South Korean Churches – The PeninsulaThe PeninsulaPastors in South Korea claim that church-linked COVID-19 outbreaks have tainted the public image of churches in the country. Most recently, a church in Seoul emerged as the source of the country’s second largest infection cluster following a spike in cases associated with a religious sect in Daegu earlier this year. A 2015 Gallup Korea poll finds that more South Koreans, particularly those in their twenties and thirties, are moving away from religion.

    Hallyu Con 2020 | KCCUK – virtual festival on October 4th

    Ageism Is Not Just A Disease—It Is The New Business Model For Top Ad Agenciesthe original statement inadvertently let the cat out of the bag about agencies’ cost cutting at the expense of clients: they are now inhabited by junior talent, inexpensive and inexperienced. And this is the main reasons for the decline of the advertising industry. The holding companies like WPP were formed in the eighties, and they started consolidating the industry by gobbling up independent agencies. To do so, they needed to issue debt and the industry mortgaged itself to bankers. Madison Avenue went from focusing on the clients’ business to focusing on their balance sheet. And that meant getting rid of “cost”: talented experienced people in their forties and fifties and replacing them with cheaper labor.

    GBA hurt by Cold War, pandemic and protests EJINSIGHT – ejinsight.com – Greater Bay Area (cities and Hong Kong around the Pearl River delta) that China envisages as kind of like Judge Dredd’s Mega City One

    Video encoders using Huawei chips have backdoors and bad bugs – and Chinese giant says it’s not to blame • The Register 

    Hard to pardon: why Tenet’s muffled dialogue is a very modern problem | Tenet | The Guardian“Think about it: the first few Star Wars [films], we heard them all. We heard all the lines. Listen to Apocalypse Now – you hear everything.” Price agrees: “If you watch old movies, you might hear some sound effects here and there but now they go nuts: somebody’s walking across the room in a leather jacket, you hear the zippers clink and the creak of the leather and every footstep is right in your face.” When television became commonplace in the mid-20th century and challenged cinema’s dominion, cinema needed to distinguish itself; it needed to prove that it could justify people leaving the comfort of their homes. It did so partly by becoming bigger and louder. In an era – and a pandemic – in which home streaming dominates, cinema may be forced to pull out the stops once more. “I think we’re bombarded,” Paul Markey, a projectionist at the Irish Film Institute, says of modern films. “The more expensive movies have got, the more of a bombardment they become on your senses.”

    ‘The Devil All The Time’ Costume Designer On Its Style | Esquire – the world has never fallen out of love with American workwear; no split, no wandering eye. The only thing that has changed is who wears it. The plaid-clad men of The Devil All The Time wear clothes that are as tough and hardscrabble as their lives. Their ancestors still flock to the same brands – think Dickies, Levi’s and Carhartt – only now it’s because they’ve collaborated with Off-White. Still, context is context, but the fact that these classics still work is testament to their longevity, both in design and build – the timelessness of American workwear

  • Dark stores and coercive diplomacy

    I came across a couple of interesting terms recently: dark stores and coercive diplomacy.

    Dark stores

    Gartner for Marketing (formerly L2 Inc.) were talking about a new development at Amazon’s Whole Foods subsidiary. It was what Gartner called digital dark stores. The first one has been established in Industry City to serve much of Brooklyn, New York.

    Amazon themselves called it a ‘permanent online-only store‘ on their blog.

    So whats the difference between dark stores and the ‘last mile’ warehouses that Amazon uses for fulfilment in places like London?

    • Looking at the limited amount of photos available, this doesn’t feel warehouse-like. There wasn’t obvious automation in the pictures. Instead it feels like a supermarket that’s well stocked, but lacking price tags and shopper marketing accoutrements. Gartner describe it as ‘technically a grocery store’, which implies that there might be zoning or planning regulations that they might be working around
    • It is only for the Whole Foods brand; rather than fulfilling Amazon Fresh and Amazon Prime Now items

    This isn’t just an Amazon thing. Gartner points out that American supermarket brands Kroger and Giant Eagle have also embraced the order-only store model. More at Gartner for Marketing here.

    Coercive diplomacy

    The Australian Strategic Policy Institute published a report on September 1, 2020 called The Chinese Communist Party’s coercive diplomacy. It was written by Fergus Hanson, Emilia Currey and Tracy Beattie. Hanson, Currey and Beattie analysed ten years of Chinese government diplomacy. In there words:

    The Chinese Communist Party (CCP) is increasingly deploying coercive diplomacy against foreign governments and companies. Coercive diplomacy isn’t well understood, and countries and companies have struggled to develop an effective toolkit to push back against and resist it.

    The Chinese Communist Party (CCP) is increasingly deploying coercive diplomacy against foreign governments and companies. Coercive diplomacy isn’t well understood, and countries and companies have struggled to develop an effective toolkit to push back against and resist it.

    This report tracks the CCP’s use of coercive diplomacy over the past 10 years, recording 152 cases of coercive diplomacy affecting 27 countries as well as the European Union. The data shows that there’s been a sharp escalation in these tactics since 2018. The regions and countries that recorded the most instances of coercive diplomacy over the last decade include Europe, North America, Australia, New Zealand and East Asia.

    There seems to be an escalation of economic and non-economic measures deployed. Economic measures would include:

    • Trade sanctions – such as the recent ban on German pork products. This was rolled out just a few days in advance of a trade negotiation meeting between China and the European Union
    • Investment restrictions in strategic industries such as the ‘agreement‘ that Yahoo!, Softbank and Alibaba had over Alipay (which included what would now be Ant Group). Strategic industries like state security is notoriously (and deliberately) ill-defined in China
    • Tourism bans
    • Popular boycotts such as Korean corporate Lotte being driven out of China and the 2012 anti-Japan protests where the public smashed Japanese stores, attacked factories and burned Japanese cars

    Coercive pressure is also applied at below state level on businesses. It may also be applied on individuals, based on the data leak provided from Zhenhua Data seems to imply.

    Non economic measures include:

    • Arbitrary detention. The best example of this would be Michael Kovrig and Michael Spavor detained as part of China’s dispute with Canada. Another example might be Australian citizen Karm Gilespie. China didn’t admit it had detained him for over six years, until they announced his death sentence in the summer
    • Restrictions on official travel
    • State-issued threats which are usually issued on a regular basis as part of wolf warrior diplomacy. (Wolf Warrior is a set of two films with a Chinese action hero, a la Rambo – but with less humour).

    Some of the imputus for coercive diplomacy might come from the Chinese Communist Party’s continued rancour over Qing dynasty-era unequal treaties. More China related content here and more on retailing here.