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.

Competition in logistics + more

Failure of competition in logistics market – The EU thinks this website is the key to fixing its weak e-commerce market — Quartz – surely there is some arbitrage play for ‘trumpeting’ deliveries in and out to take advantage of lowest cost parcel routing? Given the amount of parcel carriers why is there a failure of market competition in logistics. I suspect that gathering data on this by the EU is the first step; in a similar way to what happened on mobile roaming rates. More Europe-related posts here

WeChat failed to go global | Techinasia – the thing I took away from this foreign campaigns was how similar they were to what I would have expected a foreign company to do in China. I suspect that they weren’t localised enough and Tencent didn’t think about a compelling hook

Housing crisis in China’s ‘Silicon Valley’: Huawei, other hi-tech giants head for cheaper cities as rising costs deter talents – also provides opportunities for start-ups to take up staff that don’t want to make the move

Nokia could cut up to 15,000 jobs | Telecom Asia – not surprising there would have been a lot of overlap between them

Adidas to Return Mass Shoe Production to Germany in 2017 | Business of Fashion – isn’t likely to be traditional adidas models like the Gazelle or Superstar as designs are adapted for the robot production line that Adidas intends to use

Why Huawei is suing Samsung over cellphone patents – Recode – the amount of redactions in this document is interesting. The optics of the court case are trying to position Huawei as an innovator. Huawei will win in the Chinese court filling. The US one could be more interesting. If Huawei is considered to be abusing its position it could find itself in an EU court case though

A new study shows how government-collected “anonymous” data can be used to profile you — Quartz

Even Apple is acknowledging that the “iPads in education” fad is coming to an end | Quartz – which has to be worrisome for tablets in business surely?

Why Big Apps Aren’t Moving to Swift (Yet)

May 28, 2016
The New Nokia
The New Nokia can rise from the ashes of the old. Microsoft finally let go of its licence for the Nokia brand license on May 19, 2016.

There is a lot of logic to this move:
- Microsoft has already written down the full value of the business acquisition
- It has got the most valuable technical savvy out of the team and moved it into the Surface business
- It removes problematic factories and legacy products
For the businesses that have acquired the rights to use the Nokia name and the factories the upsides are harder to see.

The factories may be of use, however there is over supply in the Shenzhen eco-system and bottlenecks aren’t usually at final manufacture, but in the component supply chain.

There is still some brand equity left in the Nokia phone brand. I analysed Nokia along with a number of other international Greater China smartphone eco-system brands using Google Trend data.

There has been a decline in brand interest over the past 12 months for Nokia of 37%

Nokia still has comparable brand equity to other legacy mobile brands such as BlackBerry and Motorola

The brand equity is comparable to other value mobile brands. Honor; Huawei’s value brand has had a lot of money and effort pumped into it to achieve its current position.

But it’s brand equity doesn’t stack up well against premium handset brands from Greater China. The reason for this is that smartphone marketing and fast moving consumer goods marketing now have similar dynamics – both are in mature little differentiated markets. Brands need to have deep pockets and invest in regular advertising to remain top-of-mind across as large an audience as possible. Reach and frequency are more important than social media metrics like engagement.

In addition to advertising spend needs to be put into training and incentivising channel partners including carriers.

They are entering a hyper-competitive market and it isn’t clear what their point of advantage will be. Given the lock down that Google puts on Android and commoditised version of handset manufacture, the best option would be to look for manufacturing and supply chain efficiencies – like Dell did in the PC industry. But that’s easier said than done.

Garnering the kind of investment required to seriously support an international phone brand is a hard sell to the finance director or potential external investors.

Growth is tapering out.

The average selling price is in steady decline

This is partly because the emerging markets are making the majority new phone purchases.

Consumers in developed markets are likely holding on to the their phones for longer due to a mix economic conditions and a lack of compelling reason to upgrade.

All of the consumers that likely want and can afford a phone in developed markets have one. Sales are likely to be on a replacement cycle as they wear out. Manufacturers have done a lot to improve quality and reliability of devices.

Even the old household insurance fraud standby of dropping a phone that the consumer was bored with down the toilet doesn’t work on the latest premium Android handsets due to water-proofing.

More information

The answer to the question you’ve all been asking | Nokia – Nokia’s official announcement
Gartner highlights a more challenging smartphone sector for Nokia than when it “quit” in 2013 | TelecomTV
Nokia is coming back to phones and tablets | The Verge
So the Nokia brand returns.. with a Vengeance | Communities Dominate Brands

Supporting data slides in full

1605 new nokia smartphone deck from Ged Carroll
May 23, 2016
Smart home is stuck + more ideas

The smart home is stuck – Recode – interesting analysis on the nascent smartphone market. Will we move beyond Nest, Hue light bulbs and IP security cameras? Will consumers see utility in the modern smartphone and be ready for the upgrade cycle. Or will smart home is stuck morph into just a fad like 3D TV sets? More on the web of no web here as the internet meets the real world in ways that make the technology invisible and integral to everyday life.

New Chinese online payment rules take HK e-shoppers by surprise | HKEJ Insight – looks like controlling capital flight measures. It represents a serious cramp in Alipay and WeChat Pay opportunities. There also must be come work around as these services are expanding abroad to meet the needs of high spending Chinese travellers.

Xiaomi opens stores | Shanghai Daily – interesting pivot in distribution channels. Previously Xiaomi was famous for popularising flash sales online of its handsets a bit like Drop.com do now. Its model now looks closer to that pursued by the likes of Huawei and Apple in China. It will also be interesting if Xiaomi uses these stores to sell its range of home appliances alongside handsets

Why a staggering number of Americans have stopped using the Internet the way they used to – The Washington Post – Nearly one in two Internet users say privacy and security concerns have now stopped them from doing basic things online — such as posting to social networks, expressing opinions in forums or even buying things from websites, according to a new government survey released Friday (paywall). All of which belies the influence that social platforms seem to have in shaping popular opinion and building grass roots groups. There is obviously a missing piece between consumer behaviour and this research. I am not quite too sure what it is though.

May 17, 2016
Monster internet surveillance + more

Britain to pay billions for monster internet surveillance network | DuncanCampbell.org – lets park the moral dilemma this represents for a moment, would other countries come to the UK for expertise in terms of how to implement this locally? What countries would they be? What would the optics be on it? Who are the contractors that are likely to benefit from this work in the UK? More on security related issues here.

I think it will be pretty hard to make lemonade out of these lemons. The business opportunity probably won’t scale to get a ‘space race’ type benefit, the likely client countries may pose problems in terms of optics. After Snowden, you can count out the EU territories. An obvious contractor to benefit would likely be Huawei (mix of telecoms and enterprise tech, fast growing player in enterprise storage) – who wouldn’t need British expertise to sell this monster internet surveillance solution abroad

Let’s Talk About Amazon Reviews: How We Spot the Fakes | The Wirecutter – Although many reviews on Amazon are legitimate, more and more sketchy companies are turning to compensated Amazon reviews to inflate star ratings and to drum up purchases

jenny odell • living a designed life – interesting essay on the rendered spaces used by developers in their sales pitches

Samsung 837 – JWT Intelligence – really interesting retail space

Italian Crime Series Gomorrah Kills Pornhub Traffic – Pornhub Insights – the power of mainstream media played out online, I am sure there would be a similar dip for something like Game of Thrones or the FA Cup Final in the US and UK respectively

WPP Mobile New technology service from Maxus makes marketing as easy as Pie – gives WPP a bigger arbitrage opportunity but if you were a large client wouldn’t you be demanding similar implementation times?

MSN Ceases Chinese Operations | ChnaTechNews – and that’s the last of the western portals when went there leaving the market

CK Hutchison mulls legal challenge as EC thwarts its UK ambitions | TotalTele.com – not terribly surprising. UK Government’s big mistake was allowing BT to acquire a cellular operator again

Misused English Words and Expressions in EU Publications – European Court of Auditors – Secretariat General Translation Directorate – fascinating document that explains why English speakers may feel exasperated at times with their EU counterparts

Xiaomi faces existential crisis | Techinasia – if it loses the Chinese middle classes, it loses the opportunity to sell its eco-system of smart home products to them

May 15, 2016
The helmsman + more things

Sailing the Seas Depends on The Helmsman

Sailing The Seas Depends On The Helmsman – There has been a minor drama playing out amongst westerners who analyse China. A theatre group put on a performance in the symbolic heart of the Chinese Communist Party. Sailing The Seas Depends On The Helmsman – is a Cultural Revolution era song which eulogises Mao Zedong’s leadership.

The Helmsman or Great Helmsman was one of the many labels Mao picked up as leader of China. This series of concerts were seen as a celebration of the Cultural Revolution and elevated President Xi to a similar ‘cult of personality’ within China. Some considered it to be a subtle way to sabotage Mr Xi. Either way it took pull to allow the group to perform in the Great Hall of the People. The scale of the presentation was spectacular and it’s quite a catchy tune – as you can see in the video created by the South China Morning Post.

Morgan special projects

I am not the fan of car designs that I was as a child and have never been a fan of Morgans. But there is a lot to admire in Morgan Motor’s Special Project team. The video outlines the process they went through in building a bespoke car for a customer. Ask pretty much any other car manufacturer to do this and the money would literally be astronomical.

It is ironic in a day of 3D printing and CNC machines that they use old school techniques that my Dad would have learned as an apprentice to create a special one-off car. There is also an interesting mix of materials in the design and the marine plywood-based seats caught my eye. The designer gave careful thought to how the car would age.

Objective See

Objective-See – handy ransomware blocker for OSX (macOS), ideal for these troubled times when 2/3rds of UK business have come under some form of a hack.

Everyday objects

A blogger who goes by the name of ‘The Electronic Mercenary’ has set up a great YouTube channel where they x-ray everyday objects or components for your enjoyment.

Check it out.

I don’t often have much time for Samsung, their product advertising usually lacks subtlety and creative chops – you are not charmed by their marketing. Instead you are bludgeoned into submission with a media plan that has more in common with a Katyusha rocket system than persuasion. Occasionally they do some stunning emotive corporate marketing, this is the latest example. Separated Korean families unite in heartfelt Samsung spot | Marketing Interactive

May 13, 2016