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Archive for September, 2007

 I visited the Silk Market the first time I was in Beijing 8 years ago.  Then, it was an open market, smack in the middle of the embassy district and around the corner from the St. Regist Hotel where we stayed at.  I remembered walking around with my Chinese colleagues, not finding anything in particular to buy, but ended up negotiating for a sweater nonetheless.  It was a green woolen sweater, branded Gap.  The asking price was rmb 300, we returned price of rmb 40 and didn’t blink.  We got it for rmb 40, and I was told we could have gotten it for 20. 

8 years later, the market moved indoors to a new complex, completed with air con, heat, escalators/elevators, a restaurant…  it must be 10 times the size of what it was before.  10 times in size, and perhaps just 2 times the merchandise.  Which means there’d be 100 stores selling exactly the same items.  Competition is fierce, though not hostile.  At least not hostile between stalls.  I hear business is very tough these days… 

For me, I’d love to see the silk market gone.  Not only because they sell fake pirated goods, but more because of the horrible shopping experience.  The saleswomen there have an incredible command of English, both when wooing you to buy, yelling when negotiating, grabbing your arm, and swearing at you for not purchasing.  Last time I went, I got money thrown at me.  To be fair, my colleagues thought it was entertaining and enjoyed the sport; I felt abused. 

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Saturday Entertainment…

Here’s an article from the NYTs from December of 1908, when the last emperor Pu Yi was enthroned when he was 3 yrs old.   I think everyone can view these articles now with TimeSelect gone?  Well, if not, let me know and I can produce a link. 

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The Mattel Apology

The relationship between China and the US has always been complicated.  It is a huge chess game really.  This morning, we woke up to Mattel apologizing to China (yep, the whole of China) for excessive toy recall.  Here’s the article, fresh from the press.  I suspect this was given under great pressure from China – imagine what’s going to happen to Mattel if China were to ban Mattel from manufacturing toys from China.  Or, if enough negative press is generated such that Mattel’s products are boycotted by Chinese consumers. 

As a consumer, I think Mattel owes me a huge apology.  When I buy Mattel’s products, I trust that they, as an American toy company, symbolizes safety and quality.  Thus, when lead paint was found, I hold them accountable.  I could care less about what the real source is; all I know is that I bought a Thomas Tank (which I did and gave to my friend’s son right before the recall) with harmful paint on it.  The fact that the harmful paint comes from China is irrelevant.

For companies like Mattel, the only way to ensure product safety is to assert control over the supply chain.  This doesn’t mean all toys need to be produced in the US – perhaps it is time to rethink the outsourcing strategy.  Perhaps it is time to move away from the “platform” structure and shift back to the direct ownership model. 

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In the DNA?

I sat through the incredibly boring Emmy’s awards night last Sunday – but one thing did stuck in my mind (ok, two, the first being Sally Field’s speech).  Helen Mirren made a wonderful comment:  “You Americans are wonderfully generous people. You’re a lot of other things as well, some good, some bad. But if I was to categorize your nature, it’s generosity above all.”

This is so very true.  Americans are the most generous and selfless people around the world.  And I’m not referring to monetary donations or charitable works which the US lead by a margin.  I’m talking about everyday observations – selfless acts our neighbors and strangers do for each other without expecting anything in return. 

I wonder if generosity comes with wealth and prosperity.  Or, is it in the DNA?  A friend once told me that in India, even in the best of all neighborhoods, the streets are incredibly filthy because everyone only take care of their own property and own family.  There’s no sense of shared responsibility.  I feel it is the same way for us Chinese.  We can be incredibly generous with our family and close friends; but if you’re outside the circle, we won’t care less.  I wonder if this will ever change. 

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This is by no means scientific.  It seems the most valuable degree for young entreprenuers in China is English, or English Literature.  From anecdotes, I observe that speaking fluent English is a huge plus for global investors.  Personally, I am skeptical about this bias – yes, you’d be able to communicate better.  And yes, they might sound more trustworthy and sincere since they can express themselves better (to you).  They might even understand the few jokes you’re cracking.  On the other hand, this “edge” they have might put you in a vulnerable position.  When I travel, if I get into a cab with a chatty-English-speaking driver, I know I’m in for a ride around town.  The friendlier cab drivers are, the higher chance I end up getting ripped off (and eventually pissed off too).  And this applies even in NYC.   So, beware…

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Why US companies fail in China

Kaiser Kuo has an interesting discussion going on his blog regarding why large US companies fail in Asia.  In his article, he quotes a podcast on the China Business Network, an interview with Eric Rosenblum.  Rightfully, they attributed eBay’s failure, for example, to an inappropriate corporte reporting/decision structure, and also the short-term thinking of the parent company (inability to weather the storm).  I completely agree, and will add the following points:

1. Startup risk – China or not, entering a new region is equivalent to starting a new business.  Unless you are a product company like Coke, or Microsoft.  With a new business, the risk is the same anywhere. 

2. Lack of Talent – Assuming I’m a talented Chinese manager, I will either 1) choose to work for established MNCs like IBM or Microsoft where I gain highest visibility and responsibility, or 2) start something on my own so I have full control and upside.  This is not unlike the US as well; entreprenuers never survive within large organizations.

3. Brand dependancy – eBay may be #1 in the US, but it means absolutely nothing in China.  In fact, these days, it’s better to appear local (as in Chinese).  Yes, Chinese wants Italian designer clothes, and Japanese electronics, but when it comes to Internet services, it wants its very own. 

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Booking Air Tickets

Here’s an observation that’s quite interesting… 

Apparently the way Americans and Chinese book air tickets are completely reversed.  In the US, we have the 14-day and 21-day rule – whereby the closer you are to the date of flight, the more expensive tickets become.  I presume this is due to price discrimination; if you are booking late, you must really want to go!  Or, perhaps it’s just simple demand and supply – the less seats available, the more pricey it is.

In China, people book tickets last minute, at most 3 or 4 days in advance.  Tickets also get cheaper as it gets closer to flight date.  The difference, as I can see it, is a result of a competitive intermediary market and inefficient information.  Most transactions are done in person, mostly through the thousands of travel agents spread around town.  If you buy through the online portal, ctrip.com, a messenger will deliver your tix to your door in exchange for cash.  I suspect the lack of real-time transaction capabilities prevent airlines from controlling last minute pricing effectively.  Or, if applying simple supply and demand theory, this indicates that supply way surpass demand for Chinese domestic flights.   

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