Can organic vegetables grow in China’s depleted soils? Won’t environmental pollution offset any gains from eating healthy? Aren’t vegetables here, produced by China’s 500 - 600 million farmers, already dirt-cheap? These are just some of the questions I had about a year ago, when a Chinese entrepreneur pitched me on an idea that seemed so ridiculous that I had to remind myself of one of the traditional entrepreneurial litmus tests: If you’ve got an idea so crazy that everybody thinks you’ve lost your marbles, on the contrary you just might be onto something.

In a nutshell, this fellow had agricultural and academic connections to be parlayed into a network of greenhouses. They would be rented to foreigners who wanted to grow their own food. An integrated coffee shop and walking tour would allow people to hang around and watch their vegetables grow precariously from the ceilings. It was to be located in Shanghai’s picturesque and rural Fengxian district.

Although I knew something about the locavore and LOHAS (Lifestyle of Health and Sustainability) concepts, I still wondered if there were really enough green-thumb foreigners in the city to rent his greenhouses and farm their own produce.

“No problem!” he said, “We have people who do the actual farm work.” And what’s more, fresh ten kilogram baskets of the organically grown fruits and vegetables would be delivered to customers’ doors weekly. Ah, a garden without the work! Now he might be onto something.

I passed on the opportunity to invest but recommended the entrepreneur instead focus his marketing on the emerging middle/upper class of Chinese consumers who would be more than eager to eat up healthy vegetables at inflated prices. It turns out I was at least partly right. Before I get to that, let’s review a little Olympic context for organic foods in China.

In the wake of a poisonous dumpling scandal which rocked China-Japan relations in early 2008, China’s pre-Olympic food preparations suffered one indignity after another: The US planned to boycott the Olympic Village food altogether, Australia had to be banned from bringing its own food into the Village (including, it seems, copious quantities of Vegemite - Australia’s favorite spread), and the Olympic Village cafeteria itself would offer only 30 percent of the menu from China’s famous local cuisines. Then perhaps the ultimate loss of face for Chinese gourmands: Usain Bolt’s pre-world-record-setting meal? Chicken nuggets.

I mention the Olympics for its effect of kicking China’s organic foods production up a notch. In order to reassure Olympians - and the world - that China’s food chain was safe, no expense was spared. From RFID-encoded shipments to pigs having Mozart played on their final walk to the abattoir, safety was the number one priority. Number two was health.

In the run up to the Olympics, China has embraced organic foods extremely rapidly. Despite the fact that China has been a producer of organic foods for decades, just two years ago it was hard to find locally-available organic foods in even the foreign-owned hypermarts. Now, fresh, locally-grown organics are not only found in major grocery stores and served in top restaurants, they are even joining the ranks of DIY products.

Vegetable gardens put the commune back in China

Last week in the Shanghai Daily, a pair of organic food stories caught my eye, but this one about the People’s LOHAS Commune in Qingpu District was especially relevant given my experience with the farm/coffee shop/vegetable gallery I was told about last year:

The 33-hectare commune includes 27 hectares of farm land, and a 7-hectare eco-lagoon. The farm is divided into four parts - an orchard, a flower garden, an organic Chinese medicine farm and a vegetable farm.

For only 3,000 yuan (US$441) a year, you can have 3 hectares of land to grow any plant you like, even expensive ginseng.

In Supertrends of Future China, we discuss the growing trend in China of consumers seeking high-quality alternatives and upgrading their lifestyle, adopting activities such as LOHAS originally found in more affluent countries. We believe the trend is just getting started in China, although a number of incumbent businesses such as popular Shanghai eateries Element Fresh and Jujube Tree are already benefitting from the growing segment of health-conscious consumers. The Commune’s proprietor, Xie Lun, seems to share our optimism:

“The People’s LOHAS Commune welcomes everyone who loves nature as long as they observe two simple rules,” Xie says. “The first is no spitting and the second is that other people’s produce must not be taken without their permission. ”

So far more than 400 people, most white-collar workers, have applied to be members of the commune even though it will not officially open until next year.

Although China’s organic food industry is clearly only for affluent locals and foreign residents at this time, this is indeed a trend to watch and get positioned for. China’s own version of Whole Foods of Trader Joe’s may not be far behind.

Categories: Aspiring, China Supertrends, Consuming, Greening
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As a service to our readers and those with an interest in the research reports, academic and statistical data, and media references used in the writing of Supertrends of Future China, the complete Endnotes section is now available online.

Each note is supplemented with a hyperlink (when available) to visit for more information.

The endnotes can be found by clicking here or at the top menu bar, “Book Notes and Excerpts.”

Categories: Announcements
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Just in time for the Olympics, Supertrends of Future China is on shelves now for retail sales in the following bookstores (and will be available in wide-release in the US mid-August):

Singapore

Borders Pte Ltd
Kinokuniya Book Store
Page One Bookshop
MPH Book Store
Popular Book Store
The Commercial Press
Times Newslink
Harris Book Company
Times The Bookshop

Hong Kong

NewsLink (Airport bookshop)

Malaysia

Borders Pte Ltd, Times Square
Times The Bookshop
Kinokuniya Book Store
Nation First Books
MPH Book Store

As before, the book can still be pre-ordered online for immediate delivery in your area when it becomes available, see our list of online retailers for more information or contact us.

Categories: Announcements
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In Supertrends of Future China, we discuss the need for localization of products and services when foreign companies come to China. We take it one step further, saying that products from the Chinese market are going to have a big influence on the lives of people outside of China as well. Think instant noodles or traditional Chinese medicine (TCM) as two early examples. China’s large market will encourage firms to create products suitable for local use, and some of the best will boomerang back. We call this Sinofication.

Back in October last year, Coca-Cola made news in China by establishing a research center specifically for products related to TCM ingredients. This announcement was important for two reasons. First, Coca-Cola showed how important China’s market was by increasing R&D spending there and, second, that the functional foods and beverages category (especially in Asia) is a growing trend.

While the kinds of beverages being developed are still kept secret, they could be standalone products (Coca-Cola makes teas, juices, and bottled water in addition to sodas) or a new variant on the original Coke recipe: Traditional (Chinese Medicine) Coca-Cola, anyone?

In fact the company is in a good position to benefit from a potential Coke-TCM concoction: Coca-Cola, originally containing cocaine from Coca leaves, was created as a tonic (”Coca-Cola Revives and Sustains” - 1905 slogan), and, in China, Coca-Cola is commonly given as a home remedy for some maladies by boiling it together with ginger and lemon, served hot to the patient (this is also a popular drink in many Hong Kong-style restaurants). Coke Adds Life? It may yet, if the TCM research bears fruit.

A recent article illuminated a few new details of Coca-Cola’s plan:

Cao Hongxin, the president of the China Academy of Chinese Medical Sciences, said that the center “has a few projects” with Coca-Cola.

“Generally speaking, we want to create drinks that relieve fatigue and help the body fight off diseases,” he said. “(Coke executives) all hope to develop a Chinese-medicine-based beverage quickly.”

The director of the research center, Zhang Huaying, said of potential TCM-based beverages that “The aim is to be global but the source of the knowledge comes from China.”

We think this is a growing trend. Products influenced by their China localization or innovated from scratch in China will make greater inroads into global markets. Bubble tea, green tea extracts in just about everything from shampoo to anti-cancer preventative supplements, and China-influenced designer bags are just the start. Solar water heaters, solar-powered everything actually, invented elsewhere but perfected in China, are among the country’s next big exports. That, and TCM Coke.

Categories: Book Update, China Supertrends, Servicing
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Huge numbers capture the imagination, while some numbers merely surprise, and still other numbers only reaffirm or validate an expectation. China’s Internet users now top 253 million, the highest globally. This announcement by the China Internet Network Information Center (CNNIC) falls into that final category: After all it was only a matter of time before China’s Internet users surpassed those of the formerly-number-one (and birthplace of the net itself) United States, because China’s overall Internet usage rate even now stands at less than 20 percent, versus more than 70 percent in the US.

Since the time of the Great Wall and its first population estimates, China has been a nation of superlatives. Currently it has the longest bridge, the fastest train, the biggest shopping mall, and so on. We even covered this in Supertrends of Future China as the propensity to over-build infrastructure for

1. expected growth (Bejing’s new T3, the world’s biggest air terminal and building);
2. prestige or attention-getting (how about the once-planned 13-mile concrete dragon project);
3. and lack of financial restraints and stakeholder safeguards (easy lending terms, land grabs).

(In fact, a whole book was recently written about just the urbanization and infrastructure trends alone, the aptly-named Concrete Dragon)

Back to China’s Netizen population, I’m with ImageThief in believing the absolute numbers themselves are not as important the stories behind the data, the context. For example, what exactly are China’s estimated 253 million Internet users doing on the web?

A whole lot of blogging going on

China has more than 107 million blogs and spaces as of the end of June 2008, according to the latest CNNIC survey. This is up from 73 million last November, growing 46.5 percent. Active bloggers have increased to 70 million, up from 47 million last November, growing almost 50 percent in seven months. Who are the most popular bloggers?

Although QQ.com and 163.com are the recognized leaders in blog hosting in China, Sina.com hosts three of the top bloggers: Director/actress/writer/traveler Xu jinglei, singer/actor/writer/race car driver Han Han, writer/model/TV personality Acosta.

Each blogger has more than 170 million accumulated visits, with Xu Jinglei topping 180 million to be China’s (and by some measures, the world’s) most popular online personality.

Other rankings, such as BlogRank.cn, put Bill Gates’ personal blog as the 6th most popular, while a movie review blog written by a Chinese girl named duoduo is ranked number one, followed by another multi-talented actress/model/writer Yang Gongru.

It seems that China’s blogosphere rankings are ruled by the individual, unlike most US rankings, which tend to be dominated by gadget and gossip sites (e.g. Endagadget, Perez Hilton, Gawker) and collaborative works (e.g. The Huffington Post, BoingBoing), or the occasional celebrity blogger (e.g. Rosie O’Donnel).

China’s most popular blogs, on the other hand, retain a kind of casual atmosphere where down-to-earth celebrities write about what’s on their minds without slick product or site tie-ins. In China, monetization of blogger content (a la Google AdWords, or paid sponsorships) is only in its nascent stage and most popular bloggers elect to be site-hosted rather than self-hosted with their own URL. To be sure, some may be paid to post on those sites to draw in advertisers, but very few of the 70 million active bloggers would fall into that category.

Gawker recently lamented that too many people in the US blogged for free; in China, pretty much everyone blogs for free, and parlaying online popularity into real-life money or fame is a still seldom occurrence.

It’s clear to me that China’s blogosphere has much growth potential and opportunities yet to come.

(Come back for part two of this story on Monday.)

Categories: China Supertrends, Inter-Networking
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