“It is estimated that nearly 60 million children are left behind in rural hometowns while one or both parents work in manufacturing or city jobs. “

~ from Chapter 6 of China’s Economic Supertrends by Jason Inch

]]> http://www.chinasupertrends.com/photo-of-the-day-chinas-floating-population/feed/ 0 http://www.chinasupertrends.com/todays-links-chinas-stimulus-plan-surge-in-luxury-brand-sales-bright-acquires-weetabix/?utm_source=rss&utm_medium=rss&utm_campaign=todays-links-chinas-stimulus-plan-surge-in-luxury-brand-sales-bright-acquires-weetabix http://www.chinasupertrends.com/todays-links-chinas-stimulus-plan-surge-in-luxury-brand-sales-bright-acquires-weetabix/#comments Mon, 14 May 2012 01:46:12 +0000 news http://www.chinasupertrends.com/?p=594 Despite the fact that many luxury and electronic brands such as Apple are experiencing growth in sales, “consumption in China is actually severely depressed…To reduce taxes and stimulate consumption, China will likely increase the minimum deductible salary, increase wages and give more subsidies  or tax cuts to small and medium enterprises.”
(Chapter 1 of China’s Economic Supertrends).

Today’s China links:

• Chinese Food Company takes a big bite out of Weetabix
• US Treasury Secretary urges China to focus on domestic consumption to sustain China’s economic growth
• Shanghai Disneyland spurs increase in foreign direct investment into the city
• Temasek to sell $2.4bn in shares in its Chinese banks as profits at banks slow
• Luxury brands in China experience surge in sales
• Canadian farmers looking to milk China’s high demand for grains and oilseeds
• China kickstarts stimulus plan in response to signs of weakening economy
• In the meantime, the Wall Street Journal are skeptical of the stimulus plan’s effectiveness

Photo credit: Han Yi

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“Monthly auctions during the last two years saw high demand and high prices for plates.  In fact, the price of a plate can be as much as eight to 16 months’ salary for a typical office worker… Sixes and eights are important in Chinese numerology, so plates with auspicious numbers such as 888 are even more expensive and can go for astronomical amounts.”

~ from Chapter 6 of China’s Economic Supertrends by Jason Inch

Photographer: Han Yi

China’s Great Firewall will continue to face challenges in the future.  In the meantime, Mongolia may be putting up its own walls to stem the flow of Chinese foreign investment.

Today’s China News Links:

• US and Chinese film industries join forces to build Chinawood, a $1.27 bn movie making complex in Tianjin.
• China’s PMI rises indicating re-energizing of manufacturing output.
• Resource rich Mongolia  suspends exploration and mining activities at flagship mine in a possible  move to wean itself off from Chinese foreign investment.
• GE shifts attention from China to Australia.
• Netizens at the great firewall. Deadline for real-name registration on microblogging sites passes without a hitch…for now.
• The incredible shrinking trade surplus.

Art Scene in China

Today’s Links:

• China to become the next art superpower?
• The auto industry ramps up production of luxury cars in China. On a related note, GM will also open an additional 600 dealerships as well.
• Huawei’s net profit falls by 53 %
• Chinese manufacturers begin to experience a rebound
• Hollywood’s move to the East to hit a possible roadblock with bribe investigations
• LVMH launches new site to reach Chinese consumers
• The Lancet’s China themed issue takes a look at the healthcare system

Photo credit: nuomi

"China is simply crazy for cars. With just over 100 private motor vehicles per 1,000 people (versus 750 cars per 1,000 in the United States and 120 per 1,000 globally) China's personal car ownership market is expected to grow quickly." - Jason Inch (Chapter 5 - The New Manufacturing Supertrend, pg 181)

Photo credit: China Supertrends Photography Project

Here are today’s China’s news links:

• The property bubble deflates as home prices continue to fall
• Scrimp or splurge syndrome: the real spending habits of China’s middle class
• China’s TCL partners with IKEA to make the UPPLEVA
• Those in rural dwellers will suffer the most from the upcoming demographic crisis
• China to offer a crude-oil futures contract
• A growing number of U.S. film studios are teaming up with Chinese studios but what kind of issues lie ahead?
• Goldman Sachs to sell $2.3 billion stake in ICBC
• The Economist talks about the issue of water shortage in China
• Mini electric cars are a hot sell amongst lower-income buyers in China while Ford drives expansion in China with new plants. As indicated by the demand for license plates and as mentioned in the New Manufacturing Supertrends chapter, the demand for cars in China continues to grow.

One article which is an especially good overview of the book is by the Global Times reporter Shen Shushu. An online edition of the article can be found at this link. However, a PDF which includes some of the photos from the China Supertrends Photography Project, is also available here:

Global Times – Show me the money – China’s Economic Supertrends – April 16 2012

If you are thinking about reading China’s Economic Supertrends, check out Shen Shushu’s article today.

Here are today’s China links:

• China’s domestic consumption to rise 15 % and drive growth in 2012
• China Construction Bank’s growth expected to slow down despite rise in profits
• Chinese airlines begin to target international markets with expansion abroad
• Meanwhile, China Eastern and Qantas join forces to set up a budget airline
• Apple’s Tim Cook visits China
• Huawei to ask Australia to reconsider them for a broadband project after being banned

From Voxy.com

• The Globe and Mail takes a look at the counterfeit wine trade in China.
• China moves to make the yuan more international by allowing  Japan to purchase 10 billion in state bonds. In the meantime, China also moves to push economic reforms.
• Trade tensions unearthed between the United States and China regarding the export of rare earth metals. Update: It may be too late.
• Politicians in China begin to make campaigning moves. Let the games begin.
• Popular online video companies Youku and Tudou to merge.

Photo credit: DavidDennisPhotos.com

China links of the day:

• China move towards giving freer rein to the yuan.
• China’s high-speed rail ambitions receives another setback as a section of a high-speed rail line collapses in Hubei province.
• BMW’s profits reach all time high thanks to demand from China.
• China’s trade deficit raises concerns.
• The World Bank releases a report called “China 2030: Building a Modern, Harmonious, and Creative High-Income Society” which highlights risks that the Chinese economy will face and urges China to consider major reforms.
• Chinese government working on easing inflation.

That company, of course, is China’s bellwether Huawei Technologies – fuel to the fire for Huawei’s famed ‘wolf-culture‘ of hard work, passion, and ruthless competition.

I thought this news about Huawei was worth posting because it is a significant globally-recognized data point supporting the trend of China’s drive to be more innovative. In Supertrends of Future China, we noted China’s increased spending on R&D through its universities and research institutes (in various public and public-private partnerships), increased domestic patent filings, and relocation of multinational R&D centers to China (especially after new tax credits were introduced in 2007 / 2008′s revamping of corporate tax policy). All of these are indicators of a concerted effort to make China a more technology-intensive country, with two caveats.

First, it should be noted that WIPO patent filings are not an accurate reflection of domestic patent applications or patents granted overall. WIPO’s ranking refers to patents filed under the Patent Cooperation Treaty (PCT), in which a patent must be successfully filed in a signatory country or region before it is accepted under WIPO’s PCT for global protection. The PCT system enables the filing company to protect its intellectual property in 153 Contracting States with a single application, thereby significantly reducing costs and partially solving the problem of establishing and protecting IP in foreign territories.

Second, in terms of the individual company patent filings, Huawei coming in first for the first time does not necessarily indicate a broader trend of Chinese companies becoming more innovative. Filing under WIPO’s PCT could merely indicate how aggressively a company intends to defend patents abroad. WIPO’s PCT makes this much easier, as mentioned in the previous paragraph. Furthermore, a precipitous decline in patent filings in 2008 by Philips and Panasonic was more likely the true cause of Huawei’s placing first. With only one other Chinese company – ZTE - in the top 100, China’s strength in patenting versus that of global competitors is still negligible.

However, is there any additional evidence concerning patents that supports the contention that China is indeed becoming more innovative? For that, you could look to domestic applications and patents granted by the State Intellectual Property Office (SIPO). In this regard, China appears to be getting more innovative, with about 317,000 patents granted overall in 2008 (Jan – Nov 2008), up from about 301,000 patents granted in 2007 (Jan – Dec 2007). If you go back further, to 2006, less than 224,000 patents were granted. Globally, China ranks number three in patent-intensiveness, ahead of Germany and Korea (and behind world-leaders US and Japan).

All of the above figures, it should be stated, do not speak to the quality of the patents, and I have not provided a breakdown of patents by type (inventions vs. incremental improvements, for example), but an examination of the data on SIPO’s statistics page does show increases in invention and design patent categories that are slower than overall patent growth in China. Therefore one conclusion might be that China’s large number of patents filed owes more to brute force improvements rather than quality innovation.

Also, it will take China some time to reach the state of the art, but this is still a good indicator of progression on China’s long march up the global value-chain.

Chalk one more up for Huawei’s wolf-culture. At least for now, it is leader of the pack.

According to the article, which profiled the creator Wu Yongjian, a professor of design,

Chinese culture needed to be the essential element to embody the spirit of World Expo 2010. “A large number of mascot designs to express Chinese culture were inspired by images of pandas, monkeys and dragons, etc,” says Wu. “What I did was try to find another way to interpret China, a more abstract way.”

Perhaps referring to the Olympic Fuwa as an example of the oft-overused panda design motif, Wu’s explanation of how Haibao was conceived answers some of the Netizen-led criticisms of it apparently being the figment of the designer’s TV-addled mind.

After several changes to the initial submission of the Haibao character were made, a design was finalized that incorporated the imagery of the Chinese character ren – 人 – in the color of ocean blue, perhaps connecting the mascot to the host city Shanghai (the character for Shanghai’s hai is also one of the characters in Hai bao). Indeed, the deeper meaning of the mascot was expressed in the article in this way:

Like an ocean, Haibao symbolically represents a city where all values and ideologies can coexist.

Ummm, ok. Back in September 2008 John Pasden of the Sinosplice blog discussed how the five Olympic Fuwa of Friendliness were finally fading into obscurity. Today only the echoes of their alliteration remain, signaling the impermanence of all things. To John’s dismay however, in Shanghai the Fuwa have been replaced by the emergence of Haibao. As of late, Haibao is indeed everywhere. (The charmingly creative installation pictured above was found bordering the Jing’an Sculpture Park).

But back to the subject of the Shanghai Daily article, Haibao’s origins, Wu Yongjian’s dilemma is this: From the release of Haibao back in 2007, the creator has been accused by Netizens of the Chinese blogosphere of, to put it kindly, being influenced by Growing Pains, the classic 80s TV show, which became one of China’s most popular TV imports.  Ask any 80s or 90s-generation Chinese and they’ll likely know Chengzheng de Fannao and might even remember how Ben Seaver’s room was decorated:

Western readers will recognize the character on Ben’s wall as Gumby, an American icon of rubbery fun, so it is perhaps more correct to say the designer was influenced by Gumby rather than Growing Pains, but Mr. Wu is not going to come out and say, “Yes, I copied it!” The Daily article gives a measured and authentic-sounding explanation for how Haibao evolved, but the true initial conception of Haibao may never be known except to Mr. Wu himself. I am willing to give him the benefit of the doubt. Nevertheless, China has a large number of similar-looking logos and trademarks that could stand a bit of re-branding, in my opinion.

Although it is not exactly a Supertrend in and of itself, we put  the need for more brand development into our book’s chapter on the evolution of the service and retail sectors in China. I was also discussing this with a new friend who moved to Shanghai and set up shop as a brand consultant last year. Business is going well.  If you’re looking for a good brand-builder, drop me a line and I’ll put you in touch. I will also follow the topic of branding in a later post.

Happy Chinese New Year.