ZHONG GUO - THE MIDDLE KINGDOM

ZHONG GUO - THE MIDDLE KINGDOM
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Oct 22, 2009

A Consumer Paradigm for China by McKinsey Quarterly

China's stimulus package has certainly helped to keep its economy afloat. However, long term behavioral changes within the people need to occur to continue China' economic growth. Industrialization and export intensive industries allowed China to develop into one of the largest economies in the world over the past 3 decades. To continue what has become "the norm" of annual double digit growth, habits must change.

Much of China's high savings behavior is a result of centuries or even millennia of uncertainties created by the government. As a result, stuffing money is your mattress was one of the only ways to guarantee future survival. Given the upheavals of The Great Leap Forward and Cultural Revolution, more recent policies, obviously, have not done much to assuage their fears.

Clear steps need to be taken to make sure that this strategy is taken in order to continue to fuel China's economy.

To be continued...

Sep 5, 2009

Made In China - The People's Republic of Profit




This is one of most interesting videos regarding China's growth over the past 10 to 20 years. One of the most staggering facts is that there are over 400,000 millionaires in China! The segment on golf courses in China was of particular interest to me as I run my family's golf course business. Being able to charge $250,000 in dues alone and having over 200 rounds a day is unheard of in the US. Most golf courses in the US, especially in this economic time, are struggling to get even 100 rounds a day. The amount of wealth the Chinese have created (and saved) to be able to afford such an expensive sport literally blows me away. I wish some of them would move to our neck of the woods and help support Westport Golf Club and River Oaks Golf Club.

Aug 25, 2009

China's Consumption Challenge by McKinsey Quarterly

May 28, 2009

Is China recession proof? from McKinsey Quarterly




Haven't been blogging enough lately, but have been really busy. This is a great piece on China's economy and future. Had to share.

Apr 21, 2009

The Art of Doing Business in China - China Prime - Youtube of Today Show Interview




In a post from last year, The Culture Effect, I discussed the importance of viewing things in a "Chinese way". The Today Show interview with JWT China CEO, Tom Doctoroff, illustrates and reinterates the points made in my article. Trust being of utmost importance and along side it hierarchy.

Other seemingly superficial acts can destroy a potential relationship such as the business card exchange. In the US, we swap business cards daily and barely give them a second glance. In China, it is important to take the card with both hands and carefully review the information as shown in the video. Hierarchy and the importance of showing leadership are also touched upon in the interview. Charisma is important in dictating a sense of leadership.

Trust is the basis of all Chinese dealings and relates directly with guanxi. In order to develop a sense of trust, a true relationship must be formed and nurtured. While this might not translate into the Western version of friendship, it should be an integral part of the strategy of doing business in China.

This strategy has, of course, come under serious scrutiny due to the intense and overt corruption that can be found in all elements of Chinese society from the government to the local neighborhood. Therefore, it is imperative that meticulous steps are taken to avoid bribery and other non-kosher behavior.

Apr 15, 2009

The Right Way(s) and the Wrong Way(s) to Invest in China « ChinaLuxCultureBiz

Interesting article discussing the possibilities and risks of investing in China.

The Right Way(s) and the Wrong Way(s) to Invest in China « ChinaLuxCultureBiz: "The Right Way(s) and the Wrong Way(s) to Invest in China"

Apr 14, 2009

Apr 2, 2009

Can China Save the World? Far Eastern Economic Review Weighs In

The recent announcement of China's stimulus package has raised hopes around the world that China will be able to bankroll the US and the rest of world. This article tackles the issues behind the downturn such as decreasing consumption--both on a consumer and merchant level. With more and more companies scaling back and laying off, the rate at which government spending can counteract these forces is likely to have little short term effect.

Consumers increased fear of markets creates additional dilemmas. The recent banking industry scandals has made some want to stash their money under their mattress rather than investing or depositing it. The Chinese have long had this fear which has led to high savings rates. It is likely even higher than actual estimates due to unreported "mattress savings". Individuals not spending is what further hinders the recovery process because it prohibits firms from spending. So a vicious cycle is in-process. The real question is "How do you restore confidence so that all people starting spending again?" And, not, spending on credit but with cash.

Apr 1, 2009

Who will China learn from now?

Who is China learning from now?
from China Rises: Notes from the Middle Kingdom by Tim Johnson
Here’s a little ditty making the rounds about China’s evolution over the decades:

Mao Zedong and the first-generation leaders decided to learn from the Soviet Union – and the Soviet Union collapsed.

Deng Xiaoping and the second-generation leaders decided to learn from Japan (East Asia miracle) – and Japan has been in stagnation.

Jiang Zemin and the third-generation leaders decided to learn from the United States (market economy) – and the United States is virtually bankrupt.

Hu Jintao and the fourth-generation leaders decided to learn from ... who's next?

What makes this comparison so interesting is that China hasn't collapsed, stagnated, or gone bankrupt. I think the ultimate lesson is that adaptability and flexibility are keys to running any successful entity.

Mar 31, 2009

More research on Guanxi and differences between US and Chinese manager

http://www.people.hbs.edu/rchua/Guanxi%20vs%20Networking%20JIBS.pdf

http://hbswk.hbs.edu/item/6129.html

When I first starting blogging, I posted many articles on what guanxi entailed and how the differences between US and Chinese managers affect business. These articles provide additional insights.

Check out my first posts for more information:

http://www.chinabizstrategy.com/2008/01/culture-effect.html

Mar 21, 2009

Corruption in China--from covert to overt

http://tinyurl.com/cqdk9a

I am a huge fan of massages and in China, you just can't get much better than a $10 massage. However, using public funds to support this habit is absolutely ridiculous. The CCP has done some pretty amazing things for China. Bringing a majority of its citizens out of absolute poverty is HIGHLY impressive. Checks and balances on deliberate abuses of power need to be put in place. Much like they need to be put in place in the States. Outrageous bonuses to incompetent executives comes to mind. So many have lost so much all due to incompetent individuals being put in positions of power. If we, as US citizens, aren't able to control gross abuse of power, why is it that expect authoritarian regimes to do the same? Are China's systems and US systems really that much different? It all seems like different colors on the same cat, if you ask me.

Mar 18, 2009

China still uncomfortable with foreign ownership or antitrust?

http://tinyurl.com/d6h6b5

China recently rejected Coke's move to acquire its largest beverage makers siting anti-trust reasons. Many think this is due to fear of foreign ownership. However, would the US allow Coke to overtake another large beverage maker? I doubt it. Although, it would've likely resulted in a lucrative business deal--doesn't it prevent some element of competition?

Mar 8, 2009

Interesting Asian fashion

http://tinyurl.com/3dhfm6


Seriously, what is up with Japanese fashion??

Mar 6, 2009

US and Chinese habits--Need to change to turn around the economy?

http://burnurl.com/pBXL3s

http://tinyurl.com/c2vsur





A couple of interesting articles regarding stimulus packages, US and Chinese habits, and how it is necessary for both to change.

Jan 9, 2009

Video from McKinsey Quarterly: What's Holding China Back?



Long Yongtu discusses in this video several of the factors that have prevented China from expanding its own businesses abroad. Several keys points include: unfamiliarity with rule of law and Western legal norms, mores, and standards, transparency issues--traditional Chinese society has been based almost exclusively on guanxi and lack of transparency, and the tendency for Chinese to stick together and not integrate themselves into different cultures (the example given is the plethora of Chinatowns one finds abroad).