Thursday, December 30, 2010
Netizens of the World, Unite!
China's online population might now top 450 million. That figure includes an estimated 277 million who rely on smartphones to access the Internet.
Fighting the Good Fight
The Information Office of China's State Council has released its first-ever white paper regarding the country's anti-corruption efforts. Government corruption is a highly sensitive subject in China and sparks public furor across the PRC blogosphere, despite the government's best efforts to squelch them.
White papers are nice, but I do not expect any fundamental changes to the CPC's approach to date, which has been to scapegoat mid-level officials whenever public opinion appears ready to spark action.
White papers are nice, but I do not expect any fundamental changes to the CPC's approach to date, which has been to scapegoat mid-level officials whenever public opinion appears ready to spark action.
Friday, December 24, 2010
Go West
The old punishments are still the best. Beijing's Vice Mayor has been "reassigned" somewhere in China's remote western region. Politically speaking, that is the equivalent of being transferred to the dark side of the moon. His sin was in bungling the rollout of the city's new traffic-improvement plan. Beijing's subway system has roughly tripled in size since I moved away in 2004, yet street and highway traffic continues its stranglehold, so the city is considering a wide range of aggressive measures to combat the problem. Word that new-car registrations would be severely limited in 2011 led to a rash of panic buying in December and sealed the vice mayor's fate.
Anecdotally, I can attest to the seductive power automobiles have on the "average" Chinese consumer. While visiting Beijing earlier this month, I had dinner with two of the city's newest and proudest car owners. They are friends I have known since 2002, when both worked at my gym. They have since married, bought a dog, and live in a modest apartment block not far from the intersection of the South Third Ring Road and Line 5 of the subway system. They drive a new Chinese model that looks like a 1999 Nissan Sentra and cost roughly US$12,000. While it might be a "status" symbol, the car does not exactly reflect their professional achievement: he has a low-level sales position while she is between jobs as they consider starting a family. Both acknowledged that their parents often help them make ends meet.
Their neighborhood is what I like to call the "real" Beijing: densely settled and thoroughly urban but seemingly cut off from the political, international, historical, academic, diplomatic, economic, post-Olympic, and/or touristic dazzle of much of the city. Bus service is excellent (so long as you don't mind crowds), and taxis are everywhere; even before the subway stretched this far, I could not imagine why anyone would want to own a car here. I tiptoed around the issue and carefully asked when they drove. He shrugged in response as if the answer were obvious: "to work, to the store..." but later conceded his commute can take nearly two hours, roughly twice as long as by public transportation.
Whatever the motivations, they seem to be shared by many of my friends' neighbors. The small square wedged between their apartment block and its twin was never designed to accommodate anything more than foot traffic but is regularly jammed with more than a dozen parked cars.
Automakers are not as alarmed by the prospect of new restrictions as one might imagine, apparently because they cannot satisfy current demand.
Anecdotally, I can attest to the seductive power automobiles have on the "average" Chinese consumer. While visiting Beijing earlier this month, I had dinner with two of the city's newest and proudest car owners. They are friends I have known since 2002, when both worked at my gym. They have since married, bought a dog, and live in a modest apartment block not far from the intersection of the South Third Ring Road and Line 5 of the subway system. They drive a new Chinese model that looks like a 1999 Nissan Sentra and cost roughly US$12,000. While it might be a "status" symbol, the car does not exactly reflect their professional achievement: he has a low-level sales position while she is between jobs as they consider starting a family. Both acknowledged that their parents often help them make ends meet.
Their neighborhood is what I like to call the "real" Beijing: densely settled and thoroughly urban but seemingly cut off from the political, international, historical, academic, diplomatic, economic, post-Olympic, and/or touristic dazzle of much of the city. Bus service is excellent (so long as you don't mind crowds), and taxis are everywhere; even before the subway stretched this far, I could not imagine why anyone would want to own a car here. I tiptoed around the issue and carefully asked when they drove. He shrugged in response as if the answer were obvious: "to work, to the store..." but later conceded his commute can take nearly two hours, roughly twice as long as by public transportation.
Whatever the motivations, they seem to be shared by many of my friends' neighbors. The small square wedged between their apartment block and its twin was never designed to accommodate anything more than foot traffic but is regularly jammed with more than a dozen parked cars.
Automakers are not as alarmed by the prospect of new restrictions as one might imagine, apparently because they cannot satisfy current demand.
Hazard a Guess
The Economist has a cute interactive graph with which to predict--using real GDP growth, inflation, and yuan appreciation as variables--when China will overtake the United States as the largest economy in the world.
Monday, December 20, 2010
Same Song, Second Verse
The story of China's huge strides in the field of green technology lacks the 'warm and fuzzy' feeling it might otherwise have because the PRC is employing its proven strategy of exacting big technology transfers from foreign investors while propping up Chinese competitors.
This pas de deux has, on the one side, overzealous multinationals who just can't say no in the face of China's growth opportunities, while on the other, China applies layers of technical standards and registration procedures that, according to most MNCs, force applicants to divulge much of their proprietary information.
This pas de deux has, on the one side, overzealous multinationals who just can't say no in the face of China's growth opportunities, while on the other, China applies layers of technical standards and registration procedures that, according to most MNCs, force applicants to divulge much of their proprietary information.
Friday, December 10, 2010
Going Upscale
During my recent visit to Beijing, there were pockets of the city that I recognized as being unchanged since at least 2003, but large sections were stunningly transformed in the run-up to the 2008 Olympics. Unlike the city's pre-WTO growth, when changes could be measured largely by new fast food restaurants, supermarkets, and apartment towers, the latest transformation is characterized by "top-quality" office space and luxury-brand retailers.
The story behind Beijing's rise as a 'city of the world' had always been marked by its short supply of quality office space. The story behind The China World Trade Center, if ever it is told, could be summed up as a license to print money. Opened in 1990, China World was the address for anyone looking to open a representative office in China to await the next big thing (be it MFN status, PNTR designation, WTO entry, or whatever). If you weren't there, you were nowhere.
Developers were quick to meet the excess demand, but while they succeeded in scooping up most of the city's prime real estate, the buildings they constructed typically fell woefully short of world-class standards. Sci-Tech Plaza is an example. It is an easy walk from Tiananmen Square along Beijing's main thoroughfare and sits adjacent to the Second Ring Road (one of several concentric expressways surrounding the city; the Second Ring more or less tracks the old city wall, the "first" ring is, presumably, the moat around the Forbidden City). When new, the complex was merely an eyesore. Years later, it is a depressing combination of sooty, crumbling exterior tile and oversized billboards. Still, its retail wing is home to such brands as Burberry, Armani, and Bentley Motors. The office units are as resplendent or as neglected as their tenants desire, but the common areas are cramped and showing their age. One occupant, a global marketing/PR firm I met with, was counting the days until its scheduled move to a new tower in the heart of Beijing's CBD, which overlaps the eastern section of the Third Ring Road and is anchored by the ageless China World. Despite its off-center location, the CBD is now the closest thing this sprawling city has to a "downtown".
Amazingly, Sci-Tech is a gargantuan success in comparison to the Henderson Centre, its neighbor just inside the Second Ring Road and even closer to Beijing's historical and political nucleus. Entering the building causes a pang of claustrophobia, as the ceilings are remarkably low and the floor plan downright labyrinthine. Its location next to the city's main rail station means a steady stream of humble Chinese travelers (read: peasants) course through the complex at all hours looking for restrooms. Tenants began to flee both the office and retail sections as early as 2002, which was roughly the time that A&W abandoned the food court, and apparently China altogether. That location was my first and only experience with A&W fare, and I can only imagine key elements were lost in the company's "translation" to the China market. Even when starved for comfort food, the burgers were a disappointment and left me deeply chagrined when Chinese colleagues asked, "Is this what people eat in your country?"
My first trip to Beijing in 1996 was punctuated by my many dealings with the city's sellers of counterfeit goods--everything from "jade" trinkets to "Norwegian" sweaters. I browsed pirated CDs in the gutted, two-story ruins of a lot that is now home to the LG Twin Towers. The infamous Silk Alley, once an open-air market of fake North Face, Nike, and Levi's products, among many others, has been reborn as a four-story megamarket of more than 1,000 vendors. Behind a thin veneer of IPR respectability lies most of the same stuff that was available in the good old days. All you have to do is ask.
But while Silk Street remains a high-profile embarrassment (the northern tip of the original "alley" emptied onto the doorstep of the former U.S. embassy), it is not representative of China's overall IP problem. Fake pharmaceuticals, pirated software, shoddy building materials and machine parts marketed as international brands, to say nothing of the many "genuine" products that are tainted by harmful additives, solvents, and other chemicals, are the real danger. Silk Street is a quaint novelty in comparison. Moreover, foreign tourists are its biggest customers.
There is reason for hope, however. As they did with China's overall economic development, the country's upper and upper-middle classes will eventually lead the way to better IP protections and heightened consumer safety. For all the talk of China being a "classless" society, the average Chinese professional is as status-conscious and brand-aware as any Manhattanite. iPhones, Mont Blanc pens, designer bags, Swiss watches, and coffee at Starbucks are some of the many "subtle" ways that upwardly-mobile Chinese flaunt their wealth. A stroll through Beijing's newest department stores had me Googling several brand names previously unknown to me, only to discover that they are among the tops in European fashion.
In my hasty crisscrossing of Beijing's Dongcheng and Chaoyang districts, I didn't see any McDonald's or KFCs that hadn't been there since at least 2004, but those looking for the latest from, say, Luis Vuitton, now have at least three boutiques to choose from (not counting the airport shopping gallery). And Beijing has joined the short list of cities worldwide that feature an Armani "concept" store. When Chinese yuppies shop, they want the genuine article and are increasingly able to afford the very best.
We are a long way from ridding the shelves of China's rural markets of boxes of "Colaate" brand toothpaste or "Heed and Sholders" shampoo, but I predict a trickle-down effect from the absurd heights of Beijing's conspicuous consumption.
The story behind Beijing's rise as a 'city of the world' had always been marked by its short supply of quality office space. The story behind The China World Trade Center, if ever it is told, could be summed up as a license to print money. Opened in 1990, China World was the address for anyone looking to open a representative office in China to await the next big thing (be it MFN status, PNTR designation, WTO entry, or whatever). If you weren't there, you were nowhere.
Developers were quick to meet the excess demand, but while they succeeded in scooping up most of the city's prime real estate, the buildings they constructed typically fell woefully short of world-class standards. Sci-Tech Plaza is an example. It is an easy walk from Tiananmen Square along Beijing's main thoroughfare and sits adjacent to the Second Ring Road (one of several concentric expressways surrounding the city; the Second Ring more or less tracks the old city wall, the "first" ring is, presumably, the moat around the Forbidden City). When new, the complex was merely an eyesore. Years later, it is a depressing combination of sooty, crumbling exterior tile and oversized billboards. Still, its retail wing is home to such brands as Burberry, Armani, and Bentley Motors. The office units are as resplendent or as neglected as their tenants desire, but the common areas are cramped and showing their age. One occupant, a global marketing/PR firm I met with, was counting the days until its scheduled move to a new tower in the heart of Beijing's CBD, which overlaps the eastern section of the Third Ring Road and is anchored by the ageless China World. Despite its off-center location, the CBD is now the closest thing this sprawling city has to a "downtown".
Amazingly, Sci-Tech is a gargantuan success in comparison to the Henderson Centre, its neighbor just inside the Second Ring Road and even closer to Beijing's historical and political nucleus. Entering the building causes a pang of claustrophobia, as the ceilings are remarkably low and the floor plan downright labyrinthine. Its location next to the city's main rail station means a steady stream of humble Chinese travelers (read: peasants) course through the complex at all hours looking for restrooms. Tenants began to flee both the office and retail sections as early as 2002, which was roughly the time that A&W abandoned the food court, and apparently China altogether. That location was my first and only experience with A&W fare, and I can only imagine key elements were lost in the company's "translation" to the China market. Even when starved for comfort food, the burgers were a disappointment and left me deeply chagrined when Chinese colleagues asked, "Is this what people eat in your country?"
My first trip to Beijing in 1996 was punctuated by my many dealings with the city's sellers of counterfeit goods--everything from "jade" trinkets to "Norwegian" sweaters. I browsed pirated CDs in the gutted, two-story ruins of a lot that is now home to the LG Twin Towers. The infamous Silk Alley, once an open-air market of fake North Face, Nike, and Levi's products, among many others, has been reborn as a four-story megamarket of more than 1,000 vendors. Behind a thin veneer of IPR respectability lies most of the same stuff that was available in the good old days. All you have to do is ask.
But while Silk Street remains a high-profile embarrassment (the northern tip of the original "alley" emptied onto the doorstep of the former U.S. embassy), it is not representative of China's overall IP problem. Fake pharmaceuticals, pirated software, shoddy building materials and machine parts marketed as international brands, to say nothing of the many "genuine" products that are tainted by harmful additives, solvents, and other chemicals, are the real danger. Silk Street is a quaint novelty in comparison. Moreover, foreign tourists are its biggest customers.
There is reason for hope, however. As they did with China's overall economic development, the country's upper and upper-middle classes will eventually lead the way to better IP protections and heightened consumer safety. For all the talk of China being a "classless" society, the average Chinese professional is as status-conscious and brand-aware as any Manhattanite. iPhones, Mont Blanc pens, designer bags, Swiss watches, and coffee at Starbucks are some of the many "subtle" ways that upwardly-mobile Chinese flaunt their wealth. A stroll through Beijing's newest department stores had me Googling several brand names previously unknown to me, only to discover that they are among the tops in European fashion.
In my hasty crisscrossing of Beijing's Dongcheng and Chaoyang districts, I didn't see any McDonald's or KFCs that hadn't been there since at least 2004, but those looking for the latest from, say, Luis Vuitton, now have at least three boutiques to choose from (not counting the airport shopping gallery). And Beijing has joined the short list of cities worldwide that feature an Armani "concept" store. When Chinese yuppies shop, they want the genuine article and are increasingly able to afford the very best.
We are a long way from ridding the shelves of China's rural markets of boxes of "Colaate" brand toothpaste or "Heed and Sholders" shampoo, but I predict a trickle-down effect from the absurd heights of Beijing's conspicuous consumption.
Subscribe to:
Posts (Atom)