Monday, January 17, 2011

Quality bargains: combination for success in China?

Lunch time in Shanghaithe old-style food corner by Fantake via FlickrNo week goes by without somebody passing by (fortunately mostly virtual) with a business idea to get rich in China fast. Or increasingly Chinese who set their eye on Europe. In most cases it takes me no more than two minutes to explain why they are wrong. During my last visits it struck me how many chain enterprises had popped up in the hospitality industry, very different from only a few years ago.
Apart from the old Jinjiang hotel chain and foreign brands, an interesting string of mostly domestic chains asked for my attention. HuaBiHe food chain from Ningbo. The Spicy-joint restaurant in Shanghai. RBT tea houses from Hong Kong. The hotel chain Hanting. All of them were extremely busy, pretty well organized and amazingly cheap. Unlike their often sloppy predecessors, they were reasonably clean and had a good service.
As argued before, the Chinese 'middle class' still has to survive on relative low wages and might be able to afford the high-end services as 5-star hotels only when they have to make an expensive impression; cheaper services might do better in this low-income country. With their relative higher quality, they might attract a younger generation, who also asks for a higher quality.
Next is the question whether those Chinese companies could export their success to Europe and the US. For most of Asia and Africa, that would be a no-brainer. But as the economic crisis is still hurting both the US and Europe, chances for these high quality bargains will increase.
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