Guanxi dies or gets into prison; the Fredy Bush case - Wei Gu

Guanxi used to be a key word when foreigners came to China to do business, including business women Fredy Bush, the founder of Nasdaq-listed Xinhua Finance, a successful deal in the tough media industry. Wealth editor Wei Gu explains for the WSJ why the now-jailed tycoon could not survive now times have changed.

Wei Gu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.

+China Weekly Hangout 

Foreign firms have a hard time in adjusting to the fast changing times in China, where consumers and government rules become more important than guanxi, the connections with the powerful. In the China Weekly Hangout on January 30, 2013, panelist +Richard Brubaker of Collective Responsibility and +Andrew Hupert, expert on conflict management in China, discussed the changing playing field for foreign companies. Moderation: +Fons Tuinstra of the +China Speakers Bureau. Including references to Apple, Mediamarkt, Foxconn and many others.

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Doubling Apple stores is just not enough - Shaun Rein

Shaun Rein

Battling a slowdown in Apple's China sales by doubling the number of outlets might just not be enough, tells retail analyst Shaun Rein in Bloomberg. Apple is facing “serious political headwinds”.

Bloomberg:

Concerns that Apple’s growth is slowing globally were reinforced by a forecast for sales this quarter that may miss analysts’ predictions by as much as $4.9 billion. In China, where Apple has 11 outlets, the company has been criticized in state-run media over the quality of its after-sales service compared to that provided in the U.S. 

“Doubling stores over two years is simply not enough,” said Shaun Rein, managing director of China Market Research Group in Shanghai. “Their sales growth is really collapsing.” 

Apple is facing “serious political headwinds” that may make it more difficult to get permits to open new stores, Rein said. Cook’s plan is well off the pace set by former head of retail operations Ron Johnson, who set a target of 25 stores by February 2012. 

Apple opened its first Chinese store in Beijing’s Sanlitun district in 2008. Johnson left Apple in 2011 to becomeJ.C. Penney Co. (JCP)’s CEO, a role he was ousted from this month.

More in Bloomberg.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.


+China Weekly Hangout
Many foreign firms fail in China. The China Weekly Hangout discussed in January 30, 2013 a range of failures  with panelist +Richard Brubaker of Collective Responsibility and +Andrew Hupert, expert on conflict management in China. Moderation: +Fons Tuinstra of the +China Speakers Bureau. Including references to Apple, Mediamarkt, Foxconn and many others.

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Apple's iTunes conundrums - Ben Cavender

Ben Cavender

Apple got itself into trouble with the government last month, but a bigger fight is looming, says business analyst Ben Cavender in Quartz. First, the Chinese government has noted Apple iTunes does not comply with its censorship regime. And convincing Chinese consumers they have to pay for content might even be a larger barrier for business. 

Quartz:

But there is little chance that anything related to Apple’s businesses in China—its second-largest market after the United States—will stay under the radar now. 

“It’s almost like a glitch in the Matrix … they’ve sort of used up their luck in terms of not being noticed,” said Ben Cavender, associate principal at China Market Research Group in Shanghai. “I wouldn’t be surprised if Apple comes under much more pressure to conform and toe the line in terms of censorship and getting approval from the government for what’s in their store.” 

However, a bit more censorship in China might not be disastrous for Apple, provided it can navigate the treacherous PR and government relations challenges like those it encountered this week. A far bigger hurdle will be getting Chinese consumers to actually pay for apps, music, and video. 

“The biggest problem is getting people to pay for content. A lot of people are jailbreaking their phones and getting copycat programs, or popular games with their features stripped out,” he said.

More in Quartz.

Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Getting around China's internet censorship is also a challenge for both businesses and individuals. The China Weekly Hangout discussed the problems in using VPN's in December 2012 with Sam Xu, John R. Otto, Gabriel Rueck and Fons Tuinstra; are the recent hiccups in VPN-usage just tests? Has China a kill button for the internet and will it use it? Or will there be a two-class internet, one for corporate users, and one for home users?
An overview of all hangouts you can find here. 

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iTunes: Apple's Trojan horse - Jeremy Goldkorn

Jeremy Goldkorn

China is Apple's largest market, and internet watcher Jeremy Goldkorn explains in China File why its troubles are far from over, after the recent upheaval about the Chinese media attack on its customer' service. The state-sponsored attacks will continue, he tells, for example on its vulnerable iTunes service.

Jeremy Goldkorn:

China is the major part of [Apple's] growth plans, and they need to do everything they can to stop hostile attitudes towards their company and products from the Chinese government and official media. I don’t think Chinese consumers are very upset about the problems CCTV exposed, but the government could very easily make Apple’s China dreams impossible to realize. 

If Apple does not act contrite, there are thousands of other issues that CCTV or other state actors could attack them on, starting with the apps and content on their iTunes store: To this day the iTunes is the greatest Trojan horse of foreign content that any foreign media or tech company has managed to sneak into the People’s Republic without serious scrutiny. 

Despite the apology, I expect Apple will continue to meet hostility from official organs in the coming years - their government and public relations teams are going to have to earn their keep.

More in China File.

Jeremy Goldkorn is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

China's media are changing very fast, not only at home, but also expand into the rest of the world. The China Weekly Hangout discussed on March 7 how they try to conquer Africa. A session with  veteran journalists Eric Olander of the China Africa Project, and Lara Farrar, previously working for both the China Daily and CNN. Moderation by Fons Tuinstra, president of the China Speakers Bureau.

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Apple was wrong to apologize to Chinese consumers - Shaun Rein

Shaun Rein

Apple apologized on April 1 to its consumer in China for flaws in its service, after weeks of attacks by China's state-owned media. Wrong, says business analyst Shaun Rein to Bloomberg. "Consumers would China to deal with pollution rather than Apple. By the apology the attacks got some credibility."

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

The +China Weekly Hangout is Thursday April 4 going to focus on Xi Jinping's upcoming tenure. Which of the 14 subjects discussed during the recent NPC do you think at important. See here our survey and announcement. Here you can register for the event.

Earlier we discussed already one of the issues: food security and dead pigs, in our session two weeks ago with +Richard Brubaker , +Andrew Hupert , +Chris Brown , moderated by +Fons Tuinstra

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Apple is the new Blackberry in China - Shaun Rein

Shaun Rein

Apple's Tim Cook might have been visiting telecom giant China Mobile, but business analyst Shaun Rein explains in Bloomberg why a deal is very unlikely. "Apple might become the Blackberry of China." 

Apple needs telecom giant China Mobile more than China Mobile needs Apple, according to Shaun Rein. China Mobile is in the driver's seat and that does not fit the current business model of Apple. 

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.  

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Road free for Apple's iPad after legal settlement - Shaun Rein

Shaun Rein

Apple settled for US$ 60 million legal IP claims from a Chinese firm against the usage of the name iPad. A fraction of the US$ 400 million the company asked, but took away a legal roadblock for the US company in China, says business analyst Shaun Rein in Fin24.

Fin24:

Analysts said the Chinese government wanted the matter resolved, wary of the damage a ruling against Apple could do for the foreign business climate in China. 

It is rare for a Chinese enterprise to accuse an overseas firm of trademark breaches - although foreign companies frequently complain of intellectual property rights violations in China. 

"It was clear the Chinese government would prefer a settlement," said Shaun Rein, managing director for Shanghai-based China Market Research Group. 

"For Apple, it's a cheap settlement. For Proview, they just needed the cash." 

The legal battle did not halt sales of the iPad through Apple's five retail stores in mainland China, its online store and many licensed dealers. 

But, amid uncertainty over how the Chinese courts would rule, the row loomed as a potential huge roadblock for Apple if it lost. 

Rein said the settlement should allow Apple to focus more clearly on China. 

"Having these rights, they don't have an excuse anymore to be slow in introducing the new iPad line into China," Rein said, adding that although Apple products were wildly popular in China the company could still do much better.

More at Fin24
Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Shaun Rein is the author about the recent book "The End of Cheap China: Economic and Cultural Trends that Will Disrupt the World."
More about Shaun Rein and his book at Storify.

Apple is under-performing - Shaun Rein

Shaun Rein

Apple's recent success in China might have gained it a lot of admirers, and Apple even promised to focused more on the country during the WWDC conference. But the company could have done much better and could have turned China into its largest market, retail analyst Shaun Rein tells in the Pandodaily. 

The Pandodaily:

 “Even though Apple quadrupled sales in China and it’s their second largest market, they only have five Apple stores in the country,” Rein told me over Vietnamese food in an upscale shopping mall. “We think the market can sustain about 100, and they have 300 globally. So they’re not taking what I call a China-first strategy.” This is, after all, a country of 1.3 billion people and 1.4 million US-dollar millionaires. 

While iOS voice-assistant Siri is soon to be available in Mandarin, it’s still not physically in the country, Rein points out. The company releases products in China half a year after they’re available in Hong Kong, which is just over the border, and sales of Android-powered handsets are growing faster than Apple in the smartphone market... 

“Apple needs to move a lot faster, and because they’re moving so slow, you’re getting the emergence of Samsung at the high end, and then Xiaomi at the low end, which is just absolutely booming, and they’re positioning at a great price-point for consumers,” says Rein. Chinese consumers love the Xiaomi phones in particular. The high-spec and homegrown smartphones not only have buyers, but also fans, and they sell for as much as $470 per device cheaper than the iPhone. Last week, the company announced that it had sold 3 million devices in just two years of existence and with only one model (although the company did release a second model recently). 

Is Apple, then, at risk of getting left behind? “If they don’t make massive changes, in two or three years they could run into serious challenges,” says Rein. “Three years ago, the iPhone was far superior to any other handset in the marketplace. Now it’s not.”

Much more in the Pandodaily.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Shaun Rein is the author of "The End of Cheap China: Economic and Cultural Trends that Will Disrupt the World". More about Shaun Rein and his recent book at Storify.

Apple, Ferrari: two products appealing to the rich - Ben Cavender

Ben Cavender

The Chinese are not trying to become middle class, they want to become rich, very rich. Products like Apple and Ferrari are helping consumers is creating that feeling, tells consumer analyst Ben Cavender in the Wall Street Journal and Adage.

Adage:

Initially, the allure of Apple products stemmed from the fact that they simply weren't available in China. Only people who traveled overseas or to Hong Kong could buy them. "The fact that it was hard to buy them here really boosted the cachet it had and cemented its status," said Ben Cavender, associate principal at the China Market Research Group.... 

Apple's premium retail experience, where consumers can play with the sleek gadgets out in public, is part of the allure. Apple stands out in a market where buying consumer electronics generally meant braving chaotic multistory malls crammed with tiny booths and aggressive shopkeepers hawking products that may or may not be legitimate. 

"They've done a great job working on point-of-sale, which is really, really important in China," said Mr. Cavender. 

China's five Apple stores—one for every 268 million Chinese—boast the highest traffic and revenue in the world for the company.

The Wall Street Journal:

While Ferrari’s brand has recently been tarnished in China, marketing experts say, the stains will not be long-lasting. “Many Chinese still see opportunities for wealth creation through entrepreneurship, dreaming of wealth and ownership of luxury products; many expect and hope that they too will be able to own a Ferrari,” said Ben Cavender, a senior analyst at China Market Research Group.

More in the Wall Street Journal and Adage.

Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Apple still lagging in China - Shaun Rein

Apple might be doing well in the China market, they could do better, tells business analyst Shaun Rein in Bloomberg. Apple is losing ground to the competition, because they focus better on the Chinese consumer.

Bloomberg:

The company is hardly alone in attempting to benefit from the spending power of Chinese consumers. Samsung Electronics Co. and other phone makers using Google Inc.’s Android operating system are outselling Apple, said Shaun Rein, managing director of the China Market Research Group. The company ought to release its products sooner in the Chinese market, he said. 

“Apple is a good story in China, but they are succeeding in spite of themselves,” Rein said. “They are winning because they have a great product, but they are underperforming when it comes to localizing and understanding the China market. They should be releasing products in China first.”

More at Bloomberg.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Shaun Rein is the author of The End of Cheap China: Economic and Cultural Trends that will Disrupt the World. More about him and his book at Storify.

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Apple could have done much better in China - Shaun Rein

Shaun Rein

Apple might celebrate a huge success in China, but the US company could have done much better if they had followed a 'China-first' strategy from the beginning, says Shaun Rein, author of the book The End of Cheap China: Economic and Cultural Trends that will Disrupt the World in SFgate and on Bloomberg.

 

More in SFgate

Shaun Rein is  the author of The End of Cheap China: Economic and Cultural Trends that will Disrupt the World. He is also a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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