Weblog with daily updates of the news on a frugal, fair and beautiful China, from the perspective of internet entrepreneur, new media advisor and president of the China Speakers Bureau Fons Tuinstra
China veteran and lawyer Mark Schaub dives into the issue of the upcoming exodus of ex-pats from Shanghai, triggered off by the stringent COVID-19 lockdowns. More foreigners than ever will be leaving, while fewer are coming to replace them unless their companies reinvent themselves. But to a large degree, this is a long overdue cleanup in a dynamically changing climate, he argues in his second weekly column China chit-chat.
Mark Schaub:
COVID is deadly to the vulnerable – this applies to businesses as well as people. In the West some businesses were hit hard but bounced back quickly. In the West COVID sped up the demise of old-fashioned retail, chain restaurants past their prime and often small businesses. At lot of these businesses had already lost their way and COVID just sped up the inevitable. For a long time, I have wondered whether foreign invested enterprises in China needed a shakeup. Many have been shielded by being in a growth market (but now being squeezed by competitors), having a profitable niche (but these niches are now also becoming battlegrounds), headquarters knowing China is too important to ignore but also a tough market on which they are not willing/able to spend their time on but also unwilling to fully empower the local management.
For many Western businesses the question going forward will be is can you continue to succeed in a dynamic market like China if management on the ground cannot take decisions dynamically? Can you survive against more agile competitors? Does it make sense to still be in the Chinese market.
Global companies have been warning of the major effects of China’s lockdown on their operations, curtailing Shanghai for more than six weeks. But they have very few alternatives apart from sitting out the ordeal, says Shanghai-based business analyst Ben Cavenderto CNN. The corporate exodus from Russia after the invasion of Ukraine did not help. For sure, consumption in China is down.
CNN:
The combination of both events has created a staggering one-two punch for multinational corporations, such as Estée Lauder (EL), which said last week that the “two significant headwinds” forced it to slash its outlook for the year.
The crisis is a stark reminder of China’s outsized importance to global companies.
“Like it or not, at this point if you’re a multinational, China is probably your first or second largest consumer market,” said Ben Cavender, managing director of the consultancy China Market Research Group…
“Frankly speaking, consumers right now are not worried about buying lipstick or coffee,” said Cavender. “They’re really much more focused on getting [necessities].”
Now, even as access improves, many people concentrate on what’s known as “group buying,” allowing users who live in the same community to place bulk orders together for groceries and other essentials.
Even those who aren’t stuck at home may be affected. Consumers who live in cities without restrictions might also hesitate to go out and hit the mall, for fear of “what has happened in Shanghai,” where people remain in lockdown indefinitely, said Cavender.
“It’s been a very big negative drag on consumption.”…
Cavender said that the recent challenges in Ukraine and China had highlighted “a period of greater risk” more broadly for international firms.
“I do think there are a lot more challenges now to being a multinational than there have been in the past,” he added.
CFR scholar and China veteran Ian Johnson discusses the country’s difficult balancing act between keeping control and economic growth at a panel of the Council of Foreign Relations, with of course attention to the Russian invasion of Ukraine, COVID-19, and China’s agenda.
Leading VC William Bao Bean explains how travel startups managed through the COVID-19 crisis at PhocusWire Pulse. In China, they survived by focusing on booming domestic travel, but the lack of international travel hit some severely. Some of the travel startups he guided to the market had to give up their efforts to enter the Asian market, while others adjusted to the difficult market conditions.
China’s consumption is growing again and sales growth is recovering on a solid post-COVID10 track, says marketing expert Ashley Dudarenok on her vlog. Government, tech companies, and consumers have their noses in the same direction.
Typically, China’s economy comes to a standstill during the annual Chinese New Year, but not in 2021, explains business analyst Shaun Reinto CNBCTV. GovermentalCovid-19 restrictions make it tough for migrant workers to return home, and double salaries at the factories might encourage them to continue working during the festival. Other industries like travel and leisure might suffer, though.
CNBCTV:
Shaun Rein, Managing Director at China Market Research Group on Wednesday said he expects the factory sector to outperform the expectations.
“The factories are offering incentives for workers to stay, they are giving double payment on their salaries. Meantime a lot of these workers have decided to stay where they work and so factories are going full steam ahead in January and February, so we expect that the factory sector is going to outperform a lot of expectations,” he told CNBC-TV18.
“You are also going to see outperforming in manufacturing and on eCommerce,” he added.
Rein’s observations come at a time when the Chinese migrant workers return home during the Chinese Lunar New Year period. Coming in the backdrop of almost a year of the coronavirus pandemic with reports showing re-emergence of the cases in January, the Chinese government got nervous and a lot of provincial governments made the COVID test mandatory.
China’s central government said that between January 28 and March 8—the six week period—there are going to be high restrictions on internal travel.
These new instructions on travel will hit the travel and leisure industry negatively, Rein said.
Marketing veteran Ashley Dudarenok looks at three major changes in China after the pandemic in 2021. Speed, digitalization, and consumer behavior went through an amazing rollercoaster, she says on the vlog.
China’s Single’s Day continued to be a runaway success after COVID-19, although e-commerce expert Ashley Dudarenok finds it hard to compare it with the previous events because it changed from a one-day event to an 11-days success. But more luxury brands, cars, and even McDonald’s joined the fray, and gamification become important, she tells at state-owned broadcaster CGTN.
The US failed to stamp out the coronavirus, unlike China, says Harry Broadman, a former senior US trade official to the Sydney Morning Herald. And since South Korea and New Zealand also dealt with COVID-19 efficiency, it is not China’s authoritarian regime that made the difference, he adds.
The Sydney Morning Herald:
“Obviously, the US government bungled it,” said Harry Broadman, a former senior US trade official and managing director with Berkeley Research Group. The singular authority of China’s Communist Party helped Beijing enforce contact tracing and lockdowns, Broadman said. But other democracies, including New Zealand and South Korea, stamped out the virus as China did.
The real difference between the US and China was that Washington “has been arguing over stimulus issues on Capitol Hill and it’s still far too little and too late”, said Broadman, who has served under both Republican and Democratic presidents. “That has created more and more uncertainty on the part of business.”
The world never saw so much reaction of wealth as during 2020, says Rupert Hoogewerf, chief researcher of the Hurun China Rich List, despite the coronavirus crisis triggered off by COVID-19. Even seasoned rich-researcher Hoogewerf is amazed by the number of billionaires China created over the past months, he tells Devdiscourse, citing the newly released Hurun China Rich List 2020.
Devdiscourse:
Ant is expected to create more mega-rich through what is likely to be the world’s biggest IPO, as it plans to raise an estimated $35 billion through a dual listing in Shanghai and Hong Kong. The combined wealth of those on the Hurun China list – with an individual wealth cut-off of 2 billion yuan ($299.14 million) – totaled $4 trillion, more than the annual gross domestic product (GDP) of Germany, according to Rupert Hoogewerf, the Hurun Report’s chairman.
China is minting new billionaires at a record pace despite an economy bruised by the coronavirus pandemic, thanks to booming share prices and a spate of new stock listings, according to a list released on Tuesday. The Hurun China Rich List 2020 also highlights China’s accelerated shift away from traditional sectors like manufacturing and real estate, towards e-commerce, fintech and other new economy industries.
Jack Ma, founder of Alibaba, retained the top spot for the third year in a row, with his personal wealth jumping 45% to $58.8 billion partly due to the impending mega-listing of fintech giant Ant Group . Ant is expected to create more mega-rich through what is likely to be the world’s biggest IPO, as it plans to raise an estimated $35 billion through a dual listing in Shanghai and Hong Kong.
The combined wealth of those on the Hurun China list – with an individual wealth cut-off of 2 billion yuan ($299.14 million) – totaled $4 trillion, more than the annual gross domestic product (GDP) of Germany, according to Rupert Hoogewerf, the Hurun Report’s chairman. More wealth was created this year than in the previous five years combined, with China’s rich-listers adding $1.5 trillion, roughly half the size of Britain’s GDP.
Booming stock markets and a flurry of new listings have created five new dollar billionaires in China a week for the past year, Hoogewerf said in a statement. “The world has never seen this much wealth created in just one year. China’s entrepreneurs have done much better than expected. Despite Covid-19 they have risen to record levels.”
According to a separate estimate by PwC and UBS, only billionaires in the United States possessed greater combined wealth than those in mainland China. China has accelerated capital market reforms to aid a virus-hit economy, accelerate economic restructuring and fund a “tech war” with the United States.
At first celebrated on social media when she began to publish online on January 25, Fang Fang ended up being denounced there as inadequately patriotic. That arc says much about how authorities manipulate public opinion. Many of her critics were probably government trolls, but the feeling I got in China was that after initial panic most people accepted the government’s efforts, especially as reports of the pandemic came in from abroad, where the bungling was many times worse. By March, Fang Fang’s critique of government censorship seemed passé.
That opinion turned on Fang Fang shows the artificial nature of China’s consensus. Not all public opinion is manipulated, but it’s often warped in a way that makes the culture wars of the United States appear mild. In open societies, conflicts come up like pus in a wound, whereas in China they fester below the surface. Over the past few weeks my social media feed has been filled with completely delusional views of how the pandemic has progressed in the West, with many (I would say most) Chinese believing that it has been an unadulterated debacle in rich countries, while the Chinese state has kept its people safe. Differing opinions are pilloried, and obtaining basic facts is hard. Not for the first time, I’ve felt that my Chinese friends are living in a parallel universe where certain basic assumptions about the world are turned on their head.
This is mirrored in so many facets of daily life that it is hard to list them all. Talk to most Chinese about minority areas in the country, such as Tibet and Xinjiang, and they will have almost no understanding of international concepts such as self-determination. Bring up Hong Kong and most people will angrily denounce pro-democracy protesters there as dupes and traitors. The disconnect is sometimes so strong that it’s easy to lose heart. Many people in the West have done so, leading to a sense that engagement with China has been a failure, and that confrontation is now the only alternative.
But people like Fang Fang still exist and show that China isn’t a monolith. I would argue that collectively they present a real challenge to the government—not in the classic civil society sense of people who are likely to organize opposition; the party, as Mattingly argues, is too savvy to allow such opposition to form, and officials are much better at stifling dissent than they were a couple of decades ago. Instead, Fang Fang represents a significant group of people in China who see clearly the flawed nature of their state and who are willing to express these reservations in the most direct way they know.
Consider her analysis of how local officials hid the pandemic early on. While the party-led media blamed a few local officials for not responding quickly enough to the virus, Fang Fang saw Wuhan’s problems as systemic. Without competition that might result from elections or some sort of participatory political system, China’s system leads to disaster; empty talk about political correctness without seeking truth from facts also leads to disaster; prohibiting people from speaking the truth and the media from reporting the truth leads to disaster; and now we are tasting the fruits of these disasters, one by one.
This sort of analysis is not shared by most Chinese people. For them, the party’s message is still dominant and they largely believe that it did a good job, especially compared to the mess in supposedly advanced countries. But many others do understand the party’s highly flawed nature. Their views, their books, their underground documentary movies, and their artwork—all of this is producing an unofficial history of China, a counterhistory written at the grassroots.
As the century progresses, this alternative history will stay alive, like a virus biding its time. And when the conditions are right, when Chinese people wonder why China pursued a development-at-all-costs strategy that made it vulnerable to climate change in the first place, or why local officials bungle so many crises, their suppressed views will emerge.
COVID-19 has changed life for sales professionals, says marketing guru Ashley Dudarenok. The early coronavirus crisis in China has accelerated online retail with live streaming at its core and will do so also as the rest of the world comes out of the corona crisis.
China has become an easy scapegoat for the COVID-19 pandemic, while now it is in better shape than most other countries in the world, says super-investor Jim Rogers from Singapore. “Blaming foreigners is a normal habit during crises,” he adds.
China’s food shipping was already far ahead of competitors in the US, but making a profit is still not possible, says marketing veteran Ashley Dudarenok to 90xtra, although the restaurants are griping about the percentages the shippers ask. And the COVID-19 crisis did not improve relations between retailers and shippers.
90xtra:
Ashley Dudarenok, co-writer of “New Retail Born in China Going Global,” notes how most Chinese shipping workers use maneuverable and mild e-bikes, though their Western counterparts generate cars extensive distances and incur steep labor, parking, and refueling costs. She also says Ele.me motorists are pressured by rigid evaluate systems, which penalize them RMB 200 Chinese renminbi (RMB) per weak assessment and RMB 1200 for every complaint. Another incentive: Meituan’s Supply Time Coverage alternative that charges end users simply RMB 1 ($.14), and refunds portions of service fees for any late orders…
Dudarenok, in the meantime, details out that “franchisees, HR businesses, and other third get-togethers involved in the system are in the middle. The agent on your own can even account for 25 % of Meituan’s supply profit.” Her conclusion: “Meituan’s deliveries are not sufficient to make finishes meet. It has been at a reduction for 5 many years, and it has only been successful in 2019.”
Those figures did not increase all through the pandemic, even with some restaurateurs grousing about substantial expenses. In its place, Meituan’s 1st quarter earnings announcement in depth a 12 months-in excess of-year revenue drop from RMB 19.2 billion to RMB 16.8 billion, citing offer and demand from customers difficulties (having said that, Dudarenok factors out “after the resumption of function in March and April, the volume of supply orders… has returned to practically 80 percent of the orders in advance of the outbreak” very first started).
