China veteran Shaun Rein explains why the West does so poorly in understanding China, and why China’s government is doing such a bad job in explaining China to the rest of the world, in an interview with Cyrus Janssen.
Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.
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China’s booming tech sector was mainly funded by private and sometimes overseas investors. Those days might be over as the state takes over that funding, with ride-hailing company Didi as a prime example, says business analyst Shaun Rein in Pymnts.
Pymnts:
Didi’s troubles include a ban on the company from registering new users until regulators have concluded an investigation into its data security.
This is a reversal from the situation just two years ago, when Didi was viewed by investors as largely bulletproof and rival companies were starved for capital. After the regulatory investigation into Didi was announced, things changed. In one instance, China’s leading food delivery platform, Meituan, jump-started the ridesharing service it had stopped offering in 2019, according to the report.
“The government wants tech players to have state-owned money,” said Shaun Rein, founder of China Market Research Group, per the report. “Beijing was not happy about Didi trading overseas, with the backing of foreign players including SoftBank and Uber.”
Regulators have been more closely scrutinizing unfair market practices by ridesharing companies, including Didi and Meituan. One example of such unfair market practices alleges unlicensed or unregulated drivers are hired by ridesharing companies, with the risk of operation then put onto those drivers. There’s also the order regulators have given to the ridesharing companies to quit taking so much of a percentage from transactions and to better protect users’ data.
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China’s crackdown on tech firms is in the longer run benefiting consumers and the industry itself, says business analyst Shaun Rein about the governmental efforts to curtail free-wheeling companies.
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Investors got jittery when China’s government started a coordinated action to limit the power of its tech industry. But business analyst Shaun Rein saw how powerful companies made consumers and the government weary. Rein believes stricter oversight of the technology industry will make it more sustainable, with fairer competition that will benefit consumers, he tells AP.
AP:
Until recently, tech firms operated in a regulatory gray zone, with relative freedom to create their business models, demand that merchants and vendors sign exclusive contracts with their platforms and collect user data to better understand their customers.
After China introduced health monitoring and quarantine apps during the pandemic, it became clear that tech companies like e-commerce giant Alibaba and gaming company Tencent controlled huge amounts of data, said Shaun Rein, founder and managing director of China Market Research Group in Shanghai.
“I think it was in the last year and a half that you can start to see just how much power these technology companies have,” said Rein.
Alibaba Group Holding recently was fined a record $2.8 billion over antitrust violations. Other big tech companies have been fined or investigated for alleged anti-competitive behavior and lapses in financial disclosure.
“Two years ago Chinese consumers didn’t care, they thought the convenience of apps outweighed any negative benefits,” Rein said. “But now Chinese people are quite concerned about data privacy, because Alibaba and Tencent have so much data – even more data than the government.”
Rein believes stricter oversight of the technology industry will make it more sustainable, with fairer competition that will benefit consumers.
Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.
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Starbucks sold its stake in its South-Korean joint venture, worth in total over US$2 billion. The best they can do, is reinvest their capital in expansion in China, says business analyst Shaun Rein to Reuters. “Using the sale of its South Korean operations will equip it with more cash that it can deploy to China,” Rein said.
Reuters:
South Korea is Starbucks’ fifth-largest market with more than 1,500 stores across 78 cities, but analysts said that the country offers little growth opportunity for the world’s largest coffee chain due to its mature and saturated market.
“South Korea … would not be a market for major growth in the coming years. It’s better for them to sell their stake use the capital and proceeds to invest in faster growth markets like China,” China Market Research Group analyst Shaun Rein said.
The U.S. company has in recent years been expanding globally especially in China as its largest market – the United States – saturates and grapples with stiff competition. Sales from China in its latest second-quarter report nearly doubled.
“Using the sale of its South Korean operations will equip it with more cash that it can deploy to China,” Rein said.
Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.
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When China’s authorities cracked down on Jack Ma’s Alibaba, it was only the start of ongoing efforts to control tech companies and manage their data streams, says Shanghai-based business analyst Shaun Rein to WRAL. “Now Chinese people are quite concerned about data privacy because Alibaba and Tencent have so much data – even more data than the government,” he adds.
WRAL:
China’s Communist Party leaders are uneasy with the growing influence of big technology firms. Key issues are monopolistic practices and handling of user data.
Until recently, tech firms operated in a regulatory gray zone, with relative freedom to create their business models, demand merchants and vendors sign exclusive contracts with their platforms and collect user data to better understand their customers.
After China introduced health monitoring and quarantine apps during the pandemic, it became clear that tech companies like e-commerce giant Alibaba and gaming company Tencent controlled huge amounts of data, said Shaun Rein, founder and managing director of China Market Research Group in Shanghai.
“I think it was in the last year and a half that you can start to see just how much power these technology companies have,” said Rein.
Alibaba Group Holding recently was fined a record $2.8 billion over antitrust violations. Other big tech companies have been fined or investigated for alleged anti-competitive behavior and lapses in financial disclosure.
“Two years ago Chinese consumers didn’t care, they thought the convenience of apps outweighed any negative benefits,” Rein said. “But now Chinese people are quite concerned about data privacy, because Alibaba and Tencent have so much data – even more data than the government.”
Rein believes stricter oversight of the technology industry will make it more sustainable, with fairer competition that will benefit consumers.
Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.
Are you looking for more innovation experts at the China Speakers Bureau? Do check out this list.
Dolce & Gabbana (D&G) got three years into hot water over racist ads and remarks with China’s consumers, and the row did not subside, says business analyst Shaun Rein. “It’s probably the only brand that I’ve seen the Chinese stay angry at for so long,” he told CNN.
CNN:
The brand has not signed a major mainland Chinese name since the incident. For a 2020 Chinese Valentines Day campaign, it used a combination of White and CGI models, dubbed “virtual idols.” And although hiring Chinese celebrity ambassadors and influencers could represent a way to regain trust in the country, it would be “career suicide,” according to Shaun Rein, founder and managing director of China Market Research Group.According to Rein, it is the alleged Instagram messages, rather than the ad campaign itself, that continue to affect the label’s reputation in China. “It’s probably the only brand that I’ve seen the Chinese stay angry at for so long,” he told CNN.The label’s recent moves to sue Diet Prada for defamation have only continued to “keep the story alive,” added Rein, who likened it to the “Streisand effect,” whereby attempts to cover something up only draws more attention to it. The lawsuit, which D&G declined to comment on, has created the impression that Gabbana “was mad that his private correspondence got out,” Rein said, adding that Chinese consumers felt the messages were “the true feelings, potentially, of the founder denigrating the Chinese people” — despite the fact that Gabbana and co-founder Domenico Dolce filmed an apology video shortly after the 2018 incident.Not that the video won them any goodwill at the time. “(It was) like he was trying to save money and his brand, but it wasn’t coming from the heart,” Rein said. “Because again, if you say something publicly but then allegedly say ‘Chinese are s**t’ in private, then who’s going to believe you?”…
The online furor has had real-world ramifications for D&G. In 2018, the brand had 58 boutiques in China, according to NPR. Three years on, its website lists just 47, with shops recently closing in Beijing, Shanghai and Chengdu, according to industry publication Business of Fashion.The label remains entirely frozen out of major Chinese e-retailers Tmall and JD.com, both of which pulled the brand from its virtual shelves soon after the 2018 incident. According to Rein, it is unlikely that the platforms will stock the brand anytime soon, as they are “petrified by these nationalistic consumers.”“If you can’t sell on Tmall, you can’t do business in China,” he said, adding: “If I were Dolce and Gabbana, I would take two or three years off from investing in China.”
Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.
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US President Biden is trying to beat China, just like his predecessor Trump with a strong focus on technology. But Shanghai-based business analyst Shaun Rein does not see how the US can overtake China in innovation, he tells at state-owned Global Times. And more about the tense relationship between both economic powers.
The Global Times:
GT: You are very optimistic about China’s technological innovation. According to mainstream US media analysis, President Biden is putting tech at the center of his China strategy. And some say the US is shifting from Trump’s “decoupling” to Biden’s “small yard, high fence” tactic. How do you view this more targeted approach? What could it result in?
Rein: What Trump did to China was awful. What Biden is doing is just as bad. It’s clear that the US wants to destabilize and destroy China’s high-tech industry. They want to control tech standards. It’s not because Huawei or Douyin (Tiktok), or Chinese firms have done anything bad. I’ve seen no evidence yet from the US that these Chinese firms are doing anything overly bad that is not normal in other countries. It’s clear that the US feels that future war is not conventional war, but over controlling tech standards, and whoever dominates the tech world will be the major global superpower.
Over the last five years, China has become the most innovative nation in mobile APPs. Whenever I go back to the US, I feel like I’m back in the dark ages.
China has Alipay and Wechat pay, which I think is one of the reasons why China is able to stop COVID-19. In the US, people are still using cash and physical credit cards. But because of what Trump and Biden have done to China – such as crippling Huawei – Chinese firms have to focus on semiconductor development. Four years ago they didn’t need to, now they have to. This is a do-or-die situation. So you’re going to see the government and business will all have to work together, in order to shed the yoke of American imperialism in technology, it’s a very dangerous situation.
I work with a lot of American software and technology companies. They are my clients. They’re angry, because they sell to Chinese companies. They were generating billions of dollars a year in profits in China. All of a sudden, they are no longer allowed to sell to Huawei. They can’t sell to these companies.
China is the biggest market in the world for Intel, Qualcomm and Texas Instruments. Those businesses will be gone in five years, because Chinese companies will have to sell what Intel used to sell. So Biden is destroying the American tech sector.
When it comes to semiconductors, China is five to 10 years behind the US. So basically hysteria has captured the US, in DC. You bring up anything about China, automatically Americans go crazy. They think that it’s a new red scare. It’s absurd that people aren’t thinking logically right now.
The US has a rotation between the government and the war machine. Take the new Defense Secretary Lloyd Austin. After he left the US military in Iraq, he worked for Raytheon, a weapons maker, as a board member. Now he becomes the secretary of defense. It’s rotating between government and weapons, which is very dangerous.
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H&M got hit by an unprecedented boycott from Chinese consumers, as the China internet went after the company for its stance on labor in Xinjiang. Partly that vehement outpour of anger was caused because internet companies have been under government investigations, says veteran business analyst Shaun Rein, so they had to prove more than ever they were not a danger for that government, he says at AP.
AP:
“It’s a form of self-preservation,” said Shaun Rein, managing director of China Market Research Group in Shanghai.
Rein said the outpouring of anger at H&M is the harshest he has seen against a foreign brand. He said companies are especially sensitive because this comes at a time when Chinese anti-monopoly and other regulators are stepping up scrutiny of internet operators.
“If they don’t try to criticize, they’ll also get in trouble,” Rein said.
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European sanctions against China triggered off a backlash against fashion brand H&M and business analyst Shaun Rein explains at the BBC why China’s consumers are starting boycotts against European companies like H&M.
Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.
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Typically, China’s economy comes to a standstill during the annual Chinese New Year, but not in 2021, explains business analyst Shaun Rein to 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.
Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.
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The fur trade focuses on China, as consumers in the rest of the world shun their products, convinced by the animal-rights movement. But China’s consumers are likely to follow, says Shanghai-based business analyst Shaun Rein, and they are likely to heed the anti-fur trend, he tells Vogue Business.
Vogue Business:
For those luxury brands that are continuing to use fur, the focus is on China, the country most important to the $22 billion worldwide fur trade. A survey of 400 high-income Chinese residents, predominantly Vogue and GQ readers, by Vogue Business and market research group Dynata, shows that demand for fur in China is likely to remain robust for now — but there are some signs of disquiet among a minority of fur buyers.
Just under two-thirds of respondents say they believe that fur is an appropriate material to use for clothing versus 24 per cent that think it is not. Of the group that say fur is an inappropriate material, 62 per cent say they have changed their mind in the last year — and just under half have previously purchased fur products. Objections are not necessarily based on ethical considerations, but also embrace factors such as taste and practicality.
Younger consumers appear to be leading the shift in attitude. “I think that in the Western world there’s a feeling that China is backward [on environmental issues] and that might have been true 20 years ago, maybe even 10 years ago, but right now the younger consumers are really into morality,” says Shaun Rein, founder and managing director of the China Market Research Group, which works with luxury clients including Richemont. Rein says that animal welfare is a growing concern among Chinese consumers. However, fur has been a lower priority target than shark fin or ivory…
The continued support for fur by brands like Louis Vuitton remains important to the fur industry and its image to Chinese buyers, even if sales by luxury brands account for a small share of the overall retail trade in fur. Rein says he is doubtful that luxury consumers in China would care much whether they are buying real or faux fur, as long as the product is from a name they trust. “They care more about the luxury brand than they do about the actual ingredients,” he says.
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Western media have been speculating about the whereabouts of Alibaba’s founder Jack Ma after he disappeared from the limelight months ago. Ma did get a dressing down from the government after he ushered criticism, says Shanghai-based business analyst Shaun Rein to AP. Ma is laying down, but there is no reason he is in real problems, Rein adds.
AP:
Some see Ma’s travails as a warning from the ruling Communist Party that even a wildly successful entrepreneur can’t publicly defy regulators. But finance experts said President Xi Jinping’s government already was uneasy about Alibaba’s dominance in retailing. As for Ant, regulators worried it might add to financial risks seen by the ruling party as one of the biggest threats to China’s economic growth.
Shaun Rein, a business consultant in Shanghai who said he meets Alibaba managers and people who know Ma, said none of them reports the billionaire is in legal trouble.
“They spanked him. He’s learned his lesson, and that’s why he’s been quiet for the past two months,” said Rein, founder of China Market Research Group. “Some of his friends told me they can’t believe how stupid he was.”
Ma, 56, stepped down as Alibaba’s chairman in 2019 but is part of the Alibaba Partnership, a 36-member group with the right to nominate a majority of its board of directors. He is one of the biggest shareholders…
The anti-monopoly investigation of Alibaba announced in December targets its policy that prohibits vendors and other business partners from dealing with its competitors.
Foreign investors were rattled, but Chinese businesspeople are “quite happy” with the crackdown, said Rein.
“A lot of people saw Alibaba and Tencent as monopolies and stifling competition,” he said.
Ma’s high profile is unusual in a society where folk wisdom warns, “a man fears getting famous like a pig fears getting fat.” Others such as Tencent founder Ma Huateng, who is no relation to Jack Ma, are known for avoiding reporters and public appearances.
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The massive US$34.5 billion IPO by Jack Ma’s Ant Group has been derailed by regulatory action, days before its listing, and that does not make the investors happy, says political analyst Shaun Rein at AP. The decision also might rattle Chinese entrepreneurs who were considering selling shares on their own country’s market, said Rein.
AP:
The planned market launch of Ant, spun off from Alibaba Group, the world’s biggest e-commerce company by sales volume, symbolized China’s rebound and added to a string of smaller offerings by biotech and other new companies. In an unusual move, it was due to trade in both Shanghai for mainland investors and in Hong Kong for international buyers.
A brief official announcement Tuesday cited regulatory changes. It gave no details, but authorities have tightened controls on lending by online finance platforms and raised the amount of capital they must have.
The abrupt action might make investors more cautious about China, said Shaun Rein of China Market Research Group in Shanghai, whose clients include hedge funds and institutional investors. He said they are left to wonder whether regulators were worried about risks or acted out of irritation at Ant founder Jack Ma, China’s richest entrepreneur, who publicly complained they hamper innovation.
“Whatever it is, it doesn’t make the system look good,” Rein said. “It makes a lot of global institutional investors more nervous about investing into China.”
Ant said Wednesday it will return subscription fees to investors, suggesting it might be some time before the company is allowed to offer shares to the public…
The decision also might rattle Chinese entrepreneurs who were considering selling shares on their own country’s market, said Rein.
“Until yesterday, every entrepreneur I talked to wanted to go public in the mainland, because they thought valuations would be better, and it might make them look better in front of the government,” said Rein. “Now, after Jack Ma, I’m not sure what they’re going to do.”
Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.
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