What is cool in China (not Apple) - Shaun Rein

Shaun Rein

Shanghai-based Retail analyst Shaun Rein takes Reuters on a cool brand tour in his city, as Apple keeps on losing its position. A few of the winners in this entertaining video: Starbucks and Adidas. 

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 

China’s new visa system is on the agenda of the +China Weekly Hangout coming Thursday 12 September. The system kicked in on September 1, and many questions have already been raised. In the hangout we try to answer questions, as far as possible in such an early phase. Read here our initial announcement or register here at our event page. 

Are foreign firms having a hard time in China, the China Weekly Hangout asked on August 22. Western journalists focus on Western firms in China, that might be fair, but they ignore China's real challenges argue Janet Carmosky and +Richard Brubaker, moderated by +Fons Tuinstra of the China Speakers Bureau.

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Starbucks: lifestyle and aspirations, no beans - Paul French

Starbucks, the coffee chain, has seen an amazing success in China, the country of tea drinkers. But they are not Starbucks is doing a stellar job in the China market. But not by selling coffee, says retail analyst Paul French. They are selling a lifestyle, no beans, he tells in The Province.

The Province:

Starbucks appears to face a huge task in getting China to give the bean a chance. But Paul French, an expert on China's retail scene, says Starbucks need not convert China to a coffee culture to succeed. 

"It's not about selling coffee - it's about selling a lifestyle of status and aspiration," says French, chief China market strategist with Mintel, a research and intelligence firm. 

"Arguably, few of the beverages sold at a Chinese Starbucks taste much of coffee - they're milky, sweet, foamy, chilled. It's rare to see anyone buying an espresso or serious caffeine hit in China," French says. 

"To be in Starbucks is an act of self-expression, of showing you can afford it, can enjoy it - an international expression."... 

The best way to judge Starbucks' success in China is to study same store sales between 2011 and 2012 performance, Mintel retail strategist Paul French says. 

By this measure, Starbucks China is doing well. Same store sales in Starbucks' China-Asia-Pacific region rose 10 per cent in 2012, compared with seven per cent for North America. 

"Starbucks may be struggling in some international markets but the Chinese are still in a love affair with the brand," French says in a blog. "Right now, Starbucks' profits per serving are higher in China than in most other major markets, making [it] a bit of a cash cow for the firm at the moment." 

Those profit margins, however, are being squeezed as costs - rents, wages, utilities, ingredients such as milk - rise faster than generally expected, French says. More in the Province.

Paul French 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.

Not all foreign firms are a big hit in the often difficult China market. The China Weekly Hangout discussed failing foreign firms on Janaury 30, 2013 with Andrew Hupert, Richard Brubaker and Fons Tuinstra. Including references to Apple, Mediamarkt, Foxconn and many others.

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Starbucks: Symbol of wealth - Paul French

Paul French

In China Starbucks is not a place where you only fetch coffee, it is a symbol you have made it, as a person, and as a city where the global chain sets up shop, tells retail analyst Paul French in Adage.

Adage:

"The way you know when you've arrived as a town or city is when Starbucks arrives. It used to be McDonald's, and before that it was KFC," said Paul French, chief China-market strategist at market-research firm Mintel. "Now Starbucks is the place where you go if you have cash and want to flash it. The new middle class can sit there and look out the window and drink their Frappuccino and say, "We've made it.'"... 

Mr. French, the analyst, joked that Starbucks would make more money if it gave away free coffee and charged customers by the hour to sit in its stores. 

Starbucks also has room to grow its food selections. Although the company has created products tailored to Asian preferences, such as its black sesame green-tea cake roll, local competitors are more creative, offering hot meals such as curry and pasta. Others sell dessert plates with six mini egg tarts or other sweets, designed for the group dynamic. 

"That's perfect for Chinese because they like to put a plate in the middle to share. Westerners just want a big fat muffin each," Mr. French said.

More in Adage.  

Paul French 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.

On Thursday November 8 the China Weekly Hangout (10pm Beijing Time, 3pm CET, 10am EST) will focus on the future of nuclear power in China, what are the risks after Fukushima, and might a succesful NIMBY protest be possible? Here you can register at our events page. Or see the announcement here.

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Jiang Zemin joins leadership transition - Victor Shih

Victor Shih

Former president and party leader Jiang Zemin has made appearances last week, joining the mayhem surrounding China's leadership transition, later this year. Political analyst Victor Shih gives his take in this article for Bloomberg.

Jiang, who led the Communist Party from 1989 to 2002, met with [Starbucks CEO Howard] Schultz a week after former Chongqing Communist Party leader Bo Xilai was suspended from the ruling Politburo. Jiang’s presence in Beijing suggests he is taking part in the leadership transition, complicating the succession process in the world’s second-biggest economy, said Victor Shih, a professor who focuses on Chinese finance and politics at Northwestern University in Evanston, Illinois. 

“He has shown the world conclusively that he remains in good health and that he remains part of the equation for the 18th Party Congress,” Shih said in an e-mail. “This will make complete domination by any particular faction difficult, despite recent events.”

More in Bloomberg.

Victor Shih 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.

Victor Shih is also a financial analyst, looking at China's debts here at Storify.

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Pricing not an issue for Starbucks - Shaun Rein

Shaun Rein

Starbucks has played its cards right in China, by not only selling coffee in a country of tea drinkers, but also by selling their product for a premium price. Business analyst Shaun Rein explains to AFP why Starbucks is so successful.

AFP:

"Starbucks has done a great job at catering to the needs of the Chinese consumer, who love the coffee experience. Price is just not an issue," said Shaun Rein, China Market Research Group managing director. 

Coffee culture is relatively new to China and though the market is growing rapidly it remains small compared to the United States or Europe... 

Starbucks has previously estimated that China has a massive potential market of 200-250 million coffee drinkers. 

"I am very bullish for the firm in China. Their future is bright but challenges remain, including surging real estate prices, higher wages, lack of qualified staff and growing competition", said Rein.

More in AFP

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 book at Storify.

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What did Starbucks do right in China? - Shaun Rein

Shaun Rein

Starbucks turned a nation of tea drinkers into coffee lovers. Business analyst Shaun Rein explains in CNBC what Starbucks did right to succeed in China: they went local.

Shaun Rein:

Instead of trying to force onto the market the same products that worked in the U.S. like regular coffee, Starbucks developed flavors, such as green tea flavored coffee drinks, that appeal to local tastes.  Rather than pushing take-out orders, which account for the majority of American sales, Starbucks adapted to local consumer wants and promoted dine-in service. 

By offering comfortable environments in a market where few restaurants had air conditioning in the late 1990s, Starbucks became a defacto meeting place for executives as well as gatherings of friends. In other words, Starbucks adapted its business model specifically for the Chinese, rather than obstinately trying to transplant everything that worked in America into China, as so many brands like Best Buy and Home Depot have done... 

Starbuck’s high pricing strategy of specialty drinks allows it to have its Chinese outlets to be more profitable per store in China despite the lower volume. Overall in Asia, its operating margins were 34.6 percent in 2011 versus 21.8 percent in the U.S.  Too many brands push for market share by cutting prices but in reality they should be aiming for margins. Not only does Starbuck’s premium pricing strategy fit market demands but it also allows it to regularly roll out higher margin specialty products like gift sets that offset rising commodity costs. As China’s urbanization rate nears 52 percent, companies need to put into place strategies to handle rising commodity costs.

More in CNBC

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 upcoming book The End of Cheap China: Economic and Cultural Trends that will Disrupt the World. More about Shaun Rein and his book on Storify
. 

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Missed the free coffee at Starbucks

Well, I suggested it earlier in the week myself (although I mentioned the wrong day then), but when I passed my Starbucks in Huaihai Zhonglu this morning(picture), I knew there would also be on Friday no free coffee for me. Quite a bit of a crowd in front of the little store, waiting for new coffee being brewed. I might be Dutch, but are not going to wait for an hour for a free coffee. Quite some people seemed happy to do so.