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
Surveys by the Hurun China Rich List not only show that China´s affluent have spent more money in 2016, but increasingly do to while traveling, says Hurun chairman Rupert Hoogewerf in the Luxury Daily. The number of days per month they travel went up again.
The Luxury Daily:
Purchases made while abroad are seen as part of the travel experience for many Chinese consumers looking for goods unavailable at home or unique to a specific location.
Hurun found that many affluent Chinese are reserving more days for traveling.
“Chinese luxury consumers continue to be extremely busy, away on business trips for eight days a month on average, up one day year-over-year,” said Mr. Hoogewerf.
“Despite this, they take 10 days for holiday, three more days than last year, whilst the super-rich take five more days than last year to 15 and go abroad 3.4 times a year on average, twice for traveling,” he said.
Marketing guru Tom Doctoroff explores his insights in the different generations he saw in China, born in both the 1980s and 1990s, in a lecture for the Asia Society, just before leaving China after 18 years. "They want a free mind, but within a framework," he tells his audience.
Both companies have their apps, but Ofo lowers friction by linking the app to WeChat without having to download a separate app. The users can either register their mobile phone or log in via WeChat account and unlock bikes on the streets at their convenience.
While many business analysts predict how the two rivals will merge eventually, Jeffrey Towson, consultant and professor at Guanghua Peking University, thinks otherwise. He explains why bike-sharing is nothing like ride-sharing of Didi and Uber. The professor compares the bike-sharing economy to a vending machine business than a ride-sharing one.
“Unlike ride-sharing, bike-sharing does not have a network effect,” he says. “The ride-sharing experience is a two-sided network, in which additional riders increases the networks’ value to the drivers and each new driver increases to value each rider. Through customer rating and recording of wait-time, the service gradually improves as its user population grows.”
“The problem with bike-sharing, however, is that there is no second population of drivers using the platforms and providing the bikes,” he adds. “The bikes are constantly replenished by companies themselves as opposed to each rider adding any value to the other riders. It seems that bike-sharing isn’t really part of the sharing economy.”
While Trump still has to make his mark on international relations, fears rise that he might disrupt international order in a gross way. Leading economist Arthur Kroeber says it might trigger off international anarchy where China will be unwilling to step into the void, according to the Globe&Mail.
The Globe&Mail:
Even if calm prevails, though, China shows little sign of willingness to supplant the U.S. as either architect or maintenance engineer of the specific ideas that gave rise to the World Trade Organization, the International Monetary Fund and the like.
If the U.S. under Mr. Trump begins to step away, then, “you end up with a fracturing order,” said Arthur Kroeber, a respected author and China analyst who is managing director of Gavekal Dragonomics.
“Or, in the words of international relations theorists, you are in a more anarchic world, where the common projects that have bound different countries and regions together – those bonds become much weaker and it becomes much more a matter of individual countries pursuing their self-interest in somewhat narrow ways.”...
Mr. Trump's presence in the White House means it is suddenly unclear the degree to which the U.S. will continue its position as the world’s chief buyer.
If that happens, don’t expect China to move in.
“The Chinese have no interest in playing that role,” Mr. Kroeber said. “They have made it very, very clear that their own industrial strategy is to make sure they can basically produce everything and not be reliant on anyone else. And that is a huge difference.
Because if you are now the world’s second-biggest economy and insist on running a trade surplus, you are essentially saying that everyone else in the world – or most major economies have to be in a deficit.”
That, then, is the risk posed by Mr. Trump to the system of liberal globalization: that his presidency will be marked by the rise of both his own “Make America Great Again,” and its Asian counterpart, often enunciated by Mr. Xi himself: “the great rejuvenation of the Chinese nation.”
Austerity marked the luxury goods industry, triggered off by the anti-corruption drive by president Xi Jinping. But the growth figures are back on track, says Rupert Hoogewerf, based on research by his Hurun China Rich report, released on Thursday, he tells the China Daily. Purchases are back on the 2013 level.
The China Daily:
"There is always an inherent demand. For the past three years, (wealthy) people may not have been quite sure, because they didn't want to be too ostentatious," said Rupert Hoogewerf, founder and chairman of Hurun Report.
"But now as the picture has cleared, their interest (in luxury) has risen back to the surface," he added.
Apple, Cartier and Louis Vuitton remain the top three favorite brands among the wealthy, while Samsung for the first time drops out of the favored list. And Alipay, the digital payment tool developed by Alibaba Group Holding Ltd, has for the first time outgrown credit cards to be the most preferred way to go shopping, while cash is the least favored.
Hoogewerf said he foresees China's luxury industry will reach new peaks over the next five years.
More than 90 percent of the interviewees adopted a positive attitude toward China's economy over the next two years, saying they were confident or extremely confident about prospects.
For most of the past four decades, China’s economy has grown solidly with a model based on heavy investment and cheap production. But that model is broken, says Shanghai-based researcher Shaun Rein, and the environment in China is ripe for innovation.
China already has successful innovation stories to tell – digital giants Tencent and Alibaba among them – as the country leads the world in its mobile-first approach to the digital economy.
But for innovation to really take hold and for businesses and entrepreneurs to feel confident enough to invest, Rein says China needs to focus on IP protection, regulation and education.
He cites US sandwich chain Subway as an example of a business where IP protection went wrong. Entrepreneurs copied the idea and established near-identical franchises across China, making millions off a name to which they have no legal or financial right.
Rein says a lack of certainty around regulation and a fear that state-owned enterprises will be given priority have made potential investors wary.
“China’s version of Uber got hit with new regulations because the state-owned taxi fleets didn’t like the killing they were getting in the marketplace,” he says.
Rein says boosting the education offering in China should also be a priority to grow homegrown talent that Chinese companies can recruit to build their businesses.
What they can’t build or create themselves, Rein says they will buy.
“The Chinese will become the bank roller,” he says. “They are buying technology.”
For years the trend seemed irreversible: China´s rich were leaving the motherland in troves. But in 2017 the trend has reversed, says Hurun China rich list composer Rupert Hoogewerf to the South China Morning Post. This year could be a turning point, Hoogewerf says about the findings in the Hurun Chinese Luxury Consumer Survey 2017.
The South China Morning Post.
The proportion of mainland millionaires who say they won’t emigrate has risen for a third straight year to reach a record high, even as a majority say they would like to move to another country, according to a report on Thursday.
About 44.5 per cent of mainland millionaires with personal wealth of more than 10 million yuan, are not planning to emigrate, according to Hurun Chinese Luxury Consumer Survey 2017.
“The year of 2017 could be a turning point,” said Rupert Hoogewerf, chairman and chief researcher of the Hurun Report. “The proportion of respondents considering emigration is reflecting stronger confidence.”
Still, almost half of those polled said they are considering emigrating as an option, though the figure is down from about 60 per cent in 2008.
More reviews are coming in of author Zhang Lijia´s Lotus: A Novel, about prostitution in China, this time from the NPR. The reviewer is rightfully impressed. "We can count ourselves lucky to get this glimpse into the fascinating world of Lotus."
NPR:
The author has a light touch, even when delineating the underbelly of contemporary Chinese culture. She conducted research in the red light districts of Shenzhen, Dongguan, Beihai, Tianjin and Beijing, so there is a documentary verity to the telling, giving starch to fiction that might otherwise be flabby. Zhang also brings a personal stake to the book, dedicating it to her grandmother, who was sold to a brothel as a euphemistically-termed "flower girl," or courtesan.
Some first novels, especially those birthed in creative writing classes (Zhang, a former rocket factory worker in China, studied at the University of Iowa), go heavy on self-consciously poetic language. The author tries too hard and the reader suffers. The images Zhang gives us, in contrast, are uncomplicated, concise and touching. Young Lotus's "pencil was homemade, simply the broken end of a pencil's lead discarded by her classmates, stabbed into a piece of soft wood." Concerning Bing's emotions, Zhang writes, "He had been like an ant on a hot pan ever since the girls' visit."
Book groups be advised: Readers will learn quite specific tricks of the trade. Lotus is undeniably earthy but thankfully spare, letting its characters, and its proverbs, do the talking. When Bing wants to get serious with Lotus, we hear about the development a proverbial way: "What luck, this offer. A pancake fallen from the sky, as her grandma would say." We can count ourselves lucky to get this glimpse into the fascinating world of Lotus.
Many U.S. business leaders are worried the next president will start a trade war with China that will seriously damage their interests here. Trump's threat to raise taxes on American companies that manufacture abroad - repeated in a Washington Post interview this past weekend - would represent an even more direct risk to the interests of many firms.
Instead, what U.S. business leaders want is pressure on China to open its economy further to American investment.
Arthur Kroeber, managing director of Gavekal Dragonomics, an economic research firm, said frictions had risen because the "material fruits" of the United States' engagement with China had been very unevenly distributed.
But in a client note, he said the problem could not be solved by "browbeating China to change its trade policies or bullying U.S. companies to move factories back onshore" - partly because job losses have had as much to do with cheap automation as with competition from a global labor force.
"A sensible re-set" of U.S.-China economic relations, he argued, should not look backward at trade in goods and manufacturing but instead focus on fostering a better environment for investment, "where the U.S. has more leverage and China has more to give."
President Xi Jinping´s speech at the World Economic Forum in Davos has been greeted with enthusiasm by global corporate leaders, confronted with opposite movements from Donald Trump and the Brexit. But political analyst Victor Shih warns it does not mean China is heartily embracing economic liberalism, he tells the LA Times.
LA Times:
“China certainly seems to be taking advantage of the U.S.’ increasingly shaky commitment to global free trade to portray itself as a potential new leader,” said Victor Shih of UC San Diego’s School of Global Policy and Strategy.
The country last year launched an international lending organization, which pours millions into ramshackle roads and water pumps. China continues to expand its “One Belt, One Road” initiative, an effort to revive the ancient Silk Road trade routes and spread its influence west.
Chinese leaders have increased the nation’s aggressiveness in the South China Sea’s disputed waters through artificial islands and the installation of military infrastructure. And they recently offered an alternative to a U.S.-backed Pacific trade pact that withered last year, handing the country an even greater voice in Asian economic affairs.
But Shih cautioned against assuming the communist nation had fully embraced economic liberalism. He noted that China has pursued “aggressive mercantilist” policies and advocated replacing foreign imports with “made in China” products for more than a decade. Such a policy is far harder to impose in the U.S., he said, despite Trump’s rhetoric.
“Other industrial economies will find China a troublesome trading partner for some time to come,” he said.
The Chinese leader has sought to leverage his country’s economic strength into diplomatic clout with multinational initiatives such as the Asian Infrastructure Investment Bank and his signature plan to expand infrastructure along ancient trading routes to Europe. At Davos, Xi announced a global summit on the strategy for May, saying Chinese investment in more than 100 countries had surpassed $50 billion over the past three years.
Arthur Kroeber, Beijing-based founding partner and managing director at Gavekal Dragonomics, said that provided Xi a platform to demonstrate his overseas clout back home, where the Chinese leader is preparing for a mid-term reshuffle of the party’s leadership ranks.
“It’s in Xi’s interests to take every opportunity he can and present himself as this leader who is powerful, strong and visionary, to give himself some international prestige,” said Kroeber, author of “China’s Economy: What Everyone Needs to Know.” Xi’s appearance at Davos, which has previous been attended by China’s premiers, is “consistent with the notion that Xi is now the only major authorized spokesman for the whole country.”
Xi urged other countries to also keep their doors open to Chinese investors, drawing another contrast with Trump, and said he had no plans to devalue the yuan in order to boost competitiveness.
While health care insurance has been high on China´s political agenda, the impact of private insurance is still very limited, writes Peking University professor Jeffrey Towson in the Asia Nikkei. Before turning to possible solution, he paints the grim picture.
Jeffrey Towson:
Local and foreign insurers are lined up to fill this gap but the opportunity remains tantalizingly out of reach. Efforts in private health insurance have been stymied by regulatory constraints; by too few real private secondary care hospitals; by poor consumer awareness of health insurance; and by inaccessible, limited and non-standardized medical data for underwriting and pricing.
Chinese consumers are becoming wealthier and more sophisticated in their expectations for healthcare. A survey last year by consultancy McKinsey & Co. of some 10,000 Chinese consumers found an increasing focus on eating healthier and safer food, practicing preventive medicine and playing sports. This growing focus on healthy living is great for healthcare and hospitals even if bad for KFC.
Healthcare demand is also increasing as the population ages. Plus, as China develops, chronic diseases common to developed countries, such as diabetes and obesity, are becoming more common. Overall, the demand for healthcare keeps growing.
Meanwhile, Chinese public hospitals remain overcrowded, have questionable financial incentives and are often criticized for poor service. While public insurance extends to 95% of the population, this coverage is actually very patchwork. Users are frequently required to pay 10%-35% of the cost of inpatient care. Coverage is limited with most private facilities and many treatments and medicines, especially for cancer, excluded. So despite "universal" social insurance, Chinese consumers still pay over 50% out of pocket for their care.
There is a "significant increase in the awareness and demand for private medical treatments in China," said Neil Raymond, CEO of Pacific Prime, an insurance advisory company based in Hong Kong. "This means if you have the money, and more and more people do, then you will pay to go to good private facilities."
This growing gap between supply and demand can be seen in the long lines outside of top Chinese hospitals virtually every day. It can be seen in the numbers traveling to Hong Kong, Singapore and California for care. It can be seen in families' continued hoarding of cash for medical emergencies. It can also be seen in the record number of attacks on hospital workers every year in China.
The story of her grandmother, first a prostitute, then a concubine, triggered author Zhang Lijia´s into writing her latest bookLotus: A Novel. With meticulous research she explored the life of today´s sex workers, and tells in Refinery29, how a middle-class lady explored a secret world.
Zhang Lijia:
I chatted with the salon girls and learned that they were migrants from the impoverished countryside. All three were poorly educated and unskilled: The youngest was in her early teens — the same age as my grandma when she began work at a brothel in 1928. How did these women end up here? I wondered. And how did they reconcile their trade with their conservative upbringing in the village?
It was at that moment the seed for my novel, Lotus, was planted. Through the lives of these women, I could explore China’s growing gap between men and women, urban and rural — as well as the tug of war between modernity and tradition.
Because my last book was a memoir, people often wonder if I’ve penned another autobiography: I am always quick to point out that Lotus is purely a work of fiction, not based on personal experience. Keenly aware that my middle-class urban existence is so removed from that of a migrant-worker, I knew I needed serious research. And so I interviewed sex workers in Shenzhen, Dongguang, a neighboring city, Beijing, and other cities. I tried to make friends with these sources, but it proved to be a very challenging task: Their lives are so transient, as they change from one massage parlor to another, from one city to another. They change their mobile numbers — or they simply vanish.
My breakthrough came after I managed to gain work as a volunteer for a non-governmental organization NGO that is dedicated to helping female sex workers in a northern city in China. The main task of these volunteers is to distribute condoms to sex workers operating at massage parlors and hair salons — all fronts for brothels — in an outskirt of Tianjin.
They are mostly low-class establishments, and I usually went out with a staff member from the organization, Little Y — a former sex worker herself, who is very skilled in her NGO role. She would sit down and chat over a cup of weak jasmine tea; she would always find something flattering to say.
“Wow, what a pair of heavy melons!” Little Y would say, pointing at one woman’s robust chest. “Are they real?” She would volunteer that she had had implants herself; on several occasions, she lifted up her top and compared herself to other women who also had breasts enlargement. Little Y’s augmentation was done in a back-alley clinic, and resulted in one of her nipples pointing westward.
Ma has been pushing since 2015 to increase U.S. sales to China on Alibaba. But getting one million American brands onto its platforms would require a 142-fold increase in business.
Realistically, what will likely happen is Mom and Pop stores will set up e-commerce stores on Alibaba as a side business to tap into the China market, says Ben Cavender, director with China Market Research Group.
"I don't see a lot of job creation happening," Cavender said.
While Ma did not present any concrete plans for job creation, his meeting with Trump was a good "lobby photo opp," says Duncan Clark, chairman of consultancy firm BDA China and author of "Alibaba: The House That Jack Ma Built".
It could also be seen as a way to curry favor with U.S. regulators. The U.S. Trade Representative put Taobao back on its "notorious markets" list last month, citing an "unacceptably high" level of fake goods.
Analysts say sophisticated, middle class Chinese consumers have a growing appetite for foreign goods that are more trustworthy than Asian products. Small U.S. companies that specialize in nutrition, supplements, and baby products should do well on Alibaba's platforms, said Cavender.
