Trump cannot win over Pyongyang by pushing China - Arthur Kroeber

Arthur Kroeber

President Trump's rather simplistic views on foreign affairs have waken up many observers. Trump's approach to push China on North-Korea might be just an example where easy solutions do not work, tells political analyst Arthur Kroeber, author of China's Economy: What Everyone Needs to Know® at the South China Morning Post.

The South China Morning Post:

China’s reluctance to increase pressure on North Korea amid the country’s continuous testing of ballistic missiles is setting up a clash with US President Donald Trump over economic issues that the US cannot win, according to Arthur Kroeber, managing director of Hong Kong-based financial services firm, Gavekal Dragonomics. 

“Trump has, against the advice of pretty much everyone in the traditional foreign policy establishment, now created a direct linkage between the security issues and the economic issues and the problem with that is that it’s most unlikely that the Chinese will deliver anything material in terms of constraining North Korea,” Kroeber said at an investor seminar in New York. 

“When it becomes obvious later this year that the Chinese are basically paying lip service to that issue, that then creates an incentive to get tougher on China on the economic issues.” 

The US does not have enough leverage against China to force Beijing’s hand on either the security or economic issues, making it unlikely that failure to agree on an approach to North Korea will lead to a trade war, Kroeber said. 

“If the US does decide to get more aggressive with China on economic and trade issues, China has plenty of stuff to fight back with, and I think ultimately the loser from that confrontation would be the US.”

More at the South China Morning Post.

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One Belt, One Road initiative needs a more positive take - Kaiser Kuo

Kaiser Kuo

Western analysts have been criticizing China's One Belt, One Road initiative with loads of negative comments. Time to take a more positive approach, says China veteran and rock star Kaiser Kuo, after discussing the issue with many former US leaders, at SupChina. 

Kaiser Kuo:

There are, of course, reasons for skepticism. But there’s no danger, at least among pundits in the West, that anyone has been so beguiled by Xi Jinping’s grand plan that they believe it to be rooted in altruism. 

Some fret that the debt burden on recipient countries will be crippling. Others see China’s inroads as the thin edge of a neocolonial wedge. Most agree that the Belt and Road brand — and it is, very clearly, a kind of branding exercise — is so capacious that it’s nearly meaningless, and that local officials and SOE bosses can slap the B&R label on any old project. And many Chinese are wary of this largesse when China itself hasn’t even joined the ranks of middle-income countries on a per capita basis. And then there’s the propaganda around the initiative, most of which has been downright silly, some of it risibly so (see this compilation of videos for a few examples). 

Skepticism is healthy, until you pile on so much of it that any fair appraisal becomes impossible. My worry is that the U.S. is nearing that point. Already, we’ve blundered in our approach to what might be the most important of the Belt and Road initiatives: the Asia Infrastructure Investment Bank (AIIB). A number of our recent guests on Sinica, including Nye, former U.S. trade representative Charlene Barshefsky, Acting Assistant Secretary of State for East Asia and Pacific Affairs Susan Thornton, and former deputy assistant secretary of state for East Asian and Pacific affairs Susan Shirk, have all spoken of the U.S. effort to dissuade allies from joining AIIB as a mistake. Concerns over governance and lending standards may have been well founded, but the Obama administration’s negativity toward AIIB foreclosed a chance for constructive participation and proved to be a diplomatic embarrassment. 

In a recent interview with Nathan Gardels of The World Post, the former Singaporean diplomat Kishore Mahbubani addressed the inevitability of an end to American primacy, urging the U.S. to accept its eventual fate with more grace than it’s shown, and to “abandon its destructive policies of unilateralism and start a new era of constructive policies of multilateralism.” Xi Jinping’s signature initiative offers an opportunity for just such multilateralism. “If the U.S. wants to be really cunning,” Mahbubani said, “it should seize the many business opportunities that the ‘One Belt, One Road’ initiative will eventually offer. Pragmatism and common sense should replace ideology and pride in American thinking of China.” 

Sure, Belt and Road might not end up being a “Marshall Plan without a war,” as one analyst called it. Marshall Plan comparisons, though, are ubiquitous — and they are not coming from China. Indeed, China’s official Xinhua News Agency has bluntly rejected the comparison, noting that the Marshall Plan was about Cold War–era containment of Soviet power, whereas China’s Belt and Road initiative “aims at achieving the common development of all countries rather than seeking spheres of political influence.” Perhaps those who have praised Belt and Road as an ingenious way for China’s bloated SOEs to fob off their excess capacity are underestimating the scale of overcapacity, or overestimating Asia’s appetite for new infrastructure. It’s possible, if not indeed likely, that some of the many projects lumped under Belt and Road may prove to be costly boondoggles. 

With Charles Kindleberger’s warning firmly in mind, the best response on the part of the U.S. and its allies should be neither to sneer nor to blithely cheer, but to offer constructive guidance and encouragement — and to make sure that, to the highest extent possible, all the roads, rail lines, ports, and pipelines do indeed function as public goods. 

Belt and Road would have fared better, as my colleague Jeremy has pointed out, under its original moniker — the “New Silk Road.” That name would have carried a positive historical valence that evokes in particular a historical period from which contemporary China could take real inspiration: the Tang dynasty. Ask any educated Chinese person about that dynasty — one that likely ranks at or near the top of the list of great epochs of Chinese history — and they’ll tell you that the reason for the Tang’s greatness was its openness and cosmopolitanism. Tang is a way for Chinese to reconcile national greatness with internationalism, with globalization. I’m told that this formulation worked for a certain Chinese heavy metal band. 

Now if there were only such a period that American leaders could invoke…

More at SupChina.

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How a powerful Xi Jinping changes China's policy making - Victor Shih

Victor Shih

Since Deng Xiaoping China's leaders did have relatively limited power. But all that is changing under current president Xi Jinping, writes policy analyst Victor Shih at the Policy Forum, and that might not be good news. "The policy-making environment has changed completely."

Victor Shih:

The latest plenum in China further shored up President Xi Jinping’s personal authority in the party by labelling him the “core” of the central leadership. Furthermore, the plenum called on all party members to “raise their core awareness and awareness for unity,” – essentially that everyone in the ruling party should act strictly in accordance to the instructions of Xi Jinping. But is that necessarily good for policy-making in today’s China? 

During the previous Hu Jintao administration, although Premier Wen Jiabao had jurisdiction over economic affairs, he always had to be mindful of other members of the Politburo Standing Committee, who were at least his equal, criticising his policies. This power dynamic provided incentives for the technocrats in the State Council to propose a variety of policy objectives, as well as policies. 

As a result, policy discussions were lively as technocrats and experts from the various ministries and think tanks appealed to different elite audiences. To be sure, the debates likely delayed decisions in some cases, but the more decentralised decision-making model also led to a greater variety of ideas, as well as an important self-correction mechanism. 

When bad outcomes emerged from a given policy, a subset of technocrats quickly pointed out the mistake, even if it meant offending Premier Wen. Because Premier Wen was checked by other elites and because he did not have unilateral authority over mid- and high- level appointments, even more junior technocrats dared to criticise his policies in the belief that the higher-level elites could shield them from any retaliatory action. 

With Xi’s consolidation of power and the extension of his jurisdiction to include economic affairs through his chairmanship of the Leading Group on Comprehensively Deepening Reform (LGCDR), the policy-making environment has changed completely.

More at the Policy Forum.

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Who will be the Disney of China? - Jeffrey Towson

Jeffrey Towson

Entertainment parks are becoming big business in China, but there are at least three players trying to come the Disney of China, including Disney itself. Who will be the real Disney of China, wonders Beida business professor Jeffrey Towson on his weblog.

Jeffrey Towson:

The takeaway here is that while Disney’s dream is capturing the Chinese market, that is not the objective of the government, which is actively operating in this sector as both policeman and player. They are focused on the development of an entertainment industry in Shanghai. 

And while the government needs Disney today, it is worth keeping in mind this will not always be the case. 

Finally, well-funded locals, like Wanda and Alibaba Pictures, are now giving chase. This force is the most worrisome. 

Disney is off and running in China. But so are well-funded local competitors. Dalian Wanda Group clearly wants to be the “Disney of China” and has come out with guns and press releases blazing. They are opening multiple theme parks and are the largest owner of movie theaters in China and the U.S. (and #2 in Australia). They are also actively acquiring in Hollywood. Plus you have Alibaba Pictures, Huayi Brothers and others. The competitive picture is daunting. 

However, lots of rich companies have tried to be Disney in the past and have failed. When Disney entered Europe and Japan, lots of local companies had the same ambition. And for decades, other Hollywood studios have tried to replicate Disney in the US. All have largely failed. It turns out copying Disney is pretty difficult. 

Two companies have arguably had some success: Dreamworks, founded by Jeffrey Katzenberg (who previously ran Disney Animation); and Pixar, run by John Lasseter (purchased by Disney in 2006). You could also perhaps point to Lucasfilm, creator of the “Star Wars” franchise (now owned by Disney as well). But all of these are essentially pure media companies. None have replicated Disney’s combination of animation and theme parks. 

I think this has a lot to do with cash flow. Creating animated (and singing) movies that children love is tricky. It takes years of work for one movie, costs a lot of money and is “hit or miss”. If the movie is a hit, you make lots of money. If not, you probably go bust. The unpredictable cash flow makes funding animated movie development and then building large, expensive theme parks impossible for most all companies. Disney’s advantage is that it already has a stable of popular characters and international operations that create financial scale and stability. 

But even Disney has had trouble being Disney at times. It had great success under Walt Disney but struggled in the 1980s as its movies lost their appeal. And when the movies aren’t hits, the theme parks can suffer. New leadership took over (Eisner and Katzenberg) and a string of successes like “The Little Mermaid” and “Aladdin” followed. Disney again stumbled in the early 2000s until it bought Pixar, which made Steve Jobs the largest Disney shareholder. 

So now Chinese companies are trying to be like Disney in China, which is actually really difficult. Wanda is opening theme parks and starting to make animated movies. We will see if they are more successful than past attempts by cash rich companies. Overall, it is going to be an interesting fight to watch.

More at Jeffrey Towson's website.

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Condoms: not volume but quality is the issue - Shaun Rein

Shaun Rein

Attitudes towards the usage of condoms are changing fast in China, says business analyst Shaun Rein to CNBC. While condoms have always been available, their quality was often doubtful. That opens opportunities for high-end condoms with a good - read: international - reputation.

CNBC:

"Volumes are not expanding but there is massive upgrading," in search of higher quality and a superior feel, said Shaun Rein of China Market Research Group, a consultancy. "This is where the foreign brands definitely have the advantage. Consumers are moving up the value chain." 

Chinese tourists to Japan have been returning home with bundles of condoms and Japanese manufacturers have been ramping up exports to China in recent years following a series of safety scandals that have reduced trust in local brands such as Donless, Double Butterfly and Gobon. 

Last year Shanghai police said they seized 3m locally made condoms manufactured from inferior and in some cases foul-smelling materials, following a 2013 bust of 5m fakes. Counterfeit Chinese condoms have been found as far afield as Ghana and Puerto Rico in recent years. 

Jissbon is a mid-level brand in China, appealing to lower-income workers and students who are wary of local products, said Mr Rein. 

"It's above the Chinese brands," he added. China's young people are having sex earlier, state media reported last year, with the average age of the youngest generation's first sexual experience occurring at 17. 

Ansell's main competitor in China is Reckitt Benckiser, which owns Durex, and has one of its largest factories in the Chinese city of Qingdao. 

More in CNBC.

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Chinese brands: no price premium - Tom Doctoroff

Tom Doctoroff

Chinese brands might be improving, but they can still not offer a price premium, says marketing guru Tom Doctoroff and author of What Chinese Want: Culture, Communism, and China's Modern Consumer at Campaign Asia. They are lacking long-term concept and are mostly sales-driven, he adds.

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Ant Financial: a global payment monster - Ben Cavender

Ben Cavender

China's internet companies have turned around payment systems domestically. Now they are turning to global market, says retail analyst Ben Cavender to Cryptocoinnews. Alibaba's Ant Financial now is setting up a war chest to conquer those global markets.

Cryptocoinnews:

According to a Reuters source, Ant is looking to raise up to $3 billion in debt to fund acquisitions in foreign markets. 

“Ant’s ultimate goal is to become a global payments monster – the biggest, broadest option for consumers,” said Shanghai-based Ben Cavender, speaking to Reuters from China Market Research. “The challenge is facing strong local players around the world, so it’s cheaper to buy into these companies rather than burning money to steal market share from them.” 

In its latest funding round, Ant is valued at $60 billion and is expected to announce an initial public offering this year. As things stand, Alipay is supported at nearly 100,000 retail stores across 70 overseas markets, outside China, in countries including France and Germany.

More in Cryptocoinnews.

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The China Football Association is illegal under FIFA rules - Rowan Simons

Rowan Simons

Soccer in China is government-organized and that not only leads to a bad quality soccer, it is also illegal under the FIFA rules, writes soccer expert Rowan Simons at the New York Times. Rowan Simons is chairman of China ClubFootball FC, the first amateur football network in China with foreign investors, and the author of “Bamboo Goalposts.

 Rowan Simons

China is not at the World Cup and its women’s team is no longer a leading force for reasons of politics, economics, culture and education — all challenges we are trying to tackle with ClubFootball. 

Let’s talk politics. The Chinese Football Association is an illegal organization under Article 17 of FIFA’s constitution which demands independence from government. Yet government control of the C.F.A. is clearly laid out in China’s 1994 Sports Law. These mutually exclusive regulations pose significant concerns. 

This “top down” system has several fundamental flaws that ignore the long-term grassroots solutions required. Chinese sport still follows a Soviet model, placing children in elite schools (at their own expense!). Football is a mass participation sport in which the best players may not emerge until their later teens. The simple truth is that China needs a system of community-based clubs that are run by the people for the people.

Since the C.F.A. does not even have a department for amateur football, football must grow itself. With 100,000 supporters, 2,000 kids in after-school courses and 100 adult teams, this is exactly what ClubFootball is proving today in Beijing. If our small success (with no government funding) could be replicated in every large city, China could finally benefit from its one great football advantage — its people.

More at the New York Times.

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Action needed to narrow wealth gap - Zhang Juwei

Zhang Juwei

The wealth gap in China, reflected in the gini coefficient, is moving into dangerous heights, and government action is needed to narrow to divide between rich and poor, says professor Zhang Juwei, director of the labor and social security research center at the Chinese Academy of Social Sciences to the China Daily.

The China Daily:

The Gini coefficient - a measure of income inequality commonly used by economists and institutions - reached 0.47 in China in 2005, overtaking the recognized warning level of 0.4, according to the World Bank. 

Although no new calculation has been released to gauge the latest situation of income inequality in China, the previous World Bank figure basically represents the nation's current situation and the gap is widening dramatically, said Zhang Juwei, professor and director of the labor and social security research center at the Chinese Academy of Social Sciences. 

Zhou Tianyong, senior economist of the Party School of the Central Committee of the Communist Party of China, said in a recent article that in 2008, the Gini coefficient was 0.47 in China. 

"When the Gini coefficient reaches around 0.5, it means the inequality problem is extremely severe and needs immediate action to bring it down," Zhang said... 

As for solutions, analysts are divided on where the strongest measures should be taken. Zhang said the emphasis should be placed on the primary distribution of national income. "It is the root of the income distribution system. The government should do more to raise the proportion of laborers' incomes in the income basket, which has been declining for years," he said, adding that capital investment has been a major reason for the disproportionately high ratio of wealth held by the rich. 

He said raising farmers' incomes is a practical measure and by doing that, the salaries of low-income groups like migrant workers would also go up.

More at the China Daily.

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The revival of China's traditional believes - Ian Johnson

Ian Johnson

Often reviewers tend to look at the emergence of world religions like Christianity, Islam and Buddhism, when they summarize Ian Johnson's book The Souls of China: The Return of Religion After Mao. But the most moving chapter is that on the 80 pilgrim associations from Beijing, writes professor Richard Madsen in the Washington Post.

The Washington Post:

In the most vivid and moving chapters of the book, Johnson follows the Ni family, which leads one of the 80 pilgrim associations in Beijing. The family organizes the annual two-week pilgrimage to the city’s most important religious site, Miaofengshan, or the Mountain of the Wondrous Peak, to worship a goddess called Our Lady of the Azure Clouds. These associations are independent of the government, with an authority that derives from tradition and faith. The work is unpaid and passed down from father to son. Johnson spends the entire two weeks with the Ni family’s association, ascending the mountain with tens of thousands of pilgrims. The mountain is transfigured with statues and flowers and gold-colored sheets and banners; the air is redolent of incense; and time is filled with performances of singing and dancing, stilt-walking and martial arts. 

What was the meaning of all this? “The key,” Johnson writes, “was that something was here, now: a bridge to the future. After everything that China had been through over the past century, the fact that temples were still standing was the miracle. . . . Instead of appraising the statues, I looked at the people, to see what was in their eyes.” 

What was in their eyes was a kind of faith and hope, a belief that they were connected to their ancestors and a wish that they could bequeath that connection to their children. These aspirations are expressed in different ways by the religious practitioners throughout the book. Li Bin from rural Shanxi province is a ninth-generation Daoist, a “yin-yang man,” who organizes funerals and tells fortunes, helping the living both to understand their fate and to carry on the legacy of the dead. Qin Ling is a master of Daoist “inner alchemy” meditation techniques, who teaches in Beijing, with a clientele that includes the children of high-ranking officials. Johnson studies with her and then goes on a 10-day retreat in southern China with her mentor Wang Liping and 500 others, including lawyers, business people and artists.

More in the Washington Post. 

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What moves China on a global stage - Howard French

Howard French

Explaining China's position on a global stage, that is the underlying purpose of Howard French's book Everything Under the Heavens: How the Past Helps Shape China's Push for Global Power. As an emerging world power, we need to understand China, in a similar way we now understand the US, Britain, Russia and other current and past global powers, he explains to the South China Morning Post. "Tianxia" is the key concept to understand.

The South China Morning Post:

China’s story just happens to be intimidatingly vast and complex, which partly explains French’s decision to filter its history through a central concept: tianxia, an ancient Chinese cultural concept that gives his book its title. The literal translation of the word is “everything under heaven”. 

What tianxia means in practical political terms, French writes in the book, is “China’s tribute system”. 

“Tianxia emerges as a paradigm for China’s geopolitics from a correct sense that it is vastly larger and, for most of its history, vastly richer than any neighbouring state,” French explains during our conversation. “Out of this flows an ideal, from the Chinese perspective, that order can best be established in our neighbourhood by a situation whereby the neighbours defer to us.” 

In the most technical sense, deference is expressed through a highly ritualised series of ceremonies: embassies dispatched to pay obeisance to the emperor; the adoption of the Chinese calendar and language. In broader policy terms, tianxia combines carefully deployed “sticks” and “carrots”. French points to historical evidence to argue that China uses inducements first and force only as a last resort: the Sino-Vietnamese war of 1979 is an example. Carrots include access to Chinese trade, to its potentially vast market, and to what French describes as “patents of authority. China essentially legitimates local leaders by endorsing them”. On this basis, “a harmonious pattern of coexistence can endure in the region. One could say only on this basis”. 

Although the current leadership is careful not to invoke tianxia explicitly, French argues that it explains much of China’s international diplomacy. Everything Under the Heavens devotes considerable space to unpicking Beijing’s forthright claims to territory in the South China Sea, which have made several nations uneasy. In 2013, the Philippines took China to an arbitration tribunal in the Hague to invali­date Beijing’s territorial claims. At the heart of the South China Sea dispute is the “nine-dash line”, under which China lays claim to 90 per cent of the area. On July 12 last year, the tribunal ruled in favour of the Philippines. 

“China didn’t say, ‘You are infringing upon tianxia’, but that’s very much what was going on,” French says. “[China says] ‘We control those waters. You should get with the programme and defer to us.’”

More in the South China Morning Post.

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Next: home-grown designers - Jeffrey Towson

Jeffrey Towson

China has moved away from its copycat culture in much of manufacturing and R&D, but is still lacking experienced talent when it comes to developing design. That is just a matter of time, tells Peking University business professor Jeffrey Towson to Bloomberg. Branding and quality of design are getting higher on the agenda.

Bloomberg:

There may be a brighter future for home-grown designers..., said Mr Jeffrey Towson, a professor of investment at Guanghua School of Management at Peking University. 

China has invested heavily in art and design schools and that is bearing fruit, with more than a million art and design students graduating every year since 2009, he noted. 

"They don't have the experience yet, but they have the talent. "Fifteen years ago, nobody hired Chinese engineers. Now, every Fortune 500 company builds R&D centres in China. 

"It's going to be the same with designers."

More at Bloomberg.

Jeffrey Towson 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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The disrupting power of China's consumers - Jeffrey Towson

Jeffrey Towson

China's consumers are becoming increasingly a force the rest of the world has to take into account, writes Beida business professor Jeffrey Towson at his weblog. Not only have Chinese more disposable income, they not only go for cheap offers, and regularly disrupt the world.

Jeffrey Towson:

Chinese consumers continue to grow relentlessly in number and wealth. This is a well-studied economic trend. But what people are missing is how the changing behavior of these consumers is now regularly shaking the world. 

Suddenly when Chinese consumers start eating more meat, it impacts agriculture in the American midwest. When they discover northern Thailand as a fun destination, they flood the area with tourists. When Chinese consumers change their minds about something, it now ripples outward into the global economy. And these types of phenomena are going to become a lot more noticeable in the coming years. 

The economic trend underlying this is the steady advance of China’s urban middle class families. This is the group to watch. According to McKinsey & Co., Chinese urban household disposable income will reach $8,000 a year by 2020. This will be about the same level as South Korea, but in a much, much larger population. After Middle Eastern oil, Chinese urban middle class families are arguably the most valuable natural resource on the planet. 

But within this big trend, an important shift is now occurring. Urban families are rapidly transitioning from “value hunters” to more emotional, aspirational and free-spending consumers. 

Price-focused consumers have dominated the China story thus far. They typically have had little brand loyalty and tend to shop around for the best deals, mostly for life’s necessities. Chinese companies such as Haier Group and China Vanke have done very well selling these consumers air conditioners and apartments at affordable prices. 

The more emotional group now emerging, called “new mainstream” consumers by McKinsey, already has life’s basics. And they have enough disposable income to buy discretionary items such as lattes and trips to Thailand. 

What this new group cares about is quality, brand and how products make them feel. So they want real iPhones, not cheap alternatives, and they are able and willing to pay for them. What is fascinating about this group is that they behave fairly similarly to consumers in developed markets.

More at Jeffrey Towson's weblog.

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Prostitution: A mirror of society - Zhang Lijia

Zhang Lijia

Prostitution is a mirror of society, tells Beijing-based author Zhang Lijia at the BBC. Her book Lotus: A Novel shows some of China's most urgent problems related to prostitution: migration, the gap between men and women and moral decline.

While entering the sex trade on their free will, most women did so for economic reasons, she tells. They gain economic independence, but often against a price. Much of their income is used to support their families back home, who often have no idea about the source. Why prostitution in China should be decriminalized.

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You can see the full clip here.
Zhang Lijia at the BBC

China-US trade deal: merely window dressing - Arthur Kroeber

Arthur Kroeber

The surprise trade deal between China and the US on beef and financial services is lacking real substance, tells economist Arthur Kroeber and author of China's Economy: What Everyone Needs to Know® at USagnet.

USagnet:

"China has made a few modest concessions that cost it very little, in areas strategically picked to maximize the political benefit to Trump," said Arthur Kroeber, managing director of Gavekal Dragonomics, an economic research firm in Beijing. "But the substantive impact on US-China trade and investment flows is pretty minimal."

More at USagnet.

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Coca-Cola is on the wrong track selling a tin of water for US$9 - Tom Doctoroff

Tom Doctoroffr

Coca-Cola surprised many branding experts by launching a tin of sparkling water called 'Valser' to Chinese consumers for US$9. It is not impossible, says branding guru Tom Doctoroff to the South China Morning Post, but then they have to change their marketing dramatically. “Turn it into a social currency,” Doctoroff says.

The South China Morning Post:

“Turn it into a social currency.” 

That’s the advice being given by one China marketing expert to Coca-Cola, as the US drinks giant launches what it is being billed as an ultra-luxurious Swiss sparkling water brand, a bottle of which costs double what a Starbucks venti cappuccino might cost. 

Its “Valser” water first appeared in the US soft drinks giant’s store on Chinese online marketplace Tmall a few weeks ago, highlighting specifically that it is sourced from “Switzerland.” 

But what raised many eyebrows was its price tag: a 750ml Classic bottle costs 64 yuan (US$9.29)... 

“Theoretically, it is possible [to sell at that price], but you would have to make it not just about water, but also a social currency,” said Tom Doctoroff, senior partner with global marketing consultancy The Prophet, and author of book What Chinese Want: Culture and Communism... 

“Our water comes from The Alps, which was formed 200 million years ago,” the world’s largest beverage company said of Valser in its Chinese advertisement, adding that its source is fed from melted snow and rain that filters through glacial sand. 

But other than focusing on origin, Doctoroff insists Coke should be adopting a vastly different marketing approach from what the industry is simply accustomed to. 

So far Coca-Cola has opted for a group of heavyweight endorsers, among them Chinese heartthrob Lu Han, the Korean actor Park Bo-gum, even the billionaire investment tycoon Warren Buffett – but just how successful they could prove for an ultra-premium, ultra-pricey Swiss bottled water remains a mute point. 

“The Chinese who would buy Coca-Cola’s luxury bottled water are likely to be the same group of people who are connoisseurs of Louis Vuitton handbags,” he said. 

“So to help build its prestige, you need new partners, and right opinion leaders .”

More in the South China Morning Post.

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