Health food: moving to more open supervision - Mark Schaub

Mark Schaub

The China Food and Drug Administration (“CFDA”) has released in April a draft regulation for supervision of so-called health food. Shanghai-based lawyer Mark Schaub of King & Wood Mallesons sees it as an open way to discuss a new system of filing, and less registration, he writes in Lexology.

Mark Schaub:

The Draft Opinion proposes that going forward more health food products would require only filing and less would be subjected to the more onerous registration requirements. 

This is important as it shows that CFDA is signaling a willingness to overhaul the supervision system in an open manner. In order to achieve this the CFDA will likely expand permitted health food material and ingredient lists so that health food only using permitted ingredients included in the list will require a simple filing and not registration. 

What is health food? 

The Draft Opinion specifies that health food is a special type of food that can be differentiated from both medicine but also normal food. The definition includes dietary supplements and food claiming functions to promote human health. 

Health food will need to provide clear edible dosages and also specify which groups are suitable or unsuitable for taking the product. Health food products are not to be a substitute for normal dietary needs or claim that they can be used to treat disease or as a substitute for medicine. It should also be noted that normal food should not claim any health function. 

Strengthen the management of raw materials of health food 

CFDA intends to formulate health food materials lists. These lists will form the foundation in order to expand a system that will allow many more products to require a simple filing rather than the more onerous registration process. These lists will include details as to specifying the ingredients, dosage, corresponding function, production technology and other technical requirements. Importantly, these raw materials will only be able to be used in health food – if a normal food has such ingredients it will be considered a health food. 

Function claims 

The CFDA Opinion stresses that a review and examination of the scientific basis for function claims needs to be improved. In principle, function claims made by health food should be verified by way of human testing. Consumers should be able to properly rely on such function claims and this should be evidenced by scientific consensus, solid scientific basis and verification through human testing. Foods other than health food should not make function claims. 

Health food advertisement and labelling 

The content on the label and packaging of the product must be consistent with the contents in the registration certificate or filing information. Health food labels and packaging must provide proper functional information to guide consumers and cannot include misleading information. In the future it is intended that health food will be labeled with a special symbol. The label, packaging and advertisements for health food must emphasize the product is not a substitute for medicine and also the products should not be named after a function claim.

More in Lexology.

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Getting One Belt, One Road right is a tough job - Sara Hsu

Sara Hsu

Xi Jinping's One Belt, One Road initiative has raised many voices, inside China rather positive, outside China often sceptical. Financial analyst Sara Hsu looks at some details of the multiple trillions US dollar project and feels getting it right might be tough, whatever side you are on as financial checks and balances are lacking, she writes in the Huffington Post.

Sara Hsu:

Chinese President Xi Jinping’s massive “One Belt, One Road” project is more expansive and inclusive than any other modern undertaking by a single country. If successful, it could transform the face of the developing world. But the endeavor has many potential pitfalls.

The Belt and Road initiative covers a huge part of the world and promises to thrust China into the center of the globalization process. Developing countries that lack infrastructure can theoretically obtain much-needed roads, railways and ports. The Belt and Road initiative could represent the most significant coordinated development undertaking in history.

The question, though, is if it will succeed. There appears to be insufficient due diligence in some cases, which carries political and financial risks. For example, work on the Colombo port project in Sri Lanka and a high-speed rail plan in Indonesia stalled due to local opposition. In other areas, like Gwadar in Pakistan, security is a major concern.

Projects funded by the Asian Infrastructure Investment Bank are more likely to be carefully weighed in terms of risk. By contrast, projects financed by the China Development Bank or the Export and Import Bank of China may undergo standard examination but, as part of an array of projects on the table, may be short-changed in full analysis and oversight... The presence of risks does not mean that planned projects should be abandoned. However, investment could be more beneficial if the pace of implementation is slowed down and carefully overseen. Using a more cautious approach to political and financial risks during the planning stage can help ensure that Belt and Road projects come to fruition.

More in the Huffington Post.

Sara Hsu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more experts on the One Belt, One Road initiative at the China Speakers Bureau? Do check out this list  

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Didi needs to go international - Shaun Rein

Shaun Rein

After beating Uber, Didi Chuxing is now preparing to go international. And they have to, says business analyst Shaun Rein to Digital Trends, because at home they face growing governmental limits in expanding their business.

Digital Times:

Didi has also made it possible for users to register with a Hong Kong, Taiwan, Thailand, South Korea, Japan, United Kingdom, France, Australia, Canada, United States, or Brazil phone number. This marks a departure from its long-held previous stance of requiring a Chinese mobile number in order to set up an account. And finally, the company will also begin accepting “major international credit cards,” so you don’t have to get a WeChat Wallet or Alipay just to take a ride. 

“The internationalization of local services is an important part of Didi’s global strategy,” the company said in a statement. Indeed, Didi hopes that it will soon be in countries beyond China, as the South China Morning Post reported that the firm had established an international division to look into exploring new markets. Part of the motivation to go abroad has to do with bureaucratic pressures in China, Shaun Rein, managing director of China Market Research Group, told the Financial Times. He noted, “[Didi has] to expand abroad because they’re being hit by the regulators at home.” 

Already, Didi has moved into South America by way of a partnership with Brazilian ridesharing service 99. So look out, Uber and Lyft. Didi may be coming for you on your home turf, too.

More in Digital Times.

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.

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Graduates prefer government jobs over private ones - Zhang Juwei

Zhang Juwei

China's best and brightest still prefer government jobs over joining the private sector, says professor Zhang Juwei, a researcher at the Chinese Academy of Social Sciences' Institute of Population and Labor Economics to CNN. "The private sector in China is not very well structured or developed." But government jobs are hard to get

CNN:

Central government jobs are often described as a "golden rice bowl" for their stable income and generous benefits. Officialdom can also lead to membership of the Chinese Communist Party -- a status symbol in China. 

But with only 19,000 jobs available, ... chances of a civil service career are slim. The exam (of this year) attracted record numbers of applicants, with 1.52 million completing the online registration process up from 30,000 in 2001. 

When China's economy first opened up 30 years ago, going into private business or commerce was seen as the best way to get ahead. But the civil service first began attracting huge numbers of applicants a decade ago, said Zhang Juwei, a researcher at the Chinese Academy of Social Sciences' Institute of Population and Labor Economics.

"The private sector in China is not very well structured or developed like the U.S.," he said. 

"Most of the people in private companies in China, unless their positions are high, they usually don't pay well or have a clear career ladder to move up."

More at CNN.

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China: the land of the soft openings - Ian Johnson

Ian Johnson

Western analysts often miss the point, when they look at the way China conducts business, says China watcher Andrew Batson at his weblog, and he points at an interesting aside in Ian Johnson's book The Souls of China: The Return of Religion After Mao , when he writes about soft openings in China. Case in point: comments on China's One-Belt, One-Road initiative. Batson: " It’s already clear it’s the China book of the year."

Ian Johnson:

China is the land of soft openings: projects are first announced to big fanfare, structures erected as declarations of intent, and only then filled with content. In this sense, developing a new ideology to unify China is similar to building a shopping mall: the deal is publicized, the building goes up, a few stores open, but only years later are all the shops and restaurants open for business, and only after a number of anchor tenants have gone bankrupt. This makeshift model differs from how Westerns like to see projects–envisioned and planned thoroughly, then completed according to that design. But it has its own logic. If viable, the project goes ahead; if not, backing out is easier.

More at Andrew Batson's weblog.

Ian Johnson 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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Why is Didi raising so much capital? - Jeffrey Towson

Jeffrey Towson

Since last year car-hailing giant Didi Chuxing has been raising over US$15 billion, even after it won the costly competitive struggle with Uber. Beida business professor Jeffrey Towson sees at his weblog four reasons why Didi continues to raise so much capital. Here are two of them.

 Jeffrey Towson:

Explanation 3: Going international. 

Another natural use of the newly raised funds would be to expand abroad given that Chinese app users are already going abroad in great numbers. Didi led a $100 million fundraising round for Brazilian ride-sharing app 99 in January and earlier invested in India’s Ola, Southeast Asia’s Grab and American app Lyft as part of an alliance of the four companies to take on Uber globally. In March, Didi opened an R&D center in Silicon Valley. I would not be surprised to see another string of international investments over the next twelve months, especially in Southeast Asia. 

Explanation 4: There is a big disruption coming. 

In theory, self-driving cars (i.e., autonomous driving) could reduce costs dramatically for Didi. Some reports suggest that driver fees, insurance and driver acquisition costs add up to two-thirds of the company’s operating expenses. 

However, the cost-saving argument misses the bigger implication of self-driving cars. If the technology is successful, it could wipe out the business model and competitive advantage of most ride-sharing services and could be a body blow to Didi’s current business. 

The reason this sector has consolidated down to just one or two dominant companies per region is because of the powerful economics of two-sided platforms. To get drivers, you need riders. To get riders, you need lots of drivers. Being bigger in a region not only creates a superior service — since more drivers means shorter wait times for pick up — it also creates an insurmountable barrier for new entrants. 

Self-driving cars will disrupt this competitive strength. If you no longer need drivers, you no longer have a two-sided network. Didi and Uber will then be exposed to new entrants with good cars, clever technology and different operating systems. Self-driving cars could make driver-rider networks obsolete or marginal at best. 

So Didi and Uber have a strategic imperative to transition to this new technology and search for a new source of competitive advantage. This could be by becoming the transportation ecosystem in which self-driving cars operate. It could be by becoming the operating system, the “Microsoft of moving computers.” It could be by integrating with public transportation services. Possibly though there may just not be an opportunity to be so dominant in this emerging market. 

Google, Apple, Uber and lots of major Chinese companies are rushing into self-driving cars (article here). One to keep an eye on in China is Baidu. It is developing an open-source autonomous driving platform involving hardware, software and cloud data services. This could enable lots more automotive and autonomous driving companies to enter the business. Code-named Apollo, Baidu’s project will provide capabilities in obstacle perception, trajectory planning, vehicle control and vehicle operating systems. Note that Baidu first successfully road tested its self-driving cars on the highways of Beijing back in December 2015.

More reasons at Jeffrey Towson's weblog.

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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Terror does have a short-term effect on Chinese tourists - Shaun Rein

Shaun Rein

The recent attacks in Manchester and especially London do not seem to have a huge impact on the stream of Chinese tourists, who still put Europe and especially the UK on the top of their destinations. But tourists from China are very security conscience, says business analyst Shaun Rein, who does expect a short-term decline, he tells the South China Morning Post.

The South China Morning Post:

Shaun Rein, managing director at China Market Research, warned that the attacks could have a “devastating” impact on Chinese tourism to the UK, particularly since more than one incident has occurred recently.

Chinese visitors are “very concerned about safety and tourism”, so they are more sensitive to international events than other travelers, he said. 

Areas that previously have experienced terror incidents have seen tourism fall off for a short while but saw the negative effect mitigated months later. 

While travel to Paris plummeted from 9.8 million travelers in 2015 to 8.4 million last year in the wake of the 2015 attacks on the city, officials said in April that tourism has recovered. 

Impacts to Chinese tourism in the UK will likely not be long-term, Rein said, although it may take six months without incident to reassure tourists.

More in the South China Morning Post.

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.

Are you looking for more strategy experts at the China Speakers Bureau? Do check out this list. 

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Does Alibaba's merchandise deal with Pokemon makes sense? - Shaun Rein/Jeffrey Towson

Shaun Rein

Alibaba Pictures has expanded its merchandise market with a new deal for the successful Japanese Pokemon. But experts differ on the question such a more makes sense for Alibaba Pictures. A diversion from its core business, says business analyst Shaun Rein. But Beidu business professor Jeffrey Towson lauds the effort for a comprehensive approach of the total value chain, he tells the 6th Tone. 

The Sixth Tone:

Alibaba Pictures estimated that the total sales of licensed Pokémon products on Tmall will surpass 20 million yuan ($2.9 million) in 2017. 

However, the move might be “dangerous” for Pokémon because collaborating with Alibaba means they will give away the power over quality control in China, Rein said. If manufacturers produce poor-quality products, consumers will naturally associate the bad quality with Pokémon, he added. 

Whether the strategy will bode well for Alibaba Pictures’ overall business development also remains a question. The deal is the film company’s latest expansion into licensing after suffering economic losses amounting to 976 million yuan last year. Alibaba Pictures has established partnerships with several foreign companies such as the classic arcade game “Pac-Man” and the American animated television series “The Powerpuff Girls” to sell licensed merchandise on its e-commerce platforms. 

Jeffrey Towson

For a company whose core business is movie production and distribution, tapping into licensing might prove distracting, Rein said. 

But Jeffrey Towson, a professor of investment at Peking University, regards the move as part of Alibaba’s strategy to build an integrated online and offline marketing capability across the entire entertainment value chain. 

“They have Tmall, [e-commerce platform] Taobao, [video-platform] Youku, and so on, and they can push not just movies, but also merchandise, online streaming, and other derivative products,” Towson told Sixth Tone. The movie arm “is becoming a data-driven movie studio with a unique suite of integrated marketing capabilities,” he added. “It’s basically what you would get if Amazon and Walt Disney had a baby.” 

With all the data collected from consumers across Alibaba’s myriad online services, the e-commerce giant is becoming the “must-have partner” to content companies in China and around the world who hope to succeed in the Chinese entertainment industry, said Towson.

More at the Sixth Tone. 

Shaun Rein and Jeffrey Towson are speakers at the China Speakers Bureau. Do you need them at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Chinese tourists prefer Europe and SE-Asia - Rupert Hoogewerf

Rupert Hoogewerf

Luxury outbound travel by Chinese tourists keeps on booming, with Europe and SE-Asia as their favorite destinations, says the latest report by the Hurun or China Rich List, tells its chief researcher Rupert Hoogewerf to the Shanghai Daily.

The Shanghai Daily:

Europe and Southeast Asia were the most preferred destinations among the country's super wealthy last year, accounting for 45 percent and 44 percent of respondents, respectively, according to "The Chinese Luxury Traveller," which was released in its seventh year and covered 334 samples from 12 Chinese mainland cities including Beijing, Shanghai, Nanjing and Chengdu. These high-end tourists averaged 42 years of age with per capita wealth of nearly 22 million yuan (US$3.23 million). 

Notably, Southeast Asia, in just two years, has successfully surpassed the Americas to become Chinese luxury traveller's new choice, displaying a shocking 34 percent increase in millennial favor and jumping from last year's fourth place to take the crown this year. 

"In the past year, Chinese luxury travelers have gone abroad an average of 3.3 times and stayed for an average of 27 days, with tourism increasing 5 percent to reach 69 percent," said Rupert Hoogewerf, Hurun Report Chairman and Chief Researcher. "And 60 percent of high net worth Chinese families are now willing to pay 3,000 yuan for a night on hotel accommodation and fly business or first class, impossibly high figures compared with a decade ago." 

By vocation theme, leisure, at 41 percent, was still the most popular among the rich while polar exploration and outdoor adventures have gained further momentum from the past two years, ranking the second (31 percent) and fourth (20 percent) respectively. As a new option in this year's study, island holidays, at 23 percent, were the dark horse and surpassed both cruises and self-drive holidays to rank the third. Interestingly, island holidays were especially popular among the Post-80s generation and ranked first with 46 percent. 

Looking forward, Around World travel, polar exploration and outdoor adventures will be the trend in themes for the Chinese luxury travelers in the next three years, with the Post-80s generation displaying an increased interest in Africa and the Polar regions, according to the report.

More in the Shanghai Daily.

Rupert Hoogewerf 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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Why advertising does not work in China - Tom Doctoroff

Tom Doctoroff

China's consumers have always been very suspicious of any top-down broadcasting, says marketing guru Tom Doctoroff. Anything that looks like spoon-fed propaganda does not work. Advertising can work, but it is a trick country, and easy to get it wrong, he says.

Tom Doctoroff 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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How baseball is slowly conquering China - Jeffrey Towson

Jeffrey Towson

Soccer has been catching most headlines in trying to conquer China. But the long term strategy to root baseball into the country might offer more chances for success, writes Beida business professor Jeffrey Towson at his weblog. "Major League Baseball (MLB) Is Copying the NBA in China – And It Might Work."

Jeffrey Towson:

The NBA has long provided free public access to its games in China. Starting in 1987 state broadcaster China Central Television began showing weekly game highlights that the NBA sent on video tapes to Beijing. This was particularly good timing as CCTV then had little competition for viewers and Michael Jordan was becoming a big draw. The NBA has continued to provide free access since, most recently via a deal for online streaming with Tencent Holdings. 

MLB has put in place a similar free mass dissemination strategy. Since around 2008, MLB games have been shown on more than 10 government TV channels, reaching most of the population. Under a three-year deal signed in January, Le Sports, an affiliate of online streaming company Leshi Internet Information & Technology, is streaming 125 live games in China per season. 

These are the early moves in a long-term strategy. The Chinese Baseball Association was only formed in 2002 and MLB did not have a China office until 2007. According to Leon Xie, managing director of MLB China, there were then only three real baseball diamonds in all of China. 

MLB is very unlikely to create a phenomenon as big as Yao Ming but it is working to develop Chinese players. MLB opened its first training camp in the country in 2009, in the eastern city of Wuxi. Training centers have also opened in Changzhou and Nanjing. Some younger players have gone to the U.S. to play in elite high school leagues. In 2015, Xu Guiyuan became the first player trained in Wuxi to sign with an MLB club, joining the Baltimore Orioles. 

Players at the training centers are now playing over 100 games a year and often moving directly onto Chinese university baseball teams upon graduation. The number of baseball diamonds in China has grown to over 50. And the official Chinese Baseball League, which had gone dormant, was relaunched in 2014 in partnership with property developer Hengda Lianghe Investment. 

As shown by the success of the NBA’s Jeremy Lin, Chinese consumers can also become very enthusiastic about Asian-American athletes. Given that baseball is popular in the U.S. and Taiwan, these could be sources for high-profile ethnic Chinese players. For example, Chinese-American Ray Chang, born in Kansas City, has been playing for minor league teams for more than a decade and is now on a team affiliated with the Cincinnati Reds.

More at Jeffrey Towson's weblog.

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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Jason Ma discusses Chinese diaspora on 9th World Chinese Economic Summit

Jason Ma

Renowned speaker Jason Ma will join two sessions of the 9th World Chinese Economic Summit on 13 and 14 November at the Shangri-La in Hong Kong. He will discuss entrepreneurship and the global Chinese diaspora. The meeting will focus on “Managing Global Uncertainty: Exploring New Opportunities”, and will host a range of famous participants, including politicians and business leaders.

Ma is a Member of both the Employment and Education Taskforce and the SMEs Cross-thematic Group at the Business 20 (B20), the global business advisory council for the G20, the world’s leading economic forum led by the top 20 economies’ heads of state.

He is one of the few influential business and education leaders from the G20 economies appointed perennially as a B20 member through the G20 in Australia, Turkey, China, and currently Germany.

Vincent Lo of the Shui On Group, Ronnie Chan of the Hung Lung Group and H.E. Susilo Bambang Yudhoyono, former president of Indonesia are some of the participants. The full program you can find here. (pdf)

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Women in China's market economy - Zhang Lijia

Zhang Lijia at the BBC

The Times Literary Supplement reports on an evening with author Zhang Lijia of Lotus: A Novel on prostitution in China recently in London. One of the subjects: how did Chinese women fare under the market economy, introduce by Deng Xiaoping. About the government as a big boys' club.

TLS:

Zhang commented that since the Cultural Revolution, changes may have enabled corporate growth, but haven’t done much for social welfare or social equality: “Deng Xiaoping’s reforms afforded some opportunities for educated, urban women. But the market economy has undermined gender equality. The government retreated from its role and let the market take over, but the market doesn’t always treat women kindly. Women are bearing the brunt of the shift from the planned economy to the free-market economy: women have to attain higher grades to be admitted to universities, women are the ones who are laid off first, women over forty-five are sacked from companies, companies can stipulate that they want only young and pretty women”. 

Zhang’s research showed that prostitutes are not just vulnerable to violent men, but also to police harassment and abuse. Although prostitution is considered a social evil,  Zhang added, “it’s placed under administrative law, not criminal law, so it’s dealt with through fines and sanctions. The police interpret the laws themselves. They beat up the women and extract ‘confessions’, put them in detention with no legal representation. They have leeway for corruption, abuse and a violation of the women’s rights”. Meanwhile, she argued, measures to curb prostitution “don’t tackle fundamental social problems. The root of the problem is the growing gender gap and a thin social safety net”. 

Will gender equality improve in this fascinating and rapidly transforming country? When it comes to change driven from the top down, Lijia Zhang isn’t hopeful: “Female political participation is low – women make up less than a quarter of the National People’s Congress and well under a fifth of the Standing Committee. And the top level of government is just one big boys’ club”.

More in the TLS.

Zhang Lijia is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.

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The link between climate and Daoism - Ian Johnson

Ian Johnson

China is assuming global leadership on climate, now the US is backing out. But how is that related to the grassroot feelings of its citizens? ChinaDialogue asks author Ian Johnson of The Souls of China: The Return of Religion After Mao on the links between the environment and the emerging Daoism.

ChinaDialogue:

IJ: On the more abstract level there is this idea that the body is a microcosm of the universe. You can recreate the universe in your body through different cultivation techniques. When Daoists meditate in a cave they talk about going back to the womb of the earth, trying to resync with the earth on some symbolic level. On the other hand I think it's a mistake to translate the traditional Daoist concept of ziran (自然, nature) in a modern ecological way. It's more of an idea that you should be part of the cosmos (顺其自然). 

Concretely there are moves by Daosim to position itself as a green religion. But in my view it seems to be an effort to rebrand itself because people have a hard time understanding what Daosim is. The so-called ‘world religions’ like Islam, Christianity and Buddhism, all have clear stories. Shakyamuni was a prince. He went outside and saw the world suffering. Then he discovered the solution to suffering was to end desire. Daoism is more of a folk religion which doesn't really have a clear story, even though it is inside so much of Chinese culture, from Tai Chi to Fengshui. Marketing Daoism proves to be difficult. For historical reasons, it was also socially marginalised by the Manchurian rulers of the Qing Dynasty who were Buddhists. 

The result is that even today the educational level of Daoist priests tends to be low. Almost nobody has a university degree. Buddhist temples would have monks with doctoral degrees who are much more able to tell stories and convert people. So Daoism is faced with a crisis and turns to ecology as a re-marketing opportunity. I don't mean it's disingenuous or that it's fake. But whether it will succeed or not is debatable. 

CD: Do you think Chinese religions have the potential of forming the foundation of a new environmental awareness and to contribute to the global conversation about conservation? 

IJ: There is potential in the sense that most of the temples are in the countryside and in mountainous areas. They used to have large land holdings. And some of them present themselves as stewards of these areas. I know some Daoist temples around Maoshan outside of Nanjing have organic tea and organic herbal products. The challenge for them is again the educational level of the priests who have difficulty marketing themselves successfully to the better educated urban elites. They even have trouble writing the promotional materials. Nowadays there are local governments that assist Daoist temples in marketing and attempts to elevate the level of sophistication of Daoism in general. 

I think overall, Chinese are thinking about the same issues as other people around the world. These ideas that societies are not organised fairly, that there is a lack of justice and transparency which led to great political upheavals in the West concern Chinese society as well. If there is one idea that unites all the faith groups I’ve followed, it is the idea of justice, and of "tian" or heaven. I think that's a very strongly Chinese idea that society should be just. And justice is not something given by a party or a political campaign but it is divinely given. In Miaofengshan, these pilgrimage groups all perform stories of righteousness as part of their rituals. 

The spiritual revival shows that Chinese people are participating in this global conversation. And it would be interesting to see if China through Daosim or other religions could contribute something unique.

More on ChinaDialogue.

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