Understanding social media in China

Posted in Aktuellt, Thailand / Asia on April 26th, 2012 by admin

The world’s largest social-media market is vastly different from its counterpart in the West. Yet the ingredients of a winning strategy are familiar.

No Facebook. No Twitter. No YouTube
Listing the companies that don’t have access to China’s exploding social-media space underscores just how different it is from those of many Western markets. Understanding that space is vitally important for anyone trying to engage Chinese consumers: social media is a larger phenomenon in the world’sa second-biggest economy than it is in other countries, including the United States. And it’s not indecipherable. Chinese consumers follow the same decision-making journey as their peers in other countries, and the basic rules for engaging with them effectively are reassuringly familiar.

Surveying the scene
In addition to having the world’s biggest Internet user base—513 million people, more than double the 245 million users in the United States1—China also has the world’s most active environment for social media. More than 300 million people use it, from blogs to social-networking sites to microblogs and other online communities.2 That’s roughly equivalent to the combined population of France, Germany, Italy, Spain, and the United Kingdom. In addition, China’s online users spend more than 40 percent of their time online on social media, a figure that continues to rise rapidly.

This appetite for all things social has spawned a dizzying array of companies, many with tools more advanced than those in the West: for example, Chinese users were able to embed multimedia content in social media more than 18 months before Twitter users could do so in the United States. Social media began in China in 1994 with online forums and communities and migrated to instant messaging in 1999. User review sites such as Dianping emerged around 2003. Blogging took off in 2004, followed a year later by social-networking sites with chatting capabilities such as Renren. Sina Weibo launched in 2009, offering microblogging with multimedia. Location-based player Jiepang appeared in 2010, offering services similar to foursquare’s.

This explosive growth shows few signs of abating, a trend that’s at least partially attributable to the fact that it’s harder for the government to censor social media than other information channels. That’s one critical way the Chinese market is unique. As you shape your own social-media strategy, it’s important to fully understand some other nuances of the country’s consumers, content, and platforms.

China’s social-media users not only are more active than those of any other country but also, in more than 80 percent of all cases, have multiple social-media accounts, primarily with local players (compared with just 39 percent in Japan).3 The use of mobile technologies to access social media is also increasingly popular in China: there were more than 100 million mobile social users in 2010, a number that is forecast to grow by about 30 percent annually.4 Finally, because many Chinese are somewhat skeptical of formal institutions and authority, users disproportionately value the advice of opinion leaders in social networks. An independent survey of moisturizer purchasers, for example, observed that 66 percent of Chinese consumers relied on recommendations from friends and family, compared with 38 percent of their US counterparts.

The competition for consumers is fierce in China’s social-media space. Many companies regularly employ “artificial writers” to seed positive content about themselves online and attack competitors with negative news they hope will go viral. In several instances, negative publicity about companies—such as allegations of product contamination—has prompted waves of microblog posts from competitors and disguised users. Businesses trying to manage social-media crises should carefully identify the source of negative posts and base countermeasures on whether they came from competitors or real consumers. Companies must also factor in the impact of artificial writers when mining for social-media consumer insights and comparing the performance of their brands against that of competitors. Otherwise, they risk drawing the wrong conclusions about consumer behavior and brand preferences.

China’s social-media sector is very fragmented and local. Each social-media and e-commerce platform has at least two major local players: in microblogging (or weibo), for example, Sina Weibo and Tencent Weibo; in social networking, a number of companies, including Renren and Kaixin001. These players have different strengths, areas of focus, and, often, geographic priorities. For marketers, this fragmentation increases the complexity of the social-media landscape in China and requires significant resources and expertise, including a network of partners to help guide the way. Competition is evolving quickly—marketers looking for partners should closely monitor development of the sector’s platforms and players.

Crafting a winning strategy
While these unique Chinese market characteristics often create challenging wrinkles for marketers to contend with, they don’t invalidate the principles that underpin effective social-media strategy elsewhere (for more, see “Demystifying social media”). The following few examples illustrate how companies are applying some widespread social-media tenets in China.

Make content authentic and user oriented. Estée Lauder’s Clinique brand launched a drama series, Sufei’s Diary, with 40 episodes broadcast daily on a dedicated Web site. (Viewers also could watch segments on monitors located on buses, trains, and airplanes.) While skin care was part of the story line and products were prominently featured, Sufei’s Diary was seen as entertainment—not a Clinique advertisement—and has been viewed online more than 21 million times. Clinique’s online brand awareness is now 27 percent higher than that of its competitors, although social-media content costs significantly less than a traditional advertising campaign.

Adopt a test-and-learn approach. When Dove China first imported the Real Beauty social-media campaign to promote beauty among women of all looks and body types, Chinese consumers viewed the real women as overweight and unattractive. Dove switched tack and partnered with Ugly Wudi, the Chinese adaptation of the US television show Ugly Betty, to weave the Real Beauty message into story lines and mount a number of initiatives, including a blog by Wudi and live online chats. The effort generated millions of searches and blog entries, increased uptake of Dove body wash by 21 percent year over year after the show’s first season, and increased unaided awareness of Dove’s Real Beauty by 44 percent among target consumers. The estimated return on investment from this social-media campaign was four times that of a traditional TV media investment.

Support overarching brand goals with sustained social-media efforts. Starbucks China promotes the same message of quality, social responsibility, and community building across all of its social-media efforts, as well as in its stores. And Durex didn’t just establish a corporate account on Sina Weibo: it built a marketing team that both monitors online comments around the clock and collaborates closely with agency partners to create original, funny content. The company’s approach is designed to interact meaningfully with fans, generate buzz, and deepen customer engagement with the brand.

The sheer number of the more than 300 million social-media users in China creates unique challenges for effective consumer engagement. People expect responses to each and every post, for example, so companies must develop new models and processes for effectively engaging individuals in a way that communicates brand identity and values, satisfies consumer concerns, and doesn’t lead to a negative viral spiral. Another problem is the difficulty of developing and tracking reliable metrics to gauge a social-media strategy’s performance, given the size of the user base, a lack of analytical tools (such as those offered by Facebook and Google in other markets), and limited transparency into leading platforms. Yet these challenges should not deter companies. The similarity between the ingredients of success in China and in other markets makes it easier—and well worth the trouble—to cope with the country’s many peculiarities.

Source: McKinsey Quaterly, Cindy Chiu, 26 April 2012

The end of cheap China

Posted in Aktuellt, Allmänt, Thailand / Asia on April 25th, 2012 by admin

It´s all about Fact Based Management, right! // Johan

What do soaring Chinese wages mean for global manufacturing?

TRAVEL by ferry from Hong Kong to Shenzhen, in one of the regions that makes China the workshop of the world, and an enormous billboard greets you: “Time is Money, Efficiency is Life”.

China is the world’s largest manufacturing power. Its output of televisions, smartphones, steel pipes and other things you can drop on your foot surpassed America’s in 2010. China now accounts for a fifth of global manufacturing. Its factories have made so much, so cheaply that they have curbed inflation in many of its trading partners. But the era of cheap China may be drawing to a close.

Costs are soaring, starting in the coastal provinces where factories have historically clustered (see map). Increases in land prices, environmental and safety regulations and taxes all play a part. The biggest factor, though, is labour.

On March 5th Standard Chartered, an investment bank, released a survey of over 200 Hong Kong-based manufacturers operating in the Pearl River Delta. It found that wages have already risen by 10% this year. Foxconn, a Taiwanese contract manufacturer that makes Apple’s iPads (and much more besides) in Shenzhen, put up salaries by 16-25% last month.
“It’s not cheap like it used to be,” laments Dale Weathington of Kolcraft, an American firm that uses contract manufacturers to make prams in southern China. Labour costs have surged by 20% a year for the past four years, he grumbles. China’s coastal provinces are losing their power to suck workers out of the hinterland. These migrant workers often go home during the Chinese New Year break. In previous years 95% of Mr Weathington’s staff returned. This year only 85% did.

Kolcraft’s experience is typical. When the American Chamber of Commerce in Shanghai asked its members recently about their biggest challenges, 91% mentioned “rising costs”. Corruption and piracy were far behind. Labour costs (including benefits) for blue-collar workers in Guangdong rose by 12% a year, in dollar terms, from 2002 to 2009; in Shanghai, 14% a year. Roland Berger, a consultancy, reckons the comparable figure was only 8% in the Philippines and 1% in Mexico.

Joerg Wuttke, a veteran industrialist with the EU Chamber of Commerce in China, predicts that the cost to manufacture in China could soar twofold or even threefold by 2020. AlixPartners, a consultancy, offers this intriguing extrapolation: if China’s currency and shipping costs were to rise by 5% annually and wages were to go up by 30% a year, by 2015 it would be just as cheap to make things in North America as to make them in China and ship them there (see chart). In reality, the convergence will probably be slower. But the trend is clear.

If cheap China is fading, what will replace it? Will factories shift to poorer countries with cheaper labour? That is the conventional wisdom, but it is wrong.

Advantage China
Brian Noll of PPC, which makes connectors for televisions, says his firm seriously considered moving its operations to Vietnam. Labour was cheaper there, but Vietnam lacked reliable suppliers of services such as nickel plating, heat treatment and special stamping. In the end, PPC decided not to leave China. Instead, it is automating more processes in its factory near Shanghai, replacing some (but not all) workers with machines.

Labour costs are often 30% lower in countries other than China, says John Rice, GE’s vice chairman, but this is typically more than offset by other problems, especially the lack of a reliable supply chain. GE did open a new plant in Vietnam to make wind turbines, but Mr Rice insists that talent was the lure, not cheap labour. Thanks to a big government shipyard nearby, his plant was able to hire world-class welders. Except in commodity businesses, “competence will always trump cost,” he says.

Sunil Gidumal, a Hong Kong-based entrepreneur, makes tin boxes that Harrods, Marks & Spencer and other retailers use to hold biscuits. Wages, which make up a third of his costs, have doubled in the past four years at his factories in Guangdong. Workers in Sri Lanka are 35-40% cheaper, he says, but he finds them less efficient. So he is keeping a smaller factory in China to serve America and China’s domestic market. Only the tins bound for Europe are made in Sri Lanka, since shipping costs are lower than from China.

Louis Kuijs of the Fung Global Institute, a think-tank, observes that some low-tech, labour-intensive industries, such as T-shirts and cheap trainers, have already left China. And some firms are employing a “China + 1” strategy, opening just one factory in another country to test the waters and provide a back-up.

But coastal China has enduring strengths, despite soaring costs. First, it is close to the booming Chinese domestic market. This is a huge advantage. No other country has so many newly pecunious consumers clamouring for stuff.

Second, Chinese wages may be rising fast, but so is Chinese productivity. The precise numbers are disputed, but the trend is not. Chinese workers are paid more because they are producing more.

Third, China is huge. Its labour pool is large and flexible enough to accommodate seasonal industries that make Christmas lights or toys, says Ivo Naumann of AlixPartners. In response to sudden demand, a Chinese factory making iPhones was able to rouse 8,000 workers from their dormitory and put them on the assembly line at midnight, according to the New York Times. Not the next day. Midnight. Nowhere else are such feats feasible.

Fourth, China’s supply chain is sophisticated and supple. Professor Zheng Yusheng of the Cheung Kong Graduate School of Business argues that the right way to measure manufacturing competitiveness is not by comparing labour costs alone, but by comparing entire supply chains. Even if labour costs are a quarter of those in China to make a given product, the unreliability or unavailability of many components may make it uneconomic to make things elsewhere.

Dwight Nordstrom of Pacific Resources International, a manufacturing consultancy, reckons China’s supply chain for electronics manufacturers is so good that “there is no stopping the juggernaut” for at least ten to 20 years. This same advantage applies to low-tech industries, too. Paul Stocker of Topline, a shoe exporter with dozens of contract plants in coastal China, says there is no easy alternative to China.

It is fashionable to predict that China’s inland factories will supplant its coastal ones. Official figures for foreign direct investment support this view: some inland provinces, such as Chongqing, now attract almost as much foreign money as Shanghai. The reason why fewer migrant workers from the hinterland are returning to coastal factories this year is that there are plenty of jobs closer to home.

But manufacturers are not simply shifting inland in search of cheap labour. For one thing, it is not much cheaper. Huawei, a large Chinese telecoms firm, reports that salaries for engineers with a master’s degree are not even 10% lower in its inland locations than in Shenzhen. Kolcraft considered shifting to Hubei, but found that total costs would end up being only 5-10% lower than on the coast.

Topline looked into moving inland, but found huge extra costs there. Infrastructure for exports is still shoddy or slow (shipping by river adds a week), logistics are not fully developed and Topline’s entire supply chain remains on the coast. It decided to stay put.

Inland revenue?
Moving inland brings all sorts of unexpected costs. Newish labour laws in wealthy places such as Shenzhen make it costlier to shut down plants there, for example. It can cost more to ship goods from the Chinese interior to the coast than from Shanghai to New York. Managers and other highly skilled staff often demand steep pay rises to move from sophisticated coastal cities to the boondocks. Chongqing has more than 30m people, but it’s not Shanghai. A recent anti-corruption campaign there grew so violent that it terrified legitimate businessfolk as well as crooks.

The firms investing in China’s interior are chiefly doing so to serve consumers who live there. With so many inland cities booming, this is an enticing market. But when it comes to making iPads and smartphones for export, the world’s workshop will remain in China’s coastal provinces.

In time, of course, other places will build better roads and ports and supply chains. Eventually, they will challenge coastal China’s grip on basic manufacturing. So if China is to flourish, its manufacturers must move up the value chain. Rather than bolting together sophisticated products designed elsewhere, they need to do more design work themselves. Taking a leaf out of Germany’s book, they need to make products with higher margins and offer services to complement them.

A few Chinese firms have started to do this already. A visit to Huawei’s huge corporate campus in Shenzhen is instructive. The firm was founded by a former military officer and has been helped by friends in government over the years, but it now more closely resembles a Western high-tech firm than it does a state-backed behemoth. Its managers are top-flight. Its leaders have for several years been learning from dozens of resident advisers from IBM and other American consultancies. It has become highly professional, and impressively innovative.

In 2008 it filed for more international patents than any other firm. Earlier this year, it unveiled the world’s thinnest and fastest smartphones. In a sign that at least China’s private sector is beginning to take intellectual-property rights seriously, Huawei is locked in bitter battles over patents, not only with multinationals but also with ZTE, a cross-town rival that also wants to shift from being a low-cost telecoms-equipment maker to a creator of sexy new consumer products.

China does not yet have enough Huaweis. But it attracts plenty of bright young people who would like to build one. Every year another wave of “sea turtles”—Chinese who have studied or worked abroad—returns home. Many have mixed with the world’s best engineers at MIT and Stanford. Many have seen first-hand how Silicon Valley works. Indeed, Silicon Valley veterans have founded many of China’s most innovative firms, such as Baidu.

The pace of change in China has been so startling that it is hard to keep up. The old stereotypes about low-wage sweatshops are as out-of-date as Mao suits. The next phase will be interesting: China must innovate or slow down.

Source: The Economst, economist.com, 25 April 2012

Meet the Chinese consumer of 2020

Posted in Aktuellt, Allmänt, Thailand / Asia on March 15th, 2012 by admin

Evolving economic profiles will continue to be the most important trend shaping the market.

Most large consumer-facing companies realize that they will need China to power their growth in the next decade. But to keep pace, these companies will also need to understand the economic, societal, and demographic changes shaping the profiles of consumers and the way they spend. This is no easy task not only because of the fast pace of growth and subsequent changes in the Chinese way of life but also because of the vast economic and demographic differences across the country.

These differences are set to become more marked, with significant implications for companies that fail to grasp them. Since 2005, McKinsey has conducted annual consumer surveys in China, interviewing a total of more than 60,000 people in upward of 60 cities.1 Our surveys have tracked the growth of incomes, shifting patterns of expenditure, rising expectations—sometimes in line with those of the respondents’ Western counterparts and sometimes not—and the development of many different consumer segments. Those surveys now provide insights to help us focus on the future. We cannot, of course, predict it with certainty, and external shocks might confound any forecast. But our understanding of consumer trends to date, coupled with an analysis of the economic and demographic factors that will further shape them in the next decade, serve as a useful lens for contemplating the profile of the Chinese consumer in 2020.

Changing demographics
Many of the changes taking place in China are common features of rapid industrialization: rising incomes, urban living, better education, postponed life stages, and greater mobility. Japan saw similar changes in the 1950s and 1960s, as did South Korea and Taiwan in the 1980s.

But some unique factors are also at work, such as the government’s one-child policy and the marked economic imbalances among regions. Our analysis reveals important insights into the likely demographic and socio-demographic profiles of Chinese consumers at the end of this decade.2

Changes in economic profiles have been and will continue to be the most important trend shaping the consumer landscape. The Chinese are certainly getting richer fast: the per-household disposable income3 of urban consumers will double between 2010 and 2020, from about $4,000 to about $8,000.4 That will be close to South Korea’s current standard of living but still a long way from its level in some developed countries, such as the United States (about $35,000) and Japan (about $26,000).

The current vast differences in income levels will persist, however, although the numbers at each level will shift dramatically (Exhibit 1). At present, the great majority of the population consists of “value” consumers—those living in households with annual disposable incomes between $6,000 and $16,000 (equivalent to 37,000 to 106,000 renminbi), just enough to cover basic needs. “Mainstream” consumers, relatively well-to-do households with annual disposable income of between $16,000 and $34,000 (equivalent to 106,000 to 229,000 renminbi), form a very small group by comparison. China has fewer than 14 million such households, representing only 6 percent of the urban population. A tiny group of “affluent” consumers, whose household income exceeds $34,000, accounts for only 2 percent of the urban population, or 4.26 million households.

Until now, these divergences have presented multinational companies operating in China with a choice: to target only mainstream and affluent consumers or to stretch the brand to serve the value segment. Those that took the first course could more or less maintain the same business model they applied in other parts of the world, without needing to de-engineer their products. But in taking that approach, they limited themselves to a target market of 18 million households. Companies that chose to serve the value category benefitted from a much bigger market to play in—184 million households—but their products had to be cheaper, they were forced to adapt their business models, and profitability was lower.

This situation is changing. Because the wealth of so many consumers is rising so rapidly, many people in the value category will have joined the mainstream one by 2020. Indeed, mainstream consumers will then account for 51 percent of the urban population. Their absolute level of wealth will remain quite low compared with that of consumers in developed countries. Yet this group, comprising 167 million households (close to 400 million people), will become the standard setters for consumption, capable of affording family cars and small luxury items. Companies will be able to respond by introducing better products to a vast group of new consumers, thus differentiating themselves from competitors and earning higher profits. Nevertheless, value consumers, whose ranks will fall to 36 percent of urban households in 2020, from 82 percent in 2010, will still represent an enormous market for cheaper products: 116 million households, or 307 million consumers.

Affluent consumers will remain an elite minority, making up only 6 percent of the population in 2020. (In the United States in 2010, more than half of the population earned at least $34,000.) But that 6 percent will translate into about 21 million affluent households, with 60 million consumers.

While income is expected to rise across China, some cities and regions are already significantly wealthier than others. Understanding these variations in the rate of development is important because they will affect which categories of goods and services grow most rapidly, and where.

Today, about 85 percent of mainstream consumers live in the 100 wealthiest cities; in the next 300 wealthiest, only 10 percent of consumers are mainstream, but that percentage will rise to nearly 30 percent by 2020. At that point, many families in these cities will be able to afford a range of goods and services (such as flat-screen televisions and overseas travel) that are now largely confined to the wealthiest urban areas. Exhibit 2 ( link ) explains the distribution of income in four different groups of cities. Some of them (Foshan in Guangdong, for example) are small in terms of absolute GDP or population size. But it’s worth noting that the affluence of their populations could make them as attractive to companies as leading tier-one cities, such as Shanghai and Shenzhen.

New spending patterns
An understanding of China’s changing economics and its impact on the profiles of consumers helps to identify some key trends in spending patterns in the next decade. We discuss three: high growth in discretionary categories, the tendency to trade up as consumers spend some of their discretionary income on better goods and services, and the emergence of a senior market.

Higher discretionary spending
Bigger incomes and government efforts to increase consumption will benefit all consumer-facing companies, though to varying degrees, depending on their product portfolios. Discretionary categories will show the strongest overall growth—13.4 percent—between 2010 and 2020, as these goods become affordable to growing numbers of consumers. Next come semi-necessities (10.9 percent growth) followed by necessities (7.2 percent). These average figures will of course vary significantly by region and city.

Exhibit 3 (ple find on the attached link) shows forecast annual consumption by category for 2020 and the rising importance of discretionary spending. Each broad category includes subcategories, some of which are more discretionary than others and expected to grow faster. For example, a discretionary category within food—dining out—is expected to grow by 10.2 percent a year in the coming decade, against 7.2 percent growth for basic food ingredients.

Of course, the wealthiest people—those in our affluent segment—will be the main consumers of discretionary items. Less obvious is the extent to which they will be able to afford more such items in 2020, compared with people in other income groups, as their numbers and wealth grow. Our consumption model suggests that in 2010, average household spending for value, mainstream, and affluent consumers was about $2,000, $4,000, and $12,000, respectively. These figures will jump to $3,000, $6,000, and $21,000, respectively, by 2020. So although all consumers will increase their spending, the gaps between different income groups will widen significantly. Stark disparities in standards of living are emerging in China.

Aspirational trading up
The second noticeable trend in spending is a propensity to trade up, driven increasingly by consumers aspiring to improve themselves, the way they live, and their perceived social standing. Many Chinese, like their Western counterparts, judge themselves and others by what they buy.

Strong early growth in developing markets comes when large numbers of consumers try products for the first time. As markets mature, growth relies on consumers who buy more goods and services more frequently and trade up to buy pricier versions of items they already have. This pattern explains why some basic-necessity categories have little room for growth: many consumers can already afford such items and probably won’t buy a great deal more of them. But that does not mean no growth at all. Take the market for sauces and condiments. Most people can already afford to buy as much as they need of these items. But the increased attention now paid to health and well-being shows that even here, companies have trading-up opportunities.

Such opportunities also exist within semi-necessity categories, such as apparel, health care, and household products: more consumers will be able to afford different outfits for different occasions, for instance, or to buy additional branded products. As a consequence, brands focused on mass-market consumers might need to be repositioned to suit their rising aspirations, while newer, younger brands may be able to leapfrog more established competitors by offering premium products and crafting a premium brand image.

But it is the top end of the market that will benefit most from trading up: growth at the high end of some consumer goods categories already outpaces average growth for those categories as a whole. Sales of premium skin care products, for instance, rose by more than 20 percent a year in the past decade while the industry average was 10 percent.

Annual volume growth rates of more than 20 percent are foreseeable for luxury SUV cars, compared with around 10 percent for basic family models. China had already become a leading luxury market by 2010 and could overtake Japan to become the biggest such market by 2015.

Emerging senior market
The aging of China means that as a share of the total population, it will have five percentage points more people above the age of 65 in 2020 than it has today. That is an extra 126.5 million citizens, clearly an important consumer segment. What is equally important is the way the spending patterns of older people in 2020 will differ from those of older people now. In our 2011 survey, the elderly were more inclined to save and less willing to spend on discretionary items such as travel, leisure, and nice clothes. These tendencies will probably be much less apparent in 2020.

Most people in China over the age of 55 experienced the harsh conditions of the Cultural Revolution, in the late 1960s and early 1970s. Not surprisingly, they think it important not to spend frivolously. Among residents of tier-one cities, 55- to 65-year-olds allocate half of their spending to food and little to discretionary categories: only 7 percent goes toward apparel, for example. People who are ten years younger devote only 38 percent of their spending to food but 13 percent to apparel. Indeed, our consumer surveys have revealed that although today’s older consumers behave very differently from younger ones, today’s 45- to 54-year-olds—the older generation come 2020—have spending patterns similar to those of 34- to 45-year-olds (who allocate 34 percent of their spending to food and 14 percent to apparel). This finding implies that companies will have to rethink their ideas about what older Chinese consumers want.

Implications for companies
The biggest challenge is building and sustaining a leading position in China and, for multinationals, using it to drive global growth. In fact, as the country with the world’s largest group of mainstream consumers, it could be an excellent test bed for companies that serve this consumer segment. Our analysis indicates that huge variations in the growth rates of companies operating in China come 2020 are likely, depending on the product category, consumer segment, and geography.

A second challenge is that China is so vast and its regions so diverse it should be treated almost as a collection of separate countries. Companies should redefine the roles of their regional divisions and headquarters, delegating more decision-making power to the former. Many companies already operate with three, five, or even more regional bases, but these tend to function only as sales offices, executing instructions from the top. Consumer needs could become so varied across China’s regions that local insight and strategic decision-making power will be vital. Regional offices should therefore receive full responsibility for their own profit-and-loss accounts, strategic planning, consumer research, innovations, portfolios, route-to-market models, and marketing. The corporate center should have a redefined role—serving the individual units and safeguarding the company’s brands—with less power and at a lower overhead cost.

A third challenge stems from the fact that undifferentiated mass consumption and the rising cost of ads made the scale of a brand or product crucial to its success in the past decade. Companies provided the same value proposition—usually framed around a product’s functional benefits—to all types of consumers, while stretching brands across product categories and price tiers to leverage scale and garner market share. Over the next decade, the game will change to take account of the emergence of different categories of consumers and their own sense of their differences and individuality. Companies will need the crispest value propositions to connect with each group and to stand out from competitors. By 2020, they will have to position brands (or sub-brands) to target narrower consumer segments and offer more tailored value propositions. Brands extended across too many consumer segments and price points may struggle to defend their market position. Hard though the transition could be, at some point companies that have focused on maximizing their brands’ scale will have to adopt a model based on a portfolio of more targeted brands or sub-brands to connect with different consumer segments.

No doubt China and its consumers’ behavior will take some unexpected turns over the next decade. Nonetheless, our research reveals the clear direction of travel. To be sure of taking part in that journey, companies in the market should start making the acquaintance of China’s 2020 consumers today.

Source: McKinsey Quaterly, 14 March 2012

Oro för Japan

Posted in Aktuellt, Allmänt, Thailand / Asia on February 24th, 2012 by admin

Japan hade för första gången på årtionden underskott i handelsbalansen under 2011. Det väcker en gammal oro: Japans statsskuld på över 200 procent av BNP kan få Grekland att framstå som en västanfläkt.

Grekland står högst på listan av världens ekonomiska problemländer. Men det är inte det enda landet med stora skulder. Värstingen i den rika världen är världens tredje största ekonomi: Japan, med en statsskuld på över 200 procent av BNP. Det kan jämföras med Greklands cirka 160 procent och USA:s dryga 100 procent.
En annan fascinerande siffra är att skuldnivån, enligt nyhetsbyrån Reuters, varje år växer med lika mycket som Greklands och Portugals gemensamma BNP. Det sistnämnda ger en liten känsla för vilka krafter som skulle sättas i rörelse om kapitalmarknaderna började tvivla på Japans förmåga att betala tillbaka.
”Det är skrämmande att tänka på vad som skulle kunna hända om placerarna börjar trippelsälja statspapper, aktier och valuta. Sannolikheten för att det inträffar är större än vad marknaderna tror”, säger en högt uppsatt statstjänsteman till Reuters.

Oron för Japans stora skuld är inte ny. Hittills har dock de som varnat för den gått bet. I stället har landets räntor tickat nedåt och yenen stärkts, vilket gjort japanska statspapper till en god investering. Räntan på tioåriga statspapper ligger för närvarande kring 1 procent eller ungefär hälften av nivån i Sverige och Tyskland.

Men den senaste tiden har det börjat mullra i leden. En orsak är att Japan förra året för första gången på årtionden hade underskott i handelsbalansen. Det ses som ett förebud om att landets återkommande överskott i bytesbalansen, ett bredare mått på affärerna med utlandet, kan vara på väg att vändas i ett underskott.

Visserligen förklarar tsunamikatastrofen i mars, som störde produktionen och samtidigt drev upp energiimporten, en del av underskottet men det finns också mer djupgående orsaker. Royal Bank of Scotland noterar att Japan tappat i konkurrenskraft och att allt mer av japanska företagens produktion flyttas utomlands.
”Givet att de senaste handelssiffrorna tyder på att strukturella faktorer spelar in snarare än endast konjunkturella, räknar vi inte med att exporten ska återfå tillväxtmomentum när den globala ekonomin återhämtar sig”, skriver RBS i ett marknadsbrev.

Den senaste tiden har exportsektorn fått lite draghjälp av yenen som försvagats kraftigt de senaste veckorna och nu handlas till den svagaste kursen på över ett halvår mot dollar. Rörelsen har dock skett från rekordstarka nivåer och yenen är trots försvagningen ungefär en tredjedel starkare än för fem år sedan.

RBS tror att det dröjer till 2018 innan Japan får underskott i bytesbalansen. Banken JP Morgan tror dock att inträffar redan 2015. Bytesbalansen är viktig. Överskott betyder att ett land exporterar kapital och underskott att det importerar. Om Japan skulle börja importera kapital ökar känsligheten. Ungefär 95 procent av statsskulden hålls idag av inhemska intressen, från privatpersoner till företag.

Men Japans befolkning åldras snabbt och har redan börjat minska. Inom en ganska snar framtid bör rimligtvis uttagen av sparmedel överträffa insättningarna, i takt med att en större andel av befolkningen går i pension.

Japan saknar inte medel för att hantera skulden. Skatterna hör till de lägsta i den rika världen. Regeringen väntas inom kort försöka driva igenom en ökning av momsen från 5 till 10 procent. Det politiska systemet fungerar dock illa och det är osäkert om förslaget går igenom. Landet har också en rejäl buffert i form många års överskott i bytesbalansen. Lite förenklat kan sägas att staten Japan är starkt skuldsatt men landet Japan är rikt.

Yoichi Miyazawa, före detta finansminister och ledamot av överhuset för oppositionspartiet Liberaldemokraterna, varnar för att ett värstascenario, med stigande räntor, kan bli riktigt plågsamt för Japan.
”Regeringen behöver då ha en tydlig plan för hur de offentliga finanserna ska stärkas, med reformer i stil med Greklands, som involverar kraftiga åtstramningar, stora nedskärningar i välfärdssystemet och höjda skatter”, säger han till Reuters.

Källa: DI.se, Viktor Munkhammar, 25 februari 2012
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Svenska bolag har Kina i sikte

Posted in Aktuellt, Allmänt, Thailand / Asia on February 20th, 2012 by admin

Sittandes på mitt hotellrum här i Bangkok har jag just läsy den här intressanta artikeln för svenska företags ambitioner i Kina:

De flesta svenska företagen i Kina är expansiva och lönsamma. De ökar sina marknadsandelar och investeringar trots flera handelshinder och stigande kostnader. De har över 75000 anställda och tänker rekrytera fler. Det konstateras i en ny enkät med svenska företag i Kina.
Det går bra för en klar majoritet av de svenska företagen på plats i Kina, enligt den nya affärsklimatundersökning som har gjorts av svenska ambassaden, Svenska handelskammaren och Exportrådets kontor i Peking.

Det är den tionde enkäten som gjorts sedan 2000. Den bygger på svar från 166 av 213 tillfrågade företag. De utgör i sin tur ungefär hälften av de 400–500 svenska företag som är etablerade i Kina.

Undersökningen speglar alltså företagens verksamhet i landet och inte exporten till Kina. Enkäten besvarades under sommaren 2011 och har nu sammanställts i en analys.
Här är några av slutsatserna:
1. År 2010 hade de svenska företagen tillgångar i Kina på minst 36 miljarder yuan (ungefär lika mycket i kronor), jämfört med cirka 10 miljarder tio år tidigare.
2. Närmare 40 procent av företagen säljer eller tillverkar industrivaror, medan 30 procent är i tjänstesektorn och knappt 10 procent säljer eller producerar konsumentvaror.
3. Hälften av företagen uppger att verksamheten i Kina var lönsam och 20 procent att den var mycket lönsam 2010. Därmed gick 70 procent med vinst det året, mot 62 procent 2009.
4. Bland industriföretagen svarade 29 procent av dem att verksamheten var mycket lönsam. Sämre gick det i konsumentvarubranschen där nästan en tredjedel av företagen gick med förlust.
5. Nästan två tredjedelar av alla företag i enkäten planerade att nyinvestera 2011–2012. Lika många väntade sig bättre affärer 2011 och 2012 än 2010. Strax över hälften räknar med positiva effekter för sin egen del av den kinesiska femårsplan som lanserades 2011.
6. 63 procent av företagen rapporterar att de ökade sina marknadsandelar 2010 medan 8 procent tappade terräng. Men inget företag säger sig ha gjort betydande förluster av marknadsandelar.
7. Många av industriföretagen har högre marknadsandelar än de bolag som säljer tjänster eller konsumentvaror. Mer än vart femte svenskt industriföretag i Kina har en marknadsandel som överstiger 20 procent.
8. En grupp med påfallande höga marknadsandelar i Kina är medelstora industriföretag (med en årsomsättning på upp till 25 miljoner dollar). De har med något enstaka undantag kvar tillverkningen i Sverige, och de är ofta starkt specialiserade på nischprodukter. De allra flesta är också lönsamma, och 38 procent uppgav sig ha höga vinster.

Vågen av svenska satsningar i Kina har vuxit snabbt det senaste årtiondet. Mer än 70 procent av företagen har etablerat sig där efter millennieskiftet. Flest kom 2005–2009, men inflödet har fortsatt även sedan dess.

Tillsammans har de svenska företagen nu minst 75000 anställda i Kina, varav 53000 i de tio största företagen. Och expansionen fortsätter.

Fyra av fem företag säger att de vill öka antalet lokalanställda kineser. Men många uppger att de har svårt att få tag i relevant arbetskraft i konkurrensen med andra företag.

Att rekrytera rätt personal anges som den klart största utmaningen för företagens personalavdelningar.

Svenska företag möter också andra svårigheter, och bilden har förändrats efter den globala finanskrisens utbrott 2008.

Tidigare pekade de svenska företagen i de årliga enkäterna ut den hårda konkurrensen som det klart största hindret att nå lönsamhet i Kina. Men 2009 trängde risken för en ekonomisk inbromsning fram som det största orosmomentet, och 2010 bröt stigande kostnader och handelshinder fram som betydande problem.

Cirka 45 procent av de svenska företagen anser att ineffektiva import- och exportprocedurer samt osäkerhet om myndigheternas verksamhet var betydande handelshinder för dem 2010. Nästan lika många angav att långsamma betalningar och dokumenthantering liksom vissa höga importtullar vållade problem.

En tredjedel av företagen ansåg att de påverkades negativt av brott mot upphovsrätten och andra immateriella rättigheter. Och en fjärdedel pekade ut lokala standarder som ett annat hinder.
– Rapporten visar att svenska företag i stor utsträckning möter samma problem som sina europeiska och amerikanska likar, kommenterar ambassadör Lars Fredén.

När de svenska företagen sedan tillfrågas om vilka nackdelar de har i konkurrensen med kinesiska företag betonar de priser och regeringskontakter. Som de främsta egna konkurrensfördelarna framhävs produktkvalitet, design och varumärke.

Källa: SvD

Vattenbrist hot mot Kinas tillväxt

Posted in Aktuellt, Allmänt, Thailand / Asia on February 17th, 2012 by admin

Brist på rent vatten är ett hot mot Kinas tillväxt. Kina gör i dag av med 600 miljarder kubikmeter vatten årligen och på många platser märks vattenbristen sedan länge.

Bristen på vatten har länge varit ett diskussionsämne i Kina. På torsdagen konstaterade den vice ministern för landets vattenresurser, Hu Siyi att situationen nu är så svår att den kan komma att påverka landets framtida utveckling.

Enligt Hu Siyi, som citeras av den statliga nyhetsbyrån Xinhua, använder Kina årligen tre fjärdedelar av landets hela utnyttjningsbara vattenresurser. Men föroreningar i floderna och exploatering av områden där det finns vattenreserver ökar belastningen.
Två av tre kinesiska städer lider av olika former av vattenbrist och närmare 300 miljoner boende på landsbygden saknar tillgång till rent dricksvatten, enligt Hu. Problemen på landsbygden har också ökat under senare år sedan vatten börjat transporteras till städerna.

Kinas kraftiga befolkningstillväxt under de senast 60 åren, då landet ökat med omkring 700 miljoner invånare, har satt en hård press på att få fram rent vatten. Och redan 1994 frågade sig tidskrifter som Scientific American och World Watch om Kina skulle komma att klara av att föda sin egen befolkning.

Medan Kina i dag står för 20 procent av världens befolkning har landet bara tillgång till 7 procent av världens vatten. För att klara bristen skulle Kina behöva tillgång till ytterligare 50 miljoner kubikmeter vatten årligen, skriver nyhetsbyrån.

Källa: Clas Swahn, Dn.se, 16 februari 2011
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Thailand i täten vad gäller synen på transsexuella

Posted in Aktuellt, Thailand / Asia on January 8th, 2012 by admin

Här i Thailand slås man ständigt av hur vanligt det är med transsexuella. Att det känns mer accepterat än hemma förstärks ytterligare av vad som finns att läsa i artikeln nedan:

Transsexuella har fått luft under sina vingar.

På torsdagen gjorde det thailändska flygbolaget PC Air, där kabinpersonalen består av så kallade ladyboys, sin premiärtur. Kabinpersonalen ser den unika rekryteringen som ett slag för transsexuellas rättigheter.

Transsexuella har en stark ställning i Thailand, där de är mer kända som ”katoeys” eller ”ladyboys”. De vanligaste yrkena för transsexuella i landet finns inom hälso- och skönhetsindustrin, men på torsdagen öppnades ett nytt yrke när flygbolaget PC Air gjorde sin premiärtur från Bangkok till Surat Thani. PC Air har riktat in sig på att rekrytera transsexuella till sin kabinpersonal.

– Det här är början på en acceptans av transsexuella i Thailand, vilket öppnar möjligheterna för oss att arbeta inom olika områden. I framtiden kanske vi kan få jobb som transsexuella aldrig har haft förut, som poliser, soldater, eller till och med piloter, säger 22-åriga Tanyarat Jirapatpakorn till Reuters.

PC Air hade från början tänkt rekrytera enbart män och kvinnor till kabinpersonalen, men när man fick över 100 jobbansökningar från transsexuella och transvestiter ändrade man sig, skriver Reuters.

Fyra transsexuella, 19 kvinnor och 7 män anställdes till kabinpersonalen. Enligt flygbolaget är rekryteringsprocessen densamma oavsett kön, med förebehållet att de transsexuella måste kunna bete sig kvinnligt och ha en feminin röst.

Källa: DN.se, december 2011, Philip Ramqvist
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Utvecklingen i Kina är som att åka berg-och dalbana

Posted in Aktuellt, Thailand / Asia on January 3rd, 2012 by admin

Att försöka följa Kinas utveckling känns ofta som att åka berg-och dalbana. Med på det tåget är två typer: De som med vitnande knogar skriker att tåget håller på att spåra ur, och de med händerna i luften som tjoar att vi bara har börjat få upp farten.

Varje år byggs det i Kina lika mycket bostäder som finns i hela Spanien. En ny rapport från The Economist Intelligence Unit slår fast att Rom inte byggdes på en dag. Men med Kinas nuvarande bygghastighet skulle det ta två veckor. Från Inre Mongoliets öknar till Shanghais kustlinje är det som en tsunami med byggkranar svept över landet.
Dr Doom, ekonomen Nouriel Roubini, skriver att den kinesiska bubblan är på väg att spricka redan 2013. Roubini blev känd för att redan år 2006 ha förutspått den amerikanska finanskrisen.

Alla tidigare perioder av extrema investeringar, inklusive i Ostasien på 1990-talet, har slutat med kollaps och långa perioder av dålig tillväxt.
Kina tog sig ur finanskrisen med massiva investeringar i hus, vägar och statliga stålverk. Men inget land kan att lägga halva BNP på dylikt utan att krascha i överkapacitet och dåliga lån, menar Roubini.
Journalister vallfärdar till nybyggda spökstäder, som Kangbashi, en nybyggd del av Kinas rikaste stad Ordos i Inre Mongoliet. Sju år efter att den började byggas är staden nästan tom, med öde gator. Men för optimisterna är Kangbashi bara en kostym att växa in i.

Economist-rapporten säger att 2011–2020 kommer ytterligare 160 miljoner kineser flytta in i städerna. Stadsbornas disponibla inkomst kommer att öka 2,6 gånger om. Istället för en kollaps spår de en fortsatt stark efterfrågan på bostäder. De som investerat i kinesiska fastigheter kommer då att ha gjort ett av årtiondets bästa investeringar.
I en kolumn som den här förväntas man vid det här laget ha snitslat fram läsaren genom dialektikens slalombacke till en säker slutsats: Sanningen!
Med fördel kan då sista stycket användas till en rolig sarkasm om alla idioter som tycker något annat.
Problemet är att min egen uppfattning går i en bergochdalbana. En normal dag vaknar jag som Kassandra och somnar som tv-shop. Även kinesiska bekanta klagar på samma känsla av osäkerhet. Det är en förklaring till det schizofrena beteendet hos de rika.

Det finns över en halv miljon kineser med investeringsbara tillgångar värda över tio miljoner kronor. En undersökning visar att mer än hälften överväger att emigrera. Samtidigt hamstrar de lägenheter som neurotiska ekorrar.

I skrivande stund gissar jag att optimisterna har rätt – och världen kommer att vara full av svindlande rika ekorrar om tio år. Kina är redan världens verkstad, men en medelkines konsumerar fortfarande bara 400 kilo stål per år, enligt World Steel Associations statistiska årsbok. Det är hälften mot vad en genomsnittlig sydkorean eller taiwanes. Till och med gamla färdigbyggda tjänstesamhället Sverige hade en stålförbrukning på 500 kilo per person 2007.
Samtidigt krävs sex ton stål för att bygga en vanlig kinesisk lägenhet.
Vi har nog bara sett början på den här åkturen än.

Källa: SvD
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World class dining in Bangkok

Posted in Aktuellt, Thailand / Asia on December 14th, 2011 by admin

Just back from a great dinner at Vertigo!

I have said it before – Vertigo at the top of Banyan Tree hotel in Bangkok is a world class experience.
Great food, excellent service and an outstanding view.

Whatever you do when you visit Bangkok next time, make sure that you squeeze in a dinner up here (or at least stop by for drink in their cool bar.

Streetfood i världsklass!

Posted in Aktuellt, Thailand / Asia on December 14th, 2011 by admin

Här kommer ett riktigt bra tips i Bangkok!

Ta en taxi till China Town. Du kommer garanterat att hamna på huvudgatan. Mitt på huvudgatan, i ett gathörn på höger sida (huvudgatan är enkelriktad från ett håll) ligger två mycket bra kinesthailändska street foodrestauranger. Jag brukar äta på den vänstra av dem. Otroligt bra mat, snabb service och ganska prisvärt (lite dyrare än normal street food här i Bangkok). Stället heter Lek & Rut.

Lycka till!