Changing China

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Everyone wants to go to China but who really understands how Chinese society is changing? This short presentation is a first step to discovering the future of this dynamic country. Based on interviews with Chinese residents, it lifts the lid on how people live and how businesses thrive

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Changing China

  1. 1. Changing China
  2. 2. Changing China Background Aim Get some early insights into what makes China tick today & how this will change Interviewees Chris Middleton with 9 Chinese, 2 Hong Kong, 1 Taiwanese, 1 Australian Haibao (Expo 2010 Sectors Macott) Health, retail, journalism, publishing, hotels, research Tips on writing a report on China Avoid Clichés Do not use a red background & images of dragons or fireworks Avoid terms like 'chasing', 'taming' or 'riding' Don't start each section with a Chinese proverb Steer clear of overused facts – '1.3 billion' etc. Keep clear of stereotypes 'Wily, mysterious oriental salepersons' (Source: 'That's Shanghai' Magazine, June 2010) No dragons please!
  3. 3. Changing China Inconceivable rates of change Examples Before the Expo, Shanghai had 4 metro lines; 3 years later there are 10 There are 6,500 kms hi-speed train lines; by 2020 there will be 20,000 kms Anecdotes Interviewee left for a week; returning she couldn't find home due to a new tunnel Bar advertised as venue for world cup TV; it had closed before opening match Insight State capable of rising to almost any challenge Rate of change likely to accelerate through own momentum; no signs of inertia Reasons for change Size, stupid 1.3 bn (damn!) : you feel the pressure of people and the need to fight to survive Ultra competitive: 1 place for every 90 university applicants Starting over Cultural Revolution = no intellectuals, no city culture, no entrepreneurs, no change Change is so good because past/history is so bad Keeping up with change is a key status indicator; even the old feel this pressure Conversations regularly start with dialogue about what's new, what's the latest Going underground
  4. 4. Changing China Getting to the top Stress Chinese hide stress well; no visible tension, aggression There is mental illness however; e.g. 3 student suicides in early June 2010 But 'face' is important concept i.e. best to not show stress Letting off steam through alcohol is OK; bosses get tipsy on nights' out Work rate Work long hours, but to western eyes workers can seem less productive In truth, there is always a good cultural reason for taking the 'long way round' Common to see people asleep in public Leaving the ratrace Almost impossible to slow down, down shift Pressure of having to support 6 adults in retirement (2 parents; 4 grandparents) Social pressure is enormous to keep up with the changes and not be left out New ways to succeed New parents want their kids to be more rounded, to have fun Kids still need to pass exams but are being taught to be innovative Insight Whilst achievement is all motivating, already signs that success has to be fun Little Emperor's (single kid's) values will change Chinese society forever At the top : Park Hyatt In 10 years, a creative generation will change Chinese brands' image & success is World's Tallest hotel
  5. 5. Changing China Retail Therapy It really works! Going shopping is a hobby for most middle-class urbanites It is explicity claimed as an anti-stress tool; work hard to spend hard Young spend everything; makes work worthwhile; a very tight connection From thin air With low salaries & high rents, how do they spend so much? In 1998 most were virtually given their homes; since then prices are up 10 times Home prices have tripled in last 3 years in Shanghai: people feel very wealthy Grandparents are extremely thrifty but will give anything to their Little Emperors The stock market has risen 160% in 5 years Gifts A 'gift' is a term often used to mean a bribe in China State officials can expect to at least double their salaries through gifts Luxury brands' might gain as much as half their sales revenues because of gifts Anecdote: Salvatore Ferragamo customer ordered 300 ties to give as gifts Municipalities fight to have luxury brands locate in their district, for presige - & gifts What a luxury! Land-grab: LV have 3 stores New middle-classes want Western luxury brands – now moving to tier 2 & 3 cities in Shanghai already Luxury wants China – prices 2.5 times European rates; shops look empty but at these margins, they can afford to wait! However, C&A, Zara and H&M having success too
  6. 6. Changing China Health Traditional Chinese Medicine (TCM) Several cases of fake practitioners have scandalised China & corrupted image Harmonised food intake is key along with concept of warming and cooling foods New concept restaurant blends healthy foods and medicinal herbs in its cooking Hospitals Proper healthcare is so remote for many, that they can barely even think about it Some rich reject modern hospitals too; the body is intimate; hospitals are not Focus of most pharma sales activities and most treatments are hospitals not GPs Phenomenon of super specialist hospitals: 3,000 dermatological treatments/day Herbal Life restaurant: Looks good, However, lack of medical facilities opens way for faith, gurus and cults does you good Pharmacies Can be State run Huge squeeze on their business model now due to high rents and lowering prices Increasing numbers having to relocate: low investment in stock is another result Products & Services Who fancies one of the following health supplements: sheep placenta, deer bones or kangaroo blood tablets? Phenomenon of boot camps to 'cure' young internet addicts Western medicine is not necessarily seen as 'superior'; it's not as old as TCM Headline from newspaper on 08/06/10: “Global brands face crisis” referring to product-security scandals in China (Novatis, J&J, P&G have all had problems) Time to take stock?
  7. 7. Changing China Biggest Surprises - Mobile phone vending machines - Mobile phone recharge available in street - Western business persons often needing to be chaperoned by Chinese locals due to intractable cultural differences - No graffiti in Shanghai - Market changes so rapidly that some agencies are abandoning traditional research and strategy approaches; they are outdated before any concept gets to market - It is not unheard of for a secretary to spend 2,000€ on a handbag - Change to one child policy? Where two only-children come together in marriage they can/will be able to have 2 kids - Chinese brands still have so much to go for in 3rd and 4th tier cities that exporting brands to the West is far away - Typical student exam questions: “The change of light and shadows in one's life”; “Wouild cats take the trouble of catching rats when they can have easy access to fish?”; Green is related to life & ecology; green life is a new concept” - People want white skin to avoid being seen as a peasant from the countryside (& not to seem more western) - Many workers in good positions have maids at home and full-time drivers - It is often necessary to 'donate your liver' in order to make sales deals (due to culture of copious alcohol consumption) - Such is the quest for the 'next new' that brands must innovate and launch new products on a continual basis - Whilst stores have many employees, the level of personal service is often rudimentary.
  8. 8. Changing China A Designers' Paradise Even roads are lit up at night Looking inside The Grand Hyatt (floors 54-86) Expo 2010
  9. 9. Changing China My most important finding (and another rule of report writing broken!)
  10. 10. Prepared by Chris Middleton chris@futurescoaching.com www.futurescoaching.com LONDON • PARIS

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