The Wall Street Journal Interview: The Barbie Story in China

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Recently, I was interviewed by The Wall Street Journal about how American toy-maker Mattel misread feminism in China. As the result, it had to close its flagship store, the House of Barbie, in Shanghai, and threw away over $30 million investment.

Since then, Mattel seemed to have learn a thing or two about the Chinese market. The Wall Street Journal article indicates that the company is making new efforts in China.

The Chinese toy and games market has been growing at 14% in the last five years. The demand will continue to be strong as growing Chinese middle class families want to give their children the best. And, they have the disposable incomes to do that.

There are still opportunities for Mattel to get it right in China. I will soon have an article on Forbes.com to comment on Mattel’s newly launched Barbie “Violin Soloist.” Stay tuned!

Chinese People Must Define Their Own Dream

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China’s incoming president Xi Jinping has struck a new tone: “the Chinese Dream.” In a visit to the “Road to Revival” exhibit at the National Museum in Beijing, Xi delivered a speech, calling for the revival of China into a strong nation.

“Everyone has their own ideals, pursuits, and dreams,” he said. “The greatest Chinese dream, I think, is to achieve great rejuvenation of the Chinese nation.”  He then went on to say that his generation of Communists should continue to build the Party and forge ahead with the goal of the rejuvenation of the Chinese nation.

Since then, the term “the Chinese Dream” has been repeatedly discussed by media and on Weibo, a Chinese social media site with over 300 million users.  Both Chinese and foreigners are asking the question: what is the Chinese Dream? After all, the Chinese middle class is now approaching half a billion. What is the Chinese Dream that can inspire their aspirations for a better life?

Clearly, it is not Xi Jinping’s version of the Chinese Dream.

Chinese People’s Reaction

On February 1, the Chinese government newspaper People’s Daily published an article to further explain Xi’s Chinese dream, “Power Source of the Chinese Dream.” The article says: “The American Dream is this: regardless of one’s background, with hard work and determination, one can achieve whatever one aspires. The Chinese Dream promotes the concept that what’s good for the country will be good for individuals. It reflects the Eastern culture of collectivism and believes as long as the country is strong people will be rightfully benefitted.”

Soon after the article appeared online, hundreds of people commented on Weibo: Continue reading

The Chinese Middle Class Approaches Half a Billion

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And how American companies can seize the opportunities…

The Chinese middle class is expanding rapidly, reaching 474 million this year, according to my latest calculation.

Many people may challenge this number. But it’s just arithmetic. In a recent report “Consuming China,” McKinsey indicates that 83 % of households in China’s mega cities (cities with population of over 10 million: Beijing, Chongqing, Guangzhou, Shanghai, Shenzhen, and Tianjin) and 66 % in the rest of the cities are middle class families.

By the end of 2011, China’s urban population reached 691 million. Do the simple math, and you will get the same number I got: the population of the Chinese middle class was 474 million, with 88 million living in mega cities, and 386 million in smaller cities.

This means the Chinese middle class accounts for 68 percent of urban population, which is believable to me. Assuming two percent are super rich, still about 30 percent of the people in urban areas are poor.

Some would argue that there are different criteria to measure the size of the Chinese middle class. A simple and important rule of thumb, as stated in my book The Chinese Dream, is that of a household with a third of its income for discretionary spending. These people have passed the threshold of survival and have disposable income to spend on leisure items. As I travel around China, it’s very clear to me that the majority of people in urban areas have reached this stage.

Chinese Consumers Love “Made in USA” Products

The rising Chinese middle class is the biggest story of our time. However, many US companies are missing the opportunity. US exports to China account for only 6 percent of China’s total imports. The major categories of US exports to are in industrial sectors such as power generation equipment, aircraft, and medical equipment.

The biggest opportunity, however, is in the consumer sector. On November 11, China’s “Single Day” shopping festival, online retailers Tmall (B2C) and Taobao Marketplace (C2C) generated a record revenue of $3.1 billion, more than the total sales in the U. S. on Black Friday and Cyber Monday combined. Before long, China will become the world’s largest consumer market, and its consumption could reach $13 to $16 trillion by 2020.

Better yet, Chinese consumers love American goods and are willing to pay more for them. Continue reading

The Chinese Middle Class View of the Leadership Transition

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The Chinese Communist Party began its once in a decade leadership transition as the 18th National Congress opened on Thursday. I was interviewed by the Canadian TV News Channel and a German newspaper, Sueddeutche.de, regarding the change of power in China and how members of the Chinese middle class view the leadership transition. Below are the questions and my answers:

Q: What do members of the Chinese middle-class think about the last ten years and the leadership of Hu Jintao?

A: Members of the Chinese middle class think that the country has made a lot of progress economically in the last ten years under the leadership of Hu Jintao. They feel that their lives have improved tremendously. Many of them now own homes and drive cars. This compares to thirty years ago when their parents lived in slums and could hardly afford bicycles.

While many of them approve what the government has done, they are also under extreme anxiety. This anxiety has become increasingly intense in recent years due to political uncertainties. Continue reading