SAIC Taking Wrong Approach to Build Its Brands

China’s number 1 auto maker, Shanghai Automotive Industry Corp. (SAIC), is setting up a venture capital firm in Silicon Valley to tap advanced technology for its automobile brands back home. As Rose Yu writes in the WSJ’s China Real Time blog:

Chinese car companies, including SAIC, could do with all the help they can get, as the majority of Chinese consumers prefer foreign-branded cars. Chinese domestic brands’ market share in the country’s passenger-vehicle market fell to 36.5% in May from 39.4% in the year-earlier period, the ninth-consecutive month of decline, according to data from a government-backed industry group.

“Building a brand is an arduous job,” said Chen Hong, Chairman of SAIC Motors. “Chinese car makers must go upscale, otherwise the situation will be worse.

“In terms of sales, SAIC is a big car company. But when it comes to core technologies, we are far from strong enough,” said Mr. Chen, who became chairman in May. “Silicon Valley houses a number of emerging-technology companies. Having a footprint there will help improve our innovation ability.”

But how could “having a footprint in Silicon Valley” help improve their innovation ability? It’s not like breathing the Silicon Valley air will automatically make a company more innovative. Money isn’t only the way to acquire new technologies. The best innovations happen where the problems need to be solved. SAIC doesn’t need to look farther than China to find these.

Speaking at Carlsberg Global Leadership Conference

I had the honor to speak at Carlsberg global leadership conference in Chongqing recently. The Danish brewing company has made heavy investments in Western China, betting on the growing Chinese middle class.

Every other year, the company brings its top CEOs and senior executives from around the world in a two-day meeting to re-focus its growth strategy. This is the first time that Carlsberg held its global leadership conference in China, or in Asia for that matter. This shows how important the China market is for multinationals such as Carlsberg.

As part of the two-day program, Carlsberg had a banquet party “China Night” on May 14th, where Chinese singers and dancers performed various traditional shows. My favorite is always the “face-changing” performance. In a Tibetan ethnic dance, I was pulled on the stage along with other Carlsberg executives and was dancing with the performers. That was a lot of fun!

Previously, I had an opportunity to speak at Procter & Gamble in Cincinnati on a similar subject as well.

CCTV Interview: Chinese Spring Festival

I was interviewed on CCTV-America on Friday to discuss the gigantic human movement during the upcoming Chinese Spring Festival – 3.6 billion trips, according to an official estimate.

The Spring Festival, which will officially start on January 31, is the Chinese Lunar New Year. It usually lasts for at least two weeks. During this period, many businesses are closed, and people go home to visit their families or travel for vacation. It is like Christmas in this country.

China has over 260 million migrant workers. They will be going back to their hometowns or villages for the Chinese New Year. For upper middle class Chinese, they will be traveling to overseas. I have seen many Chinese coming to this country for vacation during the Spring Festival.

Still, 3.6 billion trips is a mind-boggling number. That means every single person, including infants and elders, will make 3 trips during the holidays, which seems very unlikely. Perhaps they have a different way to count trips.

Regardless, it is a good sign for the Chinese economy. The Chinese government wants China to move more toward domestic consumption. As Chinese have more income, they will travel more, which, in turn, contributes to a more “service-oriented economy. “

Can Mattel Make A Comeback In China?

After Mattel’s embarrassing closure of its flagship store, the House of Barbie, in Shanghai two years ago, the American toy maker seems to have learned a thing or two about the Chinese market.

Its newly launched “Violin Soloist” Barbie aims to target Chinese parents who want their daughters to be “geniuses,”  just like any self-respecting tiger mom would. The doll has a traditional Barbie look – blonde, blue eyes and dressed in glamorous hot pink. In addition to her five-inch high heels, she even has a violin!

At first glance, it’s hard to imagine that a Barbie like this would appeal to Chinese girls. Don’t they want dolls that would look more like them – black hair, brown eyes and round face? Continue reading

The Wall Street Journal Interview: The Barbie Story in China

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!