Will China Lead Innovation In Mobile Social Commerce?

Social commerce is a novel term in the US, and many people are not familiar with it. Some think it refers to those annoying ads on Facebook. According to Wikipedia, social commerce is the use of social networks in the context of e-commerce transactions.

In China, social commerce has taken up a life of its own and become the backbone of e-commerce.

While the “Ice Bucket Challenge” has gone viral on Facebook, Chinese consumers use social media in a much more thoughtful way. Instead of posting some silly videos and pictures, they turn to social media to solve real life problems, to seek advice from friends and opinion leaders, and to decide what products to buy or not to buy.

Read the full article on Forbes.

The Rise of the New Global Middle Class

The global middle class will explode in the next fifteen years, growing from 1.8 billion in 2009 to 4.9 billion in 2030. About 66 percent will be in Asia Pacific, compared to only 7 percent in North America and 14 percent in Europe. New Asian Pacific consumers will wield nearly 60 percent of total purchasing power, double that of North America and Europe combined. This is a significant shift in economic power from West to East that hasn’t been seen in the last 300 years. Its impacts could dwarf the Industrial Revolution.

China and India will make the biggest waves in this surge of the new global middle class. In 2009, these two Asian countries comprised just over 5 percent of global middle class consumption; in 15 years, their share of global middle class consumption will increase to 41 percent or more.

What do you make of this? Comments are welcome.

Book Excerpt: Seeds Of Alibaba’s IPO Planted In 2004 Battle With eBay

In light of Alibaba’s upcoming IPO, I thought it would be appropriate to run a series of excerpts from my book The Chinese Dream, which documents Alibaba’s humble beginning, its triumph over eBay, and Jack Ma’s legendary story.

The first episode is set in 2004. eBay just entered China and planned to dominate China’s nascent online market. An unknown Chinese company, Alibaba, started a sister site called Taobao to compete with eBay. Everyone thought this was a crazy idea. However, Jack Ma, Alibaba’s founder and CEO, was undeterred. He asked his team to stand upside down so that they could look at the world from a totally new perspective.

He said, “EBay may be famous in the United States, but in China, if you ask one hundred people whether they’ve heard about eBay, I believe that less than 10 percent have heard of it. But if you ask one hundred people whether they’ve heard about Alibaba, 90 percent know about us…. I believe we have a chance.”

Read the full story on Forbes.com.

McDonald and Coca Cola’s New Mobile App Lures Consumers

Recently, McDonald and Coca Cola launched a new app that encourages people stay engaged with each other rather then being distracted by constant phone calls and messages. As featured in Trendwatching’s July newsletter:

In May 2014, McDonald’s and Coca-Cola partnered in the Philippines to launch BFF Timeout, an app that rewards users for not using their phones. Once individuals in a group have all opened the app, the timeout begins and points are earned for every moment the phones are left alone. As soon as anyone uses their phone, the timeout ends. Users’ scores are ranked on a public leaderboard, and prizes include trips to Japan and Singapore.

I believe that the next wave of innovation in mobile-commerce and social-commerce will come from Asia. Companies need to pay close attention in this area in order to stay ahead of the curve.

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!