The 1990 Institute: China’s Growing Global Impact

I was honored to speak at The 1990 Institute’s Teachers Workshop on Monday in San Mateo, California. The two-day workshop, titled China’s Growing Global Impact, was designed to help high school teachers understand what’s happening in China and prepare our students for a future that will be very different from their parents’.

My presentation, of course, is on the subject of the rise of China’s middle class. Here are the slides I presented at the workshop:

The 1990 Institute is an organization that fosters better understanding between the U.S. and China. Other people on the panel include Dr. Tom Gold, professor of sociology of UK Berkeley, Dr. Mark Henderson, program head of Environmental Studies at Mills College, and John Kamm from Dui Hua Foundation. It was a real honor to be in such a distinguished company.

What You Can Learn from Burger King’s Missteps

Eight years after Burger King first entered the China market in 2005, the world’s second largest burger chain restaurant has only 63 restaurants in the country, falling far short of its own plan of opening 250 to 300 restaurants by 2012.

Many analysts pointed to Burger King’s uphill battle with its competitors. Both Yum! Brands and McDonald’s entered China much earlier and both have established significant presence in the country. Yum! China has more than 4,000 KFCs and 750 Pizza Huts, in addition to its China-based units East Dawning and Little Sheep. McDonald’s China division has more than 1,500 locations.

However, there is plenty of demand for more than two big American restaurant chains in China’s $29 billion fast food market, thanks to a growing Chinese middle class. Here are a few things Burger King can do to catch up:

Myth that Chinese Don’t Eat Beef

Burger King has failed to play up the advantages of its traditional beef dishes. Instead, it added chicken burgers, believing Chinese prefer chicken to beef. The reason many Chinese consume more pork and chicken is because they are more affordable and readily available. Chinese farmers typically raise pigs and chickens to sell in the market, while cows are used mainly for farming.

The truth is that Chinese consumers consider beef a quality meat because it has less fat. Continue reading

Tom Friedman: China Needs Its Own Dream

Last month, I was honored to be invited to a private dinner with Tom Friedman in Shanghai. The dinner was hosted by Peggy Liu, founder of US-China Collaboration on Clean Energy (JUCCCE) to help Friedman get an insider’s view on China.

At the dinner, we (about twelve of us) discussed many challenges as well as opportunities China faces. Some cited the low trust in the Chinese society, others talked about entrepreneurial activities on the ground. I had a chance to give Friedman a copy of my book The Chinese Dream: The Rise of the World’s Largest Middle Class and What It Means to You.

In his recent column “China Needs Its Own Dream,” Friedman pointed out that China needs to define its own dream rather than blindly follow American’s  “We all need to be rethinking how we sustain rising middle classes with rising incomes in a warming world, otherwise the convergence of warming, consuming and crowding will mean we grow ourselves to death.”

I am glad he used the size of the Chinese middle class from my book – 300 million people expected to grow to 800 million by 2025.

Five Things Starbucks Did to Get China Right

If there is one company that should have failed in China, it would be Starbucks. China has thousands of years of history drinking tea and a strong culture associated with it. No one could have guessed that Chinese would ever drink coffee instead of tea.

Yet, Starbucks has successfully opened more than 570 stores in 48 cities since it first entered China twelve years ago. Building on this momentum, it plans to open 1,500 stores by 2015. What did the Seattle-based coffee company do right in China? Here are five lessons from Starbucks’ success.

Think Different

When Starbucks entered China in 1999, many were skeptical that Starbucks had a chance. Given the fact that Chinese people have traditionally favored tea, it seemed impossible that Starbucks would be able to break into this market.

However, Starbucks did not let this skepticism stop it. A careful market study revealed that as the Chinese middle class emerged, there existed an opportunity for Starbucks to introduce a Western coffee experience, where people could meet with their friends while drinking their favorite beverages.

Starbucks literally created that demand. Now you can find a Starbucks almost on every major street of the coastal cities in China. Even my 90-year old father in China began to tell me how he drank coffee after meals, rather than tea, to help his digestion. Starbucks has revolutionized how Chinese view and drink coffee.

Position Smart

Once Starbucks decided to enter China, it implemented a smart market entry strategy. It did not use any advertising and promotions that could be perceived by the Chinese as a threat to their tea-drinking culture. Instead, it focused on selecting high-visibility and high-traffic locations to project its brand image.

The next thing Starbucks did was to capitalize on the tea-drinking culture of Chinese consumers by introducing beverages using popular local ingredients such as green tea. This strategy has effectively turned potential obstacles into Starbucks’ favor. Chinese consumers quickly developed a taste for Starbucks’ coffee, which was essential to Starbucks’ success in China. Continue reading

The Secret of Succeeding in China

For those who have participated in our survey on The Secret of Succeeding in China seminar, thank you very much and we really appreciate your feedback!

We have received a total of 108 responses. A overwhelming majority of them says that a China strategy is extremely important to them. About 40 percent of the survey responders say the biggest challenge for them to enter the China market is “government regulations,” and 35 percent says “no connections.” Almost 80 percent people indicate that they are likely to attend our seminar.

Currently, this survey is closed. Since we have a basic account at SurveyMonkey, we are only allowed to collect the first 100 responses. If you haven’t received our free report yet, that means you are among the last 8 people who responded our survey. You can go to our Free Downloads page to download your free report.

Thank you again for your interest. Please stay tuned for our upcoming seminar The Secret of Succeeding in China.