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.

From “Outlaws of the Marsh” to Chen Guangcheng: What Hasn’t Changed in China

Recently, I have been watching the Chinese TV series “All Men Are Brothers,” a 2011 TV production based on the classic Chinese literature Outlaws of the Marsh (Water Margin is another translation). This historic fiction is set in the 11th century in China during the Song Dynasty. A group of good men and women were being forced into a life as outlaws by injustice in society.

Some of them were persecuted by evil officials. Others were victims of local thugs and rebelled. Yet there were others who took justice into their own hands and broke the law. Eventually, 108 of them (including three women) gathered at Liang Mountain to form an outlaw society. Known as heroes of Liang Mountain, they robbed the rich and helped the poor, and vowed to “do justice on Heaven’s behalf.”

Revisiting this epic novel in a TV series, I was struck by how relevant the stories are to today’s China. Despite the dramatic changes in recent years, much of China hasn’t changed at all. Every single story in “All Men Are Brothers” seems to be repeating itself in contemporary China – common people who are powerless and subject to abuse by villains, petty-minded officials who have gained high powers, upright people who find themselves running afoul of the authorities. Continue reading

My Interview on CNNMoney

This week, CNNMoney is running a series of articles about China. I was interviewed on the topic of China's growing middle class. It is a good thing that mainstream media has started to pay more attention to China.

Among the series, an article "US Companies Betting Big in China" showcased some of the most successful US companies in China:
  • Apple's sales in China reached $12 billion in 2011
  • KFC, Pizza Hut, and Taco bell opened 656 new restaurants in China last year alone
  • Boeing predicts China's aircraft market will generate $200 billion revenue
While multinationals have made significant inroads to China, small and medium sized companies face entry barriers due to lack of resources. To address this problem, I will launch seminars later this year to help small and medium sized companies to take advantage of China's growing market. Stay tune!
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I Will Be Speaking at Bay Area Council on Mar. 22

I will be speaking at Bay Area Council in San Francisco on March 22, at their luncheon series “How to Do Business in China.” See the details below:

The Bay Area Council is a business-sponsored, public policy advocacy organization for San Francisco Bay Area. Founded in 1945, the Bay Area Council has more than 275 of the largest employers in the region and is widely respected by elected officials, policy makers and other civic leaders as the regional voice of business in the Bay Area.

Please join me:

When: 12:00pm – 1:00pm, March 22, 2012

Where: Nixon Peabody LLP, One Embarcadero, 18th Floor, San Francisco, CA

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China to Become the World’s Largest Importer by 2014

According to The Economist, China will surpass the United States to become the largest importer in the world by 2014. There are plenty of opportunities for companies to take advantage of China’s growing middle class. Here are a few useful tips if you are interested in exporting to China:

  • Check out your local Chamber of Commerce or Export Assistance Center and familiarize yourselves with legal and regulatory issues in China. These facilities also have a lot of resources and services that can help you develop China market entry strategies and find the right business partners.
  • Consider rebranding or repositioning your products in China. Remember, what works in your native country may not work in China. You really need to learn about Chinese culture, understand Chinese consumers, and adapt your products and services to the China market.
  • For smaller brands, e-commerce is a great way to break into the China market without significant upfront cost. China’s ecommerce has been growing at 60 percent each year in recent years. More than 100 million Chinese shopped online last year. And China’s Internet users are expected to reach 750 million in 2015.
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