Chinese Middle Class | HELEN H WANG

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 Five Things Starbucks Did to Get China Right

Why Home Depot Struggles and IKEA Thrives in China?

Forbes: Helen H. Wang

At a time when China’s home furnishings market surged 17 percent, the largest U.S. home improvement company Home Depot has been struggling and closed five stores since it entered the China market in 2006.

Image by detbuzzsaw via Flickr

Analysts pointed to the fact that a “do it yourself” culture does not exist in China. True. Because labor costs are relatively low, many homeowners would rather hire someone to do the work than do it themselves. Apparently, Home Depot made the same mistake as some other companies that entered China without understanding the local market, which is often dramatically different from their home market.

Unlike consumers in the West, Chinese consumers have no role model from older generations. Home ownership was non-existent about fifteen years ago. It was then very common for a family, sometimes three generations, to share a 300-square-feet room that they used for sleeping, eating and daily activities. A kitchen was not even a necessity as many people simply cooked in a common area outside their room. Continue reading Why Home Depot Struggles and IKEA Thrives in China?

The Growth of the Chinese Middle Class

There are a number of predictions for the future growth of the Chinese middle class from Goldman Sacks, the Boston Consulting Group, and McKinsey Global Institute. The numbers are more or less the same.

In my forthcoming book The Chinese Dream, I mainly cite predictions from the McKinsey report From ‘Made in China’ to ‘Sold in China’: The Rise of the Chinese Urban Consumer. (For the definition of the Chinese middle class, please see my previous post).
Continue reading The Growth of the Chinese Middle Class

China's Victoria Secret

Today, I received an email from a friend of mine from Beijing, announcing his new online start-up La miu (www.lamiu.com) – a China’s Victoria Secret to be. This is at least the second “China’s Victoria Secret” I have heard among my circles of friends. The other one is Herbella (www.herbella.cn) in Shanghai. Who knows how many more are out there?

Photo credit: be Lamiu girl

The message is clear, though, that the consumer market in China is booming. Continue reading China’s Victoria Secret

HELEN H WANG

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