Friday, March 30, 2007
China's internet users jump 30%
The number of people using the internet in
Shanghai officials hit by scandal
Nine senior officials and business leaders have been reportedly expelled from
Despite China's market reforms, Communist officials still have control over large parts of manufacturing, banking and real estate industries.
Corruption is a widespread and growing problem, which
China's lost talent overseas
A report by the
About two-thirds of Chinese who have studied abroad since the 1980s have chosen not to go back home, according to state media.
Here, four of those who left their homes to pursue education abroad reflect on the choices they have made and what these mean for
"Made In Italy" woos Chinese
Michele Norsa, chief executive of Salvatore Ferragamo, the Italian luxury goods
group, is a man on a mission. He has just completed a tour of the company’s Asian operations, and formulating a
Mr Norsa was hired last October from Valentino, a listed Italian fashion house, to help prepare Ferragamo – best known for its upmarket shoes – for a possible stock market listing some time in the next two years.
He hopes to present a three-year plan to the company’s owners by the end of April. Ferragamo last year posted sales of €632m, half of which came from the Asia region, including
“I need to understand the potential of the company, its different markets and where it is more
profitable,” he told the Financial Times. “I do know that luxury brands are growing faster than [
Mr Norsa is deciding how best to develop Ferragamo’s existing
comprises 25 stores in 19 cities. The aim is to open another five stores this year on the way to hitting 50 on the mainland by 2010.
The ambitious plan would catapult the group’s
If the company’s stores in the self-governing enclaves of Hong Kong and Macau are
included, greater
Annual same-store sales growth on the mainland is growing at 50 per cent. As well as this organic growth, the company has to decide how to boost “perimeter” growth: enlarging existing stores and increasing the number of outlets.
He says: “In
the potential is huge.”
Mr Norsa says that the pace of perimeter growth is driven by property development, and also y factors such as the quality of both the shopping environment and other tenants in malls.
Ferragamo licenses some of its mainland stores through franchises with local groups that, he says, “sometimes have easier access to good real estate”.
But any expansion will not be unbridled. He says: “We must be selective in our growth and wary of the wrong geography and products.
The group’s entire product line, including 1.5m pairs of shoes a year, is produced in factories in
“The Chinese consumer wants a real product, with a ‘Made in
He is sanguine about the issue of counterfeiting, which is often cited as a barrier to the development of a sustainable luxury goods market in
“We don’t have a major counterfeit problem in
Chinese authorities have moved to tackle the problem. It is not just a
Mr Norsa is pinning his hopes on the twin beliefs that Chinese consumers desire original goods
and that Ferragamo’s long history – it was founded in 1927 – appeals to mainlanders. “Ours is a story of craftsmanship, of a family-owned business. The Chinese identify with this.”
As well as finding store locations, he accepts Ferragamo will have to overcome a number of challenges if its
At present, sales to women in Chinese stores, on average, account for 50 per cent of the total, as opposed to 60 per cent in other markets.
The Chinese are also buying lower priced items. “We need to push the customer towards more selective products.” He feels this can be achieved through consumer education and that luxury goods will gain wider appeal as
In the
Mr Norsa rates Hermès, the French fashion brand, as his own brand’s benchmark. “It has the [right] image and product and is of consistent quality,” he says.
“We can still upgrade our image and we must be known as a luxury brand. This is what Hermès has done.”
Other sales improvements include revitalising its watches division and developing products used in hotel bathrooms and the like. “It is important for visibility and a good way to get in touch with
customers.”
To gain a competitive edge, Mr Norsa likes to holiday in markets where he feels he needs to learn more about consumer tastes. This summer he plans two weeks travelling across
“It is important to understand the business environment and the life of its people. Holidays can help achieve that.”
Chinese Business Culture
When I hear the word culture used to explain business, I do not quite reach for the proverbial revolver but I do at least don my flak jacket. It is certainly wise to put one on early in this book, which, as its title announces, is a primer on how to negotiate with the Chinese. See Original Article
Such books inevitably suffer from the need to create an overarching set of assumptions, in this case about "the Chinese", no matter what alternative explanations for behaviour might be available. The Chinese, as defined here, are mainland Chinese, not those from
The assumptions are numerous, based on supposed Confucian and cultural norms: about the importance of creating a friendly, harmonious atmosphere, often fuelled by numerous banquets and alcoholic toasts; about the need to be patient and keep your cool, even in the face of
deliberate time wasting and histrionics; and aboutthe sensitivity of the Chinese to perceived slights, a "victim mentality", based on foreign atrocities in the18th and 19th centuries, that has been carefully nurtured by Chinese politicians ever since.
Much of the advice meted out here is good and true as far as it goes and some is common sense, such as advising foreign companies to ensure they have a well-briefed interpreter on their team. That and do not send executives to
Face is crucial, as the authors emphasise. Foreigners can attempt to gain a tactical advantage by making it clear that they have "lost face", such as being embarrassed back in head office by the
position they have been put in during negotiations.
So, too, is it important to understand Chinese history and the sense of grievance about it that most Chinese carry with them. Such sensitivities are never far from the surface and can be easily inflamed by a perceived lack of respect on the foreigners' part.
But the authors over-egg the cultural pudding and undercook the politics. An example is the
advice throughout about the need for foreign executives to behave like "Confucian gentlemen", minding their manners in the face of whatever provocations fly across the table. How then, does one square the calculated temper tantrum that is a staple of Chinese-style negotiations?
Confucius is a malleable old sage, as we can see from his revival in recent years as a role model after being reviled during Mao Zedong's rule. When the Chinese lose their temper, it is a
clever tactic to throw the other side off its game. But when the silly westerner does it, it becomes a transgression of deep-rooted cultural rules. Confucius can cut both ways.
The biggest challenge facing most foreigners who attempt to negotiate joint ventures or standalone businesses in
In a society as lacking in transparency and free flow of information as
One of the authors' interlocutors says that what foreign companies rarely understand is that Chinese officials are always thinking of the long term, "15 to 20 years ahead", and "what is best for
Herein lies one of
Some of the case studies in the book need a rethink as well.
The one about Volkswagen is replete with misstatements. It says the German carmaker won its leadership position through "product quality, reputation and pricing".
In fact, VW's position in
There is much to be said for understanding cultural norms in
But politics in
Useful Info China
Last Updated 30th April 2007
- Adecco Global Human Resources
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- Are you ready to do business in China?
- Avoiding the China Buyer Scam
- Basics for SME's
- Branding in China
- Business Entry Consultants
- Business Tips
- China and the WTO
- Chinese Ministry of Commerce
- Chinese Ministry of Finance
- Chinese Net Domain Authority
- Chinese Provinces don't always follow
- Common Staffing Problems
- Counterfeiting
- CITIC Bank
- Deloittes Report on
- Diplomacy
- Direct Selling in China
- Doing Business in China (the basics)
- Doing Business in China (Getty Images approach)
- Eight Critical Industries in China... Enter at your Peril
- Ernst & Young
- Etiquette
- Franchise Business Opportunities
- Going Global
- International Accounting in China
- Internet Marketing
- Keep your hands clean...even if your chinese business partner goads you
- Latest Chinese Economic Forecast
- Location I
- Location II
- Logistics and Supply Chain in China
- Management by Checklist
- Map of China (plus useful facts)
- Negotiating in China
- Original Equipment Suppliers Association (
- Outsourcing in China
- Profitability in China
- Purchasing Power of the lower class
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- Shanghai Millionaires Fair (May)
- Shanghai Stock Exchange
- Starting up in China How to do it right
- Starting up in China Small Companies
- Succeed in China (Think outside the box)
- Supplier Fraud
- Technology in China
- Ten commandments for Westerners I
- Ten Commandments for Westerners II
- The Peoples bank of China
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