Market Information

798 Art Zone.

With a large population of western and Chinese artists living and working in the 798 art zone the area has become the center for the art and creative community in Beijing. There are unique spaces available (if you know who to talk to), that are perfect for short term show rooms and for product launches.

www.unicon.co.nz

Photo by: Joe 2007

THE Minhang District People’s Court yesterday sentenced three Fujian Province natives from three to seven years in prison for selling fake cigarettes. The court also fined Xiao Zhongmei, Zheng Shufu and Li Yinghua 150,000 yuan to 200,000 yuan. The trio bought and sold fake cigarettes at a profit from April this year and were caught in June. Police seized 2.12 million yuan worth of cigarettes.

Source: Fake smokes   via Shanghai Daily: Metro by on 12/21/07

1. Take the get rich quick stories lightly: A launch in China, while holding phenomenal potential also takes a lot of heart to see through. There are dangers like misreading Chinese consumer habits, copycat competitors setting up faster than lightning, long periods of no visible returns, struggles with a workforce from a totally different culture, the list rolls out continually. Once the down sides are understood however, the potential sales campaign (considering good points and bad) can be conducted with a clear mind.

2. Look at your strategy: Does your company really want to explore new sales market? Total commitment is needed to break into a Far East Asian market place such as China. How far into the future do you look? The “We’ll clean up quickly here” mentality is often followed by excessive cash burn and a bemused collapse. Give yourself a 5 to 10 year horizon to build a worthwhile business; patience pays untold dividends in China.

3. Compare your offering: You will be going head to head against others in the most fiercely competitive market in the world. Your product or service offering needs firstly to be something that’s hard to emulate, secondly, have equal or better quality than theirs and thirdly, have something of the mystique of being foreign to the Chinese consumers. Foreign companies that reach kudos level in the Chinese high street have these traits (e.g. KFC, Starbucks).

4. Do your Market Research: The Chinese middle class is growing fast. While perhaps around 50-100m people right now, some predict it to be 250m people by 2011 and 520m by the year 2025. The clever ones are starting now, testing and learning, finding out what works and what doesn’t. When your learning period has identified your sweet spot in the market, then you can roll out wider scale (note: B&Q have used this strategy for the last 7 years to great effect).

5. Do your sums: No company can survive for long selling at less than cost price. Plan your financials thoroughly. Start with a 5 to 10 year ball park long range forecast, blending it with your overall company objective. Then break this down to the quantifiable first 2 years, getting real figures supplied by real people in China. Make sure that these figures are not being supplied by potential suppliers that could be understating costs so as to maximise the chances of getting your business.

6. Do your due diligence: This is a high priority in China. It’s a long distance from here and there are many pretenders. Make sure the business partnerships you build are with competent people who are in the place they say they are, can do the things they say they can, and have a good track record of getting things done properly. Get copies of their business licence, check references thoroughly, go to their office, meet them, and ask them the tough of questions before any deals are struck.

7. Talk to other operators: These tend to be the closest relating people to you that you will find in China. Although some of them could be in competition with you, most Brits I have met in China have been very helpful. There are many expat and business chambers that will lend a supportive hand and help out with knowledge. US and European organisations are also very helpful.

8. Watch the high street first hand: Spend some time watching how the Chinese shop. If you can take a local Chinese friend along to help you understand the mechanics of how people do business in the high street do so, it will expedite your understanding of how it works..

9. Formalise your network: Pay particular attention to your Chinese partners. Don’t forget that this is their market and you are the outsider. They are helping you to come into their world. When the time comes, spend time training them to fit well with your company but remember always that they’re the ones who really know the people who dwell in this market, not you. Make him or her earn your trust by complying with solid company procedure, and then trust them to do the job.

10. Keep learning: The fact that nothing stands still in China opens up some veryinteresting opportunities for fit businesses. Mighty western giants sometimes have toperform tactical withdrawals while small sole traders can sometimes build hundred people companies. Why? Because the small guys ask questions and listen for answers and some of those giants think that they already have the answers because they are successful in other markets, this almost guarantees spectacular failure. If you want to sell successfully into China do yourself a favour; never stop learning about the market and the interesting people in it.

For more information visit the Modern Management Worldwide website at

www.momaworldwide.com

Chinese companies are making takeover bids for mining companies in Australia and Canada, highlighting the country’s growing demand for resources amid a separate takeover battle that could yield the industry’s biggest merger ever.

Source:  Mainland Miners Look to Invest Abroad

via WSJ Briefing: China Business News on 12/12/07

China’s largest free-trade harbor area with the most preferential tax treatments started operation in the northern port city of Tianjin Tuesday, a further move in the country’s opening up strategy

Dongjiang Bonded Harbor Area, close to Beijing and located in the Bohai-rim region is set to enjoy the most favorable policies in taxation and foreign exchange polices and offers comprehensive services in international shipping, purchase, trade, processing and logistics

Source: China opens largest free-trade harbor area in N port city

from China Business

THE value of China’s foreign trade in the first 11 months of the year has surpassed that of the whole of 2006, the General Administration of Customs said yesterday. The growth rate of exports rose again but the trade surplus fell slightly due to a faster jump in imports. But the pressure remained heavy on the yuan to appreciate further, analysts said. China’s foreign trade value totaled US$1.97 trillion through November, a 23.6-percent increase from a year earlier and more than the US$1.76-trillion for the whole of last year. In November alone, foreign trade rose 23.9 percent to US$208.9 billion. Exports jumped 22.8 percent year on year to US$117.6 billion while imports climbed 25.3 percent to US$91.3 billion. The export growth rate edged up 0.5 percentage point from that of October, which dipped a bit from a month earlier, while imports reached a record high. Trade surplus in November of US$26.3 billion, is slightly less than US$27.05 billion in October. “The slowdown of the US economy has prompted China to expand exports to other markets such as the European Union and ASEAN countries,” said Shen Minggao, an economist with the Citigroup. “Currency appreciation could also have led to a change in China’s trade pattern. If the trends continue, the growth of China’s trade surplus would moderate gradually.” Combined exports in the first 11 months expanded 26.1 percent to US$1.103 trillion while imports soared 20.5 percent to US$865.4 billion. The trade surplus through November widened 52.2 percent year on year to US$238.1 billion. The EU remained China’s biggest trade partner through November with bilateral trade of US$322.7 billion, followed by the United States with US$276.2 billion and Japan with US$213.8 billion. The National Development and Reform Commission, China’s top planner, has forecast earlier the trade surplus will grow to between US$250 billion and US$300 billion this year. The soaring trade surplus has flooded the economy with cash and increased pressure from the US and Europe for the yuan to appreciate further. The yuan has gained more than 10 percent since the US dollar link was scrapped in July 2005 and ended at 7.379 yesterday. Standard Chartered has estimated earlier the exchange rate will grow to 6.84 yuan per US dollar in one year.

Source: Foreign trade swells to surpass whole of 2006

from Shanghai Daily: Business by Wang Yanlin

LIVING in China has become more expensive. China’s consumer prices last month climbed close to an 11-year high, with new signs that price pressures are spreading from food to the broader economy, raising the prospect of more aggressive monetary tightening. The Consumer Price Index in November soared 6.9 percent from a year earlier, drawing nearer to the record of seven percent posted in December 1996, the National Statistics Bureau reported yesterday. The growth last month followed a 6.5 percent jump in October and pushed the combined figure for the first eleven months to 4.6 percent, way beyond the central bank’s earlier target of less than three percent. Yao Jingyuan, the bureau’s chief economist, estimates the consumer price increase for the entire year could reach 4.7 percent which means another increase next month. “The higher-than-agreed CPI in November confirms policy makers’ increasing concerns about overheating and supports our expectation of more broad tightening measures in the coming year,” said Huang Yiping, an economist with the Citigroup. “While triggered by the food prices, the inflation has evolved into more of a macro economic problem. We expect the government to let the currency rise more quickly, alongside measures directly managing liquidities.” Food prices, which make up about one-third of the CPI basket, rose 18.2 percent last month, compared with a 17.6-percent gain in October. The non-food sector posted a 1.4-percent rise, edging up from the 1.1 percent growth in October. The subcategories of foodstuffs reported big jumps last month: pork costs swelled at 56 percent, even faster than October’s 54.9 percent, while meat and poultry prices galloped to 38.8 percent and edible oil prices rose 35 percent. Vegetable prices also grew 28.6 percent. Rural areas of the country posted a CPI growth of 7.6 percent in November, higher than the 6.6 percent rise in urban areas. “China’s rural areas and the farmers that live there lack financial services and are more vulnerable to increases in living costs,” said Stephen Green, a senior economist with the Standard Chartered Bank (China) Ltd. On Sunday, the National Development and Reform Commission said China would tighten price controls over medicine, education and property among other measures to stabilize cost increases. But Bi Jingquan, vice director of the nation’s top planner, acknowledged that it is “a rather arduous task” to cope with the inflation pressures which may peak in the first half of next year. On Saturday, the central bank announced it would raise reserve requirements for the 10th time this year by one percentage point to 14.5 percent, with the intention of controlling the flow of money in the market and cooling an economy susceptible to overheating. But such monetary policies only tackle the problem on the surface. More efforts, including the upgrading of industrial structures, reducing currency issues and diversifying capital into foreign markets, should be made to cool China’s economy and slow the pace of inflation, analysts said.

Source: China’s CPI rockets to an 11-year record

from Shanghai Daily: Business by Wang Yanlin

CHINA will tighten prices of certain goods including medicine and property as part of measures to stabilize a market which has been rocked by surging price rises, said the National Development and Reform Commission. “China will face a rather arduous task to cope with inflation pressure next year, driven by rising global prices, robust domestic demand, higher costs for using environmentally friendly resources,” said Bi Jingquan, vice director of the nation’s top planning body, according to a statement on its Website. But the country’s good harvests in recent years and the substantial increase of fiscal revenue will help ease the pressure, said Bi. According to the statement, China will ensure that overall prices do not rise too fast. It will improve supervision, guiding production, supplies and market distribution of basic necessities. The country will offer a preferential price for purchases of wheat and rice from farmers to guarantee market supply and provide subsidies for sectors badly hurt by price increases of power, crude oil and natural gas. China’s consumer prices in October climbed 6.5 percent, the highest pace in more than a decade while they widened to more than six percent in August and September. The producer prices, a gauge of factory-gate inflation, rose 4.6 percent last month from a year earlier, the highest in more than two years. The previous record was 5.9 percent in May 2005. China’s fiscal revenue may expand by 27.23 percent to more than five trillion yuan (US$675.7 billion) this year, estimated Yao Jingyuan, chief economist with the National Bureau of Statistics.

Via: Market’s stability via cost controls

from Shanghai Daily: Business by Wang Yanlin

by William McEwen, Xiaoguang Fang, Chuanping Zhang, and Richard BurkholderVia: Understadning the Chinese consumer

MODERN women display a higher appetite for luxury goods and property and expect to make their investments work harder compared with middle-class women, a survey has found.

Modern women in China - estimated at 17.4 million last year and likely to swell to 31.5 million in 2016 - are urban-based and aged 30 to 44. They have graduated from college and are professionally employed, according to the survey.

HSBC and MasterCard Worldwide conducted 1,736 interviews from February to May in Shanghai, Beijing and Guangzhou to identify the middle-class lifestyle and symbols of wealth and aspirations.

Fudan University was commissioned to devise questions and conduct the survey in the three cities.

Modern women display the strongest appetite for luxury goods with 85 percent having bought such items, followed by the middle class at 76 percent.

By Zhang Fengming 2007-12-8  Modern women’s insatiable appetite for sheer luxury