China buys into British brands

The largest foreign acquisition by a Chinese food group was announced last week. State-owned Bright Foods, based in Shanghai, took a controlling stake (60%) in the Weetabix Food Company (brands include Alpen, Weetabix and Ready Brek). Who will be next?

China: check it out

Monday, Channel 4, 8pm - 9pm. A new series. China; Triumph and Turmoil

If you are thinking of doing business in China, it's a must-view. The series started last night and the first episode is available on 4oD

China to the rescue?

If Allister Heath (City A.M. 29th Feb) is right, China needs to get its banking system in order. A new report from Lombard Street Research shows that China's household debt is 29% GDP, net company debt is 76%, gross government debt is 79%. When massive reserves of 43% are factored in, net government debt falls to 36%. and total debt is thus 141%.

On the surface things look okay, but there is an underlying weakness. In the event of a crisis it is already at the limit of what it could absorb. Give it another couple of years and the situation would become unmanageable. Help!

IPA launches International Brand Incubator(TM)

Just touched down from an exciting week in Beijing and Shenyang, promoting the IPA's latest R&D service to Chinese companies seeking to internationalise their brands outside of Asia.

The mission was much enhanced by the company of Nicola Mendelsohn (Karmarama), Stephen Maher (MBA), Bruce Hutton (Bray Leino), Alice Huntley (RKCR/Y&R), Jackie Stevenson (The Brooklyn Brothers) and Jeremy Rainbird (Addiction Worldwide) and their colleagues.

London entrepreneurs at Beijing Design Week

What a pleasure to meet Brent Hoberman (one of Britains best-known entrepreneurs (ex Lastminute.com now mydeco.com) and Tamara Mellon (of Jimmy Choo fame) at the British Embassy in Beijing on Tuesday.

They're out in China with Lord Marland, and Sir John Sorrell, UK creative industries ambassador, to lend support to the launch of Beijing Design Week.

Off to China!

Wish us luck as we set out on tour, with six IPA member agencies.

First stop Beijing, then on to Shenyang and the China International Advertising Festival.

More anon.

Smallbone of Devizes goes global!

Rescued from receivers only two years ago, looks like entrepreneur Leo Caplan, has turned things round for this local Wiltshire business.

I see reported, in last weekend's Sunday Times, that he's planning a store opening in Shanghai, hot on the heels of success in Russia, and aims to attract the affluent Chinese consumer. Apparently the brand has long been popular with the likes of Liz Hurley, Davina McCall, Oprah Winfrey and Dustin Hoffman.

It will be interesting to see which Shanghai celebrities choose Smallbone fittings to house their Aga! The latter also ventured into China recently.

Good for export, and good for the UK balance of payments, if they work.

UK welcomes Wen Jaibao

It's the first time, I think, that China's premier has gone into print in the Financial Times (page 11 24th June) talking about how his economy is market-oriented and internationalised.

Wen Jaibao is visiting the UK this week, and is signing a historic Memorandum of Understanding between UKTI and MOFCOM to further UK China collaboration in the creative industries. Proof that our outreach programme, in which the IPA plays no small part, is working.

London and Shanghai; the world's future financial centres?

Stuart Fraser, is policy Chairman of the City of London Corporation and a member of the Shanghai International Advisory Council.

He is in no doubt that China will create a financial services industry that reflects its global standing (City A.M. 23rd May), and that it is in the UK's interest to help it develop, and to foster a move to greater openness, predictability and stability.

When I was at the Business School in Cambridge early this year, I sat with a mathematics and statistics post-graduate from Shanghai. He was very clear on his career path: to work for the City of London, because it is the best in the world, and most developed, then head back to his homeland, to take his learning with him.

Let the Chinese eat what they can afford?

According to a new study by the Boston Consulting Group food brands, quick service chains and grocery retailers stand to benefit from a huge surge in sales across China. They describe this trend as an "unprecedented shift" in eating habits, largely fuelled by higher disposable incomes.

However, though productivity levels are expected to increase, there is also a genuine risk of price inflation all the way through the price chain and those suppliers who cannot act flexibly or nimbly risk losing out altogether if they are unable to keep up with rapidly changing spending patterns on food.

Let's stay in for a Chinese

WARC News are reporting this morning on the improving quality of goods and services from Chinese brands.

It goes on to highlight the pressure being put on 'foreign brands' in China, helped by the country's perceived success in hosting global events such as the 2008 Beijing Olympics and the Shanghai Expo of 2010, encouraging higher-income consumers to "buy China".

I wrote about this in a previous post and thought then: what an interesting reverse development: global events leading to local brand growth, but then local brands becoming the new global brands?

Certainly a challenge for IPA agencies and our trade mission to Beijing in October.

China second in the future, but Japan first in the here and now

Not sure if you saw the piece in WARC News today or WPP media coverage last week, but GroupM, the media arm of WPP Group, is forecasting that China could become the world's second largest advertising market in 2011.

Japan currently holds second spot, behind the US, but the tragic events in Japan are already having major repercssions in the financial markets and decline in revenue growth is almost certain.

In leapfrogging Japan, GroupM is predicting a 10% increase in Chinese advertising expenditure in 2011 after reaching $45bn (€32.4bn; £28.1bn) at the close of 2010.

China might soon be second in adspend terms, but clearly our combined skills and resources should be targeted at helping Japan first - in any way we can. What a great advertisement for global co-operation that would be?

Smartphones 4 u?

I was reading a piece in WARC News this morning about the growth of the smartphone market in the Asia Pacific region.

It has been estimated that smartphones will represent 60% of the market by 2015, compared to just 20% in 2010. Growth in Chnia is especially pronounced. Accenture recently suggested that 53% of Chinese citizens living in urban areas already own a smartphone and 38% of those surveyed by Accenture intending to buy one in the next 12 months.

Coincidentally I also came across a statistic in the April edition of .Net that the number of daily views on YouTube via mobile devices is around 200 million. three times greater than at this point last year and largely driven by sales of smartphones.

Looks like it's a smart thing to be upwardly mobile.

Chinese food for thought

McKinsey has produced a report: Understanding China's Digital Consumers a study of connected consumers, in which they describe segments uch as 'digital junkies,' 'mobile mavens' and 'info-centrics.'

McKinsey estimates that around 6 million people go online for the first time each month in China and, in their survey of 4,866 connected consumers, they found that typical respondents now spend 39.2 hours online each week, incorporating video, music, gaming, instant messaging and social networking.

'Digital junkies' spend 34.1 hours per week on new media devices such as laptops, MP3 players a e-readers and replace their mobile phones at least once a year; 'info-centrics' mainly use the web for search, information and e-mail, and 'mobile mavens' surf the net for a minimum of 14 hours per week mainly through wireless handsets.

McKinsey concludes that word-of-mouth is increasingly influential in China and, with an internet population predicted to grow from 420 million now to 750 million in 2015, that's a lot of words from a lot of mouths. I wonder what the Red Guards would have made of such democratic communication by the people, through the people, for the people?

The Future of Technology and its impact on our lives

Ogilvy & Mather's Discovery Group in Shanghai have just reported on this fascinating topic. The full report is here and it's well worth reading in full. However, I hope the author, Kunal Sinha, won't mind me revealing the topline conclusions here:

1. Broadly, all technology will eventually fall into two categories: network, and interface. One will connect devices, the other will connect a device with a human.

2.Technology will enable diverse cultures to collaborate more efficiently, in every sphere. It will bring people and organizations together, closer.

3. As opposed to the 'first wave' of technology adoption when men were the early adopters, the 'second wave' will see women adopting and using technology earlier. The gap between the genders in technology adoption will reduce; however their motivations for adoption will be different.

4. The creators of future technology products and brands will no longer be engineers/scientists but people and teams with multidisciplinary skills. An engineer-doctor; or a psychologist-engineer; and artist-engineer and so on.

5. People will increasingly look for and find ways to 'get inside' technology. It will no longer be that 'black box', and technology brands will be built not on 'featuers' but on the basis of how 'human' and 'soft' they appear to be. In that sense they will assume dimensions that have emotional underpinnings.

6. By enabling unparalleled access to information, technology is already changing consumer expectations. The power that marketing departments typically had, in terms of being able to manage consumer expectations, will disappear.

7.Technology will be a potent tool in the hands of the powerless, as they will find surprising uses for it; it will bridge the rich-poor gap in surprising ways.

8. Technology, particularly information technology, will bring in more transparency & accountability in society.

9. Technology will allow people to live multiple lives, assume and live out multiple identities.

10. Technology will strengthen the institution of family and help it survive the onslaught of modernity and individualism by creating newer and richer touch points.

Women in China

I was asked last week by CCBC Magazine about my impressions of doing business as a woman in China.

My instant response was it's a helluva lot easier than doing business in Europe.

Sexuality doesn't appear to come into it. It's the deal that's important.

With significantly less women than men because of the recent one child policy many of the younger women are high achievers.

There are some great examples of women entrepreneurs leading media conglomerates; and others where the daughter has taken over the family business, whether it's heavy industry or manufacturing.

Have mobile, will travel?

Looking through WARC News this morning there were two related stories on mobile 'phone growth in Asia:

Market Research company GfK Asia are reporting that smartphones are becoming the handsets of choice in Asia with one in five mobile 'phones bought in the last quarter being smart purchases.

Of course it's sparked a war among suppliers of operating systems, such as Symbian and long-term growth may have to wait for a market shake-out and common platforms.

However, Informa Telecoms & Media are also expecting massive growth in mobile adspend, from $2.3bn in 2009 to around $24.1bn by 2015, again with much of that growth coming from the chattering masses of India and China.

Analysts here expect advertising expenditure on mobile 'phones in the Asia-Pacific region to be representing over 30% of the market by 2015 with North America at around 18% and Western Europe 8%.

It's good to talk isn't it, but though the language barriers of global marketing have long been addressed, let's hope the multiple languages used by the computers running mobile 'phone operating systems and applications to talk to each other, don't take their place.

China: yes they can

I was reading an article in Advertising Age yesterday - "Oh, to Be a Millennial in China" - and it struck a real chord with me.

The can-do confidence of China's urban young people is palpable. They
talk in terms of 'when' not 'if', and their aspirations have no bounds.
Their first car is a 4 x 4 not a Fiat 500. They wear designer clothes
from day 1. And they're highly mobile. Because China is a land of
opportunity, rather than stick around in one place and get bored,
they'll move on; change career, change City, change country, if it
suits.

That was certainly the IPA's experience on our visit to Shanghai with
IPA members as participants in the UK Expo programme earlier this year.

Definitely a force to be reckoned with; eager to assimilate new
knowledge and exceed it.

China International Advertising Festival

After 9 months of no contact from the China Advertising Association, an opportunistic meeting with the right person at our Going Global UK China conference jut over a week ago produced email follow-up in english within 12 hours. Looks like we could be heading for the China International Advertising Festival near Beijing in 2011 after all.

This is part of the IPA's China Global Outreach Programme. Thirty IPA members already have affiliate offices in China, either because they are part of an international network, or because they are headquartered in London but have chosen to make China a territory for global expansion.