Sometimes, a major innovation starts at the top of a market and works down—think of Tesla’s electric sports car. Other times, as innovation theorist Clayton Christensen noted in The Innovator’s Dilemma, innovations bubble up from the bottom, beginning with a product that has limited functionality and seems at first like little more than a toy. That second uphill path has been the trajectory of the electric bicycle, which over the past 20 years has become an important mode of personal transportation in China and is now beginning to make inroads in the rest of the world.
Chinese millennials promise to reshape the global tourism industry. Unlike their parents’ generation, who preferred to travel abroad on Chinese-organized tour groups, today’s young Chinese are independent, individualistic and willing to try more adventurous vacations. This shift is opening up huge new opportunities for travel and tourism operators worldwide. They can now advertise directly to China’s 400 million children of the 1980s and 1990s, who often book their next trip online and on impulse. For operators able to target this group, the rewards can be spectacular. Chinese millennials already make more overseas trips than all American tourists combined.
By 2045, there will be nearly 350 million people in China aged over 65. The rapidly aging society is the legacy of a huge baby boom that was abruptly halted by the introduction of the one-child policy in 1979. Over the long term, this trend threatens to drag on economic growth. There were five Chinese taxpayers for every senior citizen in 2010; by 2030, there will be just two. But for businesses that stay ahead of the demographic curve, there will be big opportunities—another 200 million new customers. Slowly but surely, digitally-savvy seniors are changing the game for brands in China.
Over the past five years, the business model of China’s clothing industry has been unraveling. For decades, China’s vast apparel industry competed mainly on price. But with labor, land and raw materials costs rising, environmental regulations tightening and competition becoming ever fiercer, even many of China’s best-known brands have struggled. There has been one exception: HLA. The Jiangsu Province-based menswear label has grown stronger even as competitors shuttered hundreds of outlets. In this interview, Li Lode, Professor of Operations Management at CKGSB and Professor Emeritus at Yale University, explains how HLA’s success has been made possible by smart strategic decisions.
Becoming a movie star isn’t attractive anymore. For many young netizens in China, online stardom is the ultimate dream, not only because online celebrities now earn even more than A-list movie stars, but also they are able to influence hundreds and thousands of people just by go livestreaming, sharing beauty tips and fashion trends and posting their own selfies. Consumer brands and clients are chasing after these online celebrities. Reports say the online celebrity economy by some calculations is worth more than the country’s domestic film industry. How to become an online star? How do they make money? What’s behind the rise of “wanghong culture”?
Chinese parents today are willing to spend more than their parents’ generation were to make their children smile. Retail sales of toys and games in China leaped over 250% between 2011 and 2016, making the toy market very appealing. Today, playtime in China is more about learning than fun and games—Chinese parents think play should be constructive, making educational toys more popular than traditional ones. Meanwhile, seizing kids’ playtime is also a key to winning the toy market, and that’s why toy brands are attempting to combine their products with a learning center.
When talking about the Chinese wine market, most Westerners think of baijiu, a strong alcoholic beverage made from grain. But young Chinese have now developed their taste for various non-Chinese wines—red, white and sparkling—and wine can be found at parties, banquets and even dinners serving strongly-flavored Chinese foods, such as hotpot. Claudia Masüger, a businesswoman from Switzerland who has been importing wines to China for over a decade, says the Chinese are becoming more sophisticated in their taste for wine, caring not just for wines, but for pairing food with the right variety of wine. Furthermore, the market for western wine in China is even larger than imagined.
Chinese tech giant Tencent surpassed Facebook in market value this November, and is the first Asian company worth more than $500 million. Unlike Facebook, which earns 97% of its revenue from advertising, online advertising only represents 16.9% of Tencent’s revenue, according to the company’s Q3 2017 report–lagging behind domestic competitors like Alibaba in terms of ads gain. Determined now to gain a larger slice of the digital advertising market, Tencent focuses on improving targeting and algorithms to intensify ads on its ubiquitous platform WeChat while not undermining the user experience, as well as leveraging opportunities in the company’s other products and services, including mobile games.
Companies are dying fast these days. In the 1950s, the average age of a company on the Standard & Poor’s 500 index was 60 years, now it is less than 20. But International Business Machines (IBM), known as “Big Blue”, seems to be an exception. Over the past few decades, it has managed to keep up as others were dying and has successfully transformed itself. Now it has become a provider of cognitive solutions and cloud services. How has such a giant company managed to transform? Gill Zhou, chief marketing officer of IBM China, offers an answer in this interview with CKGSB Knowledge.
Is it true that consumers nowadays need less stuff? Statistics show that in the West at least, the long shopping spree is ending—people are spending more of their disposable income on recreational activities like travel and dining in good restaurants, but less on buying things. Even in China, a country that many thought to have just entered a material era, people have shown less interest in buying new things. What on earth is “minimalism”? What are the reasons behind this trend? For business, minimalism undoubtedly presents a challenge. What can you sell to people who’ve decided they don’t want more?