In recent years, globalization has lifted billions of people out of poverty and created vast wealth, but has also spawned hyper-competitive markets that make a secure niche ever more difficult to find. Everyone from cabbies to multinational businesses find it’s harder and harder to maintain an edge. Meanwhile, in the world’s younger economies, particularly China, companies face another challenge: unlike Westerners who grew up loyal to particular brands, Chinese consumers did not have that; and as markets consolidate, consumers are selecting a few favorites. So how should companies deal with these new trends?
Doing business in China has never been easy for foreign-owned companies, but Uber has largely managed to avoid conflict by operating as a separate Chinese subsidiary, Uber China, on the mainland. However, Uber China still faces many challenges: competing with Didi, not being profitable, and even worse, its business has always been riding on a government regulation fence. In a market that is as challenging, and competitive as China’s, the answer to winning over China’s smartphone users lies deeper than just competitive pricing or partnerships.
With humble beginnings in Hangzhou, Jack Ma went on to create an e-commerce titan that has grabbed the attention of China and the world. Today Jack Ma and Alibaba’s story has become the stuff that legends are made of. Duncan Clark has witnessed firsthand Jack Ma’s dizzying rise in China’s e-commerce firmament. A former investment banker at Morgan Stanley, Clark first got to know Jack Ma in 1999 when he met him in the small Hangzhou apartment where Ma and his friends famously founded Alibaba. In this interview, Clark, also the author of Alibaba, the House that Jack Ma Built, talks about Alibaba’s incredible story and its impact on China.
Xiaomi, once the most popular smartphone vendor in China, is showing signs of decline. Back in the day, Xiaomi broke the mold by offering a feature-rich phone at an impossibly low price point. Its unique marketing strategy and business model helped it to break online sales records. But soon others started copying Xiaomi’s strategy and the novelty wore off. The company has been slow to innovate. For phone buyers, Xiaomi ended up being a low-end phone: once they had enough money, they would upgrade to an Apple or Samsung. Today Xiaomi is quickly diversifying from phones to rice cookers and drones. But is that enough to come back to relevance?
The Summer 2016 issue of CKGSB Knowledge is out! It has articles and interviews like: COVER STORY: Wanted: A Miracle: Buffeted by economic forces, does China still have the wherewithal to face strong winds? CHINA DATA: From stats on wind power to McDonald’s restaurant openings, the numbers you need to know SNAPSHOT: Out to the world: More Chinese students are studying […]
Just how much time and energy would you spend pondering over which dustbin to buy next? Chances are, not a lot. But for some consumers in China, even seemingly mundane things like trashcans have started to become significant from a social status point of view. More and more Chinese consumers are shifting their consumption of even routine everyday things to more premium categories. They are often influenced by their own experiences or those of their peers, travels abroad, foreign movies or social media. But increasingly now there are a whole host of services that are geared towards exposing Chinese people to newer things—and making them buy.
In China second hand is the latest in thing. Perceptions of greater acceptance for gently used goods is reflected in investors’ enthusiasm for the many start-ups that are now aiming to become the premier national platforms for used goods, ranging from cars to phones, to luxury items and even Han dynasty antiques. Diverse as these markets are, they are all reputation-based businesses where success requires mechanisms to guard against users trying to pass off bad goods as good-as-new. So what is fuelling the growth of second hand markets in China? And how are sellers dealing with the critical issue of creating and maintaining consumer trust?
When you think of sports brands, there’s pretty much a 50% chance that it’s Adidas that comes to mind. This, after all, is the company that has provided the match ball for the FIFA World Cups, whose final is the most watched sporting event in the world, since 1970. But for all that, success in China hasn’t been a given, and at the turn of the decade Adidas found itself languishing in fourth place behind the likes of Nike and Li-Ning.
Luxury brands have never had it this bad in China. For most of them, China is no longer the cash cow it once was. Multiple reports suggest that the luxury retail business in China is shrinking. The top 10 global luxury brands as per Millward Brown’s latest BrandZ report—a list that includes names like Louis Vuitton, Hermes, Gucci and Chanel—saw 6% of their total brand valuation evaporate in 2015, and China is partly to be blamed. Already the likes of Louis Vuitton, Armani, Prada and Chanel have started shuttering stores in China. But all is not lost and luxury can still make a comeback in China.
Japanese clothing retailer Uniqlo has quickly found huge popularity in China based on an ethos of high quality at affordable prices. It has been steadily building its presence in China over the last decade, and now has ambitious plans to accelerate its growth, most notably through a bold expansion in its number of shops. That might seem sensible given its growing popularity—revenue soared by 21% between August 2014 and 2015 across Uniqlo globally, largely driven by an increase in Greater China revenues of 46% and operating profit of 66%. But is it now at risk of over-reaching itself, particularly given the slowing Chinese economy?