Looking ahead to 2013

An ode to joy 
  

Like every year we went through our ups and downs in 2012, holding our breath, praying, cursing , rejoicing and regretting. But it was delightful to see that the year ended with a cry of joy (or rather the promise of a cry) when it was declared that Kate Middleton, the Duchess of Cambridge was expecting a baby. Through sheer luck and extraordinary coincidence, prince William a kind of heir to the British throne and Kate's husband, is expecting the same! The British (or rather the world's) cup of joy runeth over and we should see a brighter and more prosperous 2013. David Cameroon, the British Prime Minister said that he was delighted at hearing the news. John Osborne, the Chancellor of the Exchequer announced that the austerity (not abstinence)  measures seem to be paying at last and the end of recession can not be far now. The world will listen to every gurgle, splutter and burp coming from the royal mahogany cot and look once again at the future with a sense of optimism. Such good fortune while the British were still basking in the glory of the Olympian sun, and the Queen's diamond jubilee! Experts feel that this will make the British a less cynical nation and might transform the nation of stiff upper lips to one of drooping lower jaws.

Pantagon

 

General  Petraeus, who moved a while ago from Pentagon to CIA, apparently left his pants behind and was caught without them, having an affair with his biographer.  "I wasn't content just having my name on the book, and wanted to get under the covers," said Paula Broadwell, his biographer.  It was a shirtless FBI agent who blew the whistle on the trouser less General Petraeus. The story captivated the American public's attention, while the nation was having its pants taken in Afghanistan. 

A number of other countries competed to put forward their own sex scandals. In UK news channel BBC was itself in the news, when it accused one who didn't of sexual offences, and broadcasted Christmas tributes to the one who did it. Thankfully Jimmy Saville, the one who did it, is dead and severely handicapped in doing it again. 

New leadership

After a grueling electoral battle with Mitt Romney, Barack Obama won the tenancy of the White House for four more years. Mitt put up a brave fight and spent a lot of money to evict Obama but failed to win favour of  "binders full of women", and hordes of Asians and non-whites who set their faith in Obama. Obama's acceptance speech saw a change of sponsor from Metal Can Company (and hence the slogan -Yes, we can) to American Best Foods (the Best for America is yet to come). Perpetually being scolded by his wife Michele for not listening to her, Obama embraced her on Twitter and proudly announced "Four more ears".  The Economist urged him to follow this with an embrace of a Republican.

New leadership also surfaced in the most important country in the world and Xi Jin Pin replaced Hu, while Wen looked on. Bent on making a difference, Xi started by setting a record for the shortest speech delivered by a senior Chinese leader. He announced, to the amazement of everyone, that the mission of the party was to look after the needs of the people. He also made the political leaders tongue tied by banning "empty talk" and red carpet receptions, with bouquets, banquets, expensive Chinese liquor and smiling children. The share price of all Chinese white spirits companies has been coming down and orphanages putting up more smiling children for adoption after the announcement.

In Russia, Vladamir Putin decided that Russia is yet to realize its full Putintial and moved back into the presidential palace.  A man called Hollande was elected leader, not of the Netherlands, but France, and is showing Dutch courage by attempting to raise the tax rate of on the wealthiest French to 75% of their income.

Liberal world

It was a good year for GLTB's as three states in America voted to legalise marriage between partners of the same sex. Several other states are expected to follow suit, while some are considering gay marriages to be the only legal marriages in their territories. Some American states changed their attitude towards marijuana usage and said that they will not try to shoot or blow up recreational users of the drug. The Netherlands on the other hand demanded a proof of Dutch citizenship before serving the stuff in its cafes, saying that it was worried about crime, though it did push tourism (as well as the tourists) to a new "high".

Banking in a fine fettle

That everything was fine with the world's banks, was proven by the fact that UBS paid nearly a billion dollars in fines to the regulators for fixing something called LIBOR. HSBC and Standard Chartered also paid over a billion each in a fine gesture to help the struggling US economy under the guise of a punishment for money laundering.

Apple and Siri 

It was a fruitful year for Apple, when it shortly became the firm with the largest market capitalization ever. As it conquered and expanded to new markets, it learnt their ways and talk and Siri started speaking Chinese when iOS 6 was released. To the delight of the Chinese iPhone users, Siri was very well informed about the location of brothels and promptly named several prominent establishments when asked "where can I find a prostitute?". This service has since been suspended and the phone now Siriously reprimands the enquirers on their cheekiness.

Bedlam in India

Indians, of course, do not have sex but still somehow manage to produce a prodigious number of babies. Many of these babies grow to become adults and need jobs which makes it imperative that the country registers a decent level of economic growth. India lost its secular momentum and reverted closer to the Hindu rate of growth. The Prime Minister made desperate efforts including allowing direct foreign investments from the likes of Walmart in retail trade. Opposition parties, true to their name, opposed this initiative (as they opposed everything else - good or bad - it is not for nothing that they are called opposition) saying that Walmart will eat the lunch of small shop owners by stealing their shoppers. 

Ending the year in style

The whole world rocked to the beat of Gangnam style from Park Jae-sang, better known as PSY, whose video clocked a billion hits on YouTube. Another young Korean, a little to the North, called Kim Jong Un, son of the Great leader Kim Jong Il (who passed away last year)  was declared the most handsome man by the satirical news channel called the Onion, which was widely and seriously endorsed by the China media. Kim swore to keep his country fit by allowing only low calorie diets for the country's starving people. It is rumoured that he might inadvertently succeed in shooting a rocket to the moon, by attempting to fire one at South Korea. 

Cliff-hanger finish

it was a cliff-hanger finish to the year. Republicans were refusing to accept any tax increases, particularly for the rich, who they argue work harder than the poor and hence deserve more tax breaks, and the Democrats were balking at any spending cuts. Speaker of the House John Boehner, a ski enthusiast, dismissed the cliff as a mild slope and decided to use it to ski down for his new year holiday. To most others, however, it was clear that the cliff will be very sharp indeed. Despite sovereign claims it is not just an American cliff, the whole world would to enjoy the precipice. As we enter 2013 we look forward to being taken for a collective ride - you don't have to have an American passport or even a green card to enjoy the spectacle and the ride. 

Written by Ashok Sethi

ashok.set@gmail.com

Half price for those with no "better half"

Singles' Day

One would have thought that Singles' Day would be a celebration of being single, when those who consider themselves lucky having escaped the clutches of matrimony, will revel with gusto and exchange congratulatory messages.  However in China, one of the few countries which has taken to the festival with enthusiasm, we see dating parties, mass marriage ceremonies and other activities designed to help the singles in losing their independence. Singles' Day seems to be treated as an occasion to attempt to rid oneself of one's single-hood and start dreaming of romantic togetherness, rather than a celebration of "single-hood". 

Online shopping extravaganza

While the significance that this day (which is celebrated every year on the 11th day of the 11th month) is debatable, the marketers have latched on to this and adopted it as a day when they will get rid of their inventories and persuade consumers to liberally open their purse strings.  During some other holidays also, most notably golden week holidays (or huangjinzhou ), we witness festooned shopping malls beckoning customers with enticing deals. Customers normally do not disappoint the marketers and reach liberally for their wallets during this period of biannual break (down to two a year from the earlier three, as May Day holiday is reduced to a single day celebration). Other festivals like Mother's Day or Father's Day also try to offer excuses for retail therapy. Singles' Day is a relative new addition to these hyper shopping festivals. The logic of why one should shop on Singles' Day is not clear (one can more easily understand why one would shop on Valentine's Day). Perhaps it is to console oneself, literally using shopping as a therapy for loneliness. Or to buy the latest fashion paraphernalia to prepare oneself for the mating ritual and try to win the attention of the opposite sex while dressed like a peacock. One needs these accessories as the game is becoming increasingly competitive, the gender imbalance in China means that there would be 24 million Chinese men who will be unable to secure a bride in the next 10 years. For these souls Singles' Day may become a life-long celebration (or lament), and "half price" at the retail shops a substitute of having a "better half".

With the unstoppable growth in popularity of online shopping, the e-commerce vendors are trying to create their own occasions for shopping. They seem to have successfully hijacked Singles' day shopping bonanza and clearly established it as a special occasion not just for any shopping buy specially for online shopping. This year it is estimated that 213 million of the 550 million internet users, took the opportunity to click a purchase on Singles' Day. Alibaba, the owner of the largest online platforms in China (Taobao and Tmall) claims to have offloaded merchandise worth a hefty 19.1 billion yuan on a single Singles' day. The secret of the success is attributed to generous discounting, with some products available for picking at half the regular price. 

Marketing opportunity

Is this shopping orgy, on a particular day of the year, with no natural connection to buying, a marketing success? Does it lead to sustained increased consumption, or merely an advancement of the purchase date, as is true with many other promotions? Does it really add value to the brands or the retailers in the long run? As with all promotions, marketers need to seek answers to these questions by carefully studying consumer behavior and attitudes. At the same time they need to worry about the potentially negative effect of heavy price-offs on brand image. In fact they need to explore how they can convert this occasion from a mere opportunity to offload their unsold goods, to an occasion to knit a bond with the consumers. According to the TIME magazine's "10 Ideas that are changing  your life", living alone is the new norm - 28% of all U.S. households are made up of people who live alone. With declining birth rate, delayed marriages and high divorce rate, the number of single member households in China is also on the increase. Marketers need to adopt a long-term strategy and look at the Singles' Day as an opportunity and occasion to win the affection and hearts of these singles in a more durable manner (after all they are still unattached and very likely to be open to a bit of love and wooing!) rather than merely a tactical opportunity to lighten their unsold inventory.

Written by Ashok Sethi

Regional Development Director – GfK Consumer Experiences, Asia Pacific

Importance of being "Foreign" -Global, local or glocal?

Multi-national companies in China often wonder the extent to which they should emphasize their foreign origin to the consumers as against demonstrating roots and strength in the local market.  In general it is true that in China, as in many other developing countries, products of international origin command a certain degree of respect and are often favored over their domestic rivals. The reasons for this are not difficult to fathom - including frequent disastrous experiences that consumers have had with some miscreant local players. However, given the ascending star of China on the global stage and the emergence of a strong streak of national pride, one could also be forgiven to assume that emphasizing local roots is of paramount importance.

Like many marketing riddles in developing markets, this is a complex question and the answer depends upon many factors. First of these factors is whether the product category in question is a premium product or an inexpensive product of daily use. At one end of the spectrum are luxury product categories.  In these categories, only international brands have been able to register their prowess with the consumers so far. Consumers use such products for their exclusivity, as status symbols and as markers of success in their climb up the ladder of success. Brands are valued for their high quality, craftsmanship and heritage. Brands are often strongly associated with a country and derive their image from the perception of the country (as in case of Luxury automobiles from Germany, a country known for its craftsmanship and engineering skills, or perfumes from France, associated with romance and chic)  Clearly establishing your international origin is of critical importance in this category. Such brands normally do not need to (in fact are not advised to) adopt their core offer and brand essence  to the local markets.

At the other end of the spectrum are daily use products whose usage is in the private space. Whether you use an expensive premium product or a cheap one, may have a significant effect on how well does your bathroom floor shine, but not in terms of how are you seen by your friends and compatriots. The consumer choice of such products is based on price and basic functionality, and consumers show little concern about the origin or provenance of the brand. In fact, often the consumers are not able to correctly classify such fast moving consumer goods as local or foreign. In a research among consumers in second tier cities of China, many consumers mentioned Johnson & Johnson as coming from Shanghai!

For products which fall somewhere in between the continuum of luxury and pedestrian, the issue is a bit more involved and establishing the international origin can be a plus though not necessarily so. While being foreign may be associated with better quality, being nimble and having a strong pulse of the market and the consumers can be even more important. Marketers have to carefully decide the relative emphasis they need to place on their international origin and local roots. One important guiding factor is the specific product category. For high technology products, consumer experience suggests that international brands bring in a quality and panache that local brands struggle to achieve. On the other hand for some categories such as skin-care or apparel, understanding of local tastes and preferences can act as a plus. In this middle territory, local brands often try to disguise themselves as international ones by choosing names such as Metersbonwe ( a popular apparel brand in China) with varying degrees of success. 

The third factor guiding the brand's strategy is specific to the brand. For brands like Coca Cola and Nike, which through clever and consistent marketing investments, have built a unique narrative and aura for themselves, which has stood the test of time as well the test of geographical diversity, it makes sense to exploit their universal value in all markets. For other brands, which though still international, lack that strong narrative, localisation and ammasing local strength may be a more logical choice. Even when such brands choose to retain their global aura and persona, localization of communication themes and styles is necessary - absence of which often leads to alienation.    

Lastly, while such preferences and attitudes do determine the importance of being "foreign", certain events can suddenly change the equation. The most notable of which has been the milk contamination scandal, which drove mothers to imported milk powder to ensure the safety of their children. In a short period of time, the share of imported milk powders rose to unimaginable levels. International marketers need to be on the look out for such sudden "change of wind", which can make their provenance and heritage more valued by the consumers.

Written by Ashok Sethi

ashok.set@gmail.com

The case of the fraudulent frauleins

Financial fraud is becoming more salient in China. Interestingly, of late, we have witnessed a number of "fraudster frauleins" – a few women entrepreneurs who scooted (or tried unsuccessfully to scoot) after relieving a number of gullible lenders of rather large sums of money. Ms. Zhang Hong, boss of a medical devices company in Nanjing in Jiangsu province, went missing with her son a few weeks ago. Along with her went a sum of RMB 500 million which she owes to several hundred private lenders. In another case of the "most beautiful boss", Ms. Gu Chunfang was apprehended in Shanghai, having earlier tried to make herself scarce with an equally large sum of money. While the temptation for these skilful and attractive operators is strong, the punishment in China is disproportionately severe. Ms. Wu Ying, another comely entrepreneur from neighbouring Zhejiang Province, is facing a death sentence for crimes involving similar fund raising.

In China it is not easy for small and medium enterprises to borrow from banks to finance their operations. Most banks are state-owned and they tend to favour lending to state-owned enterprises. On the other hand, China's large body of savers are finding it difficult to find attractive returns, as interest rates are low, the stock market has been sluggish, and the property market is on a strong leash. The lure of double-digit returns through private lending, therefore, is not insignificant. Hence there is a healthy demand as well as supply for private lending.

The effect of pulchritude on human emotions and behaviour is a complex subject. Daniel Hamermesh, an economist at the University of Texas, has been frequently writing about “pulchronomics” or the linkage of looks and economics. In a recent book called “Beauty Pays” he professes that, over a lifetime, a good looking worker in America might on average make $230,000 (in terms of today’s wages) more than a relatively plain one.   Beauty generates the confidence of competence and trust. Research has shown looks of the candidates play a significant role in voters’ choice. And  given the number of cases of fraudulent frauleins in China, one can possibly at least raise the hypothesis that Chinese men of substance find themselves reaching more readily for their wallets when confronted with a woman of grace.

In the meanwhile the Supreme People’s Court of China has overturned the death sentence for Wu Ying and ordered a retrial. It is not known whether the defendant’s good looks and youth were a part of the factors which led the judges to overrule the severe punishment.  But research does show that good looking offenders do get away with lighter punishments.

Linsanity

China found another hero in Jeremy Lin, whose success gave birth to a new word "Linsanity". The lightning and stratospheric ascent of Jeremy Lin in popularity among the Chinese seems to suggest that they are rather desperately in search of heroes and ready to overlook minor details of origin and political belief (Jeremy Lin is a Christian with his origins in Taiwan) in their embrace of such icons.

The psychology of this quest for heroes possibly lies in the Chinese desire for celebration of their achievements as well as international recognition of their success. While China is continuously adding to its list of achievements domestically, international recognition is often not forthcoming or comes begrudgingly. Even if recognition is accorded, it comes with a spectre of Chinese dominance. While Western nations refuse to applaud China's achievements, Western brands need to make sure that they do so – or else they will lose the opportunity for emotional connection with the Chinese.

While national or clannish identification definitely leads to hero worship, the developing countries like China and India reward  another characteristic in selection of their heroes – which is the quality of being underdog, who wins accolades against all odds, fighting and valiantly overcoming the hurdles and barriers which came in his way. On the face of it Harvard educated Jeremy Lin is hardly an underdog – a privileged Asian kid form an Ivy league university. However these are the precise characteristics, which make him an underdog in the world of NBA – which rewards not Ivy league education but towering body height and impressive physique – something which one would not associate easily with Jermey Lin and which perhaps does enhance the value of his accomplishments as seen by his large fan base in China.

By

Ashok Sethi

Ashok.set@gmail.com

Chinese consumers in 2011

As the world prepares to bid adieu to 2011, the Chinese still have a few weeks before the year of the rabbit sprints off and the mighty dragon is ushered in. The developed world has seen a miserable year and this has been a tough year for the Chinese too. Inflation has been consistently high - the consumer price inflation finally being reined down to under 5% only in November, economy is slowing down - and the Shanghai Composite index has lost more than 20% of its value since the beginning of the year. However 2012 is the year of the dragon - which is as propitious and auspicious as they get. With furrowed brows and much on their mind, the Chinese look back at 2011 with reflection and look forward to 2012 with optimistic anticipation.

Slow train coming

While in 2010 the nation witnessed a devastating fire in a 28 storey building under renovation in Shanghai in which 58 people lost their lives, in 2011 it was the Wenzhou train crash which resulted in similar protestations and lament at a preventable tragedy. China has been on the fast track in developing the largest fast train network in the world, with trains running at speeds of up to 350 kms an hour. The “gao tie” high speed train service between Shanghai and Beijing was inaugurated around the middle of the year and now consumers can do this journey of 1300 kilometers in just over 5 hours. However, the euphoria over this undoubtedly extraordinary achievement was short lived, when two high speed trains collided (though on a different route) taking many lives with it. The Chinese citizens were aghast and protested vociferously against suspected flouting of safety standards and lack of transparency. Transparency is something the Chinese have begun to value more and more - whether it is from the government or the companies who try to sell to them.

Swill oil and other food horrors

A few years ago the Chinese encountered the "melamine tragedy" - in which unscrupulous middlemen adulterated milk with the chemical. Hundreds of children developed stones in their kidneys and a few lost their lives. This year the consumers continue to be confounded by more food scares - the most horrifying of which was the alleged recycling of used cooking oil from sewers next to the restaurants. Consumers were also scared out of their wits by feeding of clenbuterol to pigs, which results in lean meat but can cause nausea, dizziness and heart palpitations in people who eat animals that were fed with it. We can be sure that the consumers are going to demand the highest level of food safety from manufacturers in 2012.

PM2.5 detector on the roof of the American Embassy

The health concerns of the consumers were not just confined to what they ate, but also the air they breathed. The number of smoggy days in Beijing and other big cities seem to have increased in recent times. Consumers complained that the official reports on air pollution were not accurate when they saw the results of the air pollution monitor that the American Embassy installed on its roof in Beijing. The Americans also measured PM2.5 particles (particles in the air with a diameter of less that 2.5 microns) which some scientist believe are actually more harmful than the larger ones. The government now has agreed to report PM2.5 in their pollution reports and hopefully the citizens can breathe more freely and look forward to cleaner air in 2012.

Rousing out of callousness

The Chinese have often felt that, preoccupied with the pursuit of money, there is certain degree of callousness that has overtaken the country and we often ignore injustices around us and hesitate to extend a helping hand. It took the tragic death of 2 year old Yueyue that roused the collective conscience of the nation and the Chinese took to upbraiding themselves for the thickness of their skin. The two year old was run over by two vehicles in Foshan, Guangdong and ignored by passerby’s till a cleaning lady took notice. It is believed that a major factor which restrains the helping hand is the fear that the rescued may turn into an accuser, as it has occurred in a few cases in the past. Several prominent professors from leading universities offered to compensate their students and cover their liabilities if they were ever sued by the subjects of their help. 2012 should see more sensitive hearts and a more willing hands in China.

Bad news for entertainment

In 2011 the authorities thought they need to protect the consumer from too much entertainment and also too much advertising. Firstly in March Chongqing television decided to go totally “ad-less”. In October, the State Administration of Radio, Film and Television (SARFT) decided to limit each of the country's 34 satellite channels to a maximum of 90 minutes of entertainment content from 7:30 pm to 10 pm every day. The remaining time, it was suggested, should be filled with news and programs to uplift the moral standards of the viewers. And most recently the officials announced that the government would impose a ban on advertisements in the middle of television dramas starting in 2012, though the ads will appear in the beginning and the end of the programmes. The marketers and the advertising industry feel that they can cope up with it – though some experts feel that it may drive more advertising to the digital medium.

China's own heaven

Largely an atheist nation, and not believing in the existence of heaven or hell, the Chinese have created their own heaven in space. Tiangong-1 or "Heavenly Palace -1" space station module was successfully launched this year. Subsequently Shenzhou VII spacecraft gloriously docked with the space station and returned back to earth in one piece. It is believed that this is a strategy to compensate for the possible decline in Chinese exports, by opening up a new revenue stream by renting space in the Chinese "heaven" to the religious departed from the West.

Marriage for love

It its attempt to foster greater love and lower commerce in marriage,
the Chinese courts made it clear that a home purchased before marriage is the personal property of the person who bought it. In case of divorce, the registered owner will keep the house but needs to compensate the partner if he or she contributed to any mortgage payments and any other expense which increased value in the property. The amendment to the marriage law was largely seen as rational, though the view was divided on whether it will discourage fortune hunting and result in a greater number of marriages being founded on the solid rock of love.

Naked marriage and other dressing downs

Confounded by rising cost of marriage, a new trend of naked marriage took shape in 2011. Contrary to what is suggested by the name, the nuptials do not take place in a state of undress; the "nakedness" is merely figurative and indicates that the couple took the plunge without the usual extravagant preparations and expense which accompany the occasion. The phrase caught the fancy of the citizens and they quickly coined other things that you can do with a similar degree of unpreparedness or vulnerability - such as naked resignation (resigning without another job) or naked examination (showing up for the test without adequate preparation). 2012 should see more the Chinese showing more willingness to break away from the herd, and follow their own hearts and minds.


Written by Ashok Sethi
Ashok.set@gmail.com

New languages of the Chinese internet

Chinese Weibo

When we compare the Chinese microblog (Weibo) with Twitter, we often forget that as each Chinese character is, in fact, a word. This means you can communicate a lot more in 130 Chinese characters as compared to 130 Latin characters. Chinese microbloggers are fully utilizing this freedom and license and the Weibo has become a hotbed of protest, expression of solidarity, generosity and philanthropy and even romance. The last one did lead to some unexpected consequences for a Chinese official, who mistook Weiboi as a one on one, private communication tool and was found to be romancing his mistress and fixing a surreptitious rendevous, in open sight of millions of bemused Weibo users!

First on Weibo

It is not surprising, therefore, that often Weibo is the first to report important news and generate a lively debate. When China’s image of progress and dynamism, assiduously created by erecting an enormous and still expanding network of bullet trains, was tarnished with a collision of two trains near Wenzhou, in which more than 30 people lost their lives, the accident was first reported on Sina Weibo (a popular Chinese microblog). The topic touched a raw nerve with the Chinese consumers and the continued discussion on Weibo thereafter generated strident criticism of the railways for lack of transparency and possible flouting of safety standards. The authorities have taken the lashing seriously and have withdrawn several trains for safety examination and actually reduced the speed of many trains, including the flagship Shanghai to Beijing service. The defiant mood is characteristic of the Chinese middle class consumers, who are trying to protect themselves and their families from anything ranging from sub-standard infant milk powder, to restaurant food prepared from recycled oil to unsafe rail travel – and quite often Weibo is the platform where they first air their grievances.


The language of the internet

It is often said that the development of a civilisation or a society is indicated by the degree of sophistication of its language. In Weibo and other parts of the Internet, Chinese netizens have developed not one, but several languages on the internet. These, referred to as "Mars languages" (火星文) are widely used on the internet not just by the consumers, but now increasingly also by the marketers. These include "pao xiao ti " or the roaring style, which the consumers often use to express their frustration on the many challenges of life – often linked to study and work. Or the “tao bao ti”, named after the all pervasive e-commerce platform called Taobao, where you can buy anything from a freshly slaughtered chicken to a luxury automobile. “Tao bao ti” embodies the solicitous attitude and the language that the vendors on Taobao often adopt to win customers in face of an extraordinarily fierce competition.

高考(Gao kao), the mega test of endurance and knowledge that the young Chinese need to go through to secure college admission, unfortunately decided to prohibit the use of 火星文(Mars language) in the exam, earning the epithet of "ungelievable" (meaning not cool or awesome) from the 8 million students who undertake this examination in an attempt to secure a position in a good university and pave the way to a bright future. These students, who face immense pressure (yali da 压力大as they like to say - which can also mean "my pear is big” when you change to another set of homonymous characters) will have to curb their inclination for these unorthodox modes of expression - at least for the two and half days that they toil in the examination hall.

Written by Ashok Sethi
ashok.set@gmail.com