Nokia’s distributors are facing problems in the Chinese market. Some of its major distributors, such as Calilee, are experiencing steady decline in profits since the end of last year.
Since its introduction in the Chinese market, Nokia has readjusted its marketing channel system twice. Before 2000, foreign brands that had dominated the mobile phone market in China sold their products through general agents, who could take advantage of their market networks to deliver the goods quickly to large and medium-sized cities in most parts of the country. As the number of mobile phone users has skyrocketed in China, by 2003, cheaper, domestically produced products with efficient distribution channels had captured more than half of the market share and covered tier 2, even tier 3 cities where foreign brands were unable to reach.
Nokia decided to search for provincial distributors in China and restructured their general agents in 2002. Another change is that mobile phone supermarkets, chain stores and household appliance firms have emerged in China since 2000. Thus Nokia decided to cooperate with terminal retailers, such as China Motion Telecom, EBT, Gome, Sunning, D.Phone, etc.
But they lost control over the product sales, since 2004 Nokia introduced the “Fulfillment Distributor” system (FD) to take charge of retail terminals according to its own distribution team. The FD system was designed to handle terminals in small cities and towns. Nokia now has over 5000 salespeople across China, and operates more than 110 flagship stores in addition to general agencies, in order to manage and control distributors and terminals in every city.
Under the FD mode, Nokia firmly controls the profit of its distributors and the amount of products in every region. Although Nokia is running with profit, its distributors are facing red figures. It has to cope with two emerging problems: balancing profits and resources at the various channels. This involves setting different prices in different markets and determining when to provide those markets certain products.
This is an abstract of a special coverage on www.cbfeature.com
Click here to read the full article
10.29.2007
Betting Big on Credit Cards
"Chinese people are carrying bigger, fatter wallets," joked a senior foreign bank executive at a financial seminar. "The wallets are filled with credit cards."
By 2006, Chinese card issuers had fired off a total of 56 million offers. While that breaks down to only 0.04 cards for each of the 1.3 billion Chinese people, the credit card market in China is expanding at an amazing rate. For instance: the number of standard credit cards increased by 83% in 2004, and over 100% in both 2005 and 2006.
Behind the exponential growth is a massive investment surge in credit card business in China's banking industry. In the international market, credit cards are offered by just a small proportion of banks, while in China, 27 banks and financial institutions have launched credit card businesses. It seems that any Chinese bank will provide credit card products as long as they are qualified for card issuance.
Credit cards are extremely profitable products for banks. Data shows that foreign card issuers can earn 20-40% retail revenue from credit card business. In fact, credit card operations contribute a substantial amount to a bank's bottom line. At Citibank, credit cards account for 33% of net profits, while American Express rakes in 70% of its profits from its credit cards.
But what will the credit card frenzy mean for Chinese banks? As credit card sales representatives bombard pedestrians and office workers, it costs a Chinese bank over RMB120 (US$1.6) for each new account. With such high investments up front, few Chinese banks are actually making profits from credit card operations. Although the growth of China's credit card market over the last four years is comparable to that of the US market over the past 30 years, Chinese banks are having a much tougher time squeezing cash from their credit card operations.
From infancy, to rapid growth, to maturity, and finally to saturation, the Chinese credit card market will only allow for the existence of several large players, and that means many banks will eventually be sidelined.
Chinese banks will have to decide if they plan to use credit card businesses as part of their core competitiveness and how to make their particular credit cards competitive. In fact, the flurry of credit card marketing activity in China has actually helped some Chinese banks get onto a more market-based track and differentiate in the market.
From this perspective, credit cards are more than just another financial product in China's banking industry and the climate of competition that they have created has profound significance.
This is the leader of a special coverage on www.cbfeature.com.
Click here to read the full feature.
By 2006, Chinese card issuers had fired off a total of 56 million offers. While that breaks down to only 0.04 cards for each of the 1.3 billion Chinese people, the credit card market in China is expanding at an amazing rate. For instance: the number of standard credit cards increased by 83% in 2004, and over 100% in both 2005 and 2006.
Behind the exponential growth is a massive investment surge in credit card business in China's banking industry. In the international market, credit cards are offered by just a small proportion of banks, while in China, 27 banks and financial institutions have launched credit card businesses. It seems that any Chinese bank will provide credit card products as long as they are qualified for card issuance.
Credit cards are extremely profitable products for banks. Data shows that foreign card issuers can earn 20-40% retail revenue from credit card business. In fact, credit card operations contribute a substantial amount to a bank's bottom line. At Citibank, credit cards account for 33% of net profits, while American Express rakes in 70% of its profits from its credit cards.
But what will the credit card frenzy mean for Chinese banks? As credit card sales representatives bombard pedestrians and office workers, it costs a Chinese bank over RMB120 (US$1.6) for each new account. With such high investments up front, few Chinese banks are actually making profits from credit card operations. Although the growth of China's credit card market over the last four years is comparable to that of the US market over the past 30 years, Chinese banks are having a much tougher time squeezing cash from their credit card operations.
From infancy, to rapid growth, to maturity, and finally to saturation, the Chinese credit card market will only allow for the existence of several large players, and that means many banks will eventually be sidelined.
Chinese banks will have to decide if they plan to use credit card businesses as part of their core competitiveness and how to make their particular credit cards competitive. In fact, the flurry of credit card marketing activity in China has actually helped some Chinese banks get onto a more market-based track and differentiate in the market.
From this perspective, credit cards are more than just another financial product in China's banking industry and the climate of competition that they have created has profound significance.
This is the leader of a special coverage on www.cbfeature.com.
Click here to read the full feature.
10.22.2007
The Three Kingdoms of China's Mobile Phone Industry
Changes are afoot in the global mobile phone market. Siemens, Alcatel, and Philips have all sold their mobile phone businesses, enhancing the market concentration. Meanwhile, Nokia, Motorola, Samsung, Sony Ericsson and LG have stepped up to dominate the global market.
The Chinese market is starting to play an increasingly important role in global mobile phone sales. Characterized by a three-generation family, China has more than 70 licensed handset producers and many different brands. TCL, Bird, Soutec and Panda belong to the first generation; brands like Tianyu, Changhong and Gionee, which gained their licenses under an accreditation system, fall into the second generation. Follow-up handset makers form the third generation, which is made of computer distributors, suppliers of English education materials, mobile phone distributors, DVD manufacturers, and even electronic component producers. The third generation companies are characterized by their outstanding performance and ability to release new models quickly. A large sales volume is another notable attribute.
When launching its diamond mobile phone, China's leading household appliance manufacturer TCL Corporation created new marketing channels and managed to seize some market shares as a domestic manufacturer. However, multinationals proved to be quick learners and attacked Chinese manufacturers vehemently with channel reforms and technical innovations. The industry climate has since changed and phone makers - both from China and other nations - can no longer beat their competitors by tweaking channel control or offering alternative sales policies. Rapid assembly on the industrial chain and agile market feedback systems provide a competitive edge for Chinese manufacturers. Design, channel, and manufacturing are also starting to exert a noticeable influence after years of accumulation, and the domestic handset production chain is becoming more mature. Strong suppliers, headed by MedeaTek and Spreadtrum Communication, have helped solve the most complicated chip problem for domestic manufactures. Observers note that along the Guangzhou-Shenzhen Expressway in South China, chips, molds, batteries, and electronic components - all parts needed on the mobile phone production line - can be easily tracked down. In fact, the industrial chains controlled by powerful distributors may be even more integrated than those of the mobile phone brand operators. The TianAn Cyber Park on North Huaqiang Road in Shenzhen used to be a busy place for unlicensed handsets. But now thousands of mobile phone designers gather at TianAn, which has become an important landmark in Shenzhen.
The Chinese market is starting to play an increasingly important role in global mobile phone sales. Characterized by a three-generation family, China has more than 70 licensed handset producers and many different brands. TCL, Bird, Soutec and Panda belong to the first generation; brands like Tianyu, Changhong and Gionee, which gained their licenses under an accreditation system, fall into the second generation. Follow-up handset makers form the third generation, which is made of computer distributors, suppliers of English education materials, mobile phone distributors, DVD manufacturers, and even electronic component producers. The third generation companies are characterized by their outstanding performance and ability to release new models quickly. A large sales volume is another notable attribute.
China is expected to have 600 million mobile phone subscribers in 2008, up from the current level of 400 million. These users will replace their phones every 21 months on average. Undoubtedly, all phone makers find the market prospects attractive. However, at the end of 2006, Japan-based NEC announced its plans to withdraw from China's 2G and 2.5G mobile phone market, claiming competition was too tough. Chinese manufacturers were, by contrast, delighted with their successes in 2006. As the head of a mobile phone manufacturer said, "this is a market where even a fool can make money."
But how can Chinese manufacturers achieve satisfactory results? "Chinese companies are good at fighting in groups, but multinationals won't be their equals," says the director of a mobile chip producer jokingly. Yet considering the maturity of the mobile phone industry, "fighting in groups" may be understood as the ability to assemble rapidly on the industrial chain. IC design company MediaTek, with its well-controlled chip sales, has extricated Chinese mobile phone manufacturers from multinational control in base-band chip supply. MediaTek provides chips as well as the software platform for mobile phone development, which allows applications to be added according to customer demands. To a large extent, it opens a new space for the Chinese mobile phone industry: mobile phone design studios, spare part suppliers, distributors and mobile phone brands each fulfill their roles on the industrial chain. Based on market opportunities and profits, synergy of the industrial chain brings faster mobile phone updates.
When launching its diamond mobile phone, China's leading household appliance manufacturer TCL Corporation created new marketing channels and managed to seize some market shares as a domestic manufacturer. However, multinationals proved to be quick learners and attacked Chinese manufacturers vehemently with channel reforms and technical innovations. The industry climate has since changed and phone makers - both from China and other nations - can no longer beat their competitors by tweaking channel control or offering alternative sales policies. Rapid assembly on the industrial chain and agile market feedback systems provide a competitive edge for Chinese manufacturers. Design, channel, and manufacturing are also starting to exert a noticeable influence after years of accumulation, and the domestic handset production chain is becoming more mature. Strong suppliers, headed by MedeaTek and Spreadtrum Communication, have helped solve the most complicated chip problem for domestic manufactures. Observers note that along the Guangzhou-Shenzhen Expressway in South China, chips, molds, batteries, and electronic components - all parts needed on the mobile phone production line - can be easily tracked down. In fact, the industrial chains controlled by powerful distributors may be even more integrated than those of the mobile phone brand operators. The TianAn Cyber Park on North Huaqiang Road in Shenzhen used to be a busy place for unlicensed handsets. But now thousands of mobile phone designers gather at TianAn, which has become an important landmark in Shenzhen.
Standing a cut above unlicensed mobile dealers, third generation phone makers are the most dynamic on the market due to their familiarity with the quickest operational models. After targeting a popular handset, they find an assembly plant or original equipment manufacturer (OEM) plant for big brands. The plant will then subcontract orders to peripheral enterprises, while chip and software deciphering, imitation of circuit boards, production of module diagrams and "high technology" work is completed by emerging handset design companies. With chips and components purchased from upstream enterprises, the assembly plant will deliver products similar to top brands in no time. They have few differences with genuine products in appearance or function, and are thus sold on the market at extremely low prices. These handsets have taken half of the market, and are considered the most "dynamic" and "destructive" force up for sale. This does, however, show how Chinese manufacturers can fight against their foreign rivals.
Within three months after the release of a popular foreign handset, a much cheaper China-made phone with a similar exterior design and features will enter the market. A distributor stated that the "China-made handsets are several hundred or even one thousand RMB cheaper than foreign models. Foreign brands may hope to make over RMB1,000 (US$131) in profit, but Chinese manufacturers will be satisfied with several hundred from one handset." At a mobile phone outlet in Chengdu in Southwest China, most products are Chinese brands, and if asked about a foreign brand, the sales people will try to talk the customer into buying a China-made mobile phone that's cheaper with similar features and design. At this outlet, China-made phones are the standouts, while foreign brands linger in the background.
But behind the booming phone businesses, concerns are arising. Chinese handset manufacturers are in an awkward situation: their fate is closely linked to MediaTek. With MediaTek and other upstream enterprises lowering the technological threshold, more unlicensed handset manufacturers can enter the market. Most have no desire to build their brands but are strong in channel control. They are determined to make a fortune and leave as quickly as possible, which is making the climate a great deal more competitive. Like indulged children, most of these enterprises are abusing their abundant market opportunities. Far-sighted enterprises are, naturally, thinking pf keeping their long-term goals in sight.
China's mobile phone market places foreign brands at the top, where prices are higher: with advantages in branding, technologies and operational scale, multinationals dominate the high-end market where the unit price for a handset is over RMB2,000 (US$262.4) and the ultra low-cost (ULC) market features mobiles available for less than RMB500 (US$65.6) per handset. Most Chinese brands fall in the mid-range area of the market, and include unlicensed handsets that sell for anywhere between RMB500 (US$65.6) and RMB2,000 (US$262.4). Tight pricing leads to more intense competition and reduced profits. NEC is not, in fact, the only business that finds it hard to support its mobile phone business: even Chinese manufacturers like Lenovo and Changhong have considered abandoning this seemly prosperous business and heading for a higher-end market.
NEC's exit from the 2G and 2.5G markets is also an indication that the company is looking towards the future. 3G is their specific target, but are Chinese phone makers prepared for the coming era? Are they having the last hurrah before doomsday? Or are they rehearsing before the arrival of new industrial opportunities?
We've interviewed a number of phone makers, distributors, and technology suppliers and received a clear answer. We'll examine three phone makers that made a big splash in 2006 while keeping our sights trained on the future of China's mobile phone industry.
The Growing Power of China's Secondary Markets
Beijing: 1996. Along the 3rd-ring road, you could see all kinds of factories. At that time, the 4th-ring road hadn't come into being yet, and there were very few private cars. The traditional shopping attractions, such as Xidan and Wangfujing, were full of shoppers swarming the various floors for assorted household appliances.
Beijing: 2001. No trace of industry is left along this route. All the factories along the 3rd-ring road had been moved. Beijing had become a massive construction site due to large-scale citywide housing developments. Demand for building materials was quite strong. That year, the 4th-ring road was completed and put into use, with half of the 5th-ring road to be finished. New malls mushroomed. People began to turn their attention from household appliances to housing and automobile, and construction material sales began to boom.
Beijing: 2007. With most of the new construction now found outside the 5th-ring road, the reconstruction of the downtown area is nearing completion. There are now too many people and too many cars, among which privately owned cars number more than a million. Nerve-racking traffic jams are everywhere. More motorways are being built and re-built. Tourism and financing are taking priority over housing and automobiles.
It's taken Beijing more than ten years to transform itself from a large traditional Chinese city to a city based on consumption and services. In that time, all of the large factories have been moved from downtown Beijing to satellite towns. The size of the middle-class is increasing rapidly, and residential consumption continues to rise. 90% of the white collars over 30 years old purchased at least one car or house; 30% of them have purchased at least two. Today, in addition to sufficient traditional consumables available in Beijing's market, international brands compete with domestic goods. Intermediary businesses are generating small profits. High and middle-income people have become more interested in tourism and financing.
Beijing is a metaphor for the entire country. In the last ten years, Many Chinese people in this city have accumulated unusual wealth, and continue to upgrade their consumption. In 1996, the per capita disposable income of people in cities and towns was RMB4,838 (US$631.3), with bank deposits totaling RMB3.85 trillion (US$502.4 billion) and total retail spending for the year amounting to RMB2.46 trillion (US$321 billion). By 2006, these three figures had soared to RMB11.76 trillion (US$1.53 trillion), RMB16.15 trillion (US$2.1 trillion), and RMB7.64 trillion (US$997 billion) respectively. National consumers' purchasing power is four times that of ten years ago, and the scale of the consumer goods market has doubled.
In a recent survey, management consulting firm McKinsey & Company followed the consumption changes in 620 Chinese cities. By per capita income and population, the cities were arranged in a multilayer pyramid order. On the top layer were Beijing, Shanghai, Guangzhou and Shenzhen. On the second layer were Chongqing, Tianjin, Nanjing and Chengdu. The third and fourth layers consisted of emerging cities such as Dongguan, Ningbo, Zhenjiang, Zunyi, Yueyang and Zhumadian.
As the pyramid shows, China is a multilayered, diversified consumer market. The "center of gravity", however, is rising continuously, although different cities have different consumption hotspots. Tier-1 cities, such as Beijing and Shanghai, in which the demand for consumption by wealthy people is gradually rising above traditional levels, are on the forefront of upgrades in city construction and consumption. As for the tier-2, 3 and 4 cities, since their development lags behind tier-1 cities, their consumption is not rising as fast. But the huge consuming potential of those emerging cities allows them to join the mainstream consumer cities.
Dongguan, in South China's Guangdong province, for example, was trying to squeeze into the chain of global factories ten years ago. It eventually became a global center of garment, sports shoes, furniture, and electronic products. But the consumption culture and consciousness was a bit behind the times in this city of millions. So a few years ago, the Dongguan government started large-scale reconstruction. As the road network took shape, demand for automobiles was driven up. And its housing market became very active due to the emergence of new business centers. Surprisingly, the per capita income of Dongguan was No.1 in China based on population. The consumer awakening of this emerging city will soon vault it to the top of the consumer pyramid.
Similarly, although the consumer levels of some tier-3 and 4 cities such as Zhumadian in Central China's Henan province, and Zunyi in Southwest China's Guizhou province, haven't yet risen, their large populations, in addition to the many counties and towns around them, provide hope for dramatic development. It's a critical element in a city's consumer demand since economic principles show that population is both the starting and end points of consumer demand. As income increases, the residents of tier-3 and 4 cities will eventually surpass critical consumer demand levels, thus forming a huge consumer market.
In the next 20 years, the growth of multinational companies and homegrown enterprises will be achieved mainly in the emerging tier-3 and 4 cities, which are still virgin territory for many established brands. The opportunities for new brands will also abound in these simple and practical emerging urban cultures.
This is the abstract of a Special Coverage on www.cbfeature.com.
Please click here to read the full report.
Beijing: 2001. No trace of industry is left along this route. All the factories along the 3rd-ring road had been moved. Beijing had become a massive construction site due to large-scale citywide housing developments. Demand for building materials was quite strong. That year, the 4th-ring road was completed and put into use, with half of the 5th-ring road to be finished. New malls mushroomed. People began to turn their attention from household appliances to housing and automobile, and construction material sales began to boom.
Beijing: 2007. With most of the new construction now found outside the 5th-ring road, the reconstruction of the downtown area is nearing completion. There are now too many people and too many cars, among which privately owned cars number more than a million. Nerve-racking traffic jams are everywhere. More motorways are being built and re-built. Tourism and financing are taking priority over housing and automobiles.
It's taken Beijing more than ten years to transform itself from a large traditional Chinese city to a city based on consumption and services. In that time, all of the large factories have been moved from downtown Beijing to satellite towns. The size of the middle-class is increasing rapidly, and residential consumption continues to rise. 90% of the white collars over 30 years old purchased at least one car or house; 30% of them have purchased at least two. Today, in addition to sufficient traditional consumables available in Beijing's market, international brands compete with domestic goods. Intermediary businesses are generating small profits. High and middle-income people have become more interested in tourism and financing.
Beijing is a metaphor for the entire country. In the last ten years, Many Chinese people in this city have accumulated unusual wealth, and continue to upgrade their consumption. In 1996, the per capita disposable income of people in cities and towns was RMB4,838 (US$631.3), with bank deposits totaling RMB3.85 trillion (US$502.4 billion) and total retail spending for the year amounting to RMB2.46 trillion (US$321 billion). By 2006, these three figures had soared to RMB11.76 trillion (US$1.53 trillion), RMB16.15 trillion (US$2.1 trillion), and RMB7.64 trillion (US$997 billion) respectively. National consumers' purchasing power is four times that of ten years ago, and the scale of the consumer goods market has doubled.
In a recent survey, management consulting firm McKinsey & Company followed the consumption changes in 620 Chinese cities. By per capita income and population, the cities were arranged in a multilayer pyramid order. On the top layer were Beijing, Shanghai, Guangzhou and Shenzhen. On the second layer were Chongqing, Tianjin, Nanjing and Chengdu. The third and fourth layers consisted of emerging cities such as Dongguan, Ningbo, Zhenjiang, Zunyi, Yueyang and Zhumadian.
As the pyramid shows, China is a multilayered, diversified consumer market. The "center of gravity", however, is rising continuously, although different cities have different consumption hotspots. Tier-1 cities, such as Beijing and Shanghai, in which the demand for consumption by wealthy people is gradually rising above traditional levels, are on the forefront of upgrades in city construction and consumption. As for the tier-2, 3 and 4 cities, since their development lags behind tier-1 cities, their consumption is not rising as fast. But the huge consuming potential of those emerging cities allows them to join the mainstream consumer cities.
Dongguan, in South China's Guangdong province, for example, was trying to squeeze into the chain of global factories ten years ago. It eventually became a global center of garment, sports shoes, furniture, and electronic products. But the consumption culture and consciousness was a bit behind the times in this city of millions. So a few years ago, the Dongguan government started large-scale reconstruction. As the road network took shape, demand for automobiles was driven up. And its housing market became very active due to the emergence of new business centers. Surprisingly, the per capita income of Dongguan was No.1 in China based on population. The consumer awakening of this emerging city will soon vault it to the top of the consumer pyramid.
Similarly, although the consumer levels of some tier-3 and 4 cities such as Zhumadian in Central China's Henan province, and Zunyi in Southwest China's Guizhou province, haven't yet risen, their large populations, in addition to the many counties and towns around them, provide hope for dramatic development. It's a critical element in a city's consumer demand since economic principles show that population is both the starting and end points of consumer demand. As income increases, the residents of tier-3 and 4 cities will eventually surpass critical consumer demand levels, thus forming a huge consumer market.
In the next 20 years, the growth of multinational companies and homegrown enterprises will be achieved mainly in the emerging tier-3 and 4 cities, which are still virgin territory for many established brands. The opportunities for new brands will also abound in these simple and practical emerging urban cultures.
This is the abstract of a Special Coverage on www.cbfeature.com.
Please click here to read the full report.
10.21.2007
Who will Brighten China's Solar Energy Industry?
Shi Zhengrong, CEO of Suntech Power Co., Ltd, feels a twinge of embarrassment when asked when China's photovoltaic market will get on its feet. His sense of ease has further waned since China reinforced the Renewable Energy Law. Suntech Power (NYSE: STP), which listed on the New York Stock Exchange in December 2005, has seen its market capitalization exceed US$5 billion. The resulting great "wealth effect" has helped create a highly anticipated investment landslide in China's solar energy industry.
Yet not all influences have been positive. Observers note that the influx of capital has caused China's photovoltaic industry to shape itself into a poorly wound spool of thread, bulging in the middle and thin at both ends. Data shows that in 2005, the output of newly built cell production lines exceeded past totals of up to 145.7 MW (Megawatt), and the figure was expected to break 300 MW in 2006. Gross production capacity could have reached a record high of 1,449 MW, 70% of the world's total. But a scarcity of silicon materials is threatening further expansion. Material distillation technology is controlled by a few big businesses, and Germany and Japan, where the photovoltaic market is developing rapidly, are raising the entry threshold for Chinese solar energy enterprises. Added to this is where China's green technologies are being used: most of its photovoltaic products are sold to markets outside its borders, leaving the country with inefficient and polluting power sources.
Photovoltaic power generation comes with a higher price tag than conventional means, which makes good policy implementation all the more important. "In China, dozens of photovoltaic conferences are held on only one topic, calling for the government policies to start up the market in China," notes an exhausted Shi Zhengrong. Flecks of light are breaking through the gloom, however. Suntech, a maker of photovoltaic cells and solar electrical systems, for example, is integrating raw materials and market resources across the globe with its capital power, while other enterprises struggle. If China fails to start up the domestic photovoltaic market, Chinese companies will not be able to stand up to stiff international competition. The countries where the solar power industry is developing the fastest are also improving market standards and raising entry thresholds. China needs to learn how other nations are developing industry standards and key technologies.
Yet it is still widely believed that China will be the world's largest photovoltaic market and the largest photovoltaic producer. For Chinese enterprises, the battle for shares of the overseas markets is equally as important as the "fight on the home field".
This is the abstract of a Special Coverage on http://www.cbfeature.com/.
Please click here to read the full article.
Yet not all influences have been positive. Observers note that the influx of capital has caused China's photovoltaic industry to shape itself into a poorly wound spool of thread, bulging in the middle and thin at both ends. Data shows that in 2005, the output of newly built cell production lines exceeded past totals of up to 145.7 MW (Megawatt), and the figure was expected to break 300 MW in 2006. Gross production capacity could have reached a record high of 1,449 MW, 70% of the world's total. But a scarcity of silicon materials is threatening further expansion. Material distillation technology is controlled by a few big businesses, and Germany and Japan, where the photovoltaic market is developing rapidly, are raising the entry threshold for Chinese solar energy enterprises. Added to this is where China's green technologies are being used: most of its photovoltaic products are sold to markets outside its borders, leaving the country with inefficient and polluting power sources.
Photovoltaic power generation comes with a higher price tag than conventional means, which makes good policy implementation all the more important. "In China, dozens of photovoltaic conferences are held on only one topic, calling for the government policies to start up the market in China," notes an exhausted Shi Zhengrong. Flecks of light are breaking through the gloom, however. Suntech, a maker of photovoltaic cells and solar electrical systems, for example, is integrating raw materials and market resources across the globe with its capital power, while other enterprises struggle. If China fails to start up the domestic photovoltaic market, Chinese companies will not be able to stand up to stiff international competition. The countries where the solar power industry is developing the fastest are also improving market standards and raising entry thresholds. China needs to learn how other nations are developing industry standards and key technologies.
Yet it is still widely believed that China will be the world's largest photovoltaic market and the largest photovoltaic producer. For Chinese enterprises, the battle for shares of the overseas markets is equally as important as the "fight on the home field".
This is the abstract of a Special Coverage on http://www.cbfeature.com/.
Please click here to read the full article.
Technology, Business, 2007
Global development often seems to exceed expectations. The main reason is that it is very difficult to synchronize and coordinate various factors for promoting the world's development. Convergence became a buzzword several years ago, but it was not until recently that various factors were gradually put in place to allow convergence at several levels.
With IP technology as the basis, the communications industry and IT technology seem to be rapidly converging, and both users and manufacturers are correspondingly adopting more active attitudes.
With applications, however, the convergence of various communication methods and technologies is mainly in the form of terminal convergence. The slogan "BB call, mobile phone and Shangwutong, none can do without" was introduced by the manufacturer of Shangwutong personal digital assistant several years ago. Many Chinese in a society that is flooded with information have since forgotten it. The slogan is still true today, but the difference is that their functions are integrated into one mobile phone. (In a sense, BB call has been replaced by text messaging.) For many electronic consumers, the mobile phone, MP3 player and notebook computer are indispensable. Apple intends to change this dynamic with the recent launch of its "iPhone". Terminal convergence is quickly becoming reality; whoever controls the terminal will control the information channels of the future.
A more profound influence comes from social transformation caused by the convergence of such technologies and applications.
In the not too distant past, people had to be tied to home or the office in order to surf the Internet. However, with the continuous development of mobile communications technology, as well as the increasing strength of the terminal functions, the mobile terminal represented by mobile phones is becoming an increasingly preferred way of getting online. Recently, mobile operators made a large-scale deployment on high-speed upload technology, which enables mobile phone users to upload pictures and video fragments more rapidly and conveniently. The mobile phone offers stronger real time functionality and larger customer bases. Because of this, the capacity of the popular "Web 2.0" is quite likely to be expanded due to the advancement of such technologies. Furthermore, the advancement of technology and application lowers the shift cost between the real world and the virtual world, making the dividing line between them vaguer. That blurred line can be considered a kind of convergence of social categories, namely, the convergence of the real and virtual worlds. That kind of massive convergence not only brings about great challenges for our imagination, but also allows the business community in the real world to discover new business opportunities and prospects for development. Like the title of the wildly popular 3D Internet game "Second Life" implies, we may soon be able to open a door on an entirely new world.
This is the abstract of a Special Coverage on http://www.cbfeature.com/.
10.19.2007
Global Mind, Local Eyes
To many, China no longer stands for merely a mysterious Oriental place, but rather a decisive market player closely linked to their interests.
A global company needs a global mind. What should be acquired, stored and distilled in this mind, in order to make critical strategic decisions? Thousands of miles away, with an unfamiliar tongue and a vastly different culture, China, the largest market and business engine, is facing tremendous challenges.
You are unlikely to become a “Maven of China” in a few months. And you don’t even have to be. What you do need is a pair of local eyes to perceive the most accurate, solid and vivid scene of China’s business sectors in order to make the best decisions.
When you click on CBfeature.com, you get the latest feature stories, updated every day, by the reporters at a Chinese business magazine, as well as researchers from professional, independent organizations, with a bird’s-eye view of Chinese enterprises and the Chinese market. The business features here are rooted in long-term, objective attention to the companies we explore and the people who run them. We talk to top management to learn their ideas and to find out what motivates them. With a deep understanding of China’s business environment, our stories are focused on being relevant, practical and compelling. The information we provide can make a meaningful difference to your decision.
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Trickles lead to streams, and streams can become torrents. Today, CBfeature.com has been launched, not only to share our accumulated ideas with you, but also to learn what you care about most. We believe in the global village, we are getting closer. With the ever increasing speed of information flow, why should languages, cultures and distance be obstacles?
Whatever you thought about China, think again! CBfeature.com offers you a valuable resource to become a leading business player in China – a player with a global mind and local eyes.
A global company needs a global mind. What should be acquired, stored and distilled in this mind, in order to make critical strategic decisions? Thousands of miles away, with an unfamiliar tongue and a vastly different culture, China, the largest market and business engine, is facing tremendous challenges.
You are unlikely to become a “Maven of China” in a few months. And you don’t even have to be. What you do need is a pair of local eyes to perceive the most accurate, solid and vivid scene of China’s business sectors in order to make the best decisions.
When you click on CBfeature.com, you get the latest feature stories, updated every day, by the reporters at a Chinese business magazine, as well as researchers from professional, independent organizations, with a bird’s-eye view of Chinese enterprises and the Chinese market. The business features here are rooted in long-term, objective attention to the companies we explore and the people who run them. We talk to top management to learn their ideas and to find out what motivates them. With a deep understanding of China’s business environment, our stories are focused on being relevant, practical and compelling. The information we provide can make a meaningful difference to your decision.
CBfeature (China Business Feature) is powered by CEOCIO China magazine, a leading Chinese business and management publication for the last nine years. Today, CEOCIO China enjoys a readership of more than 130,000 in addition to millions of online readers. The semimonthly is broadly recognized by numerous Chinese companies and multinationals in IT, automobile, retailing and other sectors, as well as in the fields of informatization, corporate management and investment, to name a few. Our features have earned long-standing trust and credibility.
Trickles lead to streams, and streams can become torrents. Today, CBfeature.com has been launched, not only to share our accumulated ideas with you, but also to learn what you care about most. We believe in the global village, we are getting closer. With the ever increasing speed of information flow, why should languages, cultures and distance be obstacles?
Whatever you thought about China, think again! CBfeature.com offers you a valuable resource to become a leading business player in China – a player with a global mind and local eyes.
The Republic of IBM
At a high-profile press conference, a young lady dramatically whisks away a red cloth and is instantly flooded by a lightning storm of camera flashes. The audience in front of the stage nods and applauds in agreement. As the crowd ponders what is under the red cloth, a standard baritone speaks the line, "Innovation - you need a guide!" The latest television commercial shares the consistently inexplicable style of IBM advertisements - though it seems to have said nothing, the viewers have to admit that they immediately come up with IBM.
This is the IBM style. For most of the time, the whole world is wondering, "What the hell is IBM doing?" In recent decades, the world's largest information technology and business solutions provider has introduced many novel concepts, including the idea of packaging equipment and software sales together into "concept sales", which enabled IBM to become the "Chief Architect" of a great number of large international corporations and create many business models that once puzzled many enterprises.
Since coining the term "e-business" in 1996 to its more recent proposition of "on-demand", IBM has built a business model on identifying trends, introducing concepts according to those trends, and then preparing and offering products and services for its customers. Obviously, IBM, like a missionary, instills these concepts into the minds of business leaders and spends quite a long time to pave the way for market acceptance. For example, in the first few years after the e-business concept was proposed, IBM spent roughly US$700 million each year to nurture the market and gain acceptance for its new services. Once the concept was launched, IBM acted as the head of an empire, setting mandates, determining directions and using its influence to promote the revolution. Back then, IBM was the core.
But things are different now, and the way IBM is doing business is also changing, profoundly.
In early August, 2006, the "IBM Innovation Jam", the largest online brainstorm in history, attracted 150,000 participants from 104 countries, including IBM employees, their family members, universities, business partners, and customers from 67 countries. During two separate 72-hour discussions, the participants contributed roughly 46,000 ideas. And IBM decided to invest US$100 million in the next two years to support 10 most innovative business plans generated from the extemporaneous Innovation Jam.
This online discussion is regarded as a new model for concept generation at IBM, as the new concepts did not come from IBM's own research institute. "We need to open our labs,"said IBM CEO Samuel J. Palmisano, "The collaborative innovation model requires us to believe in the creativity and wisdom of our employees, customers, and members of other innovation networks."
IBM has its own considerations when it calls for collaboration. Joel Cowley, from the strategic planning unit of IBM says, "We have seen from a growing number of fields that future innovation requires the participation of numerous members who have expertise on subtle levels."
Actually, with the extensive application of information technologies within global businesses over the past decade, IBM has realized that, if it acts merely as an advocate for commercial information technologies, the company will struggle to lead industry innovation or forge unique concepts on its own as it did ten years ago. Today, across every field, the frontiers of technological innovation are becoming increasingly specialized. Any significant breakthrough can only be achieved by combining the growing specialized expertise.
In such a situation, what need to change are not just the "models of new concept generation", but IBM's own behavioral model, and its way of doing business. So, in recent years, IBM has been redefining its original role as a "mentor" to a "supporter", and its relationship with customers is also shifting from a vertical-oriented "supply-demand relationship" to a horizontal "partnership".
Now led by the flag of innovation, a more "democratic and open" IBM, very different from the original "empire", is rapidly emerging. Particularly on the Chinese market, IBM is using all kinds of methods, including capital investment, to nurture large, medium and small Chinese enterprises to build a brand new "Republic of IBM" together.
It is believed that the change in the business model of the world's most influential company will inevitably have a deep impact on the development of many Chinese enterprises.
This is an abstract of the Special Coverage on www.cbfeature.com.
Click here to read the complete report.
This is the IBM style. For most of the time, the whole world is wondering, "What the hell is IBM doing?" In recent decades, the world's largest information technology and business solutions provider has introduced many novel concepts, including the idea of packaging equipment and software sales together into "concept sales", which enabled IBM to become the "Chief Architect" of a great number of large international corporations and create many business models that once puzzled many enterprises.
Since coining the term "e-business" in 1996 to its more recent proposition of "on-demand", IBM has built a business model on identifying trends, introducing concepts according to those trends, and then preparing and offering products and services for its customers. Obviously, IBM, like a missionary, instills these concepts into the minds of business leaders and spends quite a long time to pave the way for market acceptance. For example, in the first few years after the e-business concept was proposed, IBM spent roughly US$700 million each year to nurture the market and gain acceptance for its new services. Once the concept was launched, IBM acted as the head of an empire, setting mandates, determining directions and using its influence to promote the revolution. Back then, IBM was the core.
But things are different now, and the way IBM is doing business is also changing, profoundly.
In early August, 2006, the "IBM Innovation Jam", the largest online brainstorm in history, attracted 150,000 participants from 104 countries, including IBM employees, their family members, universities, business partners, and customers from 67 countries. During two separate 72-hour discussions, the participants contributed roughly 46,000 ideas. And IBM decided to invest US$100 million in the next two years to support 10 most innovative business plans generated from the extemporaneous Innovation Jam.
This online discussion is regarded as a new model for concept generation at IBM, as the new concepts did not come from IBM's own research institute. "We need to open our labs,"said IBM CEO Samuel J. Palmisano, "The collaborative innovation model requires us to believe in the creativity and wisdom of our employees, customers, and members of other innovation networks."
IBM has its own considerations when it calls for collaboration. Joel Cowley, from the strategic planning unit of IBM says, "We have seen from a growing number of fields that future innovation requires the participation of numerous members who have expertise on subtle levels."
Actually, with the extensive application of information technologies within global businesses over the past decade, IBM has realized that, if it acts merely as an advocate for commercial information technologies, the company will struggle to lead industry innovation or forge unique concepts on its own as it did ten years ago. Today, across every field, the frontiers of technological innovation are becoming increasingly specialized. Any significant breakthrough can only be achieved by combining the growing specialized expertise.
In such a situation, what need to change are not just the "models of new concept generation", but IBM's own behavioral model, and its way of doing business. So, in recent years, IBM has been redefining its original role as a "mentor" to a "supporter", and its relationship with customers is also shifting from a vertical-oriented "supply-demand relationship" to a horizontal "partnership".
Now led by the flag of innovation, a more "democratic and open" IBM, very different from the original "empire", is rapidly emerging. Particularly on the Chinese market, IBM is using all kinds of methods, including capital investment, to nurture large, medium and small Chinese enterprises to build a brand new "Republic of IBM" together.
It is believed that the change in the business model of the world's most influential company will inevitably have a deep impact on the development of many Chinese enterprises.
This is an abstract of the Special Coverage on www.cbfeature.com.
Click here to read the complete report.
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