Joseph Zhao – Daxue Consulting – Market Research China

China Strategy: Wanda in China

Daxue Consulting — Sun, 14 Jul 2013 04:33:21 +0000

Dalian Wanda Group was founded in 1988 and operates in five major industries including commercial properties, luxury hotels, tourism investments, cultural industries, and department store chains. The company has assets of 31 billion dollars and an annual income of 17 billion dollars. The company has already opened 49 Wanda Plazas, 28 five-star hotels, 726 cinema screens, 40 department stores and 45 all inclusive karaoke centers throughout the country. By 2015, the company aims to become a world-class enterprise by increasing its assets to 48 billion dollars and income to 32 billion dollars.

Wanda Group’s Corporate Principles

Wanda Group is an enterprise with a tradition of innovation. Wanda’s business strategy revolves around this innovation and has also facilitated company development. Wanda has improved its internal mechanism for innovation and formed a unique innovative culture. Wanda Group has established a sound corporate management system and become a forerunner in China in system improvement. Wanda Group’s strong sense of social responsibility features a pursuit of “not only the quantity of wealth but also the quality of wealth”. Wanda Group views talents as the core capital of the enterprise. It now employs close to 50,000 people. Every employee on its management team has obtained a bachelor’s degree and more than 40% of the team holds a master’s degree or PhD. In addition, 70% of the senior management team holds at least a master’s degree. Wanda Group also has the lowest employee attrition rate among large enterprises in the country. Good enterprise development prospects, a wide platform for development of individual careers, harmonious and simple interpersonal relationships, first-class and lucrative material remunerations, and a unique and excellent enterprise culture are the core elements for the cohesiveness of Wanda Group.

Wang Jianlin

Wang Jianlin, born in 1954, is the board chairman and president of Dalian Wanda Group Co., Ltd. He is a deputy to the 17th Party Congress, a member of the National Committee of the Chinese People’s Political Consultative Conference and a vice chairman of the All-China Federation of Industry and Commerce. He also holds many other important social positions, such as the vice chairman of the China Association of Enterprises, the China Entrepreneurs Association, the China Federation of Commerce and the China Real Estate Industry Association. The government has rewarded Wanda Group with great honors for its efforts to uphold its high standards of social responsibilities. In November 2005, Wang Jianlin won the Individual Award of China Charity Award issued by the Ministry of Civil Affairs. In March 2007, Wanda Group won the “most loving Chinese enterprise” title of the second China Charity Awards issued by the Ministry of Civil Affairs. In 2008, Wang Jianlin won the “most loving Chinese People” title of the third China Charity Awards issued by the Ministry of Civil Affairs. In October 2005, Wang Jianlin was rated by China Charity Federation.

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Picture:Wang Jianlin

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Korean movies in China

Daxue Consulting — Wed, 19 Jun 2013 00:45:08 +0000

Chinese press and film journals have reported extensively on the Korean film industry; the “Korean wave” (hanliu in Chinese or hallyu in Korean) reached China years ago. Of course, Korean, Japanese, Thai films are widely available in China through pirated DVDs. China’s film market is a very different one than Korea and Japan, in part because only 20 revenue-sharing foreign films are allowed in under WTO guidelines (the number used to be ten, when China began importing such films in 1994). The large majority are Hollywood blockbusters. But foreign films are widely available through DVDs and downloading. And some foreign films have come in under a “flat fee” policy, with no revenue sharing. In 2011, the total box office of China film market was 13.15 billion, with domestic films’ contribution more than 53.6%, although the situation is complicated by a number of factors.
With the opening of film industry, more and more famous Chinese directors seek for oversea actor and actress to make their film more diversified and thus can enter the film market in different country. The cooperation on film between China and South Korea has become a leading trend. Because their natural resemblance on appearance, actors and actress of China and Korea can star in both countries’ movies without having much influence. Some famous cooperation movie are named The Myth, The Promise, Snow Flower and the Secret Fan, Musa.

Korean Movie released in China in 2011 and 2012
Late Autumn (2011)
Late Autumn (Korean: 만추) is a 2010 English-language film which stars Chinese-born Hong Kong actress Tang Wei as a prisoner who is given a 72 hours parole to visit family in Seattle who meets and befriends a South Korean man on-the-run. A co-production between South Korea, Hong Kong, China and the United States, it is the fourth remake of the now-lost 1966 Lee Man-hee melodrama classic of the same title.
The film premiered at the 2010 Toronto International Film Festival. It also screened at the 15th Busan International Film Festival, the 61st Berlin International Film Festival, and the Fribourg International Film Festival. It became the highest grossing Korean film released in China to date, quickly gathering over 910,000 admissions after its March release, with a total box office take of more than 60 million yuan.

Hello Ghost (2010)
Hello Ghost (Hangul: 헬로우 고스트; RR: Hellowoo Goseuteu) is a 2010 South Korean comedy film about a man’s multiple failed suicide attempts. The film was the 9th highest grosser of Korean films in 2010. The film was bought by American film production company 1492 Pictures in February 2011 and is scheduled to be remade by Chris Columbus.

The Man from Nowhere (2010)
The Man from Nowhere (Hangul: 아저씨; Hanja: 아저氏; RR: Ajeossi; MR: Ajŏssi) is a 2010 South Korean film starring Won Bin and directed by Lee Jeong-beom. It was Korea’s highest grossing film in 2010. The film was released in the United States and Canada on October 1, 2010. The film follows the story of a vengeful man who embarks on a murderous rampage when the only person that seems to understand him is taken from him.

Come Rain, Come Shine (2010)
Come Rain, Come Shine (Hangul: 사랑한다, 사랑하지 않는다; RR: Saranghanda, Saranghaji Anneunda; literally. “I Love You, I Love You Not”) is a 2011 South Korean film by Lee Yoon-ki. A young woman (Lim Soo-jung) informs her husband of five years (Hyun Bin) that she is leaving him for another man, but the husband remains calm and even helps her pack. The experimental film traces in real-time parts of their last three hours together while the wife prepares to move out. The film premiered in competition at the 61st Berlin International Film Festival in 2011.

China Business Intelligence

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Market report: Xiaomi In China

Daxue Consulting — Sun, 16 Jun 2013 00:57:07 +0000

Market report: Xiaomi In China

More reports about smartphone market in China : here.

MI-ONE, sometimes also referred as MI-ONE Plus or Xiaomi Phone, is a smart mobile phone designed by the Xiaomi Tech Company, which was created by Lei Jun, CEO of Kingsoft. Xiaomi is a high-end smartphone with a Qualcomm Snapdragon S3 (dual core, 1.5 GHz) CPU and an Adreno 220 GPU,but its price (RMB1999/around USD310) is less than half the cost of a typical dual-core CPU smartphone. When it was released, the phone received more than 300,000 pre-orders in the first 34 hours. Since its initial two round 100,000 unit open to public releases on 18th December 2011 and 4th January 2012, the company has sold a total of 500,000 units. Xiaomi is shipped with MIUI pre-loaded, but also supports stock Android ROMs and other 3rd party ROMs, and is in consideration to add Microsoft’s Windows Phone 7 to the phone.

High-performance, low price strategy

The driving force behind Xiaomi’s success is its “high-performance, low price” strategy. China has experienced an unprecedented development in the mobile phone market in recent years. Both international brands and domestic brands compete for the market share, making the mobile market in China fierce. Many mobile phone manufacturers have adopted the new “touch-tech” reform led by Apple. The result of this trend is shifting the mobile market into one that covets high priced high-end touch screen phones. Such phones, such as iPhone or Galaxy series, are usually more than 3,000 RMB (500 USD). The launch of Xiaomi filled the gap. “As a mobile phone enthusiast, what our team did is to manufacture really high-end smartphones with attainable prices for most Chinese.” Said Lei Jun, CEO of Xiaomi Tech Company. There are three main factors to Xiaomi’s success. The first is the company’s specific and clear market positioning. Xiaomi views itself as a high-end, open-platform smart phone, catering to the younger crowd, white-collar wokers and those who are keen on upgrading their phones. The second is its excellent R&D and management team. The development process was led by the masters of former Google, Microsoft, Kingsoft employees that brought rich industrial resources and experience with them. The third factor is its fast and effective sales model. Xiaomi adopt solely online sales, following the trend of e-commerce, also taking advantage of its low-cost and fast service.

Competitors:

iPhone
In the end of 2011, when the iPhone 4S was not yet available in China, there were more and more Chinese smartphone users choosing Xiaomi Phone as an upgrade from their Nokia Symbian-powered phones. Why? Two main reasons: Xiaomi phones are cheap, one could purchase two Xiaomi phones with the money to purchase an iPhone 4 or 4S. Secondly, Xiaomi successfully created an illusion of feverish demand for its smartphones. Just like Apple, Xiaomi does not have its own manufacturing facility and has struggled to produce enough handsets to meet the extremely high demand. But still, Apple remains the pioneer of the smartphone industry and its unique brand image cannot be replicated by Xiaomi or any other competitor.

Samsung Galaxy
In some countries, the Samsung Galaxy series is the first mobile phone manufactured by Samsung that uses the open source Android operating system. The i7500, one of typical Samsung Galaxy phones, is a 3.5G smartphone, offering quad-band GSM and announced with tri-band HSDPA (900/1700/2100) at 7.2Mbit/s. The phone features a 3.2-inch AMOLED capacitive touchscreen, a 5 megapixel auto-focus camera with power LED flash, and a digital compass. One advantage of the Samsung Galaxy over Xiaomu is the variety of product options that the company offers to cater to individual customer needs.

HTC
HTC Corporation, formerly High Tech Computer Corporation, is a Taiwanese manufacturer of smartphones and tablets. The company initially made smartphones predominately based on Microsoft’s Windows Mobile operating system (OS) software, but in 2009 it began to shift its core focus away from Windows Mobile devices to devices based on Android OS, and in 2010 to Windows Phone OS as well.

Huawei
One domestic competitor of Xiaomi is Huawei. Like Xiaomi, Huawei also launched its own smartphone and developed its own operation system. There are several possible advantages of Huawei over Xiaomi. First, Huawei has more financial support, making it more easy to develop better devices and software. Second, Huawei smartphone may become cheaper than Xiaomi because unlike Xiaomi, Huawei manufactures its smartphones itself. Third, Huawei started its business with communication devices, so it has already established good relationships with the operators of the communication market.

Daxue Consulting China Market Study

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Picture: Xiaomi

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Yachts in China

Daxue Consulting — Mon, 08 Apr 2013 00:55:02 +0000

Yacht, a new way of creation, integrates the functions of sailing, sports, entertainment and leisure. In developed countries, yacht has become senior durable goods for individuals and families. It is more recreational and luxury than cars. In developing countries, yacht serves more as public recreation item than private possession. It appears in park and tourist attractions for people to ride. Yacht can be categorized into luxury yacht, sailing yacht, fishing yacht, motor yacht and inflatable boat. The market price for a top-grade luxury yacht is as much as millions of dollars, some of them tens millions of dollars. A cheap yacht is about 50,000 dollars. So it is very popular among developed countries, especially those close to sea. In US, there are more than 17 million yachts, which means that in every 16 people there is one who has yacht. The number in China is 1:1300,000.

The world’s yacht market has long been led by US, Italy, France and England. US builds about 20,000 yachts every year, ranking the first in the world, followed by France and England, with yields 7,900 and 3,300 respectively. Different from these countries, China did not experience a development process of yacht, but enter the high-end and luxury yacht market of manufacturing and purchasing directly. China’s yacht manufacturing started from 1970s’, with a policy advocating the development of high-speed transportation and tourism. Now, China has 374 factories producing boat, 50 of which focus on manufacturing yacht. 80% to 90% of the yachts produced in China are for export. Now China has ranked sixth in the world in terms of comprehensive ability of yacht manufacturing. What’s more, Chinese yachts are 20% to 30% cheaper than the average world price, making them more competitive. The export amount is now more than 200 million dollar per year.
Most yacht buyers in China are rich and powerful people and consortiums. These people are still responsible for the 100,000 purchases of yachts in the following 10 years. If the average price for a yacht is 100,000 dollar, there will be a 10 billion-dollar-trade in the following 10 years in the yacht market in China. Now there are more than 80 yacht clubs in China, each with 1000 members. An average membership fee is 10,000 dollar per year. Meanwhile, the yacht market in China also pulls its relative industries, such as sales agent, yacht fixing and maintenance, yacht parking, driving license training and so on.
In recent years, a lot of domestic manufactures of yacht have emerged, such as Qsingdao Sunvici, Horizon, Ocean Alexander, Hansheng Yacht, Sunbird, DHS, Kadaya, HeySea, Aquastar, Meilan etc. Yachts produces by these domestic manufactures are not as good as those produced by the world’s top yacht brand, such as Riva, Wally, Princess, Ferretti or Azimut, but their price are much lower, about 10% to 30%.

China yacht market is quite promising, but still some problems exist. First, because China entered the world market in a relatively later period of the market development, so there is no “yacht culture” in China. In developed countries, such as US, yacht is a very common way for ordinary people to have recreation, but in China few people have experienced yacht. Even among rich people in China, some people purchase yachts but do not fully use their function of recreation and business. So it will be long way for China to form such a kind of “yacht culture”. Second, the policy and infrastructure lag behind the market development. Some cities lack marinas for yachts, yacht association and club, after-sale service and so on. But we can predict that these facilities will accommodate the increasing demand and that the yacht market in China will boom in the near future.

For a complete research on yachts in China (in French)

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IWC in China

Daxue Consulting — Fri, 07 Sep 2012 06:28:30 +0000

International Watch Co, also known as IWC, is a high-end Swiss watch manufacturer located in Schaffhausen, Switzerland. IWC is an active member of the Federation of the Swiss Watch Industry FH. IWC Schaffhausen is notable for being the only major Swiss watch factory located in eastern Switzerland, as the majority of the well-known Swiss watch manufacturers are located in western Switzerland. WC’s motto is Probus Scafusia (L.), meaning “good, solid craftsmanship from Schaffhausen” and was established in 1903 as the “Official Motto”.

In 1868, an American engineer and watchmaker Florentine Ariosto Jones (1841–1916) who had been a director of E. Howard & Co., in Boston, then America’s leading watchmaking company, founded the International Watch Company with the intention of combining the craftsmanship of the Swiss with the modern engineering technology from the U.S. to manufacture movements and watch parts for the American market.” At the time, wages in Switzerland were relatively low although there was a ready supply of skilled watchmaking labor” mainly carried out by people in their homes. Since 1997, IWC has been offering a unique horological item for on-line auction annually on its website. The proceeds are donated to the Ecole des Sables – Antoine de Saint Exupéry school in Mali. The school provides education for Tuareg children.

IWC’s entrance to China was little bit later than other Swiss watch manufacturer. But before the officially entered China, they did a lot of preparations. With its long history of manufacturing watches and excellent craftsmanship, it soon opened its market in China. It has several boutiques (chain store) in China, but lots of authorized retailers spreading 28 cities in China. Since the financial crisis in 2008, IWC has gain a lot of climbing in sales in China. According to IWC’s China Regional Director, China is one of the company’s most value market in the following years, and it plan to reach the top 5 watch retailers in China.

In 2012, IWC has a lot of activities concerning the China market. As in the Chinese calendar, 2012 is the Year of the Dragon. IWC Schaffhausen has released a limited-edition timepiece in celebration of this year; The Portuguese Automatic Edition Dragon Year. Featuring a Pellaton automatic winding, this exceptional mechanical watch has a power reserve of 168 hours and is limited to 888 pieces, worldwide. The number 888 is also associated with sustained riches and good fortune in Chinese tradition. The Portuguese Automatic Edition Dragon Year features the same classic appeal as the original edition. The 18-carat red gold casing with a slate-coloured dial and a black alligator leather strap, give this watch a very elegant demeanor. The small seconds at 9 o’clock and the power reserve display at 3 o’clock, further enhance the classiness of this timepiece. Furthermore, the “DRAGON YEAR – ONE OUT OF 888” engraving underlines the exclusivity of this watch.

IWC Schaffhausen is Official Timekeeper of the Volvo Ocean Race in Sanya, China 2011–2012 and sponsors the 24-hour Speed Record Challenge. The third leg of the round-the-world Volvo Ocean Race has taken the six competing teams to Sanya in China. As Official Timekeeper, IWC Schaffhausen awarded the prestigious trophy in its 24-hour Speed Record Challenge to the crew of Puma. Ian Walker, skipper of the IWC-sponsored Abu Dhabi Ocean Racing team, used the stopover to visit the exclusive Flagship Boutique in Hong Kong. At a prize-giving ceremony, Winnie Ho, Marketing and Communications Manager of IWC Asia Pacific, and Sandy Lin, Marketing and Communications Director of IWC China, awarded the trophy to the winning crew. IWC Schaffhausen will present the watches to the winning crew at the end of the race in Galway, Ireland.

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IWC in China

Daxue Consulting — Fri, 07 Sep 2012 06:26:03 +0000

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Market study: Agnès B in China

Matthieu David — Wed, 15 Aug 2012 01:44:56 +0000

Agnès B. opened her first shop on Rue du Jour in Paris in 1975. Since then, she has designed clothing for men, women, and children that reflects the spirit of the age by creating a timeless wardrobe that can easily adapt to every personality. Today, Agnès B. continues to design each collection that bears her name, including accessories, watches, jewelry, and sunglasses. The company has more than one hundred shops throughout the world. As a family and civic enterprise, Agnès B. tries as much as possible to keep her production in France. The group mainly designs and sells casual clothing and cosmetics through a network of shops and in department stores. It also operates a few restaurants and flower shops in Asia, which contribute to the distinctive atmosphere of its retail outlets.

Company strategy

Agnès B. has strong brand presence with over 200 boutiques spread over three continents in 12 countries and an exclusive online store which it uses to sell select merchandise. The brand has diversified into footwear, fragrances and eye-wear to make it a complete urban lifestyle brand. In addition, it formed a green committee to carry out its many green initiatives such as using recycled materials for its products and packaging. The brand also undertakes several CSR initiatives for fighting AIDS with initiatives like Help Yourself which have been successful.

Despite these successful campaigns, Agnès B. also has some weaknesses in terms of its business operations. It has not indulged in any advertisements and promotions unlike its competitors, such as Louis Vuitton, Burberry and Prada. Also, it has limited presence in emerging economies that present huge potential. The brand faces threats from the highly fragmented fashion industry where there is high bargaining power for buyers and low brand loyalty. These facts are the main reason why few people in China have heard of the brand. Now, many market opportunities have presented themselves in front of Agnès B. The brand can concentrate on new emerging markets such as India and China. With its wide range of products and services, it can also look forward to offering new retail formats.

Plans to enter Asia

In an interview in 2009, Agnès B.’s management in Asia outlined plans to double the number of Agnès B.’s 10,000-to-15,000-square-foot stores in China, seven stores at the time. It also said that up to 20% of sales in Hong Kong were made to mainland Chinese customers. The group now operates 12 shops on the mainland, in addition to the 23 it has in Hong Kong (where it has a presence in pretty much all of the territory’s major shopping centers, including IFC Mall in Central), with 21 in Taiwan and one in Macau.

The bigger picture for the group remains unclear, and it is still tightly controlled by its founder. However, its Paris-based CMC SAS subsidiary generated an operating turnover of about $90 million equivalent, according to a 2009 filing. The subsidiary employs about 16% of the group’s total staff, and looks after the French network and exports. International end-consumer sales are made under separate companies. Hong Kong-listed Ports Design Ltd. would appear to be a reasonable, if perhaps larger, proxy. It had a 2009 turnover of about $235 million, operates 353 stores and has a market capitalization of around $1.4 billion.

Daxue Consulting China Market Study

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Picture Source: Agnès B.

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