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A Chinese woman carrying a bag displaying the name of US fashion label Calvin Klein in central Beijing. Photograph: David Gray/Reuters
China's taste for high-end fashion and luxury brands reaches new heights
Vogue China editions the size of a doorstop, 960,000 millionaires and rising, and now the aspirational class are buying
Angelica Cheung, the Chanel-frocked editor of Vogue China, has a problem her counterparts would sell their designer wardrobes for: too much advertising to fit in the glossy.
"I have to sit down at a desk to flip through it," she says. "It is going to get very difficult to read. It's too heavy. Maybe it will have to be two magazines in future."
In the US, Vogue's chunky September issue is fashion's lodestar; so successful it spawned its own documentary. In China every month's edition is a glossy, advert-packed, doorstopper: testament to the explosion of the high-end fashion industry.
As the latest Hurun wealth report logs 960,000 millionaires in China, the expanding ranks of the super-rich are seeking ways to confirm their status and indulge a newfound taste for consumption.
High-end brands are happy to assist. The ubiquitous Louis Vuitton boutiques have been joined by Loewe and Balmain. Burberry plans to expand from 57 to 100 stores within five years. Hermès has even launched its own China-specific sub-brand, Shang Xia.
The management consultancy McKinsey predicts that, as middle-class consumers acquire the designer habit too, within four years China will become the world's largest luxury market, worth $27bn (£16bn), up from $10bn in 2009. .
Add in purchases overseas, by Chinese tourists avoiding the country's sky-high luxury taxes, and the figures are staggering. Chinese consumers will buy more than 44% of the world's luxury goods by 2020, forecasts CLSA Asia-Pacific, the brokerage and investment group.
That ratio is all the more remarkable given that high-end brands emerged only in the 1990s. Cheung says Vogue China requires more "education" pages than its sister titles, to make up for the missing years and unravel the western references. "In China [the 1960s] was the Cultural Revolution. You need to explain swinging London, Mary Quant, the Beatles and why these people made a difference. If you don't explain, they're just clothes."
Certainly, the fashion industry is putting down roots in popular culture. China has its own Project Runway – called Creative Sky, with Cheung as a judge. And it has its own take on The Devil Wears Prada, with the fashion romance Colour Me Love.
Even now fewer than 2% of the population buys top-end brands, says Zhu Mingxia of Beijing's University of International Business and Economics. "The next decade will be the golden era for luxury."
Beauty products and accessories account for a much larger slice of the market than in the west, and more of the customers are male; according to the American accessories marketer Coach Retail International, men account for 45% of China's $1.2bn luxury handbag market.
Prada shoulder bags and Gucci clutches are essential props for many businessmen. And if they are not carrying their own status symbol, young men may wield one on behalf of a girlfriend.
Buying a partner an expensive handbag establishes you as husband material; carrying it for her is also appreciated, so it is not uncommon to see burly young men gallantly toting pink or diamante-studded bags.
Many of these new consumers are executives and entrepreneurs, keen to show they have made it, or the offspring of wealthy families. Others, however, are the aspirational: "Secretaries who live on instant noodles for six months to pay for their LV handbag ... it's a way of saying, 'I have become part of this world,' " said Paul French of the retail consultancy Access Asia.
Cynics joke that "the three Cs – the corrupt, the criminal and the concubines" are among the heaviest spenders. A gold watch or expensive handbag not only show appreciation to a helpful official or acquiescent mistress; they are also tradable assets and less traceable than cash.
Brands see they must fight to retain an aura, justifying their price tags as their popularity increases.
Shops are springing up not only in Beijing and Shanghai, but also in unglamorous provincial cities such as Hefei and Shijiazhuang. With minimal rents (developers believe prestige brands attract other clients), there is little to stop their relentless multiplication, even when customers are thin on the ground.
"Every mall in Beijing has a Versace, and every year there's another mall," said Miao Wong, managing director of a record company, as she eyed the designer-clad crowd at a recent Burberry party in the capital. Two or three years ago she too shopped for high-end, western labels; these days she prefers local designers such as Vega Wang.
She may be rare among her peers, but officials also appear to think fashion is better when it keeps a lower profile. Beijing recently banned billboards promoting "hedonistic and high-end lifestyles", underlining concern about overt displays of wealth in an increasingly unequal society.
One day later a minister indicated plans to cut luxury taxes. The message to brands and customers alike: consumption is fine, just don't make it too conspicuous.
China's taste for high-end fashion and luxury brands reaches new heights
Vogue China editions the size of a doorstop, 960,000 millionaires and rising, and now the aspirational class are buying
Angelica Cheung, the Chanel-frocked editor of Vogue China, has a problem her counterparts would sell their designer wardrobes for: too much advertising to fit in the glossy.
"I have to sit down at a desk to flip through it," she says. "It is going to get very difficult to read. It's too heavy. Maybe it will have to be two magazines in future."
In the US, Vogue's chunky September issue is fashion's lodestar; so successful it spawned its own documentary. In China every month's edition is a glossy, advert-packed, doorstopper: testament to the explosion of the high-end fashion industry.
As the latest Hurun wealth report logs 960,000 millionaires in China, the expanding ranks of the super-rich are seeking ways to confirm their status and indulge a newfound taste for consumption.
High-end brands are happy to assist. The ubiquitous Louis Vuitton boutiques have been joined by Loewe and Balmain. Burberry plans to expand from 57 to 100 stores within five years. Hermès has even launched its own China-specific sub-brand, Shang Xia.
The management consultancy McKinsey predicts that, as middle-class consumers acquire the designer habit too, within four years China will become the world's largest luxury market, worth $27bn (£16bn), up from $10bn in 2009. .
Add in purchases overseas, by Chinese tourists avoiding the country's sky-high luxury taxes, and the figures are staggering. Chinese consumers will buy more than 44% of the world's luxury goods by 2020, forecasts CLSA Asia-Pacific, the brokerage and investment group.
That ratio is all the more remarkable given that high-end brands emerged only in the 1990s. Cheung says Vogue China requires more "education" pages than its sister titles, to make up for the missing years and unravel the western references. "In China [the 1960s] was the Cultural Revolution. You need to explain swinging London, Mary Quant, the Beatles and why these people made a difference. If you don't explain, they're just clothes."
Certainly, the fashion industry is putting down roots in popular culture. China has its own Project Runway – called Creative Sky, with Cheung as a judge. And it has its own take on The Devil Wears Prada, with the fashion romance Colour Me Love.
Even now fewer than 2% of the population buys top-end brands, says Zhu Mingxia of Beijing's University of International Business and Economics. "The next decade will be the golden era for luxury."
Beauty products and accessories account for a much larger slice of the market than in the west, and more of the customers are male; according to the American accessories marketer Coach Retail International, men account for 45% of China's $1.2bn luxury handbag market.
Prada shoulder bags and Gucci clutches are essential props for many businessmen. And if they are not carrying their own status symbol, young men may wield one on behalf of a girlfriend.
Buying a partner an expensive handbag establishes you as husband material; carrying it for her is also appreciated, so it is not uncommon to see burly young men gallantly toting pink or diamante-studded bags.
Many of these new consumers are executives and entrepreneurs, keen to show they have made it, or the offspring of wealthy families. Others, however, are the aspirational: "Secretaries who live on instant noodles for six months to pay for their LV handbag ... it's a way of saying, 'I have become part of this world,' " said Paul French of the retail consultancy Access Asia.
Cynics joke that "the three Cs – the corrupt, the criminal and the concubines" are among the heaviest spenders. A gold watch or expensive handbag not only show appreciation to a helpful official or acquiescent mistress; they are also tradable assets and less traceable than cash.
Brands see they must fight to retain an aura, justifying their price tags as their popularity increases.
Shops are springing up not only in Beijing and Shanghai, but also in unglamorous provincial cities such as Hefei and Shijiazhuang. With minimal rents (developers believe prestige brands attract other clients), there is little to stop their relentless multiplication, even when customers are thin on the ground.
"Every mall in Beijing has a Versace, and every year there's another mall," said Miao Wong, managing director of a record company, as she eyed the designer-clad crowd at a recent Burberry party in the capital. Two or three years ago she too shopped for high-end, western labels; these days she prefers local designers such as Vega Wang.
She may be rare among her peers, but officials also appear to think fashion is better when it keeps a lower profile. Beijing recently banned billboards promoting "hedonistic and high-end lifestyles", underlining concern about overt displays of wealth in an increasingly unequal society.
One day later a minister indicated plans to cut luxury taxes. The message to brands and customers alike: consumption is fine, just don't make it too conspicuous.
Foreign students flock to China for internship
An increasing number of foreign students are coming to China for internship to build up their credentials for future hunt for jobs. Thanks to his six-month internship in China, Luke Saunders from the United States, made it into the Boeing US-China Bilateral Trade Internship Program in Washington, D.C.
"The internship helped my resume a lot," the 25-year-old graduate who has a degree in International Studies and a minor in Chinese told China Daily. "The employer sees my experience in China and asks me to join the program." During internship, Saunders worked at a Shanghai trade company which helps foreign firms, especially African ones, do business in China, engaging in marketing, preparing proposals for potential customers, and attending social networking events.
"My communication skills got improved during this period of time and I have also learned a lot from the business field", Saunders said.
He took on the internship after finishing an intensive language class at Capital Normal University in Beijing. Before coming to China, he had taken Chinese lessons for several years in the US, as well as multiple courses on Chinese literature, culture, politics and business.
"My interest in China has always been strong and I would like to know more about China by working here", Saunders told China Daily.
Saunders is among an increasing number of foreign graduates who found internship through Uoutlook Education Company.
"The application for internship here is increasing recent years, as US economic outlook is gloomy and more American companies are looking to the Chinese market," said Fu Qiang, its program director.
Having a working experience in China is a very competitive advantage for western students to find a job in their home country."
Beijing-based Mei Hua Hong Lian, the Chinese branch of American educational company Go Abroad China Foundation, is also part of this business, among three to four such firms in the Chinese capital.
Its general manager, Feng Zhaozhao who studied in the United States, said his company wanted to open a passageway connecting Chinese companies and foreign graduates seeking Chinese internship.
"Hiring foreign interns is a good choice for most Chinese companies," Feng said, explaining that the cost is lower than hiring foreign staff and those foreigners can help improve the English-language skills of the Chinese employees. International Business Exchange, a human resource service company operating in coastal cities of Qingdao, Shandong Province, and Zhuhai, Guangdong Province recruits European and American interns, providing them job opportunities in China.
Found in 2007 by Frank Lenhardt from Germany, the company helps about 150 to 180 European and Americans each year to find internship in the Middle Kingdom, said Lenhardt.
His company has introduced more than 600 foreign graduates to some 200 companies in almost 25 industries since its founding, according to him.
Talking about the reason to operate in coastal cities rather than Beijing and Shanghai, he explained that foreign interns need to know more about China which can be best represented by coastal cities, not metropolis.
Lenhardt said he plans to open an office in Xiamen, Fujian Province next year.
While aiding foreign students’job hunting back in their home country, internship in China has helped some find jobs in China.
Rory McBrid from the United States landed on a job of American project manager at Shanghai Zhenhua Heavy Industries Company after working three months as an assistant of an Fudan University professor who runs a program helping Chinese students find universities in the US.
The 3-month experience helped McBrid, majored in international relations and economics better understand business development, which he could learn little from his classroom.
"My internship is a very constructive learning experience. It does not directly apply to my new job, but helps me to understand the Chinese business environment," said he.
Besides overseas graduates, more and more Chinese companies are finding benefits in foreign internship and are extending warms arms to them.
Shanghai LiKang Disinfectant Hi-tech Company, Ltd currently has two foreign interns. Huang Chunming, its marketing and strategies director wants more.
"I would like to see new foreign interns coming to my company as they are of low cost and have a more serious attitude toward work", Huang said.
Sun Jiafeng, partner of Shanghai Hongtai Law Office, said foreign interns worked even harder than their Chinese.
"Some of the foreign intern paid a lot for this internship experience, having to pay for their international air tickets and accommodation in China. They therefore treasure this opportunity and try to learn as many things as possible", Sun told China Daily.
However, some foreign interns may find themselves unfit for their planned internship due to cultural differences.
Yu Hao, director of Chinese Association for Science and Technology California Chapter at Los Angeles, said the Exchange Student Summer Internship program did not go well in recent years.
"Students’ expectation about their placement in China is different from what they actually do after they arrive China, some may not cooperate well as different cultures exist", Yu told China Daily.
For example, one US student finished her internship of teaching Chinese students English one month ahead of original schedule, Yu said.
"While the students’ parents said their kids learned nothing from her, her intention is to cultivate students’ interests in learning English."
An increasing number of foreign students are coming to China for internship to build up their credentials for future hunt for jobs. Thanks to his six-month internship in China, Luke Saunders from the United States, made it into the Boeing US-China Bilateral Trade Internship Program in Washington, D.C.
"The internship helped my resume a lot," the 25-year-old graduate who has a degree in International Studies and a minor in Chinese told China Daily. "The employer sees my experience in China and asks me to join the program." During internship, Saunders worked at a Shanghai trade company which helps foreign firms, especially African ones, do business in China, engaging in marketing, preparing proposals for potential customers, and attending social networking events.
"My communication skills got improved during this period of time and I have also learned a lot from the business field", Saunders said.
He took on the internship after finishing an intensive language class at Capital Normal University in Beijing. Before coming to China, he had taken Chinese lessons for several years in the US, as well as multiple courses on Chinese literature, culture, politics and business.
"My interest in China has always been strong and I would like to know more about China by working here", Saunders told China Daily.
Saunders is among an increasing number of foreign graduates who found internship through Uoutlook Education Company.
"The application for internship here is increasing recent years, as US economic outlook is gloomy and more American companies are looking to the Chinese market," said Fu Qiang, its program director.
Having a working experience in China is a very competitive advantage for western students to find a job in their home country."
Beijing-based Mei Hua Hong Lian, the Chinese branch of American educational company Go Abroad China Foundation, is also part of this business, among three to four such firms in the Chinese capital.
Its general manager, Feng Zhaozhao who studied in the United States, said his company wanted to open a passageway connecting Chinese companies and foreign graduates seeking Chinese internship.
"Hiring foreign interns is a good choice for most Chinese companies," Feng said, explaining that the cost is lower than hiring foreign staff and those foreigners can help improve the English-language skills of the Chinese employees. International Business Exchange, a human resource service company operating in coastal cities of Qingdao, Shandong Province, and Zhuhai, Guangdong Province recruits European and American interns, providing them job opportunities in China.
Found in 2007 by Frank Lenhardt from Germany, the company helps about 150 to 180 European and Americans each year to find internship in the Middle Kingdom, said Lenhardt.
His company has introduced more than 600 foreign graduates to some 200 companies in almost 25 industries since its founding, according to him.
Talking about the reason to operate in coastal cities rather than Beijing and Shanghai, he explained that foreign interns need to know more about China which can be best represented by coastal cities, not metropolis.
Lenhardt said he plans to open an office in Xiamen, Fujian Province next year.
While aiding foreign students’job hunting back in their home country, internship in China has helped some find jobs in China.
Rory McBrid from the United States landed on a job of American project manager at Shanghai Zhenhua Heavy Industries Company after working three months as an assistant of an Fudan University professor who runs a program helping Chinese students find universities in the US.
The 3-month experience helped McBrid, majored in international relations and economics better understand business development, which he could learn little from his classroom.
"My internship is a very constructive learning experience. It does not directly apply to my new job, but helps me to understand the Chinese business environment," said he.
Besides overseas graduates, more and more Chinese companies are finding benefits in foreign internship and are extending warms arms to them.
Shanghai LiKang Disinfectant Hi-tech Company, Ltd currently has two foreign interns. Huang Chunming, its marketing and strategies director wants more.
"I would like to see new foreign interns coming to my company as they are of low cost and have a more serious attitude toward work", Huang said.
Sun Jiafeng, partner of Shanghai Hongtai Law Office, said foreign interns worked even harder than their Chinese.
"Some of the foreign intern paid a lot for this internship experience, having to pay for their international air tickets and accommodation in China. They therefore treasure this opportunity and try to learn as many things as possible", Sun told China Daily.
However, some foreign interns may find themselves unfit for their planned internship due to cultural differences.
Yu Hao, director of Chinese Association for Science and Technology California Chapter at Los Angeles, said the Exchange Student Summer Internship program did not go well in recent years.
"Students’ expectation about their placement in China is different from what they actually do after they arrive China, some may not cooperate well as different cultures exist", Yu told China Daily.
For example, one US student finished her internship of teaching Chinese students English one month ahead of original schedule, Yu said.
"While the students’ parents said their kids learned nothing from her, her intention is to cultivate students’ interests in learning English."
Louis Vuitton's new Kunming flagship will be its largest in southwest China
Second-Tier Spotlight: Kunming Quietly Becoming A Luxury Brand Magnet
Jing Daily’s ongoing “Second-Tier Spotlight” series looks at some of the key trends shaping China’s provincial capitals, often referred to as the
country’s “second-tier” cities. Previously in the series, we’ve highlighted Xi’an’s surprisingly young luxury consumers, a “Goldfinger”-worthy publicity
stunt in Changsha, jade fever in Qingdao, and Shenyang’s love for second-hand shops. Today, we turn to Kunming, capital city of southwest China’s Yunnan
province, an area traditionally popular for its tourism and natural beauty.
Once-sleepy Kunming — long a stopping-over point for itinerant backpackers — has quietly become one of the most lucrative luxury markets in southwest China. In recent years, brands like Cartier, Max Mara and Burberry have set up shop in fast-growing Kunming, which has benefited from increasing cross-border trade
with neighboring Vietnam, Laos and Myanmar (Burma). Considering the city’s Gingko Center mall recorded a respectable 2 billion yuan (US$308 million) in
sales last year, and Kunming has become a destination for villa-buying Chinese celebrities, expansion into Yunnan’s capital is probably a smart move.
To get a temperature reading of a given Chinese city’s luxury market, a good indicator is always a Louis Vuitton flagship, and soon Kunming will be home to
the largest LV flagship in all of southwestern China. Since LVMH maintains strict requirements as to where it chooses to invest based, in no small part, on
a city’s spending power, a glittering Louis Vuitton flagship tends to be a dead giveaway that a given city has “made it,” at least in raw economic terms. While
Kunming’s per capita income remains far lower than wealthier coastal cities, with annual urban income in Kunming averaging 5,726 yuan (US$882) in 2010,
around half that of their counterparts in Beijing, demand clearly exists for high-end goods. Between 2009-2010, Kunming’s Gingko Center mall saw revenue
increase by 500 million yuan (US$77 million).
So who are these outliers? These consumers who can afford to drop thousands of dollars in a province where rural per capita GDP amounts to only around $400
a year? This week, Xinhua speaks to the general manager of Kunming’s Gingko Center mall to find out who the city’s luxury consumers are, what they’re buying, and why Louis Vuitton chose Kunming as the destination for its largest store in southwest China. Translation by Jing Daily team.
According a Gingko Center analyst, current hotspots in Kunming’s luxury consumer market are cosmetics, designer apparel, leather goods, watches, jewelry
and other personal items. As the analyst added, “Soon, luxury investment in Kunming will shift towards real estate, red wine, automobiles, contemporary art
and other areas.” Luxury watches are representative of Kunming’s luxury market. At Gingko Center, all of the world’s top luxury watch brands are sold, with some
models costing over one million yuan.
Who are Kunming’s luxury consumers? As Mr. Wei, manager of Gingko Center, explained, currently Kunming’s luxury consumers are mostly split between two
types. One type is business owners and higher-level managers; the other is high-income, fashion-savvy white collar workers and some freelancers. Split up
by age, most luxury consumers in Kunming are either between the ages of 28-35 or over the age of 40, and they’re getting younger.
As for the reason Louis Vuitton chose Kunming to set up a lavish flagship in southwest China, manager Wei said that Kunming is a stylish city, and that
several years of market development has fostered a growing number of local consumers who care about quality and cultural heritage. For their part, luxury
brands now recognize the spending power of wealthy Kunming residents.
As we’ve seen in other second-tier cities, where wealthy consumers have already bought their luxury watches and stocked up their wardrobes with high-end
brands, watch for Kunming to become a hot market for wine, jade and art collecting. As Xinhua points out, wine is likely to become the first big new investment area in Kunming, as an ever-growing number of wine stores look to rocure popular brands like Chateau Lafite for their clientele. As one wine store owner recently said, a bottle of Lafite now retails for around 20,000 yuan (US$3,080) in Kunming, and “it’s not uncommon for people to drink more than 10,000 yuan worth of red wine at dinner.”
Where to Buy in China
From the roadside stall to the large-scale modern shopping mall, from the common store to a popular supermarket, China has numerous perfect places to shop that can satisfy all shoppers' desires.
Department Stores
Shopping in China is easy and convenient, as various department stores are commonly found, especially in the high street. The level and scale of these shops vary, depending on the city and the area.Various items for daily use, which are much cheaper, are often offered in the smaller and more ordinary roadside shops or boutiques. Whenever you need something like everyday necessities, snacks or even clothes, you can immediately go there for your favorite things. Don't forget to try bargaining: you may get a special price.Shopping Mall
In the busy streets of the downtown area, usually in the shopping center of a city, there are large-scale and high-class emporiums, in which not only the domestic brands but also many well-known international brands are all sold. Everyday items, cosmetics, household appliances, bedding, clothes, and everything up-market that you wish for can be found easily to satisfy your every need. Bargaining is seldom acceptable, but there are often special promotions or end-of-season sales with an attractive price.
Business Street
Most large and distinctive Chinese cities, like Beijing, Shanghai, Xian, Hangzhou, Guangzhou, feature special business streets, where local products are on sale. Merchandise of the same kind is usually sold in the same street, which makes shopping easy and saves you time. The Hongqiao Market in Beijing, also known as the 'Pearl Market', especially attracts female overseas tourists and mainly sells pearl jewellery, while Silver Street, where many boutiques are located, always tempt the youth by its modern fashion. You may also find various characteristic streets selling the four treasured tools of studying (writing brush, ink, inkstone and paper), painting and calligraphy, handicraft, silk and embroidery, jade articles, crockery, furnishings, musical instruments, boutiques, even flowers, as well as grocery streets or food streets. Some of the business streets are pedestrian malls, where tourists can relax and shop at their leisure.
Supermarket
The western-style mode of sales operation, the supermarket, is becoming more and more popular in China for its convenience, competitive price and products, close to where people live. Everything you want for daily use can be found easily here. Many world-famous supermarket chains like Wal-Mart, Carrefour and Metro entered the Chinese market by opening scores of branches in most of the larger Chinese cities. Domestic brands like the Home World, Trust-Mart and Renrenle are also popular among Chinese people. You have to pay what the price tag shows since bargaining is unacceptable. Make sure your bags are stored in the Locker Service before you start your shopping.
Bargain Market
If you want to buy something cheap and nice at a much lower price, the bargain market is your best choice. Almost all the Chinese cities have such places for you to fossick through things, marveling at the price. Generally the goods here are not as superior as in the shops or malls, but this does not rule out those which are still of high quality. Clothes, shoes, bags, commodities, and food; in the bargain market you will find all your desires. As some of them are secondhand or old factory stock, carefully check the goods you purchase so as to avoid buying inferior or defective products. Rememeber to bargain with the seller to get the lowest possible price; you may get a most favorable discount.
Factory Shop
Factory shops also sell the products they make in their own showrooms, especially those who produce a local specialty, like jade articles, porcelain, ceramics, silk, arts and crafts. If you join a tourist group on your China trip, most probably the tour guide will take you to such factories as one of the attractions. Since the place is where the products are made, the merchandise is certainly genuine and you may get a very preferential price at a good discount.Hotel Store
As one of the supporting facilities for their guests, a store is often located in most star-rated hotels. Actually goods are somewhat more expensive than those being sold in other shops outside the hotel, but the quality is good. Food, articles for everyday use and especially local souvenirs are commonly on sale here. Shopping at the hotel store is very convenient and saves you much time.
Shopping Online
As the new-fashioned way to shop, online-shopping is now gradually being accepted. Since it is not time-consuming, but easy and convenient, some young people like to shop online. Shoppers can buy with ease simply in front of their own internet connected computers. The price is also competitive compared with that in the shops. The well-known Chinese online-shopping websites like Sohu, Sina, Netease, Ebay, Joyo and Dangdang offer you a normal and legal online trading platform. Payment security is the shoppers' worst worry, so online shopping is not so highly recommended. If you insist on buying online, do verify the selllers' authenticity and prestige and be cautious of the whole process.Please refer to our China Guide for shopping information in each Chinese city where you can get more detail.
From the roadside stall to the large-scale modern shopping mall, from the common store to a popular supermarket, China has numerous perfect places to shop that can satisfy all shoppers' desires.
Department Stores
Shopping in China is easy and convenient, as various department stores are commonly found, especially in the high street. The level and scale of these shops vary, depending on the city and the area.Various items for daily use, which are much cheaper, are often offered in the smaller and more ordinary roadside shops or boutiques. Whenever you need something like everyday necessities, snacks or even clothes, you can immediately go there for your favorite things. Don't forget to try bargaining: you may get a special price.Shopping Mall
In the busy streets of the downtown area, usually in the shopping center of a city, there are large-scale and high-class emporiums, in which not only the domestic brands but also many well-known international brands are all sold. Everyday items, cosmetics, household appliances, bedding, clothes, and everything up-market that you wish for can be found easily to satisfy your every need. Bargaining is seldom acceptable, but there are often special promotions or end-of-season sales with an attractive price.
Business Street
Most large and distinctive Chinese cities, like Beijing, Shanghai, Xian, Hangzhou, Guangzhou, feature special business streets, where local products are on sale. Merchandise of the same kind is usually sold in the same street, which makes shopping easy and saves you time. The Hongqiao Market in Beijing, also known as the 'Pearl Market', especially attracts female overseas tourists and mainly sells pearl jewellery, while Silver Street, where many boutiques are located, always tempt the youth by its modern fashion. You may also find various characteristic streets selling the four treasured tools of studying (writing brush, ink, inkstone and paper), painting and calligraphy, handicraft, silk and embroidery, jade articles, crockery, furnishings, musical instruments, boutiques, even flowers, as well as grocery streets or food streets. Some of the business streets are pedestrian malls, where tourists can relax and shop at their leisure.
Supermarket
The western-style mode of sales operation, the supermarket, is becoming more and more popular in China for its convenience, competitive price and products, close to where people live. Everything you want for daily use can be found easily here. Many world-famous supermarket chains like Wal-Mart, Carrefour and Metro entered the Chinese market by opening scores of branches in most of the larger Chinese cities. Domestic brands like the Home World, Trust-Mart and Renrenle are also popular among Chinese people. You have to pay what the price tag shows since bargaining is unacceptable. Make sure your bags are stored in the Locker Service before you start your shopping.
Bargain Market
If you want to buy something cheap and nice at a much lower price, the bargain market is your best choice. Almost all the Chinese cities have such places for you to fossick through things, marveling at the price. Generally the goods here are not as superior as in the shops or malls, but this does not rule out those which are still of high quality. Clothes, shoes, bags, commodities, and food; in the bargain market you will find all your desires. As some of them are secondhand or old factory stock, carefully check the goods you purchase so as to avoid buying inferior or defective products. Rememeber to bargain with the seller to get the lowest possible price; you may get a most favorable discount.
Factory Shop
Factory shops also sell the products they make in their own showrooms, especially those who produce a local specialty, like jade articles, porcelain, ceramics, silk, arts and crafts. If you join a tourist group on your China trip, most probably the tour guide will take you to such factories as one of the attractions. Since the place is where the products are made, the merchandise is certainly genuine and you may get a very preferential price at a good discount.Hotel Store
As one of the supporting facilities for their guests, a store is often located in most star-rated hotels. Actually goods are somewhat more expensive than those being sold in other shops outside the hotel, but the quality is good. Food, articles for everyday use and especially local souvenirs are commonly on sale here. Shopping at the hotel store is very convenient and saves you much time.
Shopping Online
As the new-fashioned way to shop, online-shopping is now gradually being accepted. Since it is not time-consuming, but easy and convenient, some young people like to shop online. Shoppers can buy with ease simply in front of their own internet connected computers. The price is also competitive compared with that in the shops. The well-known Chinese online-shopping websites like Sohu, Sina, Netease, Ebay, Joyo and Dangdang offer you a normal and legal online trading platform. Payment security is the shoppers' worst worry, so online shopping is not so highly recommended. If you insist on buying online, do verify the selllers' authenticity and prestige and be cautious of the whole process.Please refer to our China Guide for shopping information in each Chinese city where you can get more detail.
The Stock I Want to Buy in China
The Stock I Want to Buy in China By Tim Hanson
The Motley Fool Global Gain team is leaving for China in search of promising investment opportunities in that exciting emerging market. Ahead of the trip, we wanted to know two things:
1. What are they looking for in a promising Chinese stock?
2. What company are they most excited to meet with during the trip?
Here's what they had to say ...
Rich Greifner: I think we're all looking for a company that's poised to ride the tailwind of a surging Chinese economy -- but that doesn't mean we need to limit our search to only Chinese companies. I'm looking for a company that will not only benefit from a stronger Chinese consumer, but also has sound financials, shareholder-friendly management, and perhaps even a steady dividend -- the best of both worlds.
One obvious candidate is YUM! Brands . The first quick-service restaurant chain to enter China, Yum already has over 3,000 restaurants in the Middle Kingdom, on its way to a target of 20,000 units. I'm eagerly anticipating a visit to Yum's East Dawning restaurant -- which serves Chinese fast food instead of pizza and fried chicken -- when we visit Beijing.
Nate Weisshaar: As I head to China, I'm really looking for a company that is going to help me time travel. Just to clarify, I want to find a company that gives me the opportunity, from an investing standpoint, to turn back the clock. The great thing about developing markets is they give us the chance to find the Chinese version of AT&T or Wal-Mart before they get too big. On this trip, I'd love to find the next great Chinese consumer brand or retailer.
The name that jumps to the top of my list is China Nepstar Chain Drugstore , which could ride the convergence of China's demographics, the implementation of universal health care, and rising incomes to become the Chinese CVS or Walgreen. I have some questions about their expansion plans that I hope management can clear up for me, but I think Nepstar has the chance to be really big down the road.
However, if we do stumble across a company that has perfected time travel, the preceding two paragraphs will never have happened.
Tim Hanson: I'm not sure there's any topping Nate's answer, and I'm looking for very much the same opportunities. We were told last year that China's in just the sixth inning of its growth story, but I'm not sure the country is even that far along. Urban disposable income has risen 12% annually over the past decade and continues to grow -- creating an ever-larger consumer class that should drive growth for another decade or more.
To that end, the meeting I'm most excited for this year is the tour we're planning of Melco Crown Entertainment's new City of Dreams casino in Macau. Macau's revenue growth has been massive this year and with a concept tailored exclusively to Asian tastes, Melco should be able to pick up market share as awareness of this new facility builds.
Nathan Parmalee: No doubt about it, I'm hoping to find a promising consumer focused company on this trip. If it looks like we're all keying on a similar theme, it's probably because we are. China's economy has been driven by government spending on infrastructure for the last decade and to balance out its economy and put it on a healthier long-term growth track, China needs to boost consumption. Making the transition to more of a consumer economy and greater internal consumption could take years, but that is also what makes it an attractive growth opportunity.
We're meeting with a number of consumer-focused companies, and Tim and Nate have already hit on two I'm very excited to meet with. But there is one other I'm looking forward to. Natural Beauty Bio-technology took the unusual step of removing franchisees from its roster last year, which knocked its sales and earnings off their previously stable growth trajectory. The willingness to sacrifice the short term for the long term is something I always like to see, and I'm looking forward to hearing more about Natural Beauty's plans for the future.
The Stock I Want to Buy in China By Tim Hanson
The Motley Fool Global Gain team is leaving for China in search of promising investment opportunities in that exciting emerging market. Ahead of the trip, we wanted to know two things:
1. What are they looking for in a promising Chinese stock?
2. What company are they most excited to meet with during the trip?
Here's what they had to say ...
Rich Greifner: I think we're all looking for a company that's poised to ride the tailwind of a surging Chinese economy -- but that doesn't mean we need to limit our search to only Chinese companies. I'm looking for a company that will not only benefit from a stronger Chinese consumer, but also has sound financials, shareholder-friendly management, and perhaps even a steady dividend -- the best of both worlds.
One obvious candidate is YUM! Brands . The first quick-service restaurant chain to enter China, Yum already has over 3,000 restaurants in the Middle Kingdom, on its way to a target of 20,000 units. I'm eagerly anticipating a visit to Yum's East Dawning restaurant -- which serves Chinese fast food instead of pizza and fried chicken -- when we visit Beijing.
Nate Weisshaar: As I head to China, I'm really looking for a company that is going to help me time travel. Just to clarify, I want to find a company that gives me the opportunity, from an investing standpoint, to turn back the clock. The great thing about developing markets is they give us the chance to find the Chinese version of AT&T or Wal-Mart before they get too big. On this trip, I'd love to find the next great Chinese consumer brand or retailer.
The name that jumps to the top of my list is China Nepstar Chain Drugstore , which could ride the convergence of China's demographics, the implementation of universal health care, and rising incomes to become the Chinese CVS or Walgreen. I have some questions about their expansion plans that I hope management can clear up for me, but I think Nepstar has the chance to be really big down the road.
However, if we do stumble across a company that has perfected time travel, the preceding two paragraphs will never have happened.
Tim Hanson: I'm not sure there's any topping Nate's answer, and I'm looking for very much the same opportunities. We were told last year that China's in just the sixth inning of its growth story, but I'm not sure the country is even that far along. Urban disposable income has risen 12% annually over the past decade and continues to grow -- creating an ever-larger consumer class that should drive growth for another decade or more.
To that end, the meeting I'm most excited for this year is the tour we're planning of Melco Crown Entertainment's new City of Dreams casino in Macau. Macau's revenue growth has been massive this year and with a concept tailored exclusively to Asian tastes, Melco should be able to pick up market share as awareness of this new facility builds.
Nathan Parmalee: No doubt about it, I'm hoping to find a promising consumer focused company on this trip. If it looks like we're all keying on a similar theme, it's probably because we are. China's economy has been driven by government spending on infrastructure for the last decade and to balance out its economy and put it on a healthier long-term growth track, China needs to boost consumption. Making the transition to more of a consumer economy and greater internal consumption could take years, but that is also what makes it an attractive growth opportunity.
We're meeting with a number of consumer-focused companies, and Tim and Nate have already hit on two I'm very excited to meet with. But there is one other I'm looking forward to. Natural Beauty Bio-technology took the unusual step of removing franchisees from its roster last year, which knocked its sales and earnings off their previously stable growth trajectory. The willingness to sacrifice the short term for the long term is something I always like to see, and I'm looking forward to hearing more about Natural Beauty's plans for the future.
How to buy a camera in China
BY CHARLIE CUSTER
China can be a wild and wacky place, but there's no way to prove your crazy stories to anyone after you get home unless you get them on film. So what do you do if you didn't bring a camera (or, like me, you did bring a camera but it broke as soon as the plane landed)? You buy a new one.
But, and this is a big but, do not just buy one at the nearest electronics mall. You can find these giant malls all over China, and there will be dozens of shops there peddling everything from laptops to cameras of all kinds. Avoid them like the plague. These shops can be notoriously difficult to deal with if something goes wrong with your camera (read this!). They also tend to be staffed with high-pressure salesmen, and if you're not aware of the market prices, many will be more than happy to rob you blind. If you're buying something small and cheap, you may be willing to take the risk, but if you're buying an expensive DSLR (all the rage these days), buy it somewhere you can trust!
So do your research. Find out if there's a respectable camera shop in the city you're in. If you're in Beijing or have internet access anywhere else in China, we recommend Ray! Cameras, which has two brick-and-mortar shops and and an extensive website that services the rest of the country. The staff at Ray! are friendly, knowledgeable, and will help you with whatever you need, although they don't speak English, so bring a Chinese friend along if you need to. They carry most popular models and have a lot of lenses in stock. They also offer free photography classes to customers, so if you speak Chinese and you're looking to learn how to use that new camera, you can't go wrong!
If you can't go with Ray! or you're not in Beijing and don't want to buy online, ask around or search the web and find out where the best shops are in your area.
Once you get there, how can you tell the salespeople what you want? The Chinese-challenged are advised to come with pictures and model numbers -- in fact, even if your Chinese is great, that's a good idea -- but here are some words that are going to come in handy when talking about cameras:
Camera - 照相机 zhàoxiàngjī
Lens - 镜头 jìngtóu
DSLR (with kit lens) - 单反机身 dānfǎn jīshēn
DSLR (body only) - 单反套机 dānfǎn tàojī
Nikon - 尼康 Níkāng
Canon - 佳能 Jiānéng
Lens filter - 滤镜 lǜjìng
Camera bag - 摄影包 shèyǐng bāo
Tripod - 脚架 jiǎojià
As far as prices are concerned, if you want to double-check the offer you get, search for the model you want on Taobao and Amazon.cn to be sure you're paying a fair market price. When you're ready to pull the trigger, be sure you ask them to 发票 (fāpiào, give an official receipt that entitles you to service) and be sure you know their 保修 (bǎoxiū, service and repair/warranty) policy. Getting the official 发票 may take them a little time, but Ray! was happy to give us the camera in the meantime and then deliver the receipt to our office a week or so later via a delivery company.
If you bought a digital camera, you might want to pick up some memory (SD or CF cards for most cameras) from your trusted shop as well. SD and CF cards are easily counterfeited, so while you can buy them at any electronics market, there's no way to be sure you're buying the real thing and not a cheap fake that's going to break and corrupt your beautiful photos.
Once you've got your camera and memory, you can be a bit less selective in terms of some of your accessories. Ray! carries a number of bags and tripods, but if you're in Beijing, check out the Photographer's Equipment Market in Wukesong (北京五棵松摄影器材城), a mind-numbing labyrinth of shops that sell cameras, bags, tripods, lights, flashes, photographers' vests, and just about everything else you could ever need (if you're planning to become a professional wedding photographer, you can even head up to the second floor to buy props!).
Be sure to look around and ask multiple shops for prices. If you take your time, you can find accessories here for much less than they would cost abroad, and sometimes much less than they cost in the last shop you asked! Haggling is part of the game, so be ready, but don't expect to cut the asking price in half. If they can't give you a discount, some vendors might be able to offer you something free along with your purchase.
Follow this simple advice and you can have a painless, even fun, camera buying experience in China! Now get out there and get shooting! And remember to send your best photographs to us; we'll pay you pretty well if we end up printing one in the magazine!
BY CHARLIE CUSTER
China can be a wild and wacky place, but there's no way to prove your crazy stories to anyone after you get home unless you get them on film. So what do you do if you didn't bring a camera (or, like me, you did bring a camera but it broke as soon as the plane landed)? You buy a new one.
But, and this is a big but, do not just buy one at the nearest electronics mall. You can find these giant malls all over China, and there will be dozens of shops there peddling everything from laptops to cameras of all kinds. Avoid them like the plague. These shops can be notoriously difficult to deal with if something goes wrong with your camera (read this!). They also tend to be staffed with high-pressure salesmen, and if you're not aware of the market prices, many will be more than happy to rob you blind. If you're buying something small and cheap, you may be willing to take the risk, but if you're buying an expensive DSLR (all the rage these days), buy it somewhere you can trust!
So do your research. Find out if there's a respectable camera shop in the city you're in. If you're in Beijing or have internet access anywhere else in China, we recommend Ray! Cameras, which has two brick-and-mortar shops and and an extensive website that services the rest of the country. The staff at Ray! are friendly, knowledgeable, and will help you with whatever you need, although they don't speak English, so bring a Chinese friend along if you need to. They carry most popular models and have a lot of lenses in stock. They also offer free photography classes to customers, so if you speak Chinese and you're looking to learn how to use that new camera, you can't go wrong!
If you can't go with Ray! or you're not in Beijing and don't want to buy online, ask around or search the web and find out where the best shops are in your area.
Once you get there, how can you tell the salespeople what you want? The Chinese-challenged are advised to come with pictures and model numbers -- in fact, even if your Chinese is great, that's a good idea -- but here are some words that are going to come in handy when talking about cameras:
Camera - 照相机 zhàoxiàngjī
Lens - 镜头 jìngtóu
DSLR (with kit lens) - 单反机身 dānfǎn jīshēn
DSLR (body only) - 单反套机 dānfǎn tàojī
Nikon - 尼康 Níkāng
Canon - 佳能 Jiānéng
Lens filter - 滤镜 lǜjìng
Camera bag - 摄影包 shèyǐng bāo
Tripod - 脚架 jiǎojià
As far as prices are concerned, if you want to double-check the offer you get, search for the model you want on Taobao and Amazon.cn to be sure you're paying a fair market price. When you're ready to pull the trigger, be sure you ask them to 发票 (fāpiào, give an official receipt that entitles you to service) and be sure you know their 保修 (bǎoxiū, service and repair/warranty) policy. Getting the official 发票 may take them a little time, but Ray! was happy to give us the camera in the meantime and then deliver the receipt to our office a week or so later via a delivery company.
If you bought a digital camera, you might want to pick up some memory (SD or CF cards for most cameras) from your trusted shop as well. SD and CF cards are easily counterfeited, so while you can buy them at any electronics market, there's no way to be sure you're buying the real thing and not a cheap fake that's going to break and corrupt your beautiful photos.
Once you've got your camera and memory, you can be a bit less selective in terms of some of your accessories. Ray! carries a number of bags and tripods, but if you're in Beijing, check out the Photographer's Equipment Market in Wukesong (北京五棵松摄影器材城), a mind-numbing labyrinth of shops that sell cameras, bags, tripods, lights, flashes, photographers' vests, and just about everything else you could ever need (if you're planning to become a professional wedding photographer, you can even head up to the second floor to buy props!).
Be sure to look around and ask multiple shops for prices. If you take your time, you can find accessories here for much less than they would cost abroad, and sometimes much less than they cost in the last shop you asked! Haggling is part of the game, so be ready, but don't expect to cut the asking price in half. If they can't give you a discount, some vendors might be able to offer you something free along with your purchase.
Follow this simple advice and you can have a painless, even fun, camera buying experience in China! Now get out there and get shooting! And remember to send your best photographs to us; we'll pay you pretty well if we end up printing one in the magazine!
“Avoid misunderstandings, schedule carefully”
Member Story: Thijs Ottenhoff of Happy Marketing B.V.
Thijs Ottenhoff, founder of Happy Marketing B.V., has over 17 years of experience in dealing with Chinese manufacturers. His company has the Disney license Disney-branded sunglasses, hairbrushes, toiletbags and other accessories. Thijs often visits the Chinese production companies he buys from and is the first in a series of western entrepreneurs to share his Inside Story with Club China members.
How did you start your business in China? "I started in 1992 in Taiwan and Hong Kong. These regions were only just saying goodbye to mass production so the attention quickly shifted to China. My first steps were in the vicinity of Shenzhen and Guangzhou in Guangdong Province, actually still fairly close to Hong Kong. Although I must say that my first encounter with a Chinese factory was quite a shock. The production plant was located in very dirty surroundings, the plant itself was even dirtier, if possible. From other entrepreneurs, who had been doing business in China for a longer, I've heard I was still only faced with the most civilized parts of the Republic.”
How did you learn to manage relationships with agents and producers? "I still learn every day, sometimes the hard way. I’m a born optimist though, despite my experience of 17 years working with manufacturers in China. I’m very aware that certain intentions to create a product are not always fully understood by manufacturers. Misunderstandings are born easily. I have to constantly push myself to extreme rigor in the formulation of products, production, product testing and packaging. The pressure on suppliers must be high, they must literally feel that they are being watched. That they have to work according to protocol. "
What are your key learnings in terms of doing business in China? "That, if you are doing business in China, you cannot relax for a moment. And that you cannot have too ambitious a target where deadlines are concerned. Things always take longer than you imagine. I would recommend anyone to be extra careful when it comes to scheduling. The often-mentioned prejudice that Chinese do not like saying ‘no’ often proves correct. As a businessperson, you tend to think that they will do exactly what you want. In practice they may very well still follow their own agenda. "
What is the biggest misconception about doing business in China? "I often hear the comment that you can easily be deceived by Chinese business partners. I don’t believe this is a realistic observation. Chinese aren’t out to cheat you. They will always try to get the best deal within certain parameters and who can blame them? So it’s good to know the parameters, to make sure you know what you want and to have realistic objectives. Then it’s wise to stay on top of things and check regularly whether everything is going according to the agreed schedules."
Any advice on how to treat a Chinese business partner? "Have patience, be kind and show sincere interest in your business partner. That’s the way to go. Impatience and hysteria are seen as absolute weaknesses and are not recommended. "
What is your best anecdote from your business experience China? "The craziest thing happened in 1994. I’d found a very suitable plant for producing Mickey Mouse icons that are attached to certain accessories. The icons this factory produced were beautifully shaped and very well finished. Each figure was hand painted. When I announced that I wanted to visit the factory, one of the managers came up with a special gesture to thank me for my effort to travel all the way to the factory. She really wanted to show some initiative and thus to make a good impression. When I was led through the factory, she showed at the department where the Mickey Mouse icons were painted. With great pride she showed me that she had found seven ways to paint Mickey with a totally different face. Not one of the icons had any resemblance to the original. Walt Disney would probably have been horrified with this attempt to please me. It has taken me an hour to explain that I really just wanted to use the original Mickey Mouse look. And she really did not understand. Never have I found so much love for Mickey ever since!"
Sara Says
Sara Naumann has travelled throughout mainland China extensively over the past decade. She currently resides in Shanghai and is an excellent source of knowledge for our Club members
Don’t over-pack, you’ll want to save room for treasure!
What to buy in China
It’s easy to come back from a trip to China laden with cheap knock-off handbags, pirated DVDs and faux-silk pajamas. One trip to any of the big tourist markets in any city in China and all of this can be yours (along with a handy set of terracotta warrior replicas). But don’t fall into this tourist trap – know what to buy and where there is good value. Bring real treasure back from China.
Pearls Freshwater pearls are one of the best value items to purchase on a trip to China. Pearls are farmed in many locations in southern China especially in Suzhou, near Shanghai. Don’t be fooled in thinking that only seawater pearls are worth buying. You can find perfectly round, luminous, real freshwater pearls for a fraction of the price you’d pay at home.
Real Silk Don’t be tempted by those shiny Chinese-print “silk” pajamas that are on sale at the tourist markets. Those will be 100% polyester and won’t keep their shape, even after a single wash. Get yourself to a silk market where they will not only show you how silk is made – right down to the unweaving of the silk worms’cocoons – but you can order made-to-measure garments. The quality will be very good and you’ll immediately notice the difference between the tourist market stuff and high-quality silk fabrics.
Tea Another wonderful item to shop for is tea. Again, don’t be pulled in at the tourist markets where you can buy low quality tea for high prices. If you can, find out where there’s a good tea wholesale market or local tea shop. Tea sellers take pride in their wares and you can sit for as long as you like sampling different types of teas. You will probably come away appreciating that there is much more to Chinese tea than jasmine!
Don’t forget to bargain! Whatever you end up buying, don’t forget to negotiate. You might be completely new to haggling and it will take you a while to get the hang of it. But most visitors I’ve seen leave China having become accomplished bargainers.
Create a personal memory of China
There’s More to China Than ´the Big Five´
So many vacations in China encompass the same “Big Five” sights. But unlike a safari in Africa where you’re hoping for a glimpse of endangered species, China’s sights are not trying to hide from you, and there’s so much more that could be on the list!
The Big Five I call them “The Big Five” because the typical tour whisks people through these five sights in ten days or so: the Great Wall, Beijing (e.g. the Forbidden City), the Terracotta Warriors in Xi’an, the Yangtze River and Shanghai. At the end of this adventure you’ve seen some incredible sights in China but you’ve probably trod a well-worn tourist path that feels just like that.
More Off the Beaten Path You’re not going to discover some hidden tourist gem in China. With a growing, traveling middle class derived from a population of over a billion, believe me – someone’s been there before you. But still there is plenty to see that isn’t on the Western tourist map.
What’s Your Cup of Tea? Of course you want to see some famous sights, but when planning a trip to China, ask yourself what would interest you? Are you a martial arts enthusiast? Go to the birthplace of Kung Fu at Shaolin Temple and see the thousands of students practicing in unison on an early morning in the fields surrounding the temple. Are you interested in tea? Take a detour just a day’s journey outside Shanghai to the origin of the clay teapot in China at Yixing. Fascinated with ceramics? Go to the birthplace of ancient ceramic art in Jingdezhen and see where the dishes were made for the ruling emperors of China.
Choose a destination that has meaning to you and you’ll end up with a personal memory of China that you wouldn’t necessarily get from following the typical tourist route.
A beach vacation to China? Who knew...
Postcard from Sanya, Hainan Island
A holiday in China conjures a lot of images – vistas of the Great Wall, Giant Pandas munching on bamboo, skyscrapers in Shanghai – but did you know China also boasts some pristine beaches?
Transformation Hainan sits off China’s coast in the South China Sea. Of its two major cities Sanya is the main gateway to beautiful beaches and resorts. This once sleepy southern city has undergone a transformation in the six years that I've visited it with my family and is now teeming with five-star resorts, spas and amazing restaurants. And with its tropical setting Hainan Island offers some of the freshest produce China has to offer, and the local seafood is to die for.
Family Adventures Living in downtown Shanghai with two kids, outdoor activities can be limited. But every time we visit Sanya, without fail, after a day or two of listening to the ocean and drinking fresh mango smoothies in Sanya, we can’t help but relax.
A place to unwind Hopping down to Sanya ona business trip is great because it’s so easy to reach. Once you see the coconut palms that line the freeways on your way to the beach, any stress you might have picked up along the way will be wiped away by the fresh tropical air and mild ocean breeze. Most resorts have fantastic spas and all have pools that are well-away from the kids’ areas so you won’t have to put up with my children armed with their water cannons.
Survey on US investors in Chinese equities
The mainstream media has recently been full of disaster stories about Chinese stocks, accompanied by a litany of complaints by US investors and lawyers assembling class-action suits. Certainly some US retail investors who made big bets on sketchy Chinese firms have taken substantial hits. But how representative are they?
China Economic Review collaborated with Ipsos Marketing, a leading global research firm, to design and implement a survey that would take a long-overdue snapshot of US residents who play Chinese stocks. Many of the results confirmed conventional wisdom. Others were quite startling.
Demographics
The respondent pool was composed of 1,000 US residents who actively trade stocks on domestic exchanges. Of that pool, 22% had previously bought shares in a US-listed Chinese firm, a surprisingly high number. Within that 22%, two-thirds had bought or sold shares in a Chinese company in the last 12 months.
China traders are not typical American investors. Testosterone appeared to play a role in driving them to invest in Chinese shares: 53% of the total sample was male, but 68% of China traders were men. They were also younger, better educated and wealthier than their counterparts who steered clear of China stocks (henceforth referred to as “non-traders”). Those earning over US$80,000 a year made up 31% of the general pool, but 46% of the China traders.
Investing behavior
China traders tended to play stocks in sectors they were familiar with: electronics and technology, telecom, internet firms, consumer goods, materials and energy. However, buy and sell sentiment varied between sectors. The largest net buy sentiment was found in energy, telecommunications and consumer goods stocks, in that order; curiously enough, sentiment toward Chinese dot-coms was neutral, with as many investors buying as selling. This suggests that the investors driving high valuations for Chinese dot-com stocks may be institutional investors, especially hedge funds – and/or high-velocity day traders.
The motives for buying Chinese stocks were unsurprising: 61% of buyers cited the future growth prospects of the Chinese economy as their justification for executing a buy order. Those that sold, on the other hand, tended to justify it on the basis of the individual stock’s recent performance (56%), or with wider problems with the perceived valuation of all Chinese stocks in the US (30%). As a rule, US investors appeared to buy on macro and sell on micro.
Whatever their reasons, they managed for the most part to sell at a net profit. The average profit of the China traders was US$2,433 over the last 12 months, and 96.5% of them said they made a net gain on their China investments.
Overall attitudes
The strong portfolio performance of US retail investors is no doubt in part thanks to their resolute rejection of shares in Chinese companies that listed through reverse mergers. Only 16% of the respondents indicated they would consider investing in such stocks – although it must be noted that reverse-merger companies do not advertise themselves as such, and it is easy to buy shares in a Chinese firm without understanding its provenance.
Unsurprisingly, China traders were far more bullish on China than those who remained on the sidelines. Of those who play China shares, 65% rate Chinese stocks a buy or a strong buy – this is not a short-selling bunch – compared to 34% of those who have yet to invest in the China story. But sentiment toward Chinese equities has improved across the board. Half the sample has not changed their perception of Chinese stocks over the past 12 months, but 29% of both China traders and non-traders say they are more optimistic or much more optimistic about mainland companies.
A final curiosity is the finding that, despite the general reputation of Chinese companies for opacity, misrepresentation and general uncommunicativeness with their shareholders, China traders seem satisfied by interactions with the investor relations departments of listed Chinese companies. Over half of them said that Chinese firms’ interaction with investors is comparable to that of US-based companies, and a surprising 35% said Chinese companies’ investor relations were better or much better than their US counterparts.
No dummies
In conclusion, American retail investors appear to be not only bullish on China, but intelligently and profitably so. Despite news reports depicting the individual US investor as a hapless victim or a reckless gambler, he appears to be doing his homework.
China Economic Review collaborated with Ipsos Marketing, a leading global research firm, to design and implement a survey that would take a long-overdue snapshot of US residents who play Chinese stocks. Many of the results confirmed conventional wisdom. Others were quite startling.
Demographics
The respondent pool was composed of 1,000 US residents who actively trade stocks on domestic exchanges. Of that pool, 22% had previously bought shares in a US-listed Chinese firm, a surprisingly high number. Within that 22%, two-thirds had bought or sold shares in a Chinese company in the last 12 months.
China traders are not typical American investors. Testosterone appeared to play a role in driving them to invest in Chinese shares: 53% of the total sample was male, but 68% of China traders were men. They were also younger, better educated and wealthier than their counterparts who steered clear of China stocks (henceforth referred to as “non-traders”). Those earning over US$80,000 a year made up 31% of the general pool, but 46% of the China traders.
Investing behavior
China traders tended to play stocks in sectors they were familiar with: electronics and technology, telecom, internet firms, consumer goods, materials and energy. However, buy and sell sentiment varied between sectors. The largest net buy sentiment was found in energy, telecommunications and consumer goods stocks, in that order; curiously enough, sentiment toward Chinese dot-coms was neutral, with as many investors buying as selling. This suggests that the investors driving high valuations for Chinese dot-com stocks may be institutional investors, especially hedge funds – and/or high-velocity day traders.
The motives for buying Chinese stocks were unsurprising: 61% of buyers cited the future growth prospects of the Chinese economy as their justification for executing a buy order. Those that sold, on the other hand, tended to justify it on the basis of the individual stock’s recent performance (56%), or with wider problems with the perceived valuation of all Chinese stocks in the US (30%). As a rule, US investors appeared to buy on macro and sell on micro.
Whatever their reasons, they managed for the most part to sell at a net profit. The average profit of the China traders was US$2,433 over the last 12 months, and 96.5% of them said they made a net gain on their China investments.
Overall attitudes
The strong portfolio performance of US retail investors is no doubt in part thanks to their resolute rejection of shares in Chinese companies that listed through reverse mergers. Only 16% of the respondents indicated they would consider investing in such stocks – although it must be noted that reverse-merger companies do not advertise themselves as such, and it is easy to buy shares in a Chinese firm without understanding its provenance.
Unsurprisingly, China traders were far more bullish on China than those who remained on the sidelines. Of those who play China shares, 65% rate Chinese stocks a buy or a strong buy – this is not a short-selling bunch – compared to 34% of those who have yet to invest in the China story. But sentiment toward Chinese equities has improved across the board. Half the sample has not changed their perception of Chinese stocks over the past 12 months, but 29% of both China traders and non-traders say they are more optimistic or much more optimistic about mainland companies.
A final curiosity is the finding that, despite the general reputation of Chinese companies for opacity, misrepresentation and general uncommunicativeness with their shareholders, China traders seem satisfied by interactions with the investor relations departments of listed Chinese companies. Over half of them said that Chinese firms’ interaction with investors is comparable to that of US-based companies, and a surprising 35% said Chinese companies’ investor relations were better or much better than their US counterparts.
No dummies
In conclusion, American retail investors appear to be not only bullish on China, but intelligently and profitably so. Despite news reports depicting the individual US investor as a hapless victim or a reckless gambler, he appears to be doing his homework.
Navigating China's web of laws and regulations
by Ana Swanson
The English-language media has written many snarky blogs and articles about China’s recent move to restrict TV shows featuring time trave, crime and spies as the Communist Party prepares to celebrate its 90th birthday on July 1. Most articles depicted the "ban" as a law or regulation, but actually it was more of a suggestion.
The regulator, the State Administration of Radio, TV and Film, said in an announcement on the state of the industry that it had noticed "a few improper creative works," for example "fantasy and time travel dramas that alter the historical record" and "haphazard compilations of mythical stories...even propagating feudal superstitions." Later in the announcement, SARFT says that TV stations should celebrate the 90th anniversary by “working hard to release excellent works that… accurately reflect the people’s struggle, under Party leadership, to restore the greatness of the nation.”
This translation doesn’t take away the weird China regulation quotient, but it does reveal something about how business works here. Suggestions or guidance made by an authoritative party can have the practical weight of a regulation; meanwhile, regulations fall into a grey area where they may be met or ignored depending on the regulator’s authority – creating a maze of requirements that companies must navigate.
Many of the blogs and articles featuring “this-and-that wacky rule from the Middle Kingdom” are actually discussing regulations issued by ministries, which are not universal. Here is Baidu Knows’ take on the difference between laws, statutes and regulations in China:
Laws (falv) are drafted and implemented by the National People's Congress or its Standing Committee; statutes (fagui) are formulated by local peoples’ conferences; regulations (tiaoli) are implemented by ministries and committees within this system: among these laws and statues are universal, but regulations are not. Among these the force of the law is greatest, and when statues conflict with law, the law shall prevail.
That regulations are not universal can lead to patchy enforcement and conflict between agencies: For example, the turf war between regulators over a recent World of Warcraft expansion that resulted in months of delay and the eventual release of a slightly sanitized version of the game where skeleton figures had been replaced with wooden boxes. (China recently announced the creation of a new internet regulator, hopefully to help streamline this kind of conflict.)
This regulatory uncertainty does take a toll on companies and investors. In the past, it’s been difficult to tell whether investing money to follow a regulation will be a waste of capital for the company, or the factor that saves the business.
Renren provided some interesting examples of this in its pre-IPO filing, where it was required to disclose potential regulatory risks to its business. One such threat was the existing rule on virtual currency, which targets online gambling and the use of virtual currency in money laundering and illicit trade. Almost all online games companies and social network operators offer virtual currency services that could be said to violate the circulars issued by the Ministry of Public Security, the Ministry of Culture, the MIIT and the GAAP since 2007, perhaps in several ways. "It is unclear whether these restrictions would apply to certain aspects of our online games," Renren said.
The filing also mentions an industry that was dramatically reshaped by regulation: wireless value-added services. Renren and many other providers exited the business after regulators launched a crackdown on providers in 2008.
How can investors minimize their exposure to this kind of regulatory uncertainty? It's been said before, but the safest bets remain the regulators’ prodigal sons: Baidu, Sina and Tencent already dominate their markets in part because of their strong relations with the government. Even if they do run afoul of censors in the future, their businesses are sufficiently diversified to withstand the heat.
The regulator, the State Administration of Radio, TV and Film, said in an announcement on the state of the industry that it had noticed "a few improper creative works," for example "fantasy and time travel dramas that alter the historical record" and "haphazard compilations of mythical stories...even propagating feudal superstitions." Later in the announcement, SARFT says that TV stations should celebrate the 90th anniversary by “working hard to release excellent works that… accurately reflect the people’s struggle, under Party leadership, to restore the greatness of the nation.”
This translation doesn’t take away the weird China regulation quotient, but it does reveal something about how business works here. Suggestions or guidance made by an authoritative party can have the practical weight of a regulation; meanwhile, regulations fall into a grey area where they may be met or ignored depending on the regulator’s authority – creating a maze of requirements that companies must navigate.
Many of the blogs and articles featuring “this-and-that wacky rule from the Middle Kingdom” are actually discussing regulations issued by ministries, which are not universal. Here is Baidu Knows’ take on the difference between laws, statutes and regulations in China:
Laws (falv) are drafted and implemented by the National People's Congress or its Standing Committee; statutes (fagui) are formulated by local peoples’ conferences; regulations (tiaoli) are implemented by ministries and committees within this system: among these laws and statues are universal, but regulations are not. Among these the force of the law is greatest, and when statues conflict with law, the law shall prevail.
That regulations are not universal can lead to patchy enforcement and conflict between agencies: For example, the turf war between regulators over a recent World of Warcraft expansion that resulted in months of delay and the eventual release of a slightly sanitized version of the game where skeleton figures had been replaced with wooden boxes. (China recently announced the creation of a new internet regulator, hopefully to help streamline this kind of conflict.)
This regulatory uncertainty does take a toll on companies and investors. In the past, it’s been difficult to tell whether investing money to follow a regulation will be a waste of capital for the company, or the factor that saves the business.
Renren provided some interesting examples of this in its pre-IPO filing, where it was required to disclose potential regulatory risks to its business. One such threat was the existing rule on virtual currency, which targets online gambling and the use of virtual currency in money laundering and illicit trade. Almost all online games companies and social network operators offer virtual currency services that could be said to violate the circulars issued by the Ministry of Public Security, the Ministry of Culture, the MIIT and the GAAP since 2007, perhaps in several ways. "It is unclear whether these restrictions would apply to certain aspects of our online games," Renren said.
The filing also mentions an industry that was dramatically reshaped by regulation: wireless value-added services. Renren and many other providers exited the business after regulators launched a crackdown on providers in 2008.
How can investors minimize their exposure to this kind of regulatory uncertainty? It's been said before, but the safest bets remain the regulators’ prodigal sons: Baidu, Sina and Tencent already dominate their markets in part because of their strong relations with the government. Even if they do run afoul of censors in the future, their businesses are sufficiently diversified to withstand the heat.
