Tag Archive | "China"

The Pace of Digitalization in China is Much Faster Than Anywhere in the World, Says AXA China CEO

“The pace of digitalization in China is much faster than anywhere in the world and in a sense, it’s much deeper than anywhere else,” says AXA China CEO Xavier Veyry. “In China we really see an acceleration in the way companies leverage digital tools. I think in China digitalization is accelerating and I believe that in a lot of ways China is really leading the innovation in terms of worldwide interaction with the customers on the digital front.”

Xavier Veyry, CEO of AXA China, discusses how China is leading the world in digitalization and how digitalization is impacting the insurance industry and customers in an interview on CNBC:

The Pace of Digitalization in China is Much Faster Than Anywhere in the World

AXA has been one of the pioneers in terms of digital insurance in many places in the world. This is an industry, this is a trend, this is a fundamental shift in our industry that we have been pioneering in many geographies, most specifically in Europe and sometimes in Asia. Here in China, I would say that the landscape is very different. The pace of digitalization in China is much faster than anywhere in the world and in a sense, it’s much deeper than anywhere else. 

In China we really see an acceleration in the way companies leverage digital tools. The fact is that China has a very unique ecommerce platform and a very unique e-payment platform. In our analysis e-payment is the key driver toward facilitating the purchase of insurance products. It’s true that some insurance products can be designed for ecommerce for digital interactions. Others require a more personal touch and personal interaction with customers. It really depends on the product that we are manufacturing and the product that we are presenting to the customers. 

I think in China this is accelerating and I believe that in a lot of ways China is really leading the innovation in terms of worldwide interaction with the customers on the digital front.

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China Trying to Become an Economic Hegemon for the 21st Century

“This is deeper than trade,” says Steve Bannon, former White House Chief Strategist. “It’s a combination of One Belt One Road, which is this infrastructure project to unite the Eurasian landmass. It’s Made in China 2025, which is the convergence of advanced chip design, artificial intelligence, and robotics, where they will take over advanced manufacturing. Then it’s Huawei and the 5G rollout. The convergence of all three of those are trying to make China an economic hegemon for the 21st century.

Steve Bannon, former White House Chief Strategist, discusses in an interview on CNBC the true objective of the Chinese in trying to economically dominate the world through whatever means necessary which is why current trade negotiations are so important to US prosperity going forward:

China Trying to Become an Economic Hegemon

I’m not so sure how close we are (in a trade deal with China). I mean CNBC’s interview with Larry Kudlow where Larry Kudlow said last week that Lighthizer had to read the riot act to some of the Chinese about some of the red lines that had come back on the turn on the documents. You’ve got the hawks in China that really hunkered down and said we don’t know if we need to deal with the Americans.

Remember this is deeper than trade. It’s a combination of One Belt One Road, which is this infrastructure project to unite the Eurasian landmass. It’s Made in China 2025, which is the convergence of advanced chip design, artificial intelligence, and robotics, where they will take over advanced manufacturing. Then it’s Huawei and the 5G rollout. The convergence of all three of those are trying to make China an economic hegemon for the 21st century and essentially use their totalitarian mercantilist system to replace free-market capitalism of the industrial democracies.

US Doesn’t Understand the Economic War the Chinese Are Running

That’s why I was in Japan invited by the Liberal Democratic Party to go around Japan and give these lectures I give on China. It’s 100% they’re saying that the United States and Europe don’t quite understand yet the economic war that the Chinese are running on the West. This is not just about trade. It’s not about soybeans. That’s why Lighthizer, the senior partner of Skadden, Arps, who is President Trump’s right-hand man on this is so important.

This is about fundamental structural changes to the core of the Chinese economy to really integrate it into the industrial democracies. I think that this thing could go on for a long time. I actually happen to think before you get to a deal I think you’re enough to put the punitive tariffs up to 25 percent to bring the Chinese really to the table to have that types of changes that President Trump has really been hammering on since the day he started.

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Alphabet Chairman: Anybody Who Does Business in China Compromises Some of Their Core Values

Alphabet Chairman John Hennessy says that anybody who does business in China compromises some of their core values. Alphabet, of course, is the parent company of Google and reportedly Google is considering re-entering the search business in China. Hennessy said that Google is struggling with whether it is better to give Chinese citizens a decent search engine even if it is restricted and censored. 

John Hennessy, Chairman of Google parent company Alphabet, discussed Google’s struggle and internal debate on whether to provide a censored search engine in China during a live audience interview on Bloomberg.

Anybody Who Does Business in China Compromises Core Values

“Anybody who does business in China compromises some of their core values,” says Alphabet Chairman John Hennessy in a live audience interview on Bloomberg. Alphabet is the parent company of Google. “Every single company because the laws in China are quite a bit different than they are in our own country. The question that comes to my mind and that I struggle with is are we better off giving Chinese citizens a decent search engine, a capable search engine, even if it is restricted and censored in some cases than a search engine that’s not very good? Does that improve the quality of their lives? That’s the struggle that we have to work our way through.”

“I think it is a legitimate question in asking how can you do it and still live within the context of what their regulations are,” Hennessy said in response to whether Google can do more good by being in China. “Part of what is reflected inside Google as it is everywhere in the Valley and everywhere in our country right now is the divisiveness that exists. I think that divisiveness has fed more concern in how these technologies get used.”

We Are in a Different Time Now

“If you wind back to the time that Google decided to exit China there were lots of things going on, not just censorship but also surveillance, hacking attempts, things like that,” noted Hennessy. “Those all added together to create a situation. We are in a different time now. Asking how you do this, how you make it safe, but if you store data in the country it can be gotten at by the Chinese authorities. I think you should worry about that and as a minimum, you should make sure that your users understand that.”

Hennessy is not a fan of the current trade wars. “I think in general that trade wars are not productive and they’re not economically productive either. We should try to remind people of that and try to find a way to move forward.”

Google Pulled Out of China in 2010

In 2010 Google Chief Legal Officer David Drummond, announced that Google would no longer continue censoring their results on Google.cn which quickly led to a complete Google block by the Chinese government:

On January 12, 2010, we announced on this blog that Google and more than twenty other U.S. companies had been the victims of a sophisticated cyber attack originating from China, and that during our investigation into these attacks we had uncovered evidence to suggest that the Gmail accounts of dozens of human rights activists connected with China were being routinely accessed by third parties, most likely via phishing scams or malware placed on their computers. We also made clear that these attacks and the surveillance they uncovered—combined with attempts over the last year to further limit free speech on the web in China including the persistent blocking of websites such as Facebook, Twitter, YouTube, Google Docs and Blogger—had led us to conclude that we could no longer continue censoring our results on Google.cn.

So earlier today we stopped censoring our search services—Google Search, Google News, and Google Images—on Google.cn. Users visiting Google.cn are now being redirected to Google.com.hk, where we are offering uncensored search in simplified Chinese, specifically designed for users in mainland China and delivered via our servers in Hong Kong. Users in Hong Kong will continue to receive their existing uncensored, traditional Chinese service, also from Google.com.hk. Due to the increased load on our Hong Kong servers and the complicated nature of these changes, users may see some slowdown in service or find some products temporarily inaccessible as we switch everything over.

Figuring out how to make good on our promise to stop censoring search on Google.cn has been hard. We want as many people in the world as possible to have access to our services, including users in mainland China, yet the Chinese government has been crystal clear throughout our discussions that self-censorship is a non-negotiable legal requirement. We believe this new approach of providing uncensored search in simplified Chinese from Google.com.hk is a sensible solution to the challenges we’ve faced—it’s entirely legal and will meaningfully increase access to information for people in China. We very much hope that the Chinese government respects our decision, though we are well aware that it could at any time block access to our services. We will therefore be carefully monitoring access issues, and have created this new web page, which we will update regularly each day, so that everyone can see which Google services are available in China.

In terms of Google’s wider business operations, we intend to continue R&D work in China and also to maintain a sales presence there, though the size of the sales team will obviously be partially dependent on the ability of mainland Chinese users to access Google.com.hk. Finally, we would like to make clear that all these decisions have been driven and implemented by our executives in the United States, and that none of our employees in China can, or should, be held responsible for them. Despite all the uncertainty and difficulties they have faced since we made our announcement in January, they have continued to focus on serving our Chinese users and customers. We are immensely proud of them.

Posted by David Drummond, SVP, Corporate Development and Chief Legal Officer

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Millennials Love Airbnb and There Are 400 Million Millennials in China

The Head of Policy at Airbnb, Chris Lehane, says that they are seeing the same underlying dynamics and trends of millennials driving Airbnb growth in China that they saw earlier globally. With 400 million millennials living in China, the growth potential for Airbnb is massive. He noted that millennials will be 75 percent of consumers going forward and home sharing is how they like to travel.

Chris Lehane, Head of Global Policy And Communications for Airbnb, talked about the huge growth of the company and their massive potential for even more growth driven by millennials in China and around the world in an interview on Bloomberg:

Airbnb’s Single Biggest Quarter Ever

As we released on Friday, we are significantly over a billion dollars in revenue in Q3, our single biggest quarter ever. We are blessed ultimately by this really significant and robust growth. Ultimately that’s tracking to the community model that exists on Airbnb. We only do well if our hosts do well, hosts do well if our guests do well, guests do well only if communities are benefitting. That flywheel does create a network effect globally. You can see that underneath these growth numbers, 91 percent growth in Bejing. Over 79 percent growth in places like Mexico City or even Birmingham, England.

Home Sharing is How Millennials Like to Travel

Ultimately what’s really underlying the foundation for all of that is that people are looking for this type of travel. More people are going to be able to do home sharing type of travel, people to people travel tomorrow than today. This is not new, Abraham Lincoln, Gandhi, they did home sharing, but in particular, this is what consumers are looking for, particularly millennial consumers who are going to be 75 percent plus of all consumers going forward. This is how they like to travel.

400 Million Millennials in China – A Huge Opportunity for Airbnb

Looking at our global numbers, what we are seeing in China really does reflect the same thing that we are seeing globally. We are blessed with this growth which is being driven by that network effect that exists locally. What we are seeing in China is really interesting. It has the same underlying dynamics and trends that we saw with the business earlier.

When Airbnb was first launched the majority of users were millennials. If you look at our China market right now about 85 percent of our consumers are millennials. It’s a similar trend, but keeping in mind that there are 400 million millennials in China. We are really the significant player in what’s called the outbound travel, people going from China abroad. What’s happening is they come back and then they begin to travel domestically and Airbnb begins to grow as a result of that.

China is a place you have to get up every day and work incredibly hard. We do have a president of the business who is from China based on the ground there. We have an incredible team made up of Chinese folks who are on the ground there in Bejing and other offices around the country. I feel good about where we are but I know that we need to keep working at it.

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How Companies Can Solve the China Puzzle

Amy Karam, author of the book, The China Factor:Strategies to Compete, Grow and Win in the New Global Economy, recently was interviewed at Google’s Mountain View campus, providing insight for companies to better compete.

“The main intention of “The China Factor” is to equip western-based companies with strategies and tactics and knowledge to better compete with emerging entrants like those from China,” says Karam. “China has risen, they’re doing a great job, there a strong force in our economy and they do business differently. The premises is that we as western-based companies need to change our game. We need to know that emerging competitors have different approaches and we need to be more creative about that.”

“The other element is the innovation advantage and how do we protect or maintain and evolve our innovation advantage?” she asks. “How did China become so strong? What are the strengths and weaknesses of each side, the West and the East?”

Working for Cisco in China Was Eye Opening

Karam’s time at Cisco where she was involved in the Cisco sales strategy shaped her opinions of how Western companies can better compete. “The results were eye opening,” she said. “Wow, this isn’t business as usual. It’s not like our domestic competitors. It’s not a product superiority play anymore, where it’s like my box is better than your box so I’ll win the business. That’s not what was happening in emerging markets and especially with some emerging competitors.”

“That was the catalyst for me to say, wow, this is not a trend, this is not a blip, this is here to stay.” She noted some big competitive differences with Chinese companies. “First is the severe price discounting and that’s no shocker right? Most of us know that that’s generally a pretty consistent market penetration strategy, but there was really no bottom to it. I encountered a lot of escalations where they say, hey my competitors just discounted me by another 25% and I need approval for another discount. We realized that wasn’t going to be a successful strategy for either competitor and even for the customer, it wasn’t a winning game.”

“Another big thread was financing, which we didn’t really get into very much as a Western based company but that’s a a real helpful tool for emerging customers. This competitor would help them with financing and to an extreme degree. Sometimes they would help finance over a very long
period of time and that was a real great value to these emerging markets customers.”

“Another huge trend that came up was the use of politics to influence business decisions,” Karam said. “We’re like whoa, where did that come from what do we do about that? I would get escalated complaints from emerging markets that we’ve been working this deal for two years, we had in the bag and in the eleventh hour they would just say it was a an influence from above and we have no idea where it came from. It was government-to-government influencing for business decisions at a more granular level.”

What Can Western companies Do at the Practical Level?

“For those who are business geeks, you know there are the 4 P’s of marketing… product, price, place, promotion, so I created the 5th “P” which is politics,” said Karam. “I created the 5 P’s of Global Marketing framework. Because this has become such a a big world but it’s small at the same time, we need market access, we want to play and other peoples sandboxes, but there are certain rules and there are certain limitations that we need to encounter. When Google pulled out of China in 2010 for censorship reasons that was a big decision and the implications were huge. You could have affected 1.5 billion people in terms of access to knowledge, but there were really good reasons and those were the the boundaries within which a Western based company decided that they did not want to operate.”

“Recent headlines say that Google is going back in,” says Karam. “So market access is really important and reach is really important, so the political element is knowing that co-oppetition is is the new element. It’s an integral part of a strategy going forward, it’s not us versus them. It’s how do we all play together within our own boundaries and desirables to get ultimately the success that we need. That’s it at a high level.”

“Then how do we at the working level deal with politics?” she asks. “Politics even happens at the organizational level and generally there’s a pretty negative connotation to politics, but it’s really important, we can’t ignore it anymore, we we need to embrace it and apply it.

“So how do we apply it from a sales perspective is to educate the sales teams on some of the tools available from the US government and the local governments in the different countries,” asks Karam. “How can they engage with their own government to help influence their own sales locally? Reaching out to the consulates, how do you get them involved, how do you know that some of these deal opportunities are happening early on in the game? There may be unfair trade issues that you’re experiencing so that maybe some intervention sooner rather than later so it’s not at the eleventh hour when we oftentimes hear about it.”

“We’re also organizationally changed and we’re able to convince the senior vice president of government affairs to shift the focus from just a policy perspective to helping with sales objectives,” she says. “Using the influence that they have in the government affairs group for more of the end result in terms of numbers and not just policy has been very effective.”

How Should Western Companies Evolve and Change?

“Very simply, go global,” says Karam. “A lot of times Western based companies have been hesitant to go global. The second part is let’s move out of emerging markets being a novelty. I think a lot of Western based companies dabble in emerging markets thinking it’s really cool, it’s let’s try it out let’s throw a few people and in there and see how it works out, and then… oh no, not making the ROI that we need so we need to pull out. It needs to be a longer-term investment, it needs to be a commitment and you need to know that it’s it’s not just a temporary thing.”

“Make sure that your product development is catering or customizing to local customer needs,” she says. “We can’t just recycle, saying this is a mature product in this market and let’s just throw it over the fence and see if they’re going to like our old product.

How Can Wester Companies Maintain Their Innovation Advantage?

“Every company, East to West, really wants to be innovative because that’s where the next phase of growth comes from,” says Karam. “We see contingents of emerging folks coming to Silicon Valley wanting to learn the secret of how is Silicon Valley innovative, how do you do it how do you become creative? But the idea is that we have to also be creative – we have to be innovative at being innovative, so you can’t just the rest on your laurels. This whole concept of innovation is evolving and as more players from different backgrounds are becoming innovative they’re bringing different business models.”

“Some business model innovations are coming from the East,” she says. “They’re really good and commercializing things and we’re really good at making things, really cool things, but they’re really good at making money yet from really cool things or even making money from ok cool things.”

“We also talked about supply chain or process innovation,” said Karam. “There’s the reputation of manufacturing, they’ve got it down. One venture capitalist who I interviewed for the book says, you know all this business about bringing manufacturing back to America, we don’t have the efficiencies, we don’t have the ecosystems yet to do that, and some of the Eastern countries do. We need to either establish that ecosystem or just understand that there’s there’s a different source of innovation happening out there.”

“What I’m saying s let’s get more creative, let’s figure out what’s our what’s our innovation 2.0,” she says. “How are we going to step up our game and learn from others as well?”

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Uber Now Profitable In Hundreds Of Cities Globally, But Spending It All On China

The CEO of Uber, Travis Kalanick, told The Financial Times that Uber is profitable except for its investments in China and other new markets. Uber is in a fierce battle for market share as the number two ride sharing service in China behind Chinese company Didi Chuxing. China is now Uber’s biggest market in the world when measured by number of rides and amazingly accounts for a third of its business worldwide.

“We have hundreds of cities that are profitable globally,” Kalanick said. “That allows us to invest in new places, and to sustainably invest in a very expensive place like China.” Uber had first-mover advantage in China but was quickly followed by Chinese company Didi Chuxing which was flush with investment capital and has now moved into over 400 cities, while Uber has only launched in 60 plus cities, but that is changing fast. Uber lost over $ 1 billion last year in China and may lose even more this year in order to launch in new cities and gain market share.

China has 16 cities with metropolitan populations of over 10 million making market launches challenging and expensive. By comparison, the largest city in the United States, New York City, has a population of (only) 8.2 million. “We are number two in China, which means that we still have a ways to go,” Kalanick said. “But we are putting everything on the field.” According to FT, Uber’s CEO spent nearly one in five days in China. “Travis was personally invested in the success of Uber in China to a much greater degree than any other country,” noted Allen Penn, head of Asia operations at Uber.

China was always thought of as a huge challenge for Uber, but with potentially huge rewards. “We like to go after the thing that seems impossible,” Kalanick told San Francisco based FT writer Leslie Hook. “It was pretty far-flung for us to try at that time – but that was also what made it exciting.”

In order to combat difficult Chinese regulations targeting foreign owned businesses the company launched in China different than other Silicon Valley heavyweights like Google and Facebook, they created a separate company called Uber China and brought in Chinese investors. This has allowed Uber to do business in China without being hampered by unfair Chinese regulations that favor Chinese based businesses.

That’s the good news. The bad news is that Uber competitor Didi Chuxing is dominating the market and out-competing Uber and has launched in many more markets. In 2015 it arranged 1.4 billion ride shares, more than Uber has done worldwide in its history. Last year it arranged 1.4 billion rides in China, more than Uber has done worldwide in its history.

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Search in China Goes Beyond Baidu as Qihoo 360 Launches in Hong Kong

Qihoo 360 hopes a partnership with an agent in Hong Kong will help promote its search engine capabilities to international brands looking for new channels to reach Chinese consumers.

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Privacy-Savvy Search Engine DuckDuckGo Blocked in China

Search engine users in China got a rude awakening when they realized last week that DuckDuckGo had been blocked or was temporarily unavailable.
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Cortana Expands To Other Markets, Becomes “Xiao Na” In China

There’s increasing evidence that Microsoft’s personal assistant Cortana is being positioned as a key differentiator vs. Android and iPhones. A new TV commercial (below) purports to compare Cortana to Siri, with a mock Siri voice saying “I can’t do that” a number of…



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Dmitry Medvedev Visits China, Strikes Oil Agreement

Russian Prime Minister Dmitry Medvedev has been on an official trip to China since tuesday, when he arrived in Beijing after an official invite from the Chinese Premier, Li Keqiang. On the table for Medvedev’s visit are such activites as visiting the Anhui province of China, an online chat with some Chinese “netizens” on the popular news website, Xinhuanet.com, and a talk with Li Keqiang as they co-chair the 18th prime minister’s meeting between China and Russia. The annual meeting is considered an important tool for keeping communication and cooperation open between the two countries.

That cooperation and communication seems to be paying off for China, as Dmitry Medvedev just signed an $ 85 billion dollar deal to provide China with oil. The deal between the two giant nations includes plans to start building an oil refinery in Tianjin, which is just east of Beijing, as Medvedev revealed in the aforementioned talk with Chinese citizens on Xinhuanet.com. Medvedev also said that Rosneft, Russia’s largest oil producer, will be the one supplying 70 million barrels of crude oil to China over the next ten years, as per the new found agreement.

China has risen as number one in the growing energy market, overtaking the United States as the largest oil importer, mostly due to a stable economy and rapidly growing automobile industry. This deal with Russia will provide a more stable source for Chinese consumers, who currently rely on oil supplies from the incredibly unstable Persian Gulf.

On the topic of the new deal, Dmitry Medvedev was quoted as saying that the agreement “testifies to the fact that we have reached a higher and a brand new level of cooperation.” Li Keqiang, in a similar vein, was quoted as saying on the topic, “Bilateral relations have never reached such high levels. It is a good thing because we are neighbors.” Trade is, obviously, expected to boom between the two nations as a result of this deal, which will be a welcome boost for both economies.

[Image courtesy of Wikimeida Commons.]


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