Guess the city!
Hello everybody, it's time for a new Guess the city! The answer of the last Guess the city! is Beijing.Can you guess which Chinese city this is?
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| Guess the city! |
Comment on the comment section below!
Friday, October 14, 2016
CSR and tourism
This
week’s article will focus on corporate social responsibility and tourism.
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| Traditional Chinese hotel |
CSR and tourism
The
tourism industry is a big industry where CSR principles are not very often
common practices. As a result of the tourism industry the energy consumption is
rising, increased cost of garbage and sewage disposal, surface consumption and
loss of biodiversity put a lot of pressure on the environment. Yet pure,
unsullied nature, beautiful landscapes, cultural heritage and foreign cultures
represent the core elements of the supply side of tourism. To maintain these
elements, the resources vital to tourism must be managed in a sustainable way
and a preference for sustainable products and services should be encouraged
through corporate social responsibility.  |
| Traditional Chinese hotel |
Hotels in China and sustainability
China
is in the middle of an economic boom and it’s also has the world’s largest
programme of new hotel construction. The country’s hotel development continues
at a pace that would see at least three new 150+ room hotels every day in the
next years. China currently has 2.7 million hotel rooms but that number is
expected to grow to 9.1 million by 2039. The result of China’s hotel growth is increases in energy and water consumption and an rising carbon footprint. China’s hotels consume more water and energy per square metre and per occupied room than those in other countries. The most important reason is that sustainability is not always a priority for some firms. They don’t even have the capital to upgrade their equipment for the conservation of water and energy.
Importance of CSR principles for organisations
It can help organizations to bolster the image of their organization for the outside pubic. They show to their customers that they are willing to invest in CSR and do not care only about profit. The companies are seen as more trustful and reliable to their customers. It can even grow your customer base as you’re attracting a different customer segment. At first it looks like a big investment for companies to work with CSR principle but at the end it will help the business grow.Branding has changed as a result of digital media creating real-time conversations about companies’ activities whether or not the companies want it. Consumers expect transparency, authenticity and higher standards of ethical conduct from organisations. Therefore it is important to have CSR guidelines. Unilever, for example, takes the number one spot in the ranking for its corporate goal to ‘make sustainable living commonplace’, which is evident in projects such as Foundry Ideas, a global crowdsourcing platform that looks to solve sustainability issues in the areas of nutrition, sanitation and hygiene.
Control aspects
It is
important to have a controlling authority which can check whether the companies
comply to CSR guidelines. As we see in other sectors companies do not always
take the necessary measures to assure guidelines. The melamine scandal in China
for example is an perfect example of a company which did not comply to the
rules and due to the lack of a control mechanism it ended dramatically. The melamine scandal back in
2008 were milk companies mixed up milk with melamine. Six children died and an
estimated 54.000 babies were hospitalized. It is important to have a third party or an international organization which can check whether these guidelines are followed by the companies.
Bibliography
Chahal, m. (2015, 10 13). Marketingweek. Retrieved from www.marketingweek.com:
https://www.marketingweek.com/2015/10/13/the-top-100-companies-for-brand-purpose/
European Cities Marketing. (2011, 09 12).
Corporate social responsibility and toursim. Retrieved from
www.europeancitiesmarketing.com:
http://www.europeancitiesmarketing.com/corporate-social-responsibility-and-tourism/
O'Neill, S. (2016, June 9). Hotels in
China must be more sustainable says report. Retrieved from
www.greenhotelier.org: http://www.greenhotelier.org/our-themes/energy/hotels-in-china-must-be-more-sustainable-says-report/
Tuesday, October 11, 2016
Friday, October 7, 2016
Trade risks and legal risks for doing business with
China
China
is considered as the factory of the world, it is set to overtake the United
States as the number one destination for manufacturing. Outsourcing production
to China can be lucrative but you must be aware of the risks and challenges.
This article will focus on trade risks and legal risks for doing business with
China.  |
| Doing Business in China |
Risks in trading with China
As I
explained in the introduction it is important to understand the possible
difficulties you may encounter when you are doing business with China. One of
the most important risk faced by foreign
investors are volatile political systems. The risk that a government is able to
seize foreign assets and nationalize the
company. A perfect example is the nationalization of YPF (Repsol), Argentina’s
largest energy firm, without the knowledge of Repsol. Other important things companies should pay attention on are: commercial fraud, breaches of contract, intellectual property infringement and theft, bullying, intimidation, restrictions on movement and criminal charges for engaging in activities that may not contrite crimes under the law of the country of origin.
Cultural aspects
The
culture of China also plays a role in a potential trade risk when doing business
with China. One important topic in the West when doing business is ethics. The
way you should deal with ethical dilemmas and knowing what’s wrong and good.
Ethics in China is not an important topic as of now. In the west it is not done to assign family members in your company or select a family company to do a job, this is normal in China.
Furthermore it is important to have your connexions in China in order to do business with China. To get those connexions it is important to have patience. It takes quite a while for the Chinese companies to trust the Western companies. It is important for a western company to build a relation with its partner company in China. So don’t be surprised if you get invited by you partner for a drink.
Tips
To
make a success of the business you want to set up in or with China it is
important that you have the knowledge about doing business with China. If you
don’t have the knowledge look for
somebody who has the knowledge of the Chinese market. This can be done
by hiring a Chinese company who can arrange all the stuff and information you
need. Furthermore it is important to seek professional advice , legal
advice, be aware of local regulations
and try to understand the local practices.
Bibliography
Australian Trade and Investment
Commission. (2016, October 7). China: Business risks. Retrieved from
www.austrade.gov.au:
https://www.austrade.gov.au/Australian/Export/Export-markets/Countries/China/Doing-business/Business-risks
Dries, R. (2016). Legal and trade risk in
China. Legal and trade risk in China (p. 15). Deventer: Dries, Ruben.
Wednesday, October 5, 2016
Chinese consumer behaviour and tourism
A
greater disposable income and a rise of the Chinese population lead to an
increase of outbound travel as more people can afford the luxury of going
abroad. Because of this enormous potential it’s very important to focus and get
know-how on Chinese consumer behaviour and it’s relation to tourism. So this
article will focus on Chinese consumer behaviour and it’s relation to tourism.
What are the key Products Chinese buy in China versus
their vacation destination?
According
to GoldmanSachs, Chinese consumer spending can be broken down into seven
categories. These are: Looking more beautiful, eating better, better home, more
mobility/connectivity, having more fun, well-being/health/education and luxury.The above mentioned seven categories is an logical result of a greater disposable income and rise of the Chinese economy. The above mentioned categories are non-essential luxury products which will increase more and more in the upcoming years if this income rise trend continuous.
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| The Seven Key Consumer Desires |
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| Purpose of Travel |
Apparently Chinese tourist prefer to shop abroad rather than in China. But why do they prefer to shop abroad? Well there are numerous reasons for it, which I will explain below:
Lack of trust into Chinese products/brands: This is the most important reason why Chinese buy their products abroad rather than in China. As you may remember the melamine scandal back in 2008 were milk companies mixed up milk with melamine. Six children died and an estimated 54.000 babies were hospitalized. Chinese are very concerned about the safety of products. That’s why they prefer products abroad.
High prices and taxes of products: Foreign products/brands are very expensive in to buy in China. Due to high import taxes it is very expensive to buy ‘western’ luxury brands in China. It’s better for the Chinese to go abroad and buy the products there.
What does a basic Chinese diet require and do they
care about a Chinese diet being offered in a hotel?
Every
country has its own cuisine and special dishes. There are even differences
between regions within an country when it comes to the cuisine/dishes. But
Chinese food is really different compared to the Western style cuisine. Due to
this it sometimes brings difficulties to tourists who are not ‘easy eaters’. Chinese
travellers do not easily accept other cuisines when they’re abroad. To ensure
their satisfaction it is desirable to offer Chinese meals. But there are differences between provinces and the different tastes of Chinese people. People from the south like fresh food with a little spice whereas people from the south-west enjoy spicy food. People from Shanghai enjoy sweet food and people from the North of China prefer the more salty and oily cuisine.
So you may wonder how are you going to satisfy the Chinese tourists when they are so different in their preferences of food. Well they may differ on some small things but they have more in common than you think.
First of all Chinese tend to eat early. Breakfast starts at 06:00/07:00 in the morning followed by lunch at 11:30/12:00 at noon and dinner at 18:00/19:00 in the evening. The early dinning gives them the opportunity to go to the city centre for some entertainment.
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| Typical Chinese meal |
Chinese like food which are liquid and soft (hot pod, noodles etc.), but make sure you avoid serving soft boiled eggs and avoid using too many milk products.
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| Typical Chinese meal |
The hot water is not only important for the tea but also for the noodles. Chinese often bring noodles with them in case the local food wasn’t good or wasn’t enough for them.
Bibliography
chinacontact.org. (2015, October
12). China outbound tourism education series part 16: Consumer behaviour.
Retrieved from www.chinacontact.org:
http://www.chinacontact.org/en/china-outbound-tourism-education-series-part-16-consumer-behaviour/
Goldmansachs. (2016, January 1). The
rise of China's new consumer class. Retrieved from www.goldmansachs.com:
http://www.goldmansachs.com/our-thinking/macroeconomic-insights/growth-of-china/chinese-consumer/
Rafat, A. (013, January 3). The
cultural cliches the travel industry uses for Chinese tourists. Retrieved
from www.skift.com:
https://skift.com/2013/01/03/the-cultural-cliches-travel-industry-uses-for-chinese-tourists/
Sanders, E. (2016). Consumer behaviour
and tourism. Deventer: Chinatalk.
Friday, September 23, 2016
China’s e-commerce and the rise of Alibaba
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| China E-Commerce Channels |
The Chinese gross merchandize volume in e-commerce account for almost 425 billion USD in 2014 and is almost 40% larger than the retail market of the United States.
Experts predict that the Chinese e-commerce market will continue growing in the coming years due to the rise of the number of internet users in China and those who buy their products online.
This has resulted in fierce competition for online platforms in China. The Consumer-to-Consumer (C2C) market account of half of China’s e-commerce market. Taobao is by far the largest and most important C2C online platform in China with a market share of 95%. The second biggest C2C online platform is Paipai, a subsidiary of JingDong (JD).
The online Business-to-Business (B2B) market is an online platform where brand owners, wholesales etc. offer their products. The market leader in this market is Tmall, a subsidiary of Alibaba, with 52% market share. JD comes 2nd, Suning is 3rd, VIP is 4th and Yihaodian is 5th.
Due to the heavy competition on the online retail market, platforms tend to cooperate more and more with each other or even buy competitors. Due to this process two important fronts have formed on the online platform market Alibaba and JD/Tencent.
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| The two main camps |
Alibaba their history
AliBaba is
currently the biggest e-commerce platform in China with their brands Taobao
(C2C) and Tmall (B2C). But how did they become the biggest online platform in
China?
It started in 1999
when Jack Ma and 17 other co-founders created Alibaba Online. In the years
after the creation of Alibaba Online they raised funds to further continue with
their online platform. In 2001 Alibaba achieved profitability and two years later they created Taobao, a
consumer online retail platform. The establishment of Taobao was a reaction to
Ebay their acquisition of Eachnet. A year later Alibaba established Alipay, an
online payment platform, which was connected with Taobao. Alipay was an instant
succes and it contributed to the success of Taobao. Taobao started to be a success
and began a real threat to Ebay China. In 2005, AliBaba partnered with Yahoo
and took over China Yahoo. In 2008
Taobao established Tmall, a company which will complement Taobao on the
B2C market. In the following years Alibaba was listed on the Hong Kong Stock
Exchange and grew to be the largest online retail platform in China. Alibaba
still grows by acquiring and partnering with competitors in the market. For
example they bought a minority stake in the Chinese smartphone maker Meizu and
recently they acquired a stake in the online platform Lazada (South Asia).
Within 20 years Alibaba grew from a start-up tech company in 1999 to a large
multibillion conglomerate in 2016. (Alibaba group, 2006)
As described
above Taobao was created in May 2003 as a reaction to eBay buying Eachnet in March 2002. In 2003 eBay China/Eachnet was
dominating this market with a market of more than 70 percent. But by 2006
Taobao overtook eBay China as one of the largest Chinese e-commerce platforms.
In 2006 eBay decided to transfer eachnet to their joint-venture partner Tom
Online. (Stanford Graduate School of Business, 2010)
But why did eBay
not managed to set foot on the Chinese market?
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| Eachnet FrontPage |
EBay their failed ride in China
EBay was known to
be a leader in providing an online platform for millions of users to buy and
sell. EBay was founded in September 1995 as an experiment and it grew to the
most successful internet company in the world. With fresh new capital and high
pressure for growth, eBay soon started to look beyond the United States for
growth opportunities. From 1999 until 2001, eBay acquired multiple online C2C
platform companies in order to grow. By
the end of 2001, eBay had expanded operations to 17 markets around the world.
But there were
also failures to this aggressive growth to gain market share. In 2002 eBay
admitted that it had failed in Japan and announced that they will close the
Japan website. Since its launch in Japan eBay struggled to gain market
awareness and market share in Japan. In the same month eBay announced to exit
the Japan market it announced the investment in EachNet. (Stanford
Graduate School of Business, 2010)
EBay had high
hopes for China, according to Whitman: ‘Ten
to 15 years from now, I think China can be eBay largest market on a global
basis as we build up the local trade and the export trade…. We think China has
tremendous long-term potential and we want to do everything we can to maintain
our number one position’. (Stanford Graduate School of Business, 2010)
But why did eBay
fail in one of the world’s most populous country, China, when others had succeeded so successfully in
the ’land of the Red Dragon’.
The answer to
that question are numerous. First of all
eBay immediately changed the interface, categorization and technology of the website
of eBay China to align it more with the global website of eBay. A year after the
acquisition, the website of Eachnet was officially moved to that of the global
platform of eBay. This confused existing customers of Eachnet. (Sander)
Second: eBay
China’s servers were moved from China to the United Stated. This considerably
slowed down the website of eBay China, causing time-outs and blocking certain
pages because of the Great Firewall of China.
Due to this move, maintenance of the website was carried out by maintenance
workers in the United Stated. Maintenance was done at midnight in the US West
Coast, but that was during peak time in China. Meanwhile website change
requests were queued and would take months to fulfil. (Sander)
EBay also changed
the corporate structure of eBay China, by bringing in foreign employees as
CFO’s, COO’s. To make it even worse The Marketing and ICT department were moved
from China to the United States. (Sander)
Meanwhile Taobao
introduced in 2003 Alipay, to make it more easier for their customers to buy
goods on Taobao. EBay China also had been developing a similar system to AliPay
which was called ‘An Fu Tong’. This service was launched in 2004 on eBay China
their website (one year later!), it worked similar as to that of Paypal.
Meanwhile eBay acquired PayPal in 2003 and started to introduce the payment
system with its US website. The idea was to also introduce PayPal on eBay
China, but it encountered a lot of regulatory difficulties. But the most
important obstacle was that customers got confused due to the two payment
systems. (Sander)
Ebay China began
to lose a lot of customers but these alarming figures didn’t reach the CEO Meg
Whitman. Due to corporate bureaucracy, dysfunctional reporting lines figures
were presented more positive than actual facts. (Sander)
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| Crocodile in the Yangtze |
Cultural and social aspects
The big
advantage for Taobao was that it understood the market and the culture where as
eBay clearly didn’t. Not
understanding the market is a big no-go in any country. Chinese consumers have
different needs and desires when it comes to online services.
China was in
2001 still a rising market with customers not used to buying second hand goods
simply because there weren’t that much second hand goods on the market.
Customers in China preferred to buy new goods. (Sander)
As I said
earlier foreign eBay staff were sent to China to lead the company but they had
no knowledge of the Chinese language and did not understand the Chinese culture
and local market. The board came up with a plan to charge a fee for their
customers and consumers. Taobao launched with an no-fee model. This no-fee
model extended for a couple of years whereas eBay defended it fee model, noting
that ‘free is not a business model’.
More and more consumers started to use Taobao instead of eBay China. (Sander)
Another important
cultural difference which led to the demise of eBay China was the way of
communicating between buyer and seller. EBay China tried to block communication
whereas Taobao offered this form of communication. As a consequence Taobao was
perceived as informal and friendly compared to eBay China. (Sander)
Fundamental differences
With the above
in mind we can conclude that the most important differences, from an
organizational viewpoint, between Alibaba and other competitors are that
Alibaba is more focussed on the users of their platform to let them benefit of the platform. Whereas
other competitors in the world are more focused on earning money and providing
dividend to shareholders.
The future of Alibaba outside Greater China
With
the success of Alibaba in China, the acquisition of the online platform Lazada,
active in South Asia, and the introduction of Alipay in Europe I suspect that
Alibaba will try to get a foothold in other countries outside of Greater China.
Although I don’t think they will try to grow aggressively in Europe and the US
due to the existing competition there. But I do think that they will look at
Newly Industrialized Countries (NID’S) for further growth. For example South
Asian, South American and African countries. E-commerce in these regions are
still an untapped market.
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| What the future holds |
I even
think that Alibaba will follow companies like Google, Facebook and Apple by
buying companies which do not fit in to their portfolio. For example Alibaba
Finance recently acquired EyeVerify, a company which uses pictures of the human
eyeball to unlock mobile services. (Wang, 2016) If
Alibaba tries to go international with their brand and will stick to their
strategy I believe I twill be a success story. The most important goal for
Alibaba in China was not to make profit, not to make dividend but to help the
businesses and customers to grow.
Bibliography
De Bie, R. (2015). China Cross-Border
E-Commerce. Guangzhou: Consulate General of the Kingdom of the
Netherlands .
Sander, E. (sd). Alibaba &
E-Commerce. Alibaba & E-Commerce. Chinatalk, Deventer.
Stanford Graduate School of Business.
(2010). Taobao vs. eBay China. Stanford: Stanford Graduate School of
Business.
Wang, S. (2016, September 13). Alibaba
Finance Arm Buys Eye-Scan Startup in First U.S. Foray. Retrieved from
www.bloomberg.com:
http://www.bloomberg.com/news/articles/2016-09-13/alibaba-finance-arm-buys-eye-scan-startup-in-first-u-s-foray
Wong, G. (2015, August 17). Alibaba
Faces Fresh Threat From Rivals. Retrieved from The Wall Street Journal:
http://www.wsj.com/articles/alibaba-feels-heat-from-new-rivals-1439758165
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