Apple signs IPhones deal with china mobile
Chan first advised steve jobs on china mobile deal in 2008
When it comes to talk about Asia and US export, everyone is talking about China, the “Dragon” future head of the global economy and its fast-growing middle class and Chinese consumers. The Asian Tigers, the nickname given to the Southeast Asia economies, play a vital role both globally and in that entire ecosystem of the overall wellbeing of the region. Malaysia has quietly become one of the shining stars of the Asian Tigers, providing business friendly efficiency. According to the latest World Bank Study last month, Malaysia is the 6th best market to do business globally – a big jump from 12th position last year.
Below are some direct insights from a October 29, 2013 discussion with two top leaders on China and Malaysia – Savio S. Chan, President & CEO of US China Partners, an expert on China Consumers and his upcoming book, “China Super Consumers – What One Billion Customers Want and How to Sell it to Them” will be published by John Wiley & Sons in June 2014, and Vijay Tharumartnam, Vice President of Corporate Communications & Marketing, Multimedia Development Corporation (MDeC), the Malaysian government agency driving the information and communication technology (ICT) industry in Malaysia.
Some of the discussions brought out some of the common traits for these two Asian economies and its distinct differences. One thing that is interesting and shared between both Malaysia and China – something not discussed often among economists –is Harmony. According to Vijay, Malaysians are “very happy people and we generally don’t have strife”. As one of the only true multiracial countries in Southeast Asia, Malaysia had a jump on most post-colonial countries and he reiterated “Malaysia is lucky, it is gratuitous.” With only 28 million people, Malaysia positions itself as “smart” and “diversity friendly” somewhat like New York. But unlike New York, it has a low attrition rate of 5%, and 3.1%unemployment rate. Multinationals (MNCs) like Hewlett Packard, IBM, Microsoft, Shell, BMW, HSBC and what reads like a list of who’s who call MSC Malaysia home.
China, its Dragon brother has 1.5 billion people, and according to Savio, companies should try harder and be smarter in accessing the Chinese Super Consumers who have an insatiable appetite of buying US and Foreign products. Savio shares that Alibaba, the largest e-Commerce company in China, and Tmall, its B2C subsidiary, are poised to do more e-Commerce than Amazon by 2014. He suggests that in the very near future the largest eCommerce company is Alibaba, as they prepare one of the largest IPOs in the world, and the largest Internet company will be Tencent holdings from China, not Google in the US. His main reason is “How can Google be the number one Internet companies if they have very limited access to more than 600 million Internet users?”
Vijay concurred that many of the ICT companies in Malaysia are not thinking about Amazon as much, and that they are thinking about Alibaba. These thoughts were reinforced with recent activity when on November 11, 2013, China’s Singles Day broke sales records. Recent data cites Alibaba, the ecommerce transactions hit $16.42 million within the first fifty-five seconds of this year’s sales event. Overall sales exceeded $2.876 billion around noon, and a huge $5.746 billion in sales by day’s end, breaking last year’s record. The largest single transaction this year was by a woman who spent $4.1 million on a 13.33 karat diamond.
Size does matter, in this case, according to Savio, and “Even if you get a very small piece of the pie, it is still meaningful.” For example the National Football League, the most successful and largest sport franchise in America, wants to sell their products in China through e-Commerce. Unlike the NBA, which has over 150 million fans in China, the NFL only has 2 million fans spread out in China, and they have no idea on how much demand Chinese have for their licensed products. So they decided to do a test with Export Now, a US company with offices in Shanghai and Ohio, to put 72 NFL footballs for sale in Tmall, the Alibaba ecommerce platform. And boom, they were gone in less than 3 hours. So they did a bigger test with 288 footballs, and again they were all sold out in just days. Savio suggested this is a number game – China doesn’t know the NFL, but it is the sheer size of the market and the power of large number of people.
Savio Chan continued to emphasize that as American brands and products, we can sell at higher margins without losing gross profit margins as Starbuck and Colgate toothpaste are both more expensive in China than in the US. As the United States is trying hard to promote exports to other countries, and Exports from US to China have grown more than 500% over the last ten years, China proves to be the best destination for such efforts.
Another example cited by Savio is China is starting to innovate with amazing technologies with Chinese characteristic is an app which is similar to a combination of Twitter and Facebook called WeChat by Tencent holdings. According to the Wall Street Journal, WeChat has tripled its active users from last year to 236 million people, making it one of the most popular mobile app in China. Besides, Tencent has set up operations in Palo Alto, California to focus on international expansion.
“If you can’t sell to China and you can’t make it in China, what is going to be your value proposition?” says Vijay. “When you are in the middle you are stuck – because you can’t charge a premium.”
“Case in point, the number one best-selling LCD TV in America is VIZIO, started by William Wang in 2002 and in less than 12 years, went from zero from more than 4 billion of revenue. The beauty of it is VIZIO does not own any factory but he partners with Chinese factories to make it happen.” notes Savio. “ You can partner with China and be number one in America.”
What does the Brand Malaysia stand for?
“Quiet dynamism.” says Vijay. “Malaysia moved from agrarian, to manufacturing, to business. This is all planned and one of our key roles going forward is to build a Digital Malaysia, to build a digital economy. We have very high penetration in Internet broadband usage (67%) and mobile phone usage (142%) and we want people to shift from being consumers to producers when using digital technology. When you bring it down to Small and Medium Enterprises (SMEs), which is 95% of our business in Malaysia, the point is how are they reaping the benefits of the Digital economy?”
What is the brand of China?
“China Super Consumers”, says Savio. In our world of global economy, the Chinese consumers could be our “Super Hero” as they not only consumed in China, they also travel around the world and spend on all kinds of goods and services. This Super Hero, if treated properly, as many of the top retailers and hotels have been trained to do, can lift the economy of your city or country. He continued to say that the reason why the latest launch for iPhone set a sales record of 9 million is because of Chinese consumers. The previous record of 4 million iPhones was launched in the US first without Chinese participation. All the retail stores on Fifth Avenue in New York are now very “Chinese-friendly”, according to Savio.
Vijay cites “For Malaysia, the two really cool things that we took a stance on from the very beginning of MSC Malaysia in 1996 was that we would not censor the Internet and the second thing is IP protection. Malaysia was one of the first countries in the region to think about and draft cyberlaws. Last year US companies did over half a billion dollars of revenue and they are not manufacturing … they are doing high-end service work such as knowledge process outsourcing that support global operations. So our key of success is recognizing what is required for this ecosystem.”