Who's Winning China's Chocolate War?

M&M as Terracotta Warrior Credit: FITCH

At the new M&M's World chocolate megastore in Shanghai, the decor is a tribute to Chinese culture. There's a Great Wall of Chocolate and a massive M&M statue wearing the armor of a Terracotta Warrior. Chen JieTing, 20, posed for photos with an M&M wearing Bruce Lee's yellow jumpsuit. "I love M&Ms -- not too sweet and so cute," she said.

Chinese consumers traditionally prefer salty snacks, but the world's chocolate makers have been making converts -- and competing fiercely for market share -- in the high-stakes market that's home to 1.37 billion people. The local chocolate market has been growing 12% annually, according to Euromonitor International. China's embrace of chocolate has helped push up cocoa prices and contributed to fears of an international shortage. (Mars Inc., the maker of M&Ms. has warned the industry will need 1 million more metric tons by 2020 and is working on sustainable farming to boost yield.)


Meanwhile, Western brands have upped the ante in China by building factories and innovation centers, launching flashy campaigns, buying local chocolate makers and creating retail experiences like the M&M's store, which opened in August.

Mars, which also makes Snickers, has come out ahead, with a projected 39% of the Chinese market in 2014, according to Euromonitor. Its biggest hit is the Dove brand, which accounts for a whopping 34% of national chocolate consumption.

After the era of Chairman Mao Zedong, "when China's doors opened in 1979, you really had a billion people who had never tasted chocolate," said Lawrence Allen, a former Hershey and Nestlé executive in China. "It was a virgin market."

Companies rushed in and learned by trial and error -- Mars tried first with M&Ms. he said, but Dove was what took off. Hersheys had a hit with bite-size Kisses while others were selling 60- or even 80-gram bars, because "Chinese people do not sit down and eat 60 grams of chocolate at a time," said Mr. Allen, author of "Chocolate Fortunes: The Battle for the Hearts, Minds, and Wallets of China's Consumers."

There were cultural differences too. China traditionally classifies foods as "heating" and "cooling," concepts not about temperature but about the effect on the body. Chocolate is a heating food, so it's ill-advised for summer.

Read more at Adage.

The People’s Republic of Chemicals

The name of China is almost obscured by a grey smudge on the title page of The People’s Republic of Chemicals, and this image proves to be apt.  This book examines the crisis caused by toxic smogs that periodically choke vast regions of China and the massive particulate clouds that drift far beyond the country’s borders.

Authors William J. Kelly and Chip Jacobs joined forces once before in order to write their climate classic, Smogtown: the Lung Burning History of Pollution in Los Angeles, a remarkable 2008 exposé and memoir about air quality, politics and health in Southern California’s smog belt. This time, the duo of self-described “smog gumshoes from Los Angeles” go farther afield to investigate air pollution that threatens to put a chokehold on the Pacific Rim. What’s more, Mandarin editions of both books will be available through the Central Party School Publishing House.

No doubt the translators were challenged to render some of the exaggerated gonzo phrases and slang from this “murky yarn of atmospheric pain and karma” into prose that doesn’t come across as glib or simply baffling.

“Ashtray-skied towns” abound and burning coal “cruds its troposphere like cigar smoke in a closet.”  Beijing is described as “the city where your oxygen sometimes came spiced with black char.” A chapter entitled “Tweets for the Wheezy” notes that “a Twitter account had economic superpowers throwing each other the stink eye.” It goes on to describe how the U.S. Embassy in Beijing inadvertently raised a ruckus in 2009 and 2010 by posting hourly readings of particulate pollution as measured on the roof of their former compound. Intended as a service for American travellers and embassy staff, the air quality statistics appeared on @BeijingAir, an embassy-run Twitter page, and showed that the capital’s atmosphere frequently was less healthy than the official daily averages posted by China’s Environmental Protection Bureau would indicate. Chinese officials took umbrage and tried to block the public’s access to these damning numbers.  It’s obvious that Kelly and Jacobs are relentless researchers, and they don’t hide a heavy reliance on secondary sources. They readily confide: “We Googled until our fingers tingled. Then we gasped.”
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U.S. President Bill Clinton also emerges as an eco-villain. Although Clinton championed environmentalism in the United States, Kelly and Jacobs note how the bilateral trade deals made during his administration got the American consumers hooked on inexpensive Chinese goods. Prices were kept abnormally low because of China’s cheap but dirty energy sources and sweatshop wages paid to labourers. But exporting dirty manufacturing to China could not outsource pollution indefinitely, particularly when antiquated or wasteful methods were used there without modern filters. Regrettably, no provisions prevented China from financing highly contaminating coal-based projects.

“In post-W.T.O. China, something biologically creepy was only a factory pipe away,” the authors observe. They conclude that ultimately, the world cannot escape the consequences of carbon gluttony on its climate. Kelly and Jacobs urge President Xi Jinping “to make eco-restoration as much his legacy as ridding the party of the endemic graft he so loathes.”

Read more at ChinaFile.

Chinese Smartphone Brands Push Into U.S.

A host of Chinese smartphones have big ambitions for the U.S. -- but don't expect a flood of marketing from them.

Just a few weeks ago, research firm IDC declared that Xiaomi, a four-year-old Beijing company, had stormed to third in the worldwide smartphone market based on units shipped. Only a day later, it was leapfrogged when Lenovo completed its Motorola acquisition. These companies now aim to replicate industry leader Samsung's rise, parlaying success at home to go global.

Realizing this goal, however, could be an expensive marketing proposition for brands that are obscure outside of China. U.S. carriers are reluctant to carry the political risk (and marketing weight) of selling Chinese devices. That puts the onus on the smartphone brands themselves.

"Chinese brands don't do a great job of brand building," said Ben Bajarin, an analyst with Creative Strategies. "The cost to invest and build a brand in the U.S. seems a bit too daunting for them."

Daunting but tempting. Western markets still hold the industry's best margins -- and its prestige. "To be a truly global brand, you have to be in the U.S.," said Lawrence Lundy, a Frost & Sullivan analyst. He expects that some Chinese brands will follow Samsung's strategy of investing broadly in media; others will attempt to sell devices without spending big, like Apple. Here's what to expect from the top five. >>

A Map of Betrayal, An Ambivalent Double Agent, Torn Between Two Countries

When the Chinese writer Ha Jin came to the U.S. in 1985, he was only planning to stay long enough to finish his graduate degree. After that, he thought, he'd return home and teach English.

But a series of events shocked him into staying permanently, starting with the capture and trial of a Chinese spy named Larry Chin. Chin spent decades infiltrating the CIA, but swore at his trial that he was trying to improve the relations between the two countries.

Larry Chin "claimed that he was basically serving both countries. He used the metaphor 'mother and father' ... really, he was torn by the two countries," Ha Jin tells NPR's Arun Rath.

In 1989, the Tiananmen Square massacre took place. Ha Jin soon decided to settle permanently in America.

In the decades years since, his novels and stories have won him international acclaim and a National Book Award.

His newest novel, A Map Of Betrayal, describes the life of a spy who is deeply ambivalent about spying on America, a country he loves as much as China. There are unmistakable echoes of Larry Chin — and, Ha Jin tells Rath, of the novelist's own experiences.

Please read/listen the interview highlights with Hajin at NPR.

Kissing Your Socks Goodbye

By her own account, Marie Kondo was an unusual child, poring over lifestyle magazines to glean organizing techniques and then stealthily practicing them at home and school, confounding her family and bemusing her teachers.

As she writes in “The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing,” which comes out this month in the United States and is already a best seller in her native Japan and in Europe, she habitually sneaked into her siblings’ rooms to throw away their unused toys and clothes and ducked out of recess to organize her classroom’s bookshelves and mop closet, grumbling about poor storage methodologies and pining for an S-hook.

Now 30, Ms. Kondo is a celebrity of sorts at home, the subject of a TV movie, with a three-month waiting list for her decluttering services — until recently, that is, because she has stopped taking clients to focus on training others in her methods. Last Friday, I brought her book home to practice them.

What better moment to drill down and ponder the fretful contents of one’s sock drawer? Global and national news was careering from the merely hysterical to the nonsensical (the Ebola cruise ship incident was just peaking). Closer to home, other anxieties beckoned. But in my apartment on Second Avenue, the world was no larger than my closet, and I was talking to my T-shirts.

Let me explain. Ms. Kondo’s decluttering theories are unique, and can be reduced to two basic tenets: Discard everything that does not “spark joy,” after thanking the objects that are getting the heave-ho for their service; and do not buy organizing equipment — your home already has all the storage you need.

Obsessive, gently self-mocking and tender toward the life cycle of, say, a pair of socks, Ms. Kondo delivers her tidy manifesto like a kind of Zen nanny, both hortatory and animistic.

“Don’t just open up your closet and decide after a cursory glance that everything in it gives you a thrill,” she writes. “You must take each outfit in your hand.”

“Does it spark joy?” would seem to set the bar awfully high for a T-shirt or a pair of jeans, but it turns out to be a more efficacious sorting mechanism than the old saws: Is it out of style? Have you worn it in the last year? Does it still fit?

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The contents of one of Ms. Kondo’s own drawers.

You can find YouTube videos of her technique, but it’s not so hard: Fold everything into a long rectangle, then fold that in upon itself to make a smaller rectangle, and then roll that up into a tube, like a sushi roll. Set these upright in your drawers. And pour your heart into it, Ms. Kondo urges: Thank your stuff, it’s been working hard for you.

“When we take our clothes in our hands and fold them neatly,” she writes, “we are, I believe, transmitting energy, which has a positive effect on our clothes.”

She proposes a similarly agreeable technique for hanging clothing. Hang up anything that looks happier hung up, and arrange like with like, working from left to right, with dark, heavy clothing on the left: “Clothes, like people, can relax more freely when in the company of others who are very similar in type, and therefore organizing them by category helps them feel more comfortable and secure.”

Read more at NYTS.

American Women Love South Korea's BB Creams

Coco Masuda

First came the wave of manufacturing, with Samsung and LG; then the K-pop stars, whose ubiquity reached its regrettable height with Psy. Now comes the latest import from South Korea: a formidable array of beauty products.

It all started with the BB cream. In early 2011, the Korean brand Dr. Jart introduced two BB creams at Sephora in the United States. They had dermatologic roots, intended to protect and heal patients’ skin after treatment, and had been popular as all-in-one skin-care and makeup products in Korea for several years before they came to the United States.

The cream was a hit. Major beauty companies took note. Soon enough, it had spawned versions from L’Oréal, Smashbox, Clinique, Jane Iredale, Stila and Dior — and paved the way for a Korean beauty invasion of the United States.

The beauty market has long been led by European countries, which were thought to be the source of innovation. But in recent years, American women (and beauty companies), their interest piqued by the BB cream, began to look more closely at Korean multistep skin-care regimens, and they liked what they saw.

“It shifted our consciousness on what it means to take care of your skin,” said Megan McIntyre, the beauty director at the lifestyle site Refinery29. Seeing the care Korean women devote to their skin made consumers curious about new techniques, Ms. McIntyre said, adding that the often adorably twee packaging, high-tech innovations (peel-off lip stains, overnight masks) and affordable prices have not hurt, either. But let no one think that Korean women just slap on a BB cream and call it a day.

“The American approach is: the simpler the better, the faster I can get out the door,” said Cindy Kim, a founder of Peach and Lily, one of a number of online retailers, including Soko Glam and Memebox, that sells Korean beauty products. “The Korean mentality is comprehensive and detailed.”

And it is exhaustive. First, there’s cleansing, often with two different cleansers (one oil-based to remove makeup, then a foaming cleanser), followed by a toner to balance pH levels on the face.

Then there are “essences” and serums, which is “where the number of steps can blow up,” Ms. Kim said. The serums often target single issues: aging, radiance, hydration, redness. An eye cream, plus moisturizer, and BB cream (for day) or an overnight sleep mask are applied next and all sealed with a mist. There is even a term for the desired plump and sticky feeling after application of these products: “chok chok.”

Taking a half-hour for your skin-care routine “isn’t weird,” said Esther Dong, the senior vice president for marketing at the Korean line Amorepacific, whose Time Response anti-aging moisturizers are selling well in the United States. “When people describe a beautiful girl in the U.S., it’s all about the body, and the third or fourth sentence is about the face. When you describe a beautiful girl in Asia, it’s about her face and how pure and fine her skin is.”

Such standards are reflective of Korean culture at large. “The culture of South Korea is very much tied with technological advancement and the rapid pace of life,” said Richard You, the deputy general manager for Dr. Jart in the United States. “Everyone has a smartphone, is concerned about their looks, and companies are working around the clock to provide new products. Word gets around quickly regarding what’s working and what’s not.” In Korea, more than one television show is devoted to reviewing new beauty products.

Even if American women aren’t likely to massage five different creams into their faces for 30 minutes, they are willing to try new products. Alicia Yoon, the other founder of Peach and Lily, reported that most of its customers are non-Asian and that, month to month, its sales nearly double.

“The appetite is huge,” said Priya Venkatesh, who oversees the merchandising of products with Korean roots at Sephora. And not just for Korean brands. Korean-inspired masks and essences from Dior, Shiseido and SK-II are emerging as popular, she said.

American companies are also hoping to strike a chord with similar products. Peter Thomas Roth, a skin-care line in New York, makes a CC cream (a lighter sibling to the BB cream) in South Korea. Its answer to the Korean essence, a step between cleansing and treatment, is its Un-Wrinkle Turbo Line Smoothing Lotion. It also has a sleeping mask (a concentrated mask you wear overnight) and an oil-like product made from squalene, which comes from sugar cane and has long been popular in Asia.

For sure, there is an exoticism to Korean ingredients, with products like LadyKin Vanpir Dark Repair Cream (which touts Red Dragon Blood Resin Extract) and Mizon Returning Starfish Cream (with 70 percent starfish extract). Alpha-hydroxy acid-based peeling foot masks that remove layers of dead skin have been gaining followers here, the most popular being Baby Foot. (Best not to Google the product. Eeew.) 

Read more at NYT.

In a Topsy-Turvy World, China Warms to Sci-Fi

Liu Cixin

With a state-owned power plant in nearby Shanxi Province temporarily shut down to reduce air pollution, one of its engineers, Liu Cixin(刘慈欣), is using the free time to work on his hobby: reigning as China’s best-selling science-fiction author.

Along with working on a new novel and advising on screenplay adaptations of his earlier fiction, Mr. Liu, 51, has been promoting the English translation of “The Three-Body Problem,(《三体》)” the first book in his best-selling apocalyptic space opera trilogy. Translated by Ken Liu, an award-winning science-fiction writer in his own right who is based in the United States (the men are not related), it is one of the few Chinese science-fiction novels to be translated into English. It will be released in the United States on Tuesday by Tor Books.

The success of the “Three-Body” series, as it is called in China, has gained a following beyond the small but flourishing science-fiction world here. Since the third book was published in 2010, each entry in the series has sold about 500,000 copies in the original Chinese, making Mr. Liu the best-selling Chinese science-fiction author in decades.

In addition to the usual high school and college-age fans of science fiction, China’s aerospace and Internet industries have embraced the books. Many interpret the battle of civilizations depicted in the series as an allegory for the ruthless competition in the nation’s Internet industry.

The series has also breathed new life into a genre that, here as elsewhere, the literary establishment often marginalizes.

For decades, science fiction was subject to the whims of Communist Party rule. The genre went from being a vehicle for popularizing science for socialist purposes to drawing criticism in 1983 from party newspapers for “spreading pseudoscience and promoting decadent capitalist elements.” When the prestigious People’s Literature literary magazine published four of Mr. Liu’s short stories in 2012, it was a sign that the genre was back in official good graces.

At its core, science fiction capitalizes on uncertainty about the future to push the boundaries of the reader’s imagination. In fast-changing China, stories that lay out what coming years may hold in store have therefore found deeper resonance among readers.

“China is on the path of rapid modernization and progress, kind of like the U.S. during the golden age of science fiction in the ’30s to the ’60s,” Mr. Liu said. “The future in the people’s eyes is full of attractions, temptations and hope. But at the same time, it is also full of threats and challenges. That makes for very fertile soil.”

Chinese science fiction serves another purpose in the eyes of Xia Jia, a science-fiction writer and professor at Xian Jiaotong University. “Chinese science fiction, in a way, has borne the weight of the ‘Chinese dream’ since the genre first appeared in China in the late Qing dynasty,” she said, referring to the turn of the 20th century.

“The dream is about wanting to overtake the Western countries and become a very powerful modern China while still preserving these old elements,” she added. “This is what we who write science fiction in China have to grapple with.”

The “Three-Body” tomes chronicle a march of the human race into the universe set against the recent past, the tumultuous years of the Cultural Revolution. It is a classic science-fiction story in the style of the British master Arthur C. Clarke, whose work Mr. Liu says he grew up reading. “Everything that I write is a clumsy imitation of Arthur C. Clarke,” he said.

The first book in the series explores the world of the Trisolarans, an alien civilization on the brink of destruction. When a secret military project in China attempts to make contact with aliens, the Trisolarans capture the signals and decide to invade Earth. Back in China, people split into two camps: those who welcome the aliens and those who want to fight them.

The series is likely to be a change of pace for science-fiction fans in the United States, where many leading contemporary writers in the genre are rejecting classic alien-invasion plots in favor of those that take on real-world issues like climate change or shifting gender roles.

Please read more at NYT.

Hungry City: The Bao in the East Village

It’s a perilous moment, lifting a soup dumpling from its basket, hoping it won’t tear and spill its beautiful guts. This one’s skin is delicate but does not break, at least not yet, not under the tongs’ little teeth. The dumpling lands in the spoon intact, plump but not sagging, buoyant as a ball gown. Take a bite, gently, from the top; watch the steam flee; sip the broth inside, just enough to taste; then down it whole.

At the Bao, which opened in the East Village in July, the soup dumplings, or xiao long bao, are near perfect. (The menu calls this achievement “kung fu,” using the term in its original sense, as mastery acquired through practice and discipline.) Other specimens in town tend to the thick, to prevent leaks; here the dough is ultrathin, less armor than envelope for the broth — pork-stock jelly, which melts into soup as the dumplings steam — and the ball of minced pork at the center, loose and yielding, as if itself in midmelt. I did wish the soup were more flagrantly meaty, but this far from Shanghai, I’m just grateful.

 The Bao is an outpost of Kung Fu Xiao Long Bao, which the owner, Hong Bao, opened two and a half years ago in Flushing, Queens. She oversees the dim sum at both locations, but beyond the classic varieties of soup dumpling — pork and notably briny pork and crab — the restaurants diverge. East Village innovations include xiao long bao jacked up on chile, anticipating the bravado of the young and the drunk, and others spiked with wasabi, a gesture toward the neighborhood’s Japanese expats.

The rest of the menu is greatest-hits Chinese, corralling flamethrowers from Sichuan and Hunan with old-school Cantonese and Taiwanese specialties. Much of this is delicious: a garlicky confetti of chives, with pork nubs and dark pops of salt from fermented black beans; pressed, dense tofu ruddied from steeping in five spice; pickled string beans chopped into tiny rings and bobbing in a sour rice noodle soup; strips of featherweight fried chicken, almost outnumbered by dried red chiles; noodles alchemized by an age-old calculus of soy, sesame oil and sugar; and shrimp dashed with Shaoxing (rice wine) and engulfed in barely set scrambled eggs that slip through the chopsticks. (I ate the leftovers, still slippery, out of the box when I got home.)

 Please read the whole story at NYTs.com.

Catching the Eye of the Chinese Shopper

Photo by Darcy Holdorf

For consumer brands in China, a major battleground is the country's growing hypermarket segment. And the frontline troops are armed with mini-dresses and microphones.

Visit any Chinese Walmart, Carrefour or Tesco on a weekend, and there will be more than 100 promoters in the store dispensing samples and sales pitches. Their role reflects the shopping habits of middle-class Chinese, who are notoriously fickle toward brands.

"Chinese consumers know the brand name through media, but when they go to the store, they want to feel the product and get a detailed understanding before they make a purchase decision," said Alick Ying, business director at Always Marketing Services, which employs 15,000 full-time promoters across China.

The Shanghai-based WPP field-marketing agency, whose clients include Unilever, Kimberly-Clark, Kraft and Johnson & Johnson, hosted Ad Age at a Tesco hypermarket in Shanghai one recent Saturday morning.

A U.S. store has as many as 20,000 stock-keeping units, but a Chinese one can have up to 35,000, Mr. Ying said. Pair this with the tendency of Chinese shoppers to make more than 50% of purchase decisions in-store, and it's clear why brands must work hard to break through the clutter.

Retail growth
China is the world's third-largest retail market, behind the U.S. and Japan. Retail sales in the country have grown at least 16% each year between 2007 and 2011, though sales per capita remain low, according to a report from Smollan Group, another WPP field-marketing agency.

Mom-and-pop stores dominate and most Chinese still buy food in traditional "wet" markets. But the hypermarket segment is growing quickly, and it's fiercely competitive, with major Western players as well as those from Japan, Korea, Hong Kong and Taiwan. Domestic retailers are also expanding.

In the U.S., promoters are often older women handing out sausage slices on toothpicks. Meanwhile, China's PGs -- for "promoter girls" or "push girls" -- sport eye-catching uniforms, many with short hemlines. They range from the Quaker Oats promoter's blue minidress with frilly apron to the Yili "Children's Growth Milk" promoter's gold satin dress and white pumps.

Surgical masks cover their faces beneath the microphones they wear, speakers slung across the hip. (The masks are for hygiene purposes, since the promoters often hand out food and drink.)

Sometimes there are four promoters or more in one aisle, an aural assault on passing shoppers. The amplification is necessary to overcome the chaos of a Chinese store, which makes a day-before-Thanksgiving American supermarket seem civilized. The Tesco that Ad Age visited has 51 checkout counters. "Western consumers don't enjoy shopping at the hypermarket. They hate it. They want to spend 30 minutes there after work, fill up the car and then leave. Chinese consumers will bring their kids and turn it into a weekend leisure activity," said Serene Tang, who until recently was senior category manager-health and beauty for Tesco in China and previously worked for Tesco in the U.K. and Malaysia.

Lots of Renao
Western consumers "have more entertainment options. They can go to a bar to have fun. Going to the hypermarket is for buying the basics -- food and other necessities," she said. "But Chinese don't feel this way."

A Chinese hypermarket is claustrophobic to Western sensibilities, but local consumers expect renao. (Pronounced "ruh-now," it is literally translated as "heat and noise" and refers to a lively atmosphere like that of a traditional market.) Retailers have tried to replicate renao inside their stores. If it's too sedate, consumers will suspect products aren't fresh or that the store has a bad reputation.

The promotions girls are an important element of the atmosphere. Their amplified sales pitches must win over shoppers who are generally drawn to hypermarkets by the fresh offerings -- vegetables and fruit, eggs sold by weight, meat ranging from unrefrigerated lamb carcasses dangling from hooks to live fish in tanks.

It's apparently a powerful strategy: promotional products (including sale items, bonus activities, sampling and so on) make up 30% of hypermarket sales in terms of value, Ms. Tang said.

At the Shanghai Tesco, a young woman promoting Yili's blended-milk drink called out to an older shopper: "This contains red beans and peanuts, it's good for your blood and especially good for seniors." She offered a sample in a paper cup and tried to entice the woman with an orange hand towel, free with purchase.

In the personal-care section, 21-year-old promoter Ruan Lingli is giving out folding shopping trollies to a steady stream of customers -- free with the purchase of $14 in Unilever shampoo and conditioners.

"For older people, I recommend Hazeline because it's a brand that they recognize. For women who have dyed or permed hair, I'll suggest Dove. And men tend to have oily hair or dandruff, so I tell them about Clear ," she said, speaking in the rapid-fire manner of someone who makes sales pitches for much of her 16-hour shift.

A stylish middle-aged woman stopped in front of the Colgate "Optic White" toothpaste display, then asked promoter Ge Yunxia: Is this the toothpaste being promoted on TV by (Taiwanese celebrity) Big S? What flavors does it come in? Is it new?

The woman inspected the box while Ms. Ge, 24, presented the benefits. "Other whitening toothpastes might work well, but using them constantly will harm your enamel. Our toothpaste works from the inside out. The results won't be as apparent immediately, but you'll notice your teeth whitening over time as you continue to use it," she said.

Satisfied after their three-minute exchange, the customer walked away with a tube of the $4 toothpaste.  |Adage.com

Chicken-and-Pepsi Chips in China

PepsiCo is taking its global Power of One program to jointly promote beverages and snacks a step further in China, with the marriage of two Pepsi brands in a single product: Pepsi-Cola chicken-flavor Lay's potato chips.

Cola chicken is a common recipe in China, with chicken wings tossed into a wok and caramelized in soy sauce, spices and cola. In potato-chip form, the flavor is vaguely similar to barbecue with a sugary aftertaste. If there's any hint of Pepsi, it's fleeting and lacks fizz.

Richard Lee, PepsiCo's chief marketing officer in China, said the idea came from a brainstorming session involving teams from marketing and R&D, as well as Pepsi ad agency BBDO, Shanghai. Lay's launches a new flavor every year, and this time the goal was fusion.

"We thought it would be really cool to have a cola combined with chicken. ... It's a very popular dish in China," said Mr. Lee, who in 2010 became the first person to be put in charge of marketing and portfolio management for both food and beverage brands in China. "Also it would be very cool to involve one of our most-iconic soft drinks," he added.

The launch, in August, was much bigger than for any previous Lay's flavor in China, which include such unusual flavors as lemon tea (subtle), cucumber (cloying) and hot-and-sour fish soup (fishy).

The TV ad campaign played a joke on viewers, starting out like a Pepsi ad, with a guy rushing out to buy cola for his girlfriend -- not to drink, it turned out, but to use to cook chicken.

The product's name is a sophisticated word play. String Pepsi's and Lay's Chinese brand names together, and you get a double meaning: "Anything can be happy" as well as "Pepsi can become Lay's."

Lay's overall brand message in China is about enjoying the small things in life, a theme that resonates in a market where people can be dogged about earning more money and getting ahead.

"We want to celebrate a philosophy [that says] you can find happiness all around you,'" Mr. Lee said.

PepsiCo, like Coca-Cola Co., is making big investments in China. In Shanghai in November, it opened its largest R&D center outside North America, part of a 2010 plan to invest $2.5 billion over three years. Coca-Cola's soft-drink brands outsell PepsiCo's, according to Euromonitor International, but PepsiCo's snack portfolio is an extra asset.

"Coke and Pepsi have both stalled out in terms of growth potential in China," said Ben Cavender, associate principal at the China Market Research Group. "It's important for them to be developing new products and driving into these growth categories. I think Pepsi is probably better-positioned with the packaged food that it has to really make some gains there."  |Adage.com

Can China Build a Car That Will Sell?

Qoros, a new automaker from China, is aiming to be the first Chinese car brand accepted on an international level. And it plans to do so by rethinking the traditional auto-marketing standard -- speed and open roads -- and creating a practical, more "social" vehicle suited to urban life. Unlike other Chinese car companies, typically known for substandard, unsafe vehicles, Qoros is a venture between Israel's richest man and state-owned Chinese automaker Chery Automobile. It employs European executives and designers who are veterans of companies like Volkswagen and BMW.

 "We are a Chinese company in the sense that we are born in China, one of our parents is Chinese," said Stefano Villanti, Qoros' head of sales, marketing and product strategy, speaking from his office overlooking Shanghai's Oriental Pearl Tower. "On the other hand, we make international-level product."

He said when Qoros launched in 2007, its execs considered that many cars are rooted in decades-old ideas of speed and the open road -- far from the reality of constant gridlock in so many cities. Qoros wanted to make a car better suited for modern urban life.

 "We thought there was an opportunity to create something different, where the balance is tilted more to comfort, sophistication, digital connectivity -- what we call a social car," Mr. Villanti said.

A digital ecosystem allows the car to connect with the owner's mobile devices via an app and features a touchscreen "infotainment" system. And its sedan model features shoe storage on the passenger side for on-the-go footwear changes and additional space to stow water bottles.

One of Qoros' biggest challenges is overcoming deeply-rooted stigmas against Made in China." Mr. Villanti notes that consumers in China, Qoros' primary market and the world's largest car market, are the most distrustful of Chinese auto brands.

"Someone has to be a game-changer, and maybe Qoros has the opportunity once and for all to change the perception of quality for "Made in China,'" said Arto Hampartsoumian, CEO of BBH China, Qoros' creative agency of record. "Something so visible as a car, if it does live up to the expectation ... then they will be able to change perceptions on a bigger scale."
 ...
Qoros' shops include the Shanghai offices of Mindshare (media) and Agenda (digital). The focus is on telling opinion leaders and consumers who it is and why it exists, Mr. Villanti said.

The company's tagline is "A New Drive." Outdoor ads for the Shanghai auto show, which kicked off this past weekend, show Qoros sedans on an assembly line. It poses the question: "Does the brand create quality, or does quality create the brand?"

The 3 sedan, priced from about $21,000 to $29,000, is scheduled to go on sale in China and Eastern Europe at the end of 2013. A hatchback model set for release in early 2014 will help pave entry into Western European markets.

Qoros' biggest problem may not be the product, but the market into which it's launching, with car sales flat in China and on the decline in Europe. "The concept is good. The timing, however, is unfortunate," said Bertel Schmitt, editor-in-chief of automotive website The Truth About Cars. So does the world really need another car company? "No," Mr. Vallanti said. " Just a different one."

Read at Adage.com.

Michelle Phan, YouTube Maven

Adage lunched its 2014 Media Mavens list. Michelle Phan, YouTube-star, is one of them. She draw a lot of my attention after I watched her "Draw my life" at YouTube. It's very touching. I never thought the lovely girl had a very tough childhood.

Michelle Phan was a freshman design student at the Ringling College of Art and Design when she posted her first video makeup tutorial on YouTube in 2007. It got 40,000 views in a week.


By 2009, YouTube had approached her about joining its partner program, and after videos on "How to Get Lady Gaga's Eyes" brought her over a million subscribers, L'Oréal's Lancôme approached her about becoming the brand's official video artist. She quit school after her junior year.


Senior year was to be devoted to a capstone project, which was going to be creating her own makeup line. By 2013, she'd done that anyway, with Em by Michelle Phan through L'Oréal (and Ringling gave her a well-earned honorary degree).

She now has a YouTube channel with nearly 7 million subscribers, has starred in a Dr. Pepper commercial, started the multi-channel FAWN (For All Women Network) and is publishing a book in October.

But she's not giving up on makeup tutorials, which have become a genre dominated by bloggers like her rather than brands.

"Normal people, customers, just connect more to a person than a brand," Ms. Phan said. "A brand is a brand. You get great products, but you don't really connect to a brand. A lot of beauty brands are trying to crack the code, but I'll be honest, it's not a code you're supposed to crack. You have to go with the flow and let people like myself champion your brand and use the products in a more genuine and authentic way."


If you want to read her whole story, please go to Glamour.
Phan's new book: Make Up

P&G Early Foothold in China Pays Off

P&G says its Clinicare combats hair aging.

Talk about the health of any consumer-products multinational, and China will inevitably enter the conversation.

Loudly, in Procter & Gamble's case. On an earnings call last week CEO Bob McDonald said P&G has a $3.5 billion to $4 billion business there, far bigger than any rival. There are challenges -- P&G Chief Financial Officer Jon Moeller on the call faulted market-share losses in China for the company holding or gaining share in only 45% of its business globally last quarter. Still, P&G's business in China is growing at a healthy clip -- 16% in the last fiscal year -- bettering results from developed markets like the U.S. and Europe.

"P&G is so entrenched in China. They made the investments early and their brands have great cachet now. So, they're kind of like the team to beat," Deutsche Bank analyst Bill Schmitz said.

How has it gotten there? With early investment, insight-driven marketing and product innovations. P&G and Unilever are now about the same size in Asia, both with more than $18 billion in sales, but in China P&G is more than twice the size of Unilever.

In fact, P&G earlier this year relocated the global headquarters for its beauty and baby-care businesses to the Asian business hub of Singapore to better serve consumers in the region. Its ad agencies in China include Saatchi & Saatchi, Grey Group, Wieden & Kennedy, Leo Burnett, BBDO and Publicis. Citing a quiet period, a P&G spokesman declined to make Greater China President Shannan Stevenson available for an interview.

P&G's innovations include skin-whitening products from Olay and SK-II, which play into the dominant mentality in Asia that pale skin is beautiful. Crest toothpaste comes in flavors such as green tea. Tide Naturals has been a success in India, targeting the 200 million families there that still wash clothes by hand.

Chinese consumers buying washing machines for the first time are often given a complimentary packet of Ariel detergent, while Crest teaches kids in lower-tier communities how to brush their teeth.

In China, P&G's Head & Shoulders, Rejoice (formerly known as Pert Plus in the U.S.) and Pantene are the top three shampoo brands, commanding a combined 33.2% market share, according to Euromonitor data. Crest is China's top oral-care brand, while Olay is the top brand in the all-important skin-care category.

Crest Pro Health Complete 7 battles issues caused by 'modern lifestyles.' Crest Pro Health Complete 7 battles issues caused by 'modern lifestyles.'

The crux of P&G's $10 billion cost-cutting plan calls for focusing on its 40 largest and most profitable businesses, the 20 largest and most promising innovations and the 10 most important developing markets. P&G execs have not named specific brands and markets, but Pantene is almost certainly on the list. In China, its marketing strategy plays up concrete benefits to the demanding female consumer in a market where competition is fierce.

P&G has also introduced Clinicare by Pantene, targeting slightly older, higher-income women. The product combats what P&G calls "hair aging." The "Age Defy" campaign by Grey Group used the image of a restart button to educate women that hair ages just like skin does, Ms. Govindji said.

Meanwhile, Crest offers a portfolio of products targeting different demographics. The premium Pro Health Complete 7 toothpaste is aimed at top-tier consumers, while anti-cavity Repair is geared to a nationwide audience.

The marketing was built around the insight that "progressive modern life in China, oral health of Chinese people ... was depreciating," said Justin Billingsley, regional CEO and chairman of Saatchi & Saatchi Greater China, which handles creative for Crest. Complete 7 is positioned as fighting against seven oral-health issues caused by modern lifestyles, while anti-cavity Repair combats problems caused by sugary diets.

A key challenge for P&G going forward is stepping up in the beauty category, said Javier Escalante, executive director, Consumer Edge Research. He estimates that China will contribute 30% of the world's growth in the skin-care category over the next four years. Beauty offers high profit margins, and both men and women in China use skin-care products.

Read more at Adage.com.

Chinese Americans Face Stereotypes, Good and Bad

The first large group of Chinese immigrants came to the United States in the middle 1800s. At that time, some Chinese moved to the American west to build a railroad across the country. Many others worked in mines or on farms.
 
Chinese immigrants helped the U.S. economy. However, most Americans saw the Chinese as competitors.

William Wei

William Wei teaches history at the University of Colorado in Boulder. He says Chinese immigrants were not treated well. They had to live together in poor neighborhoods, or do hard work in laundries and restaurants that did not pay very much.

Mr. Wei says the American public did not believe Chinese immigrants could ever be part of their society.

In fact, in 1882 the US Congress approved and the president signed the Chinese Exclusion Act. The law barred Chinese people from moving to the United States and becoming citizens. It was the first and only US law to ban a specific ethnic group.

The US government cancelled the ban during the 1940s after China became an American ally in World War II. Yet the government limited the number of Chinese migrants to just 105 per year. Finally, in 1965, the government ended the system restricting Chinese immigration.
 

Frank Wu

​Frank H. Wu leads the Hastings College of the Law at the University of California. He says the history of Chinese immigrants in the United States helps explain why so many Chinese Americans are well-educated.

“The Chinese people who were able to immigrate were talented, they were students on scholarships, they were people who had great potential,” he says.

Mr. Wu says many Chinese Americans are pleased the American public considers them smart, good citizens who fit well into the country.

But, he adds, even positive stereotypes about Chinese Americans cause problems.

Mr. Wu says the United States includes people of many races, and one race should not be considered better.

He says white Americans may also blame other minorities for not being as successful as the Chinese.

“Some Americans say: ‘Look what we did to the Chinese. We discriminated against them, committed violence against them, excluded them from our country, yet they still have achieved. Therefore, if your minority has not succeeded in our land of opportunity, it is clearly your fault.’”

Mr. Wu says such thinking leads people to think victims are responsible for their abuse.

Charles Gallagher of LaSalle University added that all Chinese Americans are not good in school. One who does not succeed as easily may feel he or she does not really belong.

Helen Zia

Helen Zia is a Chinese American writer. She says US policy makers may believe the Chinese are successful, so the government does not have to help those who are poor or suffering.

And, Ms. Zia says, some people may believe Chinese Americans are too successful. 

“If we are perceived as being able to endure everything,” she says, “it also means that we can be perceived as being able to take over everything.” Read more at VOA.

Another Chinese Counterfeit Product: Social-Media Followers

Chen Kun, a Chinese actor

Chen Kun is a Chinese actor, singer and heartthrob who has touted products from Johnnie Walker whisky to KFC chicken. He's also a social media master: On Weibo, the Chinese Twitter, he's listed as having 72.5 million followers. Yes, 72.5 million.

Let's pause to ponder that number: That's nearly 12% of China's Internet users. It's more than the population of France. By comparison, Justin Bieber has a mere 50.8 million Twitter fans around the world.

Clearly Mr. Chen, 38, has a huge fan base, but is the 72.5 million number the real deal?

Surely not, say Chinese social-media experts, who treat such numbers with skepticism, partly because China's Weibo population is swollen with fake followers. They're referred to as "zombie fans," and they haunt brands as well as celebs.

So why would anyone buy zombies to unleash on Weibo, which China's Sina Corp. is preparing to spinoff in an initial public offering on the Nasdaq?

Because size matters, obviously.

One Asian ad exec who asked not to be named described buying fake fans to give an ego jolt to a new venture in China. The rate, he said, was about 5 U.S. cents for a zombie that's just a name, and 16 cents for higher-quality fakes with some content on their profiles. In addition to zombie fans, there's a market for faux re-tweets and comments, too.

It's hard to get a clear picture on the exact size of the problem, or how Weibo's fakes compare to those on Twitter. (Twitter said in its initial public offering filing in October that it believed less than 5% of monthly active user accounts were false, though some observers say the figure is higher.)
Weibo influencers and their followers:

Weibo, which says it has 129.1 million monthly active users and that it is committed to fighting faux accounts, hasn't given an estimate of how many there are.

New questions are being raised about how many Weibo accounts are real and truly active, and about how the platform should define active use. A professor at the University of Hong Kong recently found that 10.4 million Weibo users were responsible for around 94% of all messages, while other users just re-shared those messages or never posted anything, according to an article in the South China Morning Post this week.

Rand Han, founder of Shanghai-based social media agency Resonance China, said fake fans may have PR and vanity appeal, but they have a negative impact on community managers and content.

"Generally you'll see accounts that inflate [numbers] also have very poor, irrelevant content, mostly because the mechanism that tells you how good your content is -- new followers, real engagement -- has been broken," Mr. Han said.

Still, agencies can feel pressured to buy them. It's a cycle that Mr. Han describes like this: "A brand wants 1 million followers but also doesn't have the budget, or resources, or any significant assets to achieve this number [organically], and is also tied down by global guidelines," he said. "Then three agencies pitch and the only way they can win is to promise said numbers. One promises, and due to the lack of support, chooses to fake. When the next agency comes in, they have to keep pace with the previous agency. The only way to do this is to also fake."

How do you fix the problem? Through "education, or introducing new metrics, like active and verified rates, to temper expectations," Mr. Han said.

Sam Flemming, founder and CEO of China-based social business intelligence firm CIC, says more brands are "trying to weed out zombie fans or stop the practices leading to zombie fans."


Read more at Adage.com.

Apple Watch Makes Its Fashion Magazine Debut In China

Liu Wen Wearing the device

The Apple Watch will makes its media debut in November, gracing the cover of Vogue China. Liu Wen, a 26-year old supermodel, will sport the Apple Watch Edition, one of three models for the device Apple unveiled in September.

"Vogue China is following in the Vogue tradition of moving with the times, giving our readers the first glimpse of a pioneering piece of technology that also doubles as a highly covetable fashion accessory," Angelica Cheung, the magazine's editorial director, said in a statement.

A spokeswoman for Vogue China said putting Apple Watch on its cover was the magazine's idea. "The styling of the Apple Watch on the cover of Vogue China's November issue is an editorial decision, coming about in the same way the editor and team select and style pieces on all their covers," the spokeswoman said in an email.

Still, cooperating with the request -- the watch won't be available to the public until sometime next year -- signals the Cupertino, Calif. company is looking to cement its brand both in fashion and in the wider world.

For its event introducing the watch, Apple invited press from multiple fashion publications, a first for the company. After the event, Apple hired a top marketer from Gap, adding to its roster of recently acquired executives from fashion and retail. Apple's global retail chief, Angela Ahrendts, who left her position as CEO of Burberry in 2013, is focusing intently on expansion in international markets.
China, in particular, has been an increasing priority for Apple. The nation's slice of the company's revenue expanded from 2%, in 2009, to 16% last quarter.

Pre-orders for the iPhone 6 and iPhone 6 Plus -- larger smartphones, which have sold more successfully across Asia -- began on Friday morning in China. Within six hours, one million orders were taken by the three largest carriers, according to Fortune.

Apple did not return requests for comment.

The Vogue China cover was styled by Karl Templer and photographed by David Sims, both veteran Vogue contributors. Apple Watch Edition, the product worn on the cover, sports an 18-carat gold casing. The company also released a basic version of the device and an activity-oriented version, Apple Watch Sport. Apple has not commented on the pricing of the products, which will begin shipping in 2015 at an unspecified time.

Read more at Adage.com

The Simpsons Now In Mandarin

“Woo hoo! Now we can reveal Springfield is actually in Guangdong.” That was how The Simpsons’ executive producer greeted news that the hit US show will air for the first time in China. The long-running hit starring the doughnut and beer obsessed Homer Simpson and his irreverent son Bart will be streamed online in China by Sohu Video, reports Variety. The latest season (there are 26 in total, in case you wondered) will be shown with subtitles in Mandarin, in a deal done with the show’s maker Fox.

“The introduction of The Simpsons, a household name in the US, will further enrich our users’ choice of the best American content when they come to our platform. This deal once again demonstrated our commitment in bringing the best experience to our users and tireless efforts to enhance our competitive edge in the industry,” said Charles Zhang, Sohu’s boss. The timing of the deal will strike some as noteworthy, given Beijing has recently banned some US shows from airing on online video streaming platforms . (Week in China)

Going Gaga Over Alibaba

What do Midland Railway and IBM have in common? The answer is they were the largest companies by market capitalisation in the UK and the US when each country reached the apex of its economic dominance in 1914 and 1967 respectively.

Both firms were emblematic of their era. Midland Railway was the biggest coal hauler in the country that had ushered in the industrial revolution. IBM was the leading hardware manufacturer at the dawn of the computer age when American consumers were the envy of the world.But the two examples also highlight how fleeting global hegemony can be.

Few now remember the railway firm, which lost its independence after the First World War thanks to the Railways Act. IBM may still be a colossus, but it no longer ranks in the top 20 global companies in market cap terms.

In fact, when the New York Stock Exchange opens later today, IBM is also likely to be eclipsed by Alibaba, the company now best symbolising China’s ascendance on the world stage. The e-commerce giant priced its IPO in New York last night at $68 per share to the thunderous applause of global investors.

How gigantic is the deal?
Should the greenshoe be exercised, Alibaba’s flotation will raise $25 billion and rank as the world’s largest, beating Agricultural Bank of China’s $22.1 billion debut in 2010. When founder Jack Ma rings the opening bell, Alibaba’s market cap will be $177.5 billion, similar in size to Samsung Electronics. However, the stock price is expected to be much higher by closing on its first day, fuelled by newspaper hype and insistent demand from investors. Enthusiasm for the deal has been overwhelming, notwithstanding the fact that many investors have placed inflated orders to try to get some kind of allocation. The frustrated purchasing power of unallocated institutions, combined with the mass of retail investors who were unable to get into the IPO at all, could easily push the stock up into the stratosphere over the coming few days.
...
How is it likely to perform?
What happens to Alibaba after the initial fanfare dies down depends on what investors believe about its prospects for growth. Shareholders are unlikely to reap the same upside as investors in rivals Tencent and Baidu, which both listed a decade ago when they were less than five years old. Tencent has risen 150-fold since its June 2004 IPO, for example.

Alibaba is now 15 years old, so can we expect similar growth? There are numerous jumbo IPOs of companies with relatively mature business models which have still done well for investors. The most famous is Visa, which listed in March 2008 and still ranks as the largest IPO on record by a US firm. It rose 28% on its first day of trading and has quintupled since then.
...
A century of upside?
Jack Ma has no such qualms about Alibaba’s future. In the company’s pre-roadshow filing, he wrote a letter to prospective investors explaining how the company is only at the beginning of a 102-year journey, that will span three separate centuries from its inception in 1999.

Alibaba is not a mature business, its management says. Rather, its digital ecosystem will disrupt and transform all that it touches to the benefit of its Chinese customers and, increasingly, its global ones too.

A few years ago, Alibaba identified three pillar industries. In many respects it has only made inroads into the first one – e-commerce.
...
And outside China?
For many Chinese companies, their hallmark of success comes from going global. Alibaba has not really spent too much energy overseas yet, although it has made a number of smaller acquisitions. This is likely to change.

As Jack Ma put it in his recent investor letter: “In the past decade, we measured ourselves by how much we changed China. In the future, we will be judged by how much progress we bring to the world.”

Sohu Finance says one upshot of the IPO is the way it is shaping new perceptions of China’s internet firms. It notes that past listings tended to reinforce the view on Wall Street that China’s online giants were copycats of business models born in Silicon Valley. Thus Baidu was referred to as China’s Google, Renren as China’s Facebook and Sina Weibo as China’s Twitter.

“Of course, there are still many people calling Alibaba China’s Amazon,” writes Sohu Finance. “But this time there are a growing number of Wall Street investors realising that this title is not accurate.” In fact, many have given up trying to apply a simile to Ma’s creation.
 ...
Oh yes, so why didn’t it list domestically?
Some wonder why Alibaba didn’t list in Shanghai – where enthusiasm for buying into the IPO would have been intense.

But Doug Young, who writes the Young China Biz blog, says that this was never a realistic option since Alibaba is incorporated outside China (a common practice among Chinese venture-backed tech firms).

“Such overseas incorporation has not only barred internet giants like Tencent and Baidu from listing in China, but has also locked out other major names like China Mobile and Lenovo, which are also technically incorporated outside China for historical reasons,” he notes. Read more detalied report at Week in China.

Putting the Knife In

Lesson number one in how not to win friends abroad: deface an ancient Egyptian temple with your autograph. This was the mistake made by Nanjing teenager Ding Jinhao on a family holiday to Luxor. The graffiti was spotted by another Chinese tourist and posted online with a message about how Ding had brought shame on the nation. Even Vice Premier Wang Yang piped up, worrying how China’s new breed of tourists were sullying its reputation abroad: “They speak loudly in public, carve characters on tourist attractions, cross roads when traffic lights are red, spit anywhere and indulge in other uncivilised behaviour. It damages the image of the Chinese people and has a very bad impact,” he lamented.

Well, it seems lesson number two in how to besmirch China’s national prestige comes courtesy of a boorish tour group visiting Southeast Asia. According to the Qianjiang Evening News, 30 tourists caused havoc on a Singapore Airlines flight when they refused to give back the stainless steel cutlery. This posed an unexpected dilemma for the flight crew as they tried to retrieve the knives, forks and spoons. The incident was only resolved when the furious tour guide screamed at them: “Stop hurting the reputation of Chinese people!”

Read more at Week in China.