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6.2 THINKING

A BRIEF ON: INNOVATION // TECHNOLOGY // CULTURE

MADE IN CHINA


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CONTRIBUTORS Ben Rennie Co-Founder/Editor Partner/Director 6.2 || an innovation lab @benrennie

Glenn Chandler Co-Founder/Creative Owner – Seek&Design

Courtney van der Weyden Digital Content Manager @unclutteredwhitespaces

Paul Breen Partner/Director 6.2 || an innovation lab

Sally Hill sustahood.com sallyrhill@gmail.com @sallyrhill

Marie Lena Tupot www.scenariodna.com marielena@scenariodna.com @mtupot

Tim Stock www.scenariodna.com timstock@scenariodna.com @timstock

David Gillespie collectorsed.com @davidgillespie

Ryan Jacoby ryanjacoby.com @jacobyryan

Dan Solo nerdi.com

Paul Voulas nerdi.com

Leila Hibri Business & Brand Strategy

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FROM THE EDITOR

Editor & Founder of uncluttered white spaces On Twitter: @benrennie

THE MISCONCEPTIONS OF MADE BETTER IN CHINA BEN RENNIE

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HTTP://UNCLUTTEREDWHITESPACES.COM

At a recent conference for the Australian

in a wide variety of industries. A direct result is

technology and then there has to be a huge

Tourism Industry, I was asked to speak about

the hidden cost of doing business in China. The

push to get millions of people to make the

consumer behaviour and emerging trends.

old assumption is that things made in China

same decision at about the same time. It might

During my research, all roads led to China.

were cheap and poor quality. To dominate

work, but it’s awfully expensive”.

world markets, we need to ensure what we are The travel industry in Australia is in a good

creating is better, better than the Americans

Small markets aren’t as sexy, but they’re

place. After all, it is not a hard product to sell.

and any other country in the world for that

actually a better place to start.

The outdoors, great cities, great people, lots of

mater. So to combat this, China is getting very

open space and one of my favourites; beaches,

good at making things better in China. In fact,

thousands of beaches. The problem with being

during my research, things are more often

China right now is everyone is talking about

than not, “made better in China”.

China. The enthusiasm over the past decade for businesses to invest, produce and sell in

The direct result of this can be very high costs

China has been at the forefront of everyone’s

of doing business with China. Of course,

lips.

far from having to produce in China to be globally competitive, the truth may well be the

This has been fuelled by the assumption

opposite.

that China has chosen the capitalist road and that business is a matter of free market

To me, I regard China (of course) as a big

competition without government intervention

economy. Big markets always look inviting and

and interference. The costs of doing business

full of opportunity. There is a problem though

are extraordinarily low in China and therefore,

with big markets. Seth Godin spells it out far

to be globally competitive, a company has no

better than I ever could;

choice but to produce there.

Certainly any significant business needs to be extremely careful in how it deploys and operates in China. This is big business and they do big business well. The trends and the rise and rise of made better in China provide an opportunity for everyone, if you are prepared. Thank you again for reading the Black Report, we hope you enjoy our China Edition and please, let us know your feedback. Thanks, Ben Rennie

“The problem with huge markets is the These assumptions aren’t true. Whilst the

same problem you’d have playing squash or

ambition is there, China is only halfway onto

raquetball on a court that’s too big. The ball

the capitalist road with the local government

doesn’t have a wall to bounce off of. Huge

far from withdrawing from the economy

horizontal markets have no echo chamber, no

or the control of information. The Chinese

niches, no easy entry points. To make a system

government wants local companies to succeed

like this work, everyone has to agree on the

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INNOVATION

A PEDAL POWERED HOME

A HOUSE THAT CAN BE MOUNTED ON A TRICYCLE COURTNEY VAN DER WEYDEN

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HTTP://WWW.PEOPLES-ARCHITECTURE.COM/PAO/ Design duo Peoples Architecture Office and Peoples Industrial Design Office have together created the innovative concept of a ‘pedal-powered micro-home on wheels.’ The tricycle house design proposes that the load platform of a tricycle act as the foundation for a mobile home and garden. The idea extends from a fundamental condition within China, the inability to own land. It was designed for the future-themed 2012 Get it Louder exhibition held in Sanlitun Village Beijing. The micro-house is constructed from polypropylene plastic that can be folded without losing its strength. The plastic is cut and scored so it has the flexibility to be folded in and out, similar to an accordion. Complete homes can be expanded and linked to create extra space and compressed to become smaller. Houses contain water tanks, spacesaving shelves, hooks and multifunctional furniture that transforms from a bed to dining table. The plastic is translucent to allow sun and street light to permeate the home without compromising privacy.

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INNOVATION

A NEW SELF-SUSTAINING AND ENVIRONMENTALLY FRIENDLY CITY A CITY TO BE DEVELOPED ELIMINATING THE NEED FOR CARS COURTNEY VAN DER WEYDEN

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HTTP://BIT.LY/13V7W2Q

Architecture firm Adrian Smith + Gordon

of shuttles, plazas and parks. The vision for

60% construction and 25% infrastructure and

Gill have revealed plans for a new city to be

the city is for it to be dominantly pedestrian,

roads. By 2020 it will be determined whether

developed in Chengdu by Beijing Vantone

half of the roads will be allocated to cars, the

the final results live up to its promise.

Real Estate. Titled Chengdu Fianfu District

other to those who choose to travel by foot.

Great City, it has been designed to be

As a result, nothing is further than a fifteen

“Great City resolves the relationship between

replicated in various locations throughout

minute walk away from anything else. It will

high-density urban living and sustainable

China. The city that will be self-sustaining

be connected to Chengdu and surrounding

development. This project will provide all basic

and environmentally sensitive is a solution

locations via mass transit.

services to its residents through a sustainable

to the overburden of infrastructure,

infrastructure that supports education,

a problem that the country faces with

Being environmentally friendly the city

commerce, culture and an improved quality of

urbanisation. Consequently it will not

will use 48% less energy, 58% less water,

life. It demonstrates how China can reduce its

contribute to high energy consumption and

89% less landfill waste and 60% less

ecological footprint while creating economic

carbon emissions.

carbon dioxide than ?. To live up to its

conditions that are affordable for the majority

environmentally sensitive standards, the city

of citizens and address contemporary social

The city that will take eight years to complete

will be surrounded by a 480 acre buffer of

concerns.”

will have a population of 80, 000 people. It will

landscape. Furthermore, valleys and bodies

be 1.3 kilometres square and consist primarily

of water will be integrated into the city. 15%

Quote: Adrian Smith

of the city’s area will be designated to parks,

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TECHNOLOGY

ANGRY BIRDS INVADE MCDONALDS CHINA

POPULAR MOBILE APP JOINS FORCES WITH FAST FOOD GIANT COURTNEY VAN DER WEYDEN

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HTTP://YOUTU.BE/TBJIUEW7JPC

In October 2012 Angry Birds invaded China

“We’re always creating new engaging

by way of McDonalds. Rovio partnered with

experiences for our fans everywhere,” said

fast food retailer McDonalds to promote

Paul Chen, General Manager for Rovio China.

their highly popular game, Angry Birds. The

“With this campaign, we are once again

alliance acted as a call for more players and

bridging the gap between the physical and

customers. The multi-faceted campaign

digital worlds, with the in-game experience

consisted primarily of a location-based

complementing the 1500 completely branded

Angry Birds themed game that could only be

physical locations in a new, surprising way for

played inside McDonalds restaurants. When

our fans in China.”

played from either a iOS mobile or desktop device, the game would allow for the unlocking of special hidden game modes and free power-ups that aren’t available when played anywhere else. The game was exclusive to the location. Users were also invited to vote for one of 1,500 sites to host a life-size bird catapult on the golden arches with the aim of destroying enemy pigs. A television commercial was also executed to launch and promote the campaign. The campaign featured in game advertisements, online advertising, in-store promotions, social and outdoor media. The outdoor proportion was executed by Leo Burnett Shanghai with non outdoor components created by TBWA Shanghi and TBWA Gamelab. This campaign highlighted the importance of games as media for particular brands. “We’re delighted about this exciting new initiative in China,” said Christine Xu, Vice President, Marketing for McDonald’s China. “Both McDonald’s and Rovio are brands that are very focused on their customers, wanting to constantly bring them better and more engaging experiences [sic], and that’s what brought us together.”

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CULTURE

THE TOP TEN MOST VALUABLE BRANDS IN CHINA

A STUDY OF THE MOST VALUED BRANDS IN THE CHINESE MARKET COURTNEY VAN DER WEYDEN

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HTTP://BIT.LY/XXF78O

On December 4th 2012 Milward Brown Optimor and WPP Brandz released a repot that ranked the top fifty most valuable Chinese brands. Commissioned by WPP and undertaken by Millward , the study indicated that brands are becoming more

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important to Chinese consumers.

8 Name: Kweichow Moutai Worth: US$13 million

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Location: Renhuai, Baijiu Industry: Finance What they do: Local sorghum based liquor that has been produced for more than 2000 years

Name: Bank of China Worth: US$13.6 million Location: Beijing Industry: Finance What they do: Recently been focusing on global expansion

Name: Sinopec Worth: US$12.539 million Location: Beijing Industry: Oil and Gas What they do: Primarily a petroleum refiner and producer of petrochemical products

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and trading. In 2012 it became the first Chinese bank in Poland and Sweden


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Name: China Life

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Worth: US$14.4 million Location: Beijing

Name: ICBC

Industry: Insurance

Worth: US$40.4 million

What they do:

Location: Beijing

China’s largest insurance company and has

Industry: Finance

benefited from the growing middle class who view insurance as a necessity

Name: Baidu Inc Worth: US$22.7 million Location: Beijing Industry: Technology

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connect with domestic clients

international expansion in Latin America

world, China’s own Google

Location: Beijing

The bank used innovative technology to

with the largest IPO. It is currently pursuing

It is the second largest search engine in the

Worth: US$17.3 million

What they do:

In 2006 the company set a world record

What they do:

Name: ABC Agricultural Bank of China

Industry: Finance

What they do:

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1 Name: China Mobile Worth: US$50.6 million Location: Beijing

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Industry: Telecommunications What they do: With over 700 million subscribers it is the Name: China Construction Bank

worlds largest wireless provider

Worth: US$24 million Location: Beijing Industry: Finance Name: Teccent Worth: US$20.2 million Location: Shenzhen Industry: Technology What they do:

What they do: Due to government borrowing for infrastructure and to stimulate the economy, the bank helped navigate the economy into slowdown

Is China’s tech leader that owns Weibo, a twitter like micro-blogging platform

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TECHNOLOGY

VIRTUAL SHOPPING CENTRES

SHOPPING MALLS ONLY VISIBLE THROUGH A SMART PHONE COURTNEY VAN DER WEYDEN

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E-commerce grocery site Yihaodian plans to open over one thousand virtual supermarkets across China. The grocery stores are to be located in vacant, blank city areas and be referred to as ‘Unlimited Yihaodian’. Plans indicate that the stores will be 1200 metre square areas and will merge the offline world with online. Customers are given the ability to walk around the ‘store’ and browse, however there is no need to physically carry anything purchased as it occurs in the virtual world. A smart phone is needed to see the products on sale using augmented reality. Once selected they are delivered to the customers door. The company, which is the largest in the country and partly owned by American retailer Walmart (fifty one percent) previously used QR codes on posters. These were positioned on subway walls in city stations. This venture will be larger than the smaller scale project. The stores will be the same size as ten average urban Chinese apartments and will be larger than most convenient stores.

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HTTP://BIT.LY/QNADYU


TECHNOLOGY

A MOBILE APP STORE TO RIVAL ITUNES

A MARKETPLACE TO SELL APPS, GAMES, E-BOOKS AND MUSIC COURTNEY VAN DER WEYDEN

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HTTP://BIT.LY/Y2KPXK

Berlin and Beijing start-up 88tc88 have

with global music distribution leader The

launched a multimedia app store. Titled

Orchard, means the start-up is on the fast

Paishouba, meaning ‘let’s clap’, is set to

track to becoming one of the biggest providers

rival Apple’s iTunes. The mobile commerce

of music and ebooks in China.

experience will sell legal apps, mobile phone games, e-books and music to the

The Chinese team is made up of ten people

worlds biggest mobile marketplace. Similar

who are located in both Beijing and a dozen in

to its competitors Apple and Google Play,

Suzhou, outside of Shanghai. Their goal is to

there is both free and paid content available

have over one million subscribers by the end of

and it is compatible with iOS, Android and

this year.

HML5 versions of web apps. Payments can be made via Alipay, China’s biggest standalone e-pay platform. While iTunes offers paid-for apps, it does not offer any other products for sale locally, Paishouba hopes to fill this void in the market. As well as being an online retailer, the platform aims to have a social element allowing for networking. Users are invited to create their own community experience with the inbuilt social features. One of these is its own virtual currency PaiBi. Users can shop with the unique currency to gain bigger discounts. The platform also allows for social media integration. Sign up is available through top social media platforms QQ, RenRen and Weibo. Content is available through a cooperation a with western labels and publishers. Currently available is a mixture of old and new western rock and pop music which according to Tech in Asia, the site may or may not resonate with the local market. Currently there are is over one million songs in 320Kbps format available and over 330,000 app and game listings. Exclusive content is also on offer. A seven figure investment from Alstin and partnership

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CULTURE

CHINA: WHO GETS TO LIVE WHOSE DREAM? MARIE LENA TUPOT & TIM STOCK

AS THE WORLD WONDERS WHERE THE AMERICAN DREAM HAS DISAPPEARED TO, CHINA HAS BEGUN TO WONDER WHAT ITS OWN DREAM MIGHT LOOK LIKE.

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by Marie Lena Tupot and Tim Stock, scenarioDNA inc. www.scenariodna.com

The speed and size of economic

Brown and Company in 1931, fundamentally

development going on in China has never

“that American dream of a better, richer, and

happened before so there is good reason to

happier life for all our citizens of every rank.”

imagine the potential. The fast rising wealth is causing a flood of iconic Western brands

The rising middle class in China is still only

to consistently move into the region: Marc

a minority with money essentially only for

Jacobs, Vera Wang, Hugo Boss, to name a

better and safer basics. This is hardly the

few.

everyday disposable-income luxuries typically associated with the middle class. Yet they are

But is that what the world expects the Chinese

optimistic. One research group reported by the

Dream to look like? A simple shift of high-

Washington Post found that most of the middle

ticket finery from West to East? That’s one part

class think someday they will be rich.

of the story. However, the brands being most

And they do have reason to believe. The

embraced are presently the subtle ones, like

Chinese government is using large subsidies

Swiss-label Chloe and Italy’s Bottega Veneta.

to educate young people, reports the New York

CNN Money reported in 2012, a slowdown for

Times, which is similar to the United States

label-boasting Burberry and Louis Vuitton in

building its post-war middle class using the GI

China.

Bill.

As the Chinese gain their footing and identity,

The question is, once all is said and done,

the door is opening for new more localized

will the new middle class in China have

visions. The Financialist credits designer Guo

reason to stay in China? The US’s investment

Pei with inventing Chinese haute couture. Her

inadvertently led to an individualistic society

designs are rooted in Chinese tradition. Others

that is now rethinking itself for the future of its

have followed in her path, but all in all home-

children.

grown luxury offerings remain elite. Building reason to stay means addressing An article by John Gong in the South China

current real life, and sustainable momentum.

Post says while the Chinese dream of national

And that means seeing all the cultural

revival is well and good, it must make space

variations of middle class as they evolve.

for the aspirations of its citizens, and that

means fostering a society where all can thrive. This is actually more inline with the original meaning of the American Dream as penned by James Truslow Adams, published by Little,

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INNOVATION

CITY ATOP A CITY

A SMALL COMMUNITY IS BUILT ON TOP OF MALL COURTNEY VAN DER WEYDEN

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The city of Zhuzhou has implemented a

desired look and feel. They were designed

thirty-four national garden cities in the past

living roof in the form of four villas located

to be offices for the mall’s real estate

twenty years. Beijing has introduced a new

on top of the Jiutian International Square

development company and 160 employees.

rule that requires green rooftops, in the form

Mall. The roof of the mall now serves a

of living vegetation, on buildings that have less

new purpose, it is home to four suburban

Green roofs serve as a way to mitigate the

than twelve floors and were built within the

looking houses that stand two stories tall.

impacts of the urban heat island effect.

last twenty years.

They are located at opposite corners and

They help urban areas cool down as they are

are 500 square metres in size. The designer

generally hotter than neighbouring rural areas.

of the development combined ‘modern

The government has also made investments to

designs with landscape decor’ to create the

build a green city after it was named one of the

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INNOVATION

CHINA’S UNDERGROUND HOTEL

A HOTEL DESIGNED TO SIT INSIDE A QUARRY COURTNEY VAN DER WEYDEN

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HTTP://BIT.LY/TZT9N5 Construction has commenced on a luxury resort that delves over 100 metres underground. The hotel will hug the side of an abandoned quarry located at the foot of the Tianmashan Mountain. The hotel will have three levels above ground and nineteen underground and will be surrounded by large-scale theme park,Shimao Shanghai Wonderland. The resort is developed by the Shang Shimao Property Group and will be managed by Intercontinental Hotels. It will consist of 380 rooms, a sports facility and underwater restaurant and spa services, complete with a sixty metre glass curtain wall next to the main structure, designed to mimic a waterfall. The pit of the quarry is 100 metres deep, 240 metres long and 160 metres wide. The lowest twenty meters is filled with stagnant rainwater that the hotel will retain. The site has been a quarry since the 1950s. It was abandoned in the year 2000 and purchased in 2006 by the developers to transform into the theme park that will integrate hospitality, leisure and entertainment elements. The hotel was designed by UK based engineering firm Atkins and in 2011 was awarded with a gold medal at the commercial real estate MIPIM Asia Awards. Experts predict rooms will start from US $320 a night, twice the amount currently charged by five star hotels. The hotel is projected to open in 2014 or 2015.

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CULTURE

TRAVELLER TAKES TEN THOUSAND PORTRAITS OF CHINESE PEOPLE

COMMUNICATING THE DIFFERENT CULTURES OF CHINA VIEW LINK: HTTP://WWW.TOMCARTER.ORG/ Tom Carter travelled across the continent of China over a period of two years. He roamed across thirty three provinces, covering 35,000 miles and consequently connected with fifty six different cultures. Using a technically challenged fourmegapixel point and shot camera, he collected 10,000 portraits of the Chinese people he came into contact with. Due to limited features he was forced to get up close and personal with his subjects. However, he believes that his work benefited from the use of a simple camera. Tom was a budget traveller, staying in accommodation that ranged from US$1-$3 and used a variety of transportation including bus, boat, mule, motorcycle, train and by foot. Carter’s reasoning for the portraits was to eliminate the notion that Chinese people are all the same, homogenous in culture and identity. “China is not just one place, one people, but 33 distinct regions populated by 56 different ethnicities, each with their own languages, customs and lifestyles.”

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CULTURE

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CULTURE

CHINA’S INTERNET IS A GIANT SHOPPING MALL VIEW LINK: HTTP://BIT.LY/15RTQMR Alibaba Group, the biggest e-tailing company in China created the following infographic that visualises the online shopping scene in the country. In 2013 online sales in China are projected to reach $265 billion. This will exceed all other countries including the United States making the mainland the world’s largest online shopping market.


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CULTURE

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CULTURE

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CRITICAL LINKS

BRANDS, BOOMS, BOOKS AND BUSINESS SOME OTHER LINKS WORTH A VISIT

BOSS RAIL: THE DISASTER THAT EXPOSED THE UNDERSIDE OF THE BOOM http://www.newyorker.com/ reporting/2012/10/22/121022fa_fact_osnos

BRANDZ TOP 50 MOST VALUABLE CHINESE BRANDS 2013 http://www.wpp.com/wpp/press/2012/dec/04/ brandz-top-most-valuable-chinese-brands

OF CHINESE CULTURE, COMBS AND KANT, WITH MICHAEL B. GRIFFITHS http://advertising.chinasmack.com/2013/ofchinese-culture-combs-and-kant-with-michaelb-griffiths.html

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EIGHT WAYS TO FAIL IN CHINA http://advertising.chinasmack.com/2012/heres-athought-eight-ways-to-fail-in-china.html


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