Mao Suit Weekly News – July 15

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Diaosi Image. Source: tea Leaf Nation

Posting is still a bit haphazard at the moment as efforts goes into the long awaited Mao Suit redesign. It should be complete very soon. The Great Fire Wall also provides incessant frustrations in uploading photos and internet speeds that make blogging almost intolerable.

Plane or train? That’s the dilemma facing travelers these days plying China’s busiest transport artery between Beijing and Shanghai.  Door to door between Beijing and Shanghai’s CBDs its quicker to fly, with the journey taking 3-4 hours (without delays). The bullet train will take 6-7 hours.

This week travelling to Shanghai I decided to take the bullet, and although it takes the best part of a day, it runs on time to the second and besides being comfortable is a great way to see the countryside and remember that China isn’t all just mega – cities.

Because time is of the essence and day trips are common most fashion executives still opt to fly, yet at China’s airports major flight delays are a daily nightmare.  As reported in links below, Beijing is now officially the world’s most delayed airport.

Earlier this month I sat on a plane at the terminal in Beijing for over five hours before being cleared for take off and other horror stories are common. Luckily I was riding Cathay Pacific and the pilot kept us well-informed on proceedings and all was calm. I’ve also been on other flights inside China where passengers were kept in the dark on eventual take off time and the cause of the delay and bedlam ensued. Air rage is becoming a real issue in China, and maybe we all need some onboard performances by the Philadelphia Orchestra to calm things down.

China Flying tip: Early morning flights are ‘less’ delayed because the plane is already at the airport and not en-route from somewhere else.

Bullet train travel tip: For the Beijing –Shanghai route go for business class tickets, its actually more comfortable than first class!

I’m heading to Shanghai today for the Novo Mania Fashion Trade Show and then to look at a massive new luxury real estate development. More is never enough!

 

LIFE IN CHINA

Beijing China Airports World’s Worst for Delays –WSJ

Stories of travel in Chinese airports are a horror genre in their own right, and with good reason: When it comes to on-time arrivals or departures, the country’s airports are literally the worst in the world. According to FlightStats, which tracks airport statistics, Beijing’s airport ranks dead last among the world’s top 35, with fully 82% of flights failing to leave on time. Second worst was Shanghai, at 71%.

 

Beijing airport scores as worst for flight delays globally – Shanghai Daily
ONLY Beijing was worse than Shanghai for flight delays in the first six months of the year, according to a survey of 35 major airports around the world. Pudong International Airport had a punctuality rate of less than 30 percent, US-based aviation data provider FlightStats said yesterday, while Beijing Capital International Airport was the world’s worst at just 18.3 percent.  Only 28.7 percent of flights took off and landed at Pudong on time in the first half of the year, the survey revealed. Article states that survey results didn’t even include delays on the Shanghai – Beijing route.

 

Beijing State of Mind – Youtube and Youku

This version of Jay Z and Alicia Keys’ chart topping song about New York has been remade to Beijing specifications. It’s really well done and went viral in the foreign community in Beijing. Beijing and Shanghai have a strong rivalry and each city has its pros and cons for the fashion business. In terms of foreign communities Shanghai has more  ‘business types’ in China for the gold rush (while it lasts). Meanwhile,  Beijing has more ‘intellectual’ types who are actually interested in China, speak Mandarin and feel that pollution, traffic and freezing winters all build character.

Where would you rather live?

 

CONSUMERS

Are China’s ‘Losers’ Really Winning? – Tea Leaf Nation

The diaosi are poised to become the mainstream consumers in China …“Diaosi” originated as an insult for a poor, unattractive young person who stayed at home all day playing video games, with dim prospects for the future – a “loser.” Yet as the term went viral on the Internet, Chinese youth from all backgrounds began to embrace it. It has become a self-deprecating counter to the “gaofushuai,” or the “tall-rich-handsome,” those with status, success, and bright futures. The number of people who refer to themselves as diaosi has continued to grow, and it is slowly transforming into a descriptor of the ordinary Chinese citizen who faces everyday struggles and hardships. Awesome insights to the Diaosi  demographic complete with infographics on declining luxury sales.

 

RETAIL

Department Stores Shop for New Sales Model – Caixin Wang

The department store industry’s established business model has been challenged by shopping malls and the growth of e-commerce, forcing the stores to seek other ways to survive. The model that China’s department stores have relied on is known in the industry as “joint-operation pattern,” which means the stores provide space and management services to manufacturers for a fee. Department stores also collect a percentage of the manufacturers’ total monthly sales….

Under this model, department stores have played the role of landlords. It sees them come into contact with manufacturers, but not consumers.”The department stores have no idea what goods they sell and to whom,” Xu Youhong, managing director of the management consulting firm Accenture (China) Retail, said. “So they don’t know how to meet customers’ needs.” Mao Suit described this exact situation over two years ago in the post Buy or Die- The Future of Chinese Department Stores.

 

The State Of The Chinese Economy In One Chart Of Luxury Watch Sales – Business Insider

Luxury brands in China are grappling with a worrisome trifecta.

1. Policymakers cracked down on ‘gift giving’ at the start of the year, as citizens got increasingly frustrated with official corruption.

2. The impact of the economic slowdown on consumption.

3. Chinese are traveling more, and making their luxury purchases abroad, benefiting from weaker currencies and lower taxes.

Swiss watches have been pretty hard. Back in May China said it would cut import taxes on Swiss watches by 60% over 10 years after the two nations sign a free-trade agreement.  In a new report, Deutsche Bank’s Francesca Di Pasquantonio writes that “de-stocking in China is not yet over.” Across the board watch retailers are reporting declines, yet jewelry seems to be holding strong. One mall developer from an affluent second tier city explained  a shift in spending patters to me. With the Government’s clamp down on corruption and displays of wealth, there is a great unwillingness to wear expensive brand name watches and accessories. Instead, wealthy people are shifting their tastes towards Buddhist beads and other traditional accessories.

With rare woods, jade and other precious stones used for making these beads its easy for them to cost thousands of renminbi for each bead, a bracelet then could end up being just as expensive as a luxury brand watch, yet of course has no branding and its true value cannot be determined without close up inspection.

This is perfect stealth wealth behaviour is allowing gifting and luxury consumption to continue whilst avoiding. Another (somewhat farfetched) story I heard is about a businessman substituting gold plated name cards for gifts. The recipient cant refuse a name card and then what he does with the gold is up to him – real sneaky stuff!

 

E-COMMERCE

Easy Money or Thankless Toil? China’s Young E-commerce Entrepreneurs Weigh in on Taobao – Tea Leaf nation

 

Cocoaka, an online shop, boasts an eclectic collection of accessories that look like they belong on the shelves of an Urban Outfitters store. There is a headless cat backpack, an iPhone case with outstretched fingers, a teapot hat and – one of the most popular items – a giant tiger-head backpack, which has inspired many imitators in other stores on Taobao, the Chinese e-commerce site that is best described as eBay on steroids.

The store is owned by Luojun Xu, a 19-year-old student at the Shanghai Academy for Visual Arts. She plans to study jewelry design at the Birmingham Institute of Art and Design in England next year, and is just one of many in a recent trend of young Chinese entrepreneurs who have opened their own Taobao stores. Taobao is usually just talked about as a purveyor of counterfeit products, so great to read someone going to the effort to report on other sides of things. Without many other avenues for young fashion entrepreneurs to start up – Taobao provides a great (albeit seemingly demanding) platform for young Chinese creatives.

Mao Suit wrote about Taobao’s dominance of E-commerce in China in this article back in October and its only growing. Nnowadays when my family needs something the first place we go to in Taobao!

 

REAL ESTATE

How will a slowing China cope with rapidly aging buildings? – China Economic Review

Architect Francesca Galeazzi has been watching the construction site out her office window for some time now. It wouldn’t take someone with her level of expertise to figure out that something odd was going on at the site just off of Shanghai’s heavily commercialized Huaihai Road. “I have seen the same corner of the building being demolished and rebuilt, and then demolished and rebuilt, many, many times,” said the sustainability specialist at Arup Associates, which has no involvement with that project next door.This is an issue with construction across the board in China. For brands doing store fit outs you must be extra careful with selecting your building contractors and also super diligent in supervising work to ensure true quality. Also be careful that your stores design and construction all meet fire safety regulations and you can get the right fire safety licenses. One of the most common delays to store opening dates in China is fire safety certificates. Each city’s fire department have their own regulations and its essential to know and adhere to all of them, or you will not be permitted to open the store.

 

OPERATIONS AND ADMINISTRATION

China Product Outsourcing. How to Distinguish Between an Agent and a Manufacturer – China Law Blog

Recently received an email from a US manufacturer with a link to a Global Sources article entitled, How to detect a trader from a manufacturer in China?  The email asked me the following:

  •  Does it really matter whether we go with an agent (a/k/a trader/broker) or a manufacturer?
  •  Is the information in this article accurate?
  •  Is it really that difficult to tell the difference?

Yes, yes, and yes….

 

 

 

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