It's all about scale...
By mrbill on Apr 20, 2009
One of the things that amazes me every time I come to China is scale. Being from the US, anything older than 250 years is ancient. Here, 250 years is just a bump on the timeline. The same sense of amazement applies to business scale. China has just over 1.3 billion people. That is a huge addressable market for manufacturers and retailers. People here seem to make their purchasing decisions on a more "functional" basis rather than the western trendy / "in thing" type of choices. For example, in the US, how many people (not counting geeks who really understand) buy iPhones or Blackberries because they see a celebrity or colleague with one? Probably more than you would think on first glance. The brand name or model name is driving alot of sales.
In China, consumers seem attracted to the functionality and utility of a given product. I don't see as many iPhones per capita as I do in the US, but they do tend to buy mobile phones that fit their needs. Browser, IM, social networking utilities, and easy text entry. Of course, glitzy and quirky are still huge in this market as well.
If we look at auto manufacturing in China (since the Shanghai auto show is this week), there are over 100 manufacturers of cars in China. Some are licensed or partnered manufacturers like Volkswagen, Jeep, and Buick, but there are still plenty of opportunities for the "little guys" like Chery and BYD. There are some seriously cool cars here in addition to the Skoda, Jeep, GM, Audi, and Volkswagens that look like home. In the US, we refer to "the big three" automakers, and heaven forbid that the economy knocks one of them out of existence. Here, if one folds because of the economy and lack of sales, there will still be 99+ others waiting to take over the market share. They make some very ugly and utilitarian vehicles here, but they also make some real stunners at incredible prices.
China's largest mobile carrier is China Mobile with over 475 million subscribers. Yes, that is 475 million. More than the population of the United States. Their operating revenue for 2008 was 412 billion RMB, or about $60 billion USD. That is huge. With those numbers, you would think that they are the only game in town. No way, there are other mobile carriers in China as well, doing (what we in the US would consider) big business.
That is just the beginning. If you want to be amazed, read up on PetroChina, Bank of China, Huawei, CCB, SinoPec, Baoshan, Cosco, the University systems here, and poke around some of the english language Chinese newspapers. The changes here over the past 15 years or so are dramatic, but the people are still as friendly and warm as ever. No where else in the world have I walked across the street from Gucci, Prada, and Rolex to eat a phenomenal $10 USD lunch. Best part of working in our Beijing office is that there are a pair of Starbucks within a block of my hotel and office to keep me caffeinated while I adjust to the timezones.