8 minute read
DAVID JOSEPH
Founder of Hub of China
Interview by Ryan Gandolfo
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David Joseph moved to Chengdu in search of new opportunities, which ultimately led him to the founding of Hub of China. Joseph and his team help companies better understand the Chinese market and consumers – no easy task. Below, he shares with us some challenges of market research in China and their recent findings on Chinese people’s appetite for cultured meat.
What sparked your interest in China? I’ve always been a very curious person. When I left university in 2012, I wanted to go to a country where there was a real buzz and keen business opportunities. I also knew learning Mandarin would be very helpful to me in developing commercial opportunities. I decided that Chengdu offered Western essentials but also the opportunity to immerse myself in Chinese culture.
How did Hub of China get started? I started by teaching English. I soon saw the possibilities of creating a business employing Chinese artists. Pet owners would send photos of their animals, and these were painted in oils. This opened my eyes to the entrepreneurial opportunities in China, and Hub of China was born. I could see that China provided a lucrative market with an ever-growing appetite for Western goods and services. I was also aware that Western countries were recovering from financial crises and required new markets. Critically, I was mindful of the lack of understanding of Chinese culture and the Chinese consumer, in particular. There was certainly only a very limited understanding of the different factions (features such as geography, age and financial reserves being amongst key discriminators); to many, China was just China. And then there were the terrible gaffs.
For example, Nike naively produced trainers with the Chinese character 發 (fa meaning getting richer) on one shoe, and 福 (fu meaning fortune arrives); Unfortunately, nobody in the marketing department had realized that, in combination, these indicated getting fat. Thus, Hub of China was set up in late 2014. Initially, it was simply down to me to market my research, recruit, moderate and write up reports for focus groups. It was certainly a real test of my Chinese! Since 2014, our team in London and Chengdu has increased drastically.
What type of research and marketing services do you provide clients? We focus on FMCGs, education and the healthcare sectors. For example, we’ve recently been conducting a number of surveys for UK universities. They have been hit hard by the impact of Brexit and the pandemic. They must develop robust marketing strategies to attract Chinese students; They are looking for quick and accurate answers to questions such as, what type of degrees interest Chinese students and what support will help students to adjust quickly to the UK way of life?
What are the challenges with running focus groups in a large country like China? One of the main issues that spring to mind is social-desirability bias. Respondents provide information which they think the moderator wishes to hear rather than generally expressing their opinion. I remember one of the first focus groups we ran was for an educational app to help teach children English. The client listened while the participants were very complimentary about the app and the user interface. In the last 20 minutes, the client had to leave and suddenly the views changed drastically. From then on we decided it would be best not to have clients present at the focus groups. We always advise our clients to start fairly broadly with market surveys. Ideally we then follow-up with focus groups where we can question in-depth to identify the true motivation and, as far as possible, remove bias.
Your team recently surveyed Chinese consumer views of cultured meat. What were some findings that surprised you? There is less awareness of cultured meat among Chinese consumers than their western counterparts. This did not really surprise us as there are very few Chinese companies marketing cultured meat. However, from previous research, we knew that Chinese consumers were generally not favorably disposed to Western food or novel eating experiences. We were therefore surprised at the openness of the respondents to trying cultured meats once the concept had been explained to them. Indeed 75% of respondents took a positive view. It should be noted that our research was based on 500 middle-class Chinese consumers. Although we know that youngsters are becoming more experimental, we would still expect the majority of the Chinese population to be resistant. We were also surprised that 70% of participants were eating less meat than they did 10 years ago and the main reason (according to 30% of respondents) was their concern about animal welfare.
> Contact David via david.joseph@hubofchina.com and visit Hub of China’s website www.hubofchina. com.
TAP THAT APP Zhuan Zhuan
Thinking of moving? If so, one long look around your apartment may help you realize there’s a lot of stuff you’d rather sell than pack. While expat WeChat groups are generally a resourceful place to pawn off kitchen gadgets and instruments, there are more lucrative options that cater to a far larger customer base. One popular app among second-hand sellers is Zhuan Zhuan. The app logo is distinctive, featuring the head of a bear looking more clueless than Forest Gump during the Vietnam War. Zhuan Zhuan is an online marketplace easy for selling a range of appliances, books, clothing – you name it. We’ve had some success selling items such as a deep fryer and noticed that there’s pretty active engagement from potential buyers. If you’d like to lessen your packing load or simply downsize your clutter, Zhuan Zhuan is an easy way to bid adieu to items you no longer want to keep. (The app is only available in Chinese, so consider asking a local friend for help if necessary.)
> Zhuan Zhuan is available via iOS and Android.
CHART ATTACK ICE CREAM INFLATION
I scream, you scream, we all scream when ice cream prices rise. In early July, reports surfaced that ice cream prices were going up in China – a departure from the nostalgic RMB1 popsicles many Chinese locals enjoyed during the dog days of summer. By no means a dramatic increase, there appears to be a new price floor of RMB2 for frozen treats, while prices for higher quality products go as high as RMB70. In a survey by Sina Tech on Weibo, we learned that the majority of consumers pay between RMB2-5 for frozen treats, while around 30% pay under RMB2. As the prices rise, the percentage of buyers drops off. In the comments section, Weibo users expressed their dismay that popsicles and other frozen treats are catching up with inflation. “It used to be RMB2, now it’s RMB5,” said one commenter, referring to their favorite frozen treat. Others called out that in addition to rising prices, they believe popsicle producers are also skimping out on the sugary, artificial-flavored frozen snacks. Many reminisced on the prices of the good old days, with Weibo user Henry Hua commenting, “Back in the 80s, I could buy a popsicle for one mao.” Well Henry, get with the times because they are a-changin’.
Dong Mingzhu Named China’s Top Businesswoman
Dong Mingzhu, chairwoman of Gree Electric Appliances Inc., recently ranked first among China’s top 100 businesswomen in a list released by Forbes China. The list factored in the number of employees, revenue, profit, assets, market cap and web popularity of the companies. Dong joined Gree in 1990 as a salesperson and has climbed the ranks over the past three decades. She’s attributed with transforming not only Gree but the entire Chinese air-conditioning industry. Under Dong’s leadership, Gree Electric has developed aggressively in international markets.
No Vaccine, No Entry
More Chinese cities are publishing notices to warn citizens to get vaccinated, or else they will not be permitted to enter certain buildings and areas. China is targeting an inoculation rate of over 80% against COVID-19 by December. Given China’s strict health and safety protocols, COVID-19 cases have been largely limited to returning Chinese and foreign nationals from abroad, referred to as imported cases by state media. This development has caused an attitude shift from citizens who feel the vaccine isn’t necessary.
Suning Founder Steps Down After Stake Sale
Following a 16.96% stake sale to Stateowned investors and Alibaba, Suning billionaire founder Zhang Jindong has resigned as chairman. The move signals the end of his tenure of the now debt-ridden retail conglomerate. Alibaba, which previously held a 19.99% share of Suning.com is now the largest shareholder – however, no shareholder has a controlling stake. Zhang started from a small electronic-appliance store in Nanjing and developed Suning into a retail giant until liabilities started to build up.
China’s Share of Global Bitcoin Mining Declines
Following a crackdown on the mining of cryptocurrencies, China now accounts for less than half of the global power used for bitcoin mining, according to research published by the Cambridge Center for Alternative Finance. CNBC reported that China previously accounted for as much as 75.5% in September 2019. Bitcoin mining is a high energy-intensive process – but with the rising price of the popular cryptocurrency, more miners have utilized parts of China including Sichuan, Xinjiang and Inner Mongolia.
Cybersecurity Probe into Didi
On July 16, China’s cyberspace regulator started an on-site cybersecurity inspection of Didi Chuxing. The probe also involves regulators from the Ministry of Public Security, the Ministry of State Security, the Ministry of Natural Resources, the Ministry of Transport, the State Taxation Administration, and the State Administration of Market Regulation. Some view the highly publicized investigation as a signal to other Chinese companies to better abide by Chinese laws and regulations.
US Companies Buoyed by Strong Chinese Economy
In recent earnings calls, CEOs from Levi Strauss and PepsiCo highlighted growth opportunities in China despite a weakened global economy amid the pandemic. CEO Chip Bergh of Levi said revenue in China rose 3% in the second quarter of 2021 compared to the same period in 2019. Ramon Laguarta of PepsiCo noted that the company’s China business has been a strength due to the strong economic recovery following the COVID-19 outbreak.
