Rebranding Zhongnanhai

By way of Mr. Tony Tsai, Chief Executive Officer – BHG Retail Innovation Institute & Executive VP Operations – The BJ Hualian Hypermarket Co. from China:

"Experts ask to discontinue use of Zhongnanhai as a cigarette brand; it may mislead consumers ThinkTank Research Center for Health Development will submit a petition to the Trademark Appraisal Committee under the State Administration of Industry and Commerce asking it to discontinue the use of "Zhongnanhai [pinyin]" - the name of the central leadership compound - as a cigarette brand. Using the sacred place's name as that of a cigarette brand is misleading to consumers. Buyers feel the cigarette brand is acknowledged by the central government and see it as a symbol of high quality and authority. Some legal experts believe using Zhongnanhai as a brand violates the Trademark Law. According to Article 10 of the Trademark Law, names of a central government office location cannot be used as brands."

What Are People Looking For?

Via Mr. Martin Ertl, CIO - Bombardier Transportation, from Digg Labs, the Swarm on Digg here.

Consumer Spending Vs. Savings in the USA

In The McKinsey Quarterly, "The economic impact of increased US savings" here. Here are a few quantitative insights based on the fact that household incomes have not been growing and in some cased globally have been decreased, a recent example being renegotiation of contracts at automakers in Germany.

"...holding incomes constant, each percentage point increase in the savings rate translates into roughly $100 billion less in consumer spending¬. A 5 percent savings rate would mean $530 billion less in spending each year if US incomes fail to rise; if they rose by 2 percent a year, a 2.3 percent savings rate would mean $250 billion less spending, all else being equal."

The conclusion:

"But without significant income gains, deleveraging could undermine consumption and the global economy for years to come."

Robert Shiller on the Current Economics

Excellent conversation with Robert Shiller at The McKinsey Quarterly "Surveying the economic horizon: A conversation with Robert Shiller" here. The quarterly's email states, "Robert Shiller, a professor at Yale University and cocreator of the Case–Shiller Home Price Index, discusses four aspects of the current crisis: regulating for financial innovation, reducing trust in models, redesigning institutions, and the time line for turnaround. His perspectives are informed in part through his research that psychology—particularly an understanding of human irrationality—can play a key role in explaining economic breakdowns and exploring effective solutions."

On innovation, Robert Schiller states:

"I don’t want to see us killing off innovation, and this is what may get lost—and I hope it doesn’t get lost—in the current crisis. Ultimately, let’s not forget that we’ve learned lessons that a capitalist economy is an economy that promotes entrepreneurship, and entrepreneurship is not the province for government bureaucrats."

On the possibility of an economic turn around:

"I don’t want to say that I don’t think there will be a turnaround soon, but I think that many of us are too much expecting that it might come tomorrow or the day after. And this volatility is evidence of that. So I think it is quite possible that the stock market and the housing market, five years from now, will be close to where they are now."

Asian Airlines Delight Thier Customers

16.2 million travellers from about 100 countries took part in Skytrax's annual survey - Skytrax specializes in airline and airport research. The top 10 airlines are all Asian airlines, see details here.


The Economist writes in an article "Asian Tigers" here:

"Lining up behind the Hong Kong carrier were, in order, Singapore Airlines, Asiana Airlines, Qatar Airways, Emirates, Qantas, Etihad Airways, Air New Zealand, Malaysia Airlines and Thai Airways. Interestingly/strangely enough, the exact same airlines made up last year's top ten, albeit in a slightly different order."

I am an international traveler, yet I will reserve my comments regarding my personal experiences and share the comments of a customer of the airline industry:

"Yesterday at the airport in Hong Kong, I was waiting to get on an AA/Cathay flight back to the USA, and my heart sank when I realized it was an American 777 as opposed to the Cathay plane."

China - Alcoholic Beverage Consumption

I have recently performed a bit of business advisory work in the alcoholic beverage sector. One of my recommendations focused on the emerging markets for this USA based company. One of the reports I read provided very good insights on the decline in the Western markets versus the growth in Asia-Pacific, and in specific China. The report here highlights that:

"The global market for alcoholic drinks was worth US$979bn in 2007, equivalent to 1,460bn servings. Although sales of alcoholic drinks are typically relatively immune from recessions, although the current economic downturn has coincided with a period of higher inflation and rising prices which have dampened demand for alcoholic drinks. However, the downturn itself is likely to have a positive effect on demand. In developed markets consumers will spend more time socializing and drinking at home. In emerging markets consumers will buy fewer consumer durables and spend part of the savings on everyday treats such as beer, wine and spirits."

A few of the key findings of the report are:

"The volume of alcoholic drinks consumed in western Europe is forecast to decline over the period 2007-2012 by an average of 0.2% per annum. Between 2007 and 2012 the annual sales of spirits globally is forecast to increase by over 1bn liters. 70% of this increase will take place in Asia-Pacific markets. China is the largest beer market in the world, having overtaken the US in recent years. This growth is being driven by a growing middle class that has increasingly Western tastes plus a shift away from traditional spirits consumption. Globally, there will be an additional 18.7bn liters of beer/cider/FABs sold in 2012 compared to 2007. 62% of this increase will take place in Asia-Pacific and 29% will be in Eastern Europe. Less than 8% of this growth will be in North America and these regional rises will be a result of the decline in the Western European market."

The World Bank - "Doing Business"

I was prompted to dig deeper into "Doing Business" here, an effort under the World Bank. Ratings on 181 countries showing rankings such as "Ease of doing business", "Dealing with construction permits", "Protecting investors", "Paying taxes", etc. See the complete list here.

The Economist quotes Robert Litan, of the Kauffman Foundation, "... the World Bank may have done more good by compiling "Doing Business" than by lending much of the money that it has."

The Time has Arrived for Entrepreneurism

A very good article from the Economist - "A special report on entrepreneurship: An idea whose time has come" here. The report connects entrepreneurship and economics:

"Today entrepreneurship is very much part of economics. Economists have realised that, in a knowledge-based economy, entrepreneurs play a central role in creating new companies, commercialising new ideas and, just as importantly, engaging in sustained experiments in what works and what does not. William Baumol has put entrepreneurs at the centre of his theory of growth. Paul Romer, of Stanford University, argues that “economic growth occurs whenever people take resources and rearrange them in ways that are more valuable…[It] springs from better recipes, not just more cooking.” Edmund Phelps, a Nobel prize-winner, argues that attitudes to entrepreneurship have a big impact on economic growth."

The report believes that entrepreneurship going mainstream also lies in "... that the social contract between big companies and their employees has been broken."

The report discusses a fantastic effort by the World Bank:

"In 2003 the World Bank began to publish an annual report called Doing Business, rating countries for their business-friendliness by measuring things like business regulations, property rights and access to credit. It demonstrated with a wealth of data that economic prosperity is closely correlated with a pro-business environment. This might sound obvious. But Doing Business did two things that were not quite so obvious: it put precise numbers on things that people had known about only vaguely, and it allowed citizens and investors to compare their country with 180 others."

Open Innovation Driven Solutions for the Poor

Interesting article by Ms. Tara Acharya of the Rockefeller Foundation "Users can drive creative innovation for the poor" here. The author believes that Open Innovation can help deliver to the poor of the world that is either not developed for them or if provided, does not deliver the service required. The article states:

"Innovation guru Eric von Hippel of the US-based Massachusetts Institute of Technology says users are motivated to develop and modify products and services "because they can't get from the manufacturers exactly what they want". "

As I have stated before, I believe satiated people do not innovate. Open Innovation may truly find the breakthrough it promises through consumer innovation or User Driven Innovation (UDI) in the poor of the developing countries - because the desperate need for survival and a desire for a better life lies with them. The article gives an example:

"The Rural Innovations Network, based in India, takes another approach to UDI. It identifies, incubates and distributes grassroots technological innovations that can have a significant impact on rural lives. For example, it helped an innovator develop a novel energy-efficient burner for kerosene stoves that is cheaper, longer-lasting, safer and easier to maintain than conventional burners — making it appealing to the rural consumer. The Rural Innovations Network provided the innovator with critical market research and marketing services."

Boeing Receives $17b Order From India

Mr. Bob Evans' blog on InformationWeek "Boeing Lands $17B Outsourcing Deal From India" here. It states:

"This $17 billion deal placed by Indian airlines pushes to $25 billion the total value of orders they have awarded to Boeing in the past three years. On top of that, Boeing said a much larger 20-year commitment from Indian airlines for 1,000 aircraft valued at $105 billion is still valid, according to the president of Boeing India, Dinesh Keskar."

The blog concludes with Mr. Evans views on protectionism.

Technological Innovation in BRIC Economies

Good article focusing on an evaluation of knowledge driven innovation in the BRIC (Brazil, Russia, India and China) countries here. Interesting to note are comparisons with developed countries and with VISTA (Vietnam, Indonesia, South Africa, Turkey, and Argentina) countries.

Cisco to make SmartPhones

Since I published my blog on Cisco being the 21st century eCPG leader here, I have been provided with some insightful links on Cisco's further plans in the eCPG sector.

In an article "Are Smartphones on Cisco's Wish List?" here on Chinese website C114, analyst Mark Sue of RBC Capital Markets is stated as declaring:

"Considering its big push into the consumer market, we believe Cisco may be developing a smartphone of its own, slated for mid-2010."

To further the claim, the article cites:

"On Mar. 31, Cisco was awarded a patent for managing time delays in relaying video wirelessly to consumer electronics devices. The same day, it received a patent for a network-connected phone able to stream video. Many of Cisco's recently filed patents mention a personal digital assistant as a device that could potentially use the innovations described."

The article also provides good insights on the USA's broadband capabilities reaching a point where tele-presence will start to become a retail service along with cable TV, etc.

I look forward to the consumer digital services and values generated through competition.