lays out way ahead for multinationals
and services will have to be made for China, if they are to match
the demand of the vast number of Chinese consumers in both urban
and rural areas," said Ying Yeh, chairwoman of Kodak Greater
China Region and an honorary chairwoman of the eighth China Daily
CEO Roundtable held under the theme "Address the New China,
the Road Ahead for Multinational Companies," held on Friday
in Hong Kong.
talent, further localization, maintaining international service
standards, developing rural areas, a long-term view, readiness
to compete with local companies and working closely with both
central and local governments were the focus of discussion.
the luncheon held on Friday, 20 China-based CEOs and senior executives
of the world's largest companies such as HSBC, ExxonMobil, Disney,
Wal-Mart, Deloitte, O&M, 3M, Oracle, and Bloomberg in charge
of banking, finance, insurance, consulting, consumer products,
media, entertainment, sport, retail, lifestyle products, energy,
and IT, gathered to address some common but strategic concerns
relating to the challenges and opportunities being brought about
by the development in China of a xiaokang society - one that is
delegates were upbeat about China's sustained economic growth,
Honorary Chairwoman Ying Yeh stressed that multinationals must
be realistic in their consumer strategies and be aware of government
policies to achieve a mutually beneficial situation. "Do
your reality check as frequently as possible, paying particular
attention to government policies," Ying suggested. The past
seven years were just phenomenal in terms of China's economic
growth, and, as of today, China has overtaken the United States
as the world's number one consumer market, beating it in four
out of five key sectors, apart from energy consumption, Ying stressed.
when looking into the relative income growth between those in
urban and rural areas, Ying cautioned that the income gap has
actually widened and this should be closely monitored.
Chinese Government's western development strategy therefore has
a lot of implications for multinational companies. At the very
least this means that hidden demand will be released. "Kodak's
business in China's coastal cities has continued to generate substantial
growth for us, but we are also allocating more resources to development
in the burgeoning second and third-tier cities."
closing her speech, Ying stressed the essence of Kodak's branding
strategy in the decades to come in China is to cultivate "a
culture that Kodak is part of consumer's everyday life."
She added that the China market will be far more important than
just a big market, it will be viewed as a strategic resource for
global growth in research and development and skills.
address the growing needs and income of rural regions and second-tier
cities, the president of Wal-Mart China, Cassian Cheung, who was
also an honorary chairman of this CEO roundtable, said the company
employs four key strategies to develop its business model for
China. These are choice and convenience, price leadership, logistics
and technology, and localization and training.
said the 44 Wal-Mart stores (Supercentres, Sam's Clubs and Neighbourhood
Markets) in China are located in 21 second or third-tier cities
throughout China, and they must cater to the consumption preferences
and spending power of their respective inhabitants. Wal-Mart plans
to open another 15 outlets within 2005 and is hiring around 1,000
employees every month.
has created a huge challenge not only for Wal-Mart but also for
the entire retail industry. Towards this end, Wal-Mart has started
the Fresh Food Academy, the Walton Institute and launched the
concept of the "Store of Learning."
biggest challenge for us is to find the right talents and professionals
for this industry, who are attuned to corporate governance and
issues related to running retail operations in China."
joining the World Trade Organization (WTO), China offers both
challenges and opportunities for multinational retailers, who
are allowed to operate as wholly-owned enterprises, and their
geographical expansion is unfettered for the first time.
competition with local retail giants on all fronts is also expected.
"Multinational companies in China are currently at a crossroads,
and they must strike a balance between the consumer demands arising
from both the urban and rural markets, and at the same time pay
a great deal of attention to pricing strategies to be able to
remain competitive with local companies," he said.
Ronon, North Asia region senior vice-president of Burberry Asia
Ltd, echoed that training is a crucial issue, and every employee
working at Burberry outlets in mainland cities should offer customers
the same shopping experience as their counterparts in London or
New York. There is considerable pent-up demand on the mainland
for higher quality or up-market products, she said. "In the
case of Burberry, the customer recognizes our brand and identifies
with the product on a personal level, and because it is so recognizable,
we will continue to encounter problems with intellectual property
infringements, but luckily we have customers that understand the
value of our brand and genuine products," Ronon pointed out.
Yip, HSBC China Business chief executive, stressed the bank's
long-term view of the China market. "We have been here since
1865 and we see huge potential coming out of the high saving rate
of Chinese consumers in general, at 40 per cent," Yip said.
The bank looks forward to the complete opening of the banking
sector by the end of 2006, according to China's WTO commitments.
director of the Walt Disney (Shanghai) Company Limited Stanley
Cheung said the company's primary goal is to create magic and
dreams for the masses.
Chinese population, with an emerging middle class and elite that
are constantly stressed out, are ready to be entertained. The
biggest challenge ahead of us in China is the development of localized
content for our films, programmes and theme parks," he added.
As the market for film and television content is heavily regulated,
Disney will probably adopt a strategy with a mixture of local
and foreign content.
the property sector, Associate Director and General Manager of
Sino Land Company Limited Charlie Lin said property developments
have become a demand-driven commodity as the Chinese people's
spending power increases.
are very positive about the growth of real estate on the mainland,
and we continue to see a sustained demand as property has changed
from a fringe benefit to a genuine consumer-driven commodity,"
Fischer, managing director of NBA Asia, drew attention to the
need for entertainment as Chinese people become increasingly affluent
and can afford more leisure activities.
the importing of homegrown stars such as Yao Ming to the NBA,
the basketball promoter is enjoying tremendous growth on the mainland.
"On the Chinese mainland, there is an overwhelming 97 per
cent awareness of the NBA brand, and every one of our games broadcast
on any number of the Chinese channels is a two-hour advertisement
for us," he told delegates.
said the NBA brand is a very compelling statement in its own right,
and the company intends to consolidate its strong brand position
and extend its business beyond licensing and television programmes.
will continue to promote the game of basketball in China, and
set up additional offices across the mainland, along with basketball
stores, gymnasiums and centres with the help of local partners,
such as the Chinese Basketball Association."
the 2003 to 2004 NBA season, the cumulative audience for NBA programming
in China was over 1 billion viewers.
Poon, managing director of Oracle Systems South China and Hong
Kong, said growth in China is a matter of how fast and how much.
Oracle implemented the Golden China Programme which is essentially
a 30-year commitment training programme to educate its employees,
customers and stakeholders.
Yuan, CEO of China Entertainment Television Broadcasting Ltd (CETV),
said that despite the tough competition with other television
networks, he remains bullish about the future of his company.
He said localization is the key strategy for his station which
is currently producing 40 per cent of its content locally. It
also recently moved its operations to Shenzhen to get closer to
are actually turning down customer orders because we do not have
sufficient people to serve them," said Peter Bowie, chief
executive officer of global financial and consulting group Deloitte
Touche Tohmatsu in China.
demand for IPOs, M&As, and restructuring, in addition to the
already huge demand for professional accounting, taxation and
auditing services, has caused my firm to occasionally turn down
right people with a financial services background and related
experience that we can develop into industry professionals remain
scarce in China, while the retention of these people presents
another problem for us," he said.
said that money is usually not the most effective element to attract
or retain talents, training is. The company is in the process
of developing comprehensive training programmes to cultivate professionals
in accounting, audit and tax services, as the company plans to
recruit 40 per cent more staff in the next few years.
Mosely, managing director of L'Oreal Hong Kong, Taiwan and Viet
Nam, highlighted that China is far more important than a pure
market for consumer products. "China today has a clear advantage
as being not only cost-productive but also in terms of quality
of its production,"he said.
stressed that the Chinese element is strategically affecting multinational
companies global operation and therefore multinational free trade
will be an important development for China.
Yung, chairman of outdoor media company Clear Media Limited, shared
his bullish view about the future of the China market and was
delighted to see his company's stock option programme value increased
by 50 per cent in recent years.
does not foresee too much competition, as the advertising industry
in China is actually growing at a rapid rate.
Wang, vice-chairman of advertising group Ogilvy and Mather Greater
China, maintained that consumer growth in second and third-tier
cities on the mainland will drive the company's business in the
problems of our clients are also our problems. As many multinationals
move into the second and third-tier cities, we must understand
the needs and spending habits of their consuming population in
order to advertise effectively," he explained.
Leung, country head for China of DBS Bank (Hong Kong) Ltd, the
largest bank in Singapore and Southeast Asia, sees many opportunities
in China though his bank has previously experienced frustrations.
"There are simply not sufficient local people with banking
knowledge, not to mention experience."
many negative signs," concluded Ying Yeh.
multinationals should remain aware of the importance of protecting
intellectual property rights, effective branding as well as increasing
investment on issues related to the environment, health and safety.
said branding in China is a double-edged sword, and multinationals
must aim to further their brand position with a clearly defined
image that caters to the urban population, with pricing strategies
sensitive to rural consumers.
think everybody agrees that things will not be only made in China
in the years to come, they have to be made for China," she