Christmas in this "Godless Land" Legally, China is against all forms of superstition. Yet, the air of excitement and joy leading up to Christmas time here has been supercedes government policy. My Chinese friend here explained: "...On Christmas Eve, we go out with friends and enjoy an evening of dining, dancing, drinking, games, and fun. During Chinese New Year, we stay home with the family to enjoy the blessing for the prosperity of the old year and to welcome the new one. During the Western New Year we go on trips..." To add to the calendar of festivities in this prosperous reformed and opened-up China, National Day on October 1st as well as May Day are two holidays marked by visiting scenic points or tourist attractions, different cities, or just for gathering around the central lawn of the city for fireworks. If you took a survey of the restaurants, department stores, night clubs, and similar operations you would invariably find the proprietors ranking Christmas at the top of the list of festive periods for business volume and profit. While serving as the Chief Representative and the Director of China Business Division of a foreign company in Shanghai several years ago, I was told by a restaurant manager that it was "the regulation" to be allowed to charge double price for Christmas dinner parties. He was probably only bluffing us about the "regulation," but you should expect to pay anywhere from 30% to 200% more for your staff Christmas Party. In Beijing in 1977, hotels, stores, and restaurants were ordered by officials not to decorate their exteriors with any Christmas related colors or symbols because Christmas was not an official Chinese holiday and Santa Claus himself was a symbol of superstition. Christmas 1997 in Beijing was limited to activities "inside the house". Perhaps as part of the country's adaptation to globalization and in preparation for its entry to WTO, Christmas has been celebrated with far more fanfare subsequently. As the first Christmas of the Millennium approaches, China can look back to a year of great achievement including the succesful bid for the 2008 Summer Olympic Games in Beijing, the Apec Summit in Shanghai, China's entry into the WTO and our soccer team fielding in the World Cup final. Add to that record gains in direct foreign investment and trade surplus and the Chinese can certainly feel the Santa spirit leading up to Christmas day. A Warm Christmas for Some After the lean years since 1995, real estate developers were breathing sighs of relief and trying to hide their excitement as the rate of occupancy in modern office and residential towers in Pu Dong Shanghai rose to 90% from 30% only 2-3 years ago. The automobile industry has been predicting total private automobile ownership in China to rise from 1.5 million currently to 30 million by 2010. Foreign investors and tourists are rushing to China just "to be ahead," or not "to be left out." There can be no question that this vast country with 4000 years of recorded history with cultural richness can offer "trips without an end" to millions as foriegners start to feel the gentleness of this vast dragon. Tourism alone will produce astronomical income and business and investment opportunities in China. Tourism and Cultural Resources Where a town in New York in 1900 is not much different from another in 2001 in Gilroy, California or somewhere in England, in China, the cities and towns throughout the country and through the history are practically "one of a kind". For example, you can start from the horse riding and tent living of Mongolia, to the Northeastern Chinese cities of Harbin and Dalian replete with traces of colonial Russian and European architecture but surrounded by a heritage from Manchu tribes and Korean-like cultures. Just outside the modern metropolis of Shanghai stand helmets of uniquely restored thousand year old towns, each with volumes of history and a cultural heritage of their own. Thirty kilometers from the Rotterdam of the East, the deep sea port of city Beilun, is Ningbo, the 6000 years old cultural town of traders from whence came great names like Dong Jianhua and Sir Run Run Shaw. Sixty km further west along the coast of Hangzhou bay is Shaoxing, where 12 former emperors of the Song Dynasty sought refuge from the onsetting Jin armies. Shaoxing is also home town to big names like Chou En-lai, and is the home of the world famous Shaoxing yellow wines. Hangzhou - the resort of the emperors - is only 40 km from Shaoxing. Walking around the West Lake of Hangzhou, every stone n which you step can tell cultural and historical tales from the ages of the emperors to the cultural revolutionary years. A stone's throw away from Hangzhou to the north is the past capital city of Nanjing and to the east is the great metropolis of Shanghai. Just from this one tour you can see that each town in China can offer endless excitement and discovery. Domestic travellers rushing to see their own country and cultural heritage alone amounts to hundreds of millions annually. During the recent long holidays on National Day, October 1, it was estimated that 60 million Chinese roamed their own land to exchange visits. Given continued rising income-levels, this traffic must be certain to increase 5-10 times in the years to come. Rumors exist that the Chinese might even consider offering concessions for the development and management of some tourist spots to foreign invested companies soon. The Rise of the Latter Three Enterprises With strong government guidance and backing since last year, China has made rapid progress toward the development of the "Latter Three Enterprises," - namely Recreation, Culture, and Entertainment. With the Chinese soccer team entering the World Cup final, another Chinese basketball superstar recruited into the NBA, and Chinese dominance in table tennis, badminton, gymnastics and diving, the stage seems to be set for professional sport to go big time in this country. It is expected that China's 1.3 billion population whose income will grow to nearly $1,000 per capita soon, will be spending 17% of that amount on education and training. Several dozen universities in China are now offering advanced degree study programs from Philosophy to Nuclear Physics, from Biotech to Brass Technology and from soy bean related fields to Advanced Software Development. There are now 14,000 post-doctoral candidates undertaking research spread over nearly 1,000 research and educational institutes in China. Hundreds of thousands of primary and secondary schools throughout China will be transformed into bilingual institutions by 2005. In additional to the usual vocational schools familiar to the Chinese populace, schools for musicians, dancers, operatic performers, circus and acrobatic performers are now spring up throughout China. Arts and fashion festivals, as well as festivals unique to local areas are being celebrated year round in many different cities. It all adds up to cash for the Chinese tourism industry. As Napoleon once said, when the sleeping dragon of China awakens, it will stun the world... A Bitterly Cold Winter for Others... If we base the cost of a TV advertising spot on the size of the potential audiences, how much is a fair price for a 5 second spot on the nationally televised Chinese Central Television at the most supreme of prime times, namely the ad spots following the daily evening news program? The CCTV stations have been selling these time logs on a competitive bidding basis. The top bidder gets the first TV spot following the evening news. This winner is also given the title of "Bid King." Their reign usually does not last very long. TV Ads - the Sure-Fire Way to Rapid Rise It should come as no surprise that a country that has given so much attention people-influencing through advertising and propaganda was extra careful in opening up television to advertising spots. Only as far back as 1992, most of TV ad spots were merely simple slide shows or video recordings with crude settings and plots. Regulation ensured that TV programs were not separated by advertising spots. It was common for viewers to sit through half an hour of advertising after an evening TV program. The Rising Sun - the Shooting Star of Those Days Apollo Health Potion was the first product to be featured in a pleasant looking and well produced ad spot emphasizing corporate image. Naturally, a starved audience took the spot as a treat and helped boost the sales of this company that started out with 50,000 yuan capital in 1987 to achieve a national sales volume of 1.3 billion by 1993. All with only one product to their name. Apollo's name became synonymous with Corporate Image building in China. Many large business concerns sent their team to Guangdong to learn Corporate image brand building lessons from Apollo. Suddenly Corporate Image was as hot as a hot cake. Apollo announced its "diversified" investment plan in 1993 spending 340 million yuan in petrochemicals, real estate, cosmetics, computers, border trade, and hotels. Yet like flying dragons these investments flew high and disappeared into the blue sky, resulting in a total loss of 340 million yuan. Contrary to its arch rival, Wah Ha Ha (which later joined the Danone Group), Apollo at first insisted on being a single product company while its rival experented with dozens of allied products from health potions to ready packaged milk, fruit juice drinks, and yoghurt. Apollo's rapid growth was partly due to its generous recruitment of the highest potential young talent into their team. However, when business prospects declined, these young troops quickly changed side to Apollo's competitors. Unlike other health potion companies in China, San Zhu and Giant, Apollo had been quite well padded with cash from its previous earnings and from its listing in Hong Kong. Thus, despite their rapid change of fortunes, Apollo still managed to stay afloat. In 1997, it recruited an MBA graduate from Harvard and gave him the tough task of revitalizing the company. The road home to profitability and greatness seemed to stretch longer and longer with the years. From "Bid Kings" to "Broke Coons" The rapid rise of Apollo attributed to their TV campaign turned many heads and created a new business faith here in China - advertising. When CCTV first instituted the bidding method for it's prime time advertising in 1995, the first Bid King was the manufacturer of a strong white liquor from Shandong, To create an image of a ruthless power emperor, the product was called "Qin Che Te Qi" - "...The special blend from the liquor pool of Emperor Qin Xi of the Qin dynasty.." In return for a daily 5 second TV spot right after the evening news Qin Liquor bid the Chinese conspicuous figure of 66,666,666 yuan RMB. That amounted to 182,648 yuan per airing. The investment succeeded and reaped rich profits from a major leap in sales. Naturally, the next round would be very hot. In 1996, Qin Liquor ruled again as the Bid King with the top tender of 320 million yuan. It outbidd the runner up by 100 million yuan. That amount was also 6.4 times the company's earning on sales of 950 million yuan in 1996. However, with unfavorable newspaper reports that the Shandong company was actually filling the bottles with white liquors from Sichuan 2000 kilometers away, sales slipped to 650 million in 1997 and then to 300 million in 1998. In July, 2000, the brand name "Qin Che" was ordered to be put on auction by a court order in a trade liability case brought by one of its suppliers for 3 million yuan. Thus ended the reign of the Emperor Qin of modern day China. Advertising Mania The next Bid King was a younger man in his late 20's from South China Sea's coastal city of Zhongshan in Guangdong province. His product was the "Ai-Do" VCD player, launched in June 1995. Encouraged by his 1996 success in achieving 200 million yuan in sales helped by his 82 million yuan bid for CCTV's first ad spot following the weather report after the evening news, the 28 year old chairman Hu Zhi Biao was crowned the 1997 Bid King with a 210 million yuan offering. Subsequently sales rose eight-fold to 1.6 billion yuan. Then competition sets in as prices fell and sales promotion battles heated up. In 1995, the company earned a profit of 700-800 on the sale of a VCD player for 2000 yuan. During the brain-numbing competition among VCD player manufacturers of 1997-8, about 20 advertising spots from a dozen VCD brands were aired on CCTV within a few minutes after the evening news program each day. At the battle's height in 1998, a VCD player was sold for 1,000 yuan with promotional gifts including an electric rice cooker, a shaver, a pressure cooker, and an electric fan totalling approximately 700 yuan. That sales promotion battle cost Ai-Do 150 million yuan, and they entered a bankruptcy proceeding in May 1999. On July 4, 1999, following serving of a legal notice from a partner, Hu was forced to step down. Thus ended the case of the "disillusion with puberty" Bid King. The near superstitious belief in the effectiveness of mass TV advertising campaigns has brought several companies from rags to riches and then to wreck all within the 90's decade. Yet another case was Ju-ren, the "software developer turned badly failed health food and real estate developer". San Zhu's health potion, that promised to lengthen life expectancies of Chinese citizens, only served to shorten his own. Color TV's by weight anyone? In the old days when it was a symbol of modernity and affluence in China, televisions were a highly prized possession of many. As a result, fierce competition was the name of the game. The Chinese government allowed relatively free competition between manufacturers in the belief that China would become one of the most competitive TV manufacturers in the world. The industry itself saw several rounds of peace talks and price moratoriums. Last month a 21 inch color TV sold for only 400 yuan compared to 3000 yuan a few years ago. Sarcastically, some of the manufacturers and the retail stores launched a campaign on the theme - "Color TV by kilogram!", actually charging the buyer according to the weight of the TV. Now, with China's entry into the WTO and foreign manufacturers waiting in the wings for 1.3 billion consumers, we should at least advise them to bring with them electronic weighing scales with high precision should they want to sell their idiot boxes! 1.27 Minutes for Ads As modern TV sets complete with remote control devices became common place, one reseacrh survey found that on average, a Chinese TV viewer would watch TV advertising for 1.27 seconds before clicking away to other programs. In advertising in China at least, one needs to get to the point quickly! Have you written to Santa Lately? With the triple festivities of Christmas, New Year and Chinese New Year coming to the Dragonland, there is no doubt that trillions of yuan will be spent celebrating. The biggest joy to consumer businesses will be to have as must of that yuan that they can get. The question now of course is - "Are you in the game or on the bench?" Again, while on the bench, do check the game in progress carefully and consult your coaches before hopping in. Note: I am now teaching in an executive MBA program at Shanghai Jiaotong University, not the Chinese-Canadian joint degree program. For questions, please feel welcome email me at granddragon@sina.com.cn or pisett@hotmail.com Piset Wattanavitukul Shanghai, China

Piset Wattanavitukul is Managing Director of P. W. Consultants specializing in Investment, Management and Trade in and with China and Human Resource Development in Shanghai and Ningbo.

...from Piset Wattanavitukul's Awakening Dragon

Piset Wattanavitukul Amigo Consultants Shanghai, People's Republic of China

Piset is one of the Asia Pacific Management Forum's China columnists, providing on-the-ground tips, advice and commentary on doing business, marketing, and management in China. His colorful street level observations expressed in his unique local style have made him a indispensible monthly read to many. Piset is based in Shanghai, one of the world's most exciting cities. You can learn more about Piset by clicking on his photo.

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