Paul Wallbank – Brilliant Communications

Tag: china

  • Links of the day – redesigning the car and South China Mall.

    Links of the day – redesigning the car and South China Mall.

    The CES extravaganza continues in Las Vegas with a wave of announcement, most of which I’m ignoring, however the motor industry continues to show off new developments with Mercedes displaying their vision of how a driverless car will look.

    Other interesting links today include an analysis of the ill fated South China Mall’s flaws and how Amazon is reorganising its R&D efforts after the failure of the Amazon Fire.

    Mercedes redesigns the car

    A little while back I suggested that we could do better in redesigning the driverless car – Mercedes have gone ahead and done it.

    Mercedes’ redesign of the driverless car indicates just what can be done when we rethink what passengers will need in the vehicles of the future.

    Ford recalls a vehicle for a UI upgrade

    Ford has recalled its Lincoln MKC SUV models for a software upgrade after discovering drivers were shutting down the cars by accident.

    What’s notable with this story is how software changes are now one of the main reasons for recalling vehicles and how design flaws in an automobile’s computer programs are relatively quickly discovered and resolved.

    We will probably find in the near future car manufacturers will carry out the upgrades remotely rather than ask owners to bring their vehicles into dealerships.

    A long running security flaw is exposed

    In August 2013 a security researcher warned UK online greeting card vendor Moonpig that its system exposed up to six million users’ account and financial details. Until Monday the company had ignored him. This is a tale of classic management disregard for customer security and one area where business culture needs to dramatically change.

    Rumours of an AOL – Verizon merger

    It’s a speculative story but if a merger between US telco Verizon and former internet giant AOL goes ahead it may mark another wave of telcos moving into content services, although it’s hard not to think that Verizon could spend its money more wisely.

    After a flop, Amazon restructures its R&D

    The Amazon Fire was by all measures a miserable flop as a smartphone however it seems the company learned some important lessons from the device’s market failures. Instead of abandoning its research efforts, the online behemoth is increasing it’s R&D budget and reorganising its development division.

    Design fails of the South China Mall

    South China Mall just south of Guangzhou has been the poster child of Chinese malinvestment during the nation’s current boom. In a blog post from 2011, a shopping mall expert visits the development and points out the major design faults in the complex which may well have doomed the project from the beginning.

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  • Chinese businesses take on the world

    Chinese businesses take on the world

    We’ve looked previously at how Chinese manufacturers are moving up the value chain, proof of how PRC based companies are beginning to make their mark on markets are the latest smartphone IDC rankings.

    Two Chinese companies, Lenovo and Xiaomi, entered the rankings with the latter recording a threefold increase on the previous year’s sales.

    Remarkably, Xiaomi only had a few hours as number three in IDC’s global ranking as Lenovo closed its Motorola acquisition shortly after the release which pushed the combined company into third position.

    Top Five Smartphone Vendors, Shipments, Market Share and Year-Over-Year Growth, Q3 2014 Preliminary Data (Units in Millions)

    Vendor

    2014Q3 Shipment Volumes

    2014Q3 Market Share

    2013Q3 Shipment Volumes

    2013Q3 Market Share

    3Q14/3Q13 Change
    1. Samsung

    78.1

    23.8%

    85.0

    32.5%

    -8.2%
    2. Apple

    39.3

    12.0%

    33.8

    12.9%

    16.1%
    3. Xiaomi

    17.3

    5.3%

    5.6

    2.1%

    211.3%
    4. Lenovo*

    16.9

    5.2%

    12.3

    4.7%

    38.0%
    4. LG*

    16.8

    5.1%

    12.0

    4.6%

    39.8%
    Others

    159.2

    48.6%

    113.0

    43.2%

    40.8%
    Total

    327.6

    100.0%

    261.7

    100.0%

    25.2%

    Source: IDC Worldwide Quarterly Mobile Phone Tracker, October 29, 2014

    The two companies illustrate the different strategies Chinese companies are making in taking on the world; while Lenovo is growing through acquiring ‘cast off’ operations like Motorola Mobility from Google and the various hardware arms of IBM, Xiaomi is growing through selling lower budget devices into East Asian markets.

    Both approaches have their strengths and benefits and illustrate as much the diversity of the markets the two companies are chasing as much as the differing management philosophies of the business.

    The other message from the respective successes  of Lenovo and Xiaomi is that Chinese companies, particularly manufacturers, are increasingly confident in competing in the global marketplace.

    Just as Japanese manufacturers found their feet in the 1970s with many becoming global brands and market leaders, we are seeing the same thing happening with the Chinese businesses today.

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  • Riding China’s business pivot

    Riding China’s business pivot

    Three weeks ago Chinese e-commerce giant Alibaba triumphantly listed on the US NASDAQ stock market with a valuation of over two hundred billion dollars. It was a strong announcement to the world that Chinese companies have arrived as global competitors.

    A week later telecommunications vendor Huawei announced it was buying British internet of things darling Neul for £25 million as part of its proposed £1.3 billion investment the UK technology sector.

    Quietly last week Another NASDAQ listed Chinese company, computer manufacturer Lenovo completed its purchase of IBM’s mid market server business.

    Lenovo’s deal follows its purchase of IBMs PC division in 2005 that saw the iconic Thinkpad laptops become Lenovo products. Both deals tell us much about where the two companies see their respective futures.

    China’s great economic pivot

    These three big announcements by Chinese companies show how the economy of the Peoples’ Republic of China is pivoting just as other East Asian countries have over the past fifty years.

    Leading the example of the East Asian pivot is Japan who pioneered the model of starting as a cheap manufacturing labor source then steadily ground its way up the global value chain to being the leader in many fields.

    That model was copied by Taiwan, South Korea, Singapore and Hong Kong. It hasn’t worked everywhere as countries like Thailand, Malaysia and the Philippines have been caught in the ‘middle income trap’ that has seen their economies not move into the higher brackets.

    Racing up the development curve

    China’s mission with over a billion mouths to feed and keep politically content is to avoid the middle income trap and move into the higher brackets. With an aging population it has to do this far quicker than its successful neighbours.

    While Huawei along with car manufacturer Great Wall and white goods vendor Haier are following that established Japanese model, albeit rapidly accellerated, Lenovo and Alibaba are following radically different paths.

    Alibaba has the benefit of catering to a billion strong domestic market that’s leapfrogging the west in technology adoption. This gives the company a firm foundation for its global operations.

    With Lenovo, the sweeping up of the US technology sector’s crumbs is a strategy that sees them buy immediate market share and develop a global position that would take it another generation to do so under the Japanese model of organic expansion which companies like Honda, Toyota and Sony pioneered.

    The task ahead for the Chinese economy in moving up the economic value chain is immense and not without huge political, business and social risks. However as the economy ages, it’s a journey the country’s business and political leaders have to make.

    Recently China watcher Patrick Chovanec spoke on the Chinese pivot and warned that the changes will have major ramifications for the world economy, particularly for the commodity exporters — notably  Brazil, Australia and China — who provided the raw material for the country’s early economic expansion.

    Lenovo, Alibaba and Huawei are leading the change in the Chinese economy and how their strategies work will define business in the mid 21st Century.

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  • Jeff Weiner and LinkedIn’s Chinese cultural struggle

    Jeff Weiner and LinkedIn’s Chinese cultural struggle

    LinkedIn CEO Jeff Weiner believes the company’s culture and values are one of its most important competitive advantages, however moving into China has tested those strengths he told a conference in Sydney two weeks ago.

    During the fireside chat Weiner went over the company’s development, the challenges he faced taking over from LinkedIn founder Reid Hoffman as CEO and the importance of the company’s ethical base.

    “It’s important for companies to define what culture and values mean to them before they get to what the specific values and culture are,” Weiner said in an answer to an audience question.

    Defining values and culture

    “At LinkedIn we think culture is the collective personality of our organisation and it’s not only who we are but who we aspire to be and that aspirational component is really important,” Weiner continued.

    “Oftentimes you’ll see company executives get onstage to introduce culture and values or talk about changing  culture and values and it’s not necessarily something the company already does and it loses the trust of the employees and the audience when that material being presented because people know is not necessarily true.

    “If you allow yourself to include this aspirational dimension when defining the culture it gives everyone an opportunity to play up to where your setting that bar and I think that’s important,” stated Weiner.

    “Values are the first principles upon which we make day to day operating decisions, that’s how we make the distinction.”

    Culture as a competitive advantage

    “I think once an organisation has defined for itself what it means by culture and values it’s then obviously important to codify its culture and the pillars of the culture and the specific values that it operates with.

    “Its not enough to codify it, we went to the trouble of defining it and then putting it in our public registration when we filed to go public and that’s a good start but all too often we see people talking the talk with regard to culture and values and not walking the walk.”

    For Weiner, that commitment to the company’s culture is the company’s strength in the marketplace: “Today, I’ll tell you it’s our most important competitive advantage.”

    The China Problem

    LinkedIn’s culture though has been tested by its entry into the Chinese market where its aspirations of being a content publisher met the limitations of the country’s censors.

    When asked by this writer about the quandary LinkedIn finds itself in the PRC, Weiner reconciled this with the company’s mission to connect the world’s professionals.

    “China’s one of our largest opportunities in terms of the value we can create for members in China and for companies in China.”

    “One in five knowledge workers and students reside in China so it’s a huge part of connecting the world’s professionals and to achieve that kind of scale so we can create value for people who are living in China it’s important that we’re able to do business there.”

    “At times means complying with law that forces us to do things that are very challenging and difficult and we always knew the importance of operating in China and for us we wanted to be extremely thoughtful in terms of how we did that.”

    Favoring freedom of expression

    “Obviously we are very much against the idea of censorship and very much in favor of freedom of expression but in terms of operating there and creating economic opportunities for what could be potentially a 144 million people from time to time we may have to make some very difficult decisions. That’s the reality of doing business there.”

    In being asked if this creates a struggle with the company’s culture, Weiner answered “that was one of the things we took so much time on.”

    “From the time we decided we needed to be in China and how important it would be in creating the global platform and adding value for members and the time we entered into China with the local language version of the site it was of the order of 18 to 24 months.”

    “Discussions took place among our executives asking some very difficult questions in terms of our culture, our values and where we would be willing to compromise and where we would draw hard and fast lines and that will continue to be an ongoing process.”

    For LinkedIn and Jeff Weiner the challenge of being a trusted global publishing platform and a leader in the Chinese market raises some serious ethical questions; it’s a challenge that is going to test the company more in coming years.

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  • Alibaba and the rise of chinese companies

    Alibaba and the rise of chinese companies

    Chinese e-commerce company Alibaba floated on the New York Stock Exchange and immediately rang up a 38% gain that values the company at $238 billion, behind only Microsoft, Apple and Google in tech stock valuations.

    One of the major shareholders in Alibaba is Yahoo! who posted a 2.7% drop in value despite picking up a $5 billion windfall from the Chinese companies float.

    For Alibaba’s founder Jack Ma, this float and the stock market’s reaction is a vindication of his business and of China’s place in the modern global economy, something we discussed with early Alibaba employee Porter Erisman last year.

    Alibaba also shows that Chinese companies are now credible international businesses and companies like Haier, Lenovo and Hauwei need to be taken seriously as competitors and suppliers.

    While Jack Ma and Alibaba celebrate, Marissa Mayer and Yahoo!’s management team are going to have to give some careful thought about how to use that extra five billion dollars. Time and investor patience is dwindling away for the once powerful internet giant.

    It may be too soon to draw Alibaba’s success and the fall of Yahoo! as being the parallel of the rise of the Chinese economy and the decline of the US, but yesterday does give a strong signal about how the global economy is changing.

    Image source: alibabagroup.com

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