iPhones next frontier: China

Regarding an article in the WSJ yesterday and recent updates this morning, Apple’s partnership with China Unicom Ltd. has been finalized. Now that the groundwork has been laid out, Apple has made their iPhone penetration into the Chinese market a priority. Since the method of entry has been decided, the question now is what marketing strategies will be deployed in order to capture the massive Chinese mobile market (which almost doubles the U.S. population)?

Contending with BlackBerry and other mobile handsets, Apple will need to unearth its own niche among the vastly diverse Chinese population. One of the few countries virtually unaffected by the recession, China’s demand for premium goods is continually on the rise.

I propose the IPhone position itself as a luxury product above all other smart phones. Pay per minute phones and other cheaper smart phone alternatives are held by the majority of potential customers, therefore the iPhone must be a symbol rather than an alternative. For it to truly be successful it must be a status item, giving it a higher value in the eyes of the upper and middle classes.

What kind of marketing strategy will be most effective and which tactics will be have the greatest impact on the competition?

-John Cutrone III

Odd Manufactuing Markets

Of all the emergent markets in China, one often over looked is the manufacturing of prosthetic limb parts. Prosthetic limbs have made leaps and bounds in recent years due to greater technology and scientific capabilities. Getting involved in this division or similar frontier technology sectors might be the next novel, yet unthought-of, idea.


In a related article, Sandra Blakeslee from the New York Times reported last week that monkeys were able to move objects with their thoughts. No, they could not levitate a stapler and move it across the room; however, after implanting electrodes directly into their brain, the monkeys were able to move a curser with only their thoughts. This was of course after two weeks of practice. The subjects were able to do several different tasks indicating the next huge step into prosthetic limbs and even bodies. An amputee could operate a mechanical limb with his mind just like any organic limb!

Can anyone see possible complications with this new finding? A few that surface to me are the cost of implementing the technology, or if the body parts have the capability of being superior to natural ones.

China and U.S. Attempt to Reverse the Trade Deficit. Resolution for Recovery?

China and the U.S. met in Washington this week, to resolve trade deficit and finally speak about real issues that face both countries. Besides clean energy and security the real matter on China’s mind is what the U.S. is doing with their economy. Because China holds nearly 8 Billion in U.S. treasuries, the Chinese are just as concerned about the U.S. economy as Americans.

The trade deficit is a serious existing problem, but in actuality, it is nothing new. For thousands of years China has been a self sustainable country, never relying on trade with anyone in particular. Historically and presently, China hasn’t “needed” foreign goods (aside from Opium, but that’s a whole different story). In such a diverse yet unified country, they have virtually every resource available locally besides oil. Conversely, China is an exporting machine and the U.S. is there prime buyer – hence the deficit.

Besides butchering a few Chinese words, President Obama made several important points on how their relationship will form the next century. Like I and many others have stated, at its current rate of growth, China will surpass the U.S. within about 20 years in terms of economic and military power. Although the odds are against the U.S., if the meeting finds mutual benefits and cooperation, can the U.S. expect to be pulled out of the recession? Riding on the coat tails of China, manufactures revenues will swell from U.S. buying locally, and increased demand for products in China.

A second question that comes to mind is if the Chinese can truthfully begin to start spending more. The Chinese are known to save more than the other countries due to an unstable market. Can the government provide sufficient safety and reduce enough risk to get the population on a spending track?
-John Cutrone III

The Shift to Free Demand and Supply

In the past, successful global businesses have failed in China due to various marketing reasons, including inadequate market research, viewing the Chinese population as one single market, and differences in consumer behavior in fields like brand loyalty. However the most common, and worst, mistake made was assuming that China was already a free market-driven economy with all the associated assumptions of free demand and supply.

In the recent years we can see substantiation that China is coming out of this transformational phase, and heading into a more stable economy, more suitable for marketers to use familiar and proven methods.

Although China has a lengthy future of growth ahead of it, do we notice fewer failures due to unstable markets or does China remain a developing nation with all the associated risks?
- John Cutrone III

Africa in Partnership with China. Actions and Outcomes?

Published Saturday, "China Safari" is an interesting coverage of the recent and past economic partnership between China and Africa. Most Americans and Europeans neglect this relationship, or are unconscious of it. In reality, the Chinese have been investing heavily in Africa since 1995 and have doubled their trade efforts each year since. In 2010 the predicted total is to reach 100 billion dollars.

The African nation essentially prefers the Asian foreigners to other Western or Indian business men and women, for the simple rationale that the Chinese tend to follow through with more plans, and also, Africa wants to upset the western monopolies currently in place.

With Africa in favor of China, the Middle Kingdom has a massive new frontier. This kind of growing amicable relationship is what will shift China’s economy in the express lane to number one economy and number one world power. A Chinese housing developer working in Africa quotes “I’m going to be honest with you, China is using Africa to get where the United States is now, and surpass it.”

From the U.S.’s stand point, they need to discover how to get a larger piece of the action. Granted they already do have a part of the pack, but perhaps they can take a step back and examine how and why the Chinese have been more successful at capitalizing on the opportunity. Much like the car industry did with Japan, observe all of their operations, figure out why they’re more effective, and carbon copy the process.

From China’s position, they already have good relationships with the government and they need to use these relations to bring in new market segments once Africa has developed further. What details can we envisage in the next 10 years regarding the China & Africa partnership?

- John Cutrone III

Vast Disparity Among Marketing Expenditures

Marketing funds have been slashed across the U.S. and Europe, but what is their status in China? Companies like GE, Mattel, and most technology firms have all seen steady losses in growth. One of the 1st sections of fat to be trimmed is the advertising budget. While companies throw costs overboard to stay afloat, they significantly reduce their awareness and position in the market place. The number one search engine Google, Inc. has undergone losses due to a lack of company’s interest to advertise with them.

In China however, most firms based out of any of the four chief cities (HK, BJ, GZ, SH) have had ease funding an abundant marketing budget. In a comparative example, Baidu.com, Inc. (China’s ‘Google’) has grown 24% in the 1st quarter due to heavy advertising from Chinese companies. Baidu.com itself immensely increased their marketing budget also to “win users” and ultimately maintain its lead over Google.com; reportedly gaining over 16 million web users that quarter.

In the 3rd largest economy, not only are the industries increasing their marketing budgets, but the advertisers are increasing their marketing budgets congruently. When struggling companies finally surface from our economic debacle, what kind of environment will they face?
- John Cutrone III

China's Growth Sustained, How Do We Capitalize?

Released today, the quarterly GDP in China closed at 7.9%. Keeping in mind that the Chinese economists predicted 7.8% and U.S. economists predicted even lower, what does this say about China’s virtual invulnerability to dire economic conditions?

When the statistics bureau in Beijing released the 8% goal for 2009 GDP growth, there was widespread doubt and uncertainty. I was in Hong Kong at the time, and the local populace believed this to be another over exaggeration from the PRC. However, as we have witnessed with the last quarter and seen the updated predictions for next year it was, in actuality, right on track.

Giving credit to the stimulus packaged released from Beijing for pushing this quarter through on the final lap, questions are being raised about the reality of the next years predicted GDP growth rate of 10%. Will the ‘exporting machine’ known as China live up to its name and truly increase their national GDP 10% while the rest of the world scrambles to reduce losses?

Finally, in response to the stimulus package and increased buying power, how can marketers take advantage of higher money supply and demand in China at its current state?

- John Cutrone III