Wednesday, March 2, 2011

Business: Access Asia Update

I always find interesting bits of info from this email. If you pay a fee you can see a whole bunch of other info on the Access Asia site, which I'm sure is also very informative.
from Access Asia's Weekly Update - 3rd of March, 2011
e-mail update from Matthew Crabbe [] / Matthew Crabbe []

Weekly Update

What did Chinese Shoppers Do at New Year? They Went at it Like Rabbits!

The western press is China-inflation-obsessed (typographical inflation more like), but those of us in the know (i.e. you lot) haven't fallen for their gross generalisations of who is and who isn't severely affected by inflationary pressure. Of course, our dearly beloved high consuming urban middle class is largely blithely oblivious to inflation, except for the odd whinge. And this past new year did they shop, or did they shop? They did indeed shop - quite ferociously as it happens, at generally high prices, paying very high consumption taxes and generally getting done over! Others went on shopping rampages abroad that saw Hong Kong run out infant formula and Singapore out of fancy handbags - call the handbag emergency relief forces - more overpriced bags needed urgently!!!

The new year holiday was interminably long, just when you thought the last firework had scared your dog, another went off with some muppet thinking lighting small amounts of explosives will somehow lead to wealth - strange how, every year, this mostly happens in distinctly unwealthy areas! Yet it was a good year for China and its legions of shoppers, and most of its retailers (excepting the dumb yanks at Home Depot and Best Buy, naturally). 19% year on year growth (not much signs of inflation bothering there), and only at 4.9%, down from its peak way back in November, and still with a bit of deflation in non-food. Nowhere near serious enough to stop your true, patriotic white collar urbanite from shopping till they're fully harmonised.

One important component of this New Year was online retailing - revenue from China's express deliveries in January rose 29.5% y-o-y, with volumes reaching 250 million items, up 48.3%. Them's serious numbers. We also noted that traditional gift packs stayed strong this year and boosted the booze, tonics and a few other markets. So now we head into the rest of the year with most retailers (sorry again Best Buy guys - leave the blue polo shirts at the door on your way out) feeling buoyant and, it seems, consumers too. For the moment, at least, the China consumer boom booms on.


Sales were strong for a lot of people. This LotteMart in Nanjing was packed when we visited over the New Year, with bulging trolleys of mostly overpriced junk food, but it was all being paid for!

And so this week's still surging Access Asia Weekly Update includes a new report on Dairy Products in China, as well as: new devious plots by rogue Haibaos attempting to remain in Shanghai long past their sell by date discovered; America's fiendish plan to make every monkey (as well as every child) in China obese; twittering with Kim Jong-il; the latest on China's drink driving campaign (that's a campaign to stop it by the way, not promote it as yet more consumption); and one wine the connoisseurs and vino speculators of the PRC will not be hoarding.

Access Asia Report News

Last week, we published our new Online Retailing in China report. This week, we published our updated report on Dairy Products in China. Next week, we shall be publishing our update of Fast Food & Consumer Catering in China. This month, we also begin the task of compiling our next issue of the China Retail Quarterly, which will be out in late March/early April. For information about these reports, or the CRQ, contact us by return.

But, back to this week's newly updated report on China's dairy industry. This has been an industry rife with trouble, from its early introduction into the Chinese diet. Initially promoted by the government, and interested foreign parties, to help fill the calcium-light diet of many Chinese people, and reduce the incidence of the associated health problems that come with a lack of dietary calcium, the focus on dairy development has been disproportionate to the previous and existing need, arguably. For example, while a 200ml glass of full-fat milk provides 236mg of calcium, a 100g serving of soya bean curd (doufu), a traditional part of the Chinese diet, provides 510mg of calcium, according to the UK's Food Standards Agency.

The expedient of filling the lack of calcium in the Chinese diet created the opportunity for a mass push by foreign dairy companies into China, and the growth of domestic dairy groups that have since become very large concerns. But that rush to develop created grave systemic failures in its wake. We have spoken often in this newsletter about the melamine scandal of 2007/2008, but prior to this was the 2004 baby milk powder "event" where milk powder so poor in quality was sold that infants literally starved to death because the milk powder was so low in protein.

The systemic problems that created these issues have not entirely disappeared either. Despite most large dairy companies in China now investing in developing their own dairy herds in order to improve raw material supply, most still also rely on the small-scale farmers who, owing to lack of skill and resources, still often produce raw milk that is of low quality, thus continuing to create the potential for tampering to make that milk more economically lucrative.

As we discuss in the report, the problem of the assault on breastfeeding by manufacturers of infant formula milk continues in China, as it does in many developing economies, despite there being explicit laws banning them from marketing or advertising to expectant mothers and health professionals, and providing incentive packages to promote consumption of milk formula over breast milk.

Despite all of this, the dairy market has recovered somewhat since the 2007/2008 problem, although many Chinese shoppers still buy powdered milk via the Internet from Hong Kong and elsewhere, or buy imported products because they simply do not trust what is in the domestic product. That continued lack of confidence has meant there is a persistent weakness in the market. A result of this is that many smaller dairy companies are losing out to those with larger economies of scale, or are bought up by them. Such consolidation in the industry does provide for improved quality of supply and accountability perhaps, but the industry still has a long way to go to win back the trust of its consumers.

Rogue Haibao Alert...
They're Hiding in Plain Sight!

Despite concerted efforts to remove the menace of rogue Haibaos from society ('de-harmonisation' of Haibaos, as it's officially termed), they are proving a far more aggressive and determined pest than the five dumb whatevers that infested Beijing during the Olympics. We've shown you pictures of Haibaos infiltrating the city via the Maglev, hiding behind trees, brazenly walking on the grass in a Chinese park (cue mad Little Napoleon's in cheap Parkie uniforms with whistles and waving arms!!). Now here we see an example of the daring 'hide in plain sight' strategy, while attempting to pass yourself of as really an integral component of Chinese history. Very cunning, but not cunning enough for Access Asia's Haibao alert reader who sent us the evidence.

So, here we have the God of Wisdom, God of Longevity, God of Wealth and God of Anthropomorphic Condoms.

A Step too Far...
Even for US...
China's Fat Monkeys

OK, so we're the guys who wrote a book about obesity in China (Fat China), but at least we confined ourselves to overweight humans. But what about the hidden problem of fat monkeys in China? Who's gonna do something about that, man?!

Apparently cheap facilities, lax rules and, most importantly, a distinct lack of animal rights protestors, is making China a popular place to conduct tests on new anti-obesity drugs - by making monkeys fat!!! But it's OK, as usual we can blame the Yanks - they started it, according to the New York Times, which used to be a reputable newspaper, but is now some pages wrapped round a free China Daily insert!!

At the Oregon National Primate Research Center, monkeys are routinely fattened to twice their normal weight to test weight-loss and diabetes medications for humans. They are jammed full of peanut butter, popcorn, peanuts and fruit-flavoured punch made with high fructose (i.e. what people who travel on Amtrak eat, we've noticed).

However, in America the monkey fatteners are in trouble with the animal rights people, so what's the answer? According to a certain monkey fattener called Dr. Grove, '...using obese monkeys is a growing trend, especially in countries like China where pharmaceutical research is cheap.'

Bring on the fat monkeys...

A big-gutted monkey

DPRK News...
Kim Jong Twitter

Are you signed up to North Korea's Twitter feed? Of course, if you're in China, Twitter is banned, and nobody except a few generals have the Internet in North Korea, so it's all a bit daft. But, hey, for those who live their sad little lives on the Internet, it's probably exciting. One thing you've got to concede, those crazy North Koreans now targeting Twitter and, apparently YouTube (also blocked in China - well how else do you think they'll get Youku's share price up), are witty:

Hilary Clinton described as the 'Minister in a skirt' - a bit rich coming from a country whose leader's bouffant hairstyle in somewhat, let's be frank here, gay. And anyway, she favours pant suits! So ya boo.

Still check it out - look on Twitter and YouTube for 'uriminzokkiri' (catchy huh?)

Access Asia Readers Letters...
So How's That Drink Driving Campaign Going?

Dear Access Asia

You guys are fabby, and really cool. Last year you noted the new anti-drink driving campaign in China that was cracking down on the phenomenon of drunk officials and their feckless offspring roaring around the streets of Chinese cities shouting their father's names at everyone. It was great to see China tackling a serious social nasty, like drink driving, seriously. How's that campaign going?

All the best, a devoted reader

Access Asia replies:

Well, dear reader, we think the campaign is going just fine. So well that the roadblocks, breathalysers and watchful cops appear to have done their job and gone home. And there are lots of great business opportunities in motoring in China. Just check out this story we read recently:

Chinese media reports this week that the state-owned petroleum giant Sinopec has signed an agreement with Domaine de Chevalier to sell French wine at 110 Sinopec "Easy Joy" convenience stores throughout China. According to the Shenzhen Express News, with the growing number of cars on the road in China, retail industry experts say that new drivers demand "more diversified services" from gas station owners, which has led major companies like Sinopec to sign food and beverage agreements with McDonald's, KFC, the Yunnan Tea Group, and Moutai in recent years.

So, great! Easy access to wine and Moutai for all careful drivers!! Let's get those in-car cork screws on the market as soon as possible!! With initiatives like these, how can the anti-drink driving plan fail??

French wine/Chinese petrol - spot the difference??

And Finally...
One Wine Brand You Probably Won't Find Down the Sinopec Station

"Lafitte, Lafitte", the wine lovers of China cry, "where is our Lafitte?" (just below les ankles mates!! Gedditt??).

And all sorts of wine is selling well at the moment (not just the Lafitte). All thanks to people showing off, speculation, nouveau riche Chinese Essex Boys, a country that hasn't worked out that 'yuppie scum' is an insult and not an aspirational role model yet, etc. And yet, we feel, one brand of wine may not be sitting in the cellars of many viticulture-appreciating corrupt cadres who spend their ill-gotten gains on vino:

Not that the Taiwanese, it appears, are all that sophisticated either. The wine glass accompanying the bottle looks just like our builders tea mug!! Cheap wine out of a mug... How very Sunday in Sunderland...

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