Please click the highlighted link to see pictures taken during each visit.
Lenovo: Presentation describing Lenovo’s origins and rapid growth to become dominant computer brand in China. Special emphasis on how Lenovo capitalized on intimate knowledge of Chinese people, locales, customs and needs to tailor product offerings. Examples: creating low-cost computers that people in poorer areas could afford, even though computer capabilities were less; adapting power supplies so computer could run off electric bicycle batteries. Presenter, Leo Curtis, also described his career progression, starting Canada and moving to Lenovo.
Modern Plaza: Upscale department store. Presenters detailed transition from non-competitive market 16 years ago (“You could sell anything on the shelf.”, then to price wars, and recently upgrading store and merchandise to provide high-end goods to growing numbers of middle and upper class Chinese. Emphasized merchandise enhancements, shopping ambience, store design, famous global brands and service as key aspects of strategy. Newer program:, Modern Plaza “membership”, with special VIP sales, amenities, events, all targeting high spenders. Attracting more customers from overseas.
Beijing Chaoshifa Chain Store Co. :15 year-old supermarket, with predecessor founded in 1958. Described movement from early days of food shortages and rationing as a “food supply company”, to introduction of self-service foods (1996) and local government acquisition of majority of shares (1999). Emphasis on local market, including contracts with nearby farms helping them be known for fresh, clean produce. Growth plans include opening 180 stores by 2015, including larger stores (but not hypermarkets – not competing with Walmart, Carrefour.)
China Chain Store & Franchise Association Exhibition :Trade association for stores in organization name – largest Chinese association. 900 members – mostly from USA, though also open to domestic companies, including retailers, suppliers. Founded by Bureau of Commerce in 1997, though by 2000, all such associations had to become independent of government. Not very powerful in effecting legislation, but responds, comments when asked. Conducts exhibits, exhibitions, etc.
Suning Appliances : Largest retail chain in China, focusing on electronics, cameras and appliances. Toured new store prototype, “Suning Elite”, which changes typical merchandising format from leased spaces featuring individual brands and staffed by brand company representatives (essentially, “leased space”) to a more typically US/European model of merchandising by product category, typically mixing brands. Meeting at Suning headquarters had to be cancelled due to timing constraints.
Ministry of Commerce -Department of Consumption Economics: Presentation by government agency officials discussed various ways in which the government can encourage economic development. Basic government roles for foreign companies: review companies who want to enter China market, establish overall planning guidelines and rules, establish economic benefits. The government is interested in attracting retailers, and at both the prefecture level and locally can effectively select “winners” through the use of tax incentives. They report that since 2006, fewer approvals are required, making it easier to open a store (though Eastern China cities often seen as over-stored). Also, role to increase consumption by increasing income (12th 5-year plan specifies this), increase welfare, and expand in the countryside (outside the cities).
IBM : Presentation included a general overview of retailing in China, including how consumers are changing. Still, market is fragmented, with the largest retailer – Suning – having less than a 2% share of sales. It is also less efficient than many foreign markets, earning average margins of just 1.2% versus 3.6% for foreign companies. Some consumer patterns include resurgence of national pride and a cultural renaissance, focus on health and well-being, demand for digital products and a high interest in online shopping, and a significantly lower loyalty to a particular retailer than elsewhere in the world. Also described how IBM strategy has evolved over time in China.
The Great Wall
Group Dinner and Other Cultural Experience