Former Liberal Democrat leader predicts more Chinese participation in int’l organizations

In politics, Paddy Ashdown, probably best known as the former leader of Britain’s Liberal Democrat party, has always taken an internationalist perspective.

Having witnessed first hand several major conflicts during a military and political career spanning more than 50 years, Ashdown is convinced that China must play an active role in global affairs to ensure a peaceful transition toward a multi-polar world.

“There is a massive power shift taking place at the moment,” Ashdown says. “The last time this happened was at the beginning of the 20th century, when power began to be passed over the Atlantic from Europe to the United States.

“Increasingly if we want to work together to get things done in the modern world, we are going to have to reach beyond the circle of Atlantic powers and build partnerships with others, and one of those will be China.”

While Ashdown never made it into government while in charge of the Liberal Democrats, his international credentials are impressive. After stepping down as leader of the party, he became the United Nations High Representative for Bosnia and Herzegovina in 2002. More recently he was linked to a similar UN role in Afghanistan, although not appointed.

He is no stranger to China. In the late 1960s he spent two and a half years living in Hong Kong learning Mandarin while on sabbatical from the Royal Marines.

“I became fascinated by Chinese and tried to teach myself the language.” Despite being a gifted linguist who had already taught himself Malay, he soon realized that Mandarin would be an altogether more challenging proposition.

“I went to Chinese night school in between my military service. I was the only non-Chinese there, it was full of Cantonese and other Chinese speakers wanting to learn Mandarin. I soon discovered that I wouldn’t be able to learn it in my spare time, so I went to Hong Kong to be a student on a full-time basis.”

As Ashdown approached the end of his studies in 1969 and prepared to return to Britain, an unexpected encounter gave him the opportunity of some rather clandestine employment.

“One day, completely unannounced, I got a mysterious call from someone introducing himself as a member of the Hong Kong government. He said he was a member of the British Foreign Office, and that they were looking for people like me who could speak Chinese.

“I knew perfectly what was going on. This was not the Foreign Office proper. If this led anywhere it would end with my being asked to spy for my country.”

The meeting led Ashdown into a job working for the British secret service MI6, although the reality of espionage proved more mundane than it sounds. One assignment in 1970 had him monitoring a group of journalists from the People’s Daily visiting Northern Ireland.

“They wanted me to be part of the team that looked after the Chinese delegation, without letting them know that I could speak Chinese. My job would be to hang around, listen to what they said and report back.

“It seemed a pretty preposterous piece of espionage to me, but I went along with it. Though I heard and understood almost all they said, there was precisely nothing of any interest to anyone except themselves.”

Ashdown left the service to focus on politics, becoming a Member of Parliament in 1983 and leader of the Liberal Democrats in 1988. With Ashdown at the helm the party became favored among Britain’s Chinese community, in part because he lobbied strongly to give all British subjects in Hong Kong the right to move to Britain before the handover in 1997.

“We had a duty toward these people, but I also thought it would be in Britain’s interests. Agreeing to allow 3.5 million Chinese to come and live in Britain was not a popular position, but in my mind there was no doubt that as a consequence there would have been a massive influx of capital and investment into Britain. You only have to look at Vancouver in Canada to see what could have happened.”

Nowadays out of the spotlight of daily political life, Ashdown has turned his attention toward international affairs.

He sees China as a key player in the move toward greater international cooperation on issues as diverse as terrorism, financial regulation and trade.

“I think in the not too distant future it will be impossible to carry out interventions like the ones in Iraq and Afghanistan without it being cleared by the UN Security Council, of which China is a member.

“I think it is very possible that we may eventually find ourselves in partnership with the Chinese.”

While he appreciates, and indeed has witnessed first hand, the cultural differences between China and the West, he sees no reason why these should preclude China playing an active role in world affairs.

“I’m not naive about China, I know how much we differ on many key issues. But if you look around the world and look at the way China is operating, on the whole she is operating in a highly responsible manner. China is showing a strong sensibility toward international law.

“China understands the international financial system, and is playing a role in helping the eurozone stabilize itself. They are starting to follow a much more constructive policy in Africa. There is real evidence that Beijing is understanding the complexities of the global situation.”

Ashdown believes that as China increasingly participates in international organizations, cooperation with the West will become easier.

“The relationship between China and the West has always been characterized by the idea that both sides are inscrutable to the other. I don’t believe that’s true. I think it’s much more of a myth than a reality. We soon discover there are universal human values and aspirations that each of these two communities share pretty unilaterally.

“The days when China genuinely saw itself as zhongguo, or the middle kingdom, around which the rest of the world circles, are long gone.”

Reduced orders from European buyers push Chinese manufacturers to look to other avenues

European retailers bracing themselves for a bleak midwinter of economic slowdown have cut back on orders of toys, games and other Christmas items from China.

But Chinese manufacturers, hit hard by the slowdown, have been offered some Christmas cheer by opportunities presented in the online and low-cost retail sectors, as European consumers search for bargains.

The Confederation of British Industry (CBI) announced yet another drop in high street sales in November, with the trend expected to continue into the Christmas run-up.

“Retailers remain hard-pressed, even as we get closer to Christmas,” says Ian McCafferty, CBI chief economic adviser. “The relatively mild weather this autumn has hit clothing stores particularly hard, and retail sales are down year-on-year for the sixth month in a row.”

The scope of the problem for China cannot be over stressed. An estimated 75 percent of European toys are manufactured in China. Any sharp downturn in sales will hurt manufacturers as much as retailers. As a result, both are keen to work together to offer customers affordable products.

“Our suppliers must deal with the real world of our markets, which are growing very slowly if at all,” says Alan J. Simpson, a spokesperson for the Toy Retailers Association (TRA), which represents the toy trade in the UK and Ireland.

“The double digit growth of China in recent years means we must look to them for real efficiency gains. The years of investment in expansion of production in China must now be reapplied to product development.”

Some have suggested the slowdown has given retailers in the key Christmas toy sector greater bargaining power with manufacturers in China, but Simpson insists this is small consolation. Instead, he argues that both retailers in Europe and manufacturers in China must work together to drag the industry out of this slowdown.

“If we are having to bargain for improved deals on the basis of poor trading conditions, as we certainly are, then everyone feels the pain. We all need to adjust constantly.

“Our suppliers need to respond to the real world that we face and work with us to protect our margins and ensure flexibility in difficult trading conditions. For the retailers, those adjustments include intensifying retailing and giving constant attention to our delivery to the customer.”

Looking beyond the immediate future, Simpson argues that Chinese manufacturers must become more locally sensitive if they are to adapt to the new economic reality in Europe.

“The most obvious thing from our perspective in the UK and Europe would be for China to develop products and scales of production which allow us to meet the aspirations of our children and their parents more precisely.

“We will not see such specific products overtaking the US led blockbuster toys, but sensitivity to local needs would be mutually beneficial provided value for money did not suffer in the process.

“If real economic growth is to occur, China must leverage its efficiency and grow based on newer markets. To do anything else will injure us all as China’s expectations will be unrealistic.”

There are some encouraging signs for toy retailers this Christmas, with some companies outperforming the retail sector as a whole. As ever, retailers are looking for the season’s “must-have” toy to boost flagging sales, and this year’s has a distinctly Chinese feel.

Xia Xia, produced by US toy firm Sepia, might have a Chinese name but is reportedly selling at a rate of one every seven seconds across the US at the moment. European retailers are currently scrambling to release the product before Christmas this side of the Atlantic.

The toys, a range of four crawling crabs with changeable shells, are evidence that in the pre-Christmas retail frenzy, a simple idea can turn into big money, even during an economic downturn.

“There has certainly been a notable tightening of the purse strings this past year,” says Shane O’Neill, co-founder of Enter the Panda, a company that helps connect overseas businesses with Chinese manufacturers. “But from the retailers, distributors and small business owners we’ve dealt with, their focus has been on cutting costs without reducing the overall quality of their products.”

This will come as welcome news to Europe’s consumers this Christmas. One way consumers are looking to save is by doing their Christmas shopping online. In Ireland, 82 percent of shoppers will do at least some of their Christmas shopping online this year, spending an average of 155 euros ($205) each, according to research by Visa Europe.

“China has always provided online retailers with opportunities to undercut the bulk distributors,” O’Neill says. “To add a competitive edge, some online retailers now want to deal directly with factories in China. This gives them access to an infinite range of goods and services that allow them to develop new and exciting products for their home market.”

As well as online retailers, the economic slowdown this Christmas offers low-budget retailers in Europe an opportunity. High streets across the continent are seeing an increasing number of low-budget stores appear, and many source a lot of their goods from China.

Poundland, the UK chain that announced record profits for the last financial year, is one retailer seemingly unaffected by the downturn.

“It is clear that the challenging economic climate is set to continue for some time and that an increasing number of consumers will continue to seek value for money,” says chief executive Jim McCarthy. “We are perfectly positioned to serve the needs of consumers who place value for money at the heart of their purchasing decisions.”

Poundland’s success also offers a chance for Chinese manufacturers to sell to an estimated 3.5 million customers every week, looking to buy everything from toys to kitchenware.

In an effort to cut costs, the company runs an office in Hong Kong to better source suitable products from across China. It has even implemented a video-conferencing product approval process to lower factory to shop-floor time, and enable manufacturers thousands of miles away to react quickly to new trends in Europe.

Whether this challenge is accepted by China’s manufacturing industry is another issue, but it shows that there are opportunities amid an otherwise frosty Christmas for European retail.

“China and the West depend heavily on each other and as such the many manufacturers that are aware of the economic problems of the West share in the concerns that trade may slow in many sectors,” O’Neill says. “Some factory owners we have worked with for many years now come to us to try and find out how they can adapt in order to meet the change in demand.

“I think most people will agree that Chinese manufacturers need to improve payment terms in order to stay competitive and become more attractive to businesses with diminished turnovers. It is the point that we are trying to drive home to our factories.”

As Chinese tourist numbers rise, the industry is making efforts to make them more welcome

Chinese tourists are keeping the cash-registers ringing for European tourism at a time when the continent’s own travelers are cutting back on their spending. Travel companies, shops and airlines are among those joining the race to cash in on the “red euro” as Chinese visitor numbers reach record highs.

Around 3 million Chinese visitor trips were made to Europe last year, but with the new opportunities come challenges for the industry not only to continue to attract Chinese tourists but also better serve their specific needs.

“The European tourist industries still have a lot to do to adapt effectively to the new influx of Chinese tourists,” says Kevin Latham, author of a report that looks at how the rise of Chinese tourism will change the European travel industry.

“We can expect the growth of Chinese tourists visiting Europe to continue, but the rate of growth really depends very much upon what the key stakeholders in the industries in Europe actually do,” says Latham, a senior lecturer at the University of London’s School of Oriental and African Studies (SOAS).

“Europe finds itself in an increasingly competitive global tourism market. We have to remember that Chinese tourists don’t have to come to Europe. In fact they can more easily go to Southeast Asia, Australia or New Zealand. There is no inevitability about this flood of Chinese tourists continuing into Europe and we need to be thinking far more seriously about attracting Chinese tourists in more substantive ways.”

Latham’s research, produced in conjunction with Hilton Hotels & Resorts and SOAS, should serve as a wake-up call to an industry that has been presented with a welcome opportunity during an otherwise gloomy period for the travel sector.

The UK is particularly keen to attract higher numbers of Chinese visitors. The country has traditionally struggled against other European destinations such as France, Italy and Germany, in part because of visa restrictions.

This year the UK can expect to attract around 150,000 Chinese visitors, compared to more than half a million in each of France, Italy and Germany. As the UK remains outside the borderless Schengen Area, Chinese tourists must apply for a separate visa to visit.

But despite this hindrance, the UK is working hard to actively promote the country within China via national tourism agency VisitBritain.

“Britain is recognized as a destination rich in history and heritage,” says Travis Qian, manager of VisitBritain’s operations on the Chinese mainland and Hong Kong. “What we need is to establish a strong tourism and destination brand which is currently lacking.”

To achieve this goal, VisitBritain has launched the Great Britain 3D world tour, a 100-million-pound (116-million-euro) four-year marketing campaign that brings London’s iconic landmarks to the world in virtual format. The tour spent some time in Shanghai earlier this year.

“There was a strong surge of social media engagement through VisitBritain’s Weibo feed on Sina,” says Qian. “VisitBritain’s Weibo account has over 150,000 active followers, the most of all government official accounts.” Weibo is the Chinese equivalent of Twitter; and Sina is a leading Chinese web portal.

VisitBritain also works closely with British companies involved in the travel sector to promote both their brands and Britain as a whole. A delegation organized by VisitBritain in November took 33 UK suppliers to China including retail outlets, tourist attractions, local tourist boards and hotels.

“This is the biggest supplier delegation we have organized since 2006, which shows the high interest from the UK travel industry in China at the moment. Major brands are keen to promote in China because of the strong spending capacity of Chinese tourists. Chinese in the UK spend an average of 1,678 pounds per visit which is three times the world average,” adds Qian.

“China is one of the fastest growing and most economically important countries in the world. It is a vital market for VisitBritain, offering long-term growth potential for UK inbound tourism. Chinese rank the UK very high as an aspirational destination. It is our ambition to turn these positive perceptions into new arrivals.”

Despite some encouraging successes, there are still hurdles the VisitBritain team face. As well as the visa situation, a shortage of airport capacity is limiting the amount of inbound flights from China.

That is not to say Britain’s weakness is not an opportunity elsewhere on the continent. Finland’s national airline, Finnair, has become a European hub for Chinese tourists after a strong push in China.

“Finnair offers the shortest route to Europe from China, and we offer connections to over 50 European cities,” says Mikko Rautio, sales director for the airline. “In the past it was more about European business travelers flying to China, but it is now more and more a question of Chinese travellers – business or leisure – travelling to Europe.”

Part of Finnair’s China strategy is to expand services beyond the traditional hubs of Beijing, Hong Kong and Shanghai. The airline will open a new route next May to Chongqing, becoming the first airline to connect the Southwest China city directly to Europe.

“Our intention is to double our Asian traffic by 2020, and China is a very important part of this strategy. With rapidly growing outbound tourism along with the internationalization of Chinese companies, second-tier cities are becoming very interesting to Finnair.”

It is hoped that the links built by such connections will also have knock-on effects for Finland’s tourist economy.

“The vast majority of Finnair’s Chinese passengers use Helsinki to transfer only, but we do see more Chinese tourists making a stopover before they travel onward to other European destinations. Lapland and Santa Claus, of course, also attract tourists from China.”

Bringing Chinese tourists to Europe is, however, only half the battle. Indeed, the real economic benefits often lie in encouraging them to spend whilst they are visiting. A report released by the World Luxury Association earlier this year showed that China now accounts for a quarter of the world’s luxury goods market.

While China’s domestic luxury market has grown significantly, the vast majority of Chinese luxury spending occurs overseas. Key European markets, such as France, Italy and the UK, have seen monumental increases in the amount being spent by Chinese tourists.

In 2009 the average Chinese tourist spent over 1,000 euros per head per trip in France. Boutiques and high-end retailers in London’s Bond Street area alone took 230.7 million euros from Chinese tourists in 2010 according a report from London Luxury. The account found that Chinese shoppers were spending an average of 696 euros each per visit to one of these stores.

One shop benefiting from this trend is Selfridges, one of the continent’s most prestigious department store chains. In recent years Selfridges has implemented a series of policies designed to encourage Chinese shoppers.

“Selfridges was the first department store in the UK to really welcome and nurture the trading potential from our Chinese customers,” says Sophie Hedley, head of press at Selfridges. “We were the first major retailer in the UK to accept payment by China UnionPay cards and started introducing Chinese speaking employees on the shop-floor a few years ago.

“We have witnessed a rapid rise in sales from Chinese customers for the past five or six years, a phenomenon which has hit us a little earlier than other retailers. The growth is consistently in the double digits year on year and shows no sign of stopping.”

But while Chinese desire for designer labels from high-end department stores has been well publicized, some rather more surprising brands have also benefited from the influx of Chinese visitors to Europe.

Clarks, the British shoe brand, has seen an unexpected rise in Chinese customers at its factory outlet store Clarks Village, in Somerset. The store has benefited from Clarks high-quality reputation in China.

“We’ve heard that in China there is an ABCD of retail highlights: Aquascutum, Burberry, Clarks and Dolce and Gabbana. Our Chinese customers seem to absolutely love Clarks shoes,” says John Turner, deputy center manager at Clarks Village.

The store has been looking at ways of luring Chinese tourists through advertising campaigns in Chinese media, teaming up with tax refund service Global Blue, and by helping to organize transportation for Chinese visitors in London.

“From a financial perspective there was a huge incentive to start attracting Chinese customers. Statistics from June show that we’d had a 237 percent increase in international tourists coming to the village, of which many were Chinese.

“In China there are so many counterfeit operations that those who do have money often don’t trust their own retailers to be selling the ‘Real McCoy’. We’ve had customers from China buying up to 10 or 20 pairs of shoes at one time. Back in China a pair of Clarks shoes can cost upwards of 200 pounds but here you are probably talking 40 or 50 pounds,” says Turner.

“That is a significant difference in price and Chinese tourists will calculate that back on their airfare. Now Clarks village is seen, up against the likes of Harrods, as one of the top 10 Chinese attractions in the UK.”

Clark’s village in Somerset is one of a number of unexpected tourist destinations across the continent that is tapping into this new market of Chinese tourists. Trier in Germany, birthplace of Karl Marx, sees around 13,000 Chinese tourists a year visit the Karl-Marx-Haus museum.

Montargis, a small town in central France, is also popular for historical reasons – many of those involved in the early foundations of the Communist Party of China spent time there during the 1910s. Such China-specific tourist sites are a reminder to Europe’s travel industry that they must adapt to better serve Chinese tourists.

Nick Haley, co-founder and director of Danos & Haley, a travel company that provides bespoke tours of the United Kingdom to Chinese clients, appreciates the need for this customized approach.

“Prior to establishing our business we determined that Chinese tourists have not always had the best experience in the UK,” says Haley. “In the past they have tended to be offered tours showing ‘the best of the UK’ without really thinking how relevant it is to Chinese visitors from a cultural point of view.

“Our clients want to gain a strong understanding of British society, so rather than going to a tourist attraction and doing the fairly mundane things people have done in the past, we provide VIP hospitality to give our guests the opportunity to mix and mingle with prominent members of business and society.”

The hope is that such a personalized approach to Europe’s Chinese visitors will not only keep them happy, but, as Latham is so keen to stress, encourage them to spread the word back home.

“Increasingly outbound tourist satisfaction in China is important because one of the driving factors pushing forward tourism is word of mouth. Increase tourist satisfaction and more people will be telling their friends, relatives and even strangers online that Europe is a good place to go to.

“Europe has to innovate and adapt as well as being proactive. If the European tourist industry just assumes that more and more Chinese tourists are going to come to Europe they are likely to get left behind. If you want to really exploit the potential of that market then more innovation and adaptation needs to be introduced.”

Hilton launches program to make visitors from Middle Kingdom feel at home

As Chinese guest numbers continue to increase in hotels worldwide, one chain is taking steps to bring a little bit of China to its guests from the Middle Kingdom.

Andrew Flack, vice-president of Global Brand Marketing at Hilton Hotels & Resorts, launched Hilton Huanying earlier this year, a program designed to offer Chinese guests a few home comforts at over 50 of the group’s hotels in 13 different countries.

“We realized we had an obligation to live up to the expectations Chinese travelers were starting to carry when they traveled with Hilton. We were starting to see some consistent themes from people who were handling groups of Chinese visitors.

“They were regularly coming to our hotels and asking for things like hot water kettles in bedrooms and at least one Chinese meal a day. There came a tipping point where we needed to formalize some things that were starting to happen on a hotel by hotel basis already.”

Huanying, which means welcome in Chinese, was the result. As well as kettles, slippers and a Chinese TV channel in each room, the program guarantees a Chinese speaker at the reception desk, and breakfast items such as congee and dim sum at all participating hotels. The scheme is already proving popular.

“Chinese guests have so far been very happy with it,” says Flack. “We went to China in early September to launch the program there and I met the head of the Chinese Hotel Association. He told me he knew about Huanying already and had stayed in a Hilton in Hawaii. He said it was great to see real food!

“Interestingly it isn’t just people coming from China who are enjoying the food. There are ethnic Chinese people who are living outside of China and even other people who just like dim sum for breakfast.”

Huanying marks a watershed for Hilton as it begins a period of rapid growth focusing on both Chinese outbound tourists and the Chinese domestic market. While the company is not new to China – it opened a Shanghai hotel as far back as 1988 – slow economic growth in Europe and the US has the company turning east in search of new customers.

“China is our No 1 Asian source market now. Chinese outbound tourism is huge. A few yeas ago it started to emerge from the pack and join other major international source markets. We started to see some hotels reporting a doubling in year on year growth of Chinese visitors.

“Our top line goal is to be the preferred choice of the Chinese traveler both within China and worldwide. We’re the most well known international hotel brand in China, so we’re in a good place to try and live up to that goal.”

To achieve such a goal, Flack understands that good service must be paired with marketing tailored specifically to China. As a result the company employs a mixed marketing strategy that combines traditional approaches with more innovative ones.

“We’re using a good mix of media. We’ve been particularly aggressive on large billboard style advertising in high traffic public areas like shopping malls in Beijing and metro stations in Shanghai.

“But we use a lot of social media too. The online blogging community is very active in China, particularly with regard to travel. We actually sponsored five travel bloggers to travel with Hilton. They went to places like London, Australia, the Maldives, and we hosted them there. Some of these bloggers have over a million followers, so we’ve invested significantly in that.

“China is a society built on personal recommendation. When I travel there people always want to tell me the best restaurant or the best place to go. People want to make the right choice, so now through the Internet the capacity to give personal recommendation is particularly high in China. I’d say higher than in many other places.”

Alongside this marketing strategy, Flack is also keen to stress the importance of understanding the longer game. Hilton commissions a series of research papers, known as blue papers, which explore trends in the travel sector.

A recent blue paper examined how the rise in Chinese tourism will affect the European travel industry, concluding that there is still much to be done if Europe’s travel sector is to enjoy the potential benefits of the growth of Chinese outbound tourism.

“We want to stay continually in tune with the changing times, and we find that original research is one of the best ways to do that. It allows us to lead a conversation and, of course, there are big benefits to our business.

“The more we play our part in making the travel industry more effective in what it does, the better for everybody. The more people who are travelling, the better it is for airlines, the better it is for hotels and the better it is for Hilton. What we’re about with the Chinese blue paper for Europe is trying to help people figure out how to make it easier for Chinese people to travel to Europe.”

There are few better ways to encourage the trend than to provide good experiences to those who do travel, with a keen attention to the finer details. This is really the ethos behind Hilton’s Huanying program, and one Flack believes must spread across the continent to keep Chinese tourists coming back.

“We’ve started Huanying in four hotels in London but in due course we expect it to spread across Europe. We have decked out the program using our Chinese team members.

“For example with the breakfast items we actually wrote menus for the preparation of the food in our Chinese hotels, and then trained hotels around the world in how to cook food the Chinese way.”

It might seem a small point, but it shows how seriously multinationals take the opportunity to tap into the world’s largest emerging market. It also displays the importance of local knowledge in global operations.

“If you go back to the 80s when Japanese travelers were emerging in big numbers, we had a program back then that was designed to fast-track sensitivities to Japanese travelers in key destinations around the world. We are doing a similar thing now but this time with Chinese travelers.

“It has been interesting being in Asia in recent months. Debt crises and other issues seem a long way away when you’re in Shanghai because economies are still moving forward very robustly. That’s one advantage of being a company in so many places – there is always somewhere in the world where you can focus on growth.

“This is really a once in a generation opportunity, where a country as dynamic as China emerges onto the world travel stage. It is absolutely our core responsibility to react to it.”

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AS Chinese companies look to expand their operations abroad, European PR agencies are increasingly finding new opportunities to represent the growing number of Chinese organizations on the continent.

China’s SOEs, multinationals and government agencies are beginning to realise that there is no substitute for local expertise when it comes to branding and raising awareness in new markets.

One agency many of these organizations are turning to is Newland Public Relations, a PR agency that specialises in providing services for Chinese organizations looking to run campaigns in theUK. Previous clients have included the Bank of China, Hainan Airlines and several local governments across China.

“The challenges of representing a Chinese organization inEuropeare quite similar to those of representing a European organization in China,” says Chief Executive Andrew Methven. “Obviously there are cultural differences, and perhaps not quite enough appreciation of how things are done differently.

“There is also a need for managing expectations and for educating the client about how things are done differently. How we measure success is another issue. Measuring coverage inChinais quite different to measuring coverage and impact in theUK.”

Methven works with a diverse range of Chinese clients, including SOEs, private companies and government bodies. He has noticed a greater willingness in recent years amongst Chinese organizations to invest in region specific PR.

“Chinese clients are beginning to understand the need for effective PR, and therefore are more willing to work with global agencies. Before it was pretty much all in-house, particularly with the state-owned organizations.”

Chinese appreciation for the importance of good PR abroad has been, at times, a painful lesson to learn. In 2009 Chinalco’s proposed deal to buy a $19.5 billion stake in Anglo-Australian mining firm Rio Tinto collapsed amidst a public relations disaster that had shareholders and the Australian government lobbying against the deal.

Nowadays Chinese firms looking to invest abroad are likely to dedicate more time and resources considering the public reaction to a deal.UKagency Pelham Bell Pottinger recently advised ChineseSOESinochem on its successful 5.3 billion yuan acquisition of Emerald Energy.

But even with this new-found appreciation, attracting Chinese clients is not always easy. Turning requests from Chinese organizations into campaigns targeted at Western audiences can be even more of a challenge.

“I think the most important factor in attracting Chinese clients is on the one hand being able to communicate effectively with them, while on the other being able to deliver in their target destination,” says Methven.

Chinese organizations are particularly keen to employ one-stop services to deal with communications in new markets. Several of the major global PR agencies are beginning to team up with accountancy and law firms to provide complete communication and administrative services for expanding Chinese businesses.

Newland Public Relations itself grew out of events management. One event earlier this year had the agency organizing an event to promote the Bank of China’s expandingUKoperations. Alongside a standard PR campaign, Newland provided event management, translation and speech writing services.

Methven appreciates that while Chinese organizations need Western PR when expanding intoEurope, they also want services tailored to their specific needs. If Chinese experiences of European PR are successful, then it will only encourage more the country’s cash-rich companies to follow suit.

“The big Chinese SOEs and all the major banks are already over here. Now we are going to see more and more privately owned businesses come over as well. We have the first wave of hi-tech companies at the moment and soon we’ll have brands like Li Ning. I’m sure within 10 years we’ll see Chinese brands going global in the same way we saw Japanese brands develop 20 or 30 years ago.

“With these big Chinese brands I think we will see campaigns on a larger scale. We are already working with Chinese commercial clients that don’t just want to launch campaigns but want advice on marketing techniques and how to really engage a target market in theUK.

“It is becoming more sophisticated as Chinese companies come over and develop further. If this trend continues then Chinese PR executed with Western delivery will become more and more prominent.”

(Originally appeared in the Australian)

THE aftermath of China’s fatal high-speed rail crash in July was a reminder that the foundations of the country’s remarkable economic growth are perhaps not as solid as some may suggest.

With the outpouring of anger and grief came a series of accusations over what was to blame for the crash, corruption, cheap equipment and botched reverse-engineering among them. It was barely the best advert for a new rail network that was supposed to be yet another signal of China’s arrival as a modern global superpower.

Of course the West still looks on at China with envy; its growth rate remains at a level most can only dream of. China has revelled in the role of the white knight riding to the rescue of the global economy, buying up US and European debt and even lecturing the US on fiscal responsibility.

In recent years it has become fashionable, particularly in light of Martin Jacques’s 2009 book When China Rules the World, to look at these trends and conclude that Chinese global hegemony is inevitable. The fundamentals of the argument are always simple, often extrapolating growth rates on to China’s massive rural population.

One magazine even produced an online calculator where one could enter a different growth rate, inflation and currency appreciation to pinpoint the exact year that China becomes the world’s largest economy.

But commentators are beginning to approach such bold predictions with more caution. English author Will Hutton has argued that China can emerge as a global leader only by embracing Western tradition, even if the old dinner table gambit that economic growth will lead to democratic transition is heard far less often these days.

And now comes Why China Will Never Rule the World, a book that doubts whether China’s culture has the fortitude to lead the country to the position of sole global superpower.

Canadian author Troy Parfitt has more reason than most to view China with suspicion, having lived in Taiwan for 10 years. Lamenting the fact China seems to be all he hears about these days, he crosses the strait to find out what all the fuss is about.

The result is an entertaining and informative travelogue less concerned with number crunching than with shining a light on a culture that, for many Western analysts, is too often lost beneath the balance sheets.

There is certainly a sense that Parfitt’s views on the subject were well formed long before his arrival. His travels are interspersed with historical anecdotes that provide some context as to how China has reached its present state.

But of most interest is his damning appraisal of the national mindset, one that he argues is not conducive to the emergence of a global power. He blames Confucianism for creating a culture of unquestioning respect for authority and points to the lack of international and historical perspective among ordinary Chinese people.

At times Parfitt’s attitude towards the Chinese borders on contempt. He lets his frustrations boil over on a couple of occasions during his trip, and the book closes rather uncomfortably with Parfitt haranguing a Chinese official over the issues of Tibet, Taiwan and Tiananmen.

Why China Will Never Rule the World won’t earn Parfitt many friends. A reference to Taiwan in the subtitle of the book, Travels in the Two Chinas, alone could preclude a future visit to China. As the ruling Communist Party is at pains to remind everyone, there is only one China.

But on the whole Parfitt’s humour and knack for highlighting the absurd (there is plenty to be found in China) make him a likable travel companion. His insight into how cultural concepts such as the notion of saving face may affect China’s growth is also interesting. An entrenched societal reluctance to admit error may well have played a role in the Zhejiang train crash.

There are other ways in which Parfitt’s China clashes with this notion of a modern superpower. Simple tasks such as getting a taxi to a train station become ordeals. At every turn there seems to be somebody trying to hoodwink him out of a few extra yuan.

It is worth remembering that while China may be the world’s second largest economy, it still ranks in the 90s on the Human Development Index. In other words, many of its people are being left behind.

And there lies the true value of a book so openly critical of Chinese society. Regardless of whether China ruling the world is a matter of when or if, there is important work to be done in terms of bringing the country into the international community.

Not everyone may agree with Parfitt’s prognosis, but here is an effort to shift

the debate away from gross domestic product forecasts and on to a society that is still dangerously misunderstood by many in the West.

David Bartram is a freelance journalist who writes about China from London, Brussels and Beijing.

Why China Will Never Rule the World: Travels in the Two Chinas 
By Troy Parfitt
Western Hemisphere Press, 424pp, $29.95

Uninspired at home and in search of adventure, Alex Devoto was just 23 years old when he set up Devotec Industries, a technology company that develops and sells a range of electronics products manufactured in China.

“When I graduated I didn’t want to become a banker. Going to China and setting up a company seemed a lot more fun,” says Devoto, a British national whose company has tasted success by selling solar powered speakers. “I had no technical engineering background so it was largely a leap into the unknown.

“I had done a masters in China Studies, had begun to learn the language and had just finished an internship in Beijing so it sort of made sense. China is probably the cheapest place in the world to get things done, and we were looking at electronics so basically you had to be in China.”

Devoto is part of the new generation of young entrepreneurs who not only see huge opportunities in China, but unlike many of their predecessors, are not undaunted by the prospect of doing business in the country.

With economic prospects in Europe turning extremely bearish as more nations find themselves reeling from debt crises, many young entrepreneurs are now looking eastwards for growth opportunities.

Aside of the desire to make it big, these entrepreneurs are also attracted by the huge domestic market in China, easy availability of talent and raw material, friendly investment policies and an overall environment that fosters and kindles entrepreneurship.

But it is not that everything is smooth sailing in China especially for small- to medium-sized enterprises (SMEs) and start-ups. Many companies like Devoto realized that learning and adapting quickly to the business environment was the key to survival in China.

“I learnt a lot of things along the way, which is one of the reasons why we’ve grown quite slowly. We were making mistakes but always looking to narrow down the options until we found the right answer.

“We saw a very basic speaker product in China that we thought was quite cool. We wanted to add some modifications. So we talked with designers and found manufacturers that could add a solar panel and a couple of other pieces to it.”

But the company did face a lot of issues, especially in its negotiations with manufacturers that sometimes had different notions of quality control and standardization.

“There were definitely cultural issues,” Devoto says. “You can spend a lot of time going around in circles. The best thing we did was getting someone on the ground in China who was well trained, to be there and really inspect things. The difference in quality is huge between manufacturers, and you need someone who understands the quality demanded in Europe or the US.”

While Devoto largely learnt as he went along, European entrepreneurs now have access to an unprecedented support system both at home and in China to help them turn ideas into viable business propositions. The EU SME Centre, which is funded by the European Union, supports small- to medium-size enterprises looking to establish themselves in China.

“We offer very practical support to SMEs, especially those who are looking at early market penetration,” says Anne-Laure Maddy, communications manager at the center.

Since opening earlier this year, the center has provided support to everyone from established European businesses looking to expand into China to entrepreneurs wondering whether China is a suitable market in which to push a new product.

“People are asking us whether there is a market in China for a particular product and if so how do I go about bringing this product into China. We have had many very technical questions: What are the requirements for importing pet food into China? Is there a market for the wooden stakes used in vineyards?”

The EU is particularly keen to support the internationalization of SMEs, with 99 percent of EU businesses falling into the category. With Europe’s own economy faltering, China is a more viable option for expansion than many SMEs and young entrepreneurs initially imagine.

“I think there is a tendency in some countries to think that China is too big for a small company, but in fact there are a lot of opportunities here in certain sectors.”

Of particular focus are SMEs and entrepreneurs from the newer member states, which perhaps previously did not enjoy the trade representation of an established chamber of commerce that British or German businesses had access to.

“A lot of enquiries are coming from the different member states, particularly some of the newer member states which tend to have less trade representation in China,” Maddy says. “We’ve been dealing with enquiries from different companies. Some are still based in Europe. This is really the focus of the center, to concentrate on these early stage SMEs.”

But regardless of the help on offer, many smaller European businesses remain cautiously optimistic about their prospects in China. A European Union Chamber of Commerce Business Confidence survey released in May showed that smaller foreign owned businesses are, understandably, more reserved than larger multinationals operating in China.

Indeed only 50 percent say they are considering major new investments in China, compared to 75 percent of larger companies. Behind this discrepancy is the 41 percent of EU SMEs who feel government polices have increasingly discriminated against them over the last two years.

“China is a very vast market, it is full of opportunity but it does pose problems to a small business if they don’t understand the local business environment or they look to cut corners,” Maddy says.

An understanding of the local business environment is often what is lacking from young entrepreneurs and SMEs who want to do business with China rarely have an idea where to start. In 2007, Dave White and Shane O’Neill, a British engineer and an Irish designer respectively, spotted an opportunity to create a business that offers help to these very people.

“I met Shane and we got into a discussion about the problems foreign companies have when they come to China to do business,” White says. “We found that especially those companies on a limited budget weren’t being offered much support, particularly from the Chinese government side.

“While the EU Chamber of Commerce offers a helpdesk, we found there were limits with what they could help people with. We decided we could help by actually representing foreign businesses ourselves.”

White and O’Neill’s idea was to provide small businesses that cannot afford their own representation in China with access to their own network of contacts. Their company, Enter the Panda, was born, offering to source, negotiate, oversee quality control and ship ‘Made in China’ products to retailers and e-commerce businesses around the world.

“We basically help foreign SMEs find products of the quality they need,” White says. “These guys often have zero representation out here. If you order a container and it arrives in the UK not as you were expecting, you are in a bit of pickle. A lot of SMEs just end up selling it at a knock down price, and after that they won’t deal with China again.”

“A lot of first-timers coming to China work on far too many assumptions,” O’Neill says. “They just assume things will go smoothly. They’ve been promised a price and they’ve seen a sample. For them to come over here and manage the process themselves might be difficult and incredibly expensive. Many SMEs can’t afford to do that. We help mitigate the risk and place our reputation on it.”

White and O’Neill understand better than most the problems encountered when setting up a business in China, but also appreciate that the country offers a unique opportunity to those young entrepreneurs and SMEs willing to put in the effort to make things work.

“I was attracted to China in the first place by the prospect of living in a dynamic economy experiencing huge economic growth,” O’Neill says. “Certainly there is opportunity here. But you have to understand that if you are going to enter into business in China you are in it for the long haul. There is no quick buck. Be absolutely sure it is something you want to do and there is a gap in the market.”

Thorough preparation is certainly at the heart of most of Europe’s business success stories in China. Covering every possible eventuality, and even those you might imagine not possible, is key to developing a profitable enterprise.

One success story, and a prototype for foreign entrepreneurs looking to establish themselves in China without a great deal of financial backing, is Dominic Johnson-Hill.

In 2005 the British entrepreneur set-up Plastered, a t-shirt store in a Beijing hutong, and has since watched his brand become established among expatriates and locals alike. Along the way he has also appeared on Chinese television and picked up a series of awards, including the 2008 British Entrepreneur of the Year in China.

“I set up Plastered in a little hutong in Beijing, which was also my home,” says Jonhson-Hill. “It was the only shop on the street at the time. Now it is the most popular retail street in Beijing and has become a platform for young Chinese people to set up their own creative brands.

“The concept was simple – to take everyday images from around China and plaster them on t-shirts. That is what we did and it really hit the mark and Plastered became a household name.”

Johnson-Hill is the first to admit he didn’t anticipate the success Plastered would have, and the retail revolution it would spark in a corner of Beijing. But he sees his success as indicative of the opportunities available to entrepreneurs who are willing to set up in China.

“I never really expected the success I have had. When I started out I was relying on foreign customers, but slowly Chinese customers started paying attention. It is a difficult concept to understand how to get a Chinese customer to buy something.

“It was a matter of putting focus groups together and talking to Beijingers about what they like. If you are trying to crack the Chinese market you need to understand the people as best you can and then make a product they will love.”

But even with these challenge Johnson-Hill sees opportunities in China that simply are available back home in Europe.

“Today when I open a newspaper I see the markets in turmoil and riots in London, and yet I have just had my biggest month of sales. Retail in China is booming, and I don’t even feel what’s going on in the West. The challenges really seem quite small compared to what’s going on around the rest of the world.”

Perhaps the single greatest concern for European business taking the plunge is the issue of intellectual property rights (IPR). Last year the UK-China Business Climate Survey found that IPR was one of the top three concerns for UK businesses operating in China, alongside the environment and bureaucracy.

But there are some encouraging signs that the situation is improving. Ralph Rogers, soon to be director of The British Centre in Beijing, leads the China-Britain Business Council (CBBC) that provides assistance to British companies large and small in China.

“A common question we receive on a daily basis from people is about how to protect your intellectual property rights. In fact China has some of the best IPR regulation in the world, and now it is starting to be enforced more often,” Rogers says. “Last year there were 43,000 civil IPR cases in the Chinese courts, and only 1,500 were from foreign companies. It is actually Chinese companies who are driving forward the intellectual property agenda.”

By offering practical solutions to problems such as IPR, Rogers and the CBBC hope to encourage UK businesses to China. While previously many would have been intimidated by the prospect, rapid growth, previous success stories and increasing support from multiple avenues are making it viable for SMEs not only to manufacture in China, but also to sell to the Chinese market.

“A number of companies will outsource their manufacturing to China for obvious reasons,” Rogers says. “What we are seeing more of now is the local manufacturing partner turning around and saying: You do realize we can sell this in China as well as make it? A lot of companies will start off buying from China and end up selling there.

“China is moving away from a country focused on manufacturing for export to one more focused on domestic consumption. As Chinese consumers increase in number and affluence, there are more and more opportunities to sell to them, especially the hi-tech products and services that the UK and other European countries excel in.”

The market is a tantalizingly alluring one. The Chinese middle classes now number somewhere in the region of 300 million. There are over a million millionaires, and a population the size of the US will move into urban regions over the next 15 years. The race to grab a share of that market is already well underway. The CBBC, which operates 11 offices across China, is keen to reinforce the message that even small companies can be a part of China’s growth.

“Doing business in China is no different to doing business anywhere else in the world when you come down to the essentials of it. Obviously there are unique challenges but the essentials are the same,” Rogers says.

“China is moving up the value chain. They want to design and innovate and the UK excels in design. We can collaborate with the Chinese across the creative sector. Whether you are interior designer, an architect or a designer of electronics, there are opportunities for small businesses in China.

“If you go to China and visit Shanghai, Beijing, Guangzhou, Shenzhen or any of the many regional cities that are developing at the rate of knots, you can almost feel the opportunities in the air. You can see the new metro systems and five star shopping malls selling European goods. You can see Chinese citizens using their new smartphones – many of which use microchips designed by British companies. There are huge possibilities.”

Power of Youth conference to bring together entrepreneurs from China, European Union

A new enterprise is hoping to spark greater collaboration between young Chinese and European entrepreneurs. The Power of Youth will host a conference inTianjinlater this year in which top young entrepreneurs from all 27 EU member states will meet their Chinese counterparts to discuss everything from collaborative projects to economic policy.

“The Power of Youth is about taking young people who are really good at generating financial capital, and using them to inspire others and drive collaboration which can turn their ideas into action,” says Adam Purvis, founder of the project.

It is hoped that the five-day conference in Tianjin, which runs alongside an EU-China Year of Youth event which will be attended by Premier Wen, will not only provide an environment for Europe and China’s top young entrepreneurs to discuss ideas, but also lead on to the development of new businesses.

“Put young entrepreneurs in a room together and they will find opportunities and turn them into businesses. I believe European and Chinese entrepreneurs have really complimentary skill sets. We are very different but it’s in these differences that we find areas we can collaborate and both grow.”

Purvis hopes to take the model worldwide, withIndianext on the agenda in 2012. But he chose to begin withChinabecause of his own personal experience in the country, as well as this potential he sees for collaboration between European and Chinese businesses.

“I’ve worked inChinabeforehand, designing cars and teaching in a university over there. I learnt that once you’ve broken down the barriers and created genuine friendships and genuine dialogue, then what we can accomplish together is so much greater than what we can accomplish individually.

“We have received such a warm reception from the Chinese side. There are such obvious reasons on both sides to just open up our markets to each other. I am doing my best to hammer down all those barriers that have been put up by generations before us. I’m a great believer that individual relationships can do that.”

One of the European entrepreneurs hoping to forge such relationships is Petr Hyl from theCzechRepublic. Hyl already has some experience inChina, having been involved in the China Investment Forum, a network that supports investment betweenEuropeandChina. Previously he had founded an educational company that operated across theCzechRepublicandSlovakia.

“Every entrepreneur needs a network to succeed,” says Hyl. “When entering a new market an entrepreneur usually lacks access to contacts. Power of Youth connects its members to a new and much valuable network inChinaand elsewhere.”

On the Chinese side, one of the early supporters of the initiative is Rao Jin, a co-founder of social media website Renren. Purvis is particularly excited by the ideas that could come out of bringing together entrepreneurs like Hyl with large-scale investors inChina.

“We’ve had a look at the candidates the Chinese are putting up for us and they are spectacular. There are some really big names coming forward from the Chinese side. It looks like there are a couple of Chinese entrepreneurs coming forward who are billionaires.”

Power of Youth has already secured support from the European Commission, the British Council andTianjin’s local government to turn any ideas that come out of the conference into reality. TheTianjinlocal government has pledged five square kilometres of land in the city on which to site collaborative businesses. The Commission will provide flights toChinafor each of the 27 European entrepreneurs.

In return both the Commission and Chinese government hope not only to inspire a new generation of Sino-European entrepreneurs, but also to receive feedback from top young business people on key issues affecting both the EU and China, including the energy crisis, urbanization and the repercussions of an ageing population.

“We want to develop policy that will be useful to those who are at the leading edge of the economy in bothChinaand the EU. We are going to host a problem solving session inTianjinwhere people present their solutions to these problems. Eventually we hope to be presenting these findings to senior Chinese and European officials who will be writing policy.”

The results of the conference will also be distilled in a series of short videos and online presentations, creating a resource for other young people who want to turn their ideas into businesses.

“What we’re also going to do is take their business acumen, the know-how of making businesses work, and we’re going to crunch that into two minute infographics aimed at the attention deficit generation. Young people want this information quickly,” says Purvis.

With the application process for entrepreneurs ongoing, Purvis is keen to stress that the door is still open for successful business people to get involved with Power of Youth.

“I’m of the opinion that if you buy into our network, we can improve a global economy that is hideously inefficient. It can be far more dynamic and far more socially conscious. Power of Youth alumni – fromEurope,Chinaand across the world – will generally believe we can make the world a better place if we are more socially conscious.”