The Chief Asia Inspector Blog

Don't mess up with Quality in China...

These past weeks have seen a number of stories unveiled about quality issues on China productions, mainly on the food & drugs industries - and recently in the Toys industry.
There are stories about this bun maker using cardboards found on the streets in his products, the counterfeit drinking water sold in Beijing, or the infamous use of antifreeze chemicals inside toothpaste...
Finally, these last days, Dora the Explorer returned home, with Mattel announcing a recall for 1.5 million toys made in China (containing excessive lead levels).

The matter is getting very concerning for the Chinese government. The execution of the the ex-Food & Drugs Administration chief Zheng Xiaoyu, after being convicted for bribery charges (he took about 6,5 million RMB to let defective drugs get SFDA approval, ultimately causing the death of at least a dozen patients) will certainly not be enough to restore the reputation of the "made in China".

Figures given by the Herald Tribune sound scary : 23,000 cases uncovered of fake or low-quality food between December & May, only 81% of the food tested in a nationwide survey up to safety standards (improving from 78% the year before),

Chinese government was prompt to react, with the implementation of guarantee seals from the Quarantine administration on all food exported items in next September, the tightening of drugs approval procedures, or the implementation of a daily reporting system on food safety.

The risk that these stories hamper the long expected restoration of the Chinese leadership with the coming Beijing Olympics in August 2008, while the world will be watching closely, is high.

I can't help but insist on the importance of the Quality Inspections on-site, as much for every importer buying from China, as for the manufacters themselves who are willing to establish their reputation and improve.

From China to Europe... by car !

Another step in the cultural exchanges between the West and China : one of AsiaInspection's employees in Shenzhen just told me about how her brother has started with his wife on last July, 12th a 60,000 kms road trip from China to Europe !
They will cross nearly 20 countries, for about 6 months, and keep a diary online to record their story.

This trip is actually a big thing, since they will be allegedly the first Chinese couple to drive across Europe; they got sponsored by Volkswagen Shanghai (they drive an Octavia model, which was just released on Chinese market early June), HP, Michelin, ... and will donate a part of the income generated by their story to Greenpeace.

I wish a good trip to these modern heirs of the legendary Zheng He !

Chinese cars land in Europe !

... and they are not cheap !

Brilliance, the main Chinese car manufacturer (who also produces BMW cars for local market) has made a discrete but noticeable entry at the Geneva 77th Motor Show this week, with 3 car models on display.

The 500 first cars from the production line in Shenyang, will arrive this month in Germany to be distributed through European retailers.

The story is interesting, with the involvement of many European automotive suppliers in the project, and the design done by an Italian firm : according to Brilliance themselves, the cars they will sell in Europe are already "quite European"; for this line of products, where quality is everything, coming from China does not, for once, necessarily give you a competitive advantage.

It took about 15 years to Japanese cars to settle definitely in Europe : will China do better ?

All bets are on with China gambling craze !

I read earlier this week about how Macau's gaming revenue surged 22% in 2006, surpassing for the first time the Las Vegas (where AsiaInspection will exhibit next week - by the way...) as the world's biggest casino market.

Seven new casinos opened in Macau last year, bringing the total to 24. The number of gaming tables doubled in the period to 2,762, according to Macau's Gaming Inspection and Coordination Bureau.
And this trends seems here to stay : in total, 2.2 billion people live within five hours' flying time of Macau, compared with 410 million in the same radius of Las Vegas.

I have always been intruiged and fascinated to see how Chinese people can be both disciplined, hard working, and at the same time crazy about gambling, to an extent we seldom see in Western countries...

Invest in Shenzhen !

As I keep an eye on real estate prices in Shenzhen, I thought I would share my views on it - especially when you realize how good the investment can be !

See below an ad I received recently :

-Location : Fu Ming Metro Station
-Building Construction date : 2003
-25th floor / 32
-Flat area : 93 sq.meter
-3 bedrooms, 2 bathrooms,
-Towards south, HongKong direction: "Rice Shop" - good Fengshui
-Estimated total price - RMB1,350,000.
-Located in a  florishing area (shops and businesses)
-Estimated Rental price: around RMB 4000

Besides the fact that such a property would probably be worth more than RMB 6-7 M in Paris (not mentioning London), I really believe investment opportunities are great in Shenzhen now, and my advice (free of charge !) is to buy around 1,300 Euros / Sqm, with a 70% mortgage financement plan at a 6% variable rate...

Yet another Chinese export...

I am not the first one to blog about the Chinese "Gold Farms" (these companies where Chinese video gamers collect virtual money, mainly from World of Warcraft game, then resell it to western gamers); however I read this new article on the subject and had a chance to check again the must-see related video again (more than 500,000 views on YouTube !)...
I like the Interview of the Video maker, who states that "if more social and economic activities happen in an accessible 3D game world, people who don’t have access to other culture capital but gaming knowledge will be more likely to be included in global interaction." In other words, these Gold farms are a smart way for Chinese people who don't speak English or have no particular education, to still benefit from the globalization ...
The natural sense of business that the Chinese have, almost in their DNA, just amazes me !

Direct from the Factory - episode 3

Another episode of our Inspections videos series, gathered around China. This time we are in a Glass Factory, located in northern China (Shangxi province), where, as you can imagine, there have been some arguments about working safety conditions...

Super Girls and Super Heroes

This made me laugh: this statue looks like it is of farm girls or revolutionaries, but is actually a statue of the winner and runner-up of “Super Girl”, which is an American Idol-style contest in China. The statue is ontroversial because it seems to be honoring something frivolous rather than serious. To me, that sums up how much China’s changed in the last 20 years – for the better. I'd like to know what Granite Studio thinks of this one – he’s a new Qing historian blogger and he says he loves visiting "peaceful, dusty, old monuments". So what does he think about this new controversial monument? 

The Chinese Market: not so naive

I picked up a good book this week: China’s New Culture of Cool, by Cynthia Chan, LiAnne Yu and Christopher Ireland (who, by the way, is a woman) who all work at Cheskin Consultancy. (And they all write blogs - but not very often). Anyway… I was interested in their idea that the days of being able to market a product in China by sticking a dragon on the side of the box are over. Chinese consumers are becoming more sophisticated so marketing localization has to become more sophisticated too, to keep up with them. But I think the next step of sophistication will be when the dragons work again because people think they’re “kitch”. They’ll be like Mao t-shirts are these days – ie, so bad they’re good!

Car craze

Check out the fancy cars parked right outside my hotel. Hard to believe that Shenzhen was a dirty workshop just 8 years ago. China is catching up quick. Now, what would Mao think of that?

When Mao rhymes with money

Thirty years after his death the Mao Zedong  industry is booming in China. Just to the side of his house there are stalls selling Mao posters, pens and clothing. While this blatant capitalism might have been scorned by Mao, it is embraced by the new China.

From humble beginning to leader of the Communist party in 1949, reuniting China after many years of chaos and war, Mao is a hero in the eyes of many in China – admired not only as the founder of modern China but as a self-made man.
In the early 1990s, according to a story told by many Chinese taxi drivers, an eight-car traffic accident in Guangzhou resulted in injuries to seven of the drivers involved. The eighth, unharmed, had a Mao portrait attached to his windshield as a talisman. The incident fuelled a Mao fever (“Mao re”), a neo-folk religion with superstitious overtones. Read on!

Quick-fire backfire

                                                  

It is debatable what the EU is trying to do by imposing quick-fire textile quotas on China, now that the restrictive Multi-Fibre Agreement is no more. According to this Guardian article, if it wanted more jobs at home, it is likely to fail.  If it was also trying to look out for its own little guys - developing countries such as Morocco and Tunisia - I would suggest that it is likely to fail in that too. Who looks like the big winner, the guy making all the sweaters now that the dragon’s claws have been ever so slightly dulled? Not the weak or vulnerable, but instead: that other racy Asian economy - India.

AsiaInspection’s tours have shot up like a lunar rocket in India: we made eight times our usual number of inspections there this year. Not that China seems to be suffering too much (at this stage); inspections there have increased threefold.

If you imagine the Asian economies are rising like dough (go on, do it just for a moment), it’s funny how if someone tries to squash a bit back into its pan, another bit puffs out somewhere else. In fact, it seems that all the EU has managed to do is irritate their own importers, retailers and inflation rates. Whoops!

Taking the "fast" out of "fast food"

Here's a blunt indicator of Chinese financial (if not physical) health: fast food chain KFC took nearly a decade until 1996 to set up 100 restaurants in China; now, only ten years on, it already has over 1200 more, and is adding at a rate of 250 a year. The Chinese dig the Colonel: their taste for chicken makes KFC the largest fast food chain in the country, but McDonalds - and 660 other restaurant chains - aren't far behind. The current push is towards drive-thrus.

Why, in a country famed for its delicious noodles and dumplings, are the people salivating for fried chicken and burgers? As prices have come down slightly and disposable income has gone up rather a lot, it's not necessarily the "rice vs. Ronald McDonald" battle you might think. Rather, it’s a case of adding to, not replacing, the traditional diet with American food. China, of course, has a welcoming culture of entertaining family and clients with food; so now people simply eat out more often because they can.

I've found, as this student has, that people in China go to American-style fast food joints for:
the novelty (especially if they're visiting the city - fast food is still near-exclusive to the big eastern cities), the relative cleanliness, the relaxed atmosphere which allows them, unlike in many noodle shops, to linger over their food (ironic as this may be), and the toys - which become lucrative collectors items.

Food is way down the list - people never get filled up by french fries as much as they do by rice, egg and vegetables. But then - we’re not exactly talking haute cuisine!