June 1, 2007
Our bu
siness visits in china really started with a bang. I went to the place where my favorite Watermelon popsicles I used to eat on my mission are made. We went to Unilever’s ice cream division here in China called “Walls.” Not only did we get a ton of great ice cream to try out, but we also had a very informative presentation on marketing in China.
The head of marketing for Northeast Asia was a British man who went through the thinking behind a recent campaign introduced throughout China for their ice cream cone product called Cornetto. The campaign had a clearly Asian feel to it. Quite melodramatic and overtly cheesy. However, the point of the presentation did show the power of coordination among marketing programs and how they are really working to constantly enhance their image and keep the people wanting more of their ice cream cones. The campaigned involved their working with a couple of teen pop singers and using cell phones as a way to input codes for prizes etc.
I found it interesting that China is just now moving out of the necessity purchasing stages and are beginning to purchase on the basis of wanting to experience things. (Of course, this applies mostly to the big cities as Walls has literally no presence outside of the 4 biggest citadels in China.
Another interesting fact from the presentation was that currently over 80% of the retail business in China is unorganized. Meaning that over 80% of all purchases in China come from street vendors or little ma and pa shops. Grocery Stores and stores like Wal-mart are an extremely small part of the retail commerce in the country. As such, although Walls is a major player throughout the globe they are trying to adopt a strategy of thinking globally, but acting locally.
As we toured the production facility, I was very impressed with how many workers ran the machines. The production facility runs for 16 hours a day, which is two 8-hour shifts for the workers. The workers are brought in from neighboring provinces and given dormitories to stay at. They are also provided lunch everyday and given health insurance. However, the pay isn’t great. They make about the equivalent of $100 a month. The workers work for 7 days a week for 8 months and then the facility is closed for four months. The factory produces approximately 300 million pieces of ice cream in a year.
A few other key business insights: we discussed the fact that dealing with piracy really is just a part of doing business in China. They try to look at the fact that the competition will be allowed to mimick anything they do as incentive to always stay on the cutting edge of marketing (thus managing demand). Most retail business in China are seeing quarterly growth rates that are in excess of 15%. Crazy growth means that even poor campaigns can result in growth, but in order to stay ahead of the competition growth rates of over 20% would be necessary. Clearly remarkable the growth that is happening in China.
An anecdote regarding the freezer cabinets they use to sell ice cream out from. Walls used to give them away to their distribution channel. However, so many of them ended up getting stolen they have had to come up with a policy of requiring owners to buy the freezers and then reimbursing them over time. In 2006 Walls placed over 100,000 new freezer cabinets.
On the bus ride after the Unilever visit the professors asked that I stand at the front of the bus and talk about my experiences in China last time I was here. It felt quite awkward. Its funny how many of my previous experience has come back to the forefront of my memory though. Although I wasn’t a big fan of having to stand at the front of the bus, I hope that I gave some good information. Most of what I talked about were the other places I visited (like the terra cotta soldiers) that I really enjoyed.
For lunch we had the traditional Peking Duck. There was a lot of food and it was very good. Perhaps my favorite meal of the whole Asia excursion (to this point).
Following lunch we visited the Beijing Benz-Daimler-Chrysler plant that was opened just 9 months ago. It is a joint venture between the Beijing government, Mercedes and Chrysler. It was a far more sprawling factory (and less automated) than the Toyota factory. It also had a lot more of the work that got done in batches rather than straight line production. The factory here is expected to produce only 45,000 vehicles this year, but eventually grow to producing 120,000 vehicles a year which represents maximum capacity.
The Q & A section of this visit was very good. We spoke with an Italian from Mercedes who was the Finance guy and an American Chinese (who went to the University of Michigan). They talked a lot about being ex-pats in China. They both seemed to like it. They also discussed the importance to the Chinese workers that you don’t just work with them, but also spend time socializing with them after work.
Once again we discussed a great deal about the issue of piracy in China. Intellectual Property is seen as something that should be shared and common in China. The Italian made a great comment about the way the Chinese view piracy. Rather than viewing it as stealing I.P., they feel that if a company can find a cheaper way to provide the same goods that is seen as smart and inventive.
That night, I led a group of students over to see Tiananmen square all lit up at night. It really is a great place to see at night. We ran into a cute little family roller blading and we walked around a little bit. We talked a little bit about the monument to the people and the things (both good and horrible) that Mao did in his lifetime. I think the students who came were all glad that they had.
On the
way back we took mo-ped taxis. The drivers tried to pull a dishonest trick at the end. They had told us they would give us a ride for 30 yuan; however, when they dropped us off they wanted $30 (A difference of over $25). Fortunately, we were able to settle up with them without any incident. We paid a little more than the original price they asked, but clearly they didn’t want to make an issue of this any more than we did and they had lost the leverage by changing the price after they had driven us back to our hotel.
Our bu
siness visits in china really started with a bang. I went to the place where my favorite Watermelon popsicles I used to eat on my mission are made. We went to Unilever’s ice cream division here in China called “Walls.” Not only did we get a ton of great ice cream to try out, but we also had a very informative presentation on marketing in China.The head of marketing for Northeast Asia was a British man who went through the thinking behind a recent campaign introduced throughout China for their ice cream cone product called Cornetto. The campaign had a clearly Asian feel to it. Quite melodramatic and overtly cheesy. However, the point of the presentation did show the power of coordination among marketing programs and how they are really working to constantly enhance their image and keep the people wanting more of their ice cream cones. The campaigned involved their working with a couple of teen pop singers and using cell phones as a way to input codes for prizes etc.
I found it interesting that China is just now moving out of the necessity purchasing stages and are beginning to purchase on the basis of wanting to experience things. (Of course, this applies mostly to the big cities as Walls has literally no presence outside of the 4 biggest citadels in China.
Another interesting fact from the presentation was that currently over 80% of the retail business in China is unorganized. Meaning that over 80% of all purchases in China come from street vendors or little ma and pa shops. Grocery Stores and stores like Wal-mart are an extremely small part of the retail commerce in the country. As such, although Walls is a major player throughout the globe they are trying to adopt a strategy of thinking globally, but acting locally.
As we toured the production facility, I was very impressed with how many workers ran the machines. The production facility runs for 16 hours a day, which is two 8-hour shifts for the workers. The workers are brought in from neighboring provinces and given dormitories to stay at. They are also provided lunch everyday and given health insurance. However, the pay isn’t great. They make about the equivalent of $100 a month. The workers work for 7 days a week for 8 months and then the facility is closed for four months. The factory produces approximately 300 million pieces of ice cream in a year.
A few other key business insights: we discussed the fact that dealing with piracy really is just a part of doing business in China. They try to look at the fact that the competition will be allowed to mimick anything they do as incentive to always stay on the cutting edge of marketing (thus managing demand). Most retail business in China are seeing quarterly growth rates that are in excess of 15%. Crazy growth means that even poor campaigns can result in growth, but in order to stay ahead of the competition growth rates of over 20% would be necessary. Clearly remarkable the growth that is happening in China.
An anecdote regarding the freezer cabinets they use to sell ice cream out from. Walls used to give them away to their distribution channel. However, so many of them ended up getting stolen they have had to come up with a policy of requiring owners to buy the freezers and then reimbursing them over time. In 2006 Walls placed over 100,000 new freezer cabinets.
On the bus ride after the Unilever visit the professors asked that I stand at the front of the bus and talk about my experiences in China last time I was here. It felt quite awkward. Its funny how many of my previous experience has come back to the forefront of my memory though. Although I wasn’t a big fan of having to stand at the front of the bus, I hope that I gave some good information. Most of what I talked about were the other places I visited (like the terra cotta soldiers) that I really enjoyed.
For lunch we had the traditional Peking Duck. There was a lot of food and it was very good. Perhaps my favorite meal of the whole Asia excursion (to this point).
Following lunch we visited the Beijing Benz-Daimler-Chrysler plant that was opened just 9 months ago. It is a joint venture between the Beijing government, Mercedes and Chrysler. It was a far more sprawling factory (and less automated) than the Toyota factory. It also had a lot more of the work that got done in batches rather than straight line production. The factory here is expected to produce only 45,000 vehicles this year, but eventually grow to producing 120,000 vehicles a year which represents maximum capacity.
The Q & A section of this visit was very good. We spoke with an Italian from Mercedes who was the Finance guy and an American Chinese (who went to the University of Michigan). They talked a lot about being ex-pats in China. They both seemed to like it. They also discussed the importance to the Chinese workers that you don’t just work with them, but also spend time socializing with them after work.
Once again we discussed a great deal about the issue of piracy in China. Intellectual Property is seen as something that should be shared and common in China. The Italian made a great comment about the way the Chinese view piracy. Rather than viewing it as stealing I.P., they feel that if a company can find a cheaper way to provide the same goods that is seen as smart and inventive.
That night, I led a group of students over to see Tiananmen square all lit up at night. It really is a great place to see at night. We ran into a cute little family roller blading and we walked around a little bit. We talked a little bit about the monument to the people and the things (both good and horrible) that Mao did in his lifetime. I think the students who came were all glad that they had.
On the
way back we took mo-ped taxis. The drivers tried to pull a dishonest trick at the end. They had told us they would give us a ride for 30 yuan; however, when they dropped us off they wanted $30 (A difference of over $25). Fortunately, we were able to settle up with them without any incident. We paid a little more than the original price they asked, but clearly they didn’t want to make an issue of this any more than we did and they had lost the leverage by changing the price after they had driven us back to our hotel.That evening, before going to bed, a few of us played Rook for a while. That sure was fun! I wish I had more chances to play cards. Seems like it is always so hard to get a good group together to play with.
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1 comment:
well here i am commenting again despite your accusations that NOBODY ever comments on your blogs. i call that an insult if i didn't know better. Anyway,enjoyed your blog again. we're enjoying following your many adventures in asia. looks like you had a really good time in Beijing, but you looked like you were in pain in that Peiking Duck picture. Hope it all settled well! Loves, Jamie
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