March 12, 2009

At what point does media no longer become experimental media and transitions to new media?

Filed under: Marketing,New Media — Administrator @ 10:53 am

Scratching our heads, trolling the universe, emailing friends, stopping people on the streets, yeah, that’s how we (and Neil Ducray from TouchMedia) came up with 8 characteristics that define an experimental media.

  • Media is trying to prove it can reach people and reach them in significant numbers usually taken to be at least 50,000 and preferably 100,000.
  • Media is trying to prove it is more than a 90 day fad – the usual length of time for media figures to start to erode.
  • Media is trying to prove it works at most or all times of the year (i.e. not seasonal).
  • Media is trying to prove it is effective, actually achieving awareness, recall or response.
  • Media is trying to become a primary medium at least for a few clients.
  • Media is trying to prove its technology (hardware and software) is stable, scalable, and cost effective.
  • Media is trying to prove that it can work in more than a single market.
  • Media is trying to become a regular medium for media planners (i.e. regularly recommended to clients).

Why bother, you ask? Not sure to be honest, but as investors we need to draw that line in the sand and decide how much risk we’re willing to shoulder and at what cost (valuation). There is a certain level of risk involved in backing experimental media (and technology), which needs to be backstopped by the prospect of many multiples of reward. In this environment, we’ve got to wonder – am I going to see this reward anytime soon?

In fact, our ultimate goal wasn’t necessarily to define experimental media (which we’re staying away from) but rather to understand at what point a media (i.e. business, concept) transitions from experimental to new media. Indeed, once a media moves beyond all 8 characteristics, we’re quite comfortable assuming it is new media.

In the words of Ali-G “I liikkee”.

August 14, 2006


Filed under: Marketing,Start-up First Aid — Administrator @ 2:30 pm

Last week, The Economist ran an article titled “Something New: getting serious about innovation” about the Chinese government’s new found determination to push China’s economy up the technology value chain – shedding its manufacturing stripes and dawning a white laboratory coat.

The article is timely in that the government recently published its “National Medium-Term and Long-Term Programme for Scientific and Technological Development (2006 – 2020)” which outlines steps to spend more capital on science and technology and promote business reforms – the ultimate goal is to dramatically reduce China’s dependency on imported technology by as much as 30% by 2020.

The Economist reports that currently, on average, “China’s 20,000 large and medium-sized enterprises undertake fewer than five new development projects and generate only two and a half new products each year.” This is shockingly low when compared to Japan where the average products live cycle can be as short as 90 days.

The government’s plan also calls for an increase in R&D spending from 1.3% of GDP to 2.5% of GDP by 2020 – this would place China on par with America and Europe. In other words, China wants to crank out more engineers and scientists whilst fading “softer” skills, such as finance jockeys and marketing studs.

Admittedly, the plan’s time horizon is, well, a bit longish – who really knows what is going to happen in China over the next decade?! And frankly, this stuff ain’t all the interesting (numbers, figures, forecasts…dull) – so why am I spending time mulling this over, you ask?

What is interesting is the underlying debate this plan has generated between China’s officials – in one corner we have the nationalists who favor domestic homegrown “go-it-alone” technology innovation (i.e. mega-technology projects), in the other corner we have the internationalists who favor incremental innovation (i.e. small technology projects) of existing platforms and technology.

I think a prime example of this polarization is evident in yet-to-be-resolved-though-likely-to-happen-next-year battle over China’s 3G wireless technology standard – lovingly known at TDS-CDMA. ‘Nough said!

I bring this up on the back of a recently published (July 2006) paper a friend from Columbia University’s business school emailed me over the weekend. The paper is written by Columbia Professor Amar Bhide titled “Venturesome Consumption, Innovation and Globalization”. Professor Bhide argues that policy makers and business managers, in general, are not only totally and completely clueless as to how innovation works but also its impact on economic growth.

In describing this misperception, Bhide points to the wayward individuals as prescribing to “techno-fetishism and techno-nationalism” as described by Ostry and Nelson in 1995. Bhide writes,

“The mindset incorporates two related tendencies. One is the focus on the upstream development of new products and technologies while glossing over their downstream consumption and use. The other is the belief that national prosperity requires upstream international leadership in upstream activities – “our” scientists, engineers, entrepreneurs, and firms have to better than everyone else’s – they must write more papers, file more patents and successfully launch more products.”

Furthermore, Bhide argues that,

“…the willingness and ability of individuals to acquire and use new products and technologies is as important as – and in small countries more important than – the development of such products and technologies. An innovation originating in one country does not impoverish other countries. Rather it tends to improve standards of living in all countries that have the downstream capacity to acquire and implement the innovation.”

Okay, this might be a lot to digest – to break it down in bite size chunks – Bhide believes that innovation, true innovation, doesn’t originate upstream in federally/state funded laboratories but rather downstream in the market place and in the hands of the consumers (i.e. demand for innovative products). And thus, the most vital part of innovation (demand side of the curve) is the willingness of consumers to purchase and play around with new products and services.

On the supply side of the curve, the most important catalyst for innovation is a manager’s ability to successfully adapt the organization to embrace innovation. In other words, the company’s got to figure out how to get consumers to dig deep into their pockets and purchase crap they already own (in one form or another) in an often highly competitive and oversaturated market.

My old boss (British) use to say “…you’ve got to love Americans! You can gift wrap dog crap and they’ll buy it…” I used to grunt and scratch my head (being American and all) and try can scrape together a counter argument but, to be honest, I never could, he was right. But this is the very reason why America is so good at innovation – we’ve got consumers willing to buy crap and companies willing to sell crap (but some of this stuff is really cool crap).

As a side note, the amount of capital US companies spend on developing technology is lower than the amount of capital extended on technology integration/adoption – when this cash ratio is plotted against other OECD countries (Japan, Germany, etc) America is below average.

Back to China’s “National Medium-Term and Long-Term Programme for Scientific and Technological Development (2006 – 2020)” initiative – the question begs, is this the right strategy for China? Should the country be developing mega projects whilst encouraging a go-it-alone mindset?

I’d argue that China’s infrastructure and education system is better positioned to focus on mega-projects employees heaps and heaps of engineers and scientists, however I believe a prolong attempt down this path will not yield the sort of innovation and success China’s leadership and consumers expect. I firmly believe China must find a balance between upstream innovation and downstream innovation, with emphasis on cultivating an environment that promotes incremental innovation.

China needs to develop Venturesome consumption with Chinese characteristics.

March 20, 2006

Okay, Shanghai does have hints of global culture…

Filed under: Marketing — Administrator @ 10:58 am

Michael Jackson in Shanghai

No one likes to leave comments but they sure like emailing us. For example, the blog about Shanghai not having much international culture got us some flame mail.

Our bad, we overlooked that fact that Michael Jackson has been seen slumming it in Shanghai…

March 14, 2006

Consumer Behavior: The belly of snacking is only a skewer away

Filed under: Marketing — Administrator @ 4:39 pm

Guangdong Zhu, or in English “Guangdong Boil”, might be the most popular snack food in Shanghai, if not in China, and can be found in almost every single convenience store in Shanghai. Essentially, Guangdong Zhu is a bucket of boiling liquid filled with skewers of tofu, fish balls and vegetable like substances.

From a foreigner’s perspective (non-Asian) I wanted to know not only what made Guangdong Zhu such an attractive snack food, but also if there was a big difference in quality from store to store. And so, today, I decided to interview three receptionists in my office and ask them to tell me a little bit about Guangdong Zhu.

“So, what do you think of Guangdong Zhu?” I asked Vicky, my office receptionist.

“I like it very much…” Vicky responded “…I eat it every day for a snack…”

“And, sometimes Vicky eats it for breakfast, too, tee-hee…” interrupted Carrie, the other receptionist.

“Vicky, if you had a choice between potato chips, cookies or fish balls on a stick, which one would you go for? I asked.

“…I feel potato chips and cookies are not healthy…I would pick fish balls on a stick…” she replied.

“But what about all the oil they cook the fish balls in? Or the fact that it doesn’t look so clean…I mean there is no cover on the Guangdong Zhu and it sits next to the open door…what if someone sneezes in it…” this time I was asking Carrie who had been nodding in agreement.

Carrie replied, “…sometime we eat dirtier food…this is clean…and it isn’t oil in the Guangdong Zhu, it is just water…”

“In Hong Kong, we bake cookies at home for a snack, would you make Guangdong Zhu at home for a snack? Or is it just something you eat on the street…” I asked snatching my head.

“…no, just on the street” both girls agreed.

Turning to Selina, the third and final receptionist, I asked “which convenience store has the best Guangdong Zhu?”

“Lawson’s, Lawson’s has best Guangdong Zhu…everyone knows this in Shanghai…the food seems healthier,” said Selina

March 11, 2006

Chronicles of a China brand marketer: When branding isn’t about “branding”

Filed under: Direct Marketing,Marketing,Web 2.0 — Administrator @ 10:48 am

I met this American, Thomas, from Mooers, New York the other night while waiting for the bank manager at Pudong Development Bank to open the ATM that just eaten our bank cards. It turns out he has been in China for, get this, over 20 years as a marketing director and country manager for some of the largest consumer goods manufacturers on this planet, such as Coke Cola, Nestle, and P&G.

He started talking about what Shanghai looked like in 1982, where to get the best straight razor shave, and of course, his adventures in marketing. The last bit about marketing in China was the most interesting.

According to Thomas, branding in China isn’t about branding at all, it is all about logistics, price points and samples. From his experience he believes that before you can even build/develop a brand you’ve got to get the products into the hands and mouths of the Chinese consumer. And thus, “flashy advertising gimmicks” take a back seat to “cold hard logistical planning.” I’ll try and paraphrase what he told me:

“…not only are you building a proprietary distribution network (well oiled distribution channels are a serious competitive advantage) but also you’re dealing with suppliers unaccustomed to Western standards of quality and time constraints. That fact that consumers can see and physically touch your product might be the best, most effective marketing tool multinationals have at their disposal…

The fact is most China based marketing teams look at the branding approach the wrong way, they come at it from the direction of building short-term demand rather than building a sustainable presence. As a marketer you need to understand how the goods get to market, where products are placed, and at what price people are willing to pay for them. In China, I believe some of the best marketers are also brilliant engineers; most people disagree with this assessment…

It took Dove candy bar almost 8 years to understand this. They came into China with a large Western size candy bar, yet it was too expensive for average Chinese to afford; furthermore, they were not accustom to the rich chocolate taste. The solution was to sell sample size (or bite size) bars but this meant reengineering the entire production and distribution network, not to mention positioning and pricing.”

Well, I’m not sure I completely agree with Thomas on all of this as China’s consumers have gotten a bit more sophisticated; and yet how can you argue with someone who has been in the business about as long as I’ve been alive? I do think he makes a very interesting point about the power of samples and the importance of logistics in branding.

Anyhow, after that conversation I wanted to find out how wide spread sampling was in Shanghai, so I went into a Lawson’s, looked around, and was like, cool, lots of Western brands do in fact use sample size packaging. And, then I thought, gosh, sampling must be really expensive, at what point will manufacturers stop sampling and just go back to exclusively selling regular size products? And the I thought, in the States we are crazy about super sizing, getting biggest bang for our buck, but in China people are kind just figuring out what they like and don’t like…interesting, huh?

March 2, 2006

Ogilvy Asia’s Chairman, Miles Young, talks about how culture impacts the branding mix

Filed under: Direct Marketing,Marketing — Administrator @ 10:56 am

We’ve been meaning to write a post about the impact of cultural dynamics on branding in Asia/China – last week (2/27), Stuart Biggs, a journalist from Hong Kong’s South China Morning Post, interviewed Miles Young, Chairman of Ogilvy & Mather Asia Pacific, discussing this very topic – the article is titled, “Advertising chief spins culture into the branding mix”.

Miles concludes that Japan, as a result of zaibatsu legacy, is less accepting of single product branding (e.g. Bluebird), instead Japanese managers seek to promote the branding of the corporation (e.g. Nissan) – whereas in China, there is a “religious” acceptance to the concept of branding largely because Chinese manufacturers see branding as a defense against foreign product penetration.

We’ve transcribed a section of the article below (the article is password protected on SCMP website):

Until recently, the zaibatsu legacy – giant corporations such as Mitsubishi founded with political patronage in the late 19th century to industrialize Japan – had overshadowed more – western concepts of product branding.

“It didn’t matter what industry you were in as long as you were large and the brand was therefore the same as the corporation…separate product brands underneath that corporate umbrella were very difficult for them to grasp.”

The same is not the case in China, where Ogilvy has benefited from the “religious” acceptance of the concept of branding.

“What has driven the belief in China is that the market has opened up, so branding is seen as a defense against foreign products coming in. It is connected with how to defend market share and you certainly don’t just want to do that on price.”

Ogilvy’s clients have developed from state-owned enterprises insecure about working with foreign agencies 10-year ago, to more progressive companies such as China Mobile – “as dynamic and marketing savvy as any of its international peers”

Definitely some useful commentary from the front lines, and while we do not pretend to know more than Miles on this subject, we bid Miles a “beg-your-pardon” on the China front – branding in China is definitely not as widely accepted as we are let to believe in the interview.

Well, if you consider hypnotic messaging (e.g. Focus Media 10 sec spots repeated 1,000 times a day) or tent shows in large shopping plazas brand building, then yes, it is widely accepted, but we don’t (from a cost-benefit-measurability standpoint).

While it is true to a couple major brands turn to branding to protect their turf from foreign competitors, the fact of the matter is, until very recently, local Chinese neither had access to nor could afford foreign brands; furthermore most foreign companies entered China as joint ventures, often branding under the local’s brand, for example Gillette purchased Shanghai based Eagle razors.

More to the point, joint ventures between foreign and local manufacturers always had support of the local government and/or a state owned enterprise (SOE) – automobiles, electronics — and thus it has always been in the interest to promote the branding of these joint ventures (yes, in many cases locals “borrowed” technology and went off and did their own thing).

The real brand battle isn’t so much foreign v. local, but rather it is local v. local. If someone can afford a foreign brand, they will buy it because the quality/service is better, not because they recognize the brand, per se. Until Chinese products and services (at least higher end goods/services, we aren’t talking about soap or socks) met or exceed that of foreign offerings, branding will never be an issue.

January 24, 2006

Intellecutal Property, Starbucks, KitKats & Paula Abdu

Filed under: Marketing,Regulatory — Administrator @ 3:16 pm

Earlier this month, Starbucks won its copyright infringement case against Shanghai Xingbake Cafe Corp. Ltd. — surprisingly, Starbucks is the first international company to prevail under a 2001 Chinese law meant to protect well-known international trademarks. According to a report on Yahoo! Finance:

A Shanghai court ordered Shanghai Xingbake Cafe Corp. Ltd. to stop using the name Xingbake, the name used in Chinese by Starbucks Corp. “Xing”, pronounced “shing,” means “star” in Chinese, and “bake”, or “bah kuh,” sounds like “bucks”.

This news, while very encouraging (big thumbs up to judge Lu Guoqiang), is chronically overshadowed by daily reminders of blatant IP infringements, such as the photo I took this afternoon of my favorite candy bar, KitKat:

KaKes is manufactured by Hongyi Food — I couldn’t bring up the website so I don’t have much information to report back, my bad.

Anyhow, in the words of the incomperable American singer and dancer, Paula Abdul “…[we] take-two steps forward, [we] take-two steps back…”

January 21, 2006

Marketing 102: What a Shanghai hospital and aircraft carrier have in common…

Filed under: Marketing — Administrator @ 2:33 pm

Not to harsh too much on Shanghai’s evolving advertising and marketing community — in all fairness, it’s improving by the day — but the agency that created this campaign for a Shanghai hospital should be taken out back an politely flogged.

The photo below was taken with my mobile in an elevator in the office building of my Chinese language tutor – by the way, it is a Grade A building that charges premium rent.

If you can’t read the heading on the photo is says “Shanghai Kowloon Man’s Hospital” and the Chinese below reads “…arriving in Shanghai”.

This campaign is right up there with the IPSTAR commercials showing satellite dishes fastened to the huts of Chinese farmer eating pizza…

January 20, 2006

The Kangi and the fast fashion trend

Filed under: Marketing,Outsourcing — Administrator @ 1:19 pm

My little sister, Sara, is a doctor who just graduated from Columbia Medical School in New York City – she started a side business with her husband, Mason, called Lil’ Monkey Designs — the company designs and manufacturers baby carriers.

This is their first product – The Kangi.

What is cool is that they did a little market research and came up with two styles that fits NYC’s bi-polar populous: (1) leather (upper west side NYC); and (2) leopard skin (lower east side NYC).

Also, interestingly enough, they went with a manufacturer in the USA rather than outsource to China — my lil’ sister told me it was “…cheaper…” and “…allowed for a faster turn around time…”.

This got me to thinking about the fast retailing (not to be confused with Japanese retailing giant Fast Retailing) trend that made fashion retailer Zara, well Zara. According to an article on Harvard Business School’s Working Knowledge website:

This “fast fashion” system depends on a constant exchange of information throughout every part of Zara’s supply chain—from customers to store managers, from store managers to market specialists and designers, from designers to production staff, from buyers to subcontractors, from warehouse managers to distributors, and so on. Zara’s organization, operational procedures, performance measures, and even its office layouts are all designed to make information transfer easy.

It makes sense that the Mainland’s fashion retailers would eventually adopt a similar strategy given the crazy amount of competition and access to abundant manufacturing base (even if a majority of capacity is allocated to manufacturing exports).

Maybe Sara and Mason are on to something — maybe they represent a growing trend in the US (foreshadowing China) — localization.

January 19, 2006

China’s Consumer Electronic Market worth RMB800 billion by 2008

Filed under: Marketing,Technology — Administrator @ 1:08 pm

The three biggest electronics and home appliance retail chains in China are – GOME Home Appliance Group, Suning Appliance Chain Store (Group) Co. and China Paradise Electronics Retail Ltd.

GOME is the largest with 420 outlets in 100 cities and only 5% market share. Moving forward, the company looks to have at least 1,000 outlets by 2008 when they expect China’s electronic market to be worth RMB800 billion (about US$100 billion).

At first glance seems like the market is quite fragmented and filled with opportunity — consider this article from China Economic Net article titled, “Electric retailers not a best buy stock” about China’s impending electornic retail chain battle royale — it might change your mind.

January 14, 2006

Surprise – Size Does Matter in China!

Filed under: Direct Marketing,Marketing — Administrator @ 2:59 pm

I am working to on a new logo for Ymer – I thought the most difficult part of the process would be coming up with a funky, creative, meaningful design – Wrong!

Surprisingly, the most challenging aspect of this process has been the positioning and font size of Ymer’s Chinese name. I never realized what an explosive/sensitive area this is…

The non-Mainlander perspective (inclusive of Hong Kong ren) is English should be the most prominent feature of the logo – if the Chinese name couldn’t fit, so be it.

The Chinese Mainlander perspective is English and Chinese should be on the same line and the same size – if the Chinese name couldn’t fit, make it fit.

What surprised me the most was how immaculately consistent these views were – in other words there were no exceptions – group stratification was absolute.

What does this say about cultural subtleties? I’ve been in Asia for over 10 years and it never occurred to me that this would be an issue – in fact, it never occurred to the Hong Kong ren living across the boarder, either.

This begs the question, can a non-Mainlander truly understand/relate to Mainland Chinese? Or is the question, can Mainlanders come to grips with the fact the not everything breaching China’s boarders will be localized/sterilized to satisfy local sensitivities – and that size doesn’t matter – it’s only a logo.

The net result of the conversations above is the logo below:

I haven’t decided if Ymer will go with the above design or with the logo the “way cool” and talented designers at US-based Sukamishi are working on. If you care, stay tuned…

November 21, 2005

Internet indispensable for young people

Filed under: Direct Marketing,Marketing — Administrator @ 3:50 pm

If you had any doubt about the importance of the Internet in China, have a read of the latest results from an Internet usage survey conducted by Social Survey Center of China Youth Daily.

Below are some bits:

I can’t imagine a life without the Internet,” said Lin, a junior of Southwest University of Finance and Economics of China.

Some 19 percent of the 4,032 respondents said the Internet “can take the place of everything.”

About 62.2 percent of the Chinese netizens often play games online, 56.5 percent often download music and 53.5 percent download entertainment information from the Internet

Amazon is tagging

Filed under: Marketing,Web 2.0 — Administrator @ 3:22 pm

I was searching for Tom Clancy’s new “novel” from his Jack Ryan series when I realized that Amazon has updated their platform to incorporate tags.

Amazon calls tagging “CAPs”

October 26, 2005

Brand building through independent blogs…

Filed under: Marketing,Web 2.0 — Administrator @ 8:36 am

The New York Times published an article by Tania Ralli entitled, “Brand Blogs Capture…” that talks to the growing number of bloggers developing blogs dedicated exclusively to their favorite brands.

Tania writes, “according to a survey released this spring by Yankelovich, a marketing firm based in Chapel Hill, N.C., a third of all consumers would prefer to receive product information from friends and specialists rather than from advertising.” This makes a lot of sense, in fact there are a number of new search engines embracing this “peer ratings” such as and

One popular “brand blog” is Starbucks Gossip, maintained by Jim Romenesko, an independent blogger…

Jim Romenesko's Starbuck blog

Some other popular blogs are:

Barq root beer
Trader Joe’s
Walt Disney

Of course, there are some fake branding sites, such as Wrigley’s Juicy Fruit Gum Blog (a Flash-based site that has nothing to do with blogging other than the word appears on the site)…but all in all…(and given the lack of branding in China)…I think there is a potential business model here for a blogging community to build on…

Whereas blog communities such as Weblogs Inc focus on developing a variety of general topic blogs, perhaps the model in China should be to focus on building a community of brand blogs…

In fact, this is something we would be interested in co-developing with the right team…so if you want to be a “brand ambassador” contact us at yvc at our website’s name.

October 7, 2005

Marketing 101 gets Shanghaied…

Filed under: Marketing — Administrator @ 11:32 am

Marketing in China, for a long time now, can be summed in two words “hypnotic marketing.” A classic example is Focus Media’s (NASDAQ: FMCN), a Shanghai based media company that has build a network of LCD screens in grade A and B office buildings, strategy of repeatedly playing the same package of commercials in 3 to 4 minute loops.

However, over the past year we’ve noticed a gradual shift away from hypnotic marketing in favor of, well, more creative (though not always better) marketing campaigns. Some of the more notable campaigns are listed below.

Case Study One: Free Eyelash Curling Iron
The Lead Up: Shanghai’s second largest consumer electronic franchise (e.g. Best Buy) put and advertisement in the daily paper announcing a promotion whereby for two hours on a specific day they would be giving away free eyelash curling irons to anyone who came to their store on Hauihai Zhong Lu (a major shopping street). On the day of the event, to the obvious surprise of the store’s management, customers began lining up 2 to 3 hours prior to the designated “give away” time. As the crowd thickened, people’s patience grew thin, and confrontations between customers broke out; and thus the police were called in to bring some order. Very quickly, to the store’s management realized their marketing campaign had a critical design flaw…

The Flaw: The campaign’s goal was to increase traffic and sales at that particular store, and while traffic did increase, sales fell dramatically…the program’s major design flaw was that customers didn’t have to buy anything to get the eyelash curling iron. All they had to do was show-up between 9am and 11am, stick their hand out, and grab a gift. Furthermore, customers didn’t even have to walk into the store as the gifts were distributed at the front door. The knock on affect was that the crowds blocked the entrance to the store preventing “paying customers” from entering the store. This campaign was such a disaster the store’s manager stopped it midway through which further angered the crowd…

Case Study Two: The Gucci bag and the Microwave
The Lead Up: Executives at Gucci’s Shanghai headquarters wanted to find some interesting ways to market their products to China’s up and coming middle class. One bright idea was to design a co-branding campaign with locally manufactured products, such as microwaves. So Gucci got together with a local manufacturer of home appliances and designed a campaign to give one Gucci bag away with every microwave sold.

The Flaw: The details are sketchy but my understanding is that Gucci sold the appliance manufacturer the bags at cost and in return the manufacturer put the microwaves on sale, hoping to generate additional demand. The campaign launched and was an overnight success, at least as far as the appliance manufacturer was concerned; microwave sales went up dramatically overnight as every woman in Shanghai desired the Gucci bag. However, things were not so rosy at Gucci, a company which spends hundreds of millions of dollars a year on positioning itself as a luxury goods design house (and not a microwave popcorn supplier); and thus when the head of Gucci Asia found out about the campaign the preverbal “shit hit the fan” and the campaign was abruptly suspended. Or was it…as Gucci was contractually bound to this relationship they encountered significant push back from both the appliance manufacturer and its customers…and so, Gucci bags and microwave popcorn continued to flow out the doors for sometime until divorce negotiations were concluded…

The takeaway is clear, marketing (and brand building) is still very much in its infancy in China…you think traffic in Beijing is bad…try finding a qualified marketing manager with interactive experience in loyalty programs (hint hint)?

October 3, 2005

Broadband internet coming to mud hut near you…

Filed under: Marketing,Technology — Administrator @ 6:13 pm

This morning, as I was getting ready for work, I was watching CNBC when a commercial for Thailand based (and owned by the Thai Prime Minister) Shin Satellite’s IPSTAR interrupted a spicy report about how China and India are dooking it out over global oil rights….

My understanding of IPSTAR is that it will offer digital high-speed internet access using Internet Protocol (IP) to all of Asia – in short, broadband internet. It so happens that China is IPSTAR’s biggest market in the Asia-Pacific Region and has more than 25% of its capacity over China.

Back to the commercial…

…the first frame shows a little Chinese girl making dinner for her family, a bunch of farmers…the second frame shows the girl surprising her farming family with a pizza…the third frame shows the farmers trying to eat the pizza with chopsticks…and then some kind of voice over…

…in the fourth frame the camera pans back on the girl who is now standing back in her kitchen, rolling pizza dough with a big smile on her face…in the final frame the camera pans even further back and reveals that adjacent to the side of this kid’s hut is an IPSAT satellite dish…

After a good five minute laugh-athon I asked myself a couple questions: (1) Is IPSAT onto something here or are they “pissing against the wind” (at least in China)? and (2) Is the China market ready for this or is it too early?

I searched for a quick and dirty answer and came up with an experience that happened to me 12-years earlier. At the time (1993) I was studying Chinese at Nankai University, Tianjin, PRC and some classmates and I went on holiday to Inner Mongolia. We wanted to locate the famed Genghis Khan Mausoleum but instead we found a tiny village of mud huts and small horses. We spent the night huddled together (not for warmth but because the rug they gave us only covered 20% of the dirt floor) in a Mongolian style tent. Just as the last drop of formaldehyde infused beer was consumed we heard screeching, clapping and music. So a couple of us got up and meandered over to the hut bellowing this noise. We opened the flap, looked inside, and to our surprise we saw a massive boom box that would have put a smile on late great Jam Master Jay’s face…

Turning back to IPSTAR and wondering whether or not it will be successful in China (where only 40 million households make more than US$12,000 per annum)… I am left with the image of that “Boom Box” banging away in the Mongolian night 12-years ago…and my gut feel is that if these guys from Inner Mongolia were in the ad they would have figured out by now how to eat pizza with there hands but since the majority of peasant farmers are not from Inner Mongolia…I wouldn’t be long IPSAT…

In fact, I bet IPSAT’s China business will experience the same fate as satellite phones and Global Crossing did 4-years ago…last guy out the door don’t forget to shut off the lights. Reality check: How are these guys going to figure out how to hook up the cable box when they are sill using chopsticks to eat pizza…hell, I’m still trying to figure out how to adjust the clock on my VCR…

Copyright © 2004 - 2012 | Ymer Venture Capital Asia (Hong Kong) Ltd.