White Model in Black

The photographer Steven Klein for the October issue of Vogue France have been accused of racism. In his photos, the model Lara Stone was painted in black. The SOS Racisme president Dominique Sopo thought that the shooting had no racist intent, but it was insensitive of the magazine.

In my opinion, I agree with Sopo that the editors of Vogue France were not sensitive to the potential problem of racism that the photos might provoke. Perhaps France has no significant history of racism as the United States, but I think that turning a white person into black with cosmetics undoubtedly triggers criticism across different cultures. Unfortunately, this is the taboo of the dominant culture.

Should Kids Use Cell Phones?

According to a poll by TNS Sofres, which was published on October 6, nearly half of French students use cell phones at school - most students said they used them during class. Soon after, the Senate has decided to ban the use of mobile phones in kindergartens, primary schools and colleges. Interestingly, the reasons for the ban was not that many students, who use cell phones during class, are distracted from learning, but that using cell phones frequently is probably harmful the health of children. I found the logic of the Senate a little funny, but I think French kids deserve some punishments because of their misconduct. Talking on the phone during class is rather inappropriate!

Everybody's "Facebook" in China

Nowadays the Facebook fever exists almost everywhere around the world, but not necessarily in China – RenRen (Everybody in English, and formerly called Xiaonei), the Shan Zhai version of Facebook, turns out to beat Facebook as China’s largest social networking sites with over 70 million users.

There are two major reasons, which also shed light on how the Shan Zhai phenomenon (see my recent article) nurtures successful Chinese businesses.

The primary reason is a rather embarrassing one. In fact, it is generally not possible to access Facebook in China because the Chinese government has simply blocked the world’s largest social networking website from its people in attempts to “control” information (well, nothing is impossible…). Thanks to Shan Zhai, in this case the government’s unintended efforts to “relax” the online social networking sector, RenRen benefits tremendously from keeping its greatest rival out of the competition.

Another reason is that RenRen, which has the qualities of a successful Shan Zhai business, actually does a better job than Facebook. As a social networking website, RenRen acts faster on developing more features that fill the needs of local users. It has introduced an instant messaging platform – of course, it is in Chinese – long before Facebook did. It has also provided users with different themed online forums – a very popular form of communication in China – where they can share more culturally relevant materials. It has also been way ahead on running a website that is fully comprehensible to all Chinese users, while Facebook still receives complaints nowadays regarding translation errors. For these reasons, most Chinese users are generally willing to stick with RenRen (see various user experiences).

As a business, RenRen adopts a flexible business model that allows it to grow faster with substantial and stable profitability. Both RenRen and Facebook announced around the same time that they had turned profitable, but consider how long they have been in business – Facebook has been founded since February 2004, and RenRen since December 2005. A possible explanation to RenRen’s rapid growth is that RenRen started out rather as a for-profit website when it was launched. While RenRen offers free basic services like Facebook, it also provides paid upgrade services for those who want to customize their profiles. Moreover, RenRen leverages its largest user base and thus manages to rent out webpage space to multinational enterprises that want to penetrate the Chinese market, such as Coca-Cola, Wrigley and Proctor & Gamble, for mass advertising. Because of Shan Zhai, RenRen is able to harvest remarkable profits without having to manipulate user information as Facebook did.

Since Facebook may not overcome these Chinese difficulties in the near and medium term, RenRen shall continue to succeed as everybody’s “Facebook” in China.

The Overlord of Shan Zhai

This year’s most popular Shan Zhai business (see my recent article about the Shan Zhai phenomenon) has to be BaWang International. Back in July, the Chinese herbal shampoo manufacturer caught the world’s attention by pricing its initial public offering at the top end of an indicative range after the retail portion of its offering was 446 times subscribed. What’s more, BaWang’s share price rose as much as 34 percent on its market debut in Hong Kong when the overall market dropped.

In response to the astonishing results, Neil Hume doubted that it was just a bubble as he believed that was how the Hong Kong market works – when something is hot, everyone simply wants a piece of it.

But after further looking into the company, the business of BaWang seemed to me a real deal.

Since its entrance into the Chinese shampoo market in 2005, BaWang (Overlord in English) has rapidly become the fourth largest player, competing against other consumer products giants, such as Proctor & Gamble, Unilever and C-Bons. Also according to the company’s prospectus, BaWang’s 2008 sales revenues amounted to RMB1.4 billion (approximately USD205 million), which was 45 times what it made only 5 years ago. What’s even more amazing, BaWang carries zero liabilities throughout its business – this is a very positive indicator to investors in today’s debt-aversive market.

The future looks bright for the Overlord too. Chinese consumers nowadays have begun to be health conscious, and thus willing to consume more natural and healthy products like BaWang’s herbal shampoo products. Euromonitor anticipated that retail sales of Chinese herbal shampoo grow at a CAGR of 14.7 percent from 2007 to 2012 as well. In other words, BaWang’s reign may continue gloriously.

BaWang’s success also provides some more insights about the characteristics of successful Shan Zhai businesses.

First, many top Shan Zhai businesses, like BaWang, initially engage in mass distribution in lower-tier markets where they can quickly grow their businesses. Originally as a Shan Zhai manufacturer of Olive’s Beer Shampoo, which was the bestselling shampoo at that time, BaWang selected second-tier and third-tier cities in northeastern China as its target markets in order to avoid direct competition with the market leaders. It also took advantage of the underrated consumption power of those less developed markets, which actually contained about 60 percent of the country’s population. Even though BaWang sold their products for as cheap as 3 yuan (approximately 44 cents), the low production costs and the massive aggregate demand – thanks to Shan Zhai – were able to earn BaWang handsome profits.

Second, when successful Shan Zhai businesses achieve a certain scale and presence, they will rebrand themselves so that they can secure a unique segment of the market. As for BaWang, the former Shan Zhai shampoo maker repositioned itself as a family-run Chinese herbal shampoo company in 2005, pushing its business to the top-end market – now BaWang’s products are even more expensive than those of Vidal Sassoon in China. Furthermore, BaWang has been investing heavily in mass advertising throughout China for the past few years to amplify its presence. As a result, most people in China are very familiar, or perhaps annoyed, with BaWang’s entertaining commercials featuring its proud spokesperson Jackie Chan.

BaWang’s historic IPO is not necessarily a stock bubble that came out of the blue; it rather tells yet another story about the rise of a successful Shan Zhai business.

And we can tell that the Shan Zhai phenomenon keeps working its magic.

Spilling Milk Everywhere in Paris

In response to EU's cut on milk subsidies, milk farmer recently splashed milk everywhere in Paris to show their resentments. It was such a waste to pour 2-3 million liters of milk all over the city. I think the Parisians have probably set up a bad example because they have way too many strikes. Now, a farmer said that it is an effective way to attract attention to this problem.

Apple Sales Exploded. So Did iPhones

This article talks about the recent series of accidents involving iPhone explosions. Apple responded to the situation by saying that the explosions were due to the external pressure on the screens. In addition, Apple rejected the argument that the overheating of the iPhone battery was actually the cause of the explosions, claiming that there was no confirmation to validate the argument, and that these incidents were simply exceptional and rare because there were no more than ten accidents filed.

In my opinion, the arguments presented by Apple do not give a fair view of the situation. Although there was no evidence from the investigation that the batteries were the cause for now, Apple should not immediately blame on unknown external forces and then not intend to help investigate further. Also, it is contradictory that Apple, which has the reputation for taking customer satisfaction seriously, refused to take any responsibility for the accidents.

In any case, to most people Apple is almost like God - or drugs. I am sure that those Apple addicts will continue to buy Apple products no matter what for the sake of staying fashionable.