Peking Review

Rule of Law is Only as Good as the Cops

In the Hutong
Listening to Harry Shearer
1756 hrs.

Using Chinese New Year to catch up with my reading, I came across this short jewel by Maureen Fan over at the Washington Post. Maureen reported on the current environmental protection plan.

The money quote comes from the plan itself:

"Laws and regulations are not respected. It's very hard to punish those who violate the law and law enforcement is not strict enough."

Spot on. And it's nice to know that the government realizes it, too.

China has made immense progress over the past three decades in terms of putting Of course, it doesn't take rocket science - only the experience of driving on China's roads for more than about five minutes - to recognize that law in China is worthless without enforcers who can do their jobs without fear of reprisals from above.

(One guy here in the Hutong cracked recently that Beijing could probably pay for the Olympics with traffic citation revenues if they'd let slip 40 or so California Highway Patrol cars and officers on Beijing's streets for a year. My back-of-napkin calculations figure he's off by a few zeros, but his point is well-taken. I figure an honest, intrepid cop willing and able to pursue violators without fear of getting fired for doing so could probably deliver $360,000 - $500,000 per year in citations. That's US$.)

Why is this important?

There are indications that some senior people in the Hu administration are pushing hard for better training and management of the nation's law enforcement agencies. This group understands that there will be no "Harmonious Society" without entities that are empowered to enforce the laws on the books.

At some point in the next 18 months - though probably not during March's First Plenary Session of the 11th National People's Congress - we're gong to start hearing more about law enforcement. Some of it will be cosmetic, but we will see the start of a clear movement to improving law enforcement at all levels, beginning with a few high-profile cases.

Lies, Damned Lies, and Green Marketing

In the Hutong
Watching the CNY exodus
1817 hrs.

While we're on the topic of the environment, if you are getting tired of companies - or competitors - making unsupportable environmental claims about their products, you'll love the green paper "The 'Six Sins of Greenwashing" over at the website of environmental marketing consultants TerraChoice.

Anyone want to translate this into Chinese?

Olympic Skies

In the Hutong
Playing with my new iPod Touch
1420 hrs.

Over at The New York Times, Jim Yardley, Joseph Kahn, Keith Bradsher, and David Barboza are ten articles into a periodic series entitled "Choking on Growth," covering how China is responding to its environmental challenges. The most recent is Jim's piece dealing with the challenges of cleaning up Beijing's air for the Olympics and beyond. The real challenge, Yardley notes, is the long-term problem.

Read the full series, including:

• The superb if depressing overview article;

• Jim's look at China's silent and immense water supply problem;

• Joseph Kahn's excellent coverage of the saga of Lake Tai's green algae bloom;

• A hard look at the human costs of China's hydroelectric dam projects;

• The fate of centrally-dictated energy conservation policies;

• A case study of the challenges of wildlife protection in China;

• The role of trucks as culprits in the nation's environmental challenges;

• An issue of food safety emerges as China's fish farming goes industrial in scale; and

• The environmental effects of China's go-west effort.

Whither to Stash the Great Haul of China?

Sunflower Tower, Beijing
Grokking wind chill
1320 hrs.

China has financed a huge part of the American consumer's borrow-and-spend spree of the last two decades, to the point where the doomsayers are suggesting that the U.S. has in effect mortgaged its future - both economic and political - in return for a few shiny trinkets.

At the same time, of course, the Chinese look at the Blackstone fiasco and the sub-prime meltdown and wonder if they are the ones being played for suckers, watching their invested dollars disappear as the dollar plunges and the American financial system looks a lot less stable than it once did.

James Fallows, sophomore China-hand and probably one of the most astute observers of the American political system, has jumped on the issue in his piece in The Atlantic this month, "The $1.4 Trillion Question." Well worth the read, it provides grist for anyone who wants to understand why (although not "how") the nature of the Sino-American relationship must change (and soon) and what that is going to mean for American lifestyles and for the men responsible for a the world's largest hoard of cash.

Here's what gets me. Warren Buffett's company Berkshire-Hathaway piles up $1 billion a month in excess cash, and Warren says he has problems figuring out where to effectively invest that. And he's arguably the smartest guy in the game. The people at China Investment Corporation have a US$1.4 trillion pile of money that is growing at an estimated $1 billion a day.

Fallows makes the point that China's well educated, brilliant, and determined financial leaders want very much to do a great job with this cash. What is clear to us here in the Hutong is that they are going to be writing an entirely new chapter in the history of investing as they attempt to do so.

Cars? Check. Booth? Check? Hotties? Check. PR and Marketing? Uh-oh...

In the Hutong
Teaching my son about books
1949 hrs.

Reporting from the Detroit International Auto Show, the L.A. Times' Ken Bensinger gives us a glimpse at the impact Chinese automakers are making at Motown's home-town trade show.

He quotes a batch of American and Japanese executives who are admittedly concerned about China's ability to crank out a modestly-priced automobile, and even grants that quality and safety might be at or approaching U.S. standards. Unfortunately, Chinese automakers are still struggling with marketing:

Changfeng Chairman Li Jianxin, who doesn't speak English, insisted on reading a speech in phonetically rendered English -- a painful experience for reporters covering the event. An accompanying news release bore last-minute redactions made with black marker -- apparently in an effort to conceal the fact that one Changfeng model relies heavily on Mitsubishi Motors technology. But journalists could easily read the text beneath the black ink. Oops.

He continues:

But perhaps the most entertaining offerings were three electric vehicles made by the Li Shi Guang Ming Automobile Design Co. They looked like oversize bath toys, painted bright yellow and bearing nameplates such as "The Book of Songs," "A Piece of Cloud" and the amphibious "Detroit Fish." Two of the models could go on sale in China this year, the company says. Depending on the type of battery, the cost is $5,200 to $9,200.

The money quote came from the man who has just contracted to import 600,000 Chinese vehicles and sell them in the U.S.

"Chinese manufacturers are good at production," Chamco's [William] Pollack said. "But their expertise is clearly not in marketing."

When, oh when, will large Chinese enterprises learn to value marketing?

Peking Review Quote of the Week

"One guy makin' stuff up is a liar. A whole bunch of people makin' stuff up is a paradigm."

-- Sarge, "Red vs. Blue Sees Green"

Erudite Site

The Lido Office Building, Beijing
Eavesdropping in Korean
1505 hrs.

In an Internet filled with fluff and flame, there are still a few websites that speak cogently to the highest parts of your frontal cortex.

One that I enjoy immensely - especially when I virulently disagree with it - is Arts & Letters Daily, a site owned and operated by the Chronicle of Higher Education. The links on their front page would make for weeks of brain tickling reading.

The editors have some very clear ideas about a lot of their subjects and choose their links accordingly. On some topics their selections tend to skew toward a clear viewpoint (they are moderately anti-religion, to put it generously), and quick survey of their recent links about China suggest a fairly skeptical view among editors about China and its prospects:

China's Valley of Tears: Is Authoritarian Capitalism the Future by Slavoj Zizek

China's Syndrome of Lawless Growth by John Lee, the author of Will China Fail?, in The Australian

The Great Leap Backward? by Elizabeth Economy in Foreign Affairs

A Nation of Outlaws by Stephen Mihm, author of the recent superb historical perspective A Nation of Counterfeiters, from The Boston Globe.

My Short March Through China by Gary Rosen from Commentary

Big Red Checkbook by John Feffer in The Nation

So enjoy, but be aware that despite its pedigree as a publication catering to intellectuals, there is a clear - possibly unintentional - editorial bent at work.

Outsourcing Insight: Ink and Paper

In the Hutong
Culling the herd
1657 hrs.

It is perilously easy to plunge into one's navel here in China, to be absorbed by all things Chinese and to lose sight both of the global context in which we all operate, and the way China is seen in other parts of the world. While I'm a vocal advocate of immersion as a way to understand the way things work here, I've also learned that understanding China demands currency in global business, economic, political, and security affairs.

I tend to read for insight as much as information, and by trial and error I'm gradually honing my reading list to ensure that I've got a good balance of both.

Each year, as a habit, I go through a culling process to ensure I'm getting the most for my time - and my cash.

Stuff I'll be paying for in 2008:

1. The Economist - Still the best - if not the only - truly global news weekly, The Economist should be creating tremendous pressure on Time and Newsweek to improve their level of their coverage. Given that the latter two publications are perfectly happy to remain middlebrow (and thus likely doomed to meld into the deepening grey goo that is print media), their often-brilliant and always-engaging British rival looks to dominate its niche (and our attention) for some time to come. I mean, come on - any magazine that would run a cover photo of Kim Jong-Il with the caption "Greetings, earthlings" is the kind of publication we all should be reading.

2. BusinessWeek - What I appreciate about this publication is that, unlike Forbes and Fortune, BW rarely plays the role of business fanboy, and so delivers stories that ask discomfiting questions and that catch trends ahead of the curve. What I typically do is first listen to editor John Byrne's weekly podcast on the cover story, then I dive into the magazine (which lands in my laptop courtesy of Zinio even before it lands on US newsstands.)

3. The Atlantic - I like to have one monthly that runs thoughtful stories in my media mix. Esquire runs a close second and Vanity Fair third, but I find that they spend too much time covering matters of parochial interest. That bums me because Dr. Tom Barnett, the grand strategist who wrote The Pentagon's New Map and A Blueprint for Action is a regular Esquire contributor. The Atlantic also offers access to over a decade of back issues online, which is one of my must-haves when subscribing to a publication.

4. IEEE Spectrum - Thirty-two pages of condensed innovation once a month, Spectrum gets pigeonholed as an engineer's magazine, and that's unfair. If you want a clear, unhyped view of the direction of electronic and computer innovation, this is the publication for you. I used to love reading Wired in the old days before Conde Nast got hold of the thing. Every year when I get back to the U.S. I'll pick up the latest copy at the newsstand and decide if I want to subscribe. I only wish they'd produce a downloadable electronic version. Ah, well.

You'll notice there are no dailies on the list. I have to admit to being conflicted. On a day-to-day basis I really focus on the China-related stuff, and my RSS reader tends to serve very well for that. I didn't renew either my WSJ or my FT subscriptions when my credit card company issued me a new card number following a security breach. I have no desire to send money to the News Corp publications, especially as it looks like WSJ.com is going to be free in a few months, anyway. I do, however, sorely miss the writing of the WSJ's and FT's China reporters - they all deserve to be in newsweeklies that would appreciate their long-form stories.

Any other thoughts about what I should consider?

The Quest for Values: Confucian Schools

Starbucks Guomao 2
Please turn off the Xmas music
1121 hrs.

Maureen Fan from the Post did a profile of Luo Yu, a Chinese entrepreneur who has set aside his businesses and is focusing on running courses designed to instill traditional Chinese values into the children of China's newly-prosperous entrepreneurs.

We are going to see more of this kind of thing in the coming years. The Chinese people have had their moral codes stripped from them twice in the past century - once when Confucianism was tossed out the door in 1949, and then again when Maoism gradually fell out of favor in the wake of the Cultural Revolution.

What this has left the Chinese people is a moral code based on two of Deng Xiaoping's most famous utterances:

1. To get rich is glorious.

2. It doesn't matter if the cat is black or white, as long as it catches mice.

In other words, do whatever it takes to get rich.

Even a hardcore secular humanist should agree that this is a horribly inadequate moral and ethical basis on which to build a "harmonious society."

I suspect many parents will head in the direction of neo-Confucian schools like Mr. Luo's, and still others will turn to Buddhism and even Christianity, and that the government will be happily complicit in this process. It may not be politically correct for a senior member of the Communist Party to say that China's people need to have a spiritual aspect to their lives, but you can bet they're thinking it.

Something else we can look forward to: a growing national debate on what constitutes "Chinese Values," and an effort to create a secular cannon of Chinese morality cobbled from Confucianism, Daoism, and the more enlightened aspects of Chinese revolutionary thought (from Sun Yat-Sen through Jiang Zemin.)

Causal Marketing

In the Hutong
Would you like fries with that humbuger?
1704 hrs.

I regularly get questions from companies, practitioners, and NGOs about best practices for corporate social responsibility in China, mostly because it's an area about which I harbor some fairly strong opinions.

One of my biggest is peeves is this: there is a thin but important line between true corporate social responsibility and community relations tied to marketing goals. There is nothing wrong with either CSR or what is known as "cause marketing;" the problem comes when the thin line disappears, and a company will try to categorize the latter as the former.

Self-serving behavior like that tends to ruin a company's credibility, and to add to the dormant cynicism the general public maintains about the very idea of a company doing anything socially responsible.

That said, I'm a big fan of cause marketing when appropriately labeled, and I think companies in China (both foreign and local) do far too little of it. Given the decline in the effectiveness of TV advertising, I suspect both marketers and agencies are going to do a lot more of it.

What companies should be doing is defining CSR and cause marketing very clearly clearly and handling them separately.

Jeremy Nedelka at 1:1 Magazine (registration required) did an excellent cause marketing case study, including five rules for successful cause marketing according to David Hessekiel at the Cause Marketing Forum. The two articles are a good introduction to the topic.

What I love about the five rules is that all of them apply in China:

1. Set goals, knowing what you want to achieve going in;

2. Commit resources, because good intentions are no substitute for planning, budgets, and implementation;

3. Find a cause that has a clear, intuitive link to your core business or competency;

4. Search for models in what other companies have done before;

5. Expect results because solid cause marketing builds an emotional tie between customers

I have a few to add, though, because of a few issues I have seen crop up here in the PRC:

6. Cause marketing is no substitute for CSR. You need to do both. Make sure they are handled by separate teams and have clearly defined (and different) goals.

7. Don't be a cause-a-week company. Stick to one cause for a full marketing cycle of 12-18 months at least, and longer if possible.

8. Find a cause that is meaningful to people in China, not just to your CEO.

9. Cause marketing in China is virgin territory, so don't restrict yourself to what other companies in China have done.

10. Olympic sponsorships are not a great example of cause marketing, unless they are executed with a particular challenge in mind.

11. When your relationship with a cause wraps up, leave everyone smiling.

Shave a little of that TV budget, guys, and put it toward cause marketing. CCTV won't miss it, and you could put it to far better use than paying for fancy office towers for public broadcasters.