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November 26, 2001—China's Market without Marketing

Tattered and Tatty: With the economy sinking and Taliban mist hanging in the background, our flight across America and into the Orient was disjointed and mildly sad. Something is broken on every American Airlines craft these days, from toilets that won't flush to seat belts cinched too short to composites with fatal cracks, bespeaking a sudden lameness in what was America's proudest carrier. Security measures are double-checking the wrong people, with the security-data crunchers, to wit, not tapping into the formidable marketing databases maintained by the airlines, which would lead ground personnel to focus on high risk passengers.

We worked our way across the Pacific on Cathay Pacific, which enjoys a high, if undeserved, reputation amongst travellers. It is bumbling, and its planes are slightly down at the heels. The food does not make the grade; the Airbus movie equipment crashes frequently; checking into business class takes even longer than into economy. As an aside, the new lounge in the Hong Kong airport is absolutely first class, and we can recommend the steam buns. That said, with volumes down 17% in the most recent quarter, Cathay mirrors the recession in Hong Kong and, likewise, shouts at us that its management, like that of Hong Kong, is over the hill.

Riding the Dragon. Another Hong Kong carrier, DragonAir, is crackerjack: modern, presentable equipment; the best meal we had since leaving America, including our repast at Hong Kong's top hotel; fast, try-harder service; a crew with an unworried, attentive demeanor. As we get aboard, the pall lifts that has gripped each passenger in transit through America and Hong Kong. DragonAir is as ebullient as the People's Republic itself, where things are shakin'. The PRC cranks out 6 to 8% growth every year, its New York (Shanghai) and Washington (Beijing) both aflame with confidence, energy, and plans that will be achieved. We deplane in Beijing and are out on the open highway before you can say "Jack Robinson" or "Chairman Mao."

Producer Economy. Wherever you visit -- a ministry, the science spin-offs near Beijing University, or the thriving new Pudong area of Shanghai -- you discover that everybody would rather crank out products and services than learn about the market, the customer slightly be damned. Lacking a sales and customer marketing mentality, the China businessman hopes, but does not know, he is filling somebody's need. China may be the future sometime in the future, but it's not there yet. It has not yet given birth to its own particular version of a market economy, and it lacks the consumer brands that would give it presence in the West..

Branding. Everybody is mouthing the right words. Even administrators at science parks are hiring high-priced, unknowledgable local branding experts who are largely selling lots of smoke but not much marketing. As a leader of one of the world's largest advertising agencies put it to me in August, "this global branding thing is quite overdone." That China is taking it up, however, does tell us that China's entrepreneurs have the right goal in mind, and will eventually get into a marketing frame of mind.

Jingle Bells. The truth is that China will never have a marketing imagination until its media -- TV, newspapers, etc. -- is commercialized. When the jingles start coming out of the radio, and more media content gets a commercial flavor, then and only then will China's leaders know for sure that the message is meeting the masses. This was true in Great Britain and in several other countries where the states, however benevolent, have over-controlled the buzz. The lack of market flavor still holds back Canada's economy, for instance.

Really New Media. Forget about the Internet. That is still developing commercially in China and, frankly, everywhere else in the world. But China's media package will be new and different from ours. Sure, it does have TV, newspapers, and radio. But a fourth leg, the cell phone, is China's dominant media channel. China's wireless population has now surged past that of the U.S., and everybody, to the point of rudeness, uses that phone 30 times a day. Media companies in China will have to weave together print, and broadcast, and cellular. To do this, they will have to look at Finland, where the cell phone has become a religious objet d'art. This is convergence, big time. The emerging cellular technology -- where you get the news and do your computing -- are just what the doctor ordered for the ancient kingdom. It will integrate the huge domestic Chinese market, which is fragmented today but promises to become unified with the entrance of China into the World Trade Organization and with the prospective reformation of the media (see Two Rivers entry this week).

We Need Each Other. A bright, hyperactive official in Beijing told me, "America and China need each other." He is right in several senses, not the least of which is the fact that we can help China go to market, while the thousands of engineers China is graduating each year can instruct us how to make things that work again. We used to be a nation of salesmen and engineers; now China has the engineers.


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