During Hillary Clinton's recent visit to the PRC, she unsettled human rights advocates, Amnesty International included, with a rather blunt assessment of the current state of China and the United States' human rights dialog. She "decoupled" pursuing America's long-term goals of advancing "universal" rights with the short-term imperatives of stemming further environmental degradation and shoring up global financial markets. Her words were poorly chosen, signaling an ultra-pragmatic Obama administration insensitive to the plight of Chinese dissidents and other freedom seekers. However, the gist of what she said - i.e., human rights need to be put in a culturally-relative context to ensure mutual benefit - was surely spot on.
Consumer Preference: A Mirror of Chinese Values
To many readers, this adman exists uncomfortably on the fringes of business legitimacy. He is a sell-out cozily in bed with Orewellian dictators. He has made a Faustian bargain with the Chinese: liberty sacrificed on the plutocratic altar of economic return.
Perhaps. But Louis Vuitton is not an opiate. Legitimate communications do not "sell" products. They "position" them based on a "brand idea" rooted in: a) something physically "inside" the product that is truly different and b) a consumer "insight," a fundamental motivation to behavior and preference, often a conflict in the heart. Buzz words? Yes. But one thing is beyond dispute: to create successful brands in China, we have to know our consumers, what they want, what they aspire to and how the view the world around them.
Consumers' attitudes and preferences do not simply explain product category dynamics; they signal a different cultural universe, one that envelops a radically different moral world view. The PRC, unlike Occidental culture, considers human rights to be:
Pragmatic. They are not "inalienable," in a Jeffersonanian or Rousseauian sense. They do not emanate from the conscience of the individual. They must be a means to an end, rather than an end in themselves
Quantifiable. As John Stuart Mill argued early on, they should result in the "greater good for the greatest number of people."
Incremental. They must be achieved gradually, lest chaos, the ultimate evil, break out.
All this is reflected in how the Chinese buy and do business. And unless we recognize differences as fundamental and beliefs strongly held, we will never be in a position to encourage the Chinese to question assumptions of their moral universe.
Pragmatic Progress.
Chinese philosophy stresses the importance of stability as a perquisite to forward advancement. Confucianism considers mastery of mandated values as the only way to climb the socio-political hierarchy. Daoism focuses on achieving a cosmological harmony - i.e., assuming the shape of that which surrounds you - in order to "flow" forward. Legalism, a framework that bases law on punishment rather than rights, legitimized the barbarism the preceded the unification of China during the Qin dynasty. (Mao's moral transgressions are "70%" excused because he unified "New China.") The key point: concrete progress - individual, societal or universal - is never surrendered to abstract civil liberty.
The Chinese consumer landscape highlights this reality. Corporate social responsibility (CSR) does not impress unless individuals' lives are directly and positively impacted. Values-driven, point-of-view brands such as the Body Shop ("safeguard the planet") do not fare well. "Advocacy" sans tangible benefit lands with a thud or evaporate. Nike should not trumpet individualism without a payoff of peer endorsement. Nokia's "Connecting People" must represent more than emotional bonding; the brand should be a passport to success. Smart marketers such as General Electric understand this. During the Olympics, GE fused environmental protection, potentially an off-putting abstraction, with operational efficiency. Johnson & Johnson is beloved because it teaches mothers how to care for children. (J&J's network of neo-natal clinics is only one example of the company's pragmatic altruism.) Even luxury goods, often positioned as a "personal reward" in Europe and America, are marketed as "investments." Dividends are paid as status (i.e., "face"), the ultimate currency of advancement.
The Power of Scale : Quantifiable Impact
In China, human rights are top down, not bottom up. They do not spring from the God-given dignity of Everyman. They are defined and promoted by the powerful in the interest of collective harmony. Mencius' si duan - commiseration, sharing, courtesy and right versus wrong - are considered to be inborn but not worthy of celebration. Leaders are charged with harnessing positive human impulses for the greater good - i.e., a stable society, lower poverty rates, higher education levels, higher life expectancy and so on. Leaders fall if they fail to advance collective (i.e., the interests of the majority) well-being. They forfeit Heaven's Mandate. Protection of "sacrosanct" rights is not, and has never been, been an important KPI.
(As the financial crisis whips up uncertainty, the Communist Party more popular than ever. From peasant to hipster and worker to titan, the vast majority supports the government for its stimulus package, health care reforms and job training initiatives. Structured on a grand scale, these programs will maintain social order. No one, on the other hand, clamors for representative democracy.)
Scale is revered due to: a) the absolute authority capable of forging it and b) respect for the benefits yielded by it. This reverence is reflected in many brands' appeal. Microsoft is admired because his operating software conquered the world and made it more efficient. Alibaba's Jack Ma is a hero because he built a new (global) model of online business-to-business transaction facilitation. IBM is actually cool. Most foreign brands are actively preferred to local trademarks because global heft reassures. (That said, local banks are trusted because they are ubiquitous so HSBC and Standard Chartered will never transcend niche - i.e., upper middle class -- status. Richard Yorke, HSBC's China Chairman, wants consumer to think of the bank as the LVMH of personal finance.)
A big brand comforts. Size counts. Haier, the appliance manufacturer, is appreciated for its size and expansive service network, not because its products are particularly innovative or attractively designed. "Stretchability of brands" is a distinct feature on China's marketing landscape because bigger is better. In developed countries, basic product quality is more or less assumed. On the Mainland, an environment of fake goods and no consumer protection, new brands are eyed suspiciously; furthermore, establishing their credibility is an expensive proposition. (Media rates in Beijing and Shanghai and Guangzhou are no less expensive than in Chicago or Sydney.) Brands, therefore, tend to extend across relatively unrelated categories. P&G's Olay, for example, covers everything from its premium "anti-aging system" to mass-market shower gel. Unilever's Hazeline is a soap, shampoo, conditioner, and skin cream. Chunlan churns out everything from air conditioners to motorcycles and consumers don't bat an eyelash.
Sublime Incrementalism
"Enlightenment," in the Middle Kingdom, is dangerous. It smacks of epiphany, an impulsive, come-to-Jesus embrace of Truth. Western "Rights of Man," and the inherent rights of a man or woman, are morally absolute. In China, Western individualism - i.e., elevation of "me" as the basic productive unit of society - is regarded as impetuous, inherently destabilizing. Human rights "breakthroughs" will never happen here and, further, they are not demanded by the people. Yes, people insist that economic interests are protected - property, homes, insurance, health care. These are important to everyone, everywhere. But they recognize progress will be incremental, a result of a structured, meticulously orchestrated approach to reform. They also accept that, in the process, there will be winners and losers and, assuming more winners than losers, sympathy for the dispossessed (or imprisoned) will be muted.
Given China's fear of chaos, human rights framework will not be "granted" or "liberated." A framework will continue to be "built," extended over time. The People's Congress will gradually be empowered. The judiciary will, step by step, become independent from the party apparatus. The press will expand its role in exposing official corruption. Social safety nets and comprehensive health care coverage will be stitched, slowly but surely, in a manner consistent with the imperatives of a "harmonious society" (i.e., social stability at all cost, measured reallocation of resources). Intra-party "democracy," checks and balances required to avoid abuse of power, will bloom overtime, albeit tortuously, under the radar. (Any apparatchik under the age of 50 openly discusses the inevitability of political reform. But no one - even Western-educated officials -- believes that representative democracy is a viable path for the People's Republic.)
Businesses and Consumers: Fear of Jolts. Chinese corporate strategy also belies faith in pragmatic incrementalism. Every company has a five year plan. Despite the English business press' obsession with the "threat of Chinese brands," practically all manufacturers realize they are not ready to compete head-to-head again American or European brands; they are focusing on getting mainland fundamentals right. Corporate governance reform has been measured (even, yes, plodding). It is usually catalyzed by initial public offerings (IPOs) on foreign exchanges to compel adherence to international accounting standards. To prepare for 3G, the restructuring of the telecommunications industry has been a case study in metronomic gradualism. (Behind-the-curtain machinations were worthy of kabuki theatre.)
Chinese shoppers, like their corporate mandarins, fear abrupt change. Foreign over-the-counter (OTC) pharmaceuticals are recognized for "efficacy" but avoided because of harshness. (Chinese medicine is slow-acting and preventative; Western remedies are quick and curative.) Female shampoo users trust "natural" ingredients (e.g., Hazeline's "black sesame for black and shiny hair") because they gradually release "beauty from within." Anta, a mass market tennis shoe manufacturer, champions a "forge yourself" spirit via a tagline, yong bu zhi bu! (Literal translation: eternal-no-stop-step.) Middle class women love diamonds because they "seduce," not "grab attention"; they "sparkle," not "glare." Premium cars and luxury fashion brands are positioned based on "mastery of detail" or "connoisseurship." Johnny Walker's "Keep Walking" resonates because it frames forward advancement as a relentless journey, not a sudden ascension to superhero status.
Rise or Fall, Together
As Hillary Clinton said, China and the United States will either rise together or fall together. Opinion leaders should promote their worthy objectives of advancing Western concepts of human rights by helping the Chinese understand compatibility with their predilection for both stability and order and advancement, both individual and collective. If we fail to embrace cultural relativism, China and America, on so many levels the yin and yang of 21st century prosperity, we forever preach doctrine rather than engage in productive dialog.
If you don't believe me, listen to Chinese consumers.
I bought a 42 inch flat panel no name TV at WalMart for $400 less than what a branded TV would have cost me. I am very happy with it and should it last me ten years it will have more than paid its way. Even durable goods are replaced long before they break down. The newer appliance will be better designed, has more features, be cheaper and be more robust. In this kind of consumer market it is longer viable to spend vast sums of money and time to build up a brand. Consumers are unforgiving of even the occasional product failure. You don't want to own a marquee brand name associated with an Edsel or a recall.
Thus the Chinese model of manufacture is the unrecognized and as yet little acknowledged wave of the future. The main manufacturer will likely be just a design and final assembly house with the actual manufacturing sub-contracted to tens of thousands of small manufacturers who are formed as needed and easily redeployed for other projects at any time. The risks are spread out and no single failure will wipe out more than a small number of participants. The first to market reaps bigger profits for the short time it has a monopoly. When copycats get into the game its time to move on. The consumer gets perfectly good products at unbeatable prices. And China gets to suck out all the oxygen from everyone else.
My input on Chinese manufacturing and consumer preferences.
Nowadays product changes in consumer products have a very short shelf life. For example in electronics the model changes with practically every other shipment. There is not much point in building brands. Famous brands such as SONY and other marquee Japanese consumer electronics brand names did not protect them from demise. The once famous British and other European automobile badges have disappeared.
In this fast changing market it pays to be small and agile, to turn on a dime when a new hot product turns up and is copied by everyone with a plastic mold injection machine. The competition is brutal and profit margins razor thin. But there is still profit to be made and that is most important. The consumer learns quickly by look and feel what is quality and which is ersatz crap. Else the importer does the quality control for the consumer. It costs as much to make a bad item as it does a good one. One cannot hope to survive making crappy stuff when the number of alternative suppliers is infinite and there are always more suppliers waiting to come in. Retail shelf space is super precious. A single shipment of a crappy product and that manufacturer loses his share of the market (shelf space) for good.
(cont....part 2.)
And because of that, Chinese dissident movement is practically non-existent.
As another right-thinking communist famously wrote:
"You gentlemen who think you have a mission
To purge us of the seven deadly sins
Should first sort out the basic food position
Then start your preaching, that's where it begins...
ood is the first thing, morals follow on
So first make sure that those who are now starving
get proper helpings, when we all start carving."
B. Brecht
When Mao took power in 1949, China was an impoverished state, disjointed by rival factions, war lords, opium addiction, devistation from floods and famins, hording, and the sick and wounded from wars that had raged since the CXhinese people declared their republic in 1911.
First Mao passes the Marraige Law, then China immediately set up hospitals to treat the people, espectally to rehab opium addicts. The first area to recieve economic developmewnt was Sichuan. Then the failed Great Leap, and the Cultural Rev, not to mention being constantly bombarded by the US and the Soviets trying to break China into pieces, resulted in progress that was painfully slow.
Then comes Nixon, and China embarked on Opening Up and modernization. That was thirty years ago. Today one can hardly believe the tragic poverty Mao had inherited. As China has sped forward with opening, the US has been mired in the politics od the past, unable to recognize the amazing progress China has made. All the while, the progress that the US had made before Ronald Reagan has slipped away from us.
It seems than no one that writes about China can grasp what is really happening.