There’s much to learn from China if we let go of our blinkered predispositions and see for ourselves the elements driving its transformation
Luxury Cult | Radha Chadha
I am sitting in bed looking outside my window in Shanghai. Snow-capped cobbled roofs march out into the distance, their slanted angles glinting in the early morning sun. A clump of tall thin trees—they look like elongated Christmas ones—in the garden below have turned rusty orange, some have shed their leaves altogether, their scrawny branches striking surrealist poses. I hear the hum of traffic building up in the distance. A bus screeches to a halt. A lone cleaner carries a big fat broom across the basketball court yonder. The washing machine in my kitchen gushes in water. My daughter, sitting beside me, keys in strange beautiful Chinese characters as she completes her college essay on the singer Wang Lee Hong. Our cups of tea, on both sides of the bed, steam invitingly.
Sky’s the limit: High-rise buildings in the Pudong New Development Zone in Shanghai. Eugene Hoshiko/AP
I have always come to Shanghai as a visitor but this is the first time I have set up temporary home. This unexpected interface with everyday China makes me realize just how deep and wide its development is, and what a transformative effect it has had on daily life. Some recess of my mind has always clung to the notion that one day India will catch up with China, but as I stand at the checkout counter of the world’s biggest Carrefour store—trolley loaded with milk and eggs, bananas and persimmon, tomatoes and tofu, frying pans and kitchen knives—in this most mundane setting, the penny finally drops for me. They have arrived.
Shanghai’s comparison point isn’t Mumbai; it is New York, London, Tokyo, or Hong Kong.
It isn’t just the mammoth size of the store that tips me over—two floors of absolute household heaven teeming with shoppers—it is the vicarious peep into the Chinese home that it provides, a curated show of day-to-day materialism if you will, symbolic Lego pieces that construct ordinary lives. It is all “first world” and more—and it is all made for China. We may have started the development race together with similar sized economies in the 1980s but they have reached a different finish line. Their economy is nearly four times ours. And just like the Carrefour store it isn’t about size alone, it is the palpable quality difference at every turn.
I have a New Year resolution that I’d like to invite you to share:
Open your eyes to China. Go there if you can. Feel the pulse of the nation. Analyse what makes it tick. And figure out how we can outdo it.
My conversations in India in multiple forums have led me to believe that the simple act of seeing China’s accomplishments is hard for us, to learn from them is harder still. Pat rationalizations cloud our thinking. That China is a complex khiladi on many fronts is obvious—the recent Wen Jiabao visit shows just how hard-nosed they are—but is there any point in being mein anadi to their tu khiladi? Whether you see China as a friend or foe, whether you see it as a market to sell to or as a supplier, whether you see it as a potential partner or as a business competitor, my singular point is: See it with an open mind, and learn from it. A clear-headed understanding of China is crucial to competing and winning against them.
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iggest, fastest, latest, best, first—all these adjectives come alive for me in encounter after encounter in Shanghai. I meet a friend for breakfast—at the newly opened Langham hotel in Xintiandi—he works for a German shipping company, and tells me how Shanghai’s Yangshan Deepwater Port, developed in just a few years, has become the world’s busiest. The weather turns freezing cold and my daughter and I head out to the Cloud 9 Mall for woollies—it’s a massive mall, stuffed with mid-range brands, swarming with people—we end up at the Japanese brand Uniqlo, buying “Heattech” innerwear, amazing stuff, super-light, super-warm, great design, great price. China is Uniqlo’s biggest international market with 58 stores, which they plan to multiply to 1,000 by 2020. We warm up over coffee at the Starbucks below—it’s packed, every table taken. Starbucks too has frothy plans for China, wanting to whip up its current tally of 400 stores to 1,500 by 2015.
We catch up over drinks with another friend—he heads a big multinational—and the China forward theme continues. A Shanghai-Beijing high-speed train link is in the works that will cut the current travel time of 14 hours to 5 for a rail distance similar to Delhi-Mumbai. They are building their own aircraft—military and civil. They are dredging the Yangtze river to allow access to bigger cargo ships, which will enable moving factories westward into lesser developed areas. Airports like our Delhi T3 are a dime a dozen.
The luxury retail scene deals in superlatives too, entirely appropriate given the Chinese consumer is the biggest for most major brands. I visit the spanking new IFC Mall which has lined up all the biggies such as Louis Vuitton, Gucci, Chanel, Prada, Hermès, Tiffany, and more. The mall itself is a luxurious 1.1 million sq. ft extravaganza—developed by Hong Kong’s Sun Hung Kai, it has brought along many familiar names such as Isola (Italian restaurant) and City Super (Japanese supermarket) to the Shanghai IFC. I check out the Apple store there—Shanghai’s first—and it is a stunner just like the one on Fifth Avenue, New York, the glass cube entrance replaced with a glass cylinder here, the store below sprawled out over 16,000 sq. ft.
Back across the river, on the bustling Huai Hai Road, luxury retail takes a nostalgic turn at the Dunhill “Home”, one of four in the world, at the twin villas at No. 796—exquisitely restored identical 1920s buildings, one housing Dunhill, the other Vacheron Constantin, and the top floor merging to house the Kee Club (another Hong Kong favourite), the gardens below lit up with Christmas lights. I meet Tim King, who heads Alfred Dunhill in the region, for tea—Dunhill has grown to 90-plus stores in 50-plus cities in China. Further on Huai Hai Road, I shop for Christmas gifts at Shang Xia, the first Chinese luxury brand launched by Hermès—we are served by a young Japanese man, and it is the finest service I have experienced in years, his unabashed joy in the beautiful products he shows us makes them twice as beautiful.
There are many things one can learn from China—
the grandness of their vision, their ability to think long term, their implementation skills—but the one I admire most is their ability to “learn” from the outside world. China hasn’t got where it has on its own—it has leveraged the resources of the world to fuel its development, and here’s the big a-ha, it has still kept the upper hand. The Chinese are as feverishly nationalistic as we are, but it doesn’t stop them from embracing foreign know-how or managerial talent—they see it as a way to get their nation further faster.
That the Chinese welcome learning is best demonstrated by IBLAC, the International Business Leaders Advisory Council. Set up in 1989, IBLAC consists of heads of major global companies who meet every year to brainstorm and advise the mayor of Shanghai on the city’s development. Indra Nooyi has been a member. The advice is taken seriously and a report card of what has been implemented is presented the following year. (It’s quite a who’s who, but even here the Chinese keep the upper hand—if you don’t turn up for two years in a row you are dropped from the council.)
Which brings me back to my New Year resolution: Open your eyes to China, and open your minds to new learning.
CHINDIA MYTHS
The two central concerns of our ambivalence towards the country are largely unfounded
There are two classic arguments that tangle up our thinking on China. The first: “China has developed faster because it is a Communist dictatorship, we haven’t been able to do as much because we are a democracy.” The second: “We have so much corruption, that’s the root cause of the mess around.” Both are red herrings. Democracy is not divorced from development (look no further than the G6 nations) and neither are Communist dictatorships a guarantee for progress (North Korea is a case in point). As for corruption, China is in the same league as India according to Transparency International—not a good thing by any means, but my point is, corruption hasn’t slowed the China train.
Another pet fear: Does opening the doors to foreigners kill local businesses? Not in China. Chinese businesses are thriving—Haier, Huawei, Lenovo, Li Ning, Taobao, to name just a few—usually by playing the twin trump cards of competitive pricing and catering to local preferences. The lively sparring between Starbucks and 85C—which sells a cup of coffee at half the Starbucks price, and offers bakery products that appeal to the Chinese palate (anyone for sponge cakes coated in pork floss?) demonstrates how the tables are being turned on Western brands. 85C has 150 cafés on the mainland, 320 in Taiwan—where it is headquartered—and plans to open another 1,000 cafés by 2015.
Radha Chadha is one of Asia’s leading marketing and consumer insight experts. She is the author of the best-selling book The Cult of the Luxury Brand: Inside Asia’s Love Affair with Luxury.
Write to Radha at
luxurycult@livemint.com
