Xiaomi enters Italy, what makes it so successful?

Xiaomi, the smartphone and tech gadget manufacturer from China announced that they are expanding their reach to France and Italy the end of this month, after opening its first Mi Home store in Barcelona, Spain, late last year. The first Mi Home store is confirmed to be located in Milan and set to open on May 26, bringing more than 70 products carrying the Mi brand, from neck pillows and ballpoint pens to air purifiers and smartphones.

Xiaomi released its first smartphone in August 2011 and has rapidly gained market share in China to become China’s largest smartphone company in 2014. As of 2017 Xiaomi was the world’s 5th largest smartphone company. As of the start of Q2 of 2018, Xiaomi has now become the world’s 4th largest smartphone manufacturer.

 

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Xiaomi’s founder and CEO Leijun. Photo: GIULIA MARCHI/BLOOMBERG/GETTY IMAGES

 

Xiaomi has grown from a startup to a company with 15,000 employees and 100 billion yuan (US$16 billion) in sales in seven years. Initially, it relied on a business model that allows Xiaomi to sell hardware at zero or low profit margin, but monetize through complementary online services such as movies and shows, as well as games and other offerings. The hardware creates a platform for the company to sell services to their customers.

The model worked and caught a considerable number of fans, especially young tech-savvy workers in big cities, who appreciate Xiaomi’s affordable smartphones, tablets, laptops and online service. However, as smartphone and internet penetrated into China’s remote rural areas and small cities, Xiaomi’s exclusive reliance on online sales couldn’t quite compete with other mobile brands such as Vivo and Oppo, which heavily invested in partnership with retailers in those areas.

 

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Xiaomi’s Mi Mix 2 smartphone sits on display. Photo: GIULIA MARCHI/BLOOMBERG/GETTY IMAGES

 

2016 was a tough year for Xiaomi with smartphone sales decline to a rumored 41 million, from a reported 70 million a year earlier. Xiaomi’s billionaire founder Lei Jun — sometimes called “the Steve Jobs of China” — blamed the slump on supply-chain problems associated with the company’s rapid growth. This forced Xiaomi to retreat from several overseas markets, including Brazil and Indonesia.

But Lei Jun was not going to give up that easy. With determination, they found their solution: create an ecosystem of some 100 startups as partners to provide Xiaomi with other internet-connected home and tech products that would draw customers to its stores.

Xiaomi Senior Vice President Wang Xiang, who used to run Qualcomm’s China business, explained how the ecosystem strategy drives traffic in an interview: “Buying a phone or TV is a low-frequency event. How many times do you need to go back to the store?” he said. “But what if you also need a Bluetooth speaker, an internet-enabled rice cooker, or the first affordable air purifier in China — and each one of those products is not only best-in-class, but costs less than the existing products in that category? Our ecosystem even gives customers unusual new products that they never knew existed. So they keep coming back to Xiaomi’s Mi Home Store to see what we’ve got.”

All its ecosystem products, from pillows to air purifiers, and from rice cookers to portable Bluetooth 4.0 speakers, aim to resolve similar price-to-performance “pain points” for customers. They find out what current products’ shortcomings, such as high retail price or low battery capacity, fund a startup to devote themselves to solve that problem. Their products are inexpensive, but not cheaply designed or manufactured. They’ve won more than 100 international design awards.

 

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A Mi Home store in Shenzhen.

 

And the number proves its success. The first 10 months of 2017, Xiaomi has shipped 70 million smartphones, completing its shipment target for 2017. It also opened over 300 Mi Home stores across China to boost its offline sales and planned to have more than 2,000 by 2020. This month, Xiaomi filled to go public on the Hong Kong Stock Exchange and aims to raise $10 billion in IPO which is expected to be the world’s biggest IPO raise since 2014.

‘Milan May’ XYLEXPO 2018

Xylexpo, the biennial international exhibition of woodworking technology and furniture industry supplies will be held at FieraMilano-Rho from Tuesday, May 8, to Saturday, May 12, 2018.

All big brands (Homag, Weinig-Holz Her, Cefla, Ima Schelling, Scm and Biesse, in this sequence) have submitted their registrations, some of them with a significant expansion of their booth area. As a result, organizers have decided to add one hall, hall 4.

“In 2016 we preferred to have a “high-density” layout to offer an agile, lean, easy-to-visit exhibition, in line with the situation of the market”, said Dario Corbetta, exhibition director. “That decision was taken for the benefit of visitors and we fully “exploited” the three halls available. Now the Italian market is much more attractive, the overall economic situation has improved and many exhibitors have requested to expand their booths, so we have decided to add a fourth hall and to adapt the layout accordingly”.

Halls 1 and 3 will host companies specializing in the production of panel processing machinery and tools, surface finishing and the related products, hardware, semifinished materials and supplies; halls 2 and 4 will be dedicated to panel and solid wood processing machinery and tools, primary operation equipment and tools, semifinished materials and complementary accessories.

Again this year – in line with an approach that Xylexpo adopted several years ago before all major international exhibitions – each hall will have a “focal point” represented by one or more industry “giants”. In hall 1 this role will be played by Biesse and Barberan, in hall 2 it will be Scm Group. Homag and Cefla will be the focus in hall 3, Ima and Weinig in hall 4.

They will be surrounded by many protagonists of this industry review. “So far,” Corbetta added, “230 companies have registered, taking up approximately 28 thousand square meters, a bit less than the total area of Xylexpo 2016. With these figures we can already say that the fiftieth edition will reaffirm the role of our exhibition as a global reference event for secondary processing and leading-edge technology for industrial and advanced handicraft businesses. Merit for this goes to the many exhibitors who attend the event, leaders in business and technological innovation. Besides the big groups mentioned above, Milan will host Alberti, Albricci, Bacci, Bi-Matic, Buerkle, Costa Levigatrici, Comec Group, Cvm, Felder, Fimal, Friulmac, Giardina Group, Hundegger, Masterwood, Metalstar 2000, Pade, Top, Vitap – only to mention those who requested the largest booths – representing the core of Xylexpo and international technology”.

XYLEXPO 2018
Dates: May 8-12, 2018
Venue: FieraMilano-Rho, Milan, Italy
Official website: http://www.xylexpo.com/index.php/en/

CIFM/interzum Guangzhou

After 14 years of development, interzum Guangzhou has grown to be the most comprehensive trade fair in woodworking machinery, furniture production and interior design industry in Asia and the definitive one-stop platform for participants to meet buyers, manufacturers and suppliers from all vertical sectors of the furniture manufacturing, production and design industries. It is the preferred professional trade show for industrial decision makers from domestic and international markets.

Whether the business focuses on design, raw materials & components, upholstery & woodworking process, or manufacturing and finishing technology, interzum Guangzhou, being held concurrently with the China International Furniture Fair CIFF, provides an international avenue of business opportunities for buyers and manufacturers.

Spanning 17 halls to cover an area of 150,000 square meters, 1,396 exhibiting companies gathered at this flagship event of the industry; attracted 83,356 visitors from 114 countries and regions at the event, an increase of 13.7% from last year.

Product segment:
– Materials and Components for Furniture Production
– Machines, Materials and Components for Upholstery and Bedding
– Machines, Materials and Components for Interior Works
– Machines and Auxiliary Machines for Woodworking and Furniture Production
– Others (Media, Association)

CIFM / interzum guangzhou 2018
Date of the event: 28-31 March 2018
Opening Hours: 9:00 a.m. to 6:00 p.m.

Venue: China Import and Export Fair Complex (Pazhou Complex), Guangzhou, China
Official website: http://www.interzum-guangzhou.com/

 

Chinese Company Pays EUR16 Million for 75% of Italian Machinery Firm Masterwood

Guangzhou KDT Machinery Co. will buy 75 percent of Masterwood, an Italian computer numerical control (CNC) woodworking machinery brand for EUR16 million (USD20 million/RMB124 million) through its Hong Kong unit to improve its products technology and expand its global market share.

A Sale and Purchase Agreement was signed between the wholly-owned subsidiary KDT MAC (Hong Kong) Ltd. and three individual shareholders of Masterwood SpA on February 10, according to an announcement published by the Guangzhou-based woodworking machinery producer yesterday.

In the 75 percent of stake purchased, KDT MAC will directly hold 25.5 percent and indirectly own 49.5 percent by holding 100 percent of the equity in company Muti 2 S.r.l., which piles no business but contain 49.5 percent of Masterwood’s shares. The transition price was determined by Masterwood’s earnings (EUR1.6 million) in 2016, as well as its cash balance at the end of last year.

KDT is a leading panel machinery manufacturer in China with rapid growth in recent years, selling equipment to over 50 countries and regions worldwide. Relying on Masterwood’s knowledge and experience, the acquisition will enhance KDT’s CNC processing technology and accelerate the upgrade of its automation. Meanwhile, the high brand awareness of Masterwood worldwide will help KDT MAC expand its international market.

 

 

Guangdong-Hong Kong-Macau Greater Bay Area: A World-Class City Cluster is Coming

Part of the Belt & Road initiative, the Guangdong-Hong Kong-Macau Greater Bay Area was signed between the National Development and Reform Commission (NDRC) and the governments of Guangdong, Hong Kong and Macau in July 2017 with Chairman Xi Jinping’s presence. This ambitious plan aims to transform the Pearl River Delta (PRD) including Hong Kong and Macau to a dynamic hub of innovation and services with a GDP of US$4.62 trillion by 2030, which will overtake rival bay areas in Tokyo, New York, and San Francisco to become the biggest in the world in terms of GDP.

Where is the Area exactly?

It includes Hong Kong, Macau and 9 cities of Guangdong: Shenzhen, Guangzhou, Dongguan, Huizhou, Zhaoqing, Foshan, Zhongshan, Zhuhai and Jiangmen, all located around the PRD region.

Since the “Reform and Opening-up” policy taking effect in 1978, Guangdong has led the country’s economic development of modern day, earning the name of “The Factory of the World” and taking up 12 percent of China’s economy last year with RMB 9.35 trillion (US$1.38 trillion) of GDP.

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Photo: Fung Business Intelligence

However, as the region is facing increasing competition from countries such as India and Vietnam for low-cost manufacturing, the PRD must develop its advantages in openness and innovation to continue to take a leading role in China’s next stage of economic development.

The goal

This landmark initiative aims to bring together the key cities of the Delta region to build a new powerhouse–one that is comparable to other city clusters such as Greater Tokyo Area, San Francisco Bay Area and Greater New York.

One of the GBA’s key objectives is to improve the level of cooperation within the region. This includes identifying the core competitive advantages of the cities within GBA and exploring ways for them to complement one another. One example of this is to build on the strengths of Hong Kong’s financial and professional services sectors, Shenzhen’s high-tech manufacturing and innovation skills, and the manufacturing strengths of Dongguan and Guangzhou.

The development of the area should also act as a catalyst for China’s Belt and Road initiative–an ambitious strategy that aims to link the economies along the Silk Road Economic Belt (Central Asia to Europe) and the Maritime Silk Road (South Asia to Africa and the Middle East) together.

It’s on the move

As cities in the GBA fall under different customs zones as well as legal and administrative systems, the most pressing issue for local governments is to collaborate on a broad range of topics including economic policies, environmental and transport issues, and regulatory harmonization. The alignment of infrastructure development is already on the way.

There are three key infrastructure projects. Firstly, there is the Hong Kong-Zhuhai-Macau Bridge, which will likely open in 2018 and significantly reduce travel times from Hong Kong to Zhuhai and Macau. Secondly, there is the Express Rail Link, which is due to open in 2018 and will connect Hong Kong to Shenzhen and Guangdong, and subsequently to China’s vast high-speed rail network. Finally, there is the Shenzhen-Zhongshan Corridor, which is an eight-lane highway that will reduce travel time between Shenzhen and Zhongshan/Jiangmen by approximately 30 minutes after its completion in 2024.

Another project in the pipeline is the Guangdong free-trade zone, which was launched in 2015 across 60 square kilometers of the Nansha New Area in Guangzhou, 28 square kilometers of the Qianhai and Shekou areas in Shenzhen and 28 square kilometers of Hengqin in Zhuhai. It will make the region more open to international investment in the targeted industries.

This was followed by the proposed development of the Lok Ma Chau Loop when Hong Kong and Shenzhen signed an agreement in January 2017 to transform a stretch of land on the border between the two cities into an innovation and technology park.

Challenges

According to a survey done by KPGM China, Hong Kong General Chamber of Commerce and YouGov, the top three challenges facing the development of the GBA are protectionism (ranked as first, second or third by 60 percent of respondents) and silos between and within governments (53 percent).

If the GBA is to live up to its potential, it will be important to overcome such challenges. Concerns as to whether this is possible or not were reflected in the third-ranked challenge–an over-dependence on government’s foresight and planning capabilities (ranked as first, second or third by 47 percent of respondents.

A Look into China’s Food & Beverage Industry

Consumer trends in China’s F&B industry

China accounts for US$700 million market-share in the global food and beverage (F&B) market relying on its rapid economic development. Key drivers shaping this consumer market growth is the increasing GDP and greater consumer spending power, which in turn facilitate rapidly changing lifestyles, a growing aspirational middle class, and rising interest in health and wellness.

Foreign businesses entering the country must take into account the structural and cultural factors that shape Chinese consumers’ demand. An important factor that foreign brands often overlook is the difference in regional markets. For instance, first-tier cities such as Beijing, Shanghai, Guangzhou, and Shenzhen are better developed, have higher incomes, population, and a more Western lifestyle than other provinces. However, many tier-two areas are facilitating smart growth to accommodate new business so stepping down a tier or two – focusing on these less saturated markets may just offer up a lot more potential.

Companies entering China’s regional markets must continually invest in research and development to determine local preferences and offer customized products that suit Chinese palate.

With health awareness on the rise, more Chinese are paying closer attention to the ingredients in the food and drinks they consume. It’s important for F&B brands to consider consumers’ eating habits, the importance of safety messages and ‘healthy option’ labeling when promoting their products in China.

Companies entering China’s regional markets must continually invest in research and development to determine local preferences and offer customized products that suit Chinese palate. For example, Starbucks has managed to retain a stronghold in the largely tea drinking China by offering a unique menu that is suited to tastes and predilections of many Chinese consumers.

Market studies suggest that 82 percent of consumers from upper-tier cities prefer to buy foods and beverages online. To serve the growing internet population, over 59 out of 100 retail chains operating in China had established online stores by the end of 2011. This trend has only grown.

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The F&B industry in China has a US$ 700 billion share of the global market

Step-by-step licensing for import of food

China has a multi-layered food regulatory system to ensure the quality and safety of imported food items. The regulation also varies for different types of goods, and while there are common laws, it is important to know what legislation affects your products. Here is the procedure for obtaining licensing for import, and how the changes to China’s food safety law can affect importers.

Step 1 – Complete exporters and importers registration

As an overseas manufacturer and exporter of food, you must register with the State Certification and Accreditation Administration (CAA) if the food product being exported is on the ‘List of Food Imports Subject to Enterprise Registration’. Some of the food products that have heightened safety requirements such as meat and health products require additional registration.

Moreover, as of October 2015, it is mandatory for exporters to register each shipment of food products online with the Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) department for tracking purposes.

 

Step2 – Complete documentation and pre-import licensing

Before the shipment of products, you are required to submit a series of documents, which are reviewed only after the shipment reaches China. Therefore, you must ensure that all your documents are complete and authentic to avoid any delay and storage cost.

Although the documentation requirements vary between products and product categories, you may prepare the following documents to import food products into China:

-Commercial invoice;
-A detailed packaging list;
-Bill of loading;
-Certificate of export from country of origin;
-Hygiene / Health certificate;
-Certificate of bottling date (for drinks);
-Certificate of free sale;
-Sample of original label;
-Sample of Chinese label; and
-Inspection certificate.

In general, food products entering China do not require pre-import licensing. However, if you are importing poultry or dairy products, you need to obtain the Automatic Import License issued by the Ministry of Commerce. Food items subject to import tariff quotas such as wheat, corn, rice, and sugar are required to obtain the Agricultural Products Import Tariff Quotas Certificate.

 

Step 3 – Ensure label compliance

Every food product imported in China must be labeled in simplified Chinese characters to complete the Customs clearance. In general, a label must provide following information:

-Standard name of foodstuff;
-List of ingredients as percentage;
-Name and address of manufactures, local agent, or distributor;
-Production date, best before, end date, and guidance for storage;
-Country of origin;
-Quality grade;
-Code of national standard/industry standard for production; and
-Special contents, if any.

 

Step 4 – CIQ food sanitary inspection and customs clearance

Once the shipment arrives in China, the food products are inspected by Customs officials for review of relevant shipping documentation and labeling requirements. The CIQ sanitary certificate is issued only if the documents are complete. The certificate is issued for every product shipment.

 

Licensing for import alcohol

For the import of alcohol into China, exporters must work in collaboration with a local import entity that is in possession of a valid business license, and personal and company customs and CIQ certificates. Once conditions are agreed upon, a contract can be signed with Chinese import agent and registered with General Administration of Quality Supervision (AQSIQ).

Then, the beverage for import must be labeled according to China’s food labeling standards. At customs, a country of origin certificate, health certificate, product ingredients list, product sales approval registration document, packing list, invoice, contract, and bills of lading will be required. Once customs receives the documents, customs will release the goods to the agent. Customs will then levy customs duties and other taxes, and will release a customs clearance document. At this point, the importer can collect the goods and proceed to deliver to the distributor.

Market strategies for foreign F&B companies

To know how to market and brand your products effectively in China, you need to take into account regional market differences and the ever-evolving dynamics surrounding consumer attitudes and behaviors.

Three takeaways for your China launch

-Your China market strategy will deviate from your home country strategy, and will vary depending on the type of product, location, and choice of distribution channels.
-You need to create a meaningful product, pack and activation strategies that engage and resonate with local consumers.
-After activation, don’t rest on your laurels, be agile on strategy, and plan for reinvestment of resources in order to maintain strong market position.

 

Source: China Briefing

 

 

Why Guangzhou is the future for the wine industry?

With increased westernization of Asia in general and East Asia in particular, not to mention the rise in the living standards of the middle classes, the wine industry has seen a tremendous growth in Asian economic powerhouses like China, Japan and India. Despite rice wine having been a common commodity in East Asia for centuries, grape wine is relatively new to the masses.

However, as has been the case with most of the financial developments of the decade, it is China that continues to steal the limelight as it is gearing up to overtake the likes of Britain and France to become the second-biggest wine consumer in the world in terms of value, behind the US.

The growth of the Chinese wine market has been mainly supported by regions and cities like Hong Kong, Beijing, Shanghai and Guangzhou. In this article, we shall evaluate the contribution of China’s traditional wine hub, Hong Kong, and the rising importance of Guangzhou as wine fever takes over the Red Dragon.

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Visitors enjoying and exploring new wines at Interwine May 2017

The huge Guangzhou market

Home to nearly seven million people, Hong Kong has a highly developed wine market meant to cater to its affluent inhabitants besides underlining its own reputation as a major export hub in the world. However, with a much larger population at its disposal, Guangzhou is, in no way, lagging behind.

On the other hand, the relatively lower competition in an area stretching to a monstrous 11,000 kilometers, along with the ever-increasing purchasing power of its inhabitants (both permanent and temporary), make Guangzhou the future capital of the Chinese wine industry.

With nearly 20 million inhabitants equipped with a high purchasing power (this figure goes up to a whopping 60 million if the neighboring cities of Dongguan, Foshan, Shenzhen and others are included, all of which together make up one of the largest urban agglomerations on the planet), Guangzhou offers a huge market for any product with a decent price-quality ratio.

The Guangdong province, of which Guangzhou is the capital, is home to nearly 110 million people. These numbers, along with the fact that Guangzhou is located in mainland China and has, therefore, direct access to a much larger market than Hong Kong, underline the growing importance of the Rice City. Located at just a stone’s throw from Hong Kong (one hour to be precise), Guangzhou finds itself in an enviable position as far as trade potential is concerned.

Hong Kong:  The region’s wine trading and distribution center

On the other hand, having a strategically perfect location with respect to the foreign market, Hong Kong is undoubtedly China’s best bet for boosting its exports. However, the same domestic location has proven to be a double-edged sword for Hong Kong, which means Fragrant Harbor in Cantonese, as the sub-tropical climate there is not favorable for growing grapes, which explains its negligent domestic exports. Almost all exports and re-exports (98.5%) are directed at Asia. The Chinese mainland and Macau make up for 95.1% of those exports (85.9 and 9.2, respectively).

Hong Kong’s unfavorable climate for grape cultivation necessitated the need for importing wines from other parts of the world. Major partners include countries like France, Italy, US, Chile and Spain. Australia has also made deep inroads in the Chinese wine market in the recent years.

The differences among different customer groups in terms of cultural background, income level and consumption preferences are reasons that explain why Guangzhou is a vibrant wine market in the making.

With an eye on the ever-increasing demand for wine in the Asian market, the Hong Kong government took the major step of removing all duty-related customs and administrative controls for wine in February 2008. The move was aimed at not just making Hong Kong the region’s wine trading and distribution center, but also boosting other wine-related businesses such as auction, catering, retailing, transportation and warehousing. The deregulation of the wine market turned Hong Kong into the world’s most important market for ultra-premium and iconic wines.

Deregulation has thrown up some really fast and astonishing results, with an 80% surge in the wine imports in the first year itself being the highlight. Another area in which Hong Kong seems to have the upper hand over Guangzhou is the CEPA.

Signed between the Mainland and Hong Kong, the Closer Economic Partnership Agreement (CEPA) confers a special status onto all products of Hong Kong origin, including wine. This translates as a tariff-free treatment with effect from January 1, 2006. Under CEPA, wine imports can go into China without any tariffs. On the other hand, non-Hong Kong made wine is subject to a maximum tariff rate of 20% when entering the Mainland. But Guangzhou more than makes up for this handicap with the one crucial ace it has up its sleeve.

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Guangdong province ranked the second volume of wine market in China with 25% and No. 1 regarding total value of wine with 42%! Thousand of FCLs are entering everyday to Guangdong!

Why Guangzhou is the future?

Years of dominance as China’s (and Asia’s) wine capital has taken Hong Kong to its saturation point. As of 2009, Hong Kong had a total of 3,550 wine-related companies, underlining the cut-throat competition prevailing in an area encompassing around 1,000 kilometers only! On the other hand, the relatively lower competition in an area stretching to a monstrous 11,000 kilometers, along with the ever-increasing purchasing power of its inhabitants (both permanent and temporary), make Guangzhou the future capital of the Chinese wine industry.

The highest urban annual disposable incomes

In addition, the Guangdong province boasts of one of the highest urban household average per capita annual disposable incomes in the country, recorded at 26,897 CNY in 2010. An average individual living in Guangdong can spend as much as 216 CNY per annum on wine. In 2013, the per capita disposable income of the highest-income households stood at 74,712 CNY, whereas the per capita consumption expenditure of the highest-income urban households stood at 56,181 CNY. Given the huge target market and taking into account the fact that low-end Chinese wine amounts to somewhere between 30 and 50 CNY, Guangzhou is an unexplored market in all regards.

With French wine having registered its presence across all price spectrums in China (including the low-end price segment), there is no reason why other international exporters cannot dream big in China. And what better place than Guangzhou to start from?

A booming private economic sector

Furthermore, Guangzhou boasts of a booming private economic sector. The mega-city recorded an astounding 709,000 individually-owned businesses, a rise of 5.3% from the end of 2012. Being arguably the biggest hub in Southern China, Guangzhou witnesses a heavy flow of people, goods, capital and information. For a city whose total imports and exports amounted to USD 130.6 billion in 2014, the nascent wine industry has a huge potential to tap on. If that is not a reason big enough to invest in Guangzhou’s booming wine industry, having a look at Guangzhou’s demographic profile will certainly be.

The population structure

China’s sixth population census threw up an interesting figure. 81.9% of the city’s permanent population was aged between 15 and 64, the ideal target market for wine sellers. Another peculiar feature of Guangzhou, also famous as the Southern Gate of China, is its large migrant population. With a registered household population of just around 8 million, Guangzhou is truly a migrants’ city. The city’s transient population of tourists from other parts of China and overseas, business travelers and many migrant workers is a testimony to its diverse wine tastes. The differences among different customer groups in terms of cultural background, income level and consumption preferences are reasons that explain why Guangzhou is a vibrant wine market in the making.

Another interesting point about consumer behavior in Guangzhou is their predilection for food items and beverages. They enjoy fresh, novel and distinctive food products. So, if your wine can really whet the appetite of a highly appreciative market, Guangzhou is the place where you ought to be plying your trade.

Let’s see the opinion from those who participated in different wine exhibitions in Guangzhou and Hong Kong.

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①Fernando Silva, from Chile, is the China Office Manager of a famous Chilean winery named Agroverdi (or Casa Verdi). He has been selling wine in China for more than 5 years and the business seems going well thanks to his wines and beautiful smile.

Regarding your experience in both cities, what are the main customer’s sales channel in Hong Kong? And in Guangzhou?

Fernando: In Hong Kong, they have direct distribution to fine wine shops, and agents, but not many due the market is not so big as Guangzhou.

In Guangzhou, the distribution is with their own franchises stores, other wine shops, distributors and also agents (not only in Guangzhou, also to other provinces ). One interesting thing is that during the last few years in Guangzhou many of our customers are opening new sales channels, for example online sales, growing and growing very fast!

Do you appreciate any difference between Hong Kong and Guangzhou wine market?

Fernando: Here we have to consider that between Hong Kong and Guangzhou, although they are very close from each other, we can find some differences (we have to consider that the Hong Kong population is very small compared to Guangzhou).

In Hong Kong many of the importers who visit the exhibition are looking for one of the main brands of our winery. On the other hand, in Guangzhou many of them are looking for some new, interesting and attractive designs. Fortunately, we can offer both, and with same good quality wines.

For us, Hong Kong and the Guangzhou market are important and we can offer what customers are looking for, quality wines, beautiful label designs and a good service.

What are the main differences for you after participating in Hong Kong wine exhibition andInterwine Guangzhou? (number of visitors, industry, quantity and quality of visitors, events,..)

Fernando: Both exhibitions have a good number of interesting visitors from the wine industry, professionals, importers, agents, etc, all this makes us happy and keep us busy, That’s good!

In Interwine the organization is very professional, they care about all, and during the exhibition the visitors can attend to wine tastings and some master classes, they have the chance to lear more about different countries wines.

We have the chance to introduce our products for different markets, while in Guangzhou we have the chance to meet customer from different provinces of China, in Hong Kong we meet people from other Asian countries.

We are very happy with Interwine and that’s why we will attend again, and we will wait for all of that people who want to learn a little more about our geography, climate and and enjoy our quality wines.

2

②Víctor Coll comes from Spain and he is the CEO of Vinita Wines, a well-known importer representing 5 excellent wineries from different regions of Spain. He has been selling wine in China for more than 4 years and he has established offices in Shanghai and Hunan. He is a regular customer of Interwine participating for many years.

Do you appreciate any difference between Hong Kong and Guangzhou wine market?

Víctor: At a first glance it seems that Hong Kong market is much more mature in the wine knowledge and consumption of wines from around the world compared to the Guangzhou market, but I feel year after year Guangzhou (and the South of China) wine knowledge is increasing a lot. As for the average price and be able to have access to wines of higher quality, the exemption of taxes influences a lot because in China Mainland are higher compared to Hong Kong.

Regarding your experience in both cities, what are the main customer’s sales channel in Hong Kong? And in Guangzhou?

Víctor: The sales channels are similar, mainly all of them sold to distributors, as well as catering, and also to companies and individuals. Importers are increasingly trying to serve all channels as distributors are leaving less and less room for the oversupply that exists on the Chinese market and the number of options available to distributors to find importers of wines from anywhere in the world.

At least in the South of China they open new sales channels while in Hong Kong they just keep their traditional channels. Lot of Hong Kong wine companies depend of Chinese customers and many of them cross the border to find customers in the South of China, more and more developed.

What are the main differences for you after participating in Hong Kong wine exhibition and Interwine Guangzhou? (number of visitors, industry, quantity and quality of visitors, events,..)

Víctor: In both fairs we can find as visitors both distributors and “wine lovers” who buy wine for their own consumption and for friends.

Interwine is a fair more focused on the Chinese market as in addition to numerous wineries exhibiting. The reason we participate in Interwine is because we can find our target at the same fair, very near to us and we really appreciate it. Furthermore, in Interwine they organize a lot of tastings, events and Gala Diner. Excellent way to meet new importers or distributors with the perfect atmosphere. The market in the South of China is more dynamic.

Source: Interwine

If you need a reference to import wine or food into China, or set up companies in Hong Kong and Mainland China, or participate in exhibitions and find retailers, we are here to help you. Contact us here.

2017 Fortune Global Forum: Guangzhou is Ready

Last September, Time Inc. Chief Content Officer and Fortune Editor-in-Chief Mr. Alan Murray announced that Guangzhou will host the 2017 Fortune Global Forum from December 6-8. Since then, the city has been working continuously to promote for the Forum in Hongkong, New York, San Francisco, Chicago, Washington D.C., Tokyo, Seoul, Frankfurt, London, Barcelona, Amsterdam and twelve other cities around the globe.

This year’s forum, with the theme ‘Openness & Innovation: Shaping the Global Economy’, will see the attendance of at least 129 of the Fortune Global 500 to discuss the key issues facing multinational companies at a crucial time of change in China and the global economy.

Why Guangzhou?

Cai Chaolin, Vice Mayor of the People’s Government of Guangzhou Municipality briefly introduced Guangzhou and explained why Guangzhou was chosen as the host city for the Forum – it is a city of history, business, innovation, inclusiveness, food and leisure.

As a starting point of the Maritime Silk Road, Guangzhou has been exporting goods and culture to the Western world. Besides, with a dynamic and robust economy based on a convenient transportation network, the city ranks the third in China after Beijing and Shanghai, and on par with Hong Kong and Singapore. More importantly, it is the innovation and inclusiveness of the city that enable it to achieve a prosperous economy and a diversity of culture.

In the December issue of Fortune, it writes: “Perhaps most tellingly, you’ll see that same invest-in-what’s-next mindset in the Chinese government, which is helping to power the coming decades of innovation in that country—particularly in critical areas such as advanced semiconductors and robotics that are redefining industry. That’s a big reason we’re convening the 2017 Fortune Global Forum in Guangzhou this month—and why hundreds of CEOs and entrepreneurs from around the world will join us.”

What has Guangzhou done?

“Going Global” is an essential move for Guangzhou to develop into international hub city. Since March this year, the city has set up overseas offices in cities and regions leading in science, technology and innovation, such as Silicon Valley, Boston in the US and Israel’s Tel Aviv. The effort is designed to increase exchanges and cooperation with the European and American countries on technological achievements, innovative projects and talents.

This April the city’s Guangzhou Automobile Group, one of the Fortune Global 500, established a R&D center in the Silicon Valley. The center will focus on research and development involving new energy, new materials, advanced parts and electronic equipment in a way to keep pace with an ever-changing landscape of these globally-connected industries.

In June, the 800-million-USD-worth biotech park, jointly invested by General Electric Company and Guangzhou Development District was launched in Sino-Singapore Guangzhou Knowledge City. Moreover, the intelligent-manufacturing-centered project of CISCO (Guangzhou) Smart City started operation, drawing some 30 companies to Guangzhou, annual production value anticipating more than RMB 100 billion.

All these cases on Guangzhou’s “Bringing In” approach showcase that the city is creating an enabling business environment for Fortune Global 500 companies and internationally advanced scientific research institutions to settle down for the future.

 

Source: english.gz.gov.cn, fortune.com

The Chinese Cities GDPs Match with These Entire Countries

Beijing, Shanghai and Hong Kong are the only three names likely to figure on the very short list of Chinese cities that non-Chinese can name. But, as this map demonstrates, there are quite a few cities more in China with GDPs that measure up to the economies of sizeable independent nations.

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Switzerland has about the economic size of Guangzhou. Chile that of Chongqing. And Angola that of Ningbo. Even if those names have a less than familiar ring today, their economic might predicts that we’ll hear more of them in the future.

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The basis for this map was Chinese regional GDP (PPP) for 2015, in billions of U.S. dollars. In all, 35 cities are mentioned (scroll down for full list). While most people have heard of Shanghai, Beijing, Shenzhen and Hong Kong (and some might even be able to pinpoint them on the map), few people will be able to identify cities like Wuxi, Qingdao or Tangshan, despite the fact that they have economies similar to those of Morocco, Hungary and New Zealand, respectively.

#1 Shanghai $810 Philippines

#2 Beijing $664 U.A.E.

#3 Guangzhou $524 Switzerland

#4 Shenzhen $491 Sweden

#5 Tianjin $478 Romania

#6 Suzhou $440 Austria

#7 Chongqing $425 Chile

#8 Hong Kong $414 Peru

#9 Wuhan $324 Israel

#10 Chengdu $306 Norway

#11 Hangzhou $275 Greece

#12 Nanjing $272 Denmark

#13 Wuxi $270 Morocco

#14 Qingdao $266 Hungary

#15 Changsha $246 Sri Lanka

#16 Dalian $245 Finland

#17 Foshan $235 Uzbekistan

#18 Ningbo $233 Angola

#19 Shenyang $230 Sudan

#20 Zhengzhou $210 Ecuador

#21 Tangshan $191 New Zealand

#22 Dongguan $186 Ethiopia

#23 Yantai $184 Belarus

#24 Jinan $174 Azerbaijan

#25 Nantong $170 Slovakia

#26 Changchun $163 Dominican Republic

#27 Xi’an $161 Kenya

#28 Fuzhou $160 Tanzania

#29 Harbin $159 Bulgaria

#30 Hefei $157 Tunisia

#31 Shijiazhuang $156 Guatemala

#32 Xuzhou $150 Ghana

#33 Changzhou $147 Serbia

#34 Wenzhou $131 Croatia

#35 Zibo $123 Panama

If reading that list leaves you somewhat bewildered, it helps to know that many of those high-performing Chinese cities do not exist in isolation; in fact, a lot of names on the above list can be found of this map, of three megaregions clustering on the coast:

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The Beijing-Tianjin megaregion in the north – with an economic output equal to that of Australia ($1.14 trillion)

In the centre, the Yangtze River Delta, comprising among others Shanghai, Nanjing and Ningbo, and way ahead ($2.62 trillion) of Italy ($2.31 trillion).

And in the south, including Hong Kong, Shenzhen and Macao, the Pearl River Delta, which is doing slightly better ($1.89 trillion) than South Korea ($1.83 trillion).

Well, at least that’ll help us sort out Changzhou (Yangtze River Delta) from Guangzhou (Pearl River Delta) in future.

 

Source: big think

The Taiwanese Incubator with A Dream

One advantage of China to stay as an economically strong country is the capital it accumulated through the last 30 years of rapid development. But thinking in the long term, the government understands that the traditional manufacturing industry is going downhill and if they don’t seize the chance to advance in new technologies and industries, they will be kicked out from the game soon. So it’s not surprising to see that incubators and startups are flourishing throughout the country.

In Dongguan, the renowned world factory in the south of China, almost every official incubator gets a certain government subsidy, policy preferences and fund. We visited some of them and here is our favorite.

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Rickey Lin (right), Director of Inno17 Space, at the Startup Weekend.

Inno17 – The Breeding Ground of Startups

Located in Songshan Lake—Dongguan’s proudest national hi-tech development zone—Inno17 Space is one of the 64 incubators in Dongguan which solely dedicates to Taiwanese startups. We sat down with Director Rickey Lin to talk about this business.

As soon as we stepped into the place, a relaxing common area welcomes us with coffee aroma and colorful, cozy sofa and tables. This is the birth place of good ideas and bold thoughts. We can imagine youthful mindsets exchange ideas and debate different opinions right inside this room. Rickey greeted and led us to a table in front of their presentation area.

As one of the most Taiwanese-populated cities in the country, it makes sense to launch the project here.

Talking about how the incubator was started, Rickey mentioned that this is one of the dozens of state-funded projects that exclusively help Taiwanese entrepreneurs to set up companies in Mainland China. As one of the most Taiwanese-populated cities in the country, it makes sense to launch the project here. The local government sought cooperation from the Taiwan Businessmen Association (TBA) and they found Rickey and his two partners.

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A Startup Weekend held in Inno17

The formal Chinese name for this incubator is Dongguan Young Taiwanese Entrepreneur Alliance Management Service (DG Young T.E.A.M.S.), while Rickey prefers to use an easy name called Inno17 Space. In Chinese, 17 (yī qī) sounds like together (一起 yī qǐ). So, the name means innovate together. Having such a creative and meaningful name already differentiates it from other incubators.

Relying on the government fund, Inno17 provides seed money to selective startups, as well as offering working space, dormitory, legal, financial, technological and marketing resources and consulting. Currently, 54 startups are hatching under Inno17 and over 20 standing in the line. Events such as roadshows and startup weekends are held frequently to attract investors; Educational programs like workshops, seminars, salons and training are arranged to prepare the amateur entrepreneurs with necessary knowledge and information.

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Inside Inno17 Space, one of the 64 incubators in Dongguan which solely dedicates to Taiwanese startups

 

The Dilemma

Speaking of the biggest difficulty in running the space, Rickey confessed that it’s not from any daily operation, or struggle to decide which startup they should include, but from the government. In order to maintain a consistent fund for a startup, he needs to communicate with both the government and the startups to ensure them understand each other’s situation. A new project, especially a pioneer one, requires time and energy to do considerable marketing research which could last for half a year to a year without any solid results. As an investor, the government puts tax and value return at the first and somehow lacks consideration to the new players. Acting as a bridge between the two, Rickey could easily get stressed out.

The former one lines up with closed, separated offices because they are afraid to share information, the latter creates a friendly environment where the fear does not exist.

There are two universal ways of doing businesses. One is to sell a product and earn the price difference, buy low and sell high. The other way is to create added values to a product. You establish a company because you want to make money or you want to create something new? This theory can also apply to building an incubator. One kind of incubators, like the ones we saw previously, occupy several six-floor buildings and hire abundant staff dressed up in suits and jackets. The other kind is like Rickey’s, where a casual coffee shop and a humble shared office are the place to generate and exchange new ideas. The former one lines up with closed, separated offices because they are afraid to share information, the latter creates a friendly environment where the fear does not exist.

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The Inno17 team

Thinking of influential tech giants like Facebook, Google and Apple, none of them started with the idea to make big money. Their philosophy always emphasizes in creating a revolutionary product and a new way of life. To some incubators, their goal is to maximize their profit, pick the most profitable idea, hatch them, grow them and sell them at a high price. Other incubators, like Inno17, their mission is to try their best to realize entrepreneurs’ dreams. They grow up together with the startups, like a family.

During the talk, Rickey and one of the Point Linkers Carlo created a special connection, because they shared the similar experience and dilemma in their lives. About 10 years ago, Rickey was tired of the shoe industry which his father has been succeeded in and wished him to carry on with. He wanted something new, fresh and excited. He wanted challenges and to see what he could do without father. Carlo found himself in the similar situation like Rickey now, walking out from his family’s industry and seeking something that can enthuse him.

The talk had been energetic and inspirational. Rickey is friendly and helpful. If you also want to talk to him about China’s incubator and startup scene, or any new ideas, we would love to be the Point Linkers.