Think with foot. GWEAT

Brand is an interesting thing. Brand is many things, including the personification of a product or service.  Brand is like the name or nickname of a person for the product or service.

Branding gives others something to remember and address this very person by, especially when he has done something great and expect others to be grateful.  Thus the fundamental purpose of brand marketing is to make consumers remember it, consume it, and continue to consume it.  This should be very easy in theory.  Just expend your effort build something really fantastic, and go around shouting “hey guys, please be aware that this piece of work is proudly brought to you by [insert your brand here], and we will do even better in the future!”  But in the China marketplace, things always have some tendency to go wrong, especially in a market where everyone speaks a language very much different from most other languages available.

One such occasion is when one company has too many brands. In a recent market research project for an Illuminant client, I was surprised to learn that most consumers we interacted with did not know that Gatorade is a Pepsi brand. This isn’t necessarily bad, but in China, attaching a small brand to a globally respected name could have even better effect.

Or on other occasions when there are so many brands involved, it’s rather hard to maintain one single brand from the hellish brand warfare.  An example would be the computer industry in China.  In early 1990s, when Great Wall was the dominant PC brand, everyone was referring to computers as “386” and “486” (as in 80X86).  Manufacturers such as Great Wall and Compaq were so easily overshadowed by the processor maker. Things didn’t go better until, according to my observation, the coming of Lenovo (then named Legend: they changed their name years later when sued). Even “Intel” and “Pentium” went lost in the initial communication where the new processor brand was simply called “586” for habit’s sake. The problem was later solved by Intel’s carpet-bombing campaign of “Intel Inside” advertisements. And that’s good.

Things get even more confusing as time goes by and global collaboration becomes commonplace. Still taking our power-eating buddies for example, smart phones are the big thing right now. Currently there are brands for RAM, processors, OS providers, OSes themselves, phone manufacturers, cellular carriers. Putting them together, the a given handset’s brand profile could get really chaotic.

Take Android phones. The OS is called Android, and the maker goes by the name of Google. The ground-breaking phone manufacturer is HTC, and HTC’s phones are sold under a wide range of carrier brands such as T-Mobile (America), TIM (Italy), MTN (South Africa), and HTC itself. Product model names could also vary such as the first generation is called “T-Mobile G1” and “HTC Dream”, the second “T-Mobile MyTouch” and “HTC Magic”, while the latest two generations are simply “HTC Hero” and “HTC Tatoo”.  The chaos redoubles when it officially gets into China under HTC’s sub-brand Dopod. Consumers can now buy a Dopod A6188 (in other sense “HTC Dream”) and Dopod A6288 (in other words “HTC Hero”).  Arguably, the problems are: A) Too many brand names blind people. The brand-blind could be very serious when there are multiple mega-names among them. B) Language barrier. Chinese consumers are not so sensitive to English words or letters.

In many countries this shouldn’t be much of a problem since most people only care about their local version. But this is China, where local release, especially for phones, tends to be an expensive undertaking with newness equating to premium pricing, while consumers simultaneously have wide access to a black market. The brand war turns out to have an interesting effect. Here people always address all phones that works upon Android platform as “Google Phones”, and HTC’s great works are named in an unintended fashion as G1 (HTC Dream), G2 (HTC Magic), G3 (HTC Hero), G4 (HTC Tatoo). With HTC announcing or leaking new plans, I’m already expecting the wide usage of G5, G6, and probably G7. Gadget collectors are talking about the difference between “T-Mobile G1”, “TIM G1”, “MTN G1”, oh, and “HTC G1” only when they don’t know how this particular phone should be categorized. Poor HTC becomes the invisible man, and everyone is feverishly thanking Google for the hardware as well as software. This isn’t so great, by my standard, when HTC is selling phones under its own name and the Dopod alterna-brand.

The point here is, it’s necessary to have a brand identity, but it’s also important to make sure the brand is put into proper usage. You’ve got to pay attention to how people are talking about your stuff. Not only comments, but also how they recognize it. Advertising and other above-the-line marketing is one way to sort that out, however effective management of media exposure and other below-the-line techniques are of high importance. A failure media management program could result in something like this:

iPhone. This is the name that completely changed the smartphone business. Even before it’s much belated release in China, there were already around one million smuggled units running on the GSM networks of various carriers here. For traditional lack of creativity and marketing-oriented thinking, both China Mobile and China Unicom now are busy developing their home-grown (although technically on Android) smart phone OSes called “OPhone” and “UPhone” respectively in order to catch up with the trend begun by Apple. Intended unimaginative branding caused a brand avalanche. Since there are “iPhone”, “OPhone” and “UPhone” already, Chinese journalists begin to automatically re-brand every other player in the field on their own accord. In this fashion, Microsoft, who so proudly announced its “Windows Phone” campaign not so long ago, is now called “WPhones”. And Android is now commonly addressed as “GPhone”. Multiple tech portal websites (Chinese) have worked out thrilling big headlines going like “FIVE [X]Phones fight to be king of the hill in China!”

Although every bit true in OPhone’s and UPhone’s cases, this isn’t so good for Microsoft or Google (well, and HTC, Motorola, Sony Ericsson, Samsung, LG, etc passively represented by these two giants) because such unofficial branding renders them instantly, in the minds of millions of consumers as little more than iPhone copycats. You will see this concern stands when you see so frequently Chinese netizens commenting like “to hell with WPhones and GPhones. Our iPhone is the first and best!” A fundamental rule to market competition is, if you want to do better than iPhone, you first declare very clearly “we are definitely not an iPhone, and we don’t want to be”. Things will look much better if vendors are more serious about their media work, and spend 5 more minutes talking to the journalists which can simultaneously influence public opinion and help clarify these muddy waters.

Another solution to achieving brand integrity in China includes defining a real Chinese brand name that makes some vague sense rather than being plain transliteration. Then, and the most important, ensure that brand name is correctly used. Contributing all your good reputation to a partner is bad, but making yourself look like a no-brainer is worse.

So, behold, BlackBerry and Palm. You guys are talking with China Telecom for China entry right the moment. Do not make yourself into “BPhone” (or “BBPhone”) and “PPhone” by doing nothing! This is China, where many things could go wrong at the least unlikely point. Know what you are dealing with. Keep yourself known in a preferable way. And make sure the message is delivered correctly through the whole process.

Authored by Illuminant’s Head of Research, Kane Gao

Tourism Austria and Travel Channel China, originally uploaded by Illuminant Partners.

Dr. Petra Stolba, CEO of the Austrian National Tourism Office, visited Beijing as one of her major stops on her tour throughout Asia. In cooperation with our friend and Head of the Austrian National Tourist Office Beijing, Josef Stockinger (who amazed journalists and travel agents with his witty speech in fluent Mandarin), Illuminant Partners had the pleasure to arrange an interview with Travel Channel China and Dr. Stolba during a tourism workshop at the Landmark Hotel today.

Austria, which ranks among the top ten tourist destinations in the world, welcomes more than 170,000 Chinese tourists every year, making China the third largest overseas tourist market for the beautiful country in the heart of Europe.

In 2009, Austria will focus on marketing the 200th anniversary of the death of the outstanding composer Joseph Haydn (1732-1809), who started his career as a member of the oldest boys choir in the world, the Vienna Boys’ Choir. The Austrian city of Linz will also be the European Capital of Culture in 2009.

In her interview Dr. Stolba was confident that an ever increasing number of Chinese tourists will discover the beauty and cultural heritage of Austria and invited the audience of Travel Channel China to come and see the home of “Sisi gongzhu” and “Sound of Music” themselves and to discover how Austria has changed in its more than 1,000 years of history.

Blog posting by Illuminant’s Director of Account Services, Anja Knass.

DAN_Logo, originally uploaded by Illuminant Partners.

Illuminant Partners is excited to be working with our new client, Data Acquisitions Networks (DAN). DAN is a fast growing Australian company with a revolutionary technology that holds exceptionally strong promise for the Chinese market: a comprehensive, secure data logging system that protects the integrity of local data while allowing it to be monitored remotely from anywhere in the world.

We recently assisted DAN in its first China market visit to Beijing and Shanghai, and we were thrilled with the enthusiastic response its technology received from food industry and environmental protection officials, two sectors in which DAN’s technology has particular applicability.

DAN’s technology is two-fold: on-site hardware and web-based software hosted by DAN. The on-site hardware is comprised of a compact black box which can be configured to communicate wirelessly with up to six industrial probes. There are literally thousands of industrial probes commercially available, measuring variables from temperature to pollution levels and much more. Probes send their data back to the blackbox, which utilizes GPRS communication to transmit the data back to DAN’s server.

The web-based software gives users complete control over their data, allowing them to remotely change parameters, set alarm points, and monitor data collection. Using a secure login, users can see their data displayed in a simple format requiring no interpretation. Customized alarm points can be set, meaning that if data points fall outside of chosen parameters, SMS and e-mail alerts will be automatically sent immediately to as many as five designated recipients.

In Australia, DAN’s technology is used to measure everything from salinity in aquaculture – where it has substantially increased harvests – to monitoring chlorine levels in municipal swimming pools, ensuring safety. The advantage of DAN’s technology is not only the flexibility it offers, but also the security: data cannot be manipulated or changed, meaning central authorities can exercise remote oversight without fear of local tampering.

In China, the applicability of DAN’s technology is wide-ranging and exciting. Regulatory authorities constantly struggle with the challenge of centrally monitoring industry round-the-clock to ensure compliance with standards designed to protect safety, environmental quality, and efficiency. Data integrity is frequently suspect thanks to corruption, inappropriate monitoring techniques and tampering. DAN’s system takes the guesswork out of data collection and monitoring, meaning authorities can be independently assured of the integrity and reliability of data.

The disastrous results of faulty central oversight of industry have hit China particularly hard in the last year – from tainted food causing tragic infant deaths to faulty and dangerous products being exported around the world, never has the need for more reliable data logging and monitoring been so apparent. DAN’s comprehensive solutions would give authorities and regulators the oversight they need to ensure food safety, product integrity, and environmental protection. Illuminant is extremely excited to be working with this very promising new client!

Blog posting by Illuminant senior account manager Matt Doran.

Chinese dairy products display (unrefrigerated), originally uploaded by Illuminant Partners.

A particular story (in Chinese) has been posted on thousands of blogs in China over the last few weeks.  Preportedly written by a Chinese dairy industry “insider”, it is a breathless exposition of the many failures of China’s dairy food safety chain.

On behalf of one of our key clients, we take an active interest in Chinese food safety matters, so we briefed our research department to try to find the identity of the original poster of this story.  In the end, we were unsuccessful, but we did gain several insights during the research project.

But first, to set the scene, we should add one more blog to this chilling story.  It is reproduced, verbatium, below.  Our analysis follows.

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个奶业工人的实心话（转帖）
我不想再忍了，我所知道的奶业内幕！

I am the truth

我所学的专业是乳品工艺，刚毕业曾在某国内老大级乳业集团工作。职位——收奶员。

I am a milk collector in one of the big players in the Chinese milk industry.

这几天的三鹿事件，沸沸扬扬。其实在我看来，没什么奇怪的，事情总是要被揭穿的，只不过是时间问题，以及是哪一家企业成为那个撞上枪口的倒霉蛋。三聚氰胺————冰山的一角。也许这个事件就要告下一个段落，也许仅仅是个序幕的开始……

[The scandal] is nothing new. It was just a matter of time before the dairy safety problems would be be revealed. This is just the start of the scandal!

离职的员工到处去说原来公司的“坏话”，这个员工一定个没有道德的人。曾经我也是这么认为的，可最近我的想法变了，一个知道内情而不去告诉别人，眼看着别人吃亏上当的人，那才是个彻底道德败坏的人。

Some may said it is immoral for a former employee to say bad things about their former company. However, it is immoral if I don’t tell the truth.

离职后，我没喝过一滴奶！

After leaving my former job, I never drank a single drop of milk!

我先讲一下，收奶的过程。奶农的牛奶由当地附近村镇的奶站化验收集，按品质高低，分等级付给奶农钱。品质的指标不外乎PH值，蛋白质，干物质这几项。然后由奶站（当然了奶站是私人老板的）用罐装车混装后运到工厂，然后由工厂取样化验，测算指标同样按品质高低，分等级付给奶站钱。不知道大家看没看出来，想没想到这种操作模式会出现什么问题？有人说了，不是“天然牧场”“工业化收集吗”？有，的确有。但是我只能说：兄弟，你很傻，很天真！

The process is as follows: milk was collected based on quality in terms of pH, protein, and milk solids. Private collectors would collect milk from farmers and deliver the raw milk in tanks to the factory. The factory will collect a sample and pay the broker according to the various quality tests. So, where is the problem?

奶农想多赚钱怎么办呢？简单啊，掺水啊。那掺水指标降低就卖不上好价了怎么办？简单啊掺****啊。奶站想多赚钱怎么办呢？简单啊……。奶站的奶是从各个散户收来混装到罐车的，有一家的突然变质了，怎么办啊，全车都倒了吗？ 几十吨一罐的奶，蛋白质低了怎么办？干物质低了怎么办？PH值低了怎么办？有的牛病了打过抗生素怎么办？有的牛催奶打激素怎么办？

To earn more, water is added to the milk. But when milk from one of the farmers spoilt the quality of the whole tank, the milk collector will not dispose of the the whole tank.
话说回来了，奶农那点小计量能瞒奶站吗？奶站那点小九九能瞒工厂吗？如果我说，奶站不知情，工厂不知情。都是“不法奶农”干的坏事，全国人民要把矛头指向他们批判。那我可就真的，很傻，很天真。 I

f I were said farmers are the root cause of the contamination, I would be too naïve. Milk collectors and factorys know all about it.

我们从来不拒收奶，因为我们知道，一件东西是要充分利用的，这样才能取得最大的价值，获得最大的利润。我们分罐储藏。最好的奶，供到车间做（发酵型酸奶或搅拌型酸奶），因为不是好奶做不出来。其次，做纯牛奶，高钙奶之类的。再差的奶做花色奶即花生奶，早餐奶等。还有那些发酸的奶怎么办呢，当然不能倒了，做酸性乳饮料，就是广告狂哄乱炸的，女人小孩都喝的***。这是本公司最大的利润所在，一盒奶的成本，还没有哪个包装盒值钱。还有那种臭的熏人的奶怎么办呢，简单，做冰激凌味道最好。还有那些又臭成粘稠状的怎么办呢，做奶粉。当然这叫工业粉，它有它的用途，不是装袋子就上市场的。

We never stop collecting milk. We know that we have to maximize the value/profit out of the milk. Milk is stored separately. Milk with best quality will be sent for yogurt making, followed by pure milk and high calcium milk. Low quality milk will be used for “peanut milk” and breakfast milk. As for the milk that turns sour, it will be used to make acidic milk drinks. This is how the company earns money. The cost of the milk is lower than the cost of the box. How about the milk which is very smelly? Simple, it was used to make ice-cream (as it will smell the best). How about the smelly and sticky milk? It is made into industrial  milk powder, which has its other purpose (milk powder without packing).

我们有全球最大最先进的立体式仓库，媒体都赞扬过，可是你就没想想这快速消费品，生产出来就要卖的，搞那么大仓库什么用？酸性乳饮料越存放味道越好。那有人问了，生产日期怎么办？简单啊，提前打一个月，你也许不信吧，因为在你心中那是小黑工厂做的事。那又有人问了，市场上卖的岂不是过期奶？我就这么告诉你吧，你手中那盒奶就是过期一周了，你喝也没问题。因为你所卖的奶是UHT超高温灭菌液态奶。关于UHT超高温灭乳到底有没有营养，我不想再说了，因为这个涉及到某人在某年为中国提出的一个口号，我们正向这个口号迈进，别管你喝的是什么奶，反正是牛奶。

We have the world largest and best developed volumetric storage system which was hailed by the media. However, have you ever thought that such product is meant to sell quickly rather than for storing? What is the use of having such a big warehouse? Acidic milk will taste better the longer it was stored. How about the expiry date? Simple! Put a date which is one month later. I am telling you, the milk in your hand is already 1 week expired. You drank it and have no problem. This is because the milk being sold is processed using UHT (ultra high temperature) to kill the germs. There is no nutrient value after such UHT process. This is the slogan by someone in China: Don’t bother what milk you drink, it is milk.

有个广告，中国某企业已经是这种超高温灭菌乳全球产销量第一，难道是那些乳业发达国家真的比不上我们了吗？其实是人家不生产这种乳品了。这笑话有点冷是吧。

There is an advertisement stating that a Chinese company is the world largest UHT producer. This is not because the technology is good and better than that of developed countries. The reason is that the developed countries no longer producing such milk product.

那有人说了，我们以后喝高端奶吧，广告都说想过有品位的生活就和那种奶。是啊，那奶是贵啊，贵的东西就好啊，那奶蛋白质高啊，高，实在是高，这一点澳大利亚人都服我们啊。

Some say lets drink the high-end milk. The advertisements say that people who enjoy a quality lifestyle should drink that kind of milk. That milk is expensive. Expensive is good. It is high in protein. Even Australians respect us!

我就不相信地球上的奶牛能挤出那么高蛋白质的奶……

However I don’t believe any cow can produce such milk with such a high level of quality.

此言一出，某些专家就会来“辟谣”又得列出一套数据理论，来“引导”大家。

Once this was mentioned, specialists will provide a set of numbers to refute the statements and guide everyone to continue to consume.

是啊，我嘴没人家的大，钱更没人家拿的多……

Oh yes, my mouth is not as big and I am not collecting as much money as they did.

还有很多关键的还是不说为好，知道了对大家谁都不好。生活是美好的。

The key is that it will be better not to mention.

真实案例看三鹿奶粉背后的KB的行业潜规则
目前闹得沸沸扬扬的三鹿奶粉事件，作为一个可能的知情者和懂点化学的人，我也来谈谈我的观点：

On the current Sanlu milk powder case, as a person who knows the truth and and the chemistry, I would like to provide my view:

1、媒体也好，厂家也好，国*家质量监督也好，还是在忽悠大家，为什么我敢这么说，因为三聚氰氨根本不可能直接加入牛奶中，三聚氰氨的市场售价并不低，奶农不可能不计成本，比较麻烦；那为什么媒体，厂家，国*家质量监督要异口同声的说是不法之徒加入了三聚氰氨，其实就是为为了掩盖一个更可怕的问题，那就是加入的其他毒性更大的东西，说穿了就是尿素，尿素作为一种便宜的农家化肥，真是经济实惠的“好添加剂”。

1. Be it media, factory, national quality control, or to cheat everyone, adding melamine into the milk directly is not possible. The price of melamine is not low. Farmers will count its cost and avoid trouble. However, why they keep saying that someone add melamine? This is because they want to cover a greater problem, which is adding in an even more toxic material which is urea. Urea is a cheap fertilizer and a good value milk additive.

2、为什么要加尿素，因为各乳品公司收购鲜奶，测试的标准主要是奶的蛋白质含量，说穿了就是氮的含量，尿素作为一种最普遍的氮肥，由于它独特的分子结构，记得好象是两个氮分子配个什么我忘了，氮的含量当然高了，混入奶中，提高氮浓度，价格自然也卖得高了；

Why add urea? As a milk collector, testing of protein is based on nitrogen content. Urea is a common nitrogen-based fertilizer. It has a unique structure with around two nitrogen atoms and something else which I can’t remember. Adding in the urea will increase the nitrogen content and increase the price.

3、尿素怎么转化为三聚氰氨的，很简单，奶粉的生产过程就是将鲜奶放在封闭的环境高温环境下，然后采取喷雾的方式直接转化成粉状就成了奶粉，而尿素在高温下会产生变化，生成三聚氰氨，OK，有毒的奶粉就这样生成了。

How come urea will transform into melamine? It is simple. During the milk making process, fresh milk was kept in high temperature. It was then being sprayed to form milk powder. At high temperature, urea will form melamine. The toxic milk powder is formed.

最后，我在谈谈我怎么知道这些内幕的，前几年，是01年还是02年，我记不太清楚了，在办理一件带B社会性质的案件时，他们主要罪状之一就是把持我市某区的牛奶收购市场，长期以次冲好，我们在办案中就了解到，他们在牛奶中加入尿素、少量食用油，然后加大量水（良心好的加自来水，不好的就直接加池塘或者田里的水），最后用专用的搅拌机进行搅拌，一批蛋白质浓度高的鲜奶诞生了，但最后几个犯罪分子都翻供，说他们这种做法是普遍的，并不是他们发明的，后来我们专门去天友了解，确实如此，他们对牛奶收购中出现的这些问题根本没有比较有效的检测措施或者是因为收购站点太多，没有精力和金钱来负担这么大的检测开销，所以对广大奶农的行为基本采取的是默认，奶农收购牛奶，就普遍存在次类现象，所以三鹿事件的发生就是必然的，而且这次三鹿出了事，全国其他所有奶制品企业都保持沉默，没有一家跳出来指责，什么原因大家看了我说的牛奶，你们敢喝吗？

Lastly, how do I know the truth? A few years ago which I can’t remember it is 2001 or 2002, I investigated a case where sub-quality milk was used as high quality milk. During the investigation, I learnt that they added urea, oil and large amount of water (potable water or pond water), and used a mixer to mix. High protein milk was then produced. The criminal said that it was not their invention but it is a common practice. We went to “天友” to understand. Indeed, during the collection, they can’t afford the effort and money to conduct analysis due to the high number of collection points and effective testing system. On such a mixing by farmer, the collector choose to keep quiet. Thus, Sanlu case will definitely surface.

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There are obviously many inaccuracies in the article, above, and Illuminant certainly doesn’t endorse any of the above as being fact, however we think an analysis is of interest.  The following is written by Illuminant’s Kane Gao, from our research and language services department:

Preface

A statement has to be made here since technically it’s impossible to classify the “insider story” as true or false. The source of the story can not be traced thus we can’t be sure if it’s fundamentally reliable.

Thanks to various portal websites’ fever for PV (page view) and common internet users’ fever for scandals, the story in question has been published everywhere over the Chinese part of internet. A search with Google returned 93,700 exact matches, leaving 329 items after omitting similar entries. 15,400 exact matches in Baidu, a search engine provider which is dedicated to Chinese material search.

The government’s attitude makes the problem even worse. It gives no response to the story. Professionals in the dairy industry are silent on the subject, too. Thus the following research is based on limited material I’ve managed to find, and some common sense.

Can we believe in the “Insider Story”?

Only partly, according to common sense. Every now and then an “insider story” surfaces on the web. Some of them are evaluated as “can’t be sure”, others are hypes or slanders for certain purpose. Some portal websites occasionally “create” a shocking insider story to attract attention (and, of course, PV). Sometimes companies would try slander their competitors with forged scandals.

However, the story in question seems more reliable, although there are some glaring technical inaccuracies. Because it hasn’t make any official appearance on most known scandal-holic websites such as Sina, Sohu, and QQ (not officially means that it’s not in their news and special feature sections. But you can find the article on their subordinate forums or blogs.) Neither does it stand on the behalf of any specific dairy company, which make it less like slander. So, let’s give it a try. Now that both government and professionals are keeping silence, we’re going to make an analysis to see if it makes sense.

Factories’ roles in tainted milk products

Factories can’t be innocent in the production of tainted milk. Yes, it’s totally possible that dairy farmers or milk collecting stations may have added melamine into liquid milk. But it would be a miracle that all tainted milk “happens” to be processed into baby formulas without any acknowledgement of the factory (Sanlu, to be exact).

The story also mentioned that quality administrations, media, and milk factories themselves admit the addition of melamine to cover that fact that what they actually put into milk is urea. Yes, urea is cheaper than melamine, and its solubility is way higher. But the point has been proved to be fake after I consulted a medical expert.

Urea isn’t that poisonous, and it takes a lot of effort to make it turn into melamine. Simple heating in a closed environment is definitely not enough. The reason why the author tells such a lie is dim, but we can safely assume that addition of urea is not a “standard process” in Chinese dairy industry.

Also, the statements on UHT are technically incorrect.

“Recycling” of spoiled milk

This seems to be true because there has been a similar story about big dairy brands “recycling” spoiled milk and give it a second life. It was back in year 2005, Henan Provincial Television broadcasted a disguised investigation program. In the program, Guangming (another dairy giant in China) was exposed to be taking spoiled milk back from distributors, and “process” it into brand new products. The journalist saw that countless packs of spoiled liquid milk are being poured into tanks by factory workers. “This is recycling”, they told the journalist when questioned. Most of the packs are putrefied, with flies buzzing and maggots crawling. Even the workers were complaining about the overwhelming stink. But let’s skip the disgusting stuff; they “recycled” them anyway. 32 tons of putrefied milk, all processed by the next day.

“You don’t believe what you see here, because it’s simply out of your common sense. But you should know that every factory commits in such deeds, you just don’t have the chance to see.” A certain worker told the journalist.

Curiously, the Guangming scandal didn’t make a huge impact to the market, at least nothing I know of. Anyway, we can trust a state owned television media. They only censor news that they believe could result in panic, but they don’t tend to lie.

Our summary?  Its a hoax.

*Chinese material reference: http://news.tjinfo.com/100001/100061/100001_100061_1545.htm

Blog posting by Illuminant’s Kane Gao of research and language services.

FAKE, originally uploaded by Illuminant Partners.

The protection of Intellectual Property Rights (IPR) was a major chapter during China’s negotiations with the World Trade Organization (WTO) prior to its accession in 2001. Since then many reforms and improvements have been made and the Chinese government heavily promotes its achievements in the fight against product piracy. But according to the latest OECD survey, still 4 out of 10 counterfeited goods on the global market are “made in China”.

Interestingly to know, that not only the big names, such as Apple, Gucci, Nike or Universal, fall victim to product piracy and counterfeit – also small and medium sized companies lose immense amounts of money, because their innovative products get imitated in some Chinese backyard and are than sold at dumping prices. Repeatedly companies were made aware of IPR violations just because an angry customer called up the headquarters and complained about the poor quality of the product or asked for after-sales services.

C’est la vie en Chine?! Is product piracy merely one of the side effects one has to simply accept, when doing business in China? Not at all! Although one has to be aware that even the best strategies might fail on the Chinese market, there are 3 simple ways to reduce the potential risks for your company significantly.

1. Know the market!

Knowing the current market environment for your industry is the key for a successful performance on the Chinese market. IPR violations may happen in any industry, but the better you understand how your industry functions on the Chinese market, who your (Chinese) competitors are and what previous cases of counterfeit in the industry took place, the better you can prepare and protect your company against it.

If your company does not have the resources to get all the necessary information, you may be well advised on hiring a skilled local marketing or PR firm that is specialized in market research and truly understands the Chinese market.

2. Know the law

Since its accession to the WTO in 2001, the Chinese legal system improved significantly, although the actual implementation is far from perfect. On paper the Chinese IPR regulations do meet international standards, but most companies, when getting involved in counterfeit issues, do face a frankly unmanageable number of barriers, such as the Chinese language, the complexity of Chinese bureaucracy and the overall costs of a time-consuming lawsuit. Nevertheless, the best advice in case of an IPR violation still is to take legal action, instead of capitulating and depreciating the loss.

Be aware that the costs for an average lawsuit on IPR violations may be between USD250,000 (international law firm) and USD10,000 (local law firm). Therefore it is important to do some research and compare the actual cost-performance ratio beforehand.

3. Know your allies

Most national governments do offer some sort of investment protection for companies that are expanding their business to China. These agencies generally offer legal advice in case of IPR violations as well as financial support during a lawsuit.

Get in touch with the Chinese representatives of your home country’s chamber of commerce or the business section of your embassy for further information, or speak to Illuminant Partners for an obligation-free consultation.

Article by Anja Knass, Illuminant’s corporate affairs manager.

Illuminant Partners briefing on the restructuring of Ministry of Construction of the People’s Republic of China and the new Ministry of Environmental Protection:

March 11, 2008, Beijing—State Councilor Hua Jianmin and the Secretary General of the cabinet announced during the National People’s Congress that the Ministry of Construction will be replaced by the Ministry of Housing and Urban-Rural Construction.

The main functions of the Ministry of Housing and Urban-Rural Construction are to create housing and urban and rural development policies, guide housing development reforms, supervise the architectural and real estate markets, and ensure architectural safety. The ministry’s long-term vision is to manage haphazard urbanization through thorough planning and strengthening of the urban-rural relationship ensuring affordable and safe housing in alliance with the private sector. Additionally, the ministry will work to mobilize requisite technologies to make public and private buildings safe and cost-effective.

The new Ministry of Environmental Protection aims to boost environmental and ecological protection efforts and accelerate the building of a resource-saving and environment-friendly society.

This ministry will be responsible for drafting and implementing programs, policies and standards concerning environmental protection; working out environmental functions in different regions; supervising pollution prevention and treatment efforts; and tackling major environmental issues.

Today, Illuminant Partners assisted Eton Kids Beijing in organising a media conference with Dr. Marlene Barron (Montessori Consulting Group, New York) and Marylin Stewart (President, American Montessori Society), two world leading experts in Montesorri education.

The afternoon started with a tour through the Palm Springs campus of Eton Kids Beijing, which was covered by three national Chinese TV broadcasters. Marlene and Marylin had an enjoyable day and had plenty of opportunity to sit down and interact with the Eton kids. At 5pm the two experts gave a speech on the Montessori system and how it needs to be adapted in China, which was very well received in the media this evening. More than 200 parents and teachers from all over Beijing came to hear these two extraordinary educators talk.  We were proud to have been associated with such a great client as Eton Kids.

Guanxi (pronounced GWAN-she) is a term synonymous with doing business in China, and anybody who wants to succeed in China needs to know how to employ guanxi to their advantage.

However, many Westerners new to China find it a difficult concept to grasp. Literally translated, guanxi is nothing mysterious that cannot be rendered in the English language; it means simply “relationships” or “personal connections.”

Guanxi is not entirely foreign in the Western business community. Many businesses in the West use personal relations to their advantage. The difference is the connotation, usage and scope of these relations. However in China, understanding how to use guanxi can make the difference between mild success and a great success.

Why do Koreans, Japanese and Taiwanese operate more smoothly in China? It isn’t because they’re Asian; they know how to gain guanxi and employ it, because it operates similarly in Japan and Korea, and to a much stronger degree in China.

Guanxi implies power. A popular Chinese expression is “If you have guanxi, you can do anything.” Many a Chinese citizen’s worth in business is measured not by any talent, but more by whom that person knows. A person who knows people is valuable because they can always get their foot in the door and secure access to the means of resolving problems and deals.

Chinese, whether it be in the government or business, have an intense mistrust of “outsiders” – swindlers are everywhere in China! Consequently, the only person one trusts are those within one’s guanxi circle.

Business deals are generally made based on these guanxi connections, because they are the only ones they believe they can trust. Trust is a valuable commodity: it is more valued than talent. Although to some this might reek of nepotism, the scope of guanxi can be quite large and extend away from an individual by several people.

The main people in the guanxi circle are the family and extended family. These people are given priority above all things, and this is sometimes true in the West. The difference is that a son, in the West, who obtains his job because of his father is looked down upon, whereas in China many people would admire him. Who your family is can make a huge difference. If your father was a criminal, you are usually disqualified for any job, and if your father is a bureau chief in the government, you are qualified for anything because you have guanxi.

The next group of people would be friends and classmates. Classmates are extremely important in China. Chinese maintain relations their entire life with classmates from elementary school, middle school, high school and university. Sometimes, they may not even remember each other, but if one says they were classmates, they are automatically connected. Unlike in the West where relations with classmates is often analogous to being strangers, classmates in China are second to family and mutually assist each other over a lifetime.

The next group is the hometown or dialect groups. This is not significant any longer for major metropolitan areas in China, but in medium-sized cities and in southern China the most important question one wants to know is “where are you from?” In the West, generally there is not too much special preference for home-towners, but in China there is a strong preference.

Anyone from these groups are given strong support in business.

To observe business dealings in China is to find a web of guanxi mixed into the whole deal.

The next issue is how to employ guanxi.

Let us use a hypothetical situation: Mr. Li wants to sell banking software to banks in China. Instead of making sales calls or talking directly to every bank CEO in China, he will search among his existing guanxi for a connection with someone of influence. Perhaps Mr. Li doesn’t have direct guanxi with anyone significant, but he does have a friend Mr. Wang whose former classmate, Mr. Zhang B, is a cousin of the Vice-Minister of Commerce, Mr. Zhang A. Mr. Li would have Mr. Wang call Mr. Zhang B to arrange a meeting with Mr. Zhang A. The invitation would be polite coded terms such as “invite you to dinner” means one is looking to build his guanxi with you and “I would like to hear your expert opinion” means one is looking for help. Mr. Zhang A will clearly understand these encoded terms.

Even if Mr. Zhang A were uncomfortable with meeting Mr. Li, he would dare not reject the invitation because he would cause his cousin, Mr. Zhang B, “to lose face” in front of his former classmate. This is important due to two issues: firstly, helping friends is seen as an ethical imperative and performing a favor on behalf of a friend ensures later one can do the same. Secondly, for a person in the guanxi circle of high status, he is ethically obligated to support those below him; furthermore, he often is assured that position by the support of those below him. Therefore, when a friend or relative comes knocking, one must answer, but in the future they can do the same, and expect full support and loyalty.

Guanxi is thusly based on an endless loop of favors.

Mr. Li may have successfully had the meeting with Mr. Zhang A, but his connection with Mr. Zhang B might not be trustworthy enough to close a deal. Sometimes guanxi is only enough to get one’s foot in the door, especially if it is as convoluted as the aforementioned example. In such a case, Mr. Li’s goal would be to build his guanxi with Zhang A. If Mr. Li is a smart man, he will research Zhang A’s interests and likes. On first meeting him, the rule of the game is simple: make Zhang A happy and do not discuss business. The entire meeting goal should be to “make friends” and everything is put in friendly terms (although both sides are cognizant of the other’s intents).

Mr. Li will likely present a thoughtful or highly-luxurious gift such as high quality golf-clubs or a rare bottle of rice-wine depending on the individual’s interest. This will put Zhang A in a difficult position: he cannot reject the gift, but the meaning of the gift is “I just did something nice for you now you should do something nice for me”. In this way, it can be seen that this type of meeting is couched within terms of friendship, and discussions are more centered on interests than business.

From Mr. Zhang A’s perspective, he couldn’t care less which company provides his banking software. In his eyes they are basically the same. “If it looks the same, it is the same”. And although one system might be a much better buy, the guanxi he gained from another company might be more valuable than any financial and efficiency savings. Therefore, Mr. Zhang A is more likely to chose the person who has a better or closer relationship to him. If Mr. Zhang A uses his power, he can force all banks in China to purchase Mr. Li’s banking software; this kind of deal makes Mr. Li indebted to Mr. Zhang A for a major favor outside of business. Therefore, a year later Mr. Zhang A may call on Mr. Li to do banking security software for free or to help him do a business deal.

These practices are somewhat similar to what happens in the West, but with some significant differences. Chinese often perform favors in the natural expectation that a favor will be returned. If a favor isn’t returned, there is a strong sense of shame and “loss of face.”

Losing face is a major factor in guanxi because it is the consequence of not performing one’s obligations in this, what seems to some outsiders, a farce of a relationship. Losing face is the biggest dishonor one can suffer.

Preserving face leads to people going to extremes – for example, maintaining a marriage when one’s spouse is blatantly not providing fidelity (which is as common in China as it is in Western societies), because divorce is usually a major loss of face within Chinese society. Consequently, Mr. Zhang A would never call Mr. Li out on his insincere gestures of friendship, because not only would he cause Mr. Li to lose face, he would also lose face because he was rejecting these prima facie gestures of friendship.

Rejection can occur, however, but a rejection is rarely declared directly, but it is increasingly common due to changes in Chinese culture. Generally, for example, if a favor is requested, a negative response will be “I’ll definitely consider it” or “I’ll see what I can do.” These are all sentences which state they will make an attempt, but they neither promise nor deny the favor. At other times, a rejection will come in the form of being ignored or through deferring a decision. “I can’t make such a decision, unfortunately, but I’ll bring it up with my boss.” These are clearly and simply translated into normal Chinese as, basically, “no.”

Now the final question is, as a Western business person dealing with Chinese, how do you employ guanxi to your advantage? In my experience at Illuminant Partners, I have had to use guanxi to perform many tasks from getting meetings with high-ranking BOCOG officials to interviews with important media outlets. In the West this may be seen as an inability on my part to perform my job, whereas in China if you cannot use your guanxi you have no ability.

My fellow Illuminant partners have the same challenges and opportunities every single day at work. We all strive to understand the complex web of relationships at work in China, and to use them for our clients’ advantage.

Remember the following things:

Everyone in China is a potential resource

Everyone you meet has the potential one day of becoming a useful business asset. Get to know what they know, so you can employ them later.

Speak Chinese

If you are going to be doing business in China – and I don’t care how old you are – learn to speak Chinese. You automatically are given a huge amount of credit, trust and respect even when you speak the most basic Chinese. If you don’t speak Chinese, you’re almost always dismissed as a foreigner who doesn’t know the first thing about China.

Dinner invitations

Treat people to dinner often. Inviting someone to dinner and paying for it is a couched term for “I want to build up my guanxi with you so you can do me a favor later.” This ingratiates someone in your favor to be called upon later.

Do not directly discus business until you are familiar

Money is dirty in China although everyone loves it. Discussing money and business is considered uncivilized and unbecoming. Talk about fun things.

Drinking is essential

Drinking, just as in the West, is an essential tool. However, if you’re going to be doing business with older Chinese (in their 40s or older), you better be prepared to drink baijiu. The older generation grew up on baijiu, and despite the fact that is may sometimes taste like nail polish or industrial chemicals, drinking baijiu has symbolic cultural meaning as the drink that “brothers-in-arms” drink. So bottoms up!

Don’t be afraid to pool your friends resources

If you don’t know anyone who can help you, ask your friends who they know. It’s not impolite in China as it might be in the U.S.

Never say “no!”

Never say never. It is the worse thing you can say, because it causes people to lose face. Always say phrases that are non-committal or avoid it. If someone ask for a favor that cannot be done, then answer “I’ll seriously think about it” or avoid it altogether by saying, “Let’s not talk about business now. Let’s have fun.”

Never allow anyone to lose face in front of others

Go out of your way to prevent any loss of face. Never point out another’s faults and do not directly contradict them. To do so, not only will cause him to lose face, but might make him an enemy, and worse, if you do this consistently, you will lose face because you will be considered arrogant and uncompassionate.

Never talk about problems

In the West we talk about problems, but in China you imply problems. One of the biggest mistakes Westerns make is that they directly talk about problems, which when coming from the mouth of a foreigner, it is construed as a criticism of Chinese, which makes all Chinese lose face. Instead, talk about the positive side of things first. Afterwards you can add “There is, however, one miniscule problem that I’m sure you’ll rectify… We can help you with this problem.” Everyone will understand you, and you will come off as being a generally positive person.

In conclusion, the use of guanxi is essential to your business and communications success in China, and aught be viewed as a distinct cultural differentiator to Western modes of business and relationships.

Authored for A Source of Light by Illuminant Partners account manager Christopher Heselton on 30th January 2008.

There seems to still be some confusion about the new Chinese national holiday dates.

Chinese holidays run differently from the West in that the weekend preceding or following (generally preceding) a holiday is a work day. The two weekend break days are then combined with the holiday break; thus, adding two extra days to each holiday resulting in two five-day holidays and five three-day holidays.

The original dates given count the two extra days; however, remember that the weekend before or after (generally before) is still a work and school day.

This system is invariably confusing to westerners in China.

Below is the latest list of official required holidays, which we have sourced from published central government materials:

Western New Year (Yuandan)
1 day vacation (1-Jan-2008)

Chinese New Year (Chunjie)
3 days vacation (6-Feb-2008 to 8-Feb-2008)

Grave Sweeping Day (Qingmingjie)
1 day vacation (4-Apr-2008

International Socialist Workers’ Day (Wuyi/Laodongjie)
1 day vacation (May-1-2008)

Dragon Boat Festival (Duanwujie)
1 day vacation (June-8-2008)

Mid-Autumn Festival (Zhongqiujie)
1 day vacation (Sep-14-2008)

China National Day (Shiyi/Guoqingjie)
3 days vacation (Oct-1-2008 to Oct-3-2008)

According to the new Chinese labour law, whether or not an employer shifts the weekend break to the holiday break and which days and which weekend are all up to the employer’s discretion. However, the days listed before are the days recommended by the government and the schedule all schools in the country will follow (with the exception of the New Year where the government made a sudden change in the school break dates to Dec 31, Jan 1, 2).

Western New Year
3 days vacation (1-Jan-2008 through 3-Jan-2008)

Chinese New Year (aka “Spring Festival”)
7 days vacation (6-Feb-2008 through 12-Feb-2008)

Grave Sweeping Day
3 days vacation (4-Apr-2008 through 6-Apr-2008)

International Socialist Workers’ Day (aka “May Day”)
3 days vacation (1-May-2008 through 3-May-2008)

Dragon Boat Festival
3 days vacation (8-Jun-2008 through 10-Jun-2008)

Mid-Autumn Festival
3 days vacation (14-Sep-2008 through 16-Sep-2008)

China National Day
7 days vacation (1-Oct-2008 through 7-Oct-2008)

Certain pundits have been predicting full flexibility of vacation time for workers. It seems that as fast as China is reforming, the national economy is not quite ready for such a move, as yet.