I was on a call with a client who is a CPO based in Europe and was in the middle of a trip to China after not having been there in almost three years. It was quite interesting to hear his perspective on what he was observing, and it was quite fascinating and a bit unnerving. He started hearing the terms Gweilo and Laowai (though not being directed at him) – derogatory terms for foreigners, he felt he was being treated differently, he had very little access to news while he was there, and it just felt different. I actually turned the conversation to a neutral place by reminding him that China had been an isolated country and culture for a long time in history (The Great Wall) and that during turbulent times you never knew who was monitoring what conversations.
The economic news out of China has not been good lately. There is a significant rise in the unemployment of the educated young population and that will not change in the near future-which at more than 20 per cent in May reached their highest level since records began in 2018. The manufacturing sector has been slowing down and will continue to do so. Commodity futures are going down as a result of the bleak economic outlook. The pent-up demand from the long Covid quarantine is running out of steam thus slowing the economy down and there is no income to replace that pent up demand. You’ve all seen the large condo buildings that are fully built and empty. Those are all assets on the balance sheets of Chinese banks with no value.
Here’s some more bad news from FT: Property investment, credit and industrial profits have declined, while indicators such as retail sales have fallen short of analysts’ expectations, casting doubt on the government’s modest full-year growth target of 5 per cent. The Hang Seng China Enterprises index, which tracks large mainland companies, almost 2 per cent on Wednesday which is 20% below January! The renminbi is down 3% against the dollar this year already.
And then I ran across this sentence on CNN: But the true danger of the “blame the foreigners” sentiment comes when adults in powerful positions take advantage of it in the face of mounting pressure on the domestic front. In fact, CNN points out that current “official” dogma is that the isolationists policies of the Chinese emperors that brought about the wall are actually needed now to protect against the foreigners. The officials will need something to occupy the unemployed youth and divert their attention from their misery. There are efforts underway to encourage the educated youth to take on blue collar jobs, but those efforts are doomed culturally. The expectations of the educated youth are not going to be reduced by slogans though. And the wall this time is a cyber wall which is impossible to penetrate. Access to information is tightly and strictly controlled by “the world’s most extensive internet filtering and censorship system that blocks and deletes anything deemed “harmful” by the party”.
Given the pre-occupation of the world with Ukraine, Taiwan may start looking like an attractive target and it will keep the population pre-occupied. In addition, given the importance of Taiwan in the chip industry and China’s decreasing access to that technology changes the equation. As a Category Manager, you should be incorporating these developments into your strategy. You should also be briefing all your Stakeholders and helping them interpret these developments. It will add to your credibility and enhance your reputation.
