Page 141 - How China Is Winning the Tech Race

Right product, right market

Oriental Wisdom’s timing is impeccable. The country’s burgeoning financial
markets are undergoing a rapid transformation from state control to private
ownership, and foreign banks are boosting competition as they go into China
under terms set by that nation’s entry into the World Trade Organization in
2001. Thrifty Chinese consumers are known for saving and for gambling.
They are increasingly sophisticated about options for getting better
investment returns from their hard-earned savings rather than using the old
“stuff it under the mattress” technique or hoping for a lucky streak at a
casino in Macau off the southern coast of Mainland China. Investing in the
stock market by ordinary Chinese citizens, even taxi drivers, is common.
Combine that trend with China’s huge mobile phone market, and you
have two big drivers for Oriental Wisdom. Unlike the United States, in China
consumers never got used to the laptop personal computer or the PDA
personal organizer. China jumped right into cell phones, which far outnumber
traditional landline phones. Mobile phones are not just for chatting but
provide a powerful new media channel. Radio, television, and newspapers
can’t compare to the personal, handy, convenient cell phone. Some people
even keep their mobiles switched on all night by the bedside.
Forget the old 30-second television commercial. Armed with software
and a database of customer contacts and purchasing habits, marketers are
aiming text and multimedia ads directly at a customer’s cell phone. That’s far
more efficient than forcing products on unresponsive consumers.
No wonder worldwide ad spending on mobile phones is projected to rise
1
to $11.4 billion in 2011 from $1.5 billion in 2007. The Chinese mobile ad
market, fueled by steady economic growth and the upcoming Beijing
Olympics, is set to leap to $350 million by 2011 from approximately $60
million in 2007 and climb to about $100 million in the 2008 Olympic year. 2
Mobile advertising is commanding a greater proportion of total marketing
budgets in China too. 3
Shopping on the mobile Internet for everything from movie tickets to
subway rides also is catching on and someday may replace the use of credit
cards and cash. Revenues from so-called m-commerce will reach $40 billion
4
by 2009. Boosted by sales of mobile games, ringtones, and dating services,
Chinese m-commerce is growing by nearly 20 percent annually. 5

Oriental Wisdom—Confucian Capitalism 115