The stagnant home economy is taking its toll across many industrial and service sectors. Given its high public profile the impact of necessary fiscal consolidation is perhaps most apparent at the BBC. As part of its cost-saving initiatives it has revealed that it will be sharing its 'free-to-air' transmission rights to Formula One in the UK with NewsCorp BSkyB's own subscription and 'pay-to-see' services.
Whilst negotiations about the matter had been ongoing for some years - to the apparent previous chagrin of Bernie Ecclestone's Formula One Management company which notionally prefers 'free-to-air' - it looks as if the tumultuous drop in BSkyB's share price, which came as an effect of the NewsCorp scandal, necessitated a positive news story to support a new price-floor for the stock.
[NB BSkyB's share price averaged 830p from early March to the beginning of July, peaking at 850p before plummeting to 695p, generating gains to 740p before once again falling to 694p (as of mid-day on 03.08.2011)].
This intimates that James Murdoch at BSkyB has tried to creating a critical new price floor at 700p.
As a commercially driven entity BSkyB of course has a responsibility to its shareholders, and as part of the conglomerate holding that is NewsCorp may have a ripple-effect upon perceptions of its parent, even though NewsCorp was disallowed from expanding its own stake in the TV operator. Nevertheless, even with a smaller share-holding than it would ideally like, this good news story at BSkyB may be counted by investors as part of the ultimate necessary re-stabalisation effort, something needed given the recent general global 'sell-off' generated by the USA's QE3 action.
The news that BSkyB has indeed gained access to UK TV transmission rights for F1 will be welcome news to the Saudi Arabian Prince Alwaleed bin Talal. A majority shareholder in NewsCorp, an avid motor-sports fan and a (non-political) interests in F1 helping to develop alternative business streams in Saudi Arabia, he will enjoy viewing the synergies between personal investment and personal hobby become ever more integrated.
investment-auto-motives previously published an essay titled 'Gordon Bennett Steering Rupert Murdoch's Legacy'. It set the hypothesis that the latter modern multi-media baron may wish to replicate the efforts of the former Edwardian newspaper baron, by shaking-up the then new and now re-emerging automotive sector through the sponsorship / 'ownership'. A process of global TV rights capture - region by region – would then put BSkyB in the sports 'driving seat', effectively replacing Ecclestone and FOM.
It would also mean that Murdoch-Sky could then, with FIA co-operation, play an effective role in moulding the sports future technology strategy, where new tech prove-out and vital entertainment value can be mated, the successful elements of which – as as historically been the case – trickle-down to production supercars and beyond. This in turn creates a broader automotive-centric investment network for informed investors such as Prince Alwaleed bin Talal, which in turn creates an investment template for the those growing institutionals, private equity and individual investors across MENA and other EM regions, giving them access to 'progressive capitalism'.
To the present, and the deal struck between BSkyB and the BBC (having held exclusive rights since 2009) was one which appears to be in BSkyB's favour. From 2012 it would broadcast all the F1 Grand Prix events from across the world, including practice sessions and qualifying session. The BBC would schedule only half of the actual races, but cover practice and qualifying – with of course coverage of the British GP 'non-negotiable'.
This then creates the fundamentals for a 'switch-over' consumer pattern. Those already with Sky will watch all aspects through Sky, but those GP fans who have been BBC loyalists will watch practice and qualifying for all races as is the case now, but will be foced to 'switch-over' to Sky Sports to watch an 'uncovered' races.
For the two TV channels this 'switch-over' model then both allows Sky Sports to attract viewers directly from the BBC for a notionally steady growth of subscribers and viewers. Equally this approach creates a 'over-lap' business model at the operational level; whereby GP event specific staffing costs 'on site' internationally can be shared, a co-ordinated 'ramp-down' of personnel and costs for the BBC and 'ramp-up' for Sky Sports.
[NB Though nation specific broadcasters have in EM regions have much improved their abilities and coverage of GP events, previous reliance by the BBC on external broadcasters has been patchy, hence its retention of its own international O/B (outside broadcast) section].
This then appears a good example of medium-term 'co-opetition', both commercial organisations able to share costs during the 2012-2018 time-frame, with presumably the BBC abdicating its role far sooner than 2018.
Reports indicate that the BBC pays £40m per year for transmittal rights to FOM, excluding the costs of BBC Sport's O/B units. One report indicates that “£25m will be saved” from the 'co-opetition', though whether on an annual basis (one presumes so) or lifetime basis is not made clear.
The agreement though must have had had the endorsement of Ecclestone's FOM in order to proceed. As stated he much preferred the idea of a 'free-to-air' system of F1 coverage, but no doubt also well recognises the trend that western viewers themselves have been heavily effected by demographic,lifestyle, interests and viewing changes.
Thus whilst the BBC as the UK's national TV champion could command a certain level of viewing figures for the Sunday events - though domestically weather dependent and so periodically volatile at 6-10m viewers - a paid-for system by Sky will attract a smaller number of viewers but with greater consistency and regulatory given their 'sunk cost' subscription fee and 'inelastic' demand generated by their GP loyalty.
Thus for BSkyB and James Murdoch, this long-awaited conquest over the BBC substantiates his 'cause' to break the still strong stranglehold the corporation has over UK radio and television.
The loosening of its stranglehold over F1 however should raise questions about exactly how it now goes about offering “information, education and entertainment” in this sports sphere- one that has so much influence on the UK's own automotive sector.
Without doubt and for obvious reasons, the bias of Formula One coverage has been typically event specific, with more general website commentary via navigation of the BBC (Sport) portal and access to its 'iplayer' re-play function.
Yet over the years Formula One has also inadvertently also helped to underpin one of the BBC's 21st century success stories: that of its reborn Top Gear programme over the last 10 years or so. Top Gear's car-fanaticism includes direct commentary and celebrity invitation links with the Formula One world, indeed its old and new incarnations of the mythical 'Stig' is based on the notion of the anonymous yet super-heroic race-driver. The glass top coffee-table positioned between seats on the studio-stage is the polished block of an old Renault F1 engine. The studio itself housed inside a hanger on a race-track.
In short the relationship between F1 and the BBC is inalienable. And it is something that the BBC must continue to recognise and support for the good of the UK economy.
[NB When the then new 2002 Top Gear programme initially 'stalled' during the very first 3 episodes Turan Ahmed advised its Executive Producer by informal letter that it must add a more diverse studio audience, far greater number of women and people of multi-cultural backgrounds as opposed to the heavily biased 'boys club' presentation. That was put into practice and the show grew to have massive female and international appeal, since spun off for international viewing and international licensing].
Top Gear then was moulded as an automotive entertainment programme, yet it also recognised that it must serve the informational and educational remit of the BBC, hence its adaptation of the 'Scrapheap Challenge' format (from competitor Channel 4) into its own engineering challenge excerpts. Indeed Top Gear itself became an effective BBC spring-board, using 2 of its 3 presenters - Hammond and May - to front other programmes with a technical bent, hobby, engineering and science related aimed at youngsters and families.
These then both serves, and draws from, a fascination with the technical and its accordant paraphernalia, generating a subtle yet powerful feed-back loop between Formula One and broader 'STEM' subjects personal learning. One example is that of Hammond's exploration into the use of exotic materials, specifically the use of magnesium alloy as a central element of light and strong F1 car wheels, highlighting its pros and cons.
Today then Top Gear and its presenter enabled spin-off programmes acts as the philosophical intermediary between the ethereal world of F1 glamour & competition and the mundane reality of being sat in motorway traffic jam. It is in part a manufactured psychological world by which the 'race-track grid' meets 'urban gridlock'.Yet it is also of major influence on real world of driving aspirations and habits – the 'cool wall' highly symbolic to the suburban masses - and thus part of the 'social motor' that propels the UK motor industry at a retail level, partly at a production level and thus eventually at the supplier level.
The BBC and Top Gear then have become a concomitant part of the UK's – and indeed international - economic hub.
The 'Beeb' still retains a Royal Charter remit to serve the British nation; (indeed via the World Service influence on a broader scale). Historic precedence demonstrates its lead role in educating the nation(s).
Of course the Open University has 'carried the torch' since 1971, allowing generations of otherwise 'educationally abandoned' people to improve their being, their contributional effect to society at large and improve their life prospects. Yet also in regular programming there have been old-generation self-styled technical educators such as Raymond Baxter who's time with the RAF lend an air of knowledge and authority, whilst today in the educational realms of BBC2 & BBC4 the 'amateur professor' has given way to truly learned Ph.D wielding presenters plucked from academia to provide insightful exposure of their fields.
Today's and tomorrow's teenagers are angst-ridden about the debt-cost of education – 'god' or otherwise – and so will increasingly seek-out more affordable 'distance learning' options offered by an ever broadening number of old and new players in this education-space.
It seems inevitable then that the BBC must seek to continue to develop a socially pro-active stance, especially regards learning, and must find meaningful avenues by which to do so to inter-link technical exposure, awareness, interest and aspiration amongst successive generations.
Yes the BBC faces headwinds such as a time-tabled stepped-shrinkage of its TV licence income, and faces strong competitors such as Pearson Education with its links to the Financial Times etc, yet it strategic re-shaping is enabled by the advent of multi-media devices and channels as well as the wealth of its archive and power of its brand.
Yet also because the massive project that is the 're-orientation' of the BBC is philosophically far harder to assess and execute than would be the case for say a start-up business (which would typically operate in only one, well targeted, media space) there is innate complexity to the process.
Viewing the decentralisation and commercialisation of the BBC, one would expect each of its cost-centre divisions – both outward 'client-facing' & inward 'operationally-facing' – to potentially be sold through private equity and possibly onto public stock markets; especially so educational units.
Hence, the organisation faces the challenge of balancing its social remit with that of a commercial remit: and this requires that it be very cognisant of the strategic choices it makes.
To date the BBC's 'monetisation' efforts started with 'Christmas Special' vinyl records in the 1970s, sales BBC Symphony Orchestra records, the packaged video and DVD availability of some of the 70+ years of TV, film & radio archive stock (sold via BBC Enterprises and its shops) and to a B2B client-base of other international TV broadcasters the contractual 'lease and license' contract successes of BBC Worldwide.
The greatest challenge for the BBC then is what content and offering to retain and what to divest. It must then endeavour “not to throw the baby out with the bath-water”, especially given its role “to inform...to educate...&...to entertain”. Content and associated programming – rightly remains – at the heart of the debate.
Yet as we – business-people, government, academia and the public – essentially look over 'Stagnant Britain' and in regions a 'Broken Britain', the role and power of the BBC with its powerful cultural influence and their links to very real socio-economic worlds should not be overlooked or under-estimated.
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The Beeb certainly does not have the pseudo 'soft' Big-Brother hold over the country it once did, but with its 'care-taking' social role, it still serves as both a 'reflector', a 'dialogue forum' and a 'promoter' of 21st century Britain. A Britain which now desperately requires an economic 'kick-start' of sizeable historic proportions.
The BBC has links to Formula One which stretch back generations, and whilst it has seemingly necessarily seen fit to share and eventually divest its live Grand Prix broadcasting rights to BSkyB, it should nevertheless continue to 'show-case' the world of Formula One technology in order to create an education and knowledge trickle-down of its own.
As the Silverstone Racing Circuit becomes a 21st century educational hub for global F1 and motorsport, so the BBC will surely align its own course to become an increasingly 'tucked-in' and able to exploit the slip-stream. To do less than this would fail both its role and the UK at large given its necessary desire to grow its 'earning potential' from the global-wide 'learning potential'.
Showing posts with label BBC Made In Britain. Show all posts
Showing posts with label BBC Made In Britain. Show all posts
Thursday, 4 August 2011
Friday, 1 July 2011
Macro Level Trends - China's Global Acclimatisation – Western Re-Orientation.
Today marks the 90th anniversary of the Communist Party of China, a landmark event reflected by Premier Wen Jaiboa's European visit.
China's previous export mentality of 'cheap and cheerful' low-order manufactured goods has been the heart of the country's growth dynamic over the last decade or so. Yet as is known, the lower cost-base foreign competition of surrounding Asian, ex-CIS & African EM+ countries forces those on China's eastern seaboard to climb the value-ladder, so as to offer better products, generate greater service-led industries, develop a broader more professional B2B framework and ultimately create an advanced internal economy.
That export-led growth has in turn delivered the 'consumption paradise' promised, the import of luxury and aspirational products eagerly snapped-up by the emergent entrepreneurial hoard which now constitutes the 'new millionaires club' aswell as their middle-class employees.
Complimenting the B2C sphere, the B2B arena has generated demand for additional commercial expertise, the rabid competitiveness between Chinese companies seeking Western and Japanese insight into gaining the competitive edge. Thus foreign professional services spanning from accountancy to strategic planning to advertising have been both bought-in and in certain cases absorbed; a typical model being that of Ricardo's creation of an special engineering outfit dedicated to the localised design development of Rover into Roewe, that UK-centric team providing a knowledge-base template for SAIC, its own engineers affiliated to the project-team and latterly the project-based company formally absorbed into SAIC and able to integrate the then MG acquisition from Nanjing Motor.
Since 1976, the end of China's decade-long 'Cultural Revolution' the country has been on a slow but steady course accepting capitalism - though it quite plainly does not view this ideology as mutually connected to the western idea / interpretation of democracy. That slow but steady attitude to fundamental economic and societal change is perhaps the most prevalent reflector of the PRC's desire to maximise its own benefit from the process by controlling the rate of change.
[NB A watershed was reached in 2010 when China overtook the USA in terms of number and value of IPO's launched. The China A share (only) numbering 345 deal value at $71,621m whilst USA had 170 deals valued at $44,487m. Note also that Hong Kong beat the US in value terms, though not number of deals].
In doing so the PRC leadership well recognise that it cannot 'miss a trick' that would either undermine its self-determination and gain. Thus China has known from well before 1976 that it must learn every dimension of modern capitalism's commercial model, from every angle and at every level, whilst also able to mimic for itself the cultural model into which the commercial model is entwined, indeed having taken the lead role of cultural creation for well over a century.
Much has undoubtedly been learnt since 1976, beyond obvious diplomatic fact-finding missions across the world, much was digested when China created its first automotive JVs with the western firms of Jeep, Volkswagen and Citroen. Thus 'global-world' lessons trickled-down from central government to state-run industries, later into the banking & finance arena and then into post-graduate homeland education.
However, it wasn't until the relaxation of student foreign study rules and later tourism freedoms that the ability to truly meaningfully absorb the world at large become a truly powerful route to Chinese learning.
Arguably, one much more advantageous than Japan's experience during its own export drive years since the outward-bound Chinese youth are far less insular than were their Japanese cousins, exposing themselves far more to external influences. In turn they have been veritable cultural and business method 'absorption sponges' of almost everything that comprises the West commercially and culturally - but critically inquisitive to know how those two spheres meet to form what is a hyper-consumeristic, hyper-differentiated and so hyper-sensitive socio-economic sphere.
To this end modern technology has aided enormously, the camera-phone and smart-phone acting as the primary enabling and storage devices to snap photos and video of the world at large. Those devices are now as much in-the-field research tools for Chinese visitors as they are pure communication tools for the average Briton.
All over central London and other major UK cities the many 20-something Chinese who have come to study 'snap-away' at popular cultural artifacts, less so in museums and galleries, more so on the street and particularly in book stores, where the much of the contemporary western world is laid-out pictorially for easy visual & graphic capture. The likes of David Bailey and Lord Litchfield do indeed have 21st century proteges, but instead of creating a photo-montage culture that essentially created the swinging 1960s, today that culture is being viewed and deconstructed for homeland learning and use.
Moreover, whilst not at college many of the Chinese students appear to have day-time, evening and weekend jobs, some working almost daily, and typically in culture-orientated retail outlets such as Starbucks and the like, where not only can they earn, but critically able to informally learn about the methods for running such an enterprise.
[NB whilst no doubt many are wholly legal in mixing their 'learning with earning' ambitions, maintaining visa standards this is an arena which the UK government should inspect to ensure that the conditions of entry are being wholly respected by both student employee and employing corporation, and also investigate any UK citizen employees that act as 'go-betweens'in arranging the said employment, knowingly flouting UK law].
Of course such cultural and commercial absorption has been intrinsic to the growth of global free-trade over the centuries, and so is well recognised. The primary difference is that in today's technologically enabled world, what was once general, informal knowledge accumulation over years has become a knowledge transfer process which although notionally informal on the surface could be argued as far more formalised - albeit subtly so - than ever before.
Hence a very powerful 'Sino-absorption' of outside western and global cultures is being played-out, its three primary forces those of:
1. a highly motivated attitude toward 'extra-curriculae' cultural learning by Chinese-foreign students
2. the ability to collect and transfer the 'DNA' of western popular and commercial culture.
3. an ability to collate and relay that information through formal and informal educational realms in China.
[NB This is the very driven, directed, personal and national attitude to broad-spectrum education that reach well beyond the concept of education in the West. This pro-activity toward understanding 'the real world' stands in stark juxtaposition to the emerging negative attitude toward the UK government's announced university reform. The objectors to this reform posit that higher education's role is as much about personal learning in the philosophical and humanitarian sense, as opposes to the economic imperative that moulds a student for role in working life. This is understandable, but better 'directed learning' inside British academia which couples to the national need is undoubtedly pertinent so as to assist the UK's future.
Greece's present economic woes could indeed be laid at the feet of such idealistic yet also 'head in the sand' thinking. TV news reports show Grecian workers able to explain their plight with rhetorical and poetic prowess, yet that does not create the structural foundations the country's economy requires].
[See postscript for further observation].
The last post mentioned the BBC television programme 'Made in Britain', presented by Evan Davis, highlighting the UK vs China (ie notionally 'developed' vs 'emerging' economies). In the second episode he visited China's “Thames-Town”, a Walt Disney-esque recreation of a notional British town incorporating various styles of period architecture. It sits 30 kilometres outside of Shanghai, as one of 9 satellite New Towns designed to partially resist Shanghai's urban sprawl.
The towns are 'themed': 1 as traditional Chines, 1 as an Eco-town but it is the remaining seven that are of real interest since they are 'themed' (simularcra) of foreign countries: Britain, the USA, Germany, Holland, Sweden, Italian & Spanish. The towns are reportedly near empty, mirroring stage-sets and as such used for wedding-photo backdrops and events. But investment-auto-motives believes that the PRC's leadership's ideology was not to simply create a bigger and better versions of DisneyWorld's EPCOT Centre or a Las Vegas style ''mini-national' entertainment complex, the possibilities go far deeper. Nor do they simply reflect a re-working of Ebenezer Howard's late 19th century new Garden City ideals with internationalist twist.
The belief of investment-auto-motives is that they were planned and created to familiarise the Shanghai populace with the various differing inner-cultures of the West, and as such operate as subtle 'conditioning spaces' or national development 'landing-stages' for Chinese visitors and residents. The towns then are 'half-way' houses to assist the Chinese populace in the foreign cultural absorption necessary to effective business dealing with Americans and Europeans. Equally, no doubt in time these towns will become the preferred new 'homesteads' into which foreign corporations can install their employees.
These towns then become blurred boundaries between China and the Western world, areas in which international business relationships may flourish. The large Volkswagen factory sign that looks over Antig (the German town) infers much.
Furthermore each town has seemingly been planned to reflect a sectorial mini-economy. Just as the German-esque 'Antig' has been devised as an 'Auto-Town' with initial plans for a BMW factory and an F1 track, so the other towns have parallel micro-economy themes, the Spanish version centred around organic agricultural produce. Why import Spanish produce when it can be locally grown and sold to the Chinese consumer as the exact replicant? Moreover, Like Las Vegas and its Little-Venice, it means that these towns can also act as replica tourist destinations; just as an American feels he/she need not actually go to Venice because they've virtually experienced Venice under a roof set in a desert town in the middle of Nevada. The sumulacra becomes the real for the masses; thus the Chinese have indeed absorbed the post-modern thinking of Jean Baudrillard et el.
'Thames Town' was largely built but not connected via rail or substantial road links, though necessarily situated on a major river; very probably so that it can be brought on-stream with a later phase of infrastructure build relative to the progress of the broader national economy and state 5-year plan agenda.
Importantly, investment-auto-motives believes that this international township exercise is part of the Chinese ambition to eventually integrate into the managing and leadership of what are today's Western multi-nationals, but potentially tomorrow's Sino multi-nationals
These illustrations provide the prime examples of the innate psychological and sociological differences that exist between China and the West. What can effectively be phrased as the 'ambition factor'.
That massive 'onward marching' ambition will only serve to reduce; level and tilt the competitive playing-field in China's (and other EM nation's) favour. The historical industrial and economic advantages enjoyed by the west which provided such social and personal comforts and a far more liberal outlook, now shows itself as an innate disadvantage relative to the still very 'hungry' Chinese. The Grecian example today of an unrealistic social attitude toward the power of global competition, could very well if not checked, be the broader Western failure tomorrow, especially so with the danger of 'recession fatigue'.
Western observers may argue that the cost-base of EM regions, especially China has risen markedly over the last decade, diminishing its historic cost advantage and hence the need to climb the value chain - very true. But the primary threat to the West comes from the EM sovereign-states' ability to deploy surplus foreign currency reserves toward deep and rapid expansion of its education sector with very close ties to both old and new industrial and service sectors.
Evan Davis also highlighting the ambition of China's Li-Ning sportswear brand. The company with global ambition has obviously performed a 'copy+' brand strategy that mimicked the logos and retail environments of well-known western counterparts.
Having done that for its domestic market, so seen as the 'Sino-Nike' or similar. The programme was unable to mention the fact that it has created JVs with lesser known French and Italian sports brands, Li-Ning's production facilities used for less-costly manufacture; this then a typical JV arrangement. But what Li-Ning has the potential to do is create premium slots in the Chinese market for its JV partner brands, which having reached a mass-momentum and massive Chinese earnings, could then be used to 'capture' the western markets so dominated by the likes of Nike, Adidas, Puma, Reebok et al.
As one Chinese marketing student here in the UK stated: "all it takes is enough marketing money". Having viewed the western commercial model of media bombardment, that conclusion may be blunt but has a certain truth. The case-study of RedBull / ToroRosso a prime example. It's sponsorship of youth and sporting events providing major brand profile uplift and maintenance, even if advertising directors bemoan the fact that their sophisticated commercial artform developed over decades has been undermined.
However, even though such a simplistic approach may work for a company that pioneered the hi-energy drink to grow and defend its global market share, this approach cannot ensure success in most other fields that have greater maturity, competition and brand nuance.
And the PRC leadership is not so naive as to try and re-play 20th century 'American Cultural Imperialism' for itself, the world is a very different place today. It knows it has the budget muscle to massively integrate, but understanding psychological and cultural nuance allows that monetary force to be directed with greater aplomb, aiding ROCE, ROI and ROE.
China in the 21st century will leverage its fiscal muscle by continuing to domestically import foreign goods whilst simultaneously acquiring the West's weaker, or less well placed and defended national brands, thereby absorbing these foreign 'cultural hearts' and adapt as necessary for domestic fit (eg Roewe, MG, Volvo).
The real question is its ability to commercially and culturally 'retune' these enterprises and their inevitably Chinese made products so as to provide a compelling 'return' value proposition to its foreign export markets.
These examples pertinently relate to cars and thus other consumer goods. But as seen by the desire to absorb and export service sector know-how (eg infrastructure services (eg energy, large IT systems, hi-speed railways etc) the 'paint-by-numbers' type of picture-building is being formed, and the willingness to conquer the English language aswell as advances in language recognition technology means that the Western-Sino cultural divide will be smashed and so carving the way for higher-value professional services offerings in the nominal corporate outsourcing sphere, far beyond the typical call-centre work India amassed.
Whether believable or not at present, the fact is that we are still in the tentative early stages of this Sino ambition, and it may indeed still be decades away. China's future ambition is not of course wholly reliant on western markets as was the case in the past, it's domestic market holds decades of self-propelled growth alone, and a re-run of its western sea-board development within the interior - effectively using Chinese capabilities nigh-on alone - will undoubtedly power the economy.
Yet we plainly see by Premiere Wen Jiaboa's visit to the UK, Germany & Hungary that the Sino ambition is to maintain access to world-class technology, financial centres, commercial learning and to Europe's own CEE 'production platform', China seeing itself as a growing contributor and operator 'behind the scenes' of respected brands headed by the likes of Volkswagen & Siemens, but also playing a similar role for lesser publicly known companies that have leading sector competence and reputations.
[As has been highlighted by the FT, the disparity between the Sino-German trade agreement valued at $15bn and the Sino-British agreement valued at $2.2bn].
To conclude:
investment-auto-motives has laid out the basic aspects of the socio-economic challenge facing Western nations, one in which the innate difference between the cultural mindsets will become evident, the already entrenched 'ambition disparity' now growing due to 'recession fatigue'. Also presented in a very simple explanation is what investment-auto-motives sees as the future commercial 'Sino-strategum' and challenge generated by the global but subtle 'Sino-infusion' which will emerge in the years to come.
This then sets an unavoidable task of 'attitudinal-renewal' for western producers, service providers, governments and indeed private citizens. One that meets the much changed 'New Norm' head-on, and endeavours to maintain the West's advantage in targeted spheres across broad-ranging sectors, thus able to effectively compete in an ever expanding globalised free-trade world.
Here in London last Sunday, Premier Wen Jiaboa and entourage stepped-out of the Mandarin Oriental hotel in Knightsbridge; directly outside stood a an early production model of the as yet unreleased new red coloured Range Rover Evoque.
The intent was to cordially highlight JLR's Chinese production plans and to grow further entente-cordial, yet the Mandarin Oriental's massive facade dwarfed the small premium cross-over, a visual metaphor no doubt very much intended by the PRC.
Whilst the City of London will well be able to meet the challenges of New York and Frankfurt, the UK's regions - and indeed other Western nations - must now try and 'fast-follow' Germany's impressive lead in technological development and Sino commercial exploitation.
In this degree, Land-Rover will provide a strong additional beach-head for JLR and the UK auto-sector, its span from the 'basic bolted' Defender to the 'terrain intelligent' upscale models thus offering the PRC both an alternative to the previously refuted Hummer acquisition deal and access to IPR that will assist its own domestic-brand technical prowess in years to come.
Given the amount of camera phones held by the Premier's supporters, it may come as no surprise if an Evoque clone wearing a Chinese manufacturer's badge appears at the next major domestic show.
For TATA, JLR and those companies that comprise the UK auto-sector an undoubted case of entering a 'Brave New World'; one where an corresponding 'Alpha-Plus' mentality will be unconditionally required.
That starts with Chinese acclimatisation via Confucious, one of its society's roots.
He begins with the ideal of the 'Superior-Man'...whilst Nietzche ended with the 'Super-Man'.
This then philosophical foundation that may well underpin German & Chinese socio-economic strength and their impressive commercial mutuality.
*Post Script
The observation regard the primary differences between Sino and Western attitudes to personal education, and its ultimate effect on national productivity, should be a 'wake-up' call to the West.
Peoples of EM nation's unsurprisingly put great store in learning, an incessant behavior to improve their future personal opportunities; recognising all to well the 'have' and 'have-not' chasm that exists in most EM countries. This then implores them to become 'plugged-into' the needs of the populous typically through local trade etc, but preferably and more formally through educational route toward assisting their nation's economic needs. The critical aspect is that learning is a constant 24/7 imperative throughout all rungs of the social ladder at across the age range. Critically areas of formal learning typically in accounting, engineering, scientific and business management fields is supported by informal learning that contextualises, such as absorbing obtained MBA material from family and friends, this again is contextualised in the real-world by constant observation and discussion relative to current affairs, the financial press and importantly through philosophical economic deconstruction and appraisal of the social and commercial world around them.
This means that EM nation people's tend to be much more inquisitive because they have much more to gain, either through professional advancement inside a corporation if of that ilk, or ideally from their own entrepreneurial efforts that offer potentially far greater personal satisfaction and financial reward.
This then contrasts with the near attitude to learning most western students and indeed professionals hold, learning seen as overtly formally scheduled and related to specific ages. This outcome results from the western belief in a 'work/life' or 'study/life' “balance”, whereas many in the EM populous do not make such a distinction, spare-time devoted to additional study. Furthermore, historically western academia confines to a 'subject narrowness' that provides expertise in a singular discipline – as part of an eased division of labour concept – only the fortunate few who have the resources or personally make the sacrifice to broaden learning later in life.
As a 21 year old Indian, Brazilian or Chinese person well knows they may be studying corporate and business accounting at college, but their social dynamic of friends and family also allow them to absorb a far broader field of learning. Where learning is not a mutually exclusive 9-5 activity, but always part of a desire to see the big-picture and where the personal appetite for a myriad of multi-cultural foreign forms is ravenous.
To summise: in the advanced world education tends to be a formalised 'serial process' of restricted breadth but depth, whilst in EM regions there is a tendency for the formal (western) process to be supplemented by an informal 'layered process' with far greater contextual overlap.
China's previous export mentality of 'cheap and cheerful' low-order manufactured goods has been the heart of the country's growth dynamic over the last decade or so. Yet as is known, the lower cost-base foreign competition of surrounding Asian, ex-CIS & African EM+ countries forces those on China's eastern seaboard to climb the value-ladder, so as to offer better products, generate greater service-led industries, develop a broader more professional B2B framework and ultimately create an advanced internal economy.
That export-led growth has in turn delivered the 'consumption paradise' promised, the import of luxury and aspirational products eagerly snapped-up by the emergent entrepreneurial hoard which now constitutes the 'new millionaires club' aswell as their middle-class employees.
Complimenting the B2C sphere, the B2B arena has generated demand for additional commercial expertise, the rabid competitiveness between Chinese companies seeking Western and Japanese insight into gaining the competitive edge. Thus foreign professional services spanning from accountancy to strategic planning to advertising have been both bought-in and in certain cases absorbed; a typical model being that of Ricardo's creation of an special engineering outfit dedicated to the localised design development of Rover into Roewe, that UK-centric team providing a knowledge-base template for SAIC, its own engineers affiliated to the project-team and latterly the project-based company formally absorbed into SAIC and able to integrate the then MG acquisition from Nanjing Motor.
Since 1976, the end of China's decade-long 'Cultural Revolution' the country has been on a slow but steady course accepting capitalism - though it quite plainly does not view this ideology as mutually connected to the western idea / interpretation of democracy. That slow but steady attitude to fundamental economic and societal change is perhaps the most prevalent reflector of the PRC's desire to maximise its own benefit from the process by controlling the rate of change.
[NB A watershed was reached in 2010 when China overtook the USA in terms of number and value of IPO's launched. The China A share (only) numbering 345 deal value at $71,621m whilst USA had 170 deals valued at $44,487m. Note also that Hong Kong beat the US in value terms, though not number of deals].
In doing so the PRC leadership well recognise that it cannot 'miss a trick' that would either undermine its self-determination and gain. Thus China has known from well before 1976 that it must learn every dimension of modern capitalism's commercial model, from every angle and at every level, whilst also able to mimic for itself the cultural model into which the commercial model is entwined, indeed having taken the lead role of cultural creation for well over a century.
Much has undoubtedly been learnt since 1976, beyond obvious diplomatic fact-finding missions across the world, much was digested when China created its first automotive JVs with the western firms of Jeep, Volkswagen and Citroen. Thus 'global-world' lessons trickled-down from central government to state-run industries, later into the banking & finance arena and then into post-graduate homeland education.
However, it wasn't until the relaxation of student foreign study rules and later tourism freedoms that the ability to truly meaningfully absorb the world at large become a truly powerful route to Chinese learning.
Arguably, one much more advantageous than Japan's experience during its own export drive years since the outward-bound Chinese youth are far less insular than were their Japanese cousins, exposing themselves far more to external influences. In turn they have been veritable cultural and business method 'absorption sponges' of almost everything that comprises the West commercially and culturally - but critically inquisitive to know how those two spheres meet to form what is a hyper-consumeristic, hyper-differentiated and so hyper-sensitive socio-economic sphere.
To this end modern technology has aided enormously, the camera-phone and smart-phone acting as the primary enabling and storage devices to snap photos and video of the world at large. Those devices are now as much in-the-field research tools for Chinese visitors as they are pure communication tools for the average Briton.
All over central London and other major UK cities the many 20-something Chinese who have come to study 'snap-away' at popular cultural artifacts, less so in museums and galleries, more so on the street and particularly in book stores, where the much of the contemporary western world is laid-out pictorially for easy visual & graphic capture. The likes of David Bailey and Lord Litchfield do indeed have 21st century proteges, but instead of creating a photo-montage culture that essentially created the swinging 1960s, today that culture is being viewed and deconstructed for homeland learning and use.
Moreover, whilst not at college many of the Chinese students appear to have day-time, evening and weekend jobs, some working almost daily, and typically in culture-orientated retail outlets such as Starbucks and the like, where not only can they earn, but critically able to informally learn about the methods for running such an enterprise.
[NB whilst no doubt many are wholly legal in mixing their 'learning with earning' ambitions, maintaining visa standards this is an arena which the UK government should inspect to ensure that the conditions of entry are being wholly respected by both student employee and employing corporation, and also investigate any UK citizen employees that act as 'go-betweens'in arranging the said employment, knowingly flouting UK law].
Of course such cultural and commercial absorption has been intrinsic to the growth of global free-trade over the centuries, and so is well recognised. The primary difference is that in today's technologically enabled world, what was once general, informal knowledge accumulation over years has become a knowledge transfer process which although notionally informal on the surface could be argued as far more formalised - albeit subtly so - than ever before.
Hence a very powerful 'Sino-absorption' of outside western and global cultures is being played-out, its three primary forces those of:
1. a highly motivated attitude toward 'extra-curriculae' cultural learning by Chinese-foreign students
2. the ability to collect and transfer the 'DNA' of western popular and commercial culture.
3. an ability to collate and relay that information through formal and informal educational realms in China.
[NB This is the very driven, directed, personal and national attitude to broad-spectrum education that reach well beyond the concept of education in the West. This pro-activity toward understanding 'the real world' stands in stark juxtaposition to the emerging negative attitude toward the UK government's announced university reform. The objectors to this reform posit that higher education's role is as much about personal learning in the philosophical and humanitarian sense, as opposes to the economic imperative that moulds a student for role in working life. This is understandable, but better 'directed learning' inside British academia which couples to the national need is undoubtedly pertinent so as to assist the UK's future.
Greece's present economic woes could indeed be laid at the feet of such idealistic yet also 'head in the sand' thinking. TV news reports show Grecian workers able to explain their plight with rhetorical and poetic prowess, yet that does not create the structural foundations the country's economy requires].
[See postscript for further observation].
The last post mentioned the BBC television programme 'Made in Britain', presented by Evan Davis, highlighting the UK vs China (ie notionally 'developed' vs 'emerging' economies). In the second episode he visited China's “Thames-Town”, a Walt Disney-esque recreation of a notional British town incorporating various styles of period architecture. It sits 30 kilometres outside of Shanghai, as one of 9 satellite New Towns designed to partially resist Shanghai's urban sprawl.
The towns are 'themed': 1 as traditional Chines, 1 as an Eco-town but it is the remaining seven that are of real interest since they are 'themed' (simularcra) of foreign countries: Britain, the USA, Germany, Holland, Sweden, Italian & Spanish. The towns are reportedly near empty, mirroring stage-sets and as such used for wedding-photo backdrops and events. But investment-auto-motives believes that the PRC's leadership's ideology was not to simply create a bigger and better versions of DisneyWorld's EPCOT Centre or a Las Vegas style ''mini-national' entertainment complex, the possibilities go far deeper. Nor do they simply reflect a re-working of Ebenezer Howard's late 19th century new Garden City ideals with internationalist twist.
The belief of investment-auto-motives is that they were planned and created to familiarise the Shanghai populace with the various differing inner-cultures of the West, and as such operate as subtle 'conditioning spaces' or national development 'landing-stages' for Chinese visitors and residents. The towns then are 'half-way' houses to assist the Chinese populace in the foreign cultural absorption necessary to effective business dealing with Americans and Europeans. Equally, no doubt in time these towns will become the preferred new 'homesteads' into which foreign corporations can install their employees.
These towns then become blurred boundaries between China and the Western world, areas in which international business relationships may flourish. The large Volkswagen factory sign that looks over Antig (the German town) infers much.
Furthermore each town has seemingly been planned to reflect a sectorial mini-economy. Just as the German-esque 'Antig' has been devised as an 'Auto-Town' with initial plans for a BMW factory and an F1 track, so the other towns have parallel micro-economy themes, the Spanish version centred around organic agricultural produce. Why import Spanish produce when it can be locally grown and sold to the Chinese consumer as the exact replicant? Moreover, Like Las Vegas and its Little-Venice, it means that these towns can also act as replica tourist destinations; just as an American feels he/she need not actually go to Venice because they've virtually experienced Venice under a roof set in a desert town in the middle of Nevada. The sumulacra becomes the real for the masses; thus the Chinese have indeed absorbed the post-modern thinking of Jean Baudrillard et el.
'Thames Town' was largely built but not connected via rail or substantial road links, though necessarily situated on a major river; very probably so that it can be brought on-stream with a later phase of infrastructure build relative to the progress of the broader national economy and state 5-year plan agenda.
Importantly, investment-auto-motives believes that this international township exercise is part of the Chinese ambition to eventually integrate into the managing and leadership of what are today's Western multi-nationals, but potentially tomorrow's Sino multi-nationals
These illustrations provide the prime examples of the innate psychological and sociological differences that exist between China and the West. What can effectively be phrased as the 'ambition factor'.
That massive 'onward marching' ambition will only serve to reduce; level and tilt the competitive playing-field in China's (and other EM nation's) favour. The historical industrial and economic advantages enjoyed by the west which provided such social and personal comforts and a far more liberal outlook, now shows itself as an innate disadvantage relative to the still very 'hungry' Chinese. The Grecian example today of an unrealistic social attitude toward the power of global competition, could very well if not checked, be the broader Western failure tomorrow, especially so with the danger of 'recession fatigue'.
Western observers may argue that the cost-base of EM regions, especially China has risen markedly over the last decade, diminishing its historic cost advantage and hence the need to climb the value chain - very true. But the primary threat to the West comes from the EM sovereign-states' ability to deploy surplus foreign currency reserves toward deep and rapid expansion of its education sector with very close ties to both old and new industrial and service sectors.
Evan Davis also highlighting the ambition of China's Li-Ning sportswear brand. The company with global ambition has obviously performed a 'copy+' brand strategy that mimicked the logos and retail environments of well-known western counterparts.
Having done that for its domestic market, so seen as the 'Sino-Nike' or similar. The programme was unable to mention the fact that it has created JVs with lesser known French and Italian sports brands, Li-Ning's production facilities used for less-costly manufacture; this then a typical JV arrangement. But what Li-Ning has the potential to do is create premium slots in the Chinese market for its JV partner brands, which having reached a mass-momentum and massive Chinese earnings, could then be used to 'capture' the western markets so dominated by the likes of Nike, Adidas, Puma, Reebok et al.
As one Chinese marketing student here in the UK stated: "all it takes is enough marketing money". Having viewed the western commercial model of media bombardment, that conclusion may be blunt but has a certain truth. The case-study of RedBull / ToroRosso a prime example. It's sponsorship of youth and sporting events providing major brand profile uplift and maintenance, even if advertising directors bemoan the fact that their sophisticated commercial artform developed over decades has been undermined.
However, even though such a simplistic approach may work for a company that pioneered the hi-energy drink to grow and defend its global market share, this approach cannot ensure success in most other fields that have greater maturity, competition and brand nuance.
And the PRC leadership is not so naive as to try and re-play 20th century 'American Cultural Imperialism' for itself, the world is a very different place today. It knows it has the budget muscle to massively integrate, but understanding psychological and cultural nuance allows that monetary force to be directed with greater aplomb, aiding ROCE, ROI and ROE.
China in the 21st century will leverage its fiscal muscle by continuing to domestically import foreign goods whilst simultaneously acquiring the West's weaker, or less well placed and defended national brands, thereby absorbing these foreign 'cultural hearts' and adapt as necessary for domestic fit (eg Roewe, MG, Volvo).
The real question is its ability to commercially and culturally 'retune' these enterprises and their inevitably Chinese made products so as to provide a compelling 'return' value proposition to its foreign export markets.
These examples pertinently relate to cars and thus other consumer goods. But as seen by the desire to absorb and export service sector know-how (eg infrastructure services (eg energy, large IT systems, hi-speed railways etc) the 'paint-by-numbers' type of picture-building is being formed, and the willingness to conquer the English language aswell as advances in language recognition technology means that the Western-Sino cultural divide will be smashed and so carving the way for higher-value professional services offerings in the nominal corporate outsourcing sphere, far beyond the typical call-centre work India amassed.
Whether believable or not at present, the fact is that we are still in the tentative early stages of this Sino ambition, and it may indeed still be decades away. China's future ambition is not of course wholly reliant on western markets as was the case in the past, it's domestic market holds decades of self-propelled growth alone, and a re-run of its western sea-board development within the interior - effectively using Chinese capabilities nigh-on alone - will undoubtedly power the economy.
Yet we plainly see by Premiere Wen Jiaboa's visit to the UK, Germany & Hungary that the Sino ambition is to maintain access to world-class technology, financial centres, commercial learning and to Europe's own CEE 'production platform', China seeing itself as a growing contributor and operator 'behind the scenes' of respected brands headed by the likes of Volkswagen & Siemens, but also playing a similar role for lesser publicly known companies that have leading sector competence and reputations.
[As has been highlighted by the FT, the disparity between the Sino-German trade agreement valued at $15bn and the Sino-British agreement valued at $2.2bn].
To conclude:
investment-auto-motives has laid out the basic aspects of the socio-economic challenge facing Western nations, one in which the innate difference between the cultural mindsets will become evident, the already entrenched 'ambition disparity' now growing due to 'recession fatigue'. Also presented in a very simple explanation is what investment-auto-motives sees as the future commercial 'Sino-strategum' and challenge generated by the global but subtle 'Sino-infusion' which will emerge in the years to come.
This then sets an unavoidable task of 'attitudinal-renewal' for western producers, service providers, governments and indeed private citizens. One that meets the much changed 'New Norm' head-on, and endeavours to maintain the West's advantage in targeted spheres across broad-ranging sectors, thus able to effectively compete in an ever expanding globalised free-trade world.
Here in London last Sunday, Premier Wen Jiaboa and entourage stepped-out of the Mandarin Oriental hotel in Knightsbridge; directly outside stood a an early production model of the as yet unreleased new red coloured Range Rover Evoque.
The intent was to cordially highlight JLR's Chinese production plans and to grow further entente-cordial, yet the Mandarin Oriental's massive facade dwarfed the small premium cross-over, a visual metaphor no doubt very much intended by the PRC.
Whilst the City of London will well be able to meet the challenges of New York and Frankfurt, the UK's regions - and indeed other Western nations - must now try and 'fast-follow' Germany's impressive lead in technological development and Sino commercial exploitation.
In this degree, Land-Rover will provide a strong additional beach-head for JLR and the UK auto-sector, its span from the 'basic bolted' Defender to the 'terrain intelligent' upscale models thus offering the PRC both an alternative to the previously refuted Hummer acquisition deal and access to IPR that will assist its own domestic-brand technical prowess in years to come.
Given the amount of camera phones held by the Premier's supporters, it may come as no surprise if an Evoque clone wearing a Chinese manufacturer's badge appears at the next major domestic show.
For TATA, JLR and those companies that comprise the UK auto-sector an undoubted case of entering a 'Brave New World'; one where an corresponding 'Alpha-Plus' mentality will be unconditionally required.
That starts with Chinese acclimatisation via Confucious, one of its society's roots.
He begins with the ideal of the 'Superior-Man'...whilst Nietzche ended with the 'Super-Man'.
This then philosophical foundation that may well underpin German & Chinese socio-economic strength and their impressive commercial mutuality.
*Post Script
The observation regard the primary differences between Sino and Western attitudes to personal education, and its ultimate effect on national productivity, should be a 'wake-up' call to the West.
Peoples of EM nation's unsurprisingly put great store in learning, an incessant behavior to improve their future personal opportunities; recognising all to well the 'have' and 'have-not' chasm that exists in most EM countries. This then implores them to become 'plugged-into' the needs of the populous typically through local trade etc, but preferably and more formally through educational route toward assisting their nation's economic needs. The critical aspect is that learning is a constant 24/7 imperative throughout all rungs of the social ladder at across the age range. Critically areas of formal learning typically in accounting, engineering, scientific and business management fields is supported by informal learning that contextualises, such as absorbing obtained MBA material from family and friends, this again is contextualised in the real-world by constant observation and discussion relative to current affairs, the financial press and importantly through philosophical economic deconstruction and appraisal of the social and commercial world around them.
This means that EM nation people's tend to be much more inquisitive because they have much more to gain, either through professional advancement inside a corporation if of that ilk, or ideally from their own entrepreneurial efforts that offer potentially far greater personal satisfaction and financial reward.
This then contrasts with the near attitude to learning most western students and indeed professionals hold, learning seen as overtly formally scheduled and related to specific ages. This outcome results from the western belief in a 'work/life' or 'study/life' “balance”, whereas many in the EM populous do not make such a distinction, spare-time devoted to additional study. Furthermore, historically western academia confines to a 'subject narrowness' that provides expertise in a singular discipline – as part of an eased division of labour concept – only the fortunate few who have the resources or personally make the sacrifice to broaden learning later in life.
As a 21 year old Indian, Brazilian or Chinese person well knows they may be studying corporate and business accounting at college, but their social dynamic of friends and family also allow them to absorb a far broader field of learning. Where learning is not a mutually exclusive 9-5 activity, but always part of a desire to see the big-picture and where the personal appetite for a myriad of multi-cultural foreign forms is ravenous.
To summise: in the advanced world education tends to be a formalised 'serial process' of restricted breadth but depth, whilst in EM regions there is a tendency for the formal (western) process to be supplemented by an informal 'layered process' with far greater contextual overlap.
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