Whenever I give presentations to European or American audiences, I tell them that the Western world does not realize what is happening in China. Everything is growing so fast here, that very soon China will start overtaking them. And in some ways that has already happened. This morning I was quite surprised when I read in the Shanghai Daily that in 2006 more capital was raised in China and Hong Kong IPO’s than the total of all IPO’s on the NYSE, NASDAQ and American Stock Exchange. The figure for the Chinese exchanges was USD 62 billion versus USD 48 billion in the USA.

A big part of this was of course due to the mega-IPO’s of ICBC and the Bank of China, but it is not a one-year outlier. For this year PriceWaterhouseCoopers expects a total of about 58 billion in Greater China IPO’s, against 50 billion in the US. The time is over when a Chinese company would first think about a NASDAQ listing before considering a domestic public offering. This is partly due to the increasing regulations that you have to fulfill in the US (they are slowly digging their own grave), but also because much more investment capital is available in China.

Europe and the USA beware, China has become a force to reckon with and this will hit you sooner than you think. Don’t believe all the stories in the media about China still being backwards, China is where things are happening now.

I had some problems automatically uploading my pictures to Flickr, after I was forced to switch from my early-adopter ‘real’ Flickr account to a Yahoo login name. But today I managed to solve it (just download the tool again… Should have done that weeks ago already instead of trying all different kinds of tricks), and I uploaded a few of the pictures from the past 4 weeks.

Among others skiing in Beijing, the ice lantern festival in a gorge in Yanqing (north of Beijing), the new Olympic Stadium in Beijing (not finished yet of course), and a few pictures that I took on Saturday in Qiandaohu (1000 islands lake), one of the most beautiful places in China, and reachable in less than 3.5 hours by car from Shanghai.

If you have not been to the Thousand Islands Lake, I hope the picture above showing the natural beauty of the area, and below, of one of the 10 best hotels in China (the New Century Resort), right on the lake, will convince you to take a look.
Note: All my pictures can be found here

Many Chinese companies that I meet make good products or deliver good services. But a lot of these companies don’t understand the concept of marketing them, or dealing professionally with potential customers. This sadly not only applies to small start-ups, but sometimes even to 5-star resorts. A typical example is the upscale Fuchun Resort in Hangzhou.

On Sunday I was in Hangzhou and decided to make a detour to Fuyang to take a look at the Fuchun Resort there. I had seen the resort in several glossy magazines, and also received a brochure the last time I was having dinner at T8 in Xintiandi. The pictures looked fantastic, and it seemed like a great place to spend a weekend. Prices were on the high side, with the cheapest rooms on weekends coming in at over RMB 2200 per night (with a minimum 2 night stay), but if the quality is right I am willing to pay that – even in rural China where people live a whole year on that amount.

We drove over in our car, and asked for directions from the phone directory service 114. That went fine until we were in Fuyang, where the directions they had given us led us to a dilapidated hotel with the same name next to the Party School. Not exactly what we were looking for. So we called the resort, and the girl on the phone asked if we had made a reservation. A reservation? No, we just want to take a look to see if the location is suitable for a conference. The reply: if you don’t have reservations I won’t give you our address! I asked for the manager, and was put on hold. After waiting for over 5 minutes I realized nobody would come on the phone and hang up. We called again, and got someone else on the line. This lady claimed to be the manager. She said she did not want to tell us the address either. If we wanted to take a look we should call on Monday. We told her we are potential customers and had driven over all the way from Shanghai. She literally said: “Bad luck for you. Go back to Shanghai and call back on Monday for an appointment”. My wife asked her name and if she would be willing to take responsibility for her actions. She told us her name was Huang Juli, and she had no problem taking responsibility for this. “Just go back to Shanghai, I won’t tell you where the resort is located”.

I still thought it was just the staff that was not well-trained. So I decided to find out the address of the hotel in another way. My wife stopped a few taxis and finally found one that knew the place. It was just a five-minute drive to the entrance. But there we were stopped again of course. This time it took us about 15 minutes to convince the guard to get the (real?) manager on the phone.

Her tone was extremely bitchy, how did I dare to drive up to the gate of the hotel? I explained her my idea to organize a 40-person VC conference here in September, but she did not really care. I should call on Monday to make an appointment if I wanted to take a look. I kept calm and explained that we drove all the way over, and that we were standing at the entrance road of the hotel. She told me the hotel was fully booked and that the guests ‘were just teeing off’ so we could not enter. I repeated that I was a potential customer and would only need a few minutes to get an impression. No, this was not possible. But I don’t give up easily and kept on asking her if she really wanted to send potential customers back on the 3 hour drive to Shanghai. Finally she told me she would make a one-time exception and we would be shown around for a few minutes.

We were indeed shown around, but not by the manager of course, but by a receptionist who hardly spoke any English. On our tour of the hotel we only saw two guests on the terrace of the restaurant, the rest of the place was deserted. Even the pool and hot whirlpools had no guests. I seriously doubt that the 70-room hotel was indeed full. I asked the receptionist how many members the club had, and she told me about 100. Not an awful lot of people for such a golf club resort. The place looks nice, but the location (very close to Fuyang city, and not directly on the river as they imply in their advertising) could be better.

Note: generally I tend to write quite positive about places that I visit or restaurants where I eat. If the experience is not good, I often just don’t write about it. I know the impact that a negative blog post potentially can have, especially when it’s indexed in Google and could end up high in the search results. But what happened here is something that I do not want to keep silent about. I am still flabbergasted about the way this resort is sending away potential big customers. The Fuchun resort is not a private club that does not allow any outsiders in, but a hotel with a golf course that can even be booked through discount websites such as Ctrip.

They have of course lost me as a potential client because of how they treated us. And I advise all my readers to think twice before going there – and if you go, don’t forget to make a reservation first 🙂 If you want a nice weekend with good service there are a lot of better options around Shanghai.

The media coverage of Tudou is increasing in Europe. Not many people know the website there yet (and because we only have a Chinese version, most will likely never here about us), but the traditional media are starting to publish more about the site.

There was an article about Tudou in the Dutch magazine FEM Business about 3 weeks ago, and this week an interview with Gary and me was published in the Dutch Elsevier Magazine. Today a TV crew making programs for German stations ZDF and Deutsche Welle did interviews at the Tudou office, and this afternoon I was interviewed for Radio Eins Berlin-Brandenburg (my first live interview in German). In the next George magazine (the Dutch version) there will also be an article about Tudou.

Interesting is that my wife is also starting to appear more in the media now. For next month’s edition of CFO China she was interviewed for example, and this month she appeared in the fashion magazine Jessica.

Last night I got back from a week-long trip to among others Chengdu and Hangzhou. A nice trip with lots of interesting meetings, and also a bit of free time to do some sightseeing. Yesterday I suddenly did not feel too well. I was cold, my muscles were hurting and I felt very tired. The typical signs of a starting flu. But work goes on, so after a 10-hour deep sleep I managed to go to work with the help of some painkillers. I felt pretty well the whole day actually, probably because I was too busy to realize that I was not feeling well. But when I left the office around 9 PM I felt dizzy, so I’d better get a good sleep again tonight. No time for being sick this week 🙁

Not many posts over the last days, because I am in Chengdu at the moment with some business associates. I had not been to Chengdu in about 4 years, when I produced a short film about the city. At that time I already loved the city, and coming back here after all these years was not a disappointment. The city not only looks great (lots of green and a bit warmer than Shanghai), but it also feels great. It is booming, even more than Shanghai I feel.

We looked at several companies over the past days, and also talked to a few government agencies. From these talks I have the feeling that Chengdu could be the next big thing in China for investors. Not as expensive yet as eastern China (salaries for engineers are at least 40% lower than on the east coast), and with an excellent educated workforce.

Yesterday I learned that there are currently 430,000 people studying in Chengdu’s universities. 430,000 students… If you think about that figure it almost seems unreal. Many of them do not want to leave the city after graduation, because of the good environment. This means that finding good people here is a whole lot easier than in Shanghai – and a lot cheaper as well.

It is very well possible that I will spend some more time in Chengdu in the near future. I sense there are some big opportunities, and I don’t want to miss out on them.

On Friday Starbucks had its first Chinese Coffee Break, a two-hour event in which you could get a free tall cup of coffee. I had a lunch appointment at 12 and decided to drop by Starbucks a few minutes before noon to check how busy it was. I actually did not expect to see many people, but while walking to the Grand Gateway shopping center I knew I would be wrong: I met at least 20 people with a paper cup from Starbucks (normall I never see anybody with a Starbucks cup on my walk from the office to Grand Gateway). Upon arrival at the coffee shop there was a line of at more than 50 people waiting for their free cuppa! This was a few minutes before 12, just before the official Coffee Break would be over. I did not wait to see what would happen at 12, likely they would still serve all the people (it’s a US chain, not a Chinese one), and I certainly did not stand in line to wait for a free coffee. I did get a coffee there about an hour later, when I was just about the only customer.

It made me think, why would somebody wait in line for at least 20 minutes to get a cup of coffee for free? Of course I know the answer, most were people who had never been to Starbucks before and wanted to try the expensive coffee. Or office workers who could afford it occasionally, and now jumped to get it for free. For most Chinese time is still less valuable than money. It’s the same as on the internet: Americans have money but no time, Chinese have time but no money. Therefore I think that online ads (especially video ads and in-game advertising) are going to be huge in China: people are willing to watch them in order to see a video or watch a game for free. Don’t try to charge them for it, because nobody will pay you.

The Shanghai Daily also wrote an article about the Coffee Break, and they reported that a total of 34,000 free cups of coffee had been handed out. In Beijing the total figure was only half of this, sort of proving that Shanghainese are more thrifty than Beijingnese. All over Greater China (incl. HK and Taiwan) Starbucks handed out 186,000 free coffees. The newspaper also interviewed some of the customers waiting in line. One of them, a female headhunter working in Plaza 66, was calling her colleagues to tell them about the free coffee. For another one, a 50-year old female retired worker (they still retire early here), this was her first Starbucks coffee in her life, as the coffee would be too expensive for her to buy.

This marketing action was certainly worth its money. The total cost for 186,000 coffees is likely less than USD 100,000. For that price you have over 150,000 people coming to your store, wait there for quite some time (so they can get used to the Starbucks atmosphere) and have a good time talking to their friends (nobody comes alone in China). Likely they talk about it with their friends at home and in the office, and because it was for free probably in a positive way. Combine that with lots of free press attention and a good coverage in the blogosphere, and I think the USD 100K was well worth it. A smart move, congratulations to the Starbucks marketeer who came up with the idea.

ChinaTechWatch has a great column today, about a Chinese mining company Admax resources, that just changed its name to China YouTV (CYTV.OB). The firm is currently involved in mining, but wants to expand into online video, a completely unrelated line of business.

This is so typical of Chinese companies, if one thing does not work they just try someting completely different. They probably heard that YouTube is a big success in the US. Well, they likely reasoned, then we should do that here too of course. Not hindered by any knowledge about internet, video or the competition they start pooring money into a venture that will surely fail. It’s a pity for their investors, and it explains why I only invest in Chinese companies where I know the management personally.

An interesting passage from the press release explaining their strategy: