If bugs become a common source of protein, will China be a muse for the global industry?


Available as a podcast – scroll to the bottom to listen


The Economist recently published an article entitled “Feeding 9bn people will mean reimagining the edible world”. The article discusses the likelihood of alternative protein sources becoming more commonplace in the future – particularly protein sourced from bugs. Until very recently, the western world generally did not consider bugs as a common and marketable source of protein. However, while perhaps still not common as a source of protein, bugs are certainly becoming more marketable as a source of protein. Producers of food which use various bugs as the key ingredient have begun to emerge in western countries.

This is a very interesting trend given the fact that, unlike eastern countries such as China, western countries have not typically had bugs on their menus. However, in China, there are several bug-based-dishes which are quite commonplace on restaurant menus. When I was living in Beijing, I often saw cicada-based-dishes on the menu of local restaurants. There were dishes with roasted and fried cicada and also cicada pupae. Other parts of China also have dishes which use worms, scorpions and even spiders.

If the use of bugs as a source of protein becomes more commonplace in the future, then might we see market-players emerge in China which consolidate the experience of bug-edibles to create marketable alternative-protein-source products in China and then export these products from China to other markets? Might we see market players from outside of China taking concepts from various ways bugs are consumed in China and then creating their own products based on these?

Firstly, simply due to the rich history of consuming bugs in China, it is very possible that if consuming bugs becomes a dominant global trend that China will produce its own market players with the capacity to export to global markets. While imports of new-concept food products generally play a significant role in supply for the Chinese market, well-funded local market players tend to emerge once there is obvious potential for the product. For example, plant-based-meats is a relatively new-concept product in terms of being a dominant global trend. Despite this and despite the presence of a strong market player from abroad – Beyond Meat – in the alternative-protein market in China, Zhenmeat is very active in the Chinese market. In June 2020, Zhenmeat released plant-based “Crayfish” and “Pork” products – further to its 2019 market developments where it released various plant-based alternatives for traditional festive snacks for Mid-Autumn-Festival. The presence of the foreign brand Beyond Meat in China, whom in 2020 managed to win product rangings in Alibaba’s Freshippo supermarket chain and Yum China’s KFC, Taco Bell and Pizza Hut restaurants, will inevitably result in intensification and development of the alternative-proteins market in China which, furthermore, will result in more numerous and more export-able local market-players. Moreover, some of these local players will likely develop alternative-protein products which use bugs as the source of protein. Hence, it is likely China will eventually produce players capable of competing globally should this product category become commonplace globally.

Secondly, regarding whether or not we may see market players from outside of China taking concepts from various ways bugs are consumed in China and then creating their own products based on these, this may be happening already. Albeit, it is difficult to tell whether these concepts organically developed or were inspired by concepts of bug-consumption in China or elsewhere.

In New Zealand, there is a company called Eat Crawlers which, since 2013, has produced alternative protein products which use insects as the protein source. Moreover, its products are already sold throughout New Zealand at premium Cafes and retailers and also exported to the UK and Australia. Eat Crawler’s products include:

– Flour and pasta made from Crickets (a close relation of the Cicadas which are consumed in China).
– Salted, dried and chocolate-coated crickets, spiders and scorpions (all of which are consumed in various ways in China, including BBQ on skewers, roasted and fried).

In May 2020, following an application by Agronutris, a French company which produces insect-based food products, The European Commission approved the marketing and consumption of dried yellow mealworms for the EU. This was the first time an insect has been approved for human consumption in the EU.

Whether or not the above examples where inspired by concepts from China is hard to tell. However, it is said that almost 200 different creepy-crawly creatures are in fact approved b the Chinese authorities for human consumption. Thus, it seems inevitable that the various ways which bugs are consumed in China will become a source of inspiration, study and reference for the future development of the alternative-proteins industry globally. If China does become a source of knowledge and study for the development of this industry, it will embody somewhat of a role-reversal in terms of China’s role in the global food industry. In recent decades, China has in fact drawn on the experience from other countries in order to develop its local production capabilities for various food products introduced from the west such as beer, wine, milk, cheese and chocolate. However, given China’s existing market experience and supply resources for edible bugs, it may very well be that other countries will begin to draw on experience and resources from China to develop their local production capabilities for edible-bug type products and alternative-protein products based on various types of bugs. Let’s watch this space for the next 3 to 5 years and see what happens.

If bugs become a common source of protein, will China be a muse for the industry globally? China From Afar

If bug-sourced protein becomes more common, might we see market-players emerge in China which consolidate the experience of bug-edibles to create marketable alternative-protein-source products in China and then export these products from China to other markets? Might we see market players from outside of China taking concepts from various ways bugs are consumed in China and then creating their own products based on these? Also available as a blog post: https://chinafromafar.com/2021/10/07/if-bugs-become-a-common-source-of-protein-will-china-be-a-muse-for-the-industry-globally/
  1. If bugs become a common source of protein, will China be a muse for the industry globally?
  2. Penalty For Heist Of NZ Gold…..en Kiwifruit – A Cup Of Water On A Blazing Inferno?
  3. The Chinese government has banned tuition?

China’s Ever Intensifying Market Segmentation And The Product Differentiation It Requires

Recently, I read the China Internet Report 2021 which was released by the South China Morning Post. The report mentioned emerging and underserved internet user market segments and examples of product differentiations that have occurred in the market in order for these market segments to be tapped into. The report reminded me of how in China some market segments may seem insignificant in terms of proportion but actually, due to the sheer scale of the market in China, these market segments are sufficient as markets in themselves to justify targeted product differentiations. It also reminded me of how the constant granulation of market segments in China is results in product differentiations due to both top-down planning and bottom-up requirements:

(1) Top-down: Brands’ ensuring their products are appropriately differentiated in order to meet the needs of different market segments

and

(2) Bottom-up: Sales channels ensuring their channel stays relevant to target market segments both in terms of the product it sells and the way the product is delivered.

Background: Market Evolution

All of us understand to some degree the massive scale of the market in China. Over the last decade or so, many exporters and brands have relied on the China market to sustain growth. To take my home-country New Zealand as but one example, in 2020:

  • 93% of inshore shellfish exports were to China
  • 82% of log exports were to China
  • 72% of mutton exports were to China
  • 64% of infant formula exports were to China

Hence, it is plain to see that the sheer size of the Chinese market sustains revenue and growth for entire industries.

I remember when I first arrived in China for study in 2008, imported food and beverages enjoyed a particular status simply due to the fact they were imported products. A bottle of wine, a block of chocolate, a can of infant formula or even a bottle of mineral water were, by default, viewed by the vast majority of consumers in China as superior to locally produced products. Consumers gave little consideration to the quality, taste or functionality of the product. Likewise, many foreign brands did not consider localization of their product or even market segmentation beyond simply having labelling and marketing in the medium of the Chinese-language.

Since then, the Chinese market has evolved greatly. Firstly, multiple factors now influence Chinese consumers’ purchase decisions – the importance of country of origin is becoming less and less important. Secondly, market segments in China are becoming more and more granulated and, what perhaps would be minor segments not worth a brand’s marketing and product development resources in other countries, due to the scale of the Chinese population many of these segments which main seem insignificant proportionally are in fact significant in market-size. This is causing a trend of product differentiation amongst brands across numerous industries and product categories in order to ensure there are products with clear selling propositions which cater specifically to the different market segments.

In 2020, KPMG conducted a survey which required participants to, on a scale of 1 to 10, rank the importance of a series of product attributes influencing consumers’ food product purchases. These attributes included things like Price, Convenience, Familiarity, Health/nutrition, Innovative/unique, Taste, Texture, Fashion/trend, Brand, Aesthetics, Country of origin, Carbon Zero and et cetera. On average, Country of Origin ranked only as one of the 5th most important attributes which influence Chinese consumers’ food product purchase decisions. The attributes of Carbon Zero and Innovative/Unique equally ranked as the #1 attributes which influence Chinese consumers’ food product purchase decisions. Interestingly, price was one of the 4th most important attributes for Chinese consumers.

The fact that Chinese consumers prioritize a product being Innovative/Unique is testament to the importance of needing to understand the different market segments. Innovative/Unique is obviously a very subjectively interpreted attribute and thus depends on the market segment the consumer comes from as each market segment has needs specific to that market segment.

(1) Brands’ ensuring their products are appropriately differentiated in order to meet the needs of different market segments

Various trends pertaining to market segments of internet users in China illustrate well how brands are ensuring their products are appropriately differentiated in order to meet the needs of market segments.

In the recent China Internet Report 2021 released by the South China Morning Post, several different underserved internet user market segments were identified with examples of how these market segments are driving trends in product differentiation and the development of selling propositions catered towards these market segments.

The underserved internet user market segments identified in the report are:

  • The “Silver Economy” market segment- defined by elderly internet users
  • The “Sheconomy” market segment – defined by increasingly independent and confident female internet users
  • The “Sinking Markets” market segment – defined by internet users from tier-3 or lower cities and rural areas.

The Silver Economy is an interesting one and in this market segment in particular, there are many examples of differentiations which are done to strategically tap into this market segment. The emergence of this market segment is driven by both China’s aging population and internet penetration. While in 2020 there were around 989 million internet users in China, approximately 11% of these users were 60 or above – compared to only 4% of internet users in 2016. While 11% may sound like a small proportion of internet users – due to the sheer size of China’s population and its population of internet users, 11% equates to around 189 million.

In order to tap into this market segment, many tech companies have offered product differentiations in order to cater for this market segment and some have even released entirely new products solely catering towards the Silver Economy market segment. For example, both the search engine Baidu and the newsfeed App Toutiao have released large text versions to cater for visual impairments common to this market segment and ride hailing app Didi has, for seniors, offered one-click orders with pre-set regularly-used addresses, and simplified billing processes. Tech-giant Tencent has also backed the App Tangdou which dedicated to create an online community for square-dance lovers – a common pass-time of the elderly in China.

(2) Sales channels ensuring their channel stays relevant to target market segments both in terms of the product it sells and the way the product is delivered.

Various emerging market segments and their specific needs are also influencing sales channels both in terms of the products they select and the way they deliver their products. When I worked in Sales and Marketing for a cider company in China, I noticed the diligence and care given by many sales channels to ensure their product was both relevant to attract their target demographic and delivered in a way that was attractive to the target demographic.

One large multi-national restaurant chain which was opening in China had decided they wanted to include alcoholic drinks on their menu in their restaurants and, specifically, a premium cider on the menu. Our cider was premium and we thus pitched our cider as the exclusive cider for their menu. However, the restaurant chain soon realized that offering bottled drinks which could be purchased at a cheaper retail price from supermarkets nearby was in fact detrimental to attracting their target market segment – young white-collar workers looking for uniqueness and innovation in both the taste and dining experience. Hence, the sales channel decided that instead of simply selling bottled drinks, they would instead offer cocktails that included various top-rated beverages as the key component in the cocktail recipe. This bettered the sales proposition to the customer as the uniqueness in both taste and delivery justified the price premium on purchasing the drink from the restaurant rather than from a cheaper retail outlet. As a result, the restaurant chain worked with beverage brands to develop both alcoholic and non- alcoholic cocktail recipes for their restaurant chain and thus created a clear product differentiation and selling proposition to better cater for their market segment.

Another sales channel I pitched our cider product to was a nationwide bar/restaurant chain in China with 30+ venues. It was positioning itself as the hang-out place for university students and recent university graduates new to the workforce. The interior design of the bar and restaurant chain was done in a way that made it feel “underground” and “counter-culture” while yet being refined; the idea was to create a market positioning that made each venue “THE” social environment for those youngsters looking to recuperate from a day within the rigidness of their daily academic or corporate environment. As a result, the sales channel’s criteria for product selection not only considered the potential sales volume and sales margins of products, but also whether or not the product enhanced this market positioning.

When we pitched our product to the above sales channel, the product selection team were happy with our pricing and with our taste. However, they thought that the delivery – specifically the relatively mundane labeling of the product – was not conducive to enhancing their market positioning as it did not appeal to their market demographic. As a result, we drafted a plan for custom labelling designed by their in-house team which would ensure the product appealed to their market segment and thus enhanced the market positioning of the channel. It was a win-win situation; for us as the seller, it meant that we were able to get commitment to a certain volume as there was an MOQ (Minimum Order Quantity) and for them it meant that got a more relevant product.

A Few Thoughts

If you are a brand entering China or already in China and wanting to ensure you are as relevant to your market segment as possible. You are going to need to take into consideration both (1) your top-down planning based on high-level market trends and research, and also (2) feedback from the frontline – the sales channels whom want to ensure their products and they way they sell and deliver the sales experience of these products is as relevant as possible to the target demographic.

If you are interested in reading the China Internet Report 2021, it can be viewed via the below link:

https://multimedia.scmp.com/infographics/china-internet-2021/

My China Experience

I have recieved some questions on various channels regarding my experience in China. So, what has taken me in and out of China since 2008? The short story is that courtesy of the Chinese government I had the opportunity to study free-of-charge and expenses-paid from 2008 to 2011 then, straight after graduation, I was extremely lucky with encountering a whole bunch of job opportunities that enabled me to work in a career related to China from 2011 through to today.

Endless Scholarships

I arrived in China in 2008 – originally with the intention of staying for 1 year only. Upon completion of my Bachelor Degree with a major in Chinese language at Victoria University of Wellington in 2007, I had recieved a scholarship for one year of advanced Chinese language study at Renmin University in Beijing. The scholarship covered my accomodation, study fees and even gave me a monthly cash-stipend to cover food and other expenses all courtesy of Hanban – the Chinese government authority responsible for administering the scholarship. After completing my 2 semesters of study, I successfully applied for an extension of the scholarship – one more semester of study. While in my 3rd semester, I heard about another scholarship which was available for international students to study at Masters level. I successfully applied and thus ended up embarking on Masters of Law with a major in Sociology at Renmin University which lasted 2009 to 2011. The curriculum was fully in Chinese and I was the only foreign student in my class which really gave me the environment I needed to get an edge on my Chinese proficiency.

Luck With Getting A Good Job In China

During my last year of study in 2011, I decided I would try to find work in China for after graduation. I was interested in gaining further China experience and I had heard that there were a lot of job prospects for foreigners in China. I attended many different job interviews but could not find anything suitable. Then, to my luck, one day one of my lecturers from Renmin University called me; previously unbeknown to me, her husband was an executive at HNA Group – a massive airline conglomerate in China. One of the airlines in the conglomerate, Hainan Airlines, were looking to employ native-English speakers at their Beijing office to help them with their business development and overseas marketing. My lecturer asked me if I would be interested in sending my CV through and attending an interview -which I agreed to. I eventually landed a job at Hainan Airlines and over the course of one year jumped from being in department responsible for development of international passenger routes to the department responsible for overseas marketing. At the end of the year, I transferred to the Strategic Planning Department whose offices were in Haikou, Hainan Island.

Working In China’s Haiwaii On International Projects

I arrived in Haikou, Hainan Island in October 2012 where I began my position as Strategy Supervisor at the headquarters of HNA Group – a Fortune 500 company which employes 400K+ employees globally. Despite my lack of experience, just being bilingual and having a willingness to put in the hours to learn and meet deliverables in what was a fully-Chinese office environment, fostered the trust of my superiors to give me much higher responsibilities than I had envisioned for the position. Within 2 months of arriving in Hainan, I was project manager responsible for consolidating the research and strategic plan which our department was doing for a new-market-entry project which entailed the setup of 6 new airlines in Africa. I often worked from 0830am to 0930pm – often on the weekends aswell – in order to both cope with the workload and also study up on the theory and industry developments which I needed to know to ensure that our research and strategic plan were accurate and relevant. Despite the long hours, I enjoyed having a real commercial project to be involved in and entrusted with as it gave me a massive opportunity to learn. Then, this type of opportunity would have been difficult for me to get elsewhere as there would have been more experienced people who could have done it. Since I was in the right place at the right time, I was given the opportunity to work on the project – along with other similar projects – and benefited immensely.

As with my Master’s degree, I was also a minority in at HNA Group in terms of being non-Chinese member of staff. It was again an experience that helped me further my understanding of Chinese language, Chinese culture and business etiquette in China. The HR Department even did an article about me in their internal magazine. Click here if you are interested in reading it.

After spending 1 year in Hainan, I decided that I had learnt enough from that position and that it was thus not worth investing further amounts of overtime to better myself. Hence, I took up an offer from CRM Factory – a consulting firm that had an airline-related consulting project in Beijing.

Welcome To The Company – The Project We Employed You For Is Gone

In October 2012 I arrived in Beijing and reported for my first day of work with my new employer – a German firm that did software development and digital marketing consulting mainly in the automotive industry. The firm had originally employed me due to my airline experience as they had an airline related consulting project coming up. However, on my first day of work, I was told the client had now decided not to go ahead with the project and that I was to be assigned to another project. Thus, I was again thrown into the deep end where I was responsible for an audit of a European automotive client’s digital marketing agencies in China. I was again in a situation where despite my limited experience, simply being bilingual and having a willingness to learn and work hard to get the job done had given me another huge opportunity to learn. Over 6-months, I produced a series of reports which recommended how to improve the automotive brand’s digital marketing strategy in China.

Having successfully completed my first project, I was then assigned to a new project where I was required to conduct a business analysis requirement analysis for a US automotive brands enterprise CRM software for its dealerships in China. After the business requirement analysis, I thenwas responsible for the project management of the development and roll-out of the CRM software. It was a huge learning curve and a great learning experience. I appreciated greatly the opportunity to really get to understand a business’s processes and customer journey – something which I needed to do to ensure the software met the client’s requirements. However, just as the project was ending my old employer HNA GROUP got in touch with me and gave me a job offer I couldn’t refuse.

The Sharing Economy & Selling Planes

In October 2013, I moved to Shenzhen – the Silicon Valley of China, to work at a new company owned by HNA Group which had been setup to explore various new business possibilities in the sharing economy and e-commerce. In 2013, apps based on the sharing economy like Uber and DidiTaxi were getting lots of media attention and HNA Group had decided it wanted a piece of the pie. With my previous experience I had attained in project management for software development, they wanted me back.

We developed a B2C crowdfunding platform for various aviation-related financial products and also conceptualized several platform concepts based on the sharing-economy such as an empty-leg platform for corporate jets and fractional ownership for aircraft. We also set up an online platform for second hand aircraft sales in China which we used to advertise aircraft being retired from the fleet of HNA Group. Later, I also developed relationships with various overseas aircraft brands and signed sales agent agreements with them. We then used our online platform to market these aircraft in China.

One of the aircraft brands we were a sales agent for was a New Zealand aircraft manufacturer – Pacific Aerospace. Some time in mid-2014, Pacific Aerospace approached me about working for them. At that time, they were just starting a Joint Venture in China and wanted some New Zealand people proficient in Mandarin and with airline or aviation experience on the team. I liked the idea of connecting my career somehow back to New Zealand as I was worried that I was starting to set myself on a career trajectory that was completely unrelated to New Zealand. Hence, I ended up taking the offer.

Connecting Back to NZ

I started as Head of Business Development at Pacific Aerospace and their Joint-Venture in China BPAT (Beijing Pan-Pacific Aerospace) in October 2014. The Chinese partner in the JV was BAIC Group – a huge automotive conglemerate in China which owns the JV with Beijing Hyundai and Mercedes-Daimler. BAIC had a huge amount of resources that they were allocating to the construction of a production line in China for Pacific Aerospace’s aircraft the P-750 and the setup of a General Aviation operator for the operations of Tandem Skydiving and also provision of General Aviation wet-leasing and dry-leasing services. Over the course of my time there, I was responsible for project management, strategic planning and market-launch for two new tandem skydiving drop-zones and also the setup of an aircraft leasing venture. It was a very interesting position that involved me frequently reporting to our Sino-NZ board of directors whom I had to seek approval for and give bilingual reports regarding the various projects. As many other people working in JVs have experienced, I also often found it difficult to make serious headway on many of the projects that the JV was supposed to be doing due to the vastly differing opinions between the New Zealand directors and the Chinese directors. After working there for a year and a half, I simply became tired of always being caught in the middle and decided to quit and start my own consulting company in March 2016.

Starting A Business In China

In March 2016, I registered my own consulting company in Shenzhen – 321 JUMP. I focused on the tourism industry and marketing and sales for adventure tourism operators overseas whom wanted to attract Chinese tourists.

Along with a friend, we developed a solution based around a simple concept whereby we offered a Chinese website solution with an RMB payment capability, bookings module and Chinese-language virtual customer service for small to medium sized tourism operators. Our clients were namely tandem skydiving drop zones – whom did not have resources to have their own dedicated in-house capabilities to deal with Chinese tourists and our service fee was predominately commission-based.

We achieved some successes and managed to roll out our solution to operators in Fiji, Guam, New Zealand, Poland, Portugal Saipan and Thailand and serviced several thousand tourists in addition to providing consulting and web design for our client operators. We had originally hoped to get our business revenue up to the level that would be sufficient for us to employ staff to replace us and thus then take on more overseeing roles. However, it was difficult to get the revenue to the scale we had hoped for and, both of us having young families and limited further resources to put into the business, we decided to just put it down to experience and focus instead on furthering our careers elsewhere.

Bringing NZ Cider In China

While winding down 321 JUMP, I started looking for employment again. It was early 2018 and, despite having experience in the airline, aviation and tourism industry, I was finding it very hard to even land even interviews with potential employers let along a job. I applied for many different positions in the airline, aviation and tourism industry which were China related; however, these attempts were unsuccessful. After talking with a few mentors, they suggested that I try a different industry. Wanting to try to keep my career both New Zealand and China-related, I decided to look at the food and beverage export industry. Eventually, I landed a position at New Zealand’s largest independent cider company – Zeffer Cider Co. – as Greater China Sales Manager & Asia Regional Manager which I started in April 2018.

This was a very exciting position which I enjoyed thoroughly. I was responsible for managing and developing key sales accounts and importers and distributors across the region. My time at Zeffer took me all around the Greater China region and more or less made starbucks and airports my base offices. I managed to get Zeffer Cider into many new sales channels including 150+ Supermarkets and one of the world’s largest multinational restaurant groups. It was a very challenging position as we were essentially competing with mutli-national alcohol groups albeit on a very modest budget. However, it was a very rewarding position and I enjoyed promoting a New Zealand product in China.

Unfortunately, in early 2020, Zeffer’s importers and buyers across Mainland China, Hong Kong and Taiwan all began to cancel orders as they feared the uncertainty that the pandemic was bringing. The ultimate consequence of the wave of cancellations and lack of future orders was that Zeffer had to prioritize its markets closer to home and scale back its budget for export markets. That meant I was unable to renew my contract with Zeffer in May 2020. As an owner of shares in Zeffer which I purchased during my time as an employee there, I understood the need to re-arrange the budget and am happy to see Zeffer thriving in other markets.

Remote Work

Since late 2019, I had been basing myself in Vladivostok, Russia, where we had extended family and also which was a convenient hub in terms of easy access to Beijing, Shanghai, Taipei and Tokyo – locations which I needed to frequently visit for Zeffer. Hence, when the COVID-19 pandemic hit and later when my Zeffer contract ended, I found myself with my family here in Vladivostok. With young children, it was difficult for us to travel back to New Zealand to look for work. Hence, I stayed here in Vladivostok and was fortunate enough to be able to work remotely from here for a small conglomerate of tourism and aviation operators in Guam and Saipan. Since Mid-2020 until now, I have been responsible for the sales, marketing and business development for Skydive Saipan, Skydive Guam and Waco LLC in Greater China, Korea and Japan. I am also COO for a new startup project in Asia for the conglomerate and thus government liaisons in the target country and also strategic planning for the startup fall within my responsibilities.

So, if you were one of the people asking: “Who is this guy and what was he even doing in China?” , you now know the answer.

Penalty For Heist Of NZ Gold…..en Kiwifruit – A Cup Of Water On A Blazing Inferno?

According to an announcement released on the website of the Courts of New Zealand, due to his smuggling of Zespri’s golden kiwifruit variety – “SunGold” – into China, a former kiwifruit grower Haoyu Gao has been ordered to pay damages to the kiwifruit grower Zespri in the sum of NZD 12.1 million. 1

This 12.1 million was a reduction from the sum of NZD 14.9 million which had been ordered earlier in the year but appealed by Gao – supposedly due to an inexact measurement of Chinese orchards involved in utilizing the smuggled kiwifruit. Other details of Gao’s appeal were dismissed. 2

Interestingly, there is a Chinese saying “to pour but one cup of water on a blazing inferno on a cart of firewood” (杯水车薪). The saying, albeit largely self-explanatory, essentially refers to a method or solution too insignificant to solve an issue. While the above ruling against Gao may on the surface appear to be a win for the New Zealand kiwifruit industry and its battle against the propagation of smuggled kiwifruit in China, rather it may be the equivalent to “pouring but one cup of water on a cart of firewood set ablaze”. This is because:

  • (1) There are still 5,500 hectares of SunGold kiwifruit growing in China3 and these are unaffected by the ruling on Gao.
  • (2) Ultimately, when feasible, Chinese corporations generally favor partnerships at different parts of the value-chain over pure import and distribution.

Below, I would like to expand these opinions of mine based on more than 12 years of experience in China.

(1) There are still 5,500 hectares of SunGold kiwifruit growing in China and these are unaffected by the ruling on Gao

According to Zespri, there are still approximately 5,500 hectares of illicitly grown kiwifruit of the SunGold variety growing in China. In comparison, in New Zealand there are approximately 6,500 hectares planted with the SunGold variety. Thus, the 5,500 hectares in China is a significant amount of illicitly grown kiwifruit difficult to ignore and this is unaffected by the aforementioned ruling against Gao.4

Zespri previously explored the idea of trialing collaboration with these illicit growers so that they could be added to the Zespri value chain rather become a separate and competing value chain. The idea was that the formerly illicit Chinese growers would, over a 3-year-trial-period, produce 1.9 million trays of the SunGold variety – about 1.9% of the total trays of the variety that are expected to grow in New Zealand over the same period.5 However, Zespri only managed to get 71% of New Zealand kiwifruit growers’ votes in support of the trial – short of the required 75%. As a result, the trial will not be carried out.6

Thus, it is plain to see that these orchards growing kiwifruit propagated from the Zespri SunGold variety are there and not going away and do not appear to be affected by the ruling on Gao. Previous efforts to get Chinese authorities to crack down on the illicitly grown kiwifruit have supposedly been unsuccessful and thus it is highly unlikely that these illicit orchards will be routed.8 I anticipate, if they are not integrated into the Zespri value chain, then the growers of these illicit kiwifruit may attempt to compete with lower pricing. Undoubtedly, there will be certain demographics of consumers that will prefer to pay a lower price for their kiwifruit and this may affect the market share of imported New Zealand kiwifruit to some degree. However, exactly to what degree the illicit kiwifruit will affect the market share of imported New Zealand kiwifruit in China is debatable. Consumers in China tend to value other product attributes over price. In 2020, KPMG conducted a survey which required participants to rank the importance of a series of  roduct attributes related to food products on a scale of 1 to 10. These attributes included things like Price, Convenience, Familiarity, Health/nutrition, Innovative/unique, Taste, Texture, Fashion/trend, Brand, Aesthetics, Country of origin, Carbon Zero etc. Participants from China scored health/nutrition as one of the second most important attributes – with price as the fourth most important factor.7 This value that consumers place on health and nutrition means that when it comes to food products, Chinese consumers still have a perception that imported food products – namely from countries with high food safety standards and food industry production transparency such as New Zealand – bring a higher value proposition than do locally produced products. Hence, even if there are locally-grown kiwifruit and the production capacity of these is sufficient, they may not necessarily replace imported kiwifruit. Rather, they may coexist with imported kiwifruit and steal some market share by attracting consumers that are more sensitive to price. This may include some of the existing market demand and thus affect Zespri’s market share; however, it may also capitalize on latent market demand pertaining to a demographic that is sensitive to price and unexploited by Zespri.

The coexistence of imported and locally produced products in a product category and sometimes even the same product is actually something quite common in China. It is particularly prevalent in the Passenger Car Market in China. During my time as a Senior Consultant and Project Manager at a software development firm which developed CRM and ERP software for various car brands and their dealerships in China, I worked on projects for Skoda, General Motors, Ford Lincoln and Volkswagen. At the dealerships of many of these brands in China, I found that some car models were available in both “locally-manufactured” versions and also original-import versions. This is still the case now. The locally-manufactured versions are manufactured in China according to the relevant IP. Some brands simply import knocked-down-kits and then assemble the kits in China, while some brands go further and integrate locally sourced components into production; thus, the degree of the local manufacturing varies from brand to brand. Regardless, the locally manufactured cars are generally much more competitive at price point than the imports. The original imports are more expensive due to them being produced in the country of origin with higher labor costs and also due to import tariffs. However, there is still a market for the original imports due to consumer perceptions that safety standards for production overseas – generally speaking in Europe, USA and Japan, are better than in China and thus conducive to ensuring a better product.

I believe the above example of coexistence of imported and locally-produced versions of the same product is relevant to the current Zespri situation. The fact is, there is now a “local-version” of Zespri’s product in China that is not going to be routed. It will likely coexist with Zespri’s imported product in some shape or form and the ruling on Gao will not affect this. However, whether Zespri will be able to integrate this local-version into its value chain or whether it will become an independent value chain is yet to be determined and will depend on whether or not Zespri can find a solution to work with or control the illicit growers.

(2) When feasible, Chinese corporations generally favor partnerships at different parts of the value-chain over pure import and distribution.

In the long-term and where possible, Chinese corporations generally favor partnerships – often in the form of Joint Ventures (JVs) – as opposed to purely being the agent for import and distribution. This is because, in my experience, Chinese corporations prefer to participate as extensively as possible in the value chain so that they can attain revenue corresponding to the different links of the value chain.

Several of the industries I have worked in in China have in fact been industries where the products were originally imported finished products with Chinese partners simply importing and distributing.  However, later the Chinese partners in these industries eventually wanted more extensive participation across the value chain. Consequently, the product evolved beyond being a foreign product simply being imported to and distributed in China. Above, I have already citied examples from the automotive industry, however, I have also encountered similar trends in the aerospace industry and also the alcohol industry.

Previously, I was the Head of Business Development for a Sino-NZ Joint Venture in the Aerospace industry in China. The Sino-NZ Joint Venture was responsible for assembly of an aircraft model that, prior to the JV, had only ever been manufactured in New Zealand with no assembly ever being conducted in any other market. Due to the growing General Aviation industry in China, the Chinese partner – a massive state-owned automotive conglomerate with several JVs with big brands such as Mercedes and Hyundai already set up – had also set up a General Aviation subsidiary for the purpose of creating JV partnerships with aircraft brands. The Chinese partner originally had intended to simply set up a JV partnership in China with the NZ aircraft manufacturer, then gradually phase-in production across the approximate phases below:

  • I. The finished aircraft would sold by the NZ partner to the Chinese partner, imported from NZ by the Chinese partner and marketed in China by the Chinese partner whom would hold the exclusive distribution rights of the aircraft in China.
  • II. The NZ partner would export the aircraft in knocked-down-kits with assembly of the kits conducted at the JV-owned facility in China. The Chinese partner would also, as the exclusive distributor in China, market the aircraft in China.
  • III. Eventually, assembly would gradually evolve into local production and thus the JV would eventually produce a “local-version” of the aircraft to be marketed and sold in China by the Chinese partner.

That was the original plan. However, after beginning to negotiate the details of this JV and discuss the plan for the set up of the JV, the Chinese partner realized there was a key link in the value chain where revenue would be stimulated by the business activities of the JV in China but would not be shared with either the Chinese partner or the JV entity. The link in question was that pertaining to the export sales of the aircraft, or the knocked-down-kits of the aircraft, from China to New Zealand by the New Zealand partner in the JV – the original aircraft manufacturer itself. Upon realizing this, the Chinese partner revised the negotiations of the JV and required that, parallel to the JV in China with the New Zealand partner, the New Zealand partner would also allow the Chinese partner to purchase a 50% stake of the original aircraft manufacturing company in New Zealand. This acquisition would thus allow the Chinese partner to participate in and benefit from the aforementioned link in the value chain. Both sides eventually agreed to this arrangement and the cooperation ensued.

Another example different to the concept of a JV or acquisition but still illustrative of the Chinese partner wanting to maximize their participation in the value chain is brand collaboration. When I was the Asia Regional Manager and Greater China Sales Manager at New Zealand’s largest independent cider brand, I managed to win over a new sales channel in China – which was a bar-restaurant chain with 30+ venues nationwide and a huge following (hundreds of thousands of users) amongst 20 to 30 year olds on social media. This channel was generally only happy to work with large multinational brands when it came to network-wide supply contracts as large multinational brands could justify giving the channel cash for “marketing services”. The channel would then use this cash to, supposedly, fund advertising themultinational brands’ products throughout its venues and also on its social media – although it was obvious that some of this cash was pocketed as profit for such marketing services. Essentially, this type of arrangement allowed for the channel to not only profit from value at the level of retail profit margins – buying the product at a wholesale price and then selling it at a retail price, but it also enabled them to profit from the value attained by participating in the marketing part of the value chain. However, despite being New Zealand’s largest independent cider brand, our marketing budget was miniscule in comparison to those of multinational alcohol conglomerates. This was an obstacle to winning over the channel since the channel wanted value beyond that of the profit margins of buying the product at a wholesale price and then selling it at a retail price. Hence, after much discussion and negotiation, we found a method that would both bring the Chinese partner – the channel – further participation in the value chain and, in turn, value beyond retail sale profit margins. That method was brand collaboration.

The sales channel had its own craft beer brand. The brand had just been launched and was in need of more exposure. Hence, we came up with the idea of a collaboration cider concept exclusively for the sales channel under a dual-branded label designed by the channel’s marketing team. This was essentially a win-win in the eyes of both parties involved. For the client sales channel, it meant that they were able to attain value beyond that of retail sale profit margins. For us, the producer and seller, it meant that we were able to expand our sales network in China and thus increase our sales revenue.

In my opinion, this tendency for Chinese partners to want to participate as extensively as possible in the value chain is quite common. I am sure there are many other examples both from the industries which I have cited and also from industries which I have not cited. Hence, I believe that if Zespri are to truly ensure that these illicitly grown kiwifruit are not going to result in an independent and competing value chain that produces a competing product, I believe Zespri will indeed need to adhere to the principle of keeping one’s enemies closer than one’s friends. Otherwise, the failure to allow the Chinese side further participation in the value chain may, in the long term, ultimately decrease the overall value of the chain for Zespri. 


References:

1 https://www.courtsofnz.govt.nz/cases/haoyu-gao-v-zespri-group-ltd 2 https://i.stuff.co.nz/business/126311898/kiwifruit-smuggler-ordered-to-pay-zespri-12-million-after-unsuccessful-appeal 3 https://www.newsroom.co.nz/rod-oram-china-scooping-our-kiwifruit 4 https://www.newsroom.co.nz/rod-oram-china-scooping-our-kiwifruit 5 https://www.rnz.co.nz/programmes/the-detail/story/2018790587/managing-china-s-theft-of-nz-s-sungold-kiwifruit 6 https://www.sunlive.co.nz/news/274135-growers-vote-no-to-zespri-china-trial.html 7 https://www.theguardian.com/world/2021/jun/18/kiwi-wars-the-golden-fruit-fuelling-a-feud-between-new-zealand-and-china 8 “Agri-business Agenda 2021: New Zealand,our consumers, and our 2040 future”. KPMG, 2021.

996: In Office 9am to 9pm, 6 Days A Week – My Experience Of It

Recently, there has been significant media attention given to the Chinese government publicly announcing that it will take a tougher stance on protecting the rights of workers amidst what has become the status quo in many big corporations in China – “996” corporate culture.

996 is an abbreviation used to label the corporate culture that exists at the offices of many big corporations in China where workers are expected to be in the office from 9am until 9pm for 6 days of the week – from Monday through to Saturday.

Not only have many workers complained of the exhaustion and encroachments into free time that such a culture causes, but many have also pointed out that employers often do not pay overtime for the extra hours – despite the law requiring that work hours additional to the standard 8 hours a day should be considered overtime and thus remunerated accordingly.

For many years, the 996 corporate culture in China has commonly been accepted as the status quo by both workers and employers and, at the same time, has been allowed to exist relatively unchecked by the government. Public figures from the corporate world in China – including Jack Ma – previously have even voiced their support of 996. It is easy to understand why executives and decision makers in the corporate world have allowed it to exist. It is obvious that any stakeholder of profits in a company, from a pure cost versus profit perspective of analysis, would certainly favor an environment which allows an increase of labor resources and – supposedly – a consequent increase in production capacity whilst simultaneously maintaining a zero increase in labor cost. However, given my experience of working across multiple industries in China at various companies, I think that few employers have failed to consider some of the key reasons for why the 996 format exists; these reasons include incompetent skills and abilities of executives, management and other staff which, in parallel to necessitating the 996 status quo, also cause poor production results and failure-ridden production outputs.

Between 2008 and 2020, I worked for companies based in China. My experience spanned the industries of Events Management, Airlines, Software Development, China Market Consulting, Aviation & Aerospace and FMCG. Of the Chinese companies I worked for, some were privately owned, some were state-owned and some were Sino-NZ Joint Ventures. The smallest company I worked for had a workforce of around 30 people while the largest had a workforce of more than 400,000 people (yes, that is 6 zeroes). I believe this experience gives me some degree of credibility in commenting on 996 corporate culture. Below I will comment on my experience of 996 and the more general status quo of overtime in China that is not necessarily strictly 9am to 9pm, 6 days a week.

Across nearly all of the companies I worked for in China, overtime was commonplace and a daily occurrence. Working until 9pm was not considered out-of-the-ordinary and work spilling over onto Saturdays was considered inconvenient but normal. Moreover, the vast majority of the time, overtime was not paid for in the form of an additional monetary component of salary.

According to my experience and observations, there are several reasons why this 996 corporate culture exists. These reasons include:

  • (1) Inept Planning
  • (2) Poor Management Skills
  • (3) Poor work Ethic

(1) Inept Planning

Inept Planning was something that was evident at the executive and management level of staff. At multiple companies in China, I noticed that those in executive and management positions lacked the ability to sufficiently plan ahead. Firstly, at the executive level, decisions about large commercial projects were often made very sporadically and at very short notice. This meant that managers – whom themselves had relatively limited planning skills, were constantly thrown curveballs by executives which consequently made projects the managers were responsible for extremely precarious. The results were hastily rolled out projects that required large volumes of overtime in order to cope with short lead-times ahead of the relevant deadlines. Below, I have included a few examples from my own experiences which illustrate this.

Only 5 Days To Prepare A Business Plan For A New Market Entry & Financial Projections For 5 Years

When I was working at a large airline group, we were told by our department manager whom was told by the CEO that, in 5 days, the CEO wanted to see a business plan for the market entry of a new airline for an emerging country market in Africa. The business plan was to include a full route network plan with passenger market projections for 5 years, an aircraft fleet plan, financial projections and also a SWOT and PESTLE analysis of the country market. At the time, I along with a few colleagues had already been mandated by our department head and the CEO to oversee a similar business plan for 6 country markets in Africa that was being compiled by an international consultancy. However, the country market we were told to prepare a business plan for in just 5 days was not one of the 6 countries we had been focusing on. As a result, in order to complete the work required,for 5 days we worked from dawn until dusk and even worked until 430am on the final night before the deadline. The result was hastily compiled market research and a rushed business plan that was based on very conservative data estimations – since we were unable to find reliable data in such a short time – that painted a very mediocre market opportunity for the potential new market. Consequently, the CEO did not think the market was worth looking into further and cancelled our focus on Africa – including our focus on the other 6 African markets which business plans had not yet been completed for and, according to our preliminary research, seemed to have much more potential than the focus market which we had been sporadically told to prepare the business plan for.

The above is but one example from my time at that airline conglomerate; however, this sequence of inept planning leading to short-deadlines which then resulted in rushed projects and then poor work outputs and poor decision making was a frequent occurrence. Moreover, this inept planning necessitated the 996 corporate culture as valuable work output was so low – despite everybody being extremely busy – and the work output frequently below expectations and thus excessive working hours needed to be incurred to compensate. Interestingly, this airline conglomerate has recently gone into bankruptcy and restructuring after going on a decade-long spree of international mergers and acquisitions. It is perhaps not too far-fetched to speculate that many decisions to merge with and acquire companies were in fact made under the influence of this inept planning.

Only 6 Weeks To Launch A Brand New Aviation Tourism Operation

When I was working at a Sino-NZ Joint Venture (JV) in the aviation and aerospace sector in China, the company decided that it would set up its own subsidiary tandem skydiving drop zones in China which would use and thus showcase the aircraft which the JV manufactured. I was responsible for doing market research and due diligence to recommend suitable cities in China for the set-up of the drop zones. My recommendations for cities and airports took into consideration multiple factors that would contribute to the commercial success of the drop zones. For each respective city and airport that was recommended, these factors included tourist numbers, tourism seasonality, tourist demographics, airport infrastructure, airspace congestion, airspace usage approval feasibility, local operating costs and et cetera. I presented my list of recommended locations for set-up to the board. After several months of deliberation, the board officially gave the project team the green light to form the business plan and market launch plan for the first drop done which was to be launched in just 6 weeks time – albeit in a location which had not appeared in the list of recommended locations due to it failing to meet key selection criteria.

The chosen location was a completely unused airport which had been built by the local government of the respective region and literally was in the middle of a desert devoid of premium tourists (which were the target demographic due to the high cost and thus high sale price of tandem skydiving). The location had been chosen by the Chinese partner in the JV – whom was an automotive manufacturer – due to the fact that the local government of the administrative region in which the airport was located had purchased a fleet of passenger buses from the Chinese partner. Thus, the Chinese partner needed to“do a favor” for their government client by bringing a commercial project to the unused airport which they had spent government money to construct.

Due to the unsuitability of the location and the short-notice of the deadline for market launch, the team had to work around the clock for 6 weeks trying to get all the operational resources we needed out to the remote location and trying to convince travel agencies to add our comparatively expensive product to their tour packages. 2 weeks prior to the launch, due to the remoteness of the location and immense workload of tasks we needed to complete to ready the location for the market launch, each day we were leaving at 5am to commute to the airport from the city where we were staying and returning at 7pm. This schedule was maintained throughout the first 2 weeks of the market launch which ultimately equated to the life of the operation since it indeed was a complete failure due to its completely unsuitable location.

6 months later, the same exhaustion ensued when the board chose a 2nd location for the set-up of a new tandem skydiving operation which again did not meet any of the key criteria and again was given a deadline of only 6 weeks for market launch. The difference with the 2nd location which exaggerated the so-called 996 problem even more was the fact that the launch was planned for the 2nd day of the 7-day Chinese New Year Holiday – one of the most important periods of public holidays in China. This meant that this poor planning not only resulted in the whole team having to work according to and beyond 996 expectations for the 6 weeks leading up to the launch, but then also had to work according to those expectations through 6 days of the 7 public holiday days – with no additional compensation.

This 2nd airport chosen by the board was again chosen sporadically and for political reasons rather than commercial ones. The airport was congested with airline traffic and was located near a massive resort which, due to it annually hosting of an international forum which was attended by many heads of states, required the airspace – which our operation needed to use for tandem skydiving – to be constantly monitored and patrolled by the military for months on either side of the forum. As a result, the operation only ever carried out 2 flights approved especially by the authorities during the 2-week market launch – no further flights were ever carried out due to the tightly controlled airspace. Thus, again the poor planning not only resulted in excessive overtime and the need to work according to the 996 format to meet project deadlines, but also resulted in fail-ridden production outputs.

(2) Poor Management Skills

In my experience, a key driver behind the prevalence of the 996 corporate culture in China was poor management skills. Poor management skills – particularly time management and management of labor inputs – at the executive level and the management level of staff caused a huge amount of inefficiencies and nonsensically overloaded work schedules which, in turn, caused working schedules to expand out into the 996 format.

“Please Call Everyone To The Meeting Room”

One thing that was common across many of the Chinese companies that I worked for was the failure of executives to let managers be managers. Often, when executives wanted a particular department or business unit to work on something, instead of just meeting individually with the manager of the department or the manager of the business unit and communicating the requirements of a project or task and thus entrusting the manager to coordinate his department or team, the executive would call the entire department or business unit into the meeting room for a long-winded meeting. Hence, instead of using 2 man hours to explain a new project or task to a manager, the executive would use the 1 man hour of himself, plus the 1 man hour of the manager plus 1 man hour multiplied by the number of additional staff in the department. In my case, varying according to the company I worked for, my department ranged from between 5 to 20 people. Hence, that resulted in the executive consuming significantly more man hours than were needed for the meeting and this resulted in pulling away man hours needed for other ongoing tasks. If these other tasks were time-sensitive – which many of them were – it often resulted in staff having to work overtime to get them complete since their schedules had been disrupted by meetings which were really only necessary for their managers to attend.

CCing Everyone On Emails

Emails between executives and managers and also from them to staff often involved extensive CC recipient lists which meant that staff were constantly inundated with emails that were filled with information irrelevant to them. At the same time, staff still needed to read the emails since they were sent from or to superiors and thus had the remote possibility of containing important relevant information. These extensive CC recipient lists meant staff spent a lot of time reading irrelevant emails and this took time away from their fundamental tasks and caused the need to work late to complete them.

Servile Executives & Managers

Many executives & managers I encountered at the companies I worked for seemed to be more concerned with pleasing their superiors than actually ensuring productive and successful work systems. Time and time again, I saw executives and managers disrupt working days with meetings or require staff to attend evening functions which were designed to allow the executive or manager to show their superior their servility. This resulted in staff needing to prolong their working hours. Below is an example somewhat comical due to how ridiculous it is.

It was 4pm the day before the market launch of a new aviation operation. The location of the aviation operation was 1 hour drive from the city where one of the board directors was visiting on a business trip – where our project team also happened to be staying. Our project team was working on site getting the venue ready for the market launch. We had been at the venue since 6am and were rushing to finish by 5pm so that we could get back to the city, have some dinner and get an early night so that we would be fresh for the next day which would start again at 5am due to the market launch. I received a phone call from a company executive where he informed us that we were to have a dinner – that evening – with the respective board director to celebrate the upcoming market launch and thank the director for his support for the project. In short, after spending several minutes desperately trying to convince the executive that this was not a good idea due to the team being absolutely exhausted and the dinner most likely involving excessive drinking and a late finish, the executive did not budge and required attendance of all members of the project team. The result was a long-winded dinner where the executive constantly made toasts to the visiting director and required everyone to drink to his toasts from the moment we arrived until 10pm. The next day, half the project team were still intoxicated and too hung-over to fulfill their roles in the market launch. Consequently, a few colleagues which seemed better genetically predisposed to handling alcohol intake had to excessively multi-task to complete the market launch. Comically, the market launch was for a tandem skydiving aviation operation and I was the project manager and supposed to coordinate the different roles of the project team during the operation launch event; however, due to half of the team being indisposed on the day of the launch, I ended up performing several of the roles simultaneously – greeting customers, arranging their sign in, introducing them to instructors, driving them across the tarmac to the aircraft and greeting them on the ground upon their landing, while also communicating with the airport control tower, pilots and the tandem instructors to coordinate flight schedules. Needless to say, due to the reduction of labor input thanks to the servile executive who seemingly did not understand the concept of man hours, labor inputs, labor outputs and the effect of alcohol and disruptions by long-winded dinners on these, the day of the launch of the operation was prolonged well beyond normal working hours.

(3) Poor Work Ethics

At both state owned enterprises – where standard working hours of around 9 to 5 were more common than 996 – and also at other enterprises where the status quo was 996, I noticed that poor work ethics was common across the majority of staff. This ultimately necessitated prolonged working hours and caused 996 to be the status quo. This was true particularly for lower level staff but also for some management and executive staff.

The poor work ethics which I observed are probably best described by summarizing what would happen on a typical working day. Interestingly, the below example is based on my observation at a state owned enterprise where overtime was not as rampant due to it being government owned; however, there the degree of poor work ethics was the most severe.

  • 0845 to 0859: the staff which report to me arrive at the office and scan their fingerprints to clock in – something which must be done by 0900 to avoid a penalty deduction on salary.
  • 0900 to 0930: now clocked in as on time for work, staff either sit in the office and eat breakfast which they have purchased on the way to work or go out to eat breakfast at somewhere close by such as McDonald’s or KFC.
  • 0931 to 1100: staff sit at their work stations and work on productive tasks.
  • 1101 to 1120: smokers take the elevator downstairs and then go outside of the building to smoke since smoking is not allowed inside. Non-smokers go to the tearoom and make tea and start to chat about where they will go to eat lunch.
  • 1121 to 1145: staff return to their work stations and work on productive tasks.
  • 1146 to 1200: staff head to the elevators to make sure that waiting in the line for the elevator does not cut into their lunch break.
  • 1201 to 1300: staff eat their lunch out at restaurants or food courts nearby.
  • 1301 to 1330: staff have an afternoon nap, either napping at their work stations in their chairs, sleeping on sofas in the meeting rooms or even on fold out beds they roll out from various storage spaces in the office.
  • 1331 to 1345: staff wake up, roll their beds back to the storage spaces, smokers go outside to smoke and non-smokers prepare cups of tea to take to their desks.
  • 1346 to 1500: staff work on productive tasks,
  • 1501 to 1520: non-smokers head to the tea rooms again to make tea and smokers take the elevators and go outside to smoke again.
  • 1521 to 1715: staff are back at their desks and working on productive tasks.
  • 1715 to 1730: staff intermittently leave their desks to discuss dinner plans with colleagues.
  • 1731: staff clock out by scanning their fingerprints – something they are not able to do prior to 1730 otherwise pay will be docked – and depart for home.

It is easy to see from the above that on a typical day, the amount of time staff are actually working on productive tasks is comparatively insignificant. It is true that the typical schedule depicted above was also sometimes prolonged due to busy projects and deadlines. However, often the occurrence of overtime and the resulting increase of time where staff were in office only resulted in a slight increase of time where staff were working on productive tasks – since this time was also interrupted by excessive breaks. Consequently, a working day with office hours that would be considered representational of the 996 corporate culture usually did not actually result in productive working hours that would proportionally represent the same amount of working hours that would supposedly be expected by the 996 model. In fact, even according to a 996 schedule, the total amount of productive hours in a day were still actually far below the amount of productive hours that there were supposed to be under normal working hours.

Based on my above experience, which is not limited to the examples I have included above, I believe that the reason 996 existed was not simply due to employers wanting an increase of labor resources and – supposedly – a consequent increase in production capacity whilst simultaneously maintaining a zero increase in labor cost. Rather, I think it is the existence of inept planning, poor management and poor work ethics that have brought the 996 status quo into existence. Objectively, it is good that the government are taking a tougher stance to protect the rights of workers as surely companies where inept planning, poor management and poor work ethics are not rampant but allow the existence of 996 do benefit from an increase of labor resources and a consequent increase in production capacity whilst simultaneously maintaining a zero increase in labor cost. Moreover, this benefit is often not passed onto the workers despite them sacrificing their time and health for the benefit of their employer. However, in light of what I believe are some of the causes for the 996 corporate culture to exist, I believe that if companies focus on improving the inept planning skills, poor management skills and poor work ethics of their staff, the dislodging of the 996 status quo will not necessarily result in a decrease in production outputs or production capacity. Instead, the dislodging of the 996 status quo could in fact be a catalyst for companies to increase their productivity and efficiency. Also, it could be an opportunity for companies to improve the health of the corporate culture and create an environment that encourages people to have a better balance between work and other aspects of life.

Only 3 Hours Of Online Gaming Per Week Allowed

You may have heard that the Chinese government has introduced new rules limiting the amount of online gaming allowed by those under 18 years of age. According to the new rules, from September 1st 2021, those under the age of 18 are only be allowed to indulge in online gaming between the hours of 8pm and 9pm and only on Friday, Saturday and Sunday. Moreover, online video game providers are required to adopt measures to enforce this and have name-verification processes in place to ensure that . The National Press and Publication Administration (NPPA) – the regulator responsible for the approval of video game titles and the authority which released an explanation of the new rules, has also stated that it will bolster inspections to ensure the rules are being adhered to by online gaming companies.

Is this simply an action of an authoritarian government or is it ia government trying to curb gaming addictions and the negative affects these may cause on society?

According to available market data, the online gaming industry was worth around 630 million RMB in 2018 and soared to 6.8 billion RMB in 2020. Prior to the new laws being introduced, in June this year it was predicted that the industry would be worth 19.3 billion RMB in 20211 However, that will likely need to be revised given that the recently-released rules will inevitably affect online gaming revenue. With GDP growth in China slowing, a free-market capitalist mind might think that the Chinese government would not want to curb growth on high-tech industries – especially those which generate the majority of revenue online and thus are not as volatile in terms of GDP contributions during the current global pandemic. However, it must be that the government is more concerned about the negative effects of online gaming on young consumers and the effects this can have on society; thus, this concern overrides concerns of economic growth.

Official state-media in China has recently described online video games as “Spiritual Opium”. In China, opium has deep historical connotations and is not only a highly addictive drug but also a symbol of what historians refer to as the Century of Humiliation. During the Century of Humiliation, China was exploited by foreign powers through various invasive colonial measures – including allowing opium into China – which caused chaos in Chinese society. The development of China was severely disrupted and curtailed during this period and arguably China lacked the resources to change the status quo imposed on it by the colonial powers during that period and thus endured humiliation. Hence, for online video games to be equated with opium conveys just how repugnant the government feels towards online video games.

What is it that makes the government feel so repugnant about online video games that they take such severe measures? According to a report released in 2019, 90% of parents of primary and middle school students give their children phones,2 a further survey in 2020 showed that 93% of Chinese under the age of 18 are internet users.3 With the prevalence of mobile devices amongst young people in China and their access to the internet, young people are easily able to access online video games and thus are prone to excessive gaming and even addiction which ultimately effects their study, physical health, and physical prowess. Hence, it seems the government has stepped in to ensure that this factor negatively contributing to the physical wellbeing and academic results of young people is contained and not allowed to exist unchecked.

Regarding effects on study, in my last blog post, I mentioned briefly the measure the government has taken in its bid of reforming the sphere of education to make sure primary and secondary students rely on formal educational institutions to complete the national curriculum and ready themselves for the Gaokao (高考) examination which is held at the end of High School. Perhaps the prevalence of online video games and ease of access that youngsters have to online video games distracts students from study. Futhermore, this may be one driving factor behind parents needing send children into supervised tuition (such as that of Off-Campus-Tutoring) to make sure they do not just start gaming on their mobile devices when they are supposed to be self-studying outside of class.

Regarding effects on physical health and physical prowess of youth in China, these issues have rightly gained a lot of attention from the government in recent years. The Chinese government specifically released the “Child and Adolescent Obesity Prevention Implementation Plan”  (儿童青少年肥胖防控实施方案) in 2020 to address this issue.4 It is estimated that that almost one fifth (19%) of children aged between 6 and 17 years old in China are obese – with a sedentary lifestyle a key contributor to this.5 Thus, the aforementioned plan was formulated to counter this issue. Physical prowess of youth has also been a topic discussed both by Academia where papers have been published expressing concern over limited numbers of candidates which meet the Army’s recruitment criteria6 and the People’s Liberation Army whom have in recent years become concerned about the lack of physical prowess of recruits, with weight and eyesight being key factors causing potential recruits to fail recruitment criteria.7

In light of these issues, it is easy to see why the government is so repugnant towards excessive online gaming as it is not conducive to maintaining a healthy and fit population. As can be deduced from the attention this issue has received, this not only threatens prosperity but also national security.

Online gaming in itself is obviously not necessarily bad if done in moderation; it is when it is done in excess that problems can ensue. Objectively, this can be likened to the restrictive measures adopted for alcohol and cigarettes to avoid excess consumption causing harm to individuals and society and also to limit the access of these potentially harmful products to children and adolescents whom may be more vulnerable to addiciton and its harms. If comparing online gaming with alcohol and cigarettes is too extreme – and I expect it will be considered so for many, then let’s compare it with a driver-licensing system for cars– which to a certain degree is structured to limit risks of younger people driving.

In New Zealand, there are three different phases for the driver’s license for car licenses. This 3-phased licensing system basically means that: (1) Anyone under the age of 16 is not allowed to drive a vehicle, (2) No one under the age of 16 years and 6 months can drive a vehicle by themselves (3) No one under the age of 17 years and 6 months can drive a vehicle with passengers unsupervised.8 This system allows adolescents’ developing cognitive ability a gradual adjustment to the volatile and dangerous environment of commandeering a vehicle which legally can maneuver at a maximum of 110 KPH and thus potentially cause harm to themselves and others around them due to mistake, misjudgment or misfortune. Perhaps then the decision to limit children’s and adolescent’s exposure to video games, which can potentially cause harm to them – in the sense that it can affect their physical wellbeing and indirectly affect their future career opportunities due to the affects of excessive gaming on academic results – is made out of similar reasoning.

So, is this limit on online gaming excessive and perhaps authoritarian? The answer to that is probably going to be more subjective than objective. The right question to ask would perhaps be is it necessary? If we are to worry more about the actual consumers or users and their long term wellbeing rather than the revenue of what is being consumed or used, we may find that we begin to come to the conclusion that such a limitation is actually necessary. It seems that this is indeed what the Chinese government is doing – it is refusing to prioritise corporate revenue, market growth and the economy over the actual consumers. Other questions to ask would be: should and will other countries follow suit? Will similar restrictions also be placed on the usage of social media apps by children and adolescents either in China or elsewhere? Judging by the way social media is starting to actually shape the way we see the world by making us compare our everyday lives with the supposedly perfect lives we see on social feeds which we follow and by making us compare how we look with others’ social media photos with all the artifical filters on, then perhaps this is another question worth pondering.


References

1 https://www.sohu.com/a/472216122_120205287

2 http://www.xinhuanet.com/english/2019-10/17/c_138479615.htm

3 https://techcrunch.com/2020/05/13/93-of-chinese-minors-are-now-online/

4 http://www.nhc.gov.cn/jkj/s7915/202010/0a6f26a0c4e4457898cafb809c9957cb.shtml

5 https://news.dayoo.com/society/202109/01/140000_54037024.htm

6 https://www.fx361.com/page/2020/0420/6739827.shtml

7 https://www.scmp.com/news/china/diplomacy-defence/article/2108987/worries-over-fitness-levels-more-young-chinese-fail & https://www.standard.co.uk/news/world/young-chinese-are-too-fat-and-masturbate-too-much-to-pass-army-fitness-tests-a3617881.html

8 https://www.nzta.govt.nz/driver-licences/

The Chinese government has banned tuition?

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Having spent more than 12 years in China, naturally I am interested in China-related current events. However, the experience of studying and working in China gives me quite a different perspective when it comes to forming opinions on China current events. I often feel that in the English speaking world – whether it be in New Zealand where I am from or in other western countries – the way China is portrayed is quite misunderstood and sometimes quite inaccurate.

You have probably heard that recently in China there has been on a ban what is known as “Off-Campus Tutoring”. If a related news headline passed your glimpse, then perhaps you may have thought “Why on earth would the government ban Off-Campus Tutoring?” Or even, “How can the government do such a thing, is this not violating various personal liberties?”. These are certainly questions that seem to be common amongst mainstream media reports on this issue.

If you come from a country such as New Zealand – where I originally hail from – and have not had much to do with China or perhaps other fast-paced Asian societies such as Japan and Korea, you may not be that familiar with the concept of “Off-Campus-Tutoring” and its role in the education of the population. That is because unlike in a country in New Zealand where much of our primary and secondary education is received via state schools and private schools and where most people’s experience of “Off-Campus-Tutoring” as a service would be limited to tuition for extra-curricular activities such as performing arts and sports, in China the effectiveness of primary and secondary schools in delivering education is perceived as insufficient and thus the scope of Off-Campus Tutoring has, up until now, been viewed by most parents as a service necessary to ensure children are able to keep up with the national curriculum. That is because, the national curriculum’s end-goal essentially is to prepare students for the dreaded “GaoKao (高考 or National Higher Education Entrance Examination)” ; this is taken at the end of High School and to a large extent determines whether or not a student can qualify for entrance to University/College, which University/College they can attend and thus, as many believe, the degree of ease to which one will eventually be able to find a well-paid job and have a successful career.

Due to this importance of GaoKao, prior to the recent ban, the vast majority of Chinese families would send their children to attend Off-Campus-Tutoring despite the financial burden created and time investment required by doing so. The view held by most families was that this was the best possible way to ensure that their children had the best possible chance of achieving their best possible result in GaoKao. This environment had enabled the Off-Campus-Tutoring industry value to reach tens of billions of dollars annually – some estimates placing it as high as 70 billion dollars – with huge corporate players emerging in the industry and even listing on the US Stock Exchange. However, this is all now coming to an end with the ban which is already being strictly enforced by the government.

Essentially, it seems that government is now of the mind that reform is required to ensure order is retained in the sphere of education, educational bodies of the state retain their central role in education and that equal opportunities for education are offered to the population. Obviously, one can deduce, that if the primary and secondary school students are unable to keep up with the curriculum unless they receive Off Campus Tuition, then there may be a problem with the effectiveness of the way by which the curriculum is being delivered via the primary and secondary schools. Moreover, the existence of an educational sphere – that is Off Campus Tuition – parallel to the formal education sphere naturally creates inequalities in terms of opportunities for children to succeed in their education since those unable to afford Off Campus Tuition or unable to afford high-quality Off Campus Tuition are disadvantaged when compared with those that can afford it.

In Western Countries such as New Zealand, we tend to relativize regulations and laws against our own individual liberties before we relativize them against the common good. Hence, to us, such a move to ban Off Campus tutoring may seem authoritarian and perhaps even surreal. Many of us perhaps would view this as the government overstepping its role and even infringing on our personal liberties. This is certainly the way that this action by the government has been portrayed in various western media outlets. Indeed, upon first hearing the news of the ban on Off Campus Tuition, it is easy to simply label this as authoritarian and as the government overstepping its role in society. However, in light of the many negative affects on society that this Off Campus Tutoring has had, it seems there is nothing sinister behind this move from the government but rather is simply the government prioritizing the greater good in society.

Firstly, having lived in China and worked as an English tutor many years ago, I have witnessed firsthand how exhausted and horrifically over-burdened many primary and secondary school students are. In contrast to New Zealand, where students generally are only in school from approximately 9am to 3pm and only from Monday to Friday, students in China are generally between school from around 730am to 530pm and in some parts of China the school week is 6-days long. Moreover, outside of school and on the majority of days – including Sunday, prior to the ban, Chinese students would be in some form of Off-Campus Tuition outside of these hours for various subjects including Mathematics, Science, Fine Arts and Foreign Languages. Because of this, it is very typical to see Chinese students going to school with a suitcase packed with all the textbooks and stationary they will need to complete their busy schedule. Seeing how exhausted some of the children are due to the role Off-Campus Tuition plays in creating such a busy and exhausting schedule, I can understand why the issue has received such attention from the government.

Secondly, in recent years, the Chinese government has been promoting better health and nutrition to the population. This has been one factor that has benefitted the import volumes of various foreign food products, for example New Zealand dairy products,to China. In particular, the Chinese government has been promoting health amongst young people and have been encouraging better nutrition and sport – the latter has been particularly emphasized in order to combat the problem of child obesity. Given the previous prevalence of Off Campus Tutoring and its role in creating an education environment where most primary and secondary children were predominately sedentary – sitting in either formal classes or classes for Off Campus Tutoring, it is also easy to see why the government has decided to re-evaluate what had come to be accepted as the status quo..

Thirdly, due to the massive population in China and the historical and cultural importance placed on knowledge, learning and academic success, the educational environment is inherently competitive. In Ancient China, whole villages would sponsor one or a few individuals whom had the best chances of passing the Imperial Exam – the examination for Civil Service which effectively selected candidates for Administrative Officials – to ensure their village retained relevance in the administration. Now, in modern China, due to the pressure created in recent decades by the one-child-policy and the result that, for many families, a single child will eventually be the only familial support for retired parents, the importance placed on education remains. Parents and grandparents pool financial resources into the one offspring that would eventually support them and hence the Off Campus Tuition industry benefited from that hugely. However, if an education system such as the Off Campus Tutoring one is allowed to exist parallel to the formal education system, naturally it will be utilized by those that can afford to do so. Consequently, those unable to afford to utilize it will be disadvantaged. Thus, it appears that t the government has made this decision partly to to ensure that equal opportunities are given to the population.

But, what about the question of whether it violates individual liberties and the right (or perceived right) of us as citizens to purchase what we desire from the market? Well, this may be a question of the individual benefit versus the greater societal good. We may at first glance simply think that this move by the Chinese government is an infringement on personal liberties; however in doing this, we may be overlooking the fact that this “infringement” is actually creating an environment that is more conducive to education and equal opportunities in both education and employment and also creates an environment more healthy for children. Is such a move by a government not similar to those of our own governments – for example in New Zealand – that are made in order to deal with COVID-19? For example, I am a New Zealand citizen and I currently reside in Russia. The last time I left New Zealand was in 2019 – and then I was able to more or less decide to move freely between New Zealand and other countries at my own will and I held that as my personal liberty. However, since the COVID-19 outbreak, my ability to return to New Zealand is now subject to a new requirement introduced by the New Zealand government out of concern of the greater good for public health – I now need to first book a quarantine facility in able to return. Moreover, since the recent outbreak of the Delta variant of COVID-19 in New Zealand, the New Zealand has paused the release of spaces in the quarantine facility which by default means I am actually being denied my personal liberty of being able to return to New Zealand – since no quarantine spaces are available. Is this not the government infringing on a personal liberty out of concern for the greater good of the public? What do you think?