Tag: Business

It might not be that surprising, but many sponsors of major China local (provincial) soccer clubs in the Chinese Super League didn’t do well after naming the team.

Dalian Wanda and Dalian Shide were the names for Dalian’s soccer club. Dalian is only a city in Liaoning, but Dalian Shide was a strong team in the Chinese Super League. Dalian Aerbin is another club in Liaoning; the boss tried to acquire Dalian Shide.

More people might have heard about Evergrande. Evergrande purchased Guangzhou soccer club in 2010. Guangzhou Evergrande won seven consecutive Chinese Super League titles from 2011 to 2017.

Similar stories could be found for teams across cities/provinces, e.g. Jiangsu, Beijing, Shanghai, etc.

I am not sure if this is common globally. I can think about FTX, which sponsored the Mercedes F1 team and Golden State Warriors. But it’s not something consistently happening on the global stage.

Maybe it’s due to the business model. Property developers were very profitable and can benefit from broader audience with the clubs’ naming. Usually male watch those soccer matches more often, and those who have time and money to watch sports could be wealthier and thus homebuyers.

Search is a two side product.

You need to provide that “10 blue links” to serve consumers. Hopefully consumers can find what they need (have the answer) as fast as they can (no need to go to the next 10 search results).

You also need to serve the advertisers to market or grow their business.

Baidu seems to be challenged in both ways.

Sometimes, the most up-to-date information (with details) is found in Xiaohongshu and Douyin, where users upload tons of posts and videos. User-generated content can carry much more info than official news, as official news is well controlled by gov in China. There are basically not news other than official news.

For business owners, Baidu doesn’t offer much growth. Merchants shall spend more on e-commerce sites directly (which was mainly search-driven before recommendation rose). Douyin and Xiaohongshu may help “create the desire to buy” that search can’t. Some services can be banned from making advertisement (like after-school education). For some other businesses (toB etc.) – Moutai (liquor) is a more efficient sales spending. More importantly, search results are mostly webpages; but webpages are less useful in China vs. the US – a Weibo Account and a WeChat Public Account is more useful.

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This actually leads to another interesting thing – I feel independent websites are dying in China. They are not important at all. Maybe China is preferring mobile over PC due to real name, and mobile phone number is the easiest way to fulfill that requirements, but websites don’t necessarily need a mobile phone number. This topic should be explored more.

Two is much better Three in terms of market competition / dynamics.

Visa and Mastercard is are two giants in payment network.

WeChat and AliPay are two leading mobile payment providers in China.

Global PD-1 market has two leading drugs – Keytruda and Opdivo

Differentiated “two” is also good.

Android and iOS are two mobile operating systems with differentiated business models.

CATL and BYD are two leading Chinese battery makers with differentiated business models.

 

Three is a different picture.

US has three big automakers, Stellantis, GM, and Ford.

China has three SOE automakers, 一汽, 上汽 and 广汽. There were three private automakers, Great Wall, Geely and BYD. Three are three US-listed new energy vehicle startups, Nio, Li Auto and XPEV. [3 x 3…]

Three are three major airlines with alliances, Star Alliance (United), Oneworld (American), SkyTeam (Delta). There are three low-cost carriers (although nowadays the line is blurry) SouthWest, Alaska, and JetBlue. There are three ULCC, Allegiant, Frontier and Spirit. [3 x 3…]

China has three SOE airlines, 国航, 东航 and 南航. Each joined one of the three alliances.

 

One is rare.

Two is good; differentiated two is even better.

Three is hard; three times three is very hard.

 

Growing out of three is amazing.

BYD is an example.

Personal experience:

It was cool to hold a Starbucks drink in hand, but less so in recent years.

The cool factor is diluted with %Arabica (82 stores), Blue Bottle (5 stores), and Peet’s (over 200 stores).

Blue Bottle can drive me to a shopping mall that wasn’t on my plan. Starbucks has less effect these days.

I rarely buy Luckin coffee, unless it’s a hit product like Moutai coffee. Mostm Luckin items don’t taste like coffee but more like sugar drinks to me.

I have tried other domestic brands like M Stand (350 stores). I think that tastes more on par with Starbucks.

Manner (1000 stores) is not on par with Starbucks, but the minimalist style looks appealing than Luckin for certain customers.

Other international brands like Tim’s (912 stores) is not a bad choice. But the store is less sophisticated than Starbucks (lack of charging).

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In terms of drinks, I think Starbucks is less differentiated among premium brands like %arabica, Blue Bottle, Peet’s.

In terms of services, Starbucks is differentiated with charging outlets. And I like the option of ordering without a phone, although I mostly order on phone.

In terms of branding, it’s less “cool” compared with %Arabica and Blue Bottle, unless it’s a Starbucks Reserve coffee.

I think Starbucks’ problem in China is more of a positioning problem. How it can target different segments with a single brand? Different customers want different things and they are just too different in China.

• too mainstream to be premium / high-end
• too expensive for routine customers in the real mass market (incl. lower tier cities) in the long run

I am sure in some cities, Starbucks shall still enjoy a “cool” factor for some time, but can fade over the years if other foreign brands enter.

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%Arabica Shanghai

 

Blue Bottle Shanghai