BOOK
REVIEW Marketing guru chooses a tough
sell The End of Cheap
China: Economic and Cultural Trends That Will
Disrupt the World by Shaun
Rein Reviewed by Muhammad Cohen
The
revolution has already begun. China is no longer
the world's cheapest place to manufacture a
growing number of goods. China was the Saudi
Arabia of low-cost labor, but those reserves are
depleting fast. That squeeze and the forces
fueling it make for a fascinating story that will
play out in shops, boardrooms, living rooms and
factory floors across the globe. But that's not
the story The End of Cheap China tells.
Instead, Shaun Rein's new book tells a
different intriguing tale: the emergence of China
as the world's most compelling consumer market. In
essence, the book is about the marketing
opportunities
of post-cheap China, when
its consumers become kings and queens.
Rein is extraordinarily qualified to tell
that tale as the founder of China Marketing
Research Group, now known as CMR. Armed with
degrees from Canada's McGill University and
Harvard, the McGill of the US, Rein first went to
China nearly 20 years ago and has been a witness
to its unprecedented economic boom. For good
measure, Rein wedded into China's elite, marrying
the great-granddaughter of a Communist Party
martyr, who's also the granddaughter of 1980s
Politburo chairman Marshal Ye Jianying, a key ally
of Deng Xiaoping.
The End of Cheap
China leaves little doubt that Rein deeply
understands marketing in the mainland. For
companies hoping to succeed with China's
burgeoning wealthy and middle classes, the book
contains a mother lode of clear, actionable
advice.
Big picture writ
small Just as important, Rein weaves his
tale in an engaging, highly readable style, with
real-life examples from his vast catalog of China
research, using both statistical analysis and his
own experiences with real Chinese, from hotel
hookers to billionaire industrialists. He closes
each chapter with a set of key takeaways based on
case studies, with practical steps that businesses
can follow - or, Rein warns, ignore at their
peril. The landscape is littered with the
carcasses of top Western companies that flopped
spectacularly in China.
The book also
uncovers hidden marketing prospects that others
without Rein's practical China nous would miss.
From the Chinese view of health food to education
to real estate, Rein highlights areas ripe for
exploitation by savvy overseas businesses.
Rein is a top-notch China marketing guru.
But that expertise comes with baggage: He has to
be a true believer in the Chinese consumer. That
means buying into the unproven notion that,
despite the uncertainties surrounding its economic
and political future, China will evolve into a
consumer-driven economy. Even if you believe that
so-called rebalancing is inevitable, China's
consumers won't match the mass purchasing power of
the West for decades.
Off
course When it comes to marketing in China,
whether you agree or disagree with his analyses
and prescriptions, Rein is an undisputed expert.
The End of Cheap China may be unmatched as
a provocative guide to opportunities and traps for
foreign companies in the 21st century's liveliest
consumer battleground. But Rein isn't content to
write a book about marketing. He wants to write
about politics, where his views are far less
compelling, sometimes bordering on laughable.
A staunch supporter of the Chinese
government, Rein believes Beijing is gravely
misunderstood by its Western critics. He goes to
extraordinary lengths to excuse China's
shortcomings, deploying a variety of arguments
that don't stand up. His views may be a necessary
accommodation to do business in China as a
foreigner, particularly since CMR surveys Chinese
citizens' opinions. Rein may also be unduly
influenced by his wife's family history.
Red Guards radicals persecuted Rein's
mother-in-law during the Cultural Revolution while
she was pregnant with Rein's wife. Film star Li
Lili's husband and Rein's grandfather-in-law,
filmmaker Luo Jingyu, was driven to suicide under
torture by Red Guards. According to Rein, "the
horrors [of the] Cultural Revolution remain raw
and fresh wounds" for China's current leaders and
many ordinary Chinese citizens. He accuses Western
critics of equating the current leadership with
authors of the Cultural Revolution, an argument
that few rational people would make.
"As I
learned more, I realized my lens, having been
directed by Western media, had analyzed China too
naively," Rein writes. "Perhaps government actions
that seem thuggish to Western observers are
actually protective measures to ensure that the
country faces instability again."
All
ahead steady There's no doubt that China's
government values stability at all costs. But Rein
fails to recognize that stability has become a
codeword for continuing rule under the Communist
Party and a license to quash all opposition.
Ironically, he mentions disposed Chongqing party
boss Bo Xilai as a leader shaped by his family's
suffering during the Cultural Revolution. The
current political storm under Bo underlines the
fragility of monolithic politics: an
uncompromising drive for stability creates a
system so brittle that it can shatter with a
single crack at the top.
That system also
encourages the extreme corruption and impunity
(allegedly) seen from Bo and other Chinese
leaders. Rein argues for a distinction between the
central government authorities in Beijing, which
he portrays as in essence honest, and local
governments that can be petty and corrupt. He
can't acknowledge that there's something wrong
with a system that creates this situation and
can't fix it.
To advance his political
views, Rein sets up a number of straw men drawn
from the fringes of Western opinion. He also takes
on Nobel laureate Paul Krugman on the renminbi
exchange rate, correctly arguing that American
jobs won't come back to the US if China revalues
its currency. But Rein ignores that underlying
fact: China's government, not financial markets,
determines the renminbi value, and China
manipulates the rate to its advantage.
Rein ventures into the realm of the
ridiculous when he argues that China's Politburo
is more responsive to the needs of the people
because it is unelected. He writes: "In many ways,
because of the lack of direct elections, they have
to listen to the needs of their constituents even
more closely than members of elected governments."
Gee, so why don't they just take the easy
way and have elections? One good reason, Rein
contends, is that corruption is so rampant that
fair elections are inconceivable in China today.
Of course, corruption is an inevitable byproduct
of an unelected government.
He may be a
marketing genius, but few will buy Rein's defense
of China's government.
The End of
Cheap China: Economic and Cultural Trends that
Will Disrupt the World by Shaun
Rein. Hoboken, New Jersey, John Wiley &
Sons, 2012. ISBN: 978-1-118-17206-3. US$24.95; 224
pages.
Macau Business magazine special
correspondent and former broadcast news producer
Muhammad Cohen told America's story to the
world as a US diplomat and is author of Hong
Kong On Air, a novel set during the 1997
handover about television news, love, betrayal,
financial crisis, and cheap lingerie. See his blog
and more at MuhammadCohen.com.
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