An era ended

MJ, King of Pop

When the shocking news reached this corner of the world in the morning, I felt really sad. I was not and never expected to get emotional. The polarized image of MJ had been lingering in my head for a long time. But, that did not last any longer. I got overwhelmed by the sadness in the afternoon when I was looking through the news and the reactions of people on the internet. Those photos, music and videos are so evocative of the old days when MJ was singing. I just could not hold back the emotion and it's stirring inside! Words fail me ...

Michael，你依然是那个流行乐之王! 一路走好!

Counterproductive

2009 Declaration of the Anonymous Netizens

Finally, Google is blocked, which means I cannot use Gmail and Google Docs. I am really frustrated, because my primary email is with Gmail. Besides, I need to use Gmail/Docs to update my blog. The harsh and irrational decision to block Google has infuriated millions of netizens in China. I had a peek at some Chinese online forums and vented my anger there. The blockage has been on for a while and nobody knows how long it will last. The government has made a very stupid decision. I don't see how they can justify the decision and I don't see what they are going to achieve. One thing is for sure, netizens are unhappy. Here comes the widespread 2009 Declaration of the Anonymous (Chinese version (also see the photos)/English version). I feel much better after reading it. My words are saved.

How productive is the GFW?

Debating an eye feast? LOL

Photos from sina.com

The China Swimwear Design Contest Final was hosted at the 'Water Cube' sometime last week. I happened to watch the fashion show on TV (live? no sure). But, unfortunately I missed the first half of the show, in which the Chinese National Flag Bikinis were featured. Not being a fashion conscious guy, I still enjoyed the show. You know, beautiful and willowy models! A feast to the eyes! However, before I came across the report here (in Chinese), I was not aware of the debate whether using Chinese national flag design of bikinis is a disrespect to the flag. Some fellow blogger has translated the report into English here.

Honestly, I didn't expect this national flag design could trigger a debate. Anyway, I am amused. What to debate for? Maybe some Chinese netizens have got too much time to spend on the internet? Why not just feast your eyes on those beauties and come up with something more meaningful? Actually, I'm a bit suspicious of the truth of the report. Because I haven't seen such debate of the topic on a number of popular online Chinese forums. On second thought, maybe the report was cooked up by some crappy journalist? Easy job, em?

Photo story

A man was being forced into a mini van

Pushed into the van

Policemen in plain clothes?

The photos show what happened under my flat about one and a half hours ago. Very loud argument broke out from outside. Out of curiosity, I looked through my window and saw a bunch of people including a woman were wrestling with a man. Those people were shouting, 'Get him in the car! Get him in the car'. The man was shouting, 'Let me go, I don't know you! ...' Apparently, they were trying to force this man into their mini van parked in the middle of the road. I thought it might be a kidnapping and grabbed my camera to take some shots. As the 2nd photo shows the man was overpowered and pushed into the mini van. When they were about to leave, a black car suddenly appeared and blocked the mini van. Several guys in plain clothes came out of the car and shouted, 'Don't move! (别动).' Then, the mini van stopped. At that moment, I thought those guys must be policemen. It seemed someone must have called the police earlier before the incident. The man 'kidnapped' stuck his head out of the window of the mini van and screamed to the policemen, 'I don't know them! I don't know them!' At that moment, my camera ran out of battery and I couldn't take more shots. Those 'kidnappers' began to talk to the policemen and behaved obediently. Anyway, the man was rescued and they moved out of my sight a few minutes later.

Phew! My photos will not be used as evidence by the police!

Travel 2.0, Youth 3.0? Any idea?

I have some understanding of what 'Web 2.0' refers to. Even though there is little revolutionary development from so called 'Web 1.0', the term 'Web 2.0' came into existence and has been widely used by many people to refer to the web we are using today. I have no problem with it since everybody has some knowledge about what 'Web 2.0' means. But, it seems some people have become addicted to conjuring up new concepts nowadays. In the last a few days, I came across terms like 'China Travel 2.0' and 'Youth 3.0' on the internet with absolutely no clue what they refer to. These so called 'new concepts' left me bewildered. How can 'travel' be 2.0ed, and 'Youth' 3.0ed? And, how did the age of 'Youth 2.0' circumvent us without being noticed? Weird, weird, very weird!

Anyone knows what 'Youth 3.0' is?

No idea? It doesn't matter. I've come up with a new concept 'Sex 2.0'. I AM SMART! 

Vancl, the fast follower excels

Chen Nian, the founder and CEO of Vancl

Yesterday, I watched a TV program interviewing Chen Nian (陈年), the founder and CEO of Vancl.com. His name isn't unfamiliar. He is also the co-founder of Joyo.com (Amazon China). When Amazon acquired Joyo, he continued to work as an executive VP. However, things went sour when heated argument between him and the newly appointed top American executives began. In the end, he was not happy and left Joyo. Now, here comes Vancl, a leading online shirt retailer and a brand of men's apparel. Actually, Vancl isn't the first to explore the B2C business online. It's PPG who made a buzz first. PPG's advertising campaign almost made PPG a household name in China in 2007 and early 2008. PPG's ads were everywhere on TV and on many newspapers. However, PPG's advertising campaign backfired. It was too EXPENSIVE, which cost PPG the first mover advantage. News came out last year that PPG was in trouble and short of cash. The entrepreneurial Chen Nian was amazed by PPG's business model: selling shirt online, self-owned brand, outsourced logistics & production, and no factories needed. According to himself, he studied PPG for several months before coming up with the idea of Vancl. The business model is not much different, but Chen Nian put his advertising campaign ONLINE. That's why whenever I browse the internet, I see Vancl. Vancl was established in Oct. 2007 and later in mid 2008 received a total of USD 30 million venture capital investment. Vancl sells more than 10,000 shirts per day. According to the TV program, Vancl's sales revenue reached RMB 300 million in 2008, which was a miracle for a newly established company.

Two months ago, I bought a shirt, a pair of trousers and shoes on Vancl. Honestly, I'm very satisfied. It's inexpensive and the quality is very good. I remember Chen Nian boast that Vancl's products, moderately priced, are made of well selected high-quality fabrics, and the quality is not inferior to many big name brands. I am not an apparel expert, but I assume he lives up to what he's promised. What makes Vancl an instant success? Here are some of my thoughts,

• Being a fast follower. PPG, the first mover, found the niche
  market. Vancl followed with improved business model and is more capable of executing the business plan.
• Knowing clearly who the customers are. Vancl targets male professionals aged between 25 to 40. Well, I'm one of those customers who's reluctant to spend time walking around shopping malls to buy clothes for work use.
• Knowing how to reach target customers at a reasonable cost. Vancl's ads have been on a lot of well selected websites (e.g. Tianya.com, 51job.com, yeeyan.com, etc.). I've heard from a friend who has some contact with the marketing officer of Vancl that over 80% of their advertisement is online. There seems to be a profit-sharing agreement with various websites. That's exactly where PPG did wrong. I watched PPG's ads on TV and newspaper. All that I knew was I could dial a telephone number to order PPG's shirts, but I wasn't aware of PPG's website even though it was vaguely mentioned in the ads. Also, it's too expensive to advertise on TV and newspaper.
  

I think the above three points are the keys that led to Vancl's success. Also, there are other reasons behind Vancl's success. For example, Vancl knows customers needs very well and keeps improving their products; and Vancl's other marketing activities (e.g. customer loyalty program, giveaway electronic coupons) help foster a large number of loyal customers; good logistics ...

As I know, the orders made via Vancl.com are still on the rise. But, wait! Where is PPG now? Can Vancl take a breath now? I am afraid not. Masamaso and Bono are coming to get you!

Related reading:
VCs in China: Kleiner’s shirt factory, Sequoia’s farm
Vancl Secures Series C VC Financing

Apricot-picking trip

Apricot trees

Apricot

I got a call from my ex-ex-boss early last week, inviting me to join his family, relatives and former workmates to go on an apricot-picking trip to a village in Haidian District on Saturday. I said, 'Great, I'll be there'. On Friday, a former colleague, also a good friend, invited me to dinner and asked me to stay at his flat so that we could go together in his car early in the morning. It was raining when we hit the road. It took us about 1 hour to get to the village. When we met the other people we headed for the apricot orchard, which is on the hill near the village. We did apricot picking in the rain, which took away some of the fun. However, I noticed that a lot of people/families still managed to come out to do the trip. Anyway, the trip was not so bad. It's great to meet some friends I haven't seen for a while. It's my second fruit-picking trip. I did one many years ago. Fruit-picking is the activity that you go to a fruit orchard, enjoying your time with family/friends while picking fruits. Then, you can bring the fruits home after paying the farmer. Fruit-picking trips are popular in Beijing in Spring and Summer when fruits are ripe. Families/friends drive to the fruit orchards in the countryside. They are welcomed by the farmers who raise fruit trees in orchards, because it helps speed up sales during fruits' short maturity period.

By the way, unlike the other people, I didn't bring back any apricot which is not my favorite fruit. Next time, I'll take an apple or peach-picking trip. :)  

The anniversary

I was frustrated and angry today, because my wireless internet connection did not work almost the whole day, and I was treated with terrible customer service by the vendor who sold me the CDMA wireless card at Buynow Plaza. However, I'm happy to read the post entitled 'Looking Forward to Tomorrow' on China Hearsay before I go to bed. It's nice to read a post like that by a laowai who keeps the sanity, which is in sharp contrast with so many 'commentators'. I left a comment on the above-mentioned post and I do not have the desire to say more about the anniversary.

I'm looking forward to tomorrow, too. 

Representative Office or LLC in China? That is the question.

Several weeks ago, I received an email from one of my blog readers from US. We exchanged some emails chatting about some Chinese pop musicians, and later he expressed his interest in doing business in China. He said that in future his company would register a representative office in China and work on getting Chinese clients, which prompts me to wonder why foreign investors tend to register a rep. office instead of a LLC (limited liability company) to do business in China. So, here comes this post, in which I'll remind interested foreign investor of the regulations that he/she needs to look into before he/she decides to register a business entity in China, also I'll talk about the pros and cons of a rep. office and LLC.

Before you decide to invest in China, you're advised to look through the Catalog for the Guidance of Foreign Invested Enterprises (Revised 2007) (or, 《外商投资产业指导目录(2007 年修订)》in Chinese), which is a catalog of encouraged, restricted and prohibited foreign investments. Basically, it tells you which industry you are allowed or not allowed to invest in, and in what form, WFOE or JV, etc. Unfortunately, I cannot find an officially translated version of the Catalog. Interested foreign investors may use Google to find unofficially translated English versions of the Catalog. Anyway, don't worry. Foreign investors are allowed to invest in most industries in China. Then, let's look at the pros and cons of a rep. office and LLC.

Pros of Rep. office:

• No minimum registered capital requirement.

Cons:

• No allowed to conduct actual business (only for liaison purpose);
• Cannot hire Chinese employees directly; Employees sign employment contracts with a qualified HR company (e.g. Beijing Foreign Enterprise Service Group Co., Ltd. or 'FESCO' in short) and employees are then dispatched to work for the rep. office. The service provided by FESCO is not cheap.
• Must pay taxes even if a rep. office does not have any income. The tax payable is calculated on the basis of a portion of a rep. office's expenses.

Pros of LLC:

• Can conduct actual business in China;
• Can hire Chinese employees directly;
• Pay taxes just like any other Chinese company.

Cons:

• Minimum registered capital requirement: RMB 30,000. (Trust me, nobody would do big business with you if your liability is limited to just RMB 30,000. To make your company look trustworthy, increase the amount!)

Rep. office is only useful for companies that need special permit or license to operate business in certain industries in China, for example, banking or securities. Before these companies can obtain a license to operate their business legally, a rep. office is a reasonable choice to begin with. Foreign universities can also register a rep. office to recruit Chinese students. I would advise most foreign investors to registered a LLC if you're serious about doing business in China.

Of course, there are other business forms you can choose. My objective in this post is to advise foreign investors to go for LLC rather than a rep. office. Don't always assume a rep. office costs you less than a LLC (You pay the registered capital and it's still yours, right?).

You may be interested in having a look at the Company Law of P.R. China (《公司法》). By the way, registering a company in China is not so difficult and you don't have to hire expensive lawyers to help, unless your case is complicated and you feel the need to use lawyers. However, if you don't want to waste time on your trips, you may need to hire a professional agent to run errands for you and get your company registered.