Been Watching the PLA on TV?

In the Hutong

Wondering where Silverman is
1721 hrs.
I consider myself something of an amateur military historian, so it is particularly vexing to see a chunk of the PLA in action in Sichuan and have absolutely no idea what I’m looking at. That is even more embarrassing when you consider that my wife is a PLA brat and both of my in-laws are retired senior officers.
The web has some superb cheat sheets, though. If you’re inside the GFW you may occasionally have to do without the superb Military Analysis Network at the Federation of American Scientists’ website. If so, SinoDefence.com is also excellent – longer on the photos and much deeper on the PLA than the FAS.

Black Hawks Over China

Jingshun Road

Another Manic Wednesday
1605 hrs.

Those of you who have been watching the coverage of the rescue and recovery operations in Sichuan may have caught a glimpse of a familiar aircraft bearing unfamiliar colors: Sikorsky Black Hawk helicopters sporting People’s Liberation Army markings.

One person I mentioned this to remarked that they had not realized that U.S. assistance to China after the earthquake included helicopters. In truth, it didn’t. The planeloads of supplies and equipment delivered by the C-17s of the US Air Force included a lot of gear, even a fully-equipped urban search and rescue vehicle courtesy of FEMA and the Los Angeles County Fire Department. But no helicopters.

The Black Hawks – identical in many respects to those flown by the US military around the world – are a relic the 1980s, a time when it was politically correct to see the PLA and the US armed forces as potential allies. Despite consistent efforts on the part of Sikorsky, its parent United Technologies, and others, further sales have been politically impossible since 1989.

I am among those who believe that the calculus of global security changed significantly on September 11, 2001, and that in the kinds of non-traditional conflicts that look set to define military operations in the 21st century, the U.S. (as traditionally strong maritime power) and China (as a traditionally land power) are natural allies. It simply requires both sides to move beyond their doctrinal beliefs that the most likely next enemy is the big kid on the other side of the pond.

But I am in the minority, and so the Chinese Black Hawks will be departing the skies soon as their airframes reach the end of their effective lives and they are replaced by comparable (albeit larger) Russian-designed Mil Mi-17s produced in China under license.

In the meantime, it is somehow gratifying to watch them at work, saving lives on hillsides, valleys, and floodplains across the earthquake zone.

Telecom Reform: The Sound and the Fury

On the Airport Expressway

Experiencing a tan-out
1445 hrs.

The government has finally announced the broad strokes of the long-anticipated plan for the restructuring of the telecoms industry, and a quasi-definitive time frame for the government to finally issue the coveted 3G censes. The business and industry media are having a field day with it, arguing about what it will mean for everyone in the industry, from China Mobile to Cisco to Nokia and, yes, even to Apple.

Here is what it really means:

Nothing.

Oh, don’t get me wrong. This edict, which treats some of the world’s largest telecommunications operators like so many LEGO sets, is going to have some major short-term repercussions. Analysts and investors will spend the next 18 months figuring out what effect all of this has on the valuations of the carriers, opportunities for equipment vendors, and challenges for management consultants. Economists, for their part, will nod sagely about the creation of “more competitive entities,” “a more rational industry,” and so on.

But in the end, these changes aren’t going to amount to much. And here is why.

First, the changes do nothing to alter the fundamentals of the market. No matter what sort of beasts this process creates, consumers and businesses are going to continue to suck up bandwidth, cellphones, and services about as quickly as they can be delivered. Wireline will continue to be a tougher business than wireless. None of the three merged firms are going to get instantly smarter about expanding overseas. Efficiency will continue to be a less important issue that keeping up with demand. The managers of these companies won’t automatically get wiser about delivering services.

Second, the changes do not address any of the really pressing issues the industry faces. How do we deliver more services for less money? How do we get mobile phones the billion or so Chinese who have yet to place a call, much less buy and own a mobile phone? How do we make money on IPTV? What role do cable operators have to play in delivering telecommunications services? How do we connect the unconnected? How do we deal with the growing pile of e-waste coming from the industry?

Third, the mergers are taking place in complete disregard for the customer, the consumers and businesses who depend on these carriers to provide the communications infrastructure of their lives and livelihoods. Apart from the fact that these changes will cause a disruption that will throw the customer into fourth place behind the government, employees, and investors for the foreseeable future, aspects of the industry plan look to be designed – if not to make life tougher on consumers – at least to ensure that they reap as few benefits from the changes as possible.

Just one example: we will not only have three different mobile carriers, we will also have three wireless networks operating on incompatible technologies – one on WCDMA, one on CDMA-1X, and one on TD-SCDMA. Such incompatibility not only means that roaming across networks will be more difficult – if possible at all – it also substantially negates the potential benefits to the consumer of competition among three carriers. If everybody offered the same network, switching would be easy. This raises churn for the operators, but it also forces them to be more customer-focused. Now, buying a phone locks you into a carrier for as long as you carry that device.

Nothing in the mergers is designed – or intended – to improve customer service, to lower rates, drop costs, or broaden the scope of services available to consumers or business. Now, it is conceivable that one or more of the companies will come across opportunities to improve service. But for the foreseeable future, each company will be engrossed in the simple effort of completing these disruptive changes without having the wheels fall off.

The fundamentals don’t change. No major problems are addressed. Not only are these changes not market-driven, they ignore customers completely.

At best, things are going to look a bit tidier as the Minister of the reorganized MII looks out his window.

A Perspective on “Karma”

In the Hutong

Straining air through my teeth
2111 hrs.
There is much being written tonight about the thinking of Ms. Sharon Stone and the feelings she expressed about the earthquake in Sichuan from the red carpet in Cannes. Before we get carried away, some perspective:
No matter how intelligent or famous someone is, they cannot possibly speak intelligently about an unlimited set of subjects. We all have opinions on subjects about which we know little, and for better or worse we venture our incompletely-informed points of view on a far wider range of subjects than we should.
Usually, there is nothing wrong with that – for most of us, it gives us a chance to venture our opinions, have them shot down for very good reasons, and walk away having learned more about a subject. Not to mention had a good conversation (face-to-face, in a forum, or in a blog) in the process.
For someone in the public eye, that kind of casual “hypothesis testing” tends to be a bit more problematic. It gets very easy to step in doo-doo, so usually they avoid it.
Much to the chagrin of the many people whose livelihoods depend on her continued popularity, Ms. Stone has stepped (some would say “leapt”) into some very deep doo-doo.
I would venture to say that any religious leader – including the one she apparently deeply admires – or any true humanitarian would take her aside and inform her that whatever her opinions might be on Asian politics, her remarks were a blight not only on herself, her industry, and her cause, but on humanity. I daresay that in the interest of her own karma, her soul, or her own peace of mind they would counsel her to apologize, and to reach out with humility and take all reasonable steps to help ease some of the suffering of those she dismissed so flippantly.
But that’s not the larger issue.
What is truly important for us to remember is that there are – and will continue to be – people in the public eye who will speak out on issues related to China despite knowing very little or nothing of what they speak. Until they, or the world’s public at large, know better, this will continue.
There are, therefore, two correct responses to this situation:
1. Pointedly ignore Ms. Stone and others like her; or
2. Set out to clarify the record.
I would never defend Ms. Stone and what she said. Personally, I find every word of her diatribe, the setting, and the political convictions that underlie it, utterly detestable.
But by attacking her personally we miss an opportunity to debate the point.
And the debate is what is important. Not the source of the opinion that begets it.

Global Brands vs. Local Brands, or Musings on a Buick

Back in the Hutong
Giving Twitter an “F” for Reliability
1152 hrs

According to BusinessWeek, America’s big auto makers appear to be getting ready to boot some of their brands. You only have to spend a few hours walking along a strip of auto dealerships to understand why. Over the past two decades, the growing number of models under a given brand and the increasing reliance of the industry on cutting the number of “platforms” on which their cars are based means that differentiation among brands is disappearing.

(Seriously – apart from cosmetics, the difference between a Buick, and Pontiac, and a Chevy in a U.S. dealership are almost negligible.)

And yet, something is starting to change in the global automotive market.

Glocal, not Global, brands

As manufacturers in the U.S., Europe, Japan, and now China pursue their quest to build global brands and create global cars, a counter-trend is emerging in the growth of what I would call “glocal” brands, brands owned by a major global company but used in a small number of markets.

General Motors has followed this approach almost by accident in Australia for 77 years since the company bought local automaker Holden – and left the marque alone, rather than trying to transplant American brands Chevrolet, Pontiac, or Buick on its acquisition. Today it holds the second largest market share (behind Toyota) in the Antipodean market.

The most compelling example, however, may be in China. Buick was among the weakest of GM’s brand stable when they launched it in the PRC, lagging because it had failed to retain a niche as GM developed, but mostly because the marque had become staid, boring, and uncool. It lacked that baggage when it came to the Middle Kingdom, and as a result GM has done extremely well for itself here, giving Buick a new lease.

All of this is an illustration that the approach automakers are taking to globalization – let’s sell all of our brands everywhere – may be missing the point. The global industry is going to go through another paroxysm of consolidation, and as a result brands will be shuttered with greater alacrity than factories, mostly because it is just getting too darned expensive to build and maintain huge stables of brands.

But rather than try to replicate the success of Chevrolet, Mercury, or Saturn in China, or rather than simply toss marques like Buick, Peugeot, or SEAT into the brand dustbin, why not take a more local approach, drawing from your pool of brands in each market based on the specific local conditions? I mean, if GM can do it in China with Buick, why not Ford with Mercury in Russia?

Or, for that matter, if GM can win in Australia by buying Holden and hanging onto the brand, doesn’t it make sense to do the same thing when a multinational acquires a local brand? If people are still thinking good things about a brand, maybe it makes sense to hang onto it, rather than trying to create a brand entirely from scratch.

Kill the “Brand Organization”

What stands in the way of such common sense, however, is the way many auto companies (and, indeed many companies in other industries) are organized. Rather than have one company with a host of brands and local subsidiaries focused tightly on the specific opportunities and challenges of markets, companies create brand organizations that become independent constituencies within the organization. Eventually, each brand has its own people, its own business strategy, and is in constant conflict with its sibling brands and the parent company for resources.

All of this works great while the brand is hot, but when a brand begins a long, slow decline, it is politically difficult (if not impossible) to dismantle the organization and put the brand on ice. The business begins to service the brand, rather than the other way around. Frequently, the only way to get rid of a brand is to sell it – and its attached organization – allowing the buyer to cull head count and more intelligently guide the future of the brand.

Brand-centric structures also mean that as a company goes global, so does the brand. But should every brand be global?

More to the point – does every brand belong in China? Or are there some brands with attributes that don’t necessarily mesh with local values and aspirations? Does Fatburger belong in China? Does Peugeot? Rolling Stone magazine? Taco Bell? Vanity Fair? Trader Joe’s? NASCAR?

Or do these things need to be changed so much before coming to China that they lose their very essence?

In so many cases, it would be just as easy to buy or create a local brand

Or, more to the point, to reach into a company’s bag of retired or dormant brands, bring it to China and inject new life – and local characteristics – into it. GM did it with Buick, and Colgate could even get away with it with Darlie toothpaste, the creation of glocal brands should be high on the list of strategies for companies who own multiple brands, and a real alternative to the default strategy of globalizing everything with a recognizable marque.

A Moment

Our plans to resume vigorous posts here on Silicon Hutong upon our return from the US have been put in abeyance for the most important of reasons.

In support of the three national days of mourning for the victims of the Sichuan earthquakes, their families, and the nation. we will resume posts on May 22.

Thank you for understanding.

ChangeThis: MindMeat for Businesspeople

Nordstrom Ala Moana
Watching the Party Secretary search for her Mother’s Day gift
1052 hrs local

If you have an interest in business and management, either aspirational, functional, or academic, one online resource that is well worth mining is ChangeThis.

ChangeThis, for those who haven’t run across it, is essentially a repository of manifestos – public declarations of principles – by people who think deeply about an aspect of business, leadership, people, or life. Each manifesto averages around 14 pages and comes packaged in a consistent pdf format for easy downloading, reading or printing.

The level of contributions is consistently high. Early contributors included Tom Peters, Seth Godin, and Guy Kawasaki; the latter, like many of those contributing manifestos, took the opportunity to summarize the key points of his most recent book.

Not all contributions are useful or relevant, and some are downright irritating, but the worthwhile and thought-provoking content far outweighs the self-promotional and boring.

A starter selection:

Competing in a Flat World: The Perils and Promise of Global Supply Chains” by Dr. Victor Fung and Dr. William Fung, Group Chairman and Group Managing Director (respectively) of the Li & Fung Group;

The Hard Reality of Semiglobalization…And how to profit from it” by IESE professor Pankaj Ghemawat, who doesn’t think the world is so flat after all;

Marketing Mismatch: When New Won’t Work with Old (Riffs on a Meatball Sundae” by author and marketing gadfly Seth Godin;

The Elongating Tail of Brand Communication” by Ogilvy’s Mohammed Iqbal;

Work is Broken: Here’s How We Fix It” by the late Marc Orchant;

Seduced by Success: How the Best Companies Survive the 9 Traps of Winning” by Robert Herbold, former COO of Microsoft;

Ideaicide: How to Avoid It And Get What You Want” by consultants Alan Parr and Karen Ansbaugh;

The Gobbledygook Manifesto” by public relations strategist David Meerman Scott

100 Ways to Help You Succeed/Make Money, Part II” by uberguru Tom Peters;

The Greening of Business: Recent Trends and Remaining Hurdles” by Green to Gold author Andrew Winston.

BOCOG’s Edict to the Media

The Lanai in the Treetops
Grateful that the Fort DeRussy disco has quieted down
2153 hrs.

Among my vacation reads is BOCOG’s guide for the foreign media covering the Olympics.

Admittedly, it’s not quite a gripping as the rest of the stack of books I picked up while over here, but it provides some interesting clues about what we are going to see pumped out of Beijing this summer.

The entire 47mb tome can be downloaded from BOCOG by clicking the appropriate link on the press release page, if you’re interested. Otherwise I’ll be posting some thoughts once I slog though it.

Quote about Books

From the Lanai in the Treetops, Honolulu
Watching the submarines dive and surface
1241 hrs

Thumbing through the pile of used books I picked up in LA last week, I am reminded of an old saying.

“Books are like wine: the good ones age well, the bad ones are vinegar.”

One book that remains excellent is Robert Mason’s Chickenhawk, which was arguably the first book to give a helicopter-pilot’s eye view of the Vietnam war. I had lost my old copy so I picked up a used edition to slide into the library. I’ve read probably a half-dozen memoirs by pilots from Vietnam, and Mason’s remains the best so far.