Silicon Hutong

China and the World of Business • China Business and the World

Silicon Hutong - China and the World of Business • China Business and the World

Sophisticated Chongqing

Hutong Forward
LAX bound for Bangkok and Shanghai
1215 hrs.

My first trip to Chongqing summarily destroyed all of my preconceptions of the central Chinese river terminus.

Instead of an immense but slightly provincial city, I came away after three days with the impression that Chongqing is about as provincial as Hong Kong, and is in many ways a lot more livable than its coastal cousin.

People were fashionable and stylish, at least as much as Beijing. The streets along the river were lined with remarkable restaurants and shopping districts that made Shanghai’s Xintiandi look both quiet and unsophisticated by comparison. The Pedestrian Street between Minzu Road and the Liberation Monument bisected the central business district with a sophistication that rivals Nanjing Road and Wangfujing. And the people have that warmth that seems to come so readily to the people of Sichuan.

I berate myself now for delaying my visit for so long. There really is more to Chongqing than a foggy, overgrown river port, and I suspect that I will be going back again soon.

The True Measure of Urban China

On the Hutong Express
Somewhere in Central China
1123 hrs. 

As I hurtle through 2,800kms of Chinese countryside, a question occurs to me about China’s massive urbanization. The shift is unprecedented, and for that reason alone begs for close examination.

The truth is, we are not examining the scale of urbanization as closely as perhaps we should. Is China urbanizing as quickly as statistics suggest? Or are we – at least in part – witnessing some statistical sleight of hand?

The thought that provoked me on this trip was the villages. Admittedly, my survey was back-of-napkin and limited to those villages alongside the high speed rail lines, but there seemed to be more building, more development, and little blight. That made me wonder. Are people really leaving their villages and heading to the Big City, or are they staying put, and statisticians taking villages and towns previously designated as “rural” or other non-urban areas and predesignating them as “urban?”

There is more to this question than statistical nit-picking. If many people are urbanizing in place, this means that China faces a very different set of challenges in addressing urbanization, including rethinking the infrastructure that needs to be built and probing whether this means that more of the country’s shrinking stock of arable land is in jeopardy.

For marketers, it would mean that a growing percentage of potential customers are physically beyond the reach of their current advertising, retail promotion, and distribution infrastructure.

Either way, it is time we tarted probing China’s urbanization statistics rather than take them as gospel.

The Limits of Coercion

Persuasion trumps coercion. Even in China. The government has a monopoly on force, but it does not retain that monopoly by employing it without consideration of public opinion.

The days of high-handed government action are over, and this makes the government’s task more complex – and delicate – than ever. Power my grow from the barrel of a gun, but the nation’s leadership cannot ignore that it remains rooted in the people.

Concept of the Week: Urbanizing In Place

Urbanizing in placeconcept – the idea that China’s urbanization is not being driven entirely by migration from the countryside to the cities, but that large areas that Beijing’s statisticians might once have considered “rural” are now considered “urban.”

In-place urbanization could occur in one of three scenarios.

The physical area of a municipality has been expanded to include what was once surrounding countryside.

In the second scenario, a village that was once considered part of the countryside has now grown into a town that a demographer or statistician would now classify as urban.

In the third scenario, a group of villages in a given area are considered to be conglomerated as a single administrative entity and reclassified as a single town.

In these cases, China’s urbanization is taking place without migration, and presents a different set of policy, marketing, and personal challenges and opportunities than classical migration-based urbanization.

The Third Way on Xi

English: "Long live the great Communist P...

English: “Long live the great Communist Party of China” in Xinhuamen, Beijing ‪中文(简体)‬: 新华门左标语“伟大的中国共产党万岁” (Photo credit: Wikipedia)

“Is the Chinese dragon losing its puff?”
Peter Harcher
The Canberra Times
March 16, 2015

Professor David Shambaugh’s recent essay in the Wall Street Journal suggesting that China’s political system is about to hit some very rough times (“The Coming Chinese Crackup“) has provoked intense debate. Peter Harcher’s article written in response offers a neat summary of what makes Shamgaugh’s conclusions so debatable.

I nevertheless absolutely reject his conclusion which I find astonishingly ill-informed. The pervasive sense of dramatic change is, I have found, combined in almost all Chinese minds with satisfaction and confidence that the change is urgently needed–indeed long overdue—and in the right direction.

It also demonstrates that the American academy has powerful competition as a source of cogent analysis on Chinese politics.

Any serious discussion of China’s future must include non-Academics like economist Arthur Kroeber and Australians like Geremie Barmé of the Australian National University and David Kelly of China Policy in Beijing.

Barmé, for his part, writes off Shambaugh’s collapsism as the view of an American deeply anxious about America. Kroeber, an American himself, argues that the Party remains as strong and adaptable as it was in 2008, when Shambaugh wrote his excellent China’s Communist Party: Atrophy and Adaptation.

My problem with both sides is the determinism implicit in the arguments. The Party’s collapse might not be imminent, but neither is its adaptability without real limits, imposed upon it by important groups and individuals within its own ranks. I find it hard to believe that Barmé and Kroeber would argue that point.

We thus must agree that there may be circumstances under which the Party might prove insufficiently adaptable to avert an existential crisis. And before you protest, let us agree that there may be circumstances under which any polity, however strong and adaptable, might face the same limits. In that case, the answer is neither “the Party will collapse” nor “the Party is too adaptable to collapse.” It is, rather “under what circumstances would the Party face the danger of collapse?”

Like most of us, neither I nor my clients can afford to treat China like its future is a game of roulette: bet on Red, the Party stays in power. Bet on black, and it collapses. Creating strategy in business means contending with all possibilities, balancing them, and coming up with a pathway that appropriately addresses them.

We can be neither Cassandra nor Polyanna. We should not overestimate the considerable challenges Xi Jinping faces as he guides the nation through roiling and uncharted waters, but none of us can afford to underestimate them.

Shameless Plug Dept.: New Fast-Food Paper

Hutong West
Contemplating lunch
1253 hrs.

My most recent paper, this one on addressing the challenges facing fast food franchisors in China, “Jumping China’s Great Food Wall (pdf),” is now up on the Allison+Partners website.

Failing that, you can find the paper on here.

This is more of a practical paper than my last one, giving a quick overview of the uneven success enjoyed by fast food companies in China, and offering a series of prescriptions designed to avoid some of the more serious rocks and shoals, and mitigate the effects of many others.

Beijing’s New Internet Buzzphrase

Hutong Forward
Planespotting at Reagan National
1655 hrs 

In a ten minute speech last month in London at the 50th Meeting of ICANN, Lu Wei, the Minister of China’s Cyberspace Affairs Administration, introduced a set of seven principles under which, according to him, the Internet should be governed. While not much attention was paid Mr. Lu or his speech outside of the confines of the attendees, we can assume that it was an official statement of government policy, and therefore worth understanding, analyzing, and discussing.

His principles, as I heard them, are:

  1. The Internet should benefit all mankind and all of the world’s peoples, rather than cause harm;

  2. The Internet should bring peace and security to all countries, instead of becoming a channel for one country to attack another;

  3. The Internet should be more concerned with the interests of developing countries, because they are more in need of the opportunities it brings;

  4. The internet should place emphasis on the protection of citizens’ legitimate rights instead of becoming a hotbed for lawbreaking and criminal activities, let alone becoming a channel for carrying out violent terrorist attacks;

  5. The internet should be civilized and credible, instead of being full of rumors and fraud;

  6. The Internet should spread positive energy, and inherit and carry forward the outstanding culture of human beings;

  7. The Internet should be conducive to the healthy growth of young people, because that concerns the future of mankind.

There is a lot to grist in these, but what jumped out at me was this catchphrase “credible Internet.”

There is a ring to it that suggests that we are going to be hearing this much more in the coming months, but the aim seems clear. While in the past the boundaries of online expression have been defined by prurient content on the one hand and seditious content on the other, there is now a third piece to that troika: rumors.

This is worrisome: “non-credible” content implies a much wider scope for restriction than the modus vivendi we have enjoyed in the past, and opens to official censure a vast swath of online content. You can avoid posting prurient content rather easily by avoiding adult themes and illustrations. You can dodge seditious content by steering clear of domestic political issues. But “non-credible” content is in the eye of the beholder, and can easily extend to commercial content and company web sites as well as posts on Weibo or WeChat.

Watch this space, as I suspect we are going to learn more about where the authorities are going to be drawing the line. In the meantime, any company or individual producing a content-laden Chinese site or posts on Weibo or WeChat should err on the side of caution. Chinese law is unkind to those whom the authorities accuse of spreading rumors, and demonstrable veracity may not be enough to keep you out of the wrong kind of spotlight.

Edelman, Rui Chenggang, and China PR

Hutong Forward
In the Shadow of the Pentagon
1710 hrs

As more details about ties between the China operations of Edelman Public Relations and erstwhile China Central Television (CCTV) anchor Rui Chenggang are released, a wave of schadenfreude has risen amongst both Edelman’s rivals and the detractors of public relations. As happened when Edelman was caught in a similar ethical imbroglio when it hired ostensibly independent bloggers to post on behalf of Wal-Mart, PR‘s detractors believe that ethical lapses suffuse China’s public relations industry, while practitioners who don’t work for Edelman see this as a large, hubris-laden market monster getting its due.

Both are wrong.

Ethical lapses are common in PR in China, but “common” is a far cry from endemic. There are PR firms, executives, and teams in China who insist on the highest possible ethical standards. Rather than going broke, they discover that while some clients will shun them for these reasons, a growing number of clients, particularly MNCs, are insisting on high ethical standards and are willing to sacrifice short-term results for a clean reputation. Clean business is good: not only do these PR firms keep very busy, they have to turn opportunities away.

But while these firms are the future of the business, they are still the exception that proves the rule, and no agency executive or corporate PR manager should guffaw too loudly at Edelman’s expense. For far too long as an industry and a craft we have turned a blind eye to practices considered unethical, immoral, or even illegal in more developed markets, failing to see that China was developing and that a reckoning was coming.

Two issues prevent widespread improvement in PR industry ethics in China. First is a persistent exclusivist belief that because this is China, things are done the Chinese way, and always will be. Operating ethically is seen as naive at best, and culturally imperialist at worst (“how dare you impose your values on us!”)

The second issue is fear. PR executives and their agencies believe that if they don’t take advantage of every opportunity, however morally ambiguous, they will lose revenue and clients to competitors who lack – or opportunistically ignore – their moral compasses. The pressure is greatest among the larger agencies where the focus is exclusively financial performance. The accountants calling the shots in New York and London are not measuring ethical compliance: they measure revenues and profits. Faced with the choice of losing a sizable client or cutting some ethical corners, there is no contest.

But the persistent idea that China is an island untouched by ethical standards for the conduct of public relations is now demonstrably so much cow manure. Those who cling to such exceptionalism – and you know who you are – are dinosaurs whose time in this business is limited, regardless of the success they appear to enjoy today.

What happened to Edelman could have happened to any of dozens of local and international PR firms. Rui had made himself a target, and Edelman is the largest PR firm in the world. But the rest of us have now been given a shot across our bows. Either we bite the bullet now, change course and adopt ethical tactics and practices, or we leave our firms, our people, and our livelihoods at the mercy of government caprice. If we don’t, this will happen again, and when it does we will all find that it will not be a single firm in the spotlight – it will be every PR practitioner in China.

China and “Datathermal Energy”

Hutong West
Letting the Sunshine In
0909 hrs.

Much of my March was spent working with clients who are thinking through some of the issues facing the growing data center market in China. For the uninitiated, a “data center” is a place that houses anywhere from one to tens of thousands of servers. This blog sits in a data center, your bank information sits in a data center, there are a lot of them, and these places are growing.

Little wonder. One delightful quote from suggests why.

“From the year 2003 and working backwards to the beginning of human history, we generated five exabytes–that’s 5,000,000,000 GB – of information.

By last year, we were cranking out that much data every two days.

By next year, we’ll be doing it every 10 minutes.”

That quote was from two years ago. Draw the curve in your mind, and you can figure that, conservatively, today we could be generating five exabytes of data every five minutes. Not all of that is going to sit in phones, laptops, external hard drives, thumb drives, or those little SD cards that we stick in our digital cameras. Much of it has to sit in data centers.

The Great Heat Sink

Which is fine, until you consider that data centers suck energy the way blue whales suck krill: in massive quantities, and with large amounts of undesirable waste at the end of the process. In the case of data centers, that waste comes in the form of heat, which then demands more energy to power cooling, which in turn generates heat. The bigger data centers get, the more heat we are talking about. And data centers are getting quite large indeed, measured in millions of square feet of servers stacked like so much electronic cord wood.

Some data centers have started addressing heat as a resource, rather than a waste-product: IBM’s Swiss data center heats a pool; Telehouse in the UK is heating homes in London’s Docklands district; and Notre Dame’s Center for Reserch Computing is heating the flowers of a local municipal greenhouse with the heat from a rack of high-performance computing nodes.

Not everyplace where there are data centers needs heat, though. Some places simply need energy. As any engineer will tell you, where there is heat, there is potential energy. The key will be to capture enough heat so that it can be efficiently turned into energy, for example through steam turbines. Energy generated like this – through the waste heat of data centers, we will call “data-thermal energy.”

Data-Thermal China

China is a natural place for the development of data-thermal energy. The country is early enough in the cycle of development for data centers to start designing its largest server farms to capture and channel heat efficiently. And scale will not be an issue in China. Leaving out government-run data centers entirely, some commercial data centers, like one 6.3 million square-foot beast under construction in Langfang just outside of Beijing, will have more floor space than the Pentagon.

The ability to capture and use waste heat efficiently also opens the prospect of cutting down on air-conditioning costs. If the heat can simply be blown – or sucked – away from the servers and into a central collection point for energy generation, the need to actually cool the air should abate a bit.

There is considerable engineering work to be done, but this is a worthy (if not essential) direction of thinking for the people designing and growing China’s server farms. It will demand imagination and discipline: the old way of doing things – stack ’em high, chill ’em down, and blow the hot air out the window – is cheap and pervasive. As the costs of energy grow and sustainability becomes more important, however, Big Data will need to start seeing itself as a utility, not just a customer.

Setting the Stage for Chinese Innovation

Near People’s Square, Shanghai
Skyline in Silhouette 
0700 hrs. 

Walking the floor at both CES in Las Vegas and Electronica China in Shanghai within a ten-week space provides one with a clear view of how far Chinese enterprise has come, and, equally important, the degree to which international technology businesses have lost their former dominance in China.

One could conclude from these impressions that multinational tech companies are in a state of permanent decline in China: Beijing’s unstated but ongoing policy of import substitution has succeeded, and foreign companies are fighting a losing battle. You don’t need to go to trade shows for anecdotal evidence. Just look in purses and backpacks: ZTE, Huawei, TCL, Lenovo, and Yulong are five of the top ten mobile device brands, and they’re gaining on the global giants.

But if you dig a bit deeper, as you can at a show like Electronica, you find that the opportunities for foreign tech companies have not disappeared: they have evolved. To understand why and how, it is useful to start by looking back on how the tech business developed in China.

From Buy to Make

Since the beginning of reforming and opening in China in 1978, the nation has essentially gone through three phases of foreign involvement in technology-based industries.

The first phase was imports, when the government focused on bringing urgently-needed products like personal computers, telephone switches, automobiles, machine tools, and other technology-based products into China. The need for these products, most of which were essential to ease key bottlenecks in the development process, was so urgent that key ministries were permitted the use of precious foreign exchange to purchase those goods.

China’s leaders always expected, however, that the nation would begin producing these goods on its own, preferably in local companies, but realistically in joint ventures with global technology companies who would bring three essential ingredients: the products, with their component technologies; production know-how, with process technologies; and the capital to build the production facilities. This was the second phase: the shift to local production.

Fast Followers

By the mid-1990s, though, another shift began to take place. As the global tech giants ramped up production in China to a mass-scale, local firms began manufacturing their own technology goods. Local firms began to dominate production, using a “fast-follower” approach: “maybe we won’t be innovators, or even the first to market with a given innovation, but we will come to market so soon after the innovation leader that we will still reap our share of the market.”

By last year, the payoff of this shift had become apparent. Chinese high-tech companies were long past needing foreign manufacturers to teach them how to build high-tech products, to help them implement cutting-edge production processes, or even to finance the construction of factories. Those local firms unable to bootstrap their own capabilities and finance now had a vast stable of local and foreign companies ready to provide the necessary technology, and finance, thanks to cash flow and capital markets, was no longer a problem.

Innovation, however, remained a challenge. While a handful of local tech companies –  notably (but not limited to) Huawei, ZTE, Xiaomi, and Leovo – had begun to innovate, widespread innovation that would offer a more sustainable competitive advantage (and a larger share of profits) still seemed a ways off.

Enter the Innovation Platforms

And there it remains today.

This gap between efficient production and value-driven manufacturing is the heart of the next opportunity for foreign firms. While the days of foreign brands utterly dominating technology markets in China may be past, more than ever China’s manufacturers need a steady stream of innovations upon which they can base their own innovating.

Technologies that serve as the foundation that allows others to innovate are what we can call innovation platforms. Five factors make innovation platforms stand out from other technical advances:

Significant – The core innovation is a genuine advance that is both useful and relevant;

Substantial – There is a obvious, large, and diverse market for products based on the innovation that offer substantial profit potential, and the technology is easily commercialized;

Shared – The company promulgating the core advance is more interested in creating an ecosystem than a monopoly, i.e., it is content with focusing on supporting and enhancing the core technology and not getting into the business of its customers/licensees;

Stable – Any subsequent changes in the underlying technology are likely to be iterative, not major, for several generations of products. This makes it economically viable for companies to invest in R&D based on the innovation platform.

Supported – Rather than serving as a glorified patent troll, the companies that develop innovation platforms invest heavily in resources designed to assist product developers create viable commercial products, such as on-site engineering support, system validation labs, extensive documentation, or developer groups. In addition, the company continues to invest in improving the core technology.

Early Innovation Platforms

Many innovation platforms take the form of acknowledged industry standards. Examples like Wi-Fi, Bluetooth, and USB could be considered a form of innovation platforms, in that their technologies enabled the creation of products and even companies.

But when we talk of innovation platforms, we are really looking at products and technologies that spawn not only products, but companies and entire industries. Some illustrative examples:

The Xerographic Process: Invented by Chester Carlson and later commercialized by Haloid/Xerox, which begat the photocopier, the laser printer, desktop publishing, and many specialized sectors;

The Intel 8000 microprocessor family, that together enabled the creation of the personal computers, stand-alone video games, and a half-dozen major industries;

Qualcomm’s CDMA: CDMA enabled the commercialization of the internet, created the telematics industry, and is on its way to recreating the automotive, trucking, and healthcare industries, among others.

Each of these companies took an indirect lesson from the failure of Thomas Edison’s Motion Picture Patents Company, an industrial trust that tried to control the film business as well as the manufacture of cameras and film stock. It was, arguably, Edison’s greatest failure. By exercising a modicum of control over the core technology, supporting it, advancing it, and making it available on reasonable terms, Xerox, Intel, and Qualcomm each fostered the creation of immense economic value.

Platforms for the Future

In a world where industrial and engineering capability is a scarce quantity, the easiest way to make a return on a major innovation is to create a vertical industry around it, building the components, creating the product or system, and distributing it under your own brand. The Bell System did this for nearly a century with telephones, and IBM and a handful of other companies did this for the first three decades of the computer industry.

But when the ability to design, engineer, and industrialize complex products is widely distributed, as it is today, robust companies are built on either using innovation to enable industries, or in building on innovation to create industries.

For the time being, Chinese companies are (generally) comparatively better at building industries based on key innovations, and European and particularly US companies are (generally) comparatively better at consistently creating core innovations that can serve as the platforms for those industries. This does not mean that no core innovations will come out of China, or that the US is no longer capable of product development and commercialization.

But it does suggest that the richest opportunities in China for foreign companies, particularly those in science, engineering, and technology-based industries, lies in licensing and enabling Chinese manufacturers, rather than competing with them.

The question facing tech companies, then, is whether and how to make use of the company’s innovations – or an ongoing stream of them – in order to serve as a profitable and indispensable platform for Chinese innovation. And for those of us who watch this market, the pressing question is “in which industries will the next round of innovation platforms emerge?

I leave the first question to the companies themselves. For the second question, my early research points to transportation, healthcare and biosciences, construction, energy, and the environment. I know: I have my chips on a lot of spots on the roulette table. In the coming months, I look forward to sharing with you why I think things are going that way.

China’s Great Innovations: Way More than Four

The 50 Greatest Breakthroughs Since the Wheel
James Fallows
The Atlantic

October 23, 2013

Doing book research (and shifting as much of it from my bookshelf to Evernote as possible), I came across this little gem that had escaped my attention while I was on the road last fall.

James Fallows turned to some experts to help him come up with the 50 greatest post-wheel innovations, and while each deserves a book – or at least a long chapter – the list is intriguing for several reasons. My favorite: counting the innovations that first came out of China.

From the top 50, they are:

  • 43. The abacus
  • 17. The compass
  • 14. Gunpowder
  • 6. Paper
  • 1. Moveable type printing

Two points fascinated me. First was printing press showing up on top, and the fact that the article does not ascribe an origin to the invention. People who have studied the history of Chinese innovation understand that the movable-type printing press was invented in China by Bi Sheng some 400 years before Johannes Gutenberg and Laurens Janszoon Coster argued about who of the two of them was first. History will out, though, and China gets credit for the most important innovation since the wheel.

Speaking of wheels, a sort of honorable mention on the list goes to the wheel barrow, a simple device created in China that allows a man to move heavier loads than he can carry without the aid of an animal. And I always search these lists for acknowledgement for China’s invention of investment casting, a process that turned complex metalworking from a handicraft to a mass-production process.

But these are quibbles. The point that the article brings home is that China was once far more innovative than we – and, indeed, Chinese – give it credit. While taking credit for four great innovations, China deserves credit for at least five, and probably more.

The perpetual challenge, of course, is how to make it innovative again. And to that theme we shall return in due course.

Clarity for China’s Growing GMO Debate

Texas Hill Country
Doing Agronomy 101
0902 hrs 

The debate over genetically-modified crops is reaching the boiling point among Chinese policy-makers, and the past several months have witnessed a spate of media coverage on the issue suggesting that the two sides are taking their case public to try to sway the issue.

One would hope that the science will win out in the end, but in the meantime I am doing a deep-dive on the GMO issue to a) understand where the scientific consensus lies, beyond corporate positioning and activist FUD, b) understand China’s interests in the area, so that I can c) start making some calls as to where this will go in the region.

Which is important because where China falls on GMOs is critical to the special interests cheering from the sidelines on both sides. As a massive and growing consumer of the world’s agricultural products, a ruling by China on GMOs either way could determine the future of genetically-modified crops worldwide. Yet as an increasingly important exporter of processed food, China does not want to get too far ahead of the world on the issue.

There are a ton of superb, science-based resources on GMOs, and Dr. Cami Ryan at the University of Saskatchewan has compiled an incomparable list of those resources. Some are technical, but most are highly accessible even for those of us who haven’t taken a science class since our freshman year in college.

McKinsey Endorses Our Thinking

“Next-shoring: A CEO’s guide”
Katy George, Sree Ramaswamy, and Lou Rassey

McKinsey Quarterly
January 2014

The end of China’s time as the uncontested factory floor of the planet has become something of a meme. If that has failed to come to the attention of any of the world’s CEOs, McKinsey’s consultants make sure they get caught up.

My take is that McKinsey is late to the party. I made most of these same points two years agoI called it “right-shoring.” In such a circumstance, I would have thought that McKinsey, seeking to retain “thought leadership,” would have offered deeper insights. They don’t, even though they provide endorsement to my original thinking.

Thanks, McKinsey!

For the record, check out:

The Beginning of the End of Outsourcing,” Silicon Hutong, February 7, 2012

China and the Rightshoring Movement,” Silicon Hutong, December 4, 2012


“A” Buildings and “B” Management

Or, Top 10 Signs that Your Building Management Has Been Localized

Hutong West
Nursing the Party Secretary
1136 hrs.

A good friend and client of mine set up offices about two years ago in one of Shanghai’s better office buildings. The building housed some top professional services firms, including a cluster of subsidiaries of one of the world’s largest marketing services conglomerates. The building has been a prestige address, and is close to some funky local neighborhoods and two of my favorite hotels in the city.

Unfortunately, according to my friend, the owners of the building apparently decided to drop the global firm managing the property, choosing instead a local management company. Not long after, things began to get noticeably, well, grottier.

As our conversation progressed, I began to think about similar situations I’ve encountered with local building managers in China, and in the process I came up with this list of the top ten signs that your building management has been localized.

I post this as a public service, both for companies who are seeing the quality slip in their buildings, and as an encouragement to local management firms to up their game.

Sidebar: It is important to note that not all Chinese management companies are cut from the same cloth. Top Glory and its subsidiary Gloria Property Management (owned by the state-owned COFCO Group) in particular are a standout from the bunch, as are most of the management companies based in Hong Kong. Nonetheless, these are the exceptions that prove the rule.

Here are the signs that you may want to start hunting for new offices. “Red Alerts” are signs that it is time to get out now.

10. Advertising everywhere. Ads start showing up on almost every surface: lobby displays, floor stickers, elevator displays, video ads, ads in the toilets, and on the windows of the ground floor. Don’t get me wrong, a little targeted advertising in the right place doesn’t hurt, but when the decor becomes Madison Avenue Modern, it’s gone overboard. Red alert: when they start putting advertising on the handles of the doors into tenant offices.

9. Tragic Carpet. Stained or damaged carpet tiles stay stained or damaged for a long time. Only the most egregious stains (usually involving a very light or very dark substance spread over a large area) get taken care of promptly. Red alert: carpets are removed altogether, replaced with concrete or faux-stone tile floors.

8. Crass Cieling. Drop-down ceilings need constant upkeep. When they start showing stains, get broken, or go missing, your building has begun its long, slow slide into slumlord territory. Red alert: drop down ceilings are removed completely, leaving not an attractive “industrial” look, but just ugly pipes and ducts.

7. Security? What Security? The well-dressed, friendly, security folks sitting at the front counter and checking for appropriate badges or patrolling the floors have been replaced by surly gatekeepers who act like everyone entering the building is a terror suspect. Red alert: they stop checking ID completely, with “surly” exchanged for “not even paying attention.” Eventually even the pretense disappears, and security staff are let go.

6. Cleanliness is left for Tawdriness. Those friendly ayis constantly patrolling the public areas of the building start showing up once a week, if that. You have to start reminding the management to clean the windows. Door handles are sticky, and numbers on the elevator panel are impossible to read. Red alert: stairwells have a layer of dust so thick you could slip on it, and the doors stick.

5. Smoking in the Boys’ Room. Men’s toilets smell like cigarette smoke. Constantly. Red alert: you catch a goldbricking building employee smoking in a toilet stall. Double red alert: women’s toilets smell like cigarette smoke.

4. Cigarette Bloat. The reek of cigarette smoke starts pouring out of offices as well as bathrooms, and “no smoking” signs begin to disappear from public areas and elevators. Red Alert: building employees smoking while working.

3. Don’t Cry for Me, Cappuccino. Starbucks moves out, replaced by some poor-imitation no-name coffee or snack shop with crappy food and overpriced drinks, and probably run by the building manager’s sister-in-law. Red alert: the no-name coffee shop closes and the shell of the store just sits there, forlorn and gathering dust.

2. Vertical Transportation Gets the Shaft. It starts feeling like the elevators are offline a lot more than they used to be, and at least one is either shut down or under  maintenance on a weekly basis. Red Alert: an elevator breaks down with you, a colleague, or a loved one in it and you are stuck for more than an hour.

1. Anchors (run) Away. The building’s prestige, or “anchor” tenants, usually multinational companies, start to depart, finding other places to set up, and replaced by more, smaller tenants. Red alert: the building’s directory is at least a year out of date, or has been removed completely.