Fons Tuinstra is a global citizen, spending his time in Belgium and Switzerland. He is the current Principal at the China Speakers Bureau, China’s premier speakers’ bureau, which organize great speakers for great events. He also has a weblog, China Herald, with daily updates of the news on a modern, harmonious, and creative high-income society.
Gary: How did you get into professional journalism? How has internet changed the face of this industry? What made you decided to venture out to Asia as foreign correspondent?
Fons: It started out in University, studying History, helping me to develop my view of the world. I discovered journalism was a nice extension to my studies and realized I didn’t have to wait for people to be dead to investigate them. One of the focuses was on how to frame a subject is pretty important, not only in studying history, but also in journalism. During my time, it was framing the Cold War and on the Communism that dominated journalism. Journalists went mostly to Africa, not to figure out what Africa was about, but to see what the Soviet-Union or China was doing.
During the 1980s, the demise of Communism took place, and in the end the fall of the Berlin Wall was a symbol of what was already developing. I had to start looking for a new way to frame the next developing story, which was for me in Asia. I traveled to Korea, Taiwan, and Hong Kong, to investigate what was then called the ‘Economic Tigers’.
As I spoke to businesses, I discovered the economic tigers were moving to China. When I traveled to Beijing in 1991, I was pleasantly surprised by China due to the easygoing-ness of the people and the urban development-taking place. During that time, there was opening of foreign correspondents in Shanghai.
Gary: What were the key issues that you covered and followed during your career in China?
Fons: While the political areas were already covered by Beijing correspondents, I took the time to set up a network to understand more about the culture and soft issues in China. The need and expectation on how Europeans can get into China was what dominated my agenda.
Gary: Can you talk to us about the China Speakers Bureau? What was inspiration behind this network?
Fons: It was based on the idea and concept of a small-scale media network in Shanghai. Until my US colleague and current business partner Maria Korolov came to me with the idea of setting up a Speakers Bureau with the focus on China. It allowed me to reuse my China network in a different way with a new business model. This network included people who have good insights on China and how to set up this bureau.
Gary: Were all the clients, who hired your speakers, interested in breaking-in to the Asia market?
Fons: We discovered many of our US and European clients approached us over the Internet, so we focused on online marketing rather than using the traditional approach, doing on-the-ground marketing in China. We worked with those who are eager to get into China, yet do not have a clue what they are starting with, and increasingly also established businesses looking for our speakers to educate their clients, staff or suppliers. Our broad range of speakers helped nicely to build up our future and help to answer different kind of questions. It is different from organizing those activities in China itself because the speakers’ markets in China is not yet mature.
Gary: We were truly impressed by China Speakers Bureau’s level of network and engagement you and your team have built. It definitely requires a great expertise in consulting and management. From your experience, what is the key aspect in maintaining “guanxi” or relationship in China?
Fons: Our main clients are in Europe and in the US and that is very different from those in China. What I see is a lot of businesses in China who failed mainly because they are offering a service nobody wants in China. That’s more important issue than guanxi. It’s very easy to see your product or service as the benchmark of what people needs and that it cannot be missed by 1.4 million Chinese. And that is not always true.
Over the past years, US companies often had a recipe of disaster when entering China for example Best Buy, Mattle’s Barbie, Yahoo, Groupon, Home Depot, Google, to mention a few. Lots of companies go with the concept they have from their home country and do not change it. You fail if you do not adapt your business for China and do not look at what the Chinese really want. That’s the one of the key lesson I learned in China. It is the willingness to look at it with open mind and challenge your own assumptions.
Gary: So it is about being adaptable and understanding the people and the culture there?
Fons: Not only culture, but also the concept of change. Now I spend most of my time in Europe, they have no clue how change works. In China, the concept of change has been so overwhelming, partly because of the economic growth. It is one of the places where companies have to deal with the surprising concept of growth that they cannot manage.
When I first arrived in Shanghai and the new cities, I would sit on my bike trying to figure out how to get around and to get some landmarks to find the way. In Shanghai, you can forget about that because the next time you come back, they have already built a new skyscraper, hiding your bench mark. And that is an illustration of what happens in the society at large.
You have to re-assess things pretty often. You cannot just get your business plan in place and hope that next year everything will be the same.
Jackson: Can you give us some examples of the success and failures of those companies that are providing what the Chinese people need?
The last year I was in Shanghai, the number of luxury brands setting up shops there amazed me. Its unbelievable at how many new shops they were building. But if you look at how rich Chinese purchase their stuff, they actually go abroad to purchase it, not so much at home.
Europe has already been trying to get these Chinese customers in and US is doing that too. It is partly more prestigious to go abroad and buy things there for even cheaper. Maybe the Chinese government should smarten up and lower import taxes. Now, this part of commercial real estate is certainly a bubble.
At this stage, the investment of all the big brands and shops you see in the big cities might have a better chance in second tier cities for those who cannot afford to go abroad. Even then, these people will save their money for a later date to go abroad.
Gary: So these products are just too expensive. I know of this also where some of my friends and families from overseas would give us a shopping list of things to buy. For example, electronics such as iPhones and iPads, and even pharmaceuticals, to mail back just because it is cheaper in the US than it is in China.
Fons: Definitely. Its funny you mentioned the iPhones and the iPads, which are doing pretty okay now in China. Earlier, Apple made a huge mistake when they only released the iPhones in the US for one year before they opened up in China. Everyone who could afford an iPhone by then would have already brought it in the US. So you cannot hardly say Apple is failing in China. But in the past, they have done some pretty stupid things. Keeping an eye on the speed of change in China is again key.
So there a lot of this and its not confined to one industry. It’s many due to the failure to understand China. When I first came to China, there were not a lot of people who could manage a business in China. For example, KFC had imported Taiwanese to manage their first stores in China. Now that many upcoming graduates are more trained, there would be many opportunities as well as the salary of these qualified people will be going upwards.
Gary: In 2004, you published a book titled, “15 misunderstandings about China and the Chinese”. Can you quickly rundown what are some of common misunderstanding people in the West have about China?
Fons: The concept behind it is more important. If you look at the problem business people have in China or dealing with businesses in China, is that they have no clue. I made a pretty simple overview of explaining what China is really about to the outside world. Often not China, but incoming investors are the problem.
For example, people can only understand when they are in China because it’s a bloody big country. That concept you can get only get when you are there. What takes longer to discover is that there are internal differences in China that are much bigger than in Europe. Europe is much more a unity in terms of culture than China. But getting the feel of China and the internal differences is extremely important.
People look at China as political monolith. The Communist party that organizes everything for example the Bo Xi Lai scandal is a beautiful example of the internal differences within the politics and the party itself. This is really important to make an analysis about what’s really going on.
Gary: What do you think about China, moving forward? Where are the opportunities in the future?
Fons: The newcomers in China still complain a lot about China. I don’t understand what they worrying about; compared to starting in the early 1990s when there was no infrastructure and the unfamiliarity of foreign investors; that was really tough. Now Chinese companies are growing international and the challenge of the upcoming years is to get these companies into Europe and into the US without too many problems. The lack of due diligence, on both sides, could be a first mistake that Chinese companies make, as did so for foreign companies entering China.
It’s partly because of the political system here in Europe. Most of these ministers of economics and even on the local level politicians believe they need to get Chinese investors in. Anyone with a Chinese face would be welcomed with a lot of local support there. Any knowledge of what’s happening economically and what the company is about or whether the company is interested in going to Europe, or they just waiting for a free trip to Europe.
Gary: So it seems like the opportunity is in establishing an Europe Speakers Bureau to educate the Chinese businesses about Europe.
Fons: We have to let these Chinese companies make the first stupid mistake so we will keep a close watch on that. They have made already their first wrong investment, but more might come.
Gary: As we continue to talk on-the-ground experts in China, we learn that entering China is a long-term investment and strategies have to put in place to sell to 1.4 billion Chinese.
Fons: I think the story of the middle-class at this stage is relatively overrated. You can sell things to rich people because they have money to spend. The middle-class is more like a political concept that comes from the US that wants to transfer it over to China.
The problem is the “middle-class” in China is actually not having so much to spend. The inflation and the low interest rate on the banks caused that actually spending power of say the middle-class has gone down for the last 2 to 3 years. Actually they have less to spend. So unless you are at the top of the market and sell to the really rich people or those who are really willing to purchase expensive luxury product, you might have a hard time, despite recent increase in wages.
Down the line, its much harder and and you get much competition from Chinese companies in doing the low margin products. Unless you are really good at a certain products, the foreign companies should focus on the top of the market because the middle class still hasn’t have much to spend. However, in the long run, 5 to 10 years, things might be different.
A lot of these companies cannot afford to make losses on their operation for 5 to 10 years. Some companies did like Unilever and Proctor & Gamble, but most companies cannot afford to do that. It is still have to be the kind of companies who are willing to invest in China to hang on until the middle class have catch up economically.