It was about half past six, Friday eveningwhen I sat down for drinks with Brett Bullington in a crowded hotel bar close to the San Francisco Embarcadero where we later would be going to the Social Media Network Party organized by Seth Goldstien. Being in the presence of positive and quality spirits I presented my mission for being in the USA was to introduce more SV companies to business development opportunities which existed in Europe. I understand that most American business strategists claim the market is highly fragmented and full of potential business pitfalls, but is this not anything more than notoriety the Europeans have themselves to thank for? The reality is that Europeans entrepreneurs are rigorously protectionist and a cloud of mysterious smoke and warnings of deprivation and gloom are often exuded to foreign market entrants.

However it was this evening that I began to understand that the current general consensus in SV was in fact considerably more favorable to any kind of business expansion strategy which would include China. A consensus which eludes me to some extent and by asking my colleague Nelleke to write a short market comparative analysis hopefully we will offer some grounded perspective on the subject of China. Nelleke has been working for us in China on a social economic development project for Chinese development of tourism.

E.J. Bertrand
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China’s economy runs on export, well actually import and then export. For those manufacturers that think China’s internal market is massive, think again. Massive yes, buying power no. The average worker in China earns just enough to feed his family. The economic boom in China benefits workers to the extent that their living conditions, housing, health, education, leisure time and public services are getting better. Spending power is as limited as ever, as prices are going up.
A foreigner visiting Chinese cities is easily taken in by the many modern building going up practically overnight and Western companies hanging up their shingles left, right and center. When in Chengdu (capitol of Sichuan, 14 million inhabitants) last year and the year before, the Western storefronts had doubled and it had been impressive the first time. I liked to get my morning coffee at Starbucks across from my hotel, which costs the same or more as in the US, until my official interpreter, a university English major graduate, told me that the price of our coffee was almost equal to a week’s pay for her.

On the main boulevard car dealers showed off their latest models: no Fiat 500, Ford Ka or Suzuki Alto’s here. More like Lamborghini, Ferrari, Porsche. On the corner is a department store, billboards show fashion by Dolce & Gabbana and Armani sunglasses. There is no item in the whole store that costs less than 200 dollars, I explore all 6 floors and find myself in the company of loads of charming sales girls. No wonder, I am the only customer in the place.

My interpreter in Chengdu is excellent, although she has no specific trade vocabulary, she is a fast learner. Different experiences in other parts of the country where the official interpreters assigned to me vary from as little as ‘how are you’ to being able to keep up a simple conversation. Trying to teach these the necessary language skills is an impossible task. A pocket computer is the only way to communicate.

Undeniably there are a few very rich individuals in China. Who has money to spend are multinationals and the government. The government spends its money locally and keeps their employees in company cars, expense account dinners and the newest laptops. The average Chinese Joe earning an average wage cannot afford to buy western made products, he cannot even afford to buy Chinese made products.

Why not export to China:
The dollar has only devaluated 15%. China’s provinces are very autonomous and dealing with government officials is tedious and time consuming. No one speaks English; you always need an intermediary plus a translator. Chinese consumer has no spending power.

SF Chronicle 31/3:
“The Chinese economy today is, in large measure, an assembly platform for American and foreign companies to turn components designed and made elsewhere into final products, and then to export them to the rest of the world. More than 60 percent of “Chinese exports” are, in fact, the sales outside China of multinational firms operating in China.
What Apple says on the back of every iPod is true: “designed by Apple in California, assembled in China” from chips, hard drives and screens made in America, Korea and Japan. Chinese assembly adds only a tiny amount to the value of each iPod.

The iPod is not a new millennium icon because of its components. Nor does it beat the competition on price. iPods are must-have gadgets because of their elegant and simple design, a design created in Silicon Valley, with almost all the profits returning to Apple and its U.S. shareholders.
The final China trade secret is that Americans have benefited from the vast quantities of dollars and Treasury bills (estimated at $750 billion) China has purchased in recent years to manage the dollar-renminbi exchange rate. China-funded credit kept U.S. interest rates low after 9/11 and the dot-com bust, fueling both consumer spending and the rapid run-up in housing prices.

The only way for Beijing to allow the renminbi to appreciate was to sell dollars and Treasury bills, which it has been doing in increasing volumes. But this has put upward pressure on interest rates and tightened U.S. credit markets. China did not cause the subprime meltdown, but the sale of its dollar-based assets will hinder an American recovery.”

Why export to Europe.
The dollar is at an all time low, 50% lower than a few years ago, making American goods cheap. American made products are reliable. Europe is one market: having an office in Paris, Amsterdam or Milan covers what used to be over 30 different countries and markets. Most Europeans speak and understand English. Europeans have a large expendable income.
The additional 17 former eastern European countries that became part of the European Union over the past few years represent a large expansion of affluent consumers and companies with an ever growing buying power.

Nelleke Pruijs for TWESTC
Senior Consultant on Tourism
April 5, 2008

Two days ago I launched a new Personal Service called Holiday Home Hunters. Its basically a 72 hour manual search for vacation home rentals executed by a real person.

If you have been out on Google searching for your family holiday home you may have stumbled across over the overwhelming results of over 44 million links to holiday home companies, vacation rentals and individuals offering their homes. It isn’t the only downside because many of the same homes are advertised on many different websites Vacation Rental Management companies can have hundreds of affiliate websites where they advertise their inventory.

A few years ago you could go down the local high street travel agent for a catalogue of rentals but only a very few good companies actually print them these days. The web should have pretty much captured the market for vacation homes but instead it looks saturated and ends up not being time saving in any way, in fact it can easily slurp up hours and even days of your time.

So, more choice isn’t necessarily good for the consumer who is time stricken and quality conscious. There are actually a limited number of holiday home management companies and owners who can offer any kind of guaranty your vacation rental is up to the standards you would expect. Getting reviews on individual holiday homes is very good if you trust their opinion and have the time to go through them. Getting someone else to do the search for you who has been in the vacation home rental business for years is probably going to be able to shed the wheat from the chaf.

I was in the holiday business for years and I’ve never sold anything to anybody without having a pretty thorough idea of what I was selling them, therefore getting very few complaints and many returning customers.

I have always been an advocate that there is a growing market for personal services oddly I’d never have thought a manual personal search on the internet would become one of them until very recently. However considering the raving reviews on the launch that does seem to prove the case.

Check it out at http://www.dolcevia.com/hhh/holidayhomehunter.html

or in Dutch at http://www.dolcevia.com/vakantiehuisjager/vakantiehuisjager.html

I have spent some time researching the attitudes of SME on applying internet in a business growth strategy. SME’s actually do not use much of the Internet for advertising or to establish new distribution channels.

However, SME’s do recognize the importance of the internet in their business strategy to benefit from growth opportunities it presents. In fact SME’s consider the Internet as a vital contributor for business performance but do not apply resources to this area if; from one side, they don’t have or need a growth strategy or from the other, the value of the internet is not vividly apparent to them.

If a SME business owner has a value perception of the internet, adoption of an internet strategy is never far off even though there is no actual planned business growth strategy.

It could be that these firms see outside pressure from competition using the internet, another could be that the company owner just has a very good knowledge of the IT opportunities.

However with most SME who don’t have a planned growth strategy, the value perception of the internet is generally very low, there is usually no internal IT knowledge and perhaps they can’t see any competitive pressure.

If you will allow yourself to take a step back and look at technology adoption rates from the perspective of a SME business owner we may conclude that a change in attitude to business growth is needed and not necessarily a change in the perception of the internet as a business driver.

Show me the money

Why we ask ourselves are advertisers sceptical about online advertising and yet they will place an expensive ad in the paper without giving it a moments thought?

In my view its because the value is not transparent to all of us. I do not question the fact that my ad in the Sunday Times will be viewed by millions of readers. I read the Sunday Times, I can see my ad, my neighbour will too because I know he reads the Times front to back on Sunday afternoon. Somehow advertisers perceive the value of online advertising differently than offline advertising.

Let me be the devil’s advocate a moment by stating:. If you can’t visually illustrate ad performance, don’t bother selling it!

This may sound preposterous to an experienced online marketer. Think of all the wealth of tracking tools, analysis and performance stats I can provide to my advertiser, the possibilities to track ROI have never been finer!

All true, good arguments, but I’ll buy your ad because I know it pays off. You are telling me it will pay off and your statistics tell me this but I still have a problem visualizing the ad you are trying to sell me, I don’t even know these websites you want to place my ad on. On top of that he is thinking your pitch sounds pretty complicated. “I’m sorry we just aren’t quite ready for this right now and besides we don’t really have the budget.”

Turn around Adrank

So if we need to put the money where our mouth is, we should perhaps come up with a significantly simplified way to help advertisers visualize the ROI of online advertising.

What if we illustrate the return of ads by offering advertising conversion scores directly on the ads themselves and outside of any kind of Google AdRank. Current advertisers benefit by knowing if adjusting their creative format, copy or adblock will increase conversions for them but I’ve already made the decision to use Adwords by then. Potential advertisers should also be able to see how online ads generate leads before their very eyes and it makes the whole AdRank system much more transparent at the same time. No need to get out the case studies and analytic demo kit, get out of the hard sell business and back stuck into the relationship business.

I think I may have mentioned the Google service which allows consumers in the USA to launch phone calls to businesses straight from the Google Maps service. Or, maybe I didn’t because its in direct competition with a certain company which employs me from time to time.

In any case it is too important to ignore as Google now allows users in Germany to send a business listing from Google Maps straight into their BMW Assist service. Great if you drive a BMW and you live in Germany.

Well yesterday they did launch a new service for Google Maps in Germany. Users in Germany can now send a business listing found on Google Maps Deutschland directly to cars enabled with the BMW Assist service. (note on the map click “senden” and choose “fahrzeug” to send map details to your BMW

Alright, recently I have not been as honest and as forthcoming as I should have been about this. However the only reason I am doing this is because I thought it would be nice to keep this Canadian gem to myself, just for a while before it hit the internet high street. Did I really say Canadian??! Yes, it’s time to take your ear muffs off. This may be a serious future contender for the Google space, they are so tiny compared to Google at the moment with under 1,9 million users a pittance to Google however they have grown at a phenomenal rate of 127% since July 2006.I know you may rely on people like me to tell you something as important as this, but I was just in compliance with the unwritten code of universal bloggers. “You shall not spill anything against Google untill we have made all enough AdSense revenue to give up the day job”.

However it is official according to the Wall Street Journal ‘Stumble Upon’ delivers better search results then Google. “Next time you want to wander the Web, forget about Googling it. Stumble it.”

First of all it is important to know that Stumble Upon is a Search Engine (duh), second of all its a plug-in for Firefox users and IE, thirdly it is community based (that’s the 2007 buzz word). If the technology of this fine machine gets you fired up you may view it here.

” StumbleUpon helps you discover and share great websites. As you click Stumble!, we deliver high-quality pages matched to your personal preferences. These pages have been explicitly recommended by your friends or one of 1,959,891 other websurfers with interests similar to you. Rating these sites you like () automatically shares them with like-minded people – and helps you discover great sites your friends recommend.”

The major difference between Google and Stumble Upon is that the latter relies on intuitive search whilst Google still tends to clog up the drains with a lot of nonsense sites. The fact is that the whole need for SEO (search engine optimization) has now been disrupted and the people at Razorfish may need to re-think their 5 year plans. I mean lets face the facts here, what kind of a market is lead by the economics of search?
My rationalization on this subject is that placement of a website or brand at the top of the search engines listings was rarely about firms which provide a good quality service or product, its about who hired the best SEO people to get their website listed. This staus quo is outdated by Generation C and Twinsumers whose purchasing decisions are increasingly being determined by word of mouth, peer-to-peer, price-comparisons, opinions, reviews, ratings and recommendations. The relevancy of my search results on Google is worsened each day that SEO firms get better at understanding Google.

Advertising on StumbleUpon
When paying for ads on StumbleUpon you’re not buying ad-space as you would in other campaigns - what you’re paying for is an increased weighting within their engine - so an increased percentage of users will be directed to a page you specify (again based around their loose tagging system). So you could set up a campaign directing users to a page about Vista and tag it as “operating system” and “windows” and get semi-targetted traffic. The quality of traffic from social bookmarking sites is debatable but you are going to get targetted visitors… You can take a look at how this works here.

The only critique I would make on Stumble Upon is that they may need to add a time limit on sessions as it is the singular most addictive experience I have had since smoking. Please give it a try but be forewarned:-)

http://www.stumbleupon.com