Savio Chan - Chinas Super Consumers: What 1 Billion Customers Want and How to Sell it to Them

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Copyright 2014 by Savio Chan and Michael Zakkour. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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ISBN 978-1-118-83474-9 (cloth); ISBN 978-1-118-83482-4 (ebk); ISBN 978-1-118-90590-6 (ebk)

For my parents, Hal and Cynthia, for their unconditional love and who, from the beginning, gave me the gift of curiosity, a love for history, a global outlook, and belief in the potential and promise of my lifeand for my wife, Monique, and son, Julian, who have fulfilled that promise.

Michael

To my mother and father, and grandmother. For always believing in me. To my daughter, Kristi, who is my inspiration.

Savio

It started as another normal workday: up early for calls with China, meetings with clients, and working on a market-entry strategy for a fashion company. And then a small email with huge implications came in. It was an email that left us with our mouths hanging open. Steve Jobs, CEO of Apple computer, had written, asking for advice about dealing with China Mobile and launching the iPhone in China.

At the time China had about 600 million mobile handsets in use and China Mobile had nearly three quarters of the market. Steve felt that the Chinese market was integral to the company's continued growth. He was right. There are now 900 million mobile units in use in China, and in the next two years that number will reach 1.2 billion. Jobs explained to us that his negotiations with China Mobile, the largest mobile provider in Chinaand the worldwere proceeding slowly and progress in the short term seemed unlikely.

The email was all the more surprising because it came on the day Apple launched the world's thinnest laptop, the MacBook Air, at Macworld. Steve Jobs was thinking about China on a major product-launch day.

We suggested to Steve that while it was true that China Mobile was the biggest player in China, its current technology, management, and leadership position meant that it might still be years before a deal could be struck. We suggested pursing China Unicom, a big player by any global standard, but a much smaller rival to China Mobile. The technology needed for iPhones was already in place, and they might be hungry to beat their big rival to market with the iPhone. Most importantly, a deal with China Unicom would give Apple faster access to China's consumers and time to build its brand, reputation, and market share as it explored further plans for expansion. China was growing and changing too fast to wait, we advised.

On August 28, 2009, the iPhonethrough China Unicomwas launched.

Fast forward to January 16, 2014. After years of negotiations, alignment of interests, and technological developments, Apple CEO Tim Cook and China Mobile Chairman Xi Guoha took the stage at Apple's flagship store in Beijing to announce a partnership between the two technology giants. First-day preorders topped 1 million and first-year sales were estimated to be 24 million units.

While Apple still has some catching up to do to gain on market leaders Samsung, Lenovo, HTC, and others, it is on solid footing in the world's largest, fastest-growing, and most important mobile market. Because of its understanding that China's consumers were changing its industry, its business, and the world, Apple entered the market with the best short-term partner while being patient and finding the right deal with the best long-term partner. Apple has gone on to make billions of dollars by growing with and engaging China's Super Consumers.

I would like to thank: our editors at Wiley, Shannon Vargo, Elizabeth Gildea, and Deborah Schindlar, for believing in us and giving us the chance to tell this timely and important story. Josh Berkman, whose developmental editing and organizational brilliance gave this book shape and form. Janet Carmosky for her mentorship and encyclopedic knowledge of all things China. Richard Berman, of Verb Factory, an outstanding writer and communications pro, for freely giving of himself and his expertise. Jim Tompkins and my colleagues at Tompkins International for believing in and supporting me. Steve Ganster, Steve Crandall, and the staff at Technomic Asia. Everyone at the Confucius Institute for Business at SUNY in New York. The good people at The China Institute. My fellow Board members and everyone at the Asian Financial Society. All of the great writers and authors whose coverage and interpretation of China over the last 15 years provided me with an education on China and big shoulders to stand on, including but certainly not limited to: Jim Fallows, Yu Hua, Peter Hessler, Evan Osnos, Gady Epstein, Adam Minter, Helen Wang, Louisa Lim, Paul French, Simon Winchester, Orville Schell, Matt Schiavenza, James McGregor, Laurie Burkitt, David Barbosa, Tim Clissold, and many others. To the men and women who have supported my career and shaped my education in Chinese business, culture, history, language, and mind-set: Winston Ma, I. Peter Wolfe, Bob Shapiro, Dan Harris, Esmond Queck, Ivy Liu, Jessie Hu, Shao Heng, Dayong Liu, Hank Sheller, Richard Guo, Wei Wang, John Yang, Suresh Dalai, Professor Lawrence Delson, Rebecca Fanin, Professor Andy Molinsky, Brian Glucroft, Dai Wenhong, and too many others to name here. Thanks to all of my clients, past and present, who have let me be a part of their China dreams. And to all my friends, family, and supporters through thick and thin: Donna, Anthony, Nicolas, and Marc Zarriello, Kevin James, Mike Del Tufo, Matt Polidoro, Brian Vanderhoof, Rob Klein, Terry Zuckerman, Adam Slavitt, Marc Maurizi, George Maurizi and Gayle Uhlenberg, Elliott Warren, Stephen Hochman, Keith Stillings, Ethan Garr, Sam Blumenfeld, the Allens, the Roodenrys family, the Biedermans, Hiten Manseta, Jay Isherwood, TTYC, the Melrose Drive crew, my classmates and teachers at Livingston High School and Seton Hall University, and most importantly I want to thank the thousands of Chinese citizens, business people, academics, and political leaders I have had the honor of meeting, working with, learning from, and befriending over the years. The kindness, openness, and generosity I have always been freely given in China has provided me with not only a great career, but a second home, a second brain, and a second life.