No trouble brewing this time

No trouble brewing this time
Dec 14, 2018 (WiC 435)

There are 9,999 rooms in Beijing’s Forbidden City but a plan to turn one of them into a Starbucks in 2007 ran into intense opposition. Much of the fury was stoked by Rui Chenggang, a news anchor, who termed the plan as an insult to Chinese culture and started a campaign to kick the coffee chain out of the Forbidden City. He got what he wanted after winning the backing of half a million internet users on Sina Weibo.

More than a decade on and an attempt to bring coffee to another of China’s most iconic buildings is underway. A coffee shop called Corner Tower Cafe opened in the Palace Museum this month. Most of its beverages showcase aspects of Chinese civilisation, with many named after emperors. Visitors can enjoy “Kangxi’s Favourite Hot Chocolate” (ironic, really, as a kind of cocoa drink was presented to Kangxi in 1706 but the Qing emperor didn’t like it). And a tea is on offer that was apparently “favoured by all the 3,000 concubines”, presumably indicating it is good for women’s health.

The Palace Museum has developed more than 10,000 ‘cultural and creative products’, Xinhua says, and now makes more than $150 million in revenue every year. So don’t bet against another Corner Tower Cafe popping up in the Forbidden City. And this time Rui won’t be able to stop it: he is serving a six-year jail sentence for graft (see WiC246).

When you wish upon a (red) star

When you wish upon a (red) star
Nov 30, 2018 (WiC 434)

Among the American companies most at risk of collateral damage from trade war tensions or the threat of consumer boycotts in China, high up on the list would be Disney.

Not only is Disney increasingly dependent on the Chinese box office (see page 16 for more on the success of its latest Marvel hit Venom), it has also made a major financial commitment to the country through its newest theme park in Shanghai.

But if Disney’s boss is worried about the side effects of Donald Trump’s tariff policy, he isn’t showing it publicly. During a recent earnings call Bob Iger focused more on the rising visitor numbers at Shanghai Disney – in part driven by the opening of its Disney Toy Story Park in April – expressing confidence in the park’s future. A six-year $1.4 billion expansion has been agreed for its Hong Kong park too – which again is mostly reliant on mainland tourists.

In fact, the company has strongly hinted that another Disney park could soon be built in China, reports the Beijing Business Today. A location near Beijing is said to be favoured (rival Universal Studios is due to open one of its own theme parks in the capital by 2020).

The Chinese authorities also seem to be supportive of Disney’s prospects. Earlier this month the country’s antitrust body approved – without conditions – the US media giant’s $71.3 billion acquisition of studio 20th Century Fox. Reuters said that meant that the merger had cleared its last major hurdle.

A sense of an ending

A sense of an ending
Nov 23, 2018 (WiC 433)

While Alibaba celebrated record sales on Single’s Day this year, a lot of daigou were overwhelmed by a sense of their own demise. Literally meaning “buying on behalf of”, daigou is a uniquely Chinese occupation that capitalises on delivering to locals quality foreign goods (and bypassing heavy import duties if the same are purchased in China). It started with amateurish, part-time personal shoppers – mainly expatriate students and housewives looking to make extra income – and gradually blossomed into a minor industry that led to dedicated cross-border e-commerce platforms such as Little Red Book (see WiC413). To cater to daigou Australia Post even opened stores solely tasked with shipping health and beauty products to China.

So what is killing the flourishing trade? Apparently China’s new e-commerce law set to kick in on January 1. It requires facilitators of overseas shopping – be it companies or individuals – to register in both the source and selling countries and pay taxes accordingly. Nor is the new rule just window dressing: the Guangdong provincial government this month sentenced a daigou – who operated a fashion store on Taobao – to 10 years in jail for tax evasion and smuggling. The seemingly draconian law has contributed to the declines in the share prices of luxury brand owners such as LVMH and Kering in recent weeks.