Part One: Concept vs. Value: the Struggle of China’s Consumerism;

Part Two: Double Bureaucracies - Corporate and Government in China;

Part Three: No Reasons to Fail -Invest in the Fundamentals (to be followed)

　　Ubiquitous of Value
　　The definition on VALUE is vague for its wide coverage and dynamic interpretation. In finance, value is to do with growth of a business and its return on invested capital[1].To consumer market, value is a worth of the service or goods to its customers. Value is a moving equilibrium but, in today’s world, it also has to be a measurable metric. A value can be judged from the consumers’ reaction to a particular producton on its eventual financial return to its investors.
　　 Value creation is a natural process. No matter what kind of economic system (laissez faire or feudalist) or political structure (democratic or autocratic) is, value is forever determined by nature instead by human or any beings because of its extreme complexity to be comprehensible by any intelligentsia. Short term incentive always creates short term value, and vice versa. Historically, due to nature and particularly human nature in our case (from self-indulged intelligence,self-justified righteousness, curiosity to universal greed), value is constantly off its equilibrium. When in-equilibrium is minor, nature can make quick adjustment, which we call Evolution;when in-equilibrium is extreme, nature tends to make violent correction, whichwe call Revolution (or Crisis). The phenomena are recurrent and are no stranger to the students of history.
　　Value is forever an ongoing process. It is one of the most frequently used word, but also one of the hardest to comprehend. It is bloody simple in meaning, but bizarrely hard to describe. One has to experience a value to understand a value because of its homogeneous nature. When the world is literally smaller and more integrated because of the technology and commerce, there is a call for universal value with concepts as its delivery vehicle (democracy, for instance, in politics). Again,because of our limitation as human in such a complex world, concept fails more than too often to introduce a value to another heterogeneous society.
　　After two thousand years of the similar cycle of life and then one hundred years of violent chaos and bloody revolutions, China is determined to follow, superficially or not, the irrevocable trend of westernization and 'modernization’, which in turn thrills the world for its ‘miracle growth’. There is no miracle in economy, and thus the optimism is self-defeating in nature. Consumer market, no different from other sectors in China’seconomy, is embedded in nearly, if subconsciously, conspiratorial optimism and false assumption by many domestics and foreigners alike. As we speak, this optimism has already shown serious cracks. Beneath such a conspiratorial optimism, it also reveals a global trend to weigh in Concept over Value.There are three discernable manifestations about this trend particularly conspicuous in the past half century – (1) superficial cookie-cutter ‘westernization’ in the developing world with near revolutionary zealousness; (2) the shift from simple natural resource exploration, trade, and immigration toward consumerism globalization led by western countries with eastern countries as eager partners;(3) bureaucratic corporatization in both western and eastern countries. China has its own characters, but is representative and shows strong tendency toward Concept Oriented Development.

　　Concept in Consumer Market – Perception and Misperception
　　Concept is a human invention.Just like philosophy, literature, or any other social studies, it is to define and reflect what a particular society has created and advanced in its ownsocial context.
　　Concept is a result and thus has a visual impact, which makes it easier to understand, to accept and to relate; human has tendency to accept whatever appears to them no matter how superficial it is, and justifies its use for their own purpose. Justification process is also superficial and complicated, involving the most brilliant and sophisticated human minds, although, so many times, it is merely a show of our own inability and shortcomings in a world of nature.
　　 Theoretically,concept provides the foundation for business model if this concept can generate similar value to the consumers in others’ market. A business concept is not a value, but has narrow and strict application to foster potential value. The premises,such as social norms and business elements, to support a concept are more important than hypothetical end-results. As that being said, if a business is founded on a concept, instead on the value of such a concept is supposed to deliver,the business is deemed to have an unstable foundation. Furthermore, if a concept cannot stick to the value it is supposed to deliver, it is no longer the same concept.
　　For instance, now we know that discount store is a concept in America, and WalMart is the best one to deliver the value as a discount store. The low price is its staple. But when it took the ubiquitous ‘everyday low price’ out of its slogan and navigates into higher price territory, it started to deviate from its discount store concept. That is exactly what WalMart unsuccessfully did several years ago, and now re-fortifies its root of ‘low price’.
　　Fast Food concept is another example. Although it didn’t start the concept, McDonalds is the one to complete it. Low price, fast turn-around, standardization and hygiene are its signature.In a homogenous society, the concept is easily duplicable[2].In the past half century, fast food chain industry has grown from a few restaurant ideas into the largest restaurant sector in the US and transforms the food industry as a whole.
　　 When the social norms are similar, the value has to be similar. Nevertheless, when the growth is heterogeneous, due to politics, culture, company structure, language barrier and many more, the same concept can be distorted out of proportion. It is a phenomenon so prevalent and representative in China that how to correct such a distortion become both a necessity and an opportunity.

　　Concept without a Value
　　Super Shopping Center originated and matured in the US.Nowadays, China holds the top two places in the rank of the largest shopping centers in the world. Either of the two has little to show off except of their size. Building a big shell with a grandeur Shopping Center name only shows a misguided concept with little value to customers.
　　Home Depot is withdrawing from China’s market, closing five mega stores in the past two years. Both its high rank official and some of foreign ‘China’s experts’ claim, nobody wants DO-IT-YOURSELF in China[3].It is such an ironic statement on a multimillion dollars investment by one ofthe most well-known brands pioneered a well-accepted concept. Even after this failure, it seems still pin wrong notes in its conclusion. Again, it is a show on how wrong can be for this type of Concept-without-a-Value investment.
　　Both cases above are representative among many foreign investment and foreign concept gone leeway when they lose the sight on the center of a business concept – the value of such a concept to its customers.
　　Most of consumer market concepts today were pragmatically developed by the western countries in the past century. We can trace their origins back for hundreds of years. Value has always been the cause to formulize a concept in a homogeneous society. However, when consumerism becomes international commodity itself, concept becomes the vehicle to induce value elsewhere in a heterogeneous world. In the developing countries, to catch up their western counterparts is superficially followed in a textbook format. In accompany of this scenario, it is the heavy bureaucratization of international corporations and domestic governments, and highly educated elites substitutes entrepreneur as translator to introduce concept into new market.
　　There are so many elements that can go leeway particularly in consumer market. Sometimes, concept becomes brand name – when McDonalds and KFC succeed in China, others thought that is the success of Fast Food China concept and blatantly follow the suit[4];sometimes, a concept is abstracted to a product such as coffee regardless of the social norms to foster such a product[5].IKEA has been resilient and successful in China and rightly abide with its concept’s value foundation – decent price and fashion design. However, it was criticized as selling too cheap by some foreign experts, who have a long list of ‘achievements’and ivy league education. In other cases, investors or companies weight heavily on the future market potentials and trend as guidance. China is too big a market to ignore; losing the market may mean its losing competitiveness in long term. The fear of not to get into this market is more dominant than how to generate value to its consumers.
　　China is on expedited track to consumerism. It is like driving a car. You, either a domestic Chinese new to consumerism or a foreign expert new to Chinese market, has little knowledge on what a car is (westernized consumism in China). Regardless, you drive at an ever higher speed installed with all kinds of add-on high tech and explosive fuel, chasing after others with no particular good reasons, there will be blood.
　　The greatest concept that can be learnt from America is not just its dazzling business concepts but what values of these concepts can provide to the customers. It is simple as that.


　　(Because of the scope of the topic, the article is limited to consumer market only.)
　　
　　Paul Wang

　　

 [1] Value – the FourCornerstones of Corporate Finance, Tim Koller, Richard Dobbs, BillHuyett, McKinsey & Company  
　　[2] How Get Started intoChina’s QSR Market  Paul Wang
　　[3] WhyHome Depot Struggles and IKEA Thrives in China? Helen Wang
　　[4] “Invisible” Marketfor Foreign Investment in China’s QSR Market, Paul Wang
　　[5] Part. 1: Coffee - Devil’s Cup, Devil’s Market, Paul Wang