Chindia Alert: You’ll be Living in their World Very Soon
aims to alert you to the threats and opportunities that China and India present. China and India require serious attention; case of ‘hidden dragon and crouching tiger’.
Without this attention, governments, businesses and, indeed, individuals may find themselves at a great disadvantage sooner rather than later.
The POSTs (front webpages) are mainly 'cuttings' from reliable sources, updated continuously.
The PAGEs (see Tabs, above) attempt to make the information more meaningful by putting some structure to the information we have researched and assembled since 2006.
BEIJING (Reuters) – Tang Yue, a 27-year-old teacher from the city of Guilin in southwest China, steam-presses a blue dress and takes dozens of photographs before picking one to clinch her 200th online sale.
For a growing number of Chinese like Tang, hit by job losses, furloughs and salary cuts, the consumer economy has begun to spin in reverse. They are no longer buying – they are selling.
Instead of emerging from the coronavirus epidemic and returning to the shopping habits that helped drive the world’s second-largest economy, many young people are offloading possessions and embracing a new-found ethic for hard times: less is more.
With Tang’s monthly salary of about 7,000 yuan ($988), the self-described shopaholic said she has bought everything from Chanel lipsticks to Apple’s (AAPL.O) latest iPad in the past three years.
But the adrenaline rush that comes with binge-shopping is gone, said Tang, whose wages have been slashed with the suspension of all the classes on tourism management she usually teaches.
“The coronavirus outbreak was a wake-up call,” she said. “When I saw the collapse of so many industries, I realised I had no financial buffer should something unfortunate happen to me.”
There is no guarantee that the nascent minimalist trend will continue once the coronavirus crisis is fully over, but if it does, it could seriously damage China’s consumer sector and hurt thousands of businesses from big retailers to street-corner restaurants, gyms and beauty salons.
To be sure, there are signs that pent-up demand will drive a rush of spending as authorities reopen malls, leisure venues and tourist spots. In South Korea, the first major economy outside of China to be hit by the virus, people thronged malls this weekend to go “revenge shopping” to make up for time lost in lockdown.,
There are some signs that a similar trend will take hold in China, where some upscale malls are starting to get busy, although luxury firm Kering SA (PRTP.PA) – which owns Gucci, Balenciaga and other fashion brands – has said it is hard to predict how or when sales in China might come back.
A recent McKinsey & Co survey showed that between 20% and 30% of respondents in China said they would continue to be cautious, either consuming slightly less or, in a few cases, a lot less.
“The lockdown provided consumers with a lot of time and reasons to reflect and consider what is important to them,” said Mark Tanner, managing director at Shanghai-based research and marketing consultancy China Skinny.
“With much more of their days spent in their homes, consumers also have more time and reasons to sort through things they don’t feel they need – so they’re not living around clutter that is common in many apartments.”
#DITCHYOURSTUFF
Tang made a spreadsheet to keep track of her nearly 200 cosmetic products and hundreds of pieces of clothing. She then marked a few essentials in red that she wanted to keep. In the past two months, she has sold items worth nearly 5,000 yuan on second-hand marketplaces online.
Bargain-hunting online has become a new habit for some Chinese as the stigma that once hung over second-hand goods has begun to fade.
Idle Fish, China’s biggest online site for used goods, hit a record daily transaction volume in March, its parent company Alibaba (BABA.N) told Reuters.
Government researchers predict that transactions for used goods in China may top 1 trillion yuan ($141 billion) this year.
Posts with the hashtag #ditchyourstuff have trended on Chinese social media in recent weeks, garnering more than 140 million views.
Jiang Zhuoyue, 31, who works as an accountant at a traditional Chinese medicine company in Beijing – one of the few industries that may benefit from the health crisis – has also decided to turn to a simpler life.
“I used to shop too much and could be easily lured by discounts,” said Jiang. “One time Sephora offered 20% off for all goods, I then bought a lot of cosmetics because I feel I’m losing money if I don’t.”
Jiang, the mother of a 9-month-old baby, said she recently sold nearly 50 pieces of used clothing as the lockdown gave her the opportunity to clear things out. “It also offered me a chance to rethink what’s essential to me, and the importance of doing financial planning,” she said.
Eleven Li, a 23-year-old flight attendant, said she used to spend her money on all manner of celebrity-endorsed facial masks, snacks, concert tickets and social media activity, but now has no way to fund her spending.
“I just found a new job late last year, then COVID-19 came along, and I haven’t been able to fly once since I joined, and I’ve gotten no salary at all,” said Li, who said she was trying to sell her Kindle.
Some are even selling their pets, as they consider leaving big cities like Beijing and Shanghai where the high cost of living is finally catching up with them.
NO RETURN TO OLD WAYS?
As the coronavirus comes under control in China, the government is gradually releasing cities from lockdown, easing transport restrictions and encouraging consumers to venture back into malls and restaurants by giving out billions-worth of cash vouchers, worth between 10 yuan and 100 yuan.
But many people say they are still worried about job security and potential wage cuts because of the struggling economy. Nationwide retail sales have plunged every month so far this year.
Xu Chi, a Shanghai-based senior strategic analyst with Zhongtai Securities, said some Chinese consumers may prove the ‘21 Day Habit Theory,’ a popular scientific proposition that it only takes that long to establish new habits.
“We believe people’s spending patterns follow the well-known theory, which means most people in China, having been cooped-up at home for more than a month and not having binge-shopped, may break the habit and not return to their old ways,” Xu said.
Jiang said she was determined not to return to her free-spending ways and planned to cook more at home.
“I’ll turn to cheaper goods for some luxury brands,” she said. “I’ll choose Huawei’s smartphone, because (Apple’s) iPhone has too much brand premium.”
Tang, who has recently used 100 yuan of shopping coupons to stock up on food, is going to hold the purse strings even tighter.
“I’ve set my monthly budget at 1,000 yuan,” she said. “Including one – and just one – bottle of bubble tea.”
HONG KONG (Reuters) – Staff at Cathay Pacific Airways, Hong Kong’s flagship airline, are on edge.
A Cathay Pacific Boeing 777-300ER plane lands at Hong Kong airport after it reopened following clashes between police and protesters, in Hong Kong, China August 14, 2019. REUTERS/Thomas Peter
Their city has been gripped by months of anti-government protests, and their company is feeling the wrath of China’s aviation regulator after some staff members took part or expressed support.
Since an Aug.9 directive by the Civil Aviation Authority of China (CAAC) that called for the suspension of staff who supported or participated in the demonstrations, the regulator has rejected some entire crew lists without explanation, two sources with knowledge of the matter told Reuters.
The rejections have forced Cathay to scramble, pulling pilots and flight attendants off standby while it investigates social media accounts in an effort to determine which crew member has been deemed a security threat, one of the sources said.
Other disruptions have come in the form of a huge jump in the number of plane inspections upon landing, four pilots said.
The flexing of regulatory muscle has contributed to a climate of fear within the airline, with employees telling Reuters they felt Cathay’s longer-term future as an independent company was highly uncertain and subject to Beijing’s whims.
The CAAC’s labelling of employees who support the protest as a security risk and its demand that they be suspended from flying over mainland airspace has been a de facto career killer.
Around three quarters of Cathay flights use mainland airspace and due to the directive, 30 rank-and-file staff, including eight pilots and 18 flight attendants, have been fired or resigned under pressure, according to the Hong Kong Cabin Crew Federation.
Cathay CEO Rupert Hogg and his top deputy also resigned in August amid the mounting regulatory scrutiny on the 73-year-old airline, one of the region’s most high-profile brands that draws on Hong Kong’s British heritage.
“Things changed very quickly,” said Jeremy Tam, a pro-democracy lawmaker and pilot who resigned from the airline after the CAAC directive, likening the atmosphere to a political trial. “The threat is huge and it’s almost like zero to 100 in two seconds.”
Reuters talked to 14 current and former employees for this article. Nearly all declined to be identified for fear of being fired or due to the sensitivity of the matter.
The CAAC did not respond Reuters requests for comment on the rejections of crew lists or the increase in plane checks.Cathay said in a statement it must comply with all regulatory requirements. “Quite simply, this is our licence to operate; there is no ground for compromise,” it said.
The airline declined to comment on the number of employee departures, but said any terminations took into account factors such as a person’s ability to perform their role.
DEMERIT SYSTEM
Aviation regulators around the world conduct occasional plane inspections at airports to ensure an airline is in compliance with safety regulations.
But after the CAAC’s Aug. 9 directive, the once-infrequent inspections occurred almost daily and included the new and unusual step of checking phones owned by crew for anti-China photos and messages, the pilots said, adding that this had led to flight delays.
The step-up in checks has increased the likelihood of regulators finding minor issues to write up, which pilots said had included dirt on the plane’s exterior and scratches on a fire extinguisher.
Infractions can have outsized consequences under the CAAC’s strict demerit points system, they said, noting the regulator could force Cathay to reduce its number of flights, cut destinations or in a worst-case scenario, revoke the airline’s right to fly to mainland China.
Management has urged staff to do their utmost to avoid infractions.
“It is nothing less than the survival of the airline at stake,” said a senior employee. “Management have made that abundantly clear at meetings.”
Executives are particularly sensitive after seven incidents outside mainland China in the past two months in which pre-flight checks found emergency oxygen bottles for crew were depleted.
The CAAC is more public than many regulatory peers about disclosing safety violations, warnings and punishments.
In 2017, Emirates was banned from expanding its operations for six months following two safety incidents, while flag carrier Air China Ltd was ordered last year to cut Boeing Co 737 flights by 10% after an emergency descent linked to a pilot smoking an e-cigarette in the cockpit.
Cathay declined to provide information on its points under the CAAC system but said it wanted to emphasise that there had been no impact on its flight services into mainland China.
The pilots said the high frequency of airplane checks, which one described as “very intimidatory”, was starting to recede.
A THOUSAND CUTS
Employees are also feeling pressure from other regulatory bodies.
Last week, ahead of China’s National Day on Oct.1, immigration officers at some mainland airports requested photos of crew with the Chinese flag, said a pilot at regional arm Cathay Dragon who flies to the mainland regularly.
He said to his knowledge, most pilots – many of whom are expats from Western countries – had refused but Hong Kong cabin crew were “too nervous to say no” given the scrutiny on their actions by the company and the Chinese government.
“Everyone is walking on eggshells in China,” the pilot said.
Cathay did not respond to a request for comment, while China’s Ministry of Public Security, which oversees immigration, did not respond to a request for comment during a week of public holidays.
There has been no let-up in the widespread, sometimes violent, unrest that has beset Hong Kong. Triggered by a now-withdrawn extradition bill, it has morphed into an outpouring of opposition to the former British colony’s Beijing-backed government.
The crisis has also meant a sharp drop in travel demand to Hong Kong, putting more pressure on Cathay.
Cathay’s overall passenger numbers were down 11.3% in August. Flights at Cathay Dragon, which does most of Cathay’s mainland flying, were on average 60-65% full in September, down from the usual 80%, according to estimates from two pilots.
The pilots said while the sharp drop in demand was in some ways similar in scale to that weathered by Cathay during the SARS epidemic and the global financial crisis, there were key differences that felt more threatening to the company’s future.
Some state-controlled firms such as China CITIC Bank International and Huarong International have told employees to avoid flying with Cathay, and it has been attacked by Chinese state news organisations as well as by many mainland consumers on social media.
CAAC’s Aug.9 statement which called staff who supported the protests a security risk has also put Cathay’s reputation as one of the world’s safest airlines under a cloud it does not deserve, employees said.
Many acknowledged the new management team, which oversees around 33,000 employees, has few palatable options in dealing with the situation given the sway Beijing holds over the airline’s operations.
But they lamented the loss of freedom of speech and sense of job security, saying employees are afraid to speak about anything even vaguely political or voice support for protests on social media for fear of being reported by colleagues under a whistleblower policy.
“It has become a Hong Kong company with mainland employment terms,” a pilot at Cathay Dragon said. “The risk is death by a thousand cuts.”
CHINDIA ALERT: You'll be living in their world, very soon 