China Impression
In August, I visited two cities in China. I spent three days in Beijing and a week in Shanghai. Here is a summary of my impression.
1. China is changing rapidly
Since 1994, I have visited Shanghai once a year. This time Shanghai looked much cleaner and less congested. It used to take two hours to get from the airport to the city, but now it only takes 20 minutes on the newly completed freeway. The skyline is filled with latest design emerald green and subtle gold skyscrapers.
2. Buying power
People in big cities appear to have money. The actual buying power is a lot higher than government statistics number suggests. One reason is low income taxes. The top income tax rate is 15%. With that kind of rate, rich people can get richer a lot faster. There is no sale tax, no property tax, no capital gains tax, no social security tax, no local tax, no state tax and no whatever tax you name. The average middle income family pays virtually no taxes. In addition to salary, bonus are hefty, sometimes two or three times salary. This is a good way for the companies to hide profit, and encourage loyalty from workers. There is a tradition of year end bonuses which can be an additional one to three months salary. So far there are no big item expenses such as housing, car and medical insurance. The one child per family policy helps reduce family expenses. Therefore the saving rates are quite high. Living standards have improved so rapidly in the last few years and consumer confidence is very high. My cousin, a typical middle class person, for example, owns three condominiums and has saved $100,000 US. "It was unthinkable two years ago" she said to me.
3. VCD
VCD penetration has spread from the southern cities to the north. Shanghai has a high penetration of roughly 50%, while Beijing only 30% (statistics given by VCD salemen). The government is hard on pirated VCDs. I was told that they used to sell VCD discs on the street everywhere. But the recent crackdown has made the street dealers disappear. The price of these pirated VCDs is as low as $1 to $2 each. I visited several major department stores in Beijing and Shanghai, each time I talked to a few salespersons. Little red and black "c-cube inside" labels are on more than half of the VCDs on the display. Some brands do not have the label but have big signs next to the display which indicate "c-cube inside". The sign also explains the quality difference of having c-cube inside. In both cities, the only machine I saw that did not use c-cube is Shinco. Here are the typical questions I asked and the answers I received:
Q: What are the best selling brands ?
A: Three obvious dominate brands, Idall, Shinco and WanLiDa.
Q: Of these three brands, which are the most popular ?
A: Idall has the largest market share. However, these three brands are not too far off from each other. Idall is popular because it offers the best value for
money. Shinco is aggressive in advertising. WanLiDa is the high end machine. It is more expensive but offers the best quality.
Q: How about the other brands ?
A: Much smaller market shares and more regional presence.
Q: Is VCDs selling well now ?
A: It has picked up a lot lately due to the price drop.
Q: What is "c-cube inside" do ?
A: With c-cube inside, you get better picture and sound quality. It also offers strong error correction function and therefore is more compatible with all
VCD discs.
Note: Both Idall and WanLiDa have "c-cube inside" labels. Only Shinco uses ESST. From what I saw there is no way Fred Chan's claim of 60% of market share can be true. More likely, C-Cube has dominated the VCD market. I did see several customers paying and packing up their new VCDs. Most of them seemed to be Idall.
4. DVD
People are generally very aware of DVD. A lot of people I talked to had seen them (from cab drivers to policemen). Since VCDs, especially the pirated ones are poor quality, they are very impressed by the quality of DVDs. Many told me that price was not a problem for them, they would like to buy one today if there is enough content to watch. Many do not think $20 per DVD disc is too expensive either. My impression is DVD will take off once there is enough content, just like in the U.S.. |
