You can buy literally everything imaginable on Taobao from mobile phone recharge cards to patio furniture and shoes.  I’ve bought shirts, shoes, books, etc on Taobao.

Setting up an account is relatively simple if you can read some Chinese.  All you need is an email account, password, and the ability to navi-guess around the site in Chinese.  Actually buying and paying online becomes more complex, requiring a local bank account with either 一卡通 or 信用卡.  But this is how most of us get our salaries paid anyway.  If you can find a local friend to help you set up the link between your Taobao account and your bank account (through Alipay, of course) the first time, its pretty easy to just type in your PIN number whenever you want to buy something in the future.  Taobaofieldguide.com has a much more comprehensive and picture-oriented description of how to search and buy on Taobao.  They also offer to help you do it, for a small fee of course. Update Nov 12, 2011:  My Chinese tutor is offering Taobao (and Chinese online shopping, in general) training sessions to help get your accounts set up, bank account linked, and you shopping online. 300RMB for 2 hours + review materials. Contact: Lucy 134 825449 83 wangxin0824[at]hotmail[dot]com . Only in Shanghai.

Feeling relatively confident in my Chinese reading ability and comfortable navi-guessing and shopping on Taobao, today I decided to try my hand at selling on Taobao. And ran into a Great Wall. To sell on Taobao, you of course need a local bank account linked to Taobao through Alipay (again), which since mine was already linked was easy enough.  However, you also have to verify your identity, and while this may sound simple, for a foreigner, it’s not.

First I tried pretending I was a local because I have a local bank account, yada yada, Not so fine.  You must input the ID # matching the person who opened the bank account.  In this case, it has to be the number of digits on a local Hukou ID card (If you don’t know what a Hukou is, this post probably doesn’t apply to you…).  Well since I’m not a local, I don’t have a Hukou so my bank account was opened with my Passport, which obviously doesn’t have the right amount of digits.  Fail #1

There is an option for Foreigners to sell on Taobao. So next I tried that: first line, OK.  Second line, please input your Guarantor’s name, ID number, phone number, etc, etc.  Uh…FAIL #2.  So as a foreigner selling on Taobao is much more difficult.

I guess they’re afraid we’ll list something super expensive, let some poor unsuspecting local buy it and transfer the money, and then leave the country with his money.  Granted, it could happen, but what’s the highest value item anyone’s ever bought on Taobao (without first seeing the item)?  Maybe 10,000RMB, maybe 100,000RMB?  So all of US$1400 or US$14,000?  Is that really worth it?  Fail #3.  That’s why banks, credit cards, et al have insurance and fraud protection.

Anyway, as you can see I was a bit frustrated with my Taobao selling experience today and I wanted to save other foreigners the same annoyance and waste of time.  And I’m sorry, I don’t know what happens after IF you get a Guarantor to validate your account.

It’s also interesting to note the differences between Taobao and eBay.  Taobao takes the money immediately from the seller’s account and holds it in escrow while waiting for confirmation from the buyer that the item has been received (or a certain period of time has passed) before sending the money to the seller.  eBay lets the buyer and seller decide between themselves how and when to pay and ship.

Can I further point out that since Taobao holds the money in escrow awaiting confirmation of item receipt from the buyer, that the whole paranoia of foreign seller runs out of town with the money is NOT very likely.  Fail #4

And that’s today’s Taobao 101 Guide.

Hello Friends, Can you help me? I’m looking for experienced network marketeers to head up a new network in your country and I wondered if you could think of anyone who you feel would like to be involved as a Country Leader at this crucial launch stage.
We are not looking to sign up ‘regular’ distributors at this moment but are looking for the serious team players who will become our global team partners.
As a fouder of this NEW very narrow NICHE business in your country, first year total earnings of $100,000 potential with second year earnings of $100,000 a month potential for the right people.
If you can help me that would be great and your input would be much appreciated.
Look forward to hearing back from you.

Best wishes,

Teodor M Muntean

MY RESPONSE

Teodor,
You know that network marketing is borderline illegal in China and is governed by many complex and unclear laws, regulations, and procedures. This is why Mary Kay and Amway had to offer retail outlets in addition to network marketing distributions when entering the market. This is also the reason many other network marketing companies have not entered China. Pursuant to that, you will not find an ‘experienced network marketeer’ in China who can lead a whole country network.

I think you’re jumping the gun. You can’t, nor should you even consider, finding a Chinese business partner on the internet, particularly on a site devoted to helping travelers. That’s just absurd! And shows a complete lack of knowledge and commitment to the Chinese market on your part.

To properly setup and start a networking marketing business in China, you will need no less than 1Million US Dollars. Also, if you opt to go with a local partner, that organization needs to be considered very closely. You should personally be here researching the options and making sure you can trust them.

My feeling is you know nothing about China and this is more like a scam than a real intent to do business here.

As the Communist Party, continuing to adhere to Marxist principles, the government owns the land.  People can and do own the buildings on top of the land but they don’t own the land.  The land is used for development under ‘land use rights.’  Land use rights last for between 40-70 years, depending on the type of development.

This explains to me why all the construction in China is so poor: there’s point in investing in quality construction when your lease term is only 40-70years.  The construction only needs to last 40-70years, not a lifetime or even many generations like some of the great historical buildings we still admire today.  Why spend the money on something that won’t be around for more than 50years, because you can cut corners and get it done for cheaper if you sacrifice quality.  My apartment, according to my dad’s guess is 10-12 years-old, while in fact, its about 4 years.  It just looks older due to number of factors, among which, shoddy construction, air pollution, and acid rain.

Sure this might sound like a sarcastic post (and it largely is) but have a look for yourself.  Land ownership leads to stricter  standards and higher quality construction than ‘land use rights.’

How do they decide who stays and who gets closed down?

Do they compensate the stores that are forced to close?

China has spent a reported $40 billion on new infrastructure and stunning venues, hoping to impress visitors with a modern city when the games begin Aug. 8. But the lack of reservations could shake the city’s hotel industry, which has more than doubled its five- and four-star hotels offerings to 160 since Beijing was awarded the Olympics seven years ago.

Ha declined to reveal his hotel’s occupancy rate, but he expressed concern over a report last month from the Beijing Tourism Bureau that showed five-star hotels were 77 percent booked, and four stars were at 44 percent.

Well, the occupancy rate was higher than I’d heard, but still not great when you consider,

Some five-star hotels are in good shape — at least during the Olympics — because they secured reservations from Olympic sponsors or Olympic committee delegations.

[...]

“They need to come, and they have no choice to turn back now,” Sander said. “They have put so much money down, they cannot draw back.”

Even all the greedy apartment owners are finding themselves not only without sky high Olympics rentals, but with no tenants at all.

In response to questions about visas,

“Beijingers will enthusiastically welcome foreign tourists,” said Zhang Huiguang, director of the Beijing Tourism Bureau. “But for terrorists and troublemakers, we’ll unite and fight against them.”

I like the use of the term ‘troublemakers.’ China is openly acknowledging they’re not just worried about terrorists but also about protecting their image. As such,

Students have been targeted too, because the government fears they might side with political activists if protests erupt during the games.

Anyway, just read the article, and if you have Olympics tickets (or know someone who does) but aren’t going to use them, I’m already here and I’m happy to buy them from you!

Advantages of China–

1. Lower cost structure (labor, facilities & equipment)
2. Huge market, the Chinese love their interactive, instant gratification web apps
3. Entrepreneurial spirit, try anything, wild west gold rush mentality
4. VCs (Venture Capitalists) may be looking more at China’s internet players because China now has the most internet users in the world, and China’s internet players have more solid histories of revenue flow than Western internet players
5. Western students will intern for free just to say they’ve worked/interned in China, ‘the hot new place to be’

China’s distinct Disadvantage

1. Relatively inefficient, unproductive programmers, engineers

US’s Advantages–

1. High quality technical staff
2. Proximity to Silicon Valley & VCs
3. Proximity to a lot of tech conferences where you can meet VCs, influential bloggers, potential partners
4. Ample opportunity to get your message out because of proximity to influential tech related media

Europe has similar advantages as the US, but not on the scale they exist in the US. There are some tech conferences in Europe, there are VCs in Europe, but the media coverage for tech stuff is relatively limited in Europe.

America’s & Europe’s distinct Disadvantage–

1. High costs of labor, office space, infrastructure, etc

In conclusion, Europe seems to offer the fewest benefits. Not surprising, the cost differential makes China a very attractive place to base your start up. The US is the best for getting very influential and widely seen English-language media coverage.

Perhaps the optimal solution is to have the marketing/PR person (or firm) in/near Silicon Valley, the technical team, led by a capable Western project manager, based in China, and the executive going back and forth.

If you thoughts on aspects I’ve overlooked or other ideas, please post them in the comments section below.

Perhaps the better question than whether Facebook can scale in China, is whether it can successfully monetize in China the way China’s own social networks have done. Facebook does not make much money on advertising currently. Chinese social networks, on the other hand, have different revenue models making them more profitable than any advertising-based model developed by Western-based social networks.

Another concern I have about Facebook offering a Chinese-language version is whether that will make it yet another target on the government’s internet block list. The Chinese government already blocks more Chinese-language sites that are sensitive than English-language sites, for example wikipedia.en is sometimes available but wikipedia.cn is never available within Mainland. Therefore, if Facebook is offered in Chinese, that makes it even easier and more accessible to Chinese users, including groups for or against T_bet independence, F_lun G_ng supporters, etc, as well as other sensitive information contained in pictures and videos on Facebook. My Facebook profile is already frustratingly blocked in China (for some unknown reason), I don’t know what all of us expat Facebook addicts would do with so much spare time we’d have if Facebook was totally blocked.

Slide show about the difficulties foreign internet companies have had in China by Jonathan Haagen (Economist Intelligence Unit)

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The company had 4 Shanghainese employees, who kept wanting more and more money for less and less work.  One of them was the flight specialist who had good relations with the airlines.  Each time she booked another trip, she kept pushing the airlines to give her more and more commission, in addition to pushing the company to pay her more.  Eventually the company had to let her go.  When she left she took the entire database of clients with her, then contacted all of them and told them not to use the German-owned company anymore but instead to go through her.

One of the other, now former, Shanghainese employees disgruntled over not being paid more, goes to the police.  One morning she brings the police back to the company and the police demand that the company hand over its server.  The company refuses, saying the police have no search warrant nor other documents allowing them to take the server.  However, the company can’t do anything, so the police take the server.

The 4 Shanghainese employees get together and go to the labor and work bureau and complain that the company never paid any social security for them.  Throughout the term of their employment, the company offered all of the employees the option of paying the social security into the system or giving it to the employees as part of their salary; of course, all of the employees wanted it as salary.  Now, these employees come back saying the social security was never paid for any of them over the last few years.  As such, now the company has to repay all of these 4 employees social security again for the entire length of their employment.

Operating in China is difficult, whether it be because of employee issues or government and legal issues.  This company was by no means operating strictly in the legal realm, which of course is difficult because there are so many gray areas in business and law in China.  But that made them vulnerable when other issues came up.

• China Southern did NOT make me walk on the tarmac in Beijing in 40degree F weather
• CE & AC always let you freeze (or roast as the season may be) and waste your time by making you walk on the tarmac and then take a bus for miles to the terminal because they are too cheap to pay for a gate & a jetway
• China Southern’s PA announcer spoke English well enough and clear enough I could actually understand what she was saying
• China Southern’s plane was the newest plane I’d been on in a very long time
• China Southern gave me a comfortable amount of leg room such that I wasn’t squashed into the seat in front of me
• My last flight on AC was so crammed that I couldn’t open my laptop fully even when the seat in front of me was upright
• My bag arrived on the carousel before I’d even gotten there!  Perhaps this is only a compliment to the fact that China Southern actually had a gate, but still it’s great service compared to the normal 15-20min wait I have with CE & AC.

China Southern certainly deserves praise.  My only 2 complaints were, the food was not very tasty (which I think is because of the airport catering company, not the airline catering company) and the flight was late (only 20min though).  All-in-all, I’m very pleased with China Southern and I’m glad to know that some airline in the Chinese airline industry differentiates itself positively.

Tourism Skills Shortage in China
onrec.com
As a long time resident in China I have had the dubious privilege of watching the tourism and travel industries develop rapidly over the last decade. The development is the good news but the pre-development stage was a bit of a struggle for us all.
Over the last week I have read a number of articles indicating that China is going to move from being the world’s 4th largest tourism destination, with 124 million inbound tourists per year, to the world’s 2nd largest tourist destination, with countless more. This will happen over the next 10 years and it is great to hear. It means real change in people’s lives; overseas travel for people in China and the arrival of literally millions of tourists for upcoming events like the Beijing Olympics(2008) and the World Fair in Shanghai (2010). The downside is that there will be an inevitable shortage of skills in the tourism and hospitality sectors because the growth is massive and exponential. Businesses will suffer, and in fact are suffering right now because the growth has already started. Hiring volumes are huge and the cost of candidate identification and assessment is high when the salaries on offer are below the average for all other industries. At present there is a clear shortage of Travel Consultants in China. This stems from the exponential growth of the travel industry and the fact that so few people in China have actually been abroad in the past. In an exponentially growing industry the number of people with 10 years experience tends towards zero, and the travel industry certainly follows this path. It is very difficult in China to find someone who knows about the difficulties experienced by travellers who arrive at Heathrow(London) or JFK(New York). This is simply because so few people have actually been to either of these airports. Go back only a few years and it wasn’t even possible for someone in China to get a visa to go to either location. So, for example, it is very difficult for local Travel Consultants to really understand that you need 4 hours transit time when changing terminals at Heathrow. It’s hard to even envisage when your comparison is the small airport in your local city. And more importantly, it’s hard to effectively advise your clients when their travel plans involve multiple locations and different time zones. In effect we are looking at a skills shortage that can never be solved with simple training. The hospitality industry is a little different because it has been growing strongly for more than 10 years. So strongly in fact that it is often seen as a great training ground for other industries like sales, marketing, advertising, PR etc. Hotel people are much sought after because their language skills are developed, they have excellent presentation and they understand customer service in a very deep way. They can transition easily to selling advertising space or managing PR events for corporate clients. Unfortunately, the hospitality industry is now growing at a rate where training cannot keep up with the buildout of new hotels. Occupancy rates in hotels in China are thought to be over 70% and in many cities it is hard to get a hotel room, even when there is no major event going on in that city. Room rates have gone up significantly too. The tourism industry in China is already racking up over US$300 billion a year in turnover. It employs about 17 million people and is growing at about 9% per year. So the logical consequence of this is an ongoing struggle to recruit, retain and motivate staff. A struggle that will only get worse in the short term. The danger is that if this problem is not solved, the industry will not reach its potential. This has huge consequences when travel and tourism combined currently employ about 10% of the entire China workforce. Having the tallest hotel in the world is good, but filling it with qualified staff is much better.

I don’t necessarily disagree with the issues discussed in this article, I just don’t see them posing as big of problems as he makes them out to be.  China’s churning out the tourism/hospitality students at a rapid rate and the ones I know and work with are fantastic people, with excellent English and service skills.  If they come straight out of undergrad this smart and well-trained, I’m sure they can learn and develop great management skills as well.  As such, headhunting those truly capable tourism/travel middle and senior-level managers may just be great business idea.