It’s been a tough year for China, and it’s not yet June.

February brought unusually heavy snows across the country, causing collapsed roofs, traffic chaos, stranding hundreds of millions of holiday travelers, and ultimately killing 129 people.

Then, a global firestorm followed the Olympic torch as it made its way around the world for what was supposed to be a triumphant run. Chinese officials and the Chinese people were completely caught off guard by the negative reaction – first in the form of protests in Tibet, then the global protests in many of the world’s major cities.

Now, it's another natural disaster, a horrific 7.9-magnitude earthquake near the city of Chengdu in Sichuan Province that has killed at least 65,000 people, and likely nearly 100,000 in total.

All three events have laid bare the gaps between China’s aspirations and its present reality. Between how China presents its face to the world in the form of its largely well-developed coastal cities of Shanghai, Guangzhou, Shenzhen, and Beijing, and its undeveloped, mostly rural backwaters where the majority of the country’s people still live. Between its expectations of rapid ascendancy to the heights of world power, and a wary, powerful global elite that isn’t happy to have a new member in the club.

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SHANGHAI--The French have done it again.

The fallout from the Olympic torch run through Paris earlier this month has spread through the Chinese blogosphere on a wave of nationalist outcry. As I write, our Shanghainese research assistant is being bombarded by requests from friends to add a heart symbol to her instant messaging tag to prove that she loves her country and stands with China against France. She has also been asked, as has just about every Chinese person on the Internet, to boycott French retail giant Carrefour as an expression of disapproval.

Sound familiar? Recall the immediate aftermath of the French refusal to participate the Coalition of the Willing in 2003? French wine was poured into the streets, vacations to France were deferred or cancelled, and French pâté was tragically uneaten.

The decision by the Chinese government to publicize the French protests in China has catalyzed a grassroots fervor similar to the immediate post-9/11 years in the United States. Failure to express patriotism in a pre-approved way, whether in the form of an “I heart China” symbol on your IM profile or an American flag in your front yard, is met with swift and often intimidating disapproval.

The irony is that, as far as the cause of Tibetan independence or autonomy is concerned, the Olympic protests in Paris and elsewhere will likely do far more harm than good. Westerners, and certainly the Western media, are already predisposed to supporting Tibet, so nothing short of total independence would ever please them.

The real shift will be among the Han Chinese population. It’s safe to say that most Chinese were largely unaware of the Tibet issue before the events of the past few weeks other than having a vague sense of Tibet being a part of China. Now they’re fully energized and supportive of the government, and it feeds into a notion they have of themselves as victims. China watcher Roland Soong describes how much of a public relations coup this might be for the Chinese government.

Shanghaiist picked up on this earlier today as well.  

Image: Social Technologies

SHANGHAI--I came back from the Lawson’s convenience store near my Shanghai office this afternoon, eager to tuck into a new fresh-chilled rice and mystery-meat lunch offering and wash it all down with a cold Coke. That’s when I noticed something so shocking, so completely revolutionary, that I had to stop what I was doing and take note.

The Coke can, resplendent in red and gold Beijing 2008 Olympics logos, was topped not by a circa-1962 pull tab, as–to the surprise of nearly every Westerner who visits China for the first time–just about all canned soda drinks in China seem to be. Instead, a modern stay tab sensibly served as the key that unlocked my sweet, caffeinated beverage. That’s right, nearly 28 years after the stay tab went into widespread use in the US and Europe, its appearance at my local store, along with 50 or so companions on the shelf, seems to suggest the stay tab is poised to make its way into China on a wide scale.

When it made its appearance in the early 1980s, the stay tab was praised by environmentalists and safety experts alike. Litter from the pull tabs was a persistent problem and many people accidentally cut themselves on their sharp edges.

All due respect to Coca-Cola for finally making the switch, if indeed this change is permanent, but one cannot help but notice the timing – just five months before the Olympic games. Presumably Coca-Cola, a major sponsor of the games, wishes to avoid the remonstrations of the expected 600,000 mostly Western tourists and, possibly of greater concern, members of the international media due to hit the streets of Beijing in July and August. No mention of the change appears on Coca-Cola’s website.

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SHANGHAI--After one week with the tap turned off, YouTube is accessible again in China. Also, to my great joy, BBC News is now available for the first time in my two years here. Free blogging sites like Blogspot and Wordpress remain inaccessible except via proxy.

The only question is, "For how long?"

If the lid stays closed on any pre-Olympics politicization, I'd continue to expect a loosening of the firewall. If flare-ups continue in sensitive areas (e.g., Tibet), all bets are off.

Image: Kai Hendry (Flickr) 

SHANGHAI--I attended a talk Saturday by Rob Gifford, a former NPR China correspondent who has written a great book called China Road. Gifford spent six years here, is fluent in Chinese, and has come to the same conclusion I have – that in the long run, something’s gotta give. The country is being pulled in too many different directions at once by some pretty powerful forces (demographics, environmental degradation, industrialization, poverty, extreme wealth, etc), driving tremendously rapid social change.

Some catalyst – a natural disaster, a political movement, a shortage – could set the fire burning. Gifford suggested a safety valve might be the pace of urban development in China, which is giving the rural masses who otherwise might despair a reason to hope for a better life in the city. I hope he’s right.

Images: Social Technologies 

SHANGHAI--Youtube, CNN, Anonymouse (my go-to proxy server), even Boing Boing…all blocked as a result of the events playing out in Tibet. This is in addition to the stuff that’s already blocked, e.g., all Blogspot, Typepad, Squarespace, and Wordpress blogs, all BBC access, and Wikipedia, among others. I wonder if Bjork can somehow be blamed for the unrest?

I had assumed the next few months would see an easing of such restrictions. I hadn’t fully considered that domestic groups with a cause would use the fact that the spotlight will be on them from now until the Olympics in August to make themselves heard, but surely some will. This will be true of groups outside the country as well. I imagine we’ll see more powerful people like Steven Spielberg under pressure to make statements against the Chinese regime, whether or not they’re associated with the games in some official capacity, as Spielberg was. I can virtually guarantee a burst of criticism from some members of the US Congress beginning in the early summer and carrying through the games. It’s an election year, after all. Some European parliamentarians are likely to chime in as well.

What no one knows is how the Chinese government will respond before, during, and after the games.

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We've been working on a system for measuring the speed of change in societies around the world. We thought it might be working pretty well when we plugged in the data, ran the formula, and it spit China out as the world's fastest-changing society. (Among developed nations, Taiwan came out as the fastest-moving, which also seemed about right.)

A recent Washington Post article revealed what this could mean in people's lives.

It told the story of Huang He, who left China in 1996 to study media in the United States. After 10 years, he has returned, and finds himself in an unfamiliar land.

"China is not the same China I remember. People's values have changed," he says. "People think in a more complicated way."

His once-proud father seems to feel that Huang has been left behind: "Many of your peers who did not study overseas, they all seem to be better off. Many of them were not as outstanding as you were in school. But those who didn't leave got caught up in the fast-paced development of China."

Huang sees the results of that pace of development everywhere. Propaganda goals have been replaced by the quest for ratings in Chinese media. Even the buildings have changed: old houses are gone, with "modern brick and tile boxes" in their place.

Facing 10 years of change in one of the world's fastest-moving societies would strain anyone's capacity for newness. For Huang, it may be too much: he is thinking of leaving again.

Image: Point-Shoot-Edit (Flickr)

China's economy just shrank 40%, according to the World Bank. India's did the same.

It's not a catastrophic pan-Asian depression, however. The Bank has recalculated the size of the world's economies based on new and evidently more accurate estimate of the effects of purchasing power, or how much people can actually buy. (Measured by exchange rates, economies in the developing world are typically much smaller, sometimes by a factor of three.)

By the older method, the world looked like this in 2005. China is rapidly closing in on the US, with the rest of the world relegated to secondary orbits around the two giants:

This is how the world looked in 2005 using the new methodology, after the Chinese economy has "lost" about $3.4 trillion (nearly the size of Japan, the world's third-largest economy), and India has been shorn of $1.4 trillion (the whole Brazilian economy):

The US is far more dominant, and Japan and Germany remain near-rivals to China in the size of their economies.

We can take two preliminary conclusions from this:

• The day when China will surpass the United States in economic power -- and the things that flow from it, such as military might -- may just have been pushed back by some years.
• It always pays to remember that models are not reality. They may help to explain it, but are often more about a way of seeing the world than about hard facts.

(Graphics generated with IBM's Many Eyes)

The Financial Times has an interesting article about how some companies are holding their board meetings abroad to immerse executives in a new and stimulating environment.

The article explains that it is an opportunity for companies to push executive thinking and get board members to see their organizational challenges "with fresh eyes."

Reuters is one company that has held board meeting overseas in important new markets. The article states that Reuters' execs felt that creating their Asia strategy after being together for a week in China "grounded" their strategic conversations in a way that wouldn't have been possible otherwise. 

This reminds me of the kind of contextual awareness we and our clients picked up this past May on our Futures Expedition in Shanghai. We spent a week exploring Chinese consumer life through home visits, focus groups, shadow shopping, and meeting with experts from companies and NGOs operating there. We also got a lot out of our personal observations in the field, whether this meant hearing firsthand from young Chinese consumers what they like and dislike about their mobile phone (see image) -- or learning about people's views on the environment through our evening focus groups.

If you missed the Shanghai Expedition, but need to understand how consumers in emerging markets are living and how they're going to shape the future, consider coming on one of our upcoming BRIC Expeditions. First stop: Hyderabad, India in February 2008, with subsequent trips to Russia (September 2008), Brazil (March 2009), and back to China in October 2009.

For a sense of the experience and the output, check out some excerpts from the Shanghai post-expedition report.

Image: Social Technologies

What are our futurists reading? The following are some sources that are sparking the interest of Social Technologies' analysts at the moment:

Image: Social TechnologiesJohn Cashman:

• China CEO: Voices of Experience from 20 International Business Leaders, by Juan Antonio Fernandez & Laurie Underwood -- I’ve been slowly picking my way through this fine collection of insights, anecdotes, and advice from leaders of prominent multinationals such as Carrefour, BP, Unilever, and GE. They share their experiences, good and bad, on entering into China’s complex business landscape. The advice ranges from practical discussions on how to choose expatriate staff with the temperament for China (hint: don’t forget the effects of relocation on the employee’s family), to advice on the best strategies for entry into the Chinese market (Go it alone? Joint venture? Strong or weak joint venture partner?), to creating the proper incentive structures for managing Chinese staff (education and training opportunities, rapid advancement, and impressive-sounding titles seem to be a good place to start).

Matt Sollenberger:

• "The End of Cheap Food," in The Economist -- The Economist argues that higher food prices are not a spike but are, in fact, here to stay due to a collection of underlying factors they lump under the term “agflation.” However, the UN's Food and Agriculture Organization and the IMF tell a slightly different story.

Gio Van Remortel:

• “A Lush Business,” by Vitisia Paynich in Electronic Retailer magazine -- Lush founder and CEO Mark Constantine discusses the business approach of his wildly successful soap and cosmetic store. The company uses organic ingredients for its products and also employs a strategy of transparency and interactivity with its customers. The story piqued my interest not only because ethical consumption and transparency are trends that we monitor, but also because a colleague expressed such enthusiasm on seeing the story headline and mentioned how much she loves their store. The article confirms that this type of customer enthusiasm has much to do with their growing success.

Shanghai's skyline. Image: Aku Virtanen (Flickr)And now for some lighter news:

Those of you who joined us on our Futures Expedition to Shanghai in May will be delighted to hear that S)T's assessment of that city -- as a model for the future of China and Asia as a whole -- has been confirmed by noted futurist Paris Hiton. You can read her comments here.

This has to come as a big relief to our man in China, John Cashman, whose work in that city is now validated.

Thanks, Paris!

Yiwu's International Trade CitySHANGHAI--Last week I went with my friend Zoran to Yiwu, a city about 2 hours southwest of Shanghai via bullet train. With a population of over 600,000, Yiwu has grown into a massive wholesale trading center in recent years. On the outskirts of town is the International Trade City, a mall that dwarfs Mall of America’s paltry 4.2 million square feet. Its 30,000 stores are spread over 18 million square feet and divided into sections—toys, sporting goods, computer parts, zippers, etc.—and each section has row after row, floor after floor of shops showcasing wholesale products. Zoran was looking for unique spiral bound notebooks to sell in his three bookstores in Macedonia, and we spent the better part of two hours in the morning trolling the paper and stationery section for good finds.

The real reason I went to Yiwu, though, is closely related to trading, but far more relevant to global trends. After I left the wholesale market, I hopped on the back of a motorcycle and zipped across town to a rapidly growing Muslim neighborhood. Yiwu is becoming a draw for immigrants. The small Middle Eastern community there is comprised mostly of traders, though some are setting up restaurants and other services.

This is something new for modern China, and a potentially good indicator of future change. I wouldn’t bet the farm that China will become an immigration magnet to rival the United States anytime soon, but the country has not traditionally been a destination for migrants. How it handles this new role will be something worth keeping an eye on.

An Iraqi restaurant in Yiwu, ChinaAfter I agreed to visit Yiwu with Zoran, based on his descriptions of the thriving Muslim community, I discovered that Washington Post reporter Ariana Eunjung Cha beat me there by about three weeks. In her article, Cha reported that an estimated 20,000 Muslim immigrants have settled in Yiwu since 2002, including about 1,000 Iraqis looking to escape conditions in their war-torn country.

These numbers are miniscule in the grand scheme of things, but the feeling among some of the recent migrants is that there are better opportunities in China than elsewhere, including the United States. One imam (religious leader) quoted in Cha’s article noted that his congregation has grown from 100 in 2001 to 8,000 in 2007, adding of the new migrants, “The main feeling is that they are free here. People are buying apartments and cars. They want to live here for good.”

The Al-Arabi Restaurant in Yiwu, ChinaAs I drank tea and ate hummus and babaganoush in the Al-Arabi restaurant, the manager watched an Iraqi soap opera that spliced real war footage into its melodrama. I couldn’t help but wonder about the future of US soft power and whether it will ebb as China’s flows, or whether there will be room for both on the world stage in 50 years.

Images: Social Technologies

India's growth. Image: Social TechnologiesBy now, we’re all familiar with the 2003 Goldman Sachs report "Dreaming with BRICs: The Path to 2050," which laid out their view on the growth potential of Brazil, Russia, India, and China. An interesting new report from Ernst & Young found that there continues to be enormous enthusiasm among investment firms around the world for initiatives and investments in the BRIC markets, “but that only about 29% of deals are completed because executives are not visiting the countries and learning about the local cultures,” according to a recent article in the New Yorker.

We urge our clients to educate themselves about and immerse themselves in the markets they are trying to understand. To help with this, Social Technologies will host a series of Futures Expeditions to Brazil, Russia, India, and China over the next two years. We will give participants a firsthand view of how changes in demographics, consumer life, values, and technology use are shaping the future of these critical markets. If you’d like more information on what we’ll cover on these BRIC Expeditions, see this (PDF).

As in the past, a big part of the BRIC Expeditions will be immersing ourselves in the daily life of these markets so we get a better sense of how important issues like urbanization, environmental concerns, rising income and changing consumption patterns are actually playing out for consumers and businesses. This means in-depth interaction (e.g., home visits, shadow shopping, focus groups), and engaging with experts who truly understand where these countries are headed. For a sense of what I mean, check out this excerpt from our May 2007 Futures Expedition to Shanghai and consider joining us on these fascinating and unique futures experiences in 2008 and 2009.

Futures Expedition schedule:

• India (Hyderabad) from Thursday, February 28 to Tuesday, March 4, 2008
• Russia (Moscow) from Thursday, September 24 to Tuesday, September 30, 2008
• Brazil (Curitiba) from Thursday, March 5 to Tuesday, March 10, 2009
• China (Shanghai) from Thursday, October 15 to Tuesday, October 20, 2009

Image: TVA.govThe debate over how to combat global warming commonly focuses on technologies and policy interventions designed to cut the global emissions of carbon dioxide. On the fringes of climate change discussions, however, have been proposals to address global warming through “geoengineering” – large scale technological interventions designed to alter climate characteristics. In a recent New York Times op-ed, climate scientist Ken Caldeira touted one approach involving seeding the upper atmosphere with sunlight reflecting sulfates:

What can be done? One idea is to counteract warming by tossing small particles into the stratosphere (above where jets fly). This strategy may sound far-fetched, but it has the potential to cool the earth within months. Mount Pinatubo, a volcano in the Philippines that erupted in 1991, showed how it works. The eruption resulted in sulfate particles in the stratosphere that reflected the sun’s rays back to space, and as a consequence the earth briefly cooled. If we could pour a five-gallon bucket’s worth of sulfate particles per second into the stratosphere, it might be enough to keep the earth from warming for 50 years. Tossing twice as much up there could protect us into the next century.

Despite having a vested interest in boosting the funding for geoengineering research, Caldeira makes a good point: given the potential severity of anthropogenic global warming, wouldn’t it be prudent to at least have some sort of Plan B? Given the stakes, it seems sensible to pursue some basic research on feasibility and implementation for geoengineering.

Many climate change activists are rather lukewarm about conducting even basic research into the field. In many cases their objections boil down to two points:

1. The future promise of geoengineering is a distraction from the need to enact emissions control policies in the present.
2. Geoengineering is a reflection of the “lets tinker with the ecosystem” hubris that got the planet into this mess in the first place.

As a result, support for exploring geoengineering approaches are likely to experience slow growth in World 1.

Interestingly, World 2 – and specifically China – might develop much stronger enthusiasm for the approach. China has embraced weather modification techniques like cloud seeding on a national scale, and has world’s largest weather modification infrastructure:

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At the recent branding conference, Zhou Yunjie, a VP from one of China’s premier brands, Haier, demonstrated the fiery ambition and ingenuity of many of China’s companies while at the same time showing, perhaps inadvertently, how far Haier must go before it can compete in World 1 using a Western, World 1 workforce.

Zhou introduced Haier’s localization strategy in markets outside of China, as well as the specific tactic of identifying a niche area, e.g., miniature refrigerators for the US university student market, or the tendency of Chinese farmers to use Haier washing machines to clean vegetables. Haier gains access to distribution channels via the niche product, but once the distribution channels are open, distributors will often be willing to carry more mainstream products as well.

After discussing some of Haier’s global presence and ambitions, with manufacturing plants in the United States, Africa, and India, among other places, Zhou was  questioned about the fusion of Chinese management and local work styles. He identified this as a key issue going forward, but offered a telling example which may hint at future problems, at least in North America.

He referenced the Chinese management tactic of shaming poor-performing employees by forcing them to stand up in front of their colleagues and offer apologies and explanations for their work. What they’ve done in their US factories is ask the best-performing employees to stand up and share the secrets of their success with the rest of the team—a tactic that drew a few snickers from the crowd.

Image: Social Technologies