China's baby food market has grown into one with $19 billion by sales in 2014, compared to $9 billion in 2009. Despite the fast growth this industry is still in its infancy. Baby formula milk accounts for more than 70% of the total annual sales in China, the rest 20% + goes to cereal. Solid foods are still in its early stage, when young parents are learning the importance of giving their babies a balanced diet. Multinationals dominate the baby food market in China. In 2013 16.4 babies were born in China vs. 3.9 million in the U.S. China may expect to welcome at least 1 million more babies each year since 2015. Chinese government has been relaxing the Only Child Policy by allowing couples of both the only child to have a second child in the urban area. About 1.5 million couples have submitted application to have a second child since the new policy was announced and practiced in selected regions in China November 2013. Please click to download the latest presentation of China's Baby Food Market by Kee Global Advisors (KGA). Read more →

Alibaba Calls it Quits on its U.S. eCommerce Effort

In June 2014, I wrote an article about Alibaba's launch of 11 Main in the U.S. Please click here to read the article. Only a year later, Alibaba sold 11 Main to OpenSky. As Alibaba's Executive Vice Chairman Joseph Tsai said in an interview, "the key issue is whether we are going to have something in the U.S. market that will really target U.S. consumers. We think in the long run that's is an interesting market to us. But today, our focus is very much on cross-border activities" that connect U.S. sellers with Chinese consumers." Wasn't 11 Main designed to serve this purpose or has Alibaba failed to convince enough U.S. sellers to list on 11 Main? Alibaba Stumbles in U.S. Online Market - WSJ (June 24, 2015) Read more →

In late April, I attended a forum “China-U.S. Business Forum: Finance and Innovation” hosted by Guanghua School of Management of Peking University, my alma mater, at the New York Public Library. The speakers included Jack Rosen, CEO of Rosen Partners; Steven Barnett, Division Chief (China Division, Asia Pacific Department), International Monetary Fund (IMF); Gary Rieschel, Founding Managing Partner, Qiming Venture Partner; Hongbin Cai, Dean of Guanghua School of Management; and other China veterans. The speakers, both Chinese and American, have been doing business with China or in China for an extensive period of time. For example, Gary Rieschel has moved his family to Shanghai from the U.S. to manage his VC fund Qinming Venture Partner. The speakers were divided on the prospects for China’s economy and markets. Some of them painted a much more bullish picture than others. Differences of opinion, needless to say, are typical when a bunch of economists, business people and lawyers sit down to discuss China. Each party may have dramatically different opinions from each other. The reason is that China’s economy or market is not homogeneous, but diversified and full of self-sustained pockets that posses their own ecosystems. Broad-brush conclusions about China often sound ill-informed... Read more →

These days, the questions my clients ask me most often are how bad is the corruption in China and to what degree will Xi continue to fight it. Before I answer these questions I tell them stories from my personal experience. I want to share one story here from one of my typical trips to China a couple of years ago. My client was a private owner of a business that manufactures surveillance products. His top customers are government institutions in China. My team and I were chauffeured to a restaurant’s private room for dinner at the end of the day. At the table, we drank, ate and chatted. As dinner continued, my client started to open up and to carry out conversations with more substance, partly because of all the wine he had consumed. When we asked about how he successfully acquired government institutions as his clients, he winked his eyes and mimicked a gesture of counting dollar bills with his fingertips. Seeing that we didn’t fully understand, he gave us a long lecture. A private business owner, he had little to leverage when starting out to build his small empire. In comparison with mammoth State-Owned-Enterprises (SOEs) his company... Read more →

Yahoo! can Laugh at Last as Alibaba's IPO in the U.S. is Getting Close

No market than China sees American Internet companies fail so terribly. Google was kicked out of China, part of it because it offended the Chinese government, part of it because it lost to its local competitor Baidu. eBay pulled out of the market voluntarily after realizing it was losing ground to Alibaba's Taobao. Yahoo!'s business barely took off in China after years of struggling and trying in China. Facebook or Twitter, even worse, never got a chance to try the market out. What's more, their domains are blocked in China. Yahoo! struck a deal with Alibaba in 2005 to form a joint venture, in which Yahoo! invested $1 billion cash and Yahoo! China assets, which was valued $700 million, for a 40% stake. The whole joint venture deal was valued at $4 billion. At Alibaba's coming IPO, analysts estimate it may be valuaed around $200 billion. Even though Yahoo! was forced to reduce its share at Alibaba to 23% in 2012, Yahoo! is still going to do extremely well. Sue Decker, former Yahoo! president, looked back at what Yahoo! had done right and wrong in China in her" An Insider's Account of the Yahoo-Alibaba Deal" in Harvard Business Review Blog... Read more →