China Law Blog

I have a hard time imagining Midwesterners bragging about the great shoes they got at "Tong Sheng He."

The project is doomed unless they wise up soon.

Hard to believe Milwaukee can look so bizarre with only one letter out of place. Lucky it wasn't Oconomowoc.

Tengzhong's purchase of Hummer? I agree with you.
I think China is not retail really ready for Milwaukee.

Couple of points of disagreement in this article that I would like to express. One, while the purchase of Hummer has been a bit of a head scratch for some, it could be viewed at the level of pure intellectual property, to which a wide variety of items could be spawned from it. Doesn't require a lot of R&D to sell a series of "Hummer themed" accessories - or a Chinese built Hummer to Africa/South America/Southeast Asia. Mind you - it still has the air of the Henson - Disney purchase of a few years ago, and the recent Marvel - Disney purchase - but stranger things have happened.

As for the mall investments - there is one factor to key in on - what percentage of Asian-Americans reside in Milwaukee, if not further south in Chicago. Chi-Town is already home to an H-mart, several Asian-American stores, and the Chicago Chinatown. I would not be surprised in the near future that additional malls will be bought in or near Houston, Atlanta, and other East Coast/Plain State Cities.

They'd do better if they funded an individual chinese store in a mall already functioning. Open up a Li Ning store in some Atlanta mall or something, but to buy a WHOLE mall? Stupid.

It's good to know Joe Fall, owner of Milwaukee burger restaurant Culver's, is representative of the region's opinion and is clearly an expert on Chinese products. That was meant to be sarcastic.

Toward Group is smart, and they've chosen their battle wisely.

if this isn't a sign of chinese overconfidence i don't know what is

I live about 90 minutes from Milwaukee and my in laws even closer. While I have an adopted Chinese son and like the Chinese culture, let me just say, I doubt anyone in Milwaukee is going to believe there are high quality Chinese products to be bought there. The rubes from the midwest are not that dumb. And anyway, mall Chinese food is never all that good.

It all depends. Will this mall have a branch of "Hooters of Shanghai" in it? Then again, we're talking Milwaukee, that might not work anyway...

Why would they skip Chicago, just a coupla hours south and with a much stronger Chinese population? As far as I know there is no true "Chinese style" mall in Chicago, and the mayor is China crazed. Granted, Marquette is a solid place to watch Big East basketball, and the Milwaukee Art Museum and lakefront are absolutely superb, but...

Maybe it's a "build it and they will come" exercise in futility?

The mall will be successful if they build a beer garden in the center.

In this situation I would define the Chinese as cash rich but idea poor. The Hummer thing might turn out OK if they leave the established brand alone, but creating a Chinese mall from scratch in the Midwest will be an unmitigated disaster.

I think it's time the Chinese get an "America Law Blog" to tell them what NOT to do when starting a business in the U.S. Maybe give them a few tips on interpreters to boot!

could the Toward Group be looking to score domestic political points for being in line with China's soft diplomacy image building exercises which are so poorly (naively) executed by the govt. sponsored Confucius Institutes popping up all over the place?

Also what are they paying for the mall? The Chinese are purchasing a mall in a depressed US economy, in a low wage state, without having to borrow money. All of which will allow them to control costs.

This is exactly the opposite of what the Japanese did in the 80s. They paid top dollar for Pebble Beach and Rockefeller Center, and ended up losing a bundle.

The Chinese, I think, have been much smarter with their cash surplus. Buying up natural resources all over the world, etc. They will make mistakes but I do not think they will go the way of Japan.

This is a terrible idea. Milwaukee and China are just not ready for each other. Most Americans still think of China as they did 30 years ago, and the mass media didn't help China's image much. Toys with lead paint? If you do a survey now, I bet most Americans still think it's the Chinese company's fault, rather than Mattel's. Same with a slew of other issues, currency, IP protection, safety standards, national debt, etc, etc. I'm not saying Chinese government or companies are angels, but Americans are predisposed to fault them first.

Chinese business people and leaders, by and large, have no idea how China is perceived by most of America. When they visit, they are guided by friendly, rich people in expensive suits and visiting nice places where everyone plays nice. If they were to have a frank exchange, let’s say, town hall style? They would probably think about this investment differently. While Americans in China will, at least when they are not drunk, invariably treat their business partners with a certain façade of friendliness, regardless of what they really think.

While there are plenty of successful Chinese American businesses and business people in America, the Chinese part is not usually emphasized, or used as an advertisement, other than restaurants and such. And Americans for the most part, as long as they enjoy dealing with the business, don’t care about who owns it.

But to start a consumer mall, and using the fact that it is Chinese owned and using Chinese brands (that people never heard of and have “weird” names) as a tool to draw people in? Simply not going to work out, not in Milwaukee, not in NY, LA, Houston, or anywhere in America. The good thing is, they are getting in on a low market, maybe they won’t lose much, but I bet they will learn a few good lessons, and maybe this is what they are ultimately going for.

Funny, I just last week sat in on a meeting with the AmAsia people here in Ningbo. My impression was that the mall was an old 80s project had sat vacant for some time, and the Chinese must have bought it for a song. They want to fill it up with high quality Chinese goods. I don't know who's going to buy those goods, though. There are plenty of high fashion luxury malls here in Ningbo, and I couldn't find anything I want in any of them, even if I had a fat bank account.

I also remember Yi Jinlian complaining about the lack of Chinese in Milwaukee when he was drafted by the Bucks.

"What do you think? Is China retail really ready for Milwaukee? Is Milwaukee really ready for China retail?"

No!

Also this is an example of what they might have in mind

http://en.wikipedia.org/wiki/Chinatown,_Las_Vegas

Looking at the numbers, I think it might work. Chicago would be to Milwaukee what Los Angeles was to Las Vegas. Also, you Milwaukee is home to University of Wisconsin and that gets you professional Chinese with disposable income.

Ethan S.: Chinese business people and leaders, by and large, have no idea how China is perceived by most of America.

I think they do. One thing that China has that Japan didn't was a pretty large number of Chinese-Americans that would serve as intermediaries. You have pretty large numbers of Chinese with exposure to US society, which wasn't true with Japan in the 1980's.

Ethan S: While there are plenty of successful Chinese American businesses and business people in America, the Chinese part is not usually emphasized, or used as an advertisement, other than restaurants and such.

The Chinese part isn't emphasized to mainstream culture, but the fact that I can look and act "white" when I have doesn't mean that I'm not Chinese.

Ethan S: ? Simply not going to work out, not in Milwaukee, not in NY, LA, Houston, or anywhere in America.

Flushing (NYC), Monterey Park (LA), Bellairie Avenue (Houston). In each case, you have Chinatowns that were started by real estate investors snatching up cheap property after a real estate crash. $6 million is a tiny, tiny investment in real estate.

Now I don't know if this is going to work or not, but it's does look like something that people have tried and succeeded with before.

One other thing that I found Googling is that there seem to be a lot of Hmong in Milwaukee, and I'm curious how they see themselves as far as ethnic identity goes. It's interesting that in the article they mentioned specifically "traditional dance from Yunnan" since that's the place the Hmong originally came from.

Something that is true in Texas, is that a lot of the people that own businesses are "Hoa" Chinese-Vietnamese. There are a lot of slippery issues as far as ethnic identity goes. One thing that happens is that I'm pretty good at looking "white" so people don't realize that there are parts of me that aren't obvious.

Ethan S: And Americans for the most part, as long as they enjoy dealing with the business, don’t care about who owns it.

Ahem. There happen to be a lot of Americans that are ethnically Chinese. When marketing to Americans that are ethnically Chinese, American companies *do* often emphasize the Chinese part.

See for example....

http://chinese.schwab.com/public/schwab-us-zh

I am from Milwaukee and we have one mall that is ran by Koreans and its been around for years but its not making money like it should. I must agree bad business move they might get business for a couple of weeks just so the people can see what the mall is like but after that out of business, unless they come up with a different mission.

Two points:

1) The Hummer purchase always made a lot of sense to me. The buyer of Hummer was a heavy industrial machinery company that is trying to move into heavy-duty trucks. I've never understood why people thought that the Hummer purchase *didn't* make business sense.

It also makes political sense. Anything that keeps US factories open exporting products to China is going to be good politics.

2) Chinese aren't Japanese. I don't see why discussing Japanese missteps in foreign purchases is more relevant than talking about things like Daimler Chrysler.

Twofish,

Las Vegas: it’s a tourist trap and makes money by being a novelty in LV, and its emphasis is on Chinese culture and the experience, not made in China consumer goods. It’s a destination because for most Americans that live in cities without a Chinatown (or one that they don’t want to visit), it offers a tarted up Chinese cultural experience.

Charles Schwab in Chinese: it’s a niche market for Chinese Americans, they are trying to capture some older, first generation immigrants that are not fluent in English. My dad uses it, I use eTrade.

China towns in major US cities: they are marketing a mostly Chinese food and cultural experience. The consumer goods they sell are mostly things that can’t be bought at your local Walmart, and which reminds people of life in China. Chinese style laterns, kites, red pockets, groceries, snacks, Chinese style kitchen utensils, rice cookers, etc. Very few people, Chinese American or otherwise, actively go seek out a pair of Chinese BRAND sneakers, microwave, pencil, chair, picture frame, etc, etc, (even though they are most likely made in China). Lastly, even Chinese Americans generally won’t actively seek out Chinese brand or made in China goods, because with a few exceptions, they are not top of the line stuff; they are commodities that compete on price.

Chinatowns only exist in larger cities because their main customers are Chinese Americans, a Chinese grocery store or an AUTHENTIC Chinese restaurant simply can’t find enough customers to be sustainable in a town of 100k. I’m sure you will find an exception or two, but they are just that, exceptions.

The subject at hand here is a Chinese (not Chinese American, who are much more attuned to the American consumers) run mall, marketing Chinese BRAND consumer goods as a draw for people to visit and spend money. They will also throw in some culture, it might make people visit, some will even learn to appreciate the culture, but that’s not going to compel very many of them to buy Ningbo instead of Nike.

Twofish:

"Ethan S.: Chinese business people and leaders, by and large, have no idea how China is perceived by most of America.

I think they do. One thing that China has that Japan didn't was a pretty large number of Chinese-Americans that would serve as intermediaries. You have pretty large numbers of Chinese with exposure to US society, which wasn't true with Japan in the 1980's."

I’d have to disagree that this will give them any business advantage.

I’m generalizing, but also speaking from experience; Chinese business leaders will listen to input from Chinese Americans politely, but at the end of the day, if they disagree, they will do what has worked for them in the past, in China. Most of the time, it doesn’t work out in America.

The disconnect is expansive, and exists starting at a very basic level. I was driving a visiting Chinese executive team around a few months back. On the last day, I drove them to the airport early in the morning, there was basically no traffic around. They were very curious why I was stopped at the red light, waiting for it to turn green. There was nobody else around, it’d be perfectly safe to go, that’s how they would drive normally in China. In their minds, it was an inefficient use of time, whereas to me, it was the norm to obey the traffic rules.