Any number of retail sector analysts I talk to are confused at the moment. A host of companies, from Gome to KFC, are reporting weaker same store sales (SSS) growth recently while all the data points to continued strong consumption. A contradiction, they suspect. The major problem is that many firms are trotting out the "cautious Chinese in time of recession" line to analysts. This is disingenuous and also rather silly – some analysts may swallow the line, but most of them are actually quite bright. Whether the ultimate cause of falling SSS is poor retailing strategy or tougher competition (so the total pie is getting sliced thinner), the analysts I’ve spoken to are starting to work it out. Ultimately, the global economy will recover and those same analysts will say to firms, "Did you really think we were that stupid?"
A couple of tales of how fast things are changing for the better: First, a trip to Suzhou to sort out a bunch of permits for a client. I’d heard there was a new central permit application center, but still expected to trail around dingy offices all day. Not a bit of it. The new center is gleaming with a range of desks, one for each type of permit. The fees are displayed on a board and you simply fill in the application and pay. The whole place is fitted out with cameras to prevent corruption and the clock starts ticking on your application as soon as it’s entered into the computer. You receive a text telling you when it’s been approved. If they don’t deal with it in a specified time you get another text apologizing and naming a more senior official who is following it up. Quite simply, the system is amazing. I’m told these one-stop centers are being rolled out nationwide.
Secondly, to Chengdu to bid for a government procurement contract on behalf of another client. Now, this was always a murky world but great efforts have been made to clean it up lately. In Chengdu (and now in other cities too) the tender process is advertised in journals and online. Your tender goes into a sealed box in a new tendering center run by the Ministry of Supervision. The box is opened in front of officials and those tendering. All the tenders are read out publicly. A computer then selects a random jury of experts who are summoned to examine the bids. The jurors are not told what the project is or who the bidders are until they arrive and have their phones confiscated. They are then sealed off like a jury in a court until an announcement on the winner is made.
I know what you’re thinking – surely the system can be abused. But to me this system is about as corruption-free as you can get. There’s still the opportunity for construction firms to form cartels pre-bidding and for some to overbid to let another win, but the government is wise to this. Two procedures have been introduced to stop cartelism: they set target prices so nobody can bid exceptionally high or low; and they have created "whistleblower" lines with full immunity guaranteed to anyone revealing cartel practices. The really corrupt may well look for ways around this, but people involved in bidding for government contracts in the EU and US tell me it’s the most secure and advanced tendering system they’ve ever seen.
How many donuts can a Shanghainese eat? It seems corporate executives are hoping the answer is rather a lot. Dunkin’ Donuts plans to have 100 outlets in the city by 2011 while Mr Donut is aiming for 66. There is talk of other donut chains also coming in plus all those baked goods served up by Carrefour, Wal-Mart and independent donut shops around town. If all these expansion plans come to fruition then Shanghai will be China’s donut capital – what an honor!