Are we defending something that is perhaps no longer meant to be? Jan Philippi, an entrepreneur from Hamburg, believes that the era of particularly low-cost production in China is over. And yet, the 61-year-old himself happily witnessed how China awoke from its Mao slumber. At the time, he made the country the production base for the design manufacturer bearing his name.
But now Philippi fears the strife between the major economies will lead to further woes for the import economy. The Covid-related supply bottlenecks are just the beginning of a longer trend toward decoupling, Philippi fears in an interview with Felix Lee. The consequence: Instead of stocking up on masses of cheap goods, consumers will (have to) buy more expensive products, which they may then value more. Just like in the past, when goods still came from Europe.
Which source of energy for automobiles will win the race? This question not only concerns the big debate about hydrogen versus batteries. There are also different standards and technologies within the world of batteries. There was also some disagreement here between Germany and China on the idea of battery swap stations. German manufacturers have called the process error-prone and unnecessary; after all, there are also options for rapid charging.
Frank Sieren analyzes for us why Chinese suppliers such as NIO have made positive experiences with battery replacement. It allows the EV to be “refueled” within seconds – and the decreasing capacity of the battery is no longer a concern for the customer.
Mr. Philippi, you offer some beautiful things on your website. How much of it comes from China?
Before the pandemic began, the share from China was around 70 to 75 percent. We are now perhaps still at 55 to 60 percent, tendency falling. Unfortunately.
The reason for the decline is the travel restrictions due to the pandemic and the lockdowns in Chinese cities?
Yes, the experiences we made in the last two years were not the best.
In what way?
Several problems come together. We are a design company. Our designers here in Hamburg create the products. Some of the prototypes are also created here. Then we give the designs to Chinese producers, who then manufacture the goods for us. These are very different manufacturers. I have been traveling to China regularly over the past 30 years to select them and discuss the details together. Due to the massive travel restrictions of the past two years, this procedure no longer functions. We lack the close and personal arrangements with our Chinese partners.
Can’t modern communication channels make up for the lack of personal contact?
We are not a huge client for our Chinese business partners. We sell high-class design goods. Products that we have manufactured, we buy in China for €30 or €35, which our customers subsequently sell for €200 or more. Most of the Chinese manufacturers we work with supply large customers who order goods worth three euros each, but in huge quantities. Our Chinese partners work for us because they enjoy and have fun with our design products. Before the pandemic, I regularly traveled to China and discussed our projects directly with our Chinese partners. Or we met at the Canton trade fair. There I would show them our designs on my pad and ask them which projects they were interested in.
Is it not possible to arrange cooperation via email?
If I send my designs to anyone in China by email, I run the risk that my intellectual property will be gone straight away. It’s also important that I get an impression of the company we’re working with. If I learn, for example, that they also produce for Aldi and Lidl, I immediately know that I can’t do much with this factory. They produce 100,000 pieces of one thing and as cheaply as possible. But I only need 1,000 pieces of one product – but with very good craftsmanship.
Are you looking for alternatives?
Yes, we do. We are doing significantly more in India. We are now also more tempted to commission more decorative items and not as many practical items, for example for the household, as we have been sourcing from China for a long time.
So what are China’s advantages that other countries don’t have?
On the one hand, there is the infrastructure. China has invested a great deal in its expansion. Hardly any other country can keep up with that. In addition, I have always been able to rely on my Chinese partners. That may also be due to my personal preferences. But I can better assess my Chinese business partners.
On the other hand, costs in China have risen significantly.
Yes, China has already become much more expensive for us, even before the pandemic. That is the way things are. With the reforms under Deng Xiaoping, China brought about major changes in our consumer behavior. Germany was once a leader in the porcelain industry. When I bought a cup, it cost me €20 by today’s standards. Then China came along, and a cup at Ikea suddenly cost only €2. Suddenly people were buying lots of cups, not just six. With China as a workbench, everything became much cheaper, but things were also appreciated less. Now, naturally, our society has a hard time accepting that prices are going up again.
Due to disrupted supply chains.
Yes, it started with high container prices and transport costs, accompanied by higher raw material prices. Aluminum is now two and a half times as expensive as it was two years ago, the price of stainless steel is twice as high. And paper prices have also doubled. We can hardly do without that. Because our products are often used as gifts, the items also have to be nicely packaged.
How much does the Shanghai lockdown specifically affect you in this situation?
We are in daily contact with our Chinese partners via WeChat. If we place a new order now, we have to expect at least 10 to 20 percent additional costs. The factories also have problems getting raw material because trucks are stuck at roadblocks. That could be anywhere in the country. And we hear that our manufacturers don’t have enough workers because employees can’t get to the factories. That exacerbates the supply bottlenecks as well.
What does that mean for your company?
Where we used to calculate a production and shipping time of two months, we now expect four to six months. Before the pandemic, China functioned like clockwork. This precision is completely gone. Everything is out of sync. With China’s strict zero-Covid strategy, lockdowns affecting supply chains can happen again at any time.
What does that mean for your Christmas sales?
We learned from the bad experiences of the past two years and this time we have already ordered in January. We tried to fill our inventory as fully as possible. Theoretically, the products should have arrived by now, but they have not. We hope to have all the goods ready for the holiday season by September. But that also means that we can’t react flexibly at all. In the past, we checked which products were selling particularly well and were able to have them produced again in April/May.
Will you pass on the higher costs to your customers?
Both. Unfortunately. Depending on the size of the items, we have increased the prices between 10 and 25 percent. For very large items, such as lanterns, we have ceased production altogether. Our profit margin has also become significantly smaller. We have also asked our distributors in the sales recommendations to give up a small part of their margin as long as the freight rates are this high.
Is the pandemic just a taste of things to come with trade wars, supply chain laws, and demands for greater decoupling from China?
I think so. Of course, we are also looking at how we can become less dependent on China. We’re looking in India, and of course also in Europe. As long as times are uncertain, we don’t have any huge expansion plans, and we’re hardly pushing anything forward, because we have no idea what’s in store for us.
What does that mean for you personally?
I am one of the fortunate ones who were able to witness how China awoke from its Mao slumber and rose economically. Unfortunately, this euphoria is gone. Now we find ourselves in a situation where we are merely trying to defend what is perhaps no longer meant to be. That’s a lousy feeling.
Jan Philippi, (61), is the owner of the design company Philippi, which he founded in 1992. The company imports items designed in Hamburg, many of which are made in China and elsewhere.
Wang Xiaohong will become the new Minister of Public Security, making him one of the most powerful people in the Chinese state. The appointment was confirmed on Friday by the Standing Committee of the National People’s Congress. The official Xinhua news agency reported this somewhat casually, amid a list of staffing decisions. Wang is a confidant of strongman Xi Jinping. He previously served as deputy minister in the same house. There is no word on the whereabouts of incumbent Zhao Kezhi, 69. As soon as Wang took office on June 25, the ministry announced a “one hundred-day summer special crackdown to restore public order” (夏季治安打击整治百日行动).
The Ministry of Public Security (公安部) is the head of the police apparatus of the Chinese central government (Public Security Bureau, PSB). The PSB is not so much responsible for the usual police tasks – these are handled by officials at the provincial and county level. Its primary purpose is to ensure order in the country and to give the government an intelligence advantage. Most recently, the ministry came to the attention of the Western public because of evidence of its participation in the operation of re-education camps in Xinjiang. fin
A test car from EV company NIO has crashed from the third floor of a company building. A digital expert from the company and a technician from a partner company were killed, the company announced. NIO is cooperating with police in the search for the cause of the accident. The crash was not caused by the car, the company added. The car in question is one of NIO’s new autonomous EVs. fin
Zhuo Dan Ting gets under other people’s skin. She is a passionate tattoo artist and was one of the first to popularize tattooing in China. In 2007 she opened her studio in Shanghai – meanwhile, she runs a studio together with her husband in the Californian city of Folsom. There you’ll have to wait over a year for to get an appointment.
Although tattoos have now become mainstream, they are still a thorn in the side of the Chinese government. The Chinese sports authority, for example, now requires national soccer players to have their tattoos removed and forbids them from getting new ones. Players were previously already required to cover up their tattoos. This also applies to other members of the public. Tattoos do not fit in with Chinese traditions and values, they say.
Ting herself is covered in tattoos – more than 20 artists have immortalized themselves on her skin. She is originally from Harbin, where she started tattooing. A fellow tattoo artist sparked her interest in skin art. So she did some research and taught herself how to do tattoos. Her first attempts started on pig skin. Surprisingly quickly, friends volunteered to be graced by Ting’s ink needle. “And we’re still friends,” she says with a laugh.
At that time, tattooing was just emerging in northern China. “There was no professional tattoo studio, there was maybe a hair salon doing tattoos, maybe the eyebrows as tattoos.” The trend started around 2001 with the first stores in China’s major cities. Like in Shanghai, where Ting also opened her first studio after she couldn’t keep up with demand in her own apartment.
At the same time, the skin imagery became more socially accepted. This was due in no small part to David Beckham, who is popular in China: “He is famous, he is good-looking, and he has a lot of tattoos. He definitely got a big part of the market going.”
In the past, tattoos were rather shunned: “If you were a man, they associated you with a gangster or the little man without a job on the street. With women, people automatically started worrying about you: How are you going to find a husband? How will you get married later?”
Compared to US-Americans, the Chinese are still a bit more reserved when it comes to tattoos: “When people in China get tattoos, they still think about it: What if my husband doesn’t like it? What if my wife says something? What if my parents say something, my boss?”
Ting’s husband Joshua, a musician, also has experience with censorship because of his tattoos: “When they played an outdoor festival, they had to cover the tattoos and couldn’t really show them – I think this is pretty dumb.” Juliane Scholübbers
Heatwave, sweat pouring out of every pore, and still no AC within reach? Why not cool off with a bite off Shanghai’s Pearl Tower? Or Beijing’s Temple of Heaven? Or perhaps lick the famous Mogao Grottoes in Dunhuang? In China, famous landmarks are now available in vanilla, strawberry and grape-rum. Last year, stylish popsicles – known in Chinese as “ice stick” 冰棍儿 bīnggùr or “snow cake” 雪糕 xuěgāo – went viral. And this summer, the Chinese are once again feasting on social media-worthy miniature cultural treasures from the freezer. Fancy a little ice skating through the most famous sights on a stick? Here come some stars of the scene!
The capital Beijing, for example, has several sightseeing spots doused in ice cream. For example, the famous Temple of Heaven (天坛 tiāntán) is available in pistachio, mango, mixed berries, chocolate or cream. In the Forbidden City (故宫 gùgōng), you can safely munch on the matcha mane of the fierce guardian lion. And at the Old Summer Palace (圆明园 yuánmíngyuán), ice lotus flowers beckon with flavors of roses, strawberries, grape rum and, of course, lotus blossoms. Meanwhile, at the Capital Museum (首都博物馆 shǒudū bówùguǎn), visitors bite into bronze vessels that fortunately turn out to be smooth green tea ice cream.
Other metropolises don’t skimp either. In Shanghai, the futuristic TV Tower (东方明珠 dōngfāng míngzhū) is served in vanilla or chocolate, while Guangzhou’s Canton Tower (广州塔 guǎngzhōutǎ) is available in strawberry for traditionalists or cheesecake and sea salt for hipsters. At Hangzhou’s West Lake (西湖 xīhú), the ice cream experience then becomes interactive. Here, travelers can assemble partner ice cream into a bridge shape – in allusion to the famous classic love story that took place around the West Lake and in which the lovebirds are said to have met at a bridge.
Is this all too cheesy for you now? No problem. The freezers in the Middle Kingdom also have culinary delights in store for adventure-seekers and daredevils – namely ice cream requiring some courage. Would you like a taste? Next time you visit China, stimulate your taste buds with a rice liquor popsicle (白酒 báijiǔ), durian fruit (榴莲 liúlián), egg yolk (蛋黄 dànhuáng), scallion pancake (葱锋饼 cōngfēngbǐng) or wasabi (芥末 jièmò). And if even that doesn’t knock you off your sticky office chair during hot summer days, the Chinese also offer squid (鱿鱼 yóuyú), meat floss (肉松 ròusōng) and stinky tofu (臭豆腐 chòudòufu) flavors. There you go! By now, at the latest, you should feel a cold shiver down your spine. Cooling mission accomplished!
Verena Menzel runs the online language school New Chinese in Beijing.
Are we defending something that is perhaps no longer meant to be? Jan Philippi, an entrepreneur from Hamburg, believes that the era of particularly low-cost production in China is over. And yet, the 61-year-old himself happily witnessed how China awoke from its Mao slumber. At the time, he made the country the production base for the design manufacturer bearing his name.
But now Philippi fears the strife between the major economies will lead to further woes for the import economy. The Covid-related supply bottlenecks are just the beginning of a longer trend toward decoupling, Philippi fears in an interview with Felix Lee. The consequence: Instead of stocking up on masses of cheap goods, consumers will (have to) buy more expensive products, which they may then value more. Just like in the past, when goods still came from Europe.
Which source of energy for automobiles will win the race? This question not only concerns the big debate about hydrogen versus batteries. There are also different standards and technologies within the world of batteries. There was also some disagreement here between Germany and China on the idea of battery swap stations. German manufacturers have called the process error-prone and unnecessary; after all, there are also options for rapid charging.
Frank Sieren analyzes for us why Chinese suppliers such as NIO have made positive experiences with battery replacement. It allows the EV to be “refueled” within seconds – and the decreasing capacity of the battery is no longer a concern for the customer.
Mr. Philippi, you offer some beautiful things on your website. How much of it comes from China?
Before the pandemic began, the share from China was around 70 to 75 percent. We are now perhaps still at 55 to 60 percent, tendency falling. Unfortunately.
The reason for the decline is the travel restrictions due to the pandemic and the lockdowns in Chinese cities?
Yes, the experiences we made in the last two years were not the best.
In what way?
Several problems come together. We are a design company. Our designers here in Hamburg create the products. Some of the prototypes are also created here. Then we give the designs to Chinese producers, who then manufacture the goods for us. These are very different manufacturers. I have been traveling to China regularly over the past 30 years to select them and discuss the details together. Due to the massive travel restrictions of the past two years, this procedure no longer functions. We lack the close and personal arrangements with our Chinese partners.
Can’t modern communication channels make up for the lack of personal contact?
We are not a huge client for our Chinese business partners. We sell high-class design goods. Products that we have manufactured, we buy in China for €30 or €35, which our customers subsequently sell for €200 or more. Most of the Chinese manufacturers we work with supply large customers who order goods worth three euros each, but in huge quantities. Our Chinese partners work for us because they enjoy and have fun with our design products. Before the pandemic, I regularly traveled to China and discussed our projects directly with our Chinese partners. Or we met at the Canton trade fair. There I would show them our designs on my pad and ask them which projects they were interested in.
Is it not possible to arrange cooperation via email?
If I send my designs to anyone in China by email, I run the risk that my intellectual property will be gone straight away. It’s also important that I get an impression of the company we’re working with. If I learn, for example, that they also produce for Aldi and Lidl, I immediately know that I can’t do much with this factory. They produce 100,000 pieces of one thing and as cheaply as possible. But I only need 1,000 pieces of one product – but with very good craftsmanship.
Are you looking for alternatives?
Yes, we do. We are doing significantly more in India. We are now also more tempted to commission more decorative items and not as many practical items, for example for the household, as we have been sourcing from China for a long time.
So what are China’s advantages that other countries don’t have?
On the one hand, there is the infrastructure. China has invested a great deal in its expansion. Hardly any other country can keep up with that. In addition, I have always been able to rely on my Chinese partners. That may also be due to my personal preferences. But I can better assess my Chinese business partners.
On the other hand, costs in China have risen significantly.
Yes, China has already become much more expensive for us, even before the pandemic. That is the way things are. With the reforms under Deng Xiaoping, China brought about major changes in our consumer behavior. Germany was once a leader in the porcelain industry. When I bought a cup, it cost me €20 by today’s standards. Then China came along, and a cup at Ikea suddenly cost only €2. Suddenly people were buying lots of cups, not just six. With China as a workbench, everything became much cheaper, but things were also appreciated less. Now, naturally, our society has a hard time accepting that prices are going up again.
Due to disrupted supply chains.
Yes, it started with high container prices and transport costs, accompanied by higher raw material prices. Aluminum is now two and a half times as expensive as it was two years ago, the price of stainless steel is twice as high. And paper prices have also doubled. We can hardly do without that. Because our products are often used as gifts, the items also have to be nicely packaged.
How much does the Shanghai lockdown specifically affect you in this situation?
We are in daily contact with our Chinese partners via WeChat. If we place a new order now, we have to expect at least 10 to 20 percent additional costs. The factories also have problems getting raw material because trucks are stuck at roadblocks. That could be anywhere in the country. And we hear that our manufacturers don’t have enough workers because employees can’t get to the factories. That exacerbates the supply bottlenecks as well.
What does that mean for your company?
Where we used to calculate a production and shipping time of two months, we now expect four to six months. Before the pandemic, China functioned like clockwork. This precision is completely gone. Everything is out of sync. With China’s strict zero-Covid strategy, lockdowns affecting supply chains can happen again at any time.
What does that mean for your Christmas sales?
We learned from the bad experiences of the past two years and this time we have already ordered in January. We tried to fill our inventory as fully as possible. Theoretically, the products should have arrived by now, but they have not. We hope to have all the goods ready for the holiday season by September. But that also means that we can’t react flexibly at all. In the past, we checked which products were selling particularly well and were able to have them produced again in April/May.
Will you pass on the higher costs to your customers?
Both. Unfortunately. Depending on the size of the items, we have increased the prices between 10 and 25 percent. For very large items, such as lanterns, we have ceased production altogether. Our profit margin has also become significantly smaller. We have also asked our distributors in the sales recommendations to give up a small part of their margin as long as the freight rates are this high.
Is the pandemic just a taste of things to come with trade wars, supply chain laws, and demands for greater decoupling from China?
I think so. Of course, we are also looking at how we can become less dependent on China. We’re looking in India, and of course also in Europe. As long as times are uncertain, we don’t have any huge expansion plans, and we’re hardly pushing anything forward, because we have no idea what’s in store for us.
What does that mean for you personally?
I am one of the fortunate ones who were able to witness how China awoke from its Mao slumber and rose economically. Unfortunately, this euphoria is gone. Now we find ourselves in a situation where we are merely trying to defend what is perhaps no longer meant to be. That’s a lousy feeling.
Jan Philippi, (61), is the owner of the design company Philippi, which he founded in 1992. The company imports items designed in Hamburg, many of which are made in China and elsewhere.
Wang Xiaohong will become the new Minister of Public Security, making him one of the most powerful people in the Chinese state. The appointment was confirmed on Friday by the Standing Committee of the National People’s Congress. The official Xinhua news agency reported this somewhat casually, amid a list of staffing decisions. Wang is a confidant of strongman Xi Jinping. He previously served as deputy minister in the same house. There is no word on the whereabouts of incumbent Zhao Kezhi, 69. As soon as Wang took office on June 25, the ministry announced a “one hundred-day summer special crackdown to restore public order” (夏季治安打击整治百日行动).
The Ministry of Public Security (公安部) is the head of the police apparatus of the Chinese central government (Public Security Bureau, PSB). The PSB is not so much responsible for the usual police tasks – these are handled by officials at the provincial and county level. Its primary purpose is to ensure order in the country and to give the government an intelligence advantage. Most recently, the ministry came to the attention of the Western public because of evidence of its participation in the operation of re-education camps in Xinjiang. fin
A test car from EV company NIO has crashed from the third floor of a company building. A digital expert from the company and a technician from a partner company were killed, the company announced. NIO is cooperating with police in the search for the cause of the accident. The crash was not caused by the car, the company added. The car in question is one of NIO’s new autonomous EVs. fin
Zhuo Dan Ting gets under other people’s skin. She is a passionate tattoo artist and was one of the first to popularize tattooing in China. In 2007 she opened her studio in Shanghai – meanwhile, she runs a studio together with her husband in the Californian city of Folsom. There you’ll have to wait over a year for to get an appointment.
Although tattoos have now become mainstream, they are still a thorn in the side of the Chinese government. The Chinese sports authority, for example, now requires national soccer players to have their tattoos removed and forbids them from getting new ones. Players were previously already required to cover up their tattoos. This also applies to other members of the public. Tattoos do not fit in with Chinese traditions and values, they say.
Ting herself is covered in tattoos – more than 20 artists have immortalized themselves on her skin. She is originally from Harbin, where she started tattooing. A fellow tattoo artist sparked her interest in skin art. So she did some research and taught herself how to do tattoos. Her first attempts started on pig skin. Surprisingly quickly, friends volunteered to be graced by Ting’s ink needle. “And we’re still friends,” she says with a laugh.
At that time, tattooing was just emerging in northern China. “There was no professional tattoo studio, there was maybe a hair salon doing tattoos, maybe the eyebrows as tattoos.” The trend started around 2001 with the first stores in China’s major cities. Like in Shanghai, where Ting also opened her first studio after she couldn’t keep up with demand in her own apartment.
At the same time, the skin imagery became more socially accepted. This was due in no small part to David Beckham, who is popular in China: “He is famous, he is good-looking, and he has a lot of tattoos. He definitely got a big part of the market going.”
In the past, tattoos were rather shunned: “If you were a man, they associated you with a gangster or the little man without a job on the street. With women, people automatically started worrying about you: How are you going to find a husband? How will you get married later?”
Compared to US-Americans, the Chinese are still a bit more reserved when it comes to tattoos: “When people in China get tattoos, they still think about it: What if my husband doesn’t like it? What if my wife says something? What if my parents say something, my boss?”
Ting’s husband Joshua, a musician, also has experience with censorship because of his tattoos: “When they played an outdoor festival, they had to cover the tattoos and couldn’t really show them – I think this is pretty dumb.” Juliane Scholübbers
Heatwave, sweat pouring out of every pore, and still no AC within reach? Why not cool off with a bite off Shanghai’s Pearl Tower? Or Beijing’s Temple of Heaven? Or perhaps lick the famous Mogao Grottoes in Dunhuang? In China, famous landmarks are now available in vanilla, strawberry and grape-rum. Last year, stylish popsicles – known in Chinese as “ice stick” 冰棍儿 bīnggùr or “snow cake” 雪糕 xuěgāo – went viral. And this summer, the Chinese are once again feasting on social media-worthy miniature cultural treasures from the freezer. Fancy a little ice skating through the most famous sights on a stick? Here come some stars of the scene!
The capital Beijing, for example, has several sightseeing spots doused in ice cream. For example, the famous Temple of Heaven (天坛 tiāntán) is available in pistachio, mango, mixed berries, chocolate or cream. In the Forbidden City (故宫 gùgōng), you can safely munch on the matcha mane of the fierce guardian lion. And at the Old Summer Palace (圆明园 yuánmíngyuán), ice lotus flowers beckon with flavors of roses, strawberries, grape rum and, of course, lotus blossoms. Meanwhile, at the Capital Museum (首都博物馆 shǒudū bówùguǎn), visitors bite into bronze vessels that fortunately turn out to be smooth green tea ice cream.
Other metropolises don’t skimp either. In Shanghai, the futuristic TV Tower (东方明珠 dōngfāng míngzhū) is served in vanilla or chocolate, while Guangzhou’s Canton Tower (广州塔 guǎngzhōutǎ) is available in strawberry for traditionalists or cheesecake and sea salt for hipsters. At Hangzhou’s West Lake (西湖 xīhú), the ice cream experience then becomes interactive. Here, travelers can assemble partner ice cream into a bridge shape – in allusion to the famous classic love story that took place around the West Lake and in which the lovebirds are said to have met at a bridge.
Is this all too cheesy for you now? No problem. The freezers in the Middle Kingdom also have culinary delights in store for adventure-seekers and daredevils – namely ice cream requiring some courage. Would you like a taste? Next time you visit China, stimulate your taste buds with a rice liquor popsicle (白酒 báijiǔ), durian fruit (榴莲 liúlián), egg yolk (蛋黄 dànhuáng), scallion pancake (葱锋饼 cōngfēngbǐng) or wasabi (芥末 jièmò). And if even that doesn’t knock you off your sticky office chair during hot summer days, the Chinese also offer squid (鱿鱼 yóuyú), meat floss (肉松 ròusōng) and stinky tofu (臭豆腐 chòudòufu) flavors. There you go! By now, at the latest, you should feel a cold shiver down your spine. Cooling mission accomplished!
Verena Menzel runs the online language school New Chinese in Beijing.
