Social scoring takes shape + Mobile phone manufacturer BKK
The Social Credit System is still fragmentary
BBK: the secret smartphone market leader
Apple Daily faces closure in Hong Kong
Laschet advocates dialogue with China
UN wants to inspect Xinjiang
Sichuan closing crypto mines
EU and goods from Chinese child labor
Opinion: Joschka Fischer on the Cold War 2.0
Dear reader,
Just over seven years ago, the communist state leadership unveiled its blueprint for a far-reaching Social Credit System. The citizen and company rating is based on the scoring system for checking creditworthiness known from the financial industry. According to Beijing, they intended to increase reliability in economic exchanges. Critics, however, see the system as “Schufa on anabolic steroids” – because the potentially registered data include more than only the creditworthiness of individuals and companies.
So far, however, nowhere near as much has been done in expanding the credit system as planned, as Frank Sieren reports from China. So far, there have only been scattered field trials. But networking is underway. Therefore, it is anybody’s guess: What will an all-powerful state make of the Social Scoring System in the end? On that account, another insight is slightly surprising: The population generally approves of social credits.
Today, our economic focus is on a “hidden champion” par excellence. Do you know who the largest smartphone manufacturer worldwide is? What’s your guess? Samsung, Apple, Huawei? All wrong. BBK Electronics may be virtually unknown to consumers but actually produces one in four mobile phones worldwide. Let us introduce you to the company from Guangzhou.
Your
Amelie Richter
Feature
The Unification of the Social Credit Systems is approaching
There have been bigger projects in Suining (three million inhabitants), in Rongcheng (one million inhabitants), and within the Zhima Credit system of the online company Alibaba. In the system, which is still most comparable to the German Schufa, creditworthiness is calculated based on consumer behavior within various Alibaba apps, for example, via the financial services provider Ant Financial or the e-commerce platform Taobao. The higher the score, the more discounts and special offers are offered to the user. Customers and providers are rated similarly as on eBay but also include information from the debtors’ database.
However, Zhima Credit is hardly going to be a blueprint for the state’s Social Credit System. Although the Chinese state is working closely with the big tech companies on the issue, the central bank refused to grant Jack Ma-led Ant Financial a license to participate in a national social credit system back in 2018. The state wants to retain sovereignty over the project.
A report by the international think tank Trivium China found that regarding this system, “data completeness between other agencies ranged from 10 to 90 percent.” This indicates that there are “still large gaps in inter-agency data transfer“.
Uniform eules by 2025
After all, the various field tests have led to the legal framework now rapidly taking shape. Since December 2020, the first draft of the Social Credit Law has been circulating for evaluation – without any major surprises. In January, the Development and Reform Commission NDRC then published a national standard for credit information.
The Central Committee of the Communist Party, in turn, has issued a roadmap for the “construction of a rule of law society” until 2025, in which the Social Credit System should play a central role. This gets China a big step closer to a unified system. So far, there are only a few decentralized databases at various levels of government. Often, however, their entries are not even transmitted digitally but are created manually on paper by the supervisory authorities. Seamlessly networked digital surveillance looks different.
However, since such a system is technically feasible, it will probably only be a matter of time and further test runs before it becomes a reality. At the moment, the National Credit Information Sharing Platform (NCISP), existing since 2003, is being further expanded. This is primarily a data pool that can be accessed by the authorities, local governments, industry associations, banks, and, to some extent, the general public. Companies can already check Creditchina to see if they have any entries, for example, because of legal disputes or financial problems. Creditchina is a database of the NDRC and the State Administration of Market Regulation (SAMR).
A study by Merics, a Berlin-based China think tank, has shown that between 2003 and 2020, 73.3 percent of the cases mentioned in official documents involved companies and, in a few cases, individuals. It becomes clear that the scoring system also affects foreign companies. They are also to be evaluated according to environmental protection, quality management, or occupational health and safety criteria. There is a great deal of uncertainty in this area. The system would become a problem if foreign companies were judged particularly harshly in certain situations or were increasingly pilloried. However, this is not yet the case, but a concern.
High Acceptance among the Population
Meanwhile, a representative survey conducted by the Institute for China Studies at the FU Berlin in 2018 found that 80 percent of2,000 Chinese surveyed nationwide were in favor of the Social Credit System project, while only one percent opposed it explicitly. Some participants even described such a system as important to “close institutional and regulatory gaps.” It is interesting to note that mainly Chinese from the educated middle class favored the system. They disclose their private data to make social and economic life more stable, reliable, and less risky.
China still lacks a well-developed legal system and regulatory mechanisms in many areas, whether it’s food quality, business partners, hospitals, or road users. This is one reason why many Chinese are convinced that the Social Credit System will make their daily lives run smoother and safer. The real possibility of political supervision plays only a secondary role in current perceptions.
That may change, of course, depending on what an all-powerful state ends up making of the Social Credit System. Still, many questions are anyone’s guess: How centralized will the final system be? Will all the data from employers, landlords, and perhaps even acquaintances flow into it? Will minor offenses such as crossing against the red light be penalized? Will politically unpleasant statements be punished? Can mistakes be undone?
By mid-2019, Chinese courts have alreadyplaced 27 million citizens on a “No Fly” list. They are not allowed to book airline tickets. 14 million were denied creditworthiness. Most affected were citizens who defrauded others, failed to repay debts, or did business with fake certificates. In other words, criminals.
Data Protection with Chinese characteristics
The comparatively high acceptance of a social scoring system does not mean that Chinese people are indifferent to data protection. As was once the case with environmental protection, awareness of the dangers is slowly growing. Beijing is facing a balancing act: the government must increase society’s and the economy’s reliability while at the same time preventing the misuse of data. In October 2020, the first draft of a data protection law was presented as a precautionary measure and had been under constant development ever since. The Personal Information Protection Law (PIPL) provides Chinese people with far greater leeway than before to protect their data from theft and misuse and to seek redress in the event of an emergency. It is similar to the European Data Protection Regulation in every detail. Central to it is the principle that one’s data belongs to oneself. However, in Chinese law, the state reserves the right to collect data it deems important for maintaining public security. This loophole is particularly important for the Social Credit System.
The latest study on the subject is provided by Burson Cohn & Wolfe (BCW Global), the New York-based communications consultancy that created it for its clients with a staff of more than 4,000. Over the next five years and probably beyond, explains Jessica Reilly,one of the Company’s principals, the credit system will be used “to improve economic governance.” This will primarily involve “fair competition, market surveillance, and compliance with the law.” In the long run, it is “clear that the Social Credit System fits into CCP’s grand plan to embrace all spheres of societythrough data-based governance.“ However, it is still unclear “how comprehensive, far-reaching and efficient the system will be in practice, and how quickly it will become a reality.”
Domestic policy of the CP China
Menschenrechte
Social credit system
BBK – the world’s largest smartphone manufacturer
Only a year ago, Huawei became the first Chinese company to leave all other smartphone manufacturers behind in terms of sales figures, at least for a short time. With a global market share of 20 percent, the company from Shenzhen in southern China secured the top spot for the first time in the second quarter of 2020 – ahead of Samsung. What happened then is well known: US sanctions hit, and Huawei’s smartphone business collapsed relentlessly.
Just four percent market share was left at the end of the first quarter of 2021. What many don’t know: Although Huawei has crashed, BBK Electronics, a Chinese company, still leads the ranking of the world’s largest smartphone manufacturers.
The company is virtually unknown to consumers as it offers its devices under several brand names: Oppo, Vivo, and Realme are the most popular. Together, they accounted for a global market share of 25 percent in the first three months of 2021 – BBK produced at least one in four phones sold on the planet.
Lunch with Warren Buffett
Behind the company is the secret smartphone king of China, Duan Yongping. He doesn’t give interviews, and generally, little is known about him. The only time Duan has even made international headlines was 15 years ago. In 2006, he bought a lunch with investor legend Warren Buffett at an eBay auction for $620,000.
However, the reclusive nature of the Chinese billionaire does not diminish his success. With the brands Oppo and Vivo in particular, Duan has created two smartphone giants under the BBK umbrella that first conquered China and are now spreading to the rest of the world. While Oppo’s most recent global market share was 11 percent, Vivo managed 10 percent (China.Table reported).
Yet Duan’s phones originally drew derisive comments. They were considered cheap iPhone copies for the masses. But China’s consumers have long since become aware that the devices deliver good performance despite their low price.
Born in 1961, Duan trained as an electrical engineer. He completed his master’s degree at Beijing People’s University. He began his entrepreneurial career at the age of 28 in the southern Chinese province of Guangdong. Within a decade, he built two companies: Game console manufacturer Subor and BBK Electronics. Back then, BKK was mainly known for DVD players.
Very different from Apple
Chinese consumers have been waiting for years for homegrown brands they can be proud of, and companies like Huawei, Xiaomi, Vivo and Oppo have granted them their wish. Duan has been so successful because he has turned the expansion strategy of foreign manufacturers in China on its head. While Apple and Samsung initially focused on the top metropolises of Beijing and Shanghai, and only then began to conquer the rest of the country, Duan shuffled the field from the provinces.
With a massive advertising budget, it launched in the numerous but lesser-known megacities of the Chinese province. There, hundreds of millions of people were just waiting to finally own a smartphone that was technically in no way inferior to foreign brands but more affordable.
Duan had entire streets across the country plastered with the typical green Oppo and Vivo advertising signs. In addition, he relied on contracts with Chinese celebrities to make his smartphones more popular. Duanalso mostly did without his own stores and instead won over the already dense network of free smartphone stores by encouraging retailers with bonus payments and other benefits to decorate their stores with Oppo and Vivo advertising.
Since China’s smartphone market has also been showing the first signs of saturation for a few years, Duan is now repeating the same maneuver in India and Southeast Asia, where Chinese manufacturers are already more present than Samsung and even Apple in many places. Oppo and Vivo’s most important markets are, therefore, still in the Global South. Joern Petring/ Gregor Koppenburg
Industry
Vivo
News
Hong Kong: Apple Daily faces the axe
The Apple Daily newspaper in Hong Kong may be on the verge of shutdown. There is even talk of production being halted on Friday, the AFP news agency reports. With the newspaper’s funds frozen, salaries can no longer be paid, a publishing official said. The newspaper has asked authorities to unfreeze the accounts. So far, however, no signals are suggesting that they will come around.
Apple Daily had clearly sided with the democracy movement in recent years. The government has now used its powers under the new security law to arrest key figures such as the editor-in-chief in the past week (China.Table reported). The first court hearing for those arrested took place over the weekend. The court rejected a request to release them on bail.
By attacking the publisher’s finances, the government can now bring the paper to its knees on a convenient level. Even if the paper survives for the time being: With the intimidation of Apple Daily, freedom of expression in Hong Kong keeps losing ground. fin
Apple Daily
Freedom of the press
Laschet wants to avert new Cold War
Armin Laschet, the CDU’s Chancellor candidate, advocates continued dialogue with China. He told Britain’s Financial Times newspaper, “The question is: When we talk about limiting China, doesn’t that lead to new conflicts?” Many Europeans are suspicious of US President Joe Biden’s tough stance on dealing with China. This could lead to a new cold war. “China is a competitor and systemic rival and has a divergent social model, but is also a partner.”
In terms of content and rhetoric, Laschet is thus moving in the wake of Angela Merkel, who has also cultivated a fundamental attitude of partnership towards China, with rather cautiously voiced criticism. Internationally, the foreign policy positions of Laschet and his challenger Annalena Baerbock of the Greens, are currently attracting a lot of attention. Particularly when it comes to dealing with China, the election result is generally seen as making the difference between continuity or a new focus on human rights issues. fin
Geopolitics
Germany
UN wants trip to Xinjiang this Year
The United Nations human rights commissioner Michelle Bachelet wants to travel to China and also to Xinjiang province soon. On Monday, Bachelet said at the UN Human Rights Council meeting that she was holding talks with the relevant authorities and hoped a visit could be possible before the end of the year. Accordingly, the modalities of a “meaningful access” to Xinjiang are being negotiated. This is the first time Bachelet has spoken publicly about a trip to the region; her office has been negotiating with Chinese authorities since 2018, according to a Reuters report.
Bachelet also commented on the National Security Law in Hong Kong. It has a “deterrent effect” on democracy and the media. Under the law, 107 people have been arrested, and 57 of them formally charged, the human rights commissioner said. Starting later this week, the trials are now an important “test of independence for Hong Kong’s judiciary,” Bachelet said.
Several countries, led by Canada, are expected to make a joint statement to the UN Council on Tuesday expressing concern about the human rights situation in Xinjiang and calling on China to grant Bachelet and other independent observers full access. ari
Michelle Bachelet
United Nations
More bitcoin mines closing
China follows through with its announced crackdown on bitcoin miners. In Sichuan province, utilities are cutting power to 25 sites at the state’s behest. This is reported by the AFP news agency, citing reports on social networks in the People’s Republic. Earlier, the Beijing government had declared war on crypto mining on domestic soil (China.Table reported). The mines create new units of digital currencies and spend a lot of energy on them. fin
Bitcoin
Finance
Kryptowährungen
Technology
Study: EU imports billions of Euros’ worth of goods associated with child labor
According to a study, China is the biggest exporter of goods made with child labor that end up in the EU. In 2019 alone, around €35 billion worth of electrical goods made with child labor were imported into the European Union, said a study commissioned by the Greens/EFA group in the European Parliament. Electrical goodsaccounted for the highest proportion. According to the study, toys made with child labor were imported to the value of just over €1 billion.
Textiles from production with child labor were imported at a value of around €800 million. Cotton produced with child labor was also imported into the EU from China at a value of over €100 million, according to the study. Fireworks and building materials also found their way into the EU’s internal market. According to the study, the second-largest share of goods from child labor imported into the EU came from Vietnam. ari
Children
Fashion
Human Rights
Technology
Trade
Opinion
The last thing this century needs
By Joschka Fischer
This month’s G7 summit seemed to confirm what has long been apparent: the United States and China are entering into a cold war similar to the one between the US and the Soviet Union in the second half of the twentieth century. The West no longer views China just as a competitor and rival but as a civilizational alternative. Once again, the conflict seems to be about mutually exclusive “systems.” Amid an escalating clash of values and competing claims to global power and leadership, a military confrontation – or at least a new arms race – seems to have become a distinct possibility.
But on closer examination, the Cold War comparison is misleading. The systemic rivalry between the US and the Soviet Union was preceded by one of the most brutal and catastrophic “hot” wars in history, and reflected the frontlines of that conflict.
Though the US and the Soviet Union were the principal victors after the Germans and Japanese surrendered, they had already been ideological foes before the war. If Hitler’s Germany and imperial Japan had not both sought world domination through military conquest, the US and the Soviet Union never would have been allies. As soon as the war was over, the faceoff between Soviet communism and Western democratic capitalism resumed, their enmity intensified by the brutality of forced Sovietization in Central and Eastern Europe between 1945 and 1948.
Conflict between China and the West is not a Cold War
At the same time, the dawn of the nuclear age had fundamentally disrupted power politics by making any future war for global hegemony impossible without self-annihilation. Mutually assured destruction kept the superpower confrontation “cold,” even as it threatened all of humankind with nuclear catastrophe. If the Soviet Union and the Warsaw Pact had not collapsed four decades later, the conflict presumably would have dragged on indefinitely.
The situation between the West and China today is totally different. Though the Communist Party of China calls the country “socialist” to justify its political monopoly, no one takes that label seriously. China does not define its difference from the West according to its position on private property; rather, it simply does and says whatever is necessary to maintain one-party rule. Since Deng Xiaoping’s reforms in the late 1970s, China has established a hybrid model that accommodates both markets and central planning, and both state and private ownership. The CPC alone stands at the top of this “Market-Leninist” model.
The Chinese system’s hybrid character is what accounts for its success. China is on track to surpass the US both technologically and economically by around 2030 – a feat that the Soviet Union never had a chance of accomplishing at any point in its 70-year history. China’s “Billionaire Socialism” is clearly better equipped to compete with the West than the old Soviet system ever was.
The isolation of China is absurd
If today’s systemic rivalry isn’t the same as in the Cold War, what should a Cold War II really be about? Is the goal to force China to become more Western and democratic? Or is it simply to contain China’s power and isolate it technologically (or, at a minimum, slow down its ascent)? And if the West were to achieve any of these objectives, what then? In fact, none of these objectives could ever be satisfied at a reasonable cost for the parties involved. China is home to 1.4 billion people who can see that their historic opportunity for global recognition has come. Given the scale of the Chinese market and the economic interdependencies it engenders, the idea that China can be isolated is absurd.
But perhaps the issue is more about power than economics. Who will be the twenty-first century’s hegemon? By uniting with the rest of the West, can the US really change the historical trajectory of China’s rise and the West’s relative decline? I doubt it.
The West’s recognition that China will not become more democratic by dint of its economic development and integration into the global economy is necessary and long past due. Greed kept that fantasy afloat for far too long.
Climate Crisis forces cooperation
But I will venture a prediction that the twenty-first century will not primarily be characterized by a return to great-power politics at all, even if that looks where things are headed now. The experience of the pandemic forces us to take a longer and wider view. COVID-19 was a mere prelude to the looming climate crisis, a global challenge that will force the great powers to embrace cooperation for the sake of humankind, regardless of who is “Number One.”
For the first time ever, the pandemic has made “humankind” more than an abstraction, turning that concept into a material field for action. Containing the coronavirus and sparing everyone from the threat of dangerous new variants will require more than eight billion vaccine doses. Assuming that global warming and the overburdening of regional and global ecosystems continue apace, this same global field of action will become the dominant one in the twenty-first century. In this context, the question of who is on top will be decided not through traditional great-power politics, but by which powers step up to provide the leadership and competence that the situation demands. Unlike in the past, a cold war would hasten, not prevent, mutually assured destruction.
Joschka Fischer was Germany’s foreign minister and vice-chancellor from 1998 to 2005. In almost 20 years of leading the Greens, he helped to turn the former protest party into a governing party.
Heat in Beijing: As in many parts of Germany, the thermometer in the Chinese capital is rising to 36 degrees just in time for the first official day of summer. Those who can seek cooling – like these children in the midst of a fountain’s water jets.
Just over seven years ago, the communist state leadership unveiled its blueprint for a far-reaching Social Credit System. The citizen and company rating is based on the scoring system for checking creditworthiness known from the financial industry. According to Beijing, they intended to increase reliability in economic exchanges. Critics, however, see the system as “Schufa on anabolic steroids” – because the potentially registered data include more than only the creditworthiness of individuals and companies.
So far, however, nowhere near as much has been done in expanding the credit system as planned, as Frank Sieren reports from China. So far, there have only been scattered field trials. But networking is underway. Therefore, it is anybody’s guess: What will an all-powerful state make of the Social Scoring System in the end? On that account, another insight is slightly surprising: The population generally approves of social credits.
Today, our economic focus is on a “hidden champion” par excellence. Do you know who the largest smartphone manufacturer worldwide is? What’s your guess? Samsung, Apple, Huawei? All wrong. BBK Electronics may be virtually unknown to consumers but actually produces one in four mobile phones worldwide. Let us introduce you to the company from Guangzhou.
Your
Amelie Richter
Feature
The Unification of the Social Credit Systems is approaching
There have been bigger projects in Suining (three million inhabitants), in Rongcheng (one million inhabitants), and within the Zhima Credit system of the online company Alibaba. In the system, which is still most comparable to the German Schufa, creditworthiness is calculated based on consumer behavior within various Alibaba apps, for example, via the financial services provider Ant Financial or the e-commerce platform Taobao. The higher the score, the more discounts and special offers are offered to the user. Customers and providers are rated similarly as on eBay but also include information from the debtors’ database.
However, Zhima Credit is hardly going to be a blueprint for the state’s Social Credit System. Although the Chinese state is working closely with the big tech companies on the issue, the central bank refused to grant Jack Ma-led Ant Financial a license to participate in a national social credit system back in 2018. The state wants to retain sovereignty over the project.
A report by the international think tank Trivium China found that regarding this system, “data completeness between other agencies ranged from 10 to 90 percent.” This indicates that there are “still large gaps in inter-agency data transfer“.
Uniform eules by 2025
After all, the various field tests have led to the legal framework now rapidly taking shape. Since December 2020, the first draft of the Social Credit Law has been circulating for evaluation – without any major surprises. In January, the Development and Reform Commission NDRC then published a national standard for credit information.
The Central Committee of the Communist Party, in turn, has issued a roadmap for the “construction of a rule of law society” until 2025, in which the Social Credit System should play a central role. This gets China a big step closer to a unified system. So far, there are only a few decentralized databases at various levels of government. Often, however, their entries are not even transmitted digitally but are created manually on paper by the supervisory authorities. Seamlessly networked digital surveillance looks different.
However, since such a system is technically feasible, it will probably only be a matter of time and further test runs before it becomes a reality. At the moment, the National Credit Information Sharing Platform (NCISP), existing since 2003, is being further expanded. This is primarily a data pool that can be accessed by the authorities, local governments, industry associations, banks, and, to some extent, the general public. Companies can already check Creditchina to see if they have any entries, for example, because of legal disputes or financial problems. Creditchina is a database of the NDRC and the State Administration of Market Regulation (SAMR).
A study by Merics, a Berlin-based China think tank, has shown that between 2003 and 2020, 73.3 percent of the cases mentioned in official documents involved companies and, in a few cases, individuals. It becomes clear that the scoring system also affects foreign companies. They are also to be evaluated according to environmental protection, quality management, or occupational health and safety criteria. There is a great deal of uncertainty in this area. The system would become a problem if foreign companies were judged particularly harshly in certain situations or were increasingly pilloried. However, this is not yet the case, but a concern.
High Acceptance among the Population
Meanwhile, a representative survey conducted by the Institute for China Studies at the FU Berlin in 2018 found that 80 percent of2,000 Chinese surveyed nationwide were in favor of the Social Credit System project, while only one percent opposed it explicitly. Some participants even described such a system as important to “close institutional and regulatory gaps.” It is interesting to note that mainly Chinese from the educated middle class favored the system. They disclose their private data to make social and economic life more stable, reliable, and less risky.
China still lacks a well-developed legal system and regulatory mechanisms in many areas, whether it’s food quality, business partners, hospitals, or road users. This is one reason why many Chinese are convinced that the Social Credit System will make their daily lives run smoother and safer. The real possibility of political supervision plays only a secondary role in current perceptions.
That may change, of course, depending on what an all-powerful state ends up making of the Social Credit System. Still, many questions are anyone’s guess: How centralized will the final system be? Will all the data from employers, landlords, and perhaps even acquaintances flow into it? Will minor offenses such as crossing against the red light be penalized? Will politically unpleasant statements be punished? Can mistakes be undone?
By mid-2019, Chinese courts have alreadyplaced 27 million citizens on a “No Fly” list. They are not allowed to book airline tickets. 14 million were denied creditworthiness. Most affected were citizens who defrauded others, failed to repay debts, or did business with fake certificates. In other words, criminals.
Data Protection with Chinese characteristics
The comparatively high acceptance of a social scoring system does not mean that Chinese people are indifferent to data protection. As was once the case with environmental protection, awareness of the dangers is slowly growing. Beijing is facing a balancing act: the government must increase society’s and the economy’s reliability while at the same time preventing the misuse of data. In October 2020, the first draft of a data protection law was presented as a precautionary measure and had been under constant development ever since. The Personal Information Protection Law (PIPL) provides Chinese people with far greater leeway than before to protect their data from theft and misuse and to seek redress in the event of an emergency. It is similar to the European Data Protection Regulation in every detail. Central to it is the principle that one’s data belongs to oneself. However, in Chinese law, the state reserves the right to collect data it deems important for maintaining public security. This loophole is particularly important for the Social Credit System.
The latest study on the subject is provided by Burson Cohn & Wolfe (BCW Global), the New York-based communications consultancy that created it for its clients with a staff of more than 4,000. Over the next five years and probably beyond, explains Jessica Reilly,one of the Company’s principals, the credit system will be used “to improve economic governance.” This will primarily involve “fair competition, market surveillance, and compliance with the law.” In the long run, it is “clear that the Social Credit System fits into CCP’s grand plan to embrace all spheres of societythrough data-based governance.“ However, it is still unclear “how comprehensive, far-reaching and efficient the system will be in practice, and how quickly it will become a reality.”
Domestic policy of the CP China
Menschenrechte
Social credit system
BBK – the world’s largest smartphone manufacturer
Only a year ago, Huawei became the first Chinese company to leave all other smartphone manufacturers behind in terms of sales figures, at least for a short time. With a global market share of 20 percent, the company from Shenzhen in southern China secured the top spot for the first time in the second quarter of 2020 – ahead of Samsung. What happened then is well known: US sanctions hit, and Huawei’s smartphone business collapsed relentlessly.
Just four percent market share was left at the end of the first quarter of 2021. What many don’t know: Although Huawei has crashed, BBK Electronics, a Chinese company, still leads the ranking of the world’s largest smartphone manufacturers.
The company is virtually unknown to consumers as it offers its devices under several brand names: Oppo, Vivo, and Realme are the most popular. Together, they accounted for a global market share of 25 percent in the first three months of 2021 – BBK produced at least one in four phones sold on the planet.
Lunch with Warren Buffett
Behind the company is the secret smartphone king of China, Duan Yongping. He doesn’t give interviews, and generally, little is known about him. The only time Duan has even made international headlines was 15 years ago. In 2006, he bought a lunch with investor legend Warren Buffett at an eBay auction for $620,000.
However, the reclusive nature of the Chinese billionaire does not diminish his success. With the brands Oppo and Vivo in particular, Duan has created two smartphone giants under the BBK umbrella that first conquered China and are now spreading to the rest of the world. While Oppo’s most recent global market share was 11 percent, Vivo managed 10 percent (China.Table reported).
Yet Duan’s phones originally drew derisive comments. They were considered cheap iPhone copies for the masses. But China’s consumers have long since become aware that the devices deliver good performance despite their low price.
Born in 1961, Duan trained as an electrical engineer. He completed his master’s degree at Beijing People’s University. He began his entrepreneurial career at the age of 28 in the southern Chinese province of Guangdong. Within a decade, he built two companies: Game console manufacturer Subor and BBK Electronics. Back then, BKK was mainly known for DVD players.
Very different from Apple
Chinese consumers have been waiting for years for homegrown brands they can be proud of, and companies like Huawei, Xiaomi, Vivo and Oppo have granted them their wish. Duan has been so successful because he has turned the expansion strategy of foreign manufacturers in China on its head. While Apple and Samsung initially focused on the top metropolises of Beijing and Shanghai, and only then began to conquer the rest of the country, Duan shuffled the field from the provinces.
With a massive advertising budget, it launched in the numerous but lesser-known megacities of the Chinese province. There, hundreds of millions of people were just waiting to finally own a smartphone that was technically in no way inferior to foreign brands but more affordable.
Duan had entire streets across the country plastered with the typical green Oppo and Vivo advertising signs. In addition, he relied on contracts with Chinese celebrities to make his smartphones more popular. Duanalso mostly did without his own stores and instead won over the already dense network of free smartphone stores by encouraging retailers with bonus payments and other benefits to decorate their stores with Oppo and Vivo advertising.
Since China’s smartphone market has also been showing the first signs of saturation for a few years, Duan is now repeating the same maneuver in India and Southeast Asia, where Chinese manufacturers are already more present than Samsung and even Apple in many places. Oppo and Vivo’s most important markets are, therefore, still in the Global South. Joern Petring/ Gregor Koppenburg
Industry
Vivo
News
Hong Kong: Apple Daily faces the axe
The Apple Daily newspaper in Hong Kong may be on the verge of shutdown. There is even talk of production being halted on Friday, the AFP news agency reports. With the newspaper’s funds frozen, salaries can no longer be paid, a publishing official said. The newspaper has asked authorities to unfreeze the accounts. So far, however, no signals are suggesting that they will come around.
Apple Daily had clearly sided with the democracy movement in recent years. The government has now used its powers under the new security law to arrest key figures such as the editor-in-chief in the past week (China.Table reported). The first court hearing for those arrested took place over the weekend. The court rejected a request to release them on bail.
By attacking the publisher’s finances, the government can now bring the paper to its knees on a convenient level. Even if the paper survives for the time being: With the intimidation of Apple Daily, freedom of expression in Hong Kong keeps losing ground. fin
Apple Daily
Freedom of the press
Laschet wants to avert new Cold War
Armin Laschet, the CDU’s Chancellor candidate, advocates continued dialogue with China. He told Britain’s Financial Times newspaper, “The question is: When we talk about limiting China, doesn’t that lead to new conflicts?” Many Europeans are suspicious of US President Joe Biden’s tough stance on dealing with China. This could lead to a new cold war. “China is a competitor and systemic rival and has a divergent social model, but is also a partner.”
In terms of content and rhetoric, Laschet is thus moving in the wake of Angela Merkel, who has also cultivated a fundamental attitude of partnership towards China, with rather cautiously voiced criticism. Internationally, the foreign policy positions of Laschet and his challenger Annalena Baerbock of the Greens, are currently attracting a lot of attention. Particularly when it comes to dealing with China, the election result is generally seen as making the difference between continuity or a new focus on human rights issues. fin
Geopolitics
Germany
UN wants trip to Xinjiang this Year
The United Nations human rights commissioner Michelle Bachelet wants to travel to China and also to Xinjiang province soon. On Monday, Bachelet said at the UN Human Rights Council meeting that she was holding talks with the relevant authorities and hoped a visit could be possible before the end of the year. Accordingly, the modalities of a “meaningful access” to Xinjiang are being negotiated. This is the first time Bachelet has spoken publicly about a trip to the region; her office has been negotiating with Chinese authorities since 2018, according to a Reuters report.
Bachelet also commented on the National Security Law in Hong Kong. It has a “deterrent effect” on democracy and the media. Under the law, 107 people have been arrested, and 57 of them formally charged, the human rights commissioner said. Starting later this week, the trials are now an important “test of independence for Hong Kong’s judiciary,” Bachelet said.
Several countries, led by Canada, are expected to make a joint statement to the UN Council on Tuesday expressing concern about the human rights situation in Xinjiang and calling on China to grant Bachelet and other independent observers full access. ari
Michelle Bachelet
United Nations
More bitcoin mines closing
China follows through with its announced crackdown on bitcoin miners. In Sichuan province, utilities are cutting power to 25 sites at the state’s behest. This is reported by the AFP news agency, citing reports on social networks in the People’s Republic. Earlier, the Beijing government had declared war on crypto mining on domestic soil (China.Table reported). The mines create new units of digital currencies and spend a lot of energy on them. fin
Bitcoin
Finance
Kryptowährungen
Technology
Study: EU imports billions of Euros’ worth of goods associated with child labor
According to a study, China is the biggest exporter of goods made with child labor that end up in the EU. In 2019 alone, around €35 billion worth of electrical goods made with child labor were imported into the European Union, said a study commissioned by the Greens/EFA group in the European Parliament. Electrical goodsaccounted for the highest proportion. According to the study, toys made with child labor were imported to the value of just over €1 billion.
Textiles from production with child labor were imported at a value of around €800 million. Cotton produced with child labor was also imported into the EU from China at a value of over €100 million, according to the study. Fireworks and building materials also found their way into the EU’s internal market. According to the study, the second-largest share of goods from child labor imported into the EU came from Vietnam. ari
Children
Fashion
Human Rights
Technology
Trade
Opinion
The last thing this century needs
By Joschka Fischer
This month’s G7 summit seemed to confirm what has long been apparent: the United States and China are entering into a cold war similar to the one between the US and the Soviet Union in the second half of the twentieth century. The West no longer views China just as a competitor and rival but as a civilizational alternative. Once again, the conflict seems to be about mutually exclusive “systems.” Amid an escalating clash of values and competing claims to global power and leadership, a military confrontation – or at least a new arms race – seems to have become a distinct possibility.
But on closer examination, the Cold War comparison is misleading. The systemic rivalry between the US and the Soviet Union was preceded by one of the most brutal and catastrophic “hot” wars in history, and reflected the frontlines of that conflict.
Though the US and the Soviet Union were the principal victors after the Germans and Japanese surrendered, they had already been ideological foes before the war. If Hitler’s Germany and imperial Japan had not both sought world domination through military conquest, the US and the Soviet Union never would have been allies. As soon as the war was over, the faceoff between Soviet communism and Western democratic capitalism resumed, their enmity intensified by the brutality of forced Sovietization in Central and Eastern Europe between 1945 and 1948.
Conflict between China and the West is not a Cold War
At the same time, the dawn of the nuclear age had fundamentally disrupted power politics by making any future war for global hegemony impossible without self-annihilation. Mutually assured destruction kept the superpower confrontation “cold,” even as it threatened all of humankind with nuclear catastrophe. If the Soviet Union and the Warsaw Pact had not collapsed four decades later, the conflict presumably would have dragged on indefinitely.
The situation between the West and China today is totally different. Though the Communist Party of China calls the country “socialist” to justify its political monopoly, no one takes that label seriously. China does not define its difference from the West according to its position on private property; rather, it simply does and says whatever is necessary to maintain one-party rule. Since Deng Xiaoping’s reforms in the late 1970s, China has established a hybrid model that accommodates both markets and central planning, and both state and private ownership. The CPC alone stands at the top of this “Market-Leninist” model.
The Chinese system’s hybrid character is what accounts for its success. China is on track to surpass the US both technologically and economically by around 2030 – a feat that the Soviet Union never had a chance of accomplishing at any point in its 70-year history. China’s “Billionaire Socialism” is clearly better equipped to compete with the West than the old Soviet system ever was.
The isolation of China is absurd
If today’s systemic rivalry isn’t the same as in the Cold War, what should a Cold War II really be about? Is the goal to force China to become more Western and democratic? Or is it simply to contain China’s power and isolate it technologically (or, at a minimum, slow down its ascent)? And if the West were to achieve any of these objectives, what then? In fact, none of these objectives could ever be satisfied at a reasonable cost for the parties involved. China is home to 1.4 billion people who can see that their historic opportunity for global recognition has come. Given the scale of the Chinese market and the economic interdependencies it engenders, the idea that China can be isolated is absurd.
But perhaps the issue is more about power than economics. Who will be the twenty-first century’s hegemon? By uniting with the rest of the West, can the US really change the historical trajectory of China’s rise and the West’s relative decline? I doubt it.
The West’s recognition that China will not become more democratic by dint of its economic development and integration into the global economy is necessary and long past due. Greed kept that fantasy afloat for far too long.
Climate Crisis forces cooperation
But I will venture a prediction that the twenty-first century will not primarily be characterized by a return to great-power politics at all, even if that looks where things are headed now. The experience of the pandemic forces us to take a longer and wider view. COVID-19 was a mere prelude to the looming climate crisis, a global challenge that will force the great powers to embrace cooperation for the sake of humankind, regardless of who is “Number One.”
For the first time ever, the pandemic has made “humankind” more than an abstraction, turning that concept into a material field for action. Containing the coronavirus and sparing everyone from the threat of dangerous new variants will require more than eight billion vaccine doses. Assuming that global warming and the overburdening of regional and global ecosystems continue apace, this same global field of action will become the dominant one in the twenty-first century. In this context, the question of who is on top will be decided not through traditional great-power politics, but by which powers step up to provide the leadership and competence that the situation demands. Unlike in the past, a cold war would hasten, not prevent, mutually assured destruction.
Joschka Fischer was Germany’s foreign minister and vice-chancellor from 1998 to 2005. In almost 20 years of leading the Greens, he helped to turn the former protest party into a governing party.
Heat in Beijing: As in many parts of Germany, the thermometer in the Chinese capital is rising to 36 degrees just in time for the first official day of summer. Those who can seek cooling – like these children in the midst of a fountain’s water jets.
