Impact of Economic recession on Chinese energy markets

The energy sources of China are extremely rich in natural gas and coal, but relatively sources are lower in petroleum. Thus, today China is over increasingly getting more an more dependent on coal, which accounts for 68.7% of total energy that is consumed in the country.On the positive side, the renewable energy segment has increased from 8.8% in 2008 to 9.9% in 2009, but coal is still an essential player and irreplaceable in the Chinese energy market. (Source: Frost and Sullivan Research)

The global economic recession impacted the Chinese energy markets in multiple ways. Demand and supply was affected as the Chinese were forced to change their coal export policies in line with the slump. By reducing the degree of coal exports, the stock and the supply side of coal developed a large surplus over the demand, which decreased the price of coal in the Chinese markets for local consumption. These pulses left by the economic recession have been felt by other industries that are also related to the coal industry, like the thermal power generation and cement industries. Due to this recession in the energy markets and the decrease of the profitability of those 2 industries, China was forced to limit production, thus reducing the use of coal.

Our verdict is in order to follow the rest of the world in energy development, China has to make more use of sustainable energy.

Economic recession’s impact on Chinese solar power market

With the support of the Chinese government, the solar power industry has rapidly grown into the one of the largest industries in the world. However, the solar power industry’s structure and technology have not kept up with the rapid growth. As a result, problems have creeped into this sector in China. Thus surprisingly, cost is high in China for the generation of solar electrical energy. Furthermore, a minuscule civil market exists and the technology is grossly outdated. Thus the Chinese solar power market may face several industrial problems due to the economic situation.

The biggest barrier to further development as faced by local Chinese solar power companies is financing. Although the solar power sector in China is among the fastest growing sector in the world, to develop this emerging sector, the country needs to dedicate a lot of financial resources. Many different solar power projects can only continue with a large dedicated monetary commitments in R&D. The economic recession badly affected the solar power companies. The securities market and banks are the major financial source for such high technology companies. After the economic crisis, the level of supervision and control for Chinese securities market was promoted for issuing IPO and the banks also increased the requirements for credit. This will continue to impact the supply side of the Chinese solar power market. If companies cannot keep their liquidity, they will face bankruptcy.

Another impact of the economic recession is the reduction of foreign dependencies in the solar market. Chinese solar power industry is mainly dependent on foreign sales. The economic slowdown has influenced the sales of Chinese manufacturers. When the USA entered the economic downturn, foreign trade with other countries decreased, specifically for China and the export of solar power products. Additionally, other factors to slow down Chinese solar power market developing speed are the inferior technology and high production price.

Economic recession’s impact on Chinese wind power market

The Chinese wind power market has not been heavily influenced by the world economic recession. The wind power market can be considered the most mature among the renewable energy sectors because of its early development, relatively mature technology, and widespread application.

Still it was seen that the economic recession did have significant impact on international market demand; but the market for Chinese wind power is mainly local and the percentage of wind power produced is relatively small when compared with total electricity production using thermal power and hydro-power. Thus the situation for the Chinese wind power market is different from the solar power market, which is mainly located at the beginning of the value chain. The margin for Chinese solar power manufacturers is low enough that the solar power manufacturers could easily go bankrupt due to a poor economic situation. Also the major source of capital investment in the Chinese wind power market is from government funding. Even if many foreign investments quickly drew out from Chinese companies, it would not impact the entities’ normal operations. Overall, the wind power market would likely keep growing, but at a lower speed than before due to the influence of economic recession.

From the whole renewable energy sector point of view, the economic recession had some impact on the development of the renewable energy, but it was a relatively small effect because using renewable energy has been recognized as the best known practice to ensure sustainability worldwide. The Chinese government pushed out more and more stimulus and subsidies policies to encourage investment in renewable energy. Also, the particular nature of the Chinese renewable energy sector have played a part in helping China avoid serious pressures from the economic slowdown. For those reasons, the issues of how to help China maintain their strength in this segment should be the core for the future development of Chinese renewable energy sector.

In order for China to remain a strong market player in the renewable energy industry the following strategies are suggested:

  • First, the manufacturers must increase innovation in an effort to move into a more profitable area on the value chain.
  • Meanwhile, the standards and regulations will play an important role in protecting and regulating the industrial participants.
  • Finally, the government stimulus and subsidies will aid in attracting more FDI, venture capital investment, etc. Chinese manufacturers will have to enhance enterprise competitiveness, especially technologies with proprietary intellectual property rights, to prevail in the intensive competition with foreign companies for Chinese renewable energy market, because enterprise competitiveness is the basis of the survival and development.

This Article is authored by Jake Mazan, who is a guest author at Business Fundas. He is a Senior Research Analyst at Frost and Sullivan. He takes a keen interest on Asian Markets and their impacts on Global Markets.

The path to success is to take massive, determined action

“The path to success is to take massive, determined action.”- Anthony Robbins

Robbins summed it up in simple language. You need to have the heart to take big decisions, sometimes even risky to taste the sweetness of success. But decisions only become fruitless unless implemented with equally thoughtful implementable plan of action. The confluence of both is necessary for success.

The Most Profitable Consumer Segment

Today, the youth within the age gap of 20 – 30, commonly called the twentysumthing has become the most profitable segment for marketers. After all, this slice of the larger young adult market is nearly 38 million strong (and growing), spends more than $150 billion annually, is predisposed towards early adoption, and the bulk of its brand loyalties are still in a state of flux.   Outperform your competition and you’ll generate immediate gains to the bottom line while building lasting brand loyalties.  Miss the boat and you risk giving away a priceless competitive advantage.


To be successful, packaging must address the unique mindset and leading behavioral drivers of today’s young adults.  The market’s psyche is driven by several key factors:

Rapidly Evolving

Young adults are evolving at warp speed in language, lifestyle, usage, consideration set, and attitudes.  What’s cool today, may be passé tomorrow: brands can become obsolete faster than a speeding train.

Market Savvy

Today’s young adults are acutely aware that they are a highly desirable target market.  In a time when advertising has infiltrated pop culture, twentysomethings are well versed with the dynamics of marketing and sales: they’ve “been there, done that”.  Don’t be fooled… the market may look naïve, but it’s composed of highly experienced and enlightened consumers.


Having been touched by crime, AIDS, drugs, corporate downsizing, and an endless parade of political scandals, twentysomethings expect to be mugged by marketers.  (Sad, but true.)   Product claims are instantly interpreted as hype and greeted with intense skepticism.

Time Crunched

Packaging can, and should, help facilitate faster decision-making.  Young adults live in an accelerated culture where time is a precious commodity.  No matter what their age or socioeconomic status, they are struggling to balance work and leisure.   Products and services that deliver increased productivity or improved quality of life will be duly rewarded.

“Adventure Seeking”

With the advent of the Global Village, young adults are taking full advantage of what the world has to offer in music, food, culture, fashion, travel, ad infinitum.  They love to “adventure seek” and have the financial resources to do so.  Except for a few lucky brands, young adults typically brand surf from one product to the next.  As such, this audience is usually the first to adopt a new product, brand, or line extension.

Culturally Diverse

Today’s young adults are the most ethnically diverse group in American history.  Remember, folks, this is the “MTV Generation”.  A gangster rap video here, an alternative rock video there, Tommy Hilfiger in the inner city, FUBU in the suburbs have blurred the lines that once formally separated one ethnic group from another.  The implications on packaging strategy have yet to be fully understood.

Sophisticated (Sometimes)

The market is incredibly sophisticated across a variety of product categories, but by no means all.  The average young adult may be quite knowledgeable about high involvement categories such as fashion, electronics, music, computers, and entertainment.  In fact, in such categories, their role as Early Adopters and Influencers is nothing short of profound.  Conversely, peripheral categories (read: MOST product categories) are low involvement and, hence, call for split decision making.   “Um, I’ll take that… ah, THAT piece of gum please.”  Packaging can play an instrumental role in young adult purchasing because the market is NOT as sophisticated about most product categories as it would like you to believe.

Also, this segment is strongly categorized for having a very strong network value. Social networks play an important role in this segment.

If you do have a product for this segment, do ensure that you consider these factors while developing your marketing mix and designing your 4Ps or 7Ps as the case may be.

Mahalaya – The day heralding the Durga Puja

We, the Bengalis wake up on this day, listening to the dream music to our ears, the recitation of Birendra Kishore’s Mahalaya poetry. This heralds the  traditional 6-day countdown to Mahasaptami. Goddess Durga visits the earth for only four days but seven days prior to the Pujas, starts the Mahalaya. The enchanting voice of Birendra Krishna Bhadra fill up the predawn hours of the day thus marking the beginning of ” devipaksha ” and the beginning of the count-down of Durga Puja.

Ayi Giri Nandini Nandita Medini, Visva Vinodini Nandinute Giri Vara
Vindhya Shirodhini Vasini Vishnuvilaasini, Jisnunute Bhagavati He ShitikaNthakutumbini
Bhoorikutumbini Bhoorikrute Jaya Jaya He, Mahishaasuramardhini

How long do Bengalis all over the world wait for this day? For us, the Bengalis, the clan producing the sons like Raja Ram Mohan Roy, Rabindranath Tagore, Netaji Subhash Chandra, Bose, Satyajit Roy and so on.. this is what the Christmas is to our Christian brothers, the Id-ul-fitr is to our brothers of Islam, and so on. We, the “Bongs” across the world keenly wait for this day when we may return to our roots and look forward to a week full of magic with all those artifacts that we are identified with.

While our current Gen-X may sometimes be lost when it comes to identifying with our roots, this is the day that knocks us back to our senses and makes us get back to what we hold so dearly, our cultural roots. The expectations and memories from the Durga Puja are so high amongst our clan that where-ever we are, at that moment, we all hope or wish that were we in Kolkata when the puja will happen. We guys eagerly wait to don the Punjabis while our female counterparts dress up in Saris in anticipation of creating a few fluttering hearts, and sometime, ensnare a hopelessly romantic dolt with her charm.  The kids dress up and play, firing their toy-guns (caps) and the occasional sound of crackers and very recently, whistles and horns, play the perfect foil to merry-making. This is the time when the “Mashimas”,  “Boudis” and “Didis” with that “Para’r danpite meye” unite to play with the flavor of the crimson magic. This is the time we unite across generations and pay homage to our seniors. This is the time when nuclear families reunite in infectious joy. This is the time when the elderly, stop harping about the tormenting life, and enjoy the fruits of harmony with their younger counterparts. This is the time when the school going kids, are relieved of their burden from those nightmarish study-books and they are free to reign their world of fairy-land.

Yes, this is what Durga Puja brings to us. But unfortunately, although we “Bongs” would like to share the magic with all our Non-Bong friends, they would really not be in a position to savor the actual flavor of this delicacy. But, true to our roots, it is through the pursuit of these differences and these identities of our culture, we find meaning in our life. Otherwise, we are just another robot planted on this tormenting planet wonder, to play our role on the grander stage of life.

Three cheers to the Mahalaya, which heralds the Durga Puja.

And I wish I could do better justice to our roots with an ode to our cultural roots, but unfortunately, I have my limitations as a serious poet.

Why should you have a Corporate Social Network

Often, there is very little to differentiate between the winners and the “not-winners” in the race for corporate seniority in the industry. What creates that illusive competitive advantage for those who actually succeed. In most cases, it is not capabilities to deliver the goods that count but the winner’s socializing capability. So what benefits does a Corporate Social Network brings to a professional?

  1. Personal Branding: did you know that each member of a social network adds about U$ 80-U $ 100 to the brand value? Your depth of “intimacy” with your contacts in your corporate social network will determine this added value to your personal brand. In short, if Bill Gates and Steve Jobs are on your contact list in Linked-In, it helps to increase your personal branding.
  2. Relationships Based Organization: Today, when in a big firm, everything is standardized, we are moving into a relationship based management to deliver that inch extra. Generally, contacts with different types of stakeholders are kept in databases but, they are not organized in groups and segmented in order to build long term relationships. The same is true to all contacts of all employees that there are spread among various social networks.
  3. Knowledge sharing: Corporate social networking is one of the most popular and easiest ways of facilitating knowledge sharing, either by posting articles, wikis or by acting as a simple repository of several files as text editors, spreadsheets, presentations, etc..
  4. New leadership identification: It helps to strengthen group activity, and thus it is paramount to nominate a team of group leaders. This leadership must be naturally stimulated. The company will be able to observe styles and attitudes of each professional and reward them fairly whenever they create real value.
  5. Transparent relationship: By the time the company organizes all its stakeholders, starting by its internal collaborators, clients, suppliers in several specific groups, it opens a very strong and positive relationship channel with all of them creating the possibility that each stakeholder bring their respective relationships to the same business environment.
  6. Active & identified communication: the company starts offering to everyone an environment, in which, the communication can flow both ways actively in an identified and transparent manner. Company will know with whom it is talking to, what is being discussed and what the concrete results are because the platform itself documents all exchanged ideas.
  7. Market test: instead of spending a fortune in market research, how about having your own and qualified sample, make an in-house test and have a more reliable and real time result?
  8. Stakeholders loyalty: It is to be recognizes that there is a challenge to overcome by the time the company is exposing more. However, by facing and solving problems directly and by finding intelligent and creative solutions involving each stakeholder specifically, the company will consolidate its brand before the market and will attract the best opportunities besides making all stakeholders loyal and having them bringing new businesses to the organization. This is only possible if managers have a corporate social network which is not only wide but also deep across organizational hierarchies.
  9. Central, global & local management: Corporate social networking is all set to evolve to a central relationship point among all with several modules like payment gateway, web-conferences, mobile solutions,  CRM, reducing tremendously the operational costs of new business search and allowing the global  reach by having strong presence on the Internet while reinforcing its local presence.
  10. Lock-in effect: Considering that in general, people are fairly resistant to changes and that everyone competes for time and attention of the superiors in an organizational hierarchy, the one, who is better poised to affect their decisions will have conditions to create a a lock-in effect hence nullifying competition from co-workers.

What is Customer Network Value

“If you do build a great experience, customers tell each other about that. Word of mouth is very powerful.” – Jeff Bezos.

Customer Network Value is the Value generated from the network (Both social and professional) by the acquisition of new customers through word of mouth advertising.

Jeff Bezos, the founder, president, chief executive officer and chairman of the board of never said anything truer when it came to realize Customer Network Value. Typically it has been seen that for both B2B products and especially for B2C products, word of mouth proves to be a better media for advertising than most other media, and actually the returns on investments are that much higher.

Typically every customer has their own Customer Life-time Value (CLTV) to the firm. But very few managers realize that this is only a small fraction of the value that can be generated from a customer. The social and professional network provides another great source of value to the firm, potentially called the Customer Network Value.
Customers, on an average, through their network can potentially rope in, 2-5 times their own life time value (revenue), from their network, if they are satisfied. A satisfied customer, on an average, brings in 2.8 new customers to your firm, in the B2C segment, through word of mouth.

Not only by creating customer satisfaction, you are increasing his life tme value to the firm, by increasing customer loyalty, but also you will increase the customers network value and rope in new customers.

And all this extra network value for almost zero cost of acquisition. This is of prime importance in today’s business scenario since typically, cost of new customer acquisition is 5 times than to retain an old one. Although it is difficult to determine the exact origins of this value claim, the earliest sources that we can find attribute it to research conducted by the Technical Assistance Research Project (TARP) in Washington, D.C. in the late 1980s. Around the same time, other loyalty pundits claimed exactly the same findings as their own (for example, the Customer Service Institute, Consumer Connections Corp., and ITEM Group).

How ever big may be the multiplicity value, it boils down to one thing, Customer’s network value cannot be rejected in current times.


By the way, did you read our article on customer lifetime value estimation and management?