Top marks to Jim Coen at Franchise Perfection for bringing up a very important topic.

He posted a great article called Franchise Statistics Debunked Again! on his Let’s Talk Franchising blog and Blue MauMau.

I could not agree with him more: I get really, REALLY irritated when self=serving numbers are thrown around. The unsubstantiated drivel that comes out of the United Kingdom is especially horrendous.

Jim:

These misrepresentations just bug the hell out of me. I first wrote about it back in 2006

Those bogus statistics seemed to go away after that article. Well they are back in full force all over broker websites:

I have never been able to substantiate any of the statistics below or find the study where they came from.

Thanks for Michael for picking it up on his weblog under False Franchising Numbers. It reflects very badly on the listed websites and consumers should vote with their feet.

• A professional does not knowlingly misrepresent facts. Only deal with pros like Jim and Michael.

We have been here before with baby milk, pet food and Sudan Red (see more here). Not to mention the execution of the former head of the State Food and Drug Administration. But the current baby milk powder crisis shows that there is still a serious supply chain risk, and that companies need to proactively protect their brands – and their consumers. The current, Sanlu, scandal has now become front page news around the world. Reuters reported on 17 September:

“China’s quality-control regulator ordered the recall of 69 infant-milk products made by 22 dairy companies after samples were found to be tainted by melamine.

The General Administration of Quality Supervision, Inspection and Quarantine ordered the “immediate’’ destruction of the products, it said in a statement on its Web site.

Infant formula contaminated by the industrial chemical has been linked to 1,253 cases of infant kidney stones, killing two.

But how did it happen. Just like our firm found when investigating the background to the Sudan Red crisis on behalf of big foreign brands, it seems to have come down to a dangerous mixture of desire for profit and lack of risk management process, and too much trust. Reuters notes: Read more »

Looks like our earlier warning to not eat or drink anything with dairy content for the time being bears repeating. Singapore has now found traces of melamine in White Rabbit candies, wildly popular throughout Asia. The Straits Times reports:

Singapore’s Agri-Food and Veterinary Authority (AVA) said samples of White Rabbit-brand Creamy Candy imported from China were contaminated with melamine, an industrial chemical that can cause kidney stones and lead to kidney failure.

Authorities on Friday suspended the sale and import of all Chinese milk and dairy products after finding melamine in samples of a Yili-brand yogurt bar and Dutch Lady-brand strawberry milk manufactured in China. The ban includes milk, ice cream, yogurt, chocolate, biscuits and candy, as well as any other products containing milk from China as an ingredient.

‘Retailers and importers have been instructed to recall these products and withhold them from sale,’ the AVA said in a statement.

‘Consumers who have bought the affected products are advised not to consume them.’ This would be the second time in the short history of this blog that the quality of White Rabbit candies has been called into question. In July 2007, we reported that traces of the cancer-causing agent formaldehyde were found in the candies which are produced in Shanghai by the Guan Sheng Yuan Group.

Meanwhile, the melamine scandal continues to widen around the region:

• Hong Kong’s Centre for Food Safety has found traces of melamine in Nestle Dairy Farm Pure Milk. And in the first reported case outside of the mainland, a three-and-a-half-year-old Hong Kong toddler has been diagnosed with kidney stones after being fed with Yili milk daily for the past 15 months.
• Public health officials in Taiwan have announced their findings of melamine-tainted instant coffee, milk tea and chicken-and-corn soup. The import of all such products into Taiwan has been banned with immediate effect, including instant coffee made by the popular Taiwan brand Mr Brown in China.
• In Japan, Marudai Food Co. issued a voluntary recall of five China-made products, saying they may contain the toxin melamine
• China ally Myanmar has announced it would “seize and destroy imported Chinese baby formula to safeguard against poisoning by the toxic chemical melamine”.
• Brunei has ordered a blanket ban on all China-made milk products and dairy items.
• Malaysia has imposed a “level six import ban” on all Chinese dairy products.
• Bangladesh has also started on a crackdown and ban on three brands of Chinese-made milk powder.
• In Africa, Tanzania and Gabon were the first to impose bans on Chinese dairy products and Burundi has just joined them in the ban.

Photo from serenitynow78.

We knew it was coming, but China has now been confirmed as having the biggest online population in the world, as the BBC reports:

“More than 253 million people in the country are now online, according to statistics from the China Internet Network Information Center (CNNIC).

The figure is higher than the 223 million that the US mustered in June, according to Nielsen Online.

Net penetration in the US stands at 71% compared to 19% in China suggesting it will eventually vastly outstrip the US.

…The 2008 figure is up 56% in a year, said CNNIC. Analysts expect the total to grow by about 18% per annum and hit 490 million by 2012.

About 95% of those going online connect via high-speed links. Take up of broadband has been boosted by deals offered by China’s fixed line phone firms as they fight to win customers away from mobile operators.

…Figures from Analysys International said China’s net firms reported total revenues of $5.9bn (£2.96bn) in 2007. By contrast net advertising revenue alone for US firms in 2007 stood at $21.2bn (£10.6bn).

Boston Consulting Group (BCG), in a new report, indicates the scale of the opportunity from a different persective. A MarketWatch article on the BCG report notes:

“China’s Internet users spend an average of 2.7 hours a day surfing the Internet — or, collectively, just under 570 million hours daily.”

“Many people in the West think that China is still early in its digital development. In fact, however, in many activities such as IM and online role-playing games, China is more advanced than the United States and other Western economies,” says Christoph Nettesheim, one of the report’s coauthors and a senior partner and managing director in BCG’s Beijing office.

…although overall penetration remains much lower in China than in developed countries, a steep adoption curve will ensure continued growth for years. At current growth rates, the proportion of Chinese consumers with digital access could increase to 87 percent by 2015.

…”China’s Digital Generations” has profound implications for all multinational companies that seek to access the Chinese consumer. “Many western MNCs in China are spending heavily on traditional forms of advertising,” said coauthor David C. Michael, a senior partner and managing director and head of BCG’s Greater China practice, also in the firm’s Beijing office. “They risk losing touch with their target Chinese consumers, because increasingly these consumers are online — not watching TV or reading newspapers. MNCs in China need to revolutionize their thinking about how to reach and build relationships with Chinese consumers.”

Long live the (digital) revolution!

See news sources:

China becomes biggest net nation
BBC

China Set to Burst on Global Scene as Digital Giant
MarketWatch - USA
The report, “China’s Digital Generations: The 570-Million-Hour Opportunity,” describes how Chinese consumers have become power users of mobile services, …

4 Stocks to Play China’s Dot-Com Boom
Motley Fool - USA
There are now 253 million Chinese citizens who routinely surf the Web, according to the China Internet Network Information Center. …

While China has been in the WTO since December 2001, it has only now had the first case (the background to which we reported here in September 2006) found against it, as PA reports:

“The World Trade Organization made public its first official condemnation of Chinese commercial practices on Friday, releasing a February ruling that sided with the United States, the European Union and Canada in a dispute over car parts.

…In the sweeping decision, the three-member WTO panel ruled against China on nearly every point of contention with the U.S., the 27-nation EU and Canada. The panel found that Chinese measures “accord imported auto parts less favorable treatment than like domestic auto parts” or “subject imported auto parts to an internal charge in excess of that applied to like domestic auto parts.”

And it is not expected to be the last case, not least because a host of international manufacturers will be looking to China for the growth that now looks unlikely at home – and they will fight to break down any barriers they find:

“…The dispute has likely been closely watched by makers of everything from batteries and brakes to seats and spark plugs on both sides of the Atlantic, including U.S.-based Delphi Corp., General Motors’ former parts supplier, and Robert Bosch GmbH in Germany.”

In terms of the auto market, it is clear why there is interest, as is indicated in a new report from Research and Markets (China Automobile Sector to 2010) which notes in its key findings that:

• “It is projected that China will add 33 Million automobiles during 2008-2010.
• Passenger car production in China is expected to cross 7 Million Units in 2008.
• Passenger car stock per 1000 population is likely to increase at a CAGR of 19.8% from 2008 to 2012 in China.
• Sales of commercial vehicle in the country are forecasted to grow at a CAGR of around 5.5% during 2008-2010.
• Based on the past performance, it is projected that passenger car sales will cross 11 Million Units in 2010.
• Sedan will be the preferred segment among the Chinese consumers during the forecasted period”.

However the auto case develops, it seems that China will continue to open up its markets as its more sensitive local industries become stronger and more internationally competitive. But, whatever WTO rules, foreign domination is still not part of The Plan.

See new sources:

WTO publishes trade ruling against China
The Associated Press -
The verdict — findings of which were obtained by The Associated Press five months ago — found that China was breaking trade rules by taxing imports of auto …

China Must Revamp Auto Component Tax Rules, WTO Says (Update1)
Bloomberg - USA
By Mark Drajem July 18 (Bloomberg) — China violates global trade rules by requiring automakers operating there to buy components from local suppliers or …

Now Available - China Automobile Sector to 2010
MarketWatch - USA
“In the past few years, precisely after its accession to the World Trade Organization (WTO) in 2001, China has seen a phenomenal