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Day Three Notes & Comment from Kevin Coupe, “The Content Guy”

SHANGHAI -- There has been the sense, at this 51st annual CIES World Food Business Summit, of a world in transition.

This is the new, new world. Most of us live in the old world. The question is whether we can keep up.

The transition, even here, hardly is seamless. You can see it struggle even in the skyline, which has old buildings bumping up next to new buildings, interesting architecture conflicting with structures that seem to be all flash but with little character. It is like the city is bursting at the seams, with hundreds of edifices struggling for dominance in an unplanned frenzy of building.

It is all about momentum, about relentless progress. Or at least, that’s how it seems. It is about the new, new world, and whether the old world can compete.

Glimpses from the new, new world…

• In view of all the questions raised about products sourced in China in recent weeks, it was interesting to hear Carrefour CEO Jose Luis Duran tell the audience in his presentation that he believes that consumer ethics are largely theoretical when it comes to where retailers source products and how those products are created. While consumers say they want to be green, he said, “they are not prepared to pay for the added value … only 28 percent are ready to pay slightly more.”

Which doesn’t mean, of course, that retailers and manufacturers should abandon or marginalize their efforts to be green and ethical in their sourcing of product – just that they need to be prepared to continue to drive costs out of the system wherever possible, and to bear some of the costs themselves. Even if consumers are not willing to act ethically with their pocketbooks, it is a fair guess to suggest that they will respond to marketers that are able to allow them to act ethically without feeling any pain.

This is, needles to say, a canard. There’s almost always some pain when one tries to be ethical in one’s behavior. The result could be that retailers and manufacturers will have to better salespeople than ever before…and that effective marketing will be more important than ever before.

• In private conversations with several retailers, as well as in a speech by Mike Moore, the former prime minister of New Zealand as well as the former director general of the World Trade Organization (WTO), I was surprised to hear an argument against the “buy local” trend that seems to be sweeping many markets.

The thesis is this: that while it seems to be true that one can reduce the carbon footprint by not flying products all over the world, not sourcing these items from distant lands also could have a devastating economic impact on communities throughout the world that depend on global trade to improve their lifestyles. After all, the argument goes, that’s the whole premise behind Fair Trade…and the “buy local” trend could pull the rug out from under it.

Which essentially reinforces the notion that the new, new world is a complicated place.

• Looking at Fair Trade trend from another angle…

I had the chance this week to spend some time with Jean-Pierre Blanc, the directeur general of Cafes Malongo, a coffee retailer and distributor based in France that has been in the Fair Trade business, sourcing coffee from suppliers and making sure they earn a living wage, for more than 15 years.

In the next few weeks, he told me, Cafes Malongo will be unveiling a new program that will allow consumers to order a cup of coffee in one of his shops and use computer technology to find out who grew the coffee beans that went into that particular cup, and learn something about their lives and growing practices. It is, in many ways, the ultimate transparency.

Will this be the inevitable model of the future? Many of the people with whom I spoke said yes … maybe not today, maybe not tomorrow, but soon…

We can’t fight the future.

• Samuel Dipiazza, PricewaterhouseCoopers International CEO, gave the summit what could easily be termed a stark warning: “If you don’t think your young employees are every day looking for other opportunities you have not met Generation Y. They’ll leave you. You’ve got to re-recruit them every day … You have to give your employees the same value proposition you offer your customers … The most important aspect for your sustainability is whether you’re developing your talent.”

• While China is seen by many in the old world as a production base for inexpensive products – and, in recent days at least, products that threaten the health of some who consumer them - Dr. Victor Fung, chairman of the supply chain management firm Li & Fung Group, suggested that attendees reorient themselves to China’s emerging consumer economy which will make it the world’s largest consumer market. ““When you make export quality goods available to Chinese people you’ll increase consumption,” he said.

• Sephora, the international beauty products retailer, is one of the brands making its presence felt in China…but Jacques Levy, the company’s CEO, said that this has only happened because the company went through a period of transition after it found that its customers found it to be a cold and arrogant place to shop. “It was not pretty,” he told the audience of grocers. “Forgive me, but they said we were the supermarket of beauty.”

Levy said that the company’s repositioning and international expansion has been characterized by four essential values – excellence (which he said was both fundamental and non-negotiable), freedom (allowing stores to adapt to local markets rather than be straight-jacketed into formats and concepts), boldness (which makes innovation part of the corporate DNA), and emotion (which looks for ways to achieve a connectivity with customers in new ways). And he said, the company has worked hard to come up with differentiated product lines and services, whether unique brands or private label items, that give the stores a competitive advantage.

• Tony Tan Caktiong, chairman/president/CEO of Jollibee Foods Corp. in the Philippines, told an intriguing story of how he launched his restaurant company with an ice cream parlor based on the concept of exceeding expectations – the servings were so big, he said, that customers worried that he wasn’t making any money. From there, ex expanded into a chain of hamburger restaurants which managed to compete effectively with McDonald’s when it came to the Philippines because its burgers were deemed more flavorful and reflective of local tastes. Today, Jollibee has a variety of ethnic chains with more than 1,500 stores worldwide – including the US, where it owns the Chow King fast food chain.

After three days at CIES in Shanghai, it seems truer that ever:

It’s all about the new, new world, and whether the old world can compete.
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