Why visiting China is important in 2024?👋 | Following the yuan

Visa's hard, exit bans are scary, there may be a war on the horizon. But physical visits can bring you more value than any second-hand information, including that from myself.

Janet Yellen is set to arrive in China tomorrow, merely eight months following her previous trip, to press on “industrial overcapacity”, a thorny issue that China worries about itself.

The arrival of U.S. Treasury chief coincides with the period when the unsettling issue of exit bans, office raids dominate news headlines of the China business world. Visa's hard, exit ban's scary, there may be a war on the horizon. Why should you visit, and spend resources on planning to get the best out of it?

For China-focused investors and the business community, I want to highlight three reasons why visiting China in person is becoming increasingly critical, now and in the future, based on my recent experiences.

Visiting China could challenge thesis

A couple weeks ago, I covered streetwear brand Supreme's store opening in China — a milestone that arrived four years after they won an IP battle. I commented on the brand's China journey being “unexpectedly slow”, though, also said that it was understandable given Covid and its recent change of hands from Carlyle to VF.

I doubted that there will be lines after the first week or month, because it’s no longer aspirational around the world.

Lines in front of the Supreme store in Shanghai on a recent Saturday morning. Image: author

However, a visit to the store last weekend suggested that while my long-term view might still hold, the decline of Supreme's hype might be more gradual than anticipated in China.

When I was there with a friend around 11am on a Saturday, we opted out of joining the line, which looked like it would take hours. In the cafe next door and on the street side, we saw people carrying multiple shopping bags, we guessed they are either ‘daigou’ (purchasing agents), or resellers who own online or physical streetwear stores.

Several resellers we spoke with mentioned that entry was granted through a lottery system in a mini WeChat application. They wait for two hours to finally get into the store.

Reflecting on this experience, I recognize my initial oversight of the broader audience, the untapped enthusiasm in lower-tier markets and the vibrant resale market. This is a typical mistake when observers judge the whole picture based on their understanding, and in-person visits are the best way to counter that.

Supreme resellers rested near the official store with their purchases. Image: author

Visiting China could add perspectives

I've long been intrigued by Chengdu's laid-back atmosphere. My interest was piqued while covering the fashion market during the Covid period, noting luxury brands' growing interest in Chengdu due to its consumers' preference for life over work and its welcoming LGBTQ community.

Visiting Chengdu recently, not as a tourist but an aspiring resident, offered me firsthand insight. The city's openness and inclusivity, I learned, are rooted in its history— a legacy of migrants who became leaders and contributed to making Chengdu a melting pot of diverse terrains and ethnic cultures. Likewise, dining al fresco is usually preferred than eating in, some cafes open until nearly midnight (the store manager told me “because coffee drinkers required”), some nightclubs had schedules until early morning.

In Chengdu, dining al fresco is usually preferred than eating in. Image: author

As a coffee aficionado and someone who’ve lived in the world’s coffee capital for eight years, I was fascinated to discover how Chengdu embraces a niche coffee trend. Here, the flannel filter pour-over method — meticulously crafted by Japanese baristas that involves a drip process lasting 9-11 minutes for extraction — is popular among several speciality cafes including Airbus and Kurokii. This method demands that a barista maintain their arm raised throughout, a skill requiring patience to master.

The making of a flannel filter pour-over at Kurokii. Image: author

The fact that this intricate coffee-making technique thrives in Chengdu speaks volumes about the city's distinctive character — I cannot picture too many shops in Shanghai adopt it given their average customers’ busy lifestyle. (According to Dianping, there are several Japan-influenced cafes that offer this, but not as many as Chengdu.)

The nuances is important for China and trend watchers, it connects the dots and is conducive for future work. So days after, when I saw that a sex toy brand Cachito opening its first store ever in Chengdu, I felt that it was self-explanatory.

Some of Cachito’s products. Image: Chengdu Gogo

Visiting China could bridge the gaps in imagination

One thing I constantly cringe over is my first-tier city friends think so-called lower-tier cities, classified by GDP and population, is one whole other world.

This is vastly different from my personal experience as someone from a third-tier city in Jiangsu. To me, new-first-tiers including Chengdu, Hangzhou and Wuhan now boast retail environments comparable to those in established first-tier cities. Additionally, third-tier and fourth-tier cities in economically developed regions are catching up. This shift is largely facilitated by social media, which enables business owners to more easily identify and adapt to current trends.

The perspective of ‘othering’ non-first-tier regions, is not only limiting but potentially counterproductive, especially for those looking to do business or invest in today’s China. Since Covid, the nation has turned more inward, making local trends increasingly insulated from global influences due to the Great Firewall, reduced international exchanges, and the rise of nationalism.

1 & 2: traditional tea houses in Chengdu that the founders at Shanghai-based Kanji Tea House paid tribute to. 3 & 4: Kanji's co-founders and the store's interior. Image: Dianping & POP Shanghai

This recognition has driven my efforts to seek out native writers who can share insights about their hometowns and, why I want to applaud Baiguan for its series on opportunities in lower-tier cities. That’s where the growth is.

Considerations for businesses need to be nuanced. For a multinational food brand, the concept of how owners in a mom-and-pop shop in a rural village does bookkeeping might seem alien. Similarly, for those in medical equipment sales, the chaos and guanxi (roughly translated as ‘relationships’) inside a public hospital could be hard to fathom. Only when you see it, they become part of your reality, and communication cost gets reduced in your team.

Reflecting on my Supreme experience, it challenged my thesis and prolonged my assumed expiry date of the brand. I hope that visiting China can help challenge or confirm your theses, too.

While it might not be a hot topic, China has been eager to attract visitors during their transit or otherwise, opening up visa rules for many European, American and SEA countries, including the U.S.

You don’t have to be Janet Yellen to come to China often.

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About author: As the founder of research and strategy consultancy ApertureChina and this newsletter, Yaling Jiang specializes in providing insights and strategies for brands and financial institutions on the Chinese consumer market. She is also happy to advise on your next China trip.