Home shopping concept to be introduced on Chinese television by company in San Diego area - International Shopping Network's joint venture with China Central Television - includes related article on China's business culture

Business America, Nov, 1994

The world's largest television market--the People's Republic of China--is about to get its first look at American-style commercial programming and home shopping.

The San Diego area-based International Shopping Network (ISN), through an exclusive joint venture with the government-run China Central Television (CCTV), will begin broadcasting the television shopping program in prime time in January.

The broadcast, called "World Window Shopping," will mix the elements of both infomercials, which convey information about and imagery of brand names, followed by a sales presentation.

Each promotional segment, running from three to five minutes, will consist of about 85 percent imagery and 15 percent direct sales.

John Wang, president of ISN, said combining the two elements is necessary in the Chinese market. Both consumer brand awareness and products are inhibited by the country's limited retail distribution network.

"There are no chain stores, so one of the few viable ways to market nationally is through a program like ours," Wang said. "This show will meet the need of both educating the consumer about products and providing direct access to the product through mail order."

ISN already has commitments from a number of prominent manufacturers, including Jordache, Members Only, and JH Design (maker of major league branded sports apparel).

Ed Wachtel, president and CEO of Europe Craft Imports, the owner of Members Only, said the ISN approach is a "welcome opportunity" for his brand. "Our strong feeling is that the companies that get in first will grow the quickest and last the longest," Wachtel said. "The Chinese like American tastes in fashion, and this is a great way for us to build brand awareness and sell products."

The program will be the showcase for all kinds of U.S. products in China, Wang said, adding "we want to introduce the Chinese television viewer to the American lifestyle."

The direct-sale method also will ensure trademark protection and assure consumers that they are receiving genuine branded goods. The Chinese Government's efforts to protect intellectual property also makes the ISN concept attractive to vendors of software, music, and movies.

The show initially will be broadcast from 9:30 p.m. to 10:30 p.m. on Channel 15 (Series Three), an over-the-air Beijing station that is carried on cable through the rest of the country, reaching an estimated 100 million viewers. The show will be rebroadcast the next morning.

The goal of the three-year deal, according to Wang, is to broadcast up to 12 hours per day on a combination of state-owned networks, ultimately reaching 800 million people.

The joint venture deal was consummated after many months of negotiations with CCTV by Wang and his ISN co-founder Victor Woo. The two Chinese natives, who both immigrated to the United States about 30 years ago and developed businesses that traded with the Far East, say that their understanding of the country and culture were keys to forging the agreement.

"To operate in China, you have to understand the subtleties and develop a relationship with the decisionmakers," Wang said. "They want to deal with the principals in the firms they do business with."

As part of its community service efforts, the broadcast will promote public service messages and donate computer products to schools.

ISN is expected to employ about 60 to 80 people in San Diego and as many as 2,000 in China to operate the telephone banks, product distribution, and mail-order system.

The direct-sales method should work well in China, Wang said, because the country has a cost-effective telephone system and a well-run postal system. While credit cards and personal checking accounts are still relatively rare, postal money orders will make it convenient for the home shopping buyers to make purchases.

ISN has signed a preliminary agreement with Price Global Trading of San Diego to handle advertising sales and the exporting of U.S.-made goods to China. Price Global Trading is a subsidiary of Price Enterprises, operated by founders of The Price Club stores.

"Americans Need to Adapt to the Distinct Business Culture in China"

The Chinese economy is the fastest growing in the world, with incredible potential for U.S. business. In order to penetrate this dynamic market, however, Americans need to adapt to the distinct business culture in China.

Initial appointments can be made directly with the company or organization through its Foreign Affairs Office or Office of Foreign Cooperation. Host organizations can facilitate appointments and letters of invitation, but are not necessary in order to do business in China. A good source for additional information on companies in China will be the local Chinese consulate or the local U.S. and Foreign Commercial Service branch.

In keeping with the prevailing business climate, meetings and appointments tend to be formal events. Punctuality is critical to the Chinese, who start and end (even if abruptly) all meetings at a predetermined time. Due to the notoriously heavy traffic in China, it is important to plan ahead and to depart well in advance for meetings.