Over a decade ago, staff in our Shenton Way office were disturbed by a toy bought back from China by our senior software development officer. The quadcopter was an amusement as it swooped over workstations. It is fair to say that no one anticipated how this Chinese start-up industry would become one of the world leaders in innovative drone technology.
Little did we know that, in many ways, this precursor prototype drone also signalled a change in the trade relationship between China and the West. Rather than a follower, China was on the way to becoming a leader that others followed. It is a path Japan had followed decades earlier when it shifted from imitation to enhancement and then to innovation.
The extent of this innovation was accidentally underlined when former US President Trump used an Anker Innovations’ power bank during a live stream with Elon Musk. It sent the stock up 7.5% over several days, although at RMB54, it is still far below its June peak of RMB75 ($9.88).
However, it highlights a significant trend in the growing global influence of Chinese brands and the smart strategies driving their domestic and global success. They are strategies that Singapore developers need to counter or emulate.
Like many other global aspirants, Anker’s strategy has three key components.
The first is quality. Anker has a reputation for producing reliable, high-quality products at competitive prices. This has been key to winning over consumers worldwide.
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Strategic marketing is the key to both domestic and global success. Domestically, Anker is just one of many Chinese companies selling similar products in China. There is an intense level of competition in this area, so it is difficult to stand out in what has become a commoditised market.
Getting an unexpected and unintended online endorsement from Trump was a surprise, but it was leveraged through immediate and effective use of social media platforms like TikTok, XiaoHongShu and Douyin. These platforms are readily recognisable to Western readers.
Less recognisable are many of the more than 100 other social media platforms in China. With more than one billion people using social media, marketing campaigns can be fine-tuned to reach specific audiences. Five social media platforms report at least half a billion active users.
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Anker has effectively targeted key demographics and built a loyal customer base. The key selling pitch is personal recommendations from users posted on a wide range of social media platforms. In an environment where counterfeits and shoddy look-alike products are a constant threat, the authenticity of social media recommendations increases both brand awareness and sales.
Similarly, that already applies to local Singaporean technology and product innovations. The challenge is to take it globally.
Anker makes no secret of its global ambition. Anker’s aggressive expansion into international markets is coupled with a deep understanding of local consumer needs. This has fuelled its rapid growth.
China’s domestic market was once a testing ground for global brands. Now, it is an incubator for innovative companies with global ambitions. In today’s interconnected world, brand value is more important than product origin. The success of Chinese companies in expanding their global footprint provides a new template for business.
Shanghai Composite Index closed at 2,837.43 on Aug 28. Photo: Bloomberg
Technical outlook of the Shanghai index
Last week, we asked: “Do we have a turning point in the Shanghai index?” This week delivered the answer, and it is “no”. The obstacles proved too strong and the market has continued to fall.
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This is a market developing rally trading opportunities and they are getting increasingly better.
The reason is explained by the positions of the two downtrend lines, C and D. Trend line D acts as a resistance feature. The index is currently clustering just under this line and slowly moving down.
Trend line C acts as a support feature. When the index retreats, it uses trend line C as a rally rebound point. The index activity is kept with trend lines C and D.
These two lines are diverging, so the gap between them gets larger and larger. This means that a rally from trend line C has more room to move as the days go by. This creates better and more rewarding rally trading opportunities.
However, that’s cold comfort for those who are looking for longer-term uptrends. The market shows little indication of this developing. A breakout above trend line D has strong resistance created by the long-term group of moving averages in the Guppy Multiple Moving Average (GMMA) indicator.
The short-term group of averages in the GMMA have turned down and begun to expand. The long-term GMMA well separated. This shows investors remain sellers in this market. They will sell into any rally.
There is a high probability this index will collapse and again test the value of trend line C as a support feature. The next strong support level is near 2,720. It may be a long and painful wait for this target support level to be reached. Investors will watch carefully for any evidence of a sustainable trend breakout from this support level. Until then, it is up to rally traders to make profits.
Daryl Guppy is an international financial technical analysis expert. He has provided weekly Shanghai Index analysis for mainland Chinese media for two decades. Guppy appears regularly on CNBC Asia and is known as “The Chart Man”. He is a former national board member of the Australia China Business Council.
