The large-scale parade in Beijing was just the most obvious part of the commemoration as far as Western media was concerned. Western media seemed unaware of the numerous provincial and city-level commemorative events throughout China. These included hosting relatives of the infamous Flying Tiger squadron that operated out of Kunming.
A slew of films dealing with the war period, including Unit 731, Dead To Rights and Dong Ji Rescue were released.
Western media focused on the weapons and the military might displayed. The ranks of blue beret UN peacekeepers were mistakenly included as evidence of China’s offensive military posture. Chinese President Xi Jinping’s speech was widely miss-translated and misunderstood by Western media, which mistook “unstoppable progress in Chinese rejuvenation” as a plan for aggression.
It is not our purpose here to analyse this event and its potential implications on a geo-strategic level. What is significant from a business perspective is the way that this event is interpreted in China, where there is a greater significance attached to the end of WWII compared to Western nations.
See also: China probes ex-securities regulator for alleged violations
What the West sees as important is not always the same as what China sees as important. Therein lies ample room for misinterpretation, miss-steps and confusion. The commemoration parade puts this problem on a grand scale, but on a smaller scale, this discordance can inhibit business success.
It can be summed up as the trite KYC mantra — know your customer. The China implementation of KYC is more than a superficial probe into financial stability and ability to pay. It includes a deeper understanding of the cultural imperatives that drive consumer behaviour.
At times, it does require an appreciation of the political drivers of consumer behaviour. This doesn’t mean you agree with the politics. It does mean you have to be cognisant of the impact of political decisions on consumer behaviour.
See also: Trust and performance in China
This may manifest itself as a boycott of goods from a particular country or foreign company.
Let’s be mercenary here. There are many advantages in identifying with the strong reputation that Singapore enjoys in China. Singapore, and by association, Singaporean companies, are seen as friendly to China. That has always been an advantage, but in today’s sanction-riven environment, it has become even more so.
Business should not be afraid to use this to gain a competitive edge. What may not seem important in the local Singapore context can be significant in the context of the Chinese market.
The end of WWII anniversary parade is an example of these different perspectives.
Technical outlook for the Shanghai market
The Shanghai Index is rebounding slowly after pulling back after a strong uptrend. The retreat has four support levels and the second of these levels has provided support for the rebound.
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The first support level was the value of the lower edge of the short-term group of averages in the Guppy Multiple Moving Average (GMMA) indicator. The market dipped below this level and then rapidly rebounded.
The second support feature is the value of the long-term uptrend line A. This provided strong support for the retreating market. This long-term uptrend line is part of a cluster of support features.
The other support features are all clustered near 3,750. This combination makes this level a formidable support area and suggests that the rebound from trend line A has a solid foundation.
If support in these areas fails, then it signals a change to a downtrend, although there is long-term support near 3,700.
Support is provided by the value of the upper edge of the long-term GMMA. This is also around 3,740.
Additional support comes from the value of trend line C. The current value is around 3,735. The cluster of support features provide a strong base for the current rebound.
The rebound has a longer-term upside target near 3,970. This target is calculated by measuring the width of the trading bands and projecting this value upwards. This is a theoretically calculated target and does not closely match any previous historical resistance or consolidation levels.
This suggests the index has room for further rises towards the peak high of June 2015.
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. The writer owns China stock and index ETFs
