【正文】 it created new, incremental demand. Traveler’s checks remained the preferred method for taking money abroad for decades, until a new technology–the automated teller machine–granted travelers even greater convenience. Creating a business model is, then, a lot like writing a new story. At some level, all new stories are variations on old ones, reworkings of the universal themes underlying all human experience. Similarly, all new business models are variations on the generic value chain underlying all businesses. Broadly speaking, this chain has two parts. Part one includes all the activities associated with making something: designing it, purchasing raw materials, manufacturing, and so on. Part two includes all the activities associated with selling something: finding and reaching customers, transacting a sale, distributing the product or delivering the service. A new business model’s plot may turn on designing a new product for an unmet need, as it did with the traveler’s check. Or it may turn on a process innovation, a better way of making or selling or distributing an already proven product or service. 11 Think about the simple business that directmarketing pioneer Michael Bronner created in 1980 when he was a junior at Boston University. Like his classmates, Bronner had occasionally bought books of discount coupons for local stores and restaurants. Students paid a small fee for the coupon books. But Bronner had a better idea. Yes, the books created value for students, but they had the potential to create much more value for merchants, who stood to gain by increasing their sales of pizza and haircuts. Bronner realized that the key to unlocking that potential was wider distribution–putting a coupon book in every student’s backpack. That posed two problems. First, as Bronner well knew, students were often strapped for cash. Giving the books away for free would solve that problem. Second, Bronner needed to get the books to students at a cost that wouldn’t eat up his profits. So he made a clever proposal to the dean of Boston University’s housing department: Bronner would assemble the coupon books and deliver them in bulk to the housing department, and the department could distribute them free to every dorm on campus. This would make the department look good in the eyes of the students, a notoriously tough crowd to please. The dean agreed. Now Bronner could make an even more interesting proposal to neighborhood business owners. If they agreed to pay a small fee to appear in the new book, their coupons would be seen by all 14,000 residents of BU’s dorms. Bronner’s idea took off. Before long, had extended the concept to other campuses, then to downtown office buildings. Eastern Exclusives, his first pany, was born. His innovation wasn’t the coupon book but his business model。s own retailers can catch up with the best of the foreign chains. Competition is therefore bound to get even more intense. Some retailers39。s systems—only 30% have been plugged in so far, while the rest still need orders to be faxed to them. Just 20 trucks can fit in the loading bay and they can wait for more than an hour to be unloaded, largely by hand. WalMart will move to a new distribution hub in September. Its old one is outclassed by the cool efficiency of Lianhua39。 its 3,800 American ones need only 61,000. Then there are the many layers of middlemen. Some foreign chains are starting to deal directly with manufacturers. WalMart has introduced its notoriously hardnosed negotiating tactics. At its Shenzhen headquarters, buyers bargain in rows of cubicles strewn with goods. Just like WalMart39。s supermarket in Shenzhen has 350 staff, and 500 other people promoting not just expensive electronics, but also cheap items like toothpaste and shampoo. Stores hoping to increase loyalty are starting to promote giveaways and improve service, but often in vain. At Vanguard, buy hair dye and promoters will apply it free (customers browse its aisles sporting plastered hair and towels). Many ―shoppers‖ happily accept freebies without spending. At the Shenzhen WalMart, the buzzword is ―retailtainment‖. Chairs are placed around a big television so shoppers can watch football matches in airconditioned fort. People with empty baskets lounge on benches and read. Upstairs, staff oversee a babycrawling race. Zhang Hui Lan, 64, visits daily for free food tastings and to chat with staff, ―who are much friendlier than in the markets.‖ Yet getting people to spend more—or anything at all—is only half the task. Retailers must procure goods at the right price. In distribution and logistics, China is far behind developed countries. Strong regional tastes and lack of national scale stymie the development of national brands and efficient supply chains. WalMart39。 faces to slice up and dip in soy sauce and vinegar. Operating profitably in poorer markets often means switching to smaller stores with a narrower range. Xu Lingling, chief financial officer at Lianhua, says that whereas big foreign players, such as Carrefour, have taken top sites in large cities, Chinese chains may be better suited to midsized towns where productivity is lower. And these may suit a different approach—such as the franchising of McDonald39。 the top seller in Kunming is spicy chicken feet。s buying teams arrive in a city five months before a new store opens to research local habits: ―There are thousands of uniquenesses,‖ says WalMart39。s Xujiahui central business district outshines even Ole. It has had a 10m yuan facelift by Japanese designers and now features a juice bar, bakery, wine room and hotfood stalls. Sales are up by half and the store is packed with expatriates and hai gui (returnee Chinese). Frogs and turtles Move out of China39。s Clubs in China, but, excited by their success, WalMart plans to open more. Ho