Archive for October, 2008
Here are some articles that gives a flavor of how China’s coping with the global economic downturn… The last article republished in the Asia Times is particularly insightful. It highlights the challenge for the emerging economy: resource allocation. Not to sound cliche, crisis = opportunity, but risk also goes along with it.
China’s SMEs closing by the thousands (Strait Times)
Why China may not save the world (Strait Times)
Thousands of Chinese workers laid off as toy factory closed (VOA News)
China’s slowdown may last 3 years (Shanghai Times)
China cuts interest rates for the 3rd time in 6 weeks (MarketWatch)
China wrestles its moment of opportunity (Asia Times)
In 2007, I investigated the possibility of buying real estate in Hong Kong. I was convinced that NYC real estate prices are close to the top given where the prices were and the impending slowdown of the economy. Sure, HK real estate has gone up significantly too; but there’s the China story. Jack Ma of Alibaba reportedly bought a mansion on the Peak. There are now over 250k Chinese with over $1mn in liquid assets – where would they invest? HK real estate was said to be the answer.
That all seems to make sense until I spoke to some friends who lives in Hong Kong. Around the same time, a friend decided to purchase real estate in Manhattan. She has a good story too – that Manhattan is one of the few real cities in the world, and land is limited. Hence, real estate prices in Manhattan has to go up in the long term. She thought HK real estate was overvalued.
The moral of the story? If the locals aren’t buying anymore, you’re too late in the game.
Just wanted to point to today’s article on the NYT: “China, an Engine of Growth, Faces a Global Slump“. Nothing unexpected but nicely written. I particularly like the concluding summary:
“China doesn’t want to be viewed as a replacement for the States,” said one Chinese scholar who requested anonymity so that he could discuss the mind-set of government officials. “We are still a developing country. We have more foreign reserves than other countries, but we also have more problems.”
For my most recent trip to China, I used a travel agent called WildChina. WildChina is a high-end travel agent tailored for foreign tourists who prefers the unbeaten path, yet requires a lot of hand holding. They organizes private customized tours and supplies a 24/7 (almost!) tour guide and driver. I would recommend them if you’re looking for a hassle-free way to see China – if you’re young and adventurous though, this might be a little too much.
Anyhow, one of the benefits of such a tour is the chance to interact with a local tour guide. Ours is a 26 yr old college graduate with degree in Chinese History. As we got acquainted, he shared some stereotypes of foreign tourists from the guide’s perspective:
1) French tourists don’t tip, or tip very little -> the worst
2) Japanese tourists know the prices of everything (from their magical guidebooks). They will demand compensation from the travel agency if they bought something at the market for a premium -> quite bad as well
3) Israelie tourists like to get the most of their value. They will make sure the the guides work for their money -> tiring, but not too bad
4) US tourists talk nonstop, wanting to draw conclusion from everything they see on the way. Also, they look for poverty… or whatever that fits their stereotype -> annoying, but generous tippers
5) British tourists are the best.
6) Almost forgot about Chinese/Taiwanese tourists. They never follow instructions so you end up yelling and running around looking for them.
That’s it folks.
This seems to be a one-in-a-lifetime opportunity. Not just to win a free trip to China, but the opportunity to meet a bunch of really interesting folks from both the US and China. Unfortunately I just came back from Beijing so this won’t be for me… but here’s the chance.
Sponsored by Mashable, you might get the chance of joining the “China 2.0 Tour” led by Christine Lu from the China Business Network (CBN). I am a big fan of Christine, and have seen her do amazing things at the CBN over the past year or so. Take look here for details, and apply before Oct 27th!
I was chatting with a friend the other day and found this story fascinating. I’m going to disguise the name of the company, and will call it GRC (Global Retail China).
GRC is a global retain chain who has outlets in China. It manages its business in China via a JV with a local partner. It turns out that its local partner decided to pile up GRC merchandise in the back room while displaying and selling their own pirated version of GRC goods. These sales bypasses the normal channel and goes directly into the local partner’s bank account.
Selling pirated goods and leveraging the IPs marketing infrastructure – ingenious! What can you do about this?
One measure by the World Bank of how developed a country is by the # of days it takes to register for a business license. In other words, how many days it takes to start a new business. The rationale for using this as an indicator is that the time and cost associated for starting a business is an obstacle to economic development.
So how does China rank in this regard? According to the 2008 World Development Indicators Report,
Australia: 2 procedures, 2 days
USA: 6 procedures, 6 days
Hong Kong: 5 procedures , 11 days
Switzerland: 6 procedures, 20 days
Japan: 8 procedures, 23 days
India: 13 procedures, 33 days
China: 13 procedures, 35 days
Brazil:18 procedures, 152 days
So it takes slightly over 1 mth to start a business in China. OK, well, starting a local business that is. Starting a foreign-funded business is a whole other topic.