Updated: Travel Info

Took some time to update both the Beijing page, and added a page for Guilin/Yangshuo.  Also added some travel resource links on the sidebar…

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Global Recession Hitting China: Reading List

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)

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Do what the Romans do

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.

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How is China doing today?

 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.”

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How tourists behave in China

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.

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Free Trip to China!

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!

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Probability of a Social Unrest

One of the questions that my colleague likes to ask on every trip to China is whether people think there might be a chance of social unrest in the next decade.  Granted, it is an unofficial poll, but the results can be quite telling.

On the first couple of trips back in 06 and 07, most people think there is a possibility, but not a big one.  They see that as long as China keeps growing and people’s lives keep improving, the unrest can be contained.  Our trip in Sept 08, however, felt different.  The question gave most people a longer pause and contemplation.  Two individuals told us they thought the probability of such an event is extremely high.   

The reasons?  1) Income gap has become quite obvious over the past couple of years.  There’s tremendous abuse of the have-nots whose rights are being exploited (think about the migrant workers).  As the economy develops this situation has worsened, rather than improved; 2) There is a lot of unfulfilled dreams.  For instance, there are not enough white collar jobs for the increasing number of college grads.  Young people start to wonder why they’re not the “chosen ones”.  This is exasabated by the dependent on guanxi to advance ones career. 

The second reason is a scary development.  It will be China’s biggest challenge to create a large middle class in the next decade in order to maintain stability.  It reminds me of a book called “relative deprivation”.  If most people see themselves as worse off than others, they will become increasingly discontent and social unrest will be likely.

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Case for Tainted Milk

Maybe it is the economic crisis, or the election, or the declining status of the US (and rise of status of China)… or more likely because the victims were local Chinese; compared with the leaded toy incident, the “tainted milk” problem seemed to have received disproportionately less coverage than poisonous toys, or even the tainted pet foods.  I suppose our sense of righteousness decline when the deaths are in China, and not here.

But that’s not why I’m writing about this.  I saw this article in the New York Times this morning, titled “Courts Compound Pain of China’s Tainted Milk”.  And here’s a quote at the end of the article:

“Judge Chen said it would be better for the parents’ complaints to be treated in the traditional manner. The government should handle them as an administrative issue and dole out compensation, he said. It has already agreed to pay medical bills, but has yet to offer more compensation.

Some Chinese have raised questions, though, about whether the government should be using taxpayers’ money to compensate for private companies’ mistakes.”

This seems to be a legacy of the system before privatization of businesses, when the government essentially took up all liabilities in the country since they own the country.  Has anything really changed?  Most large corporations have government “connections” (which is really bribery, or corruption, or lobbying, depending on how you want to look at it), giving them protection.  This is particularly prevalent at the local provincial or city level.  Privatization have helped legitimize some of what once was illegal; before, government officials might have received Rolexes, now, they get to become Chairman of pre-IPO companies. 

I believe that corruption is the biggest stumbling block against the development of China; both socially and economically.

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A “Mr. China” story

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? 

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Doing Business Indicator – how does China rank?

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.

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