Friday, November 21, 2014

China firms going international: friend or foe? - Joel Backaler

Joel Backaler
+Joel Backaler 
Chinese companies going abroad are mostly new kids at the block for domestic and international companies. How to look at them, was a question consultant Joel Backaler, author of China Goes West: Everything You Need to Know About Chinese Companies Going Global often got. His third installment of his post-Europe trip.

Joel Backaler:
From the corporate perspective, this means Western multinationals will increasingly find Chinese companies taking on new roles in the international business landscape. Their new relationships with Chinese firms will vary depending on whether the Chinese firm is a competitor, partner, or owner. 
Competitors 
The extent to which Chinese firms compete on equal footing will be determined by the level of oversight and regulation provided by the government where the investment occurs. In advanced economies like the US and EU where regulations are more strictly enforced than many emerging markets, Chinese firms do not play by a separate set of rules – and if they attempt to do so, they will face consequences. Take the case of Sinovel, a Chinese wind turbine producer that divested its U.S. operations last July after it was charged in federal court with stealing trade secrets from its former U.S. supplier. 
Partners 
Over the course of my trip and during my ongoing interactions with my firm’s clients, I find that more and more Western multinationals are interested in identifying ways to partner with Chinese companies overseas. Western firms should proceed with caution. To cite just one example, Hollywood studios like DreamWorks and Chinese firms like Alibaba and Dalian Wanda are forming partnerships at a rapid pace. As collaboration between Hollywood and Chinese firms deepens over time, it will be interesting to see the impact these partnerships have on the Chinese movie production industry. What will happen when Chinese firms begin producing blockbuster international films of their own? 
Owners 
Last year I was surprised to discover that a former client, Virginia-based Smithfield Foods, had been acquired by Shuanghui International, a Chinese pork producer. Smithfield is not the only American firm to be acquired by a Chinese company and it surely won’t be the last. Chinese ownership presents a unique alternative for American companies seeking strategic investment beyond traditional routes like private equity investment or acquisition by a larger domestic industry incumbent.
More at the China Observer.

Joel Backaler is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

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Thursday, November 20, 2014

China´s nukes: a threat within 10 years - Wendell Minnick

Wendell Minnick
Wendell Minnick
China´s nuclear weapons are getting better and more powerful, writes defense analyst Wendell Minnick in Defense News. He cites a US congressional report, warning for the Chinese power to threaten US forces within 10 years.

Wendell Minnick:
The report, issued Nov. 19, by the US China Economic and Security Review Commission, states China will pose a threat to all US military forces, bases and assets in the Western Pacific within the next 10 years. 
China will also be able to attack US national security satellites in a variety of ways — kinetic, laser, electronic jamming and seizing. According to the report, China’s capabilities will hold at risk all US national security satellites in every orbital regime in the next five- to 10 years. “In space, China in 2014 continued to pursue a broad counter-space program to challenge U.S. information superiority in a conflict and disrupt or destroy U.S. satellites if necessary.” 
Beijing also calculates its space warfare capabilities will enhance its strategic deterrent as well as allow China to coerce the US and others “into not interfering with China militarily.” The report said China’s growing nuclear warfare capabilities are ominous. 
Over the next five years, China’s nuclear force will rapidly expand and modernize, providing China with an extensive range of military and foreign policy options and “potentially weakening U.S. extended deterrence, particularly with respect to Japan.’ Over the next three- to five years, China’s nuclear program will also become more lethal and survivable with the fielding of additional road-mobile nuclear missiles; five nuclear-powered ballistic missile submarines, each of which can carry 12 sea-launched intercontinental-range ballistic missiles (ICBM); and ICBMs armed with multiple independently targetable re-entry vehicles (MIRV).
More in Defense News.  

Wendell Minnick is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

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Tuesday, November 18, 2014

China plans sweeping foreign investment reforms - Xu Ping

Xu Ping
Xu Ping
At the end of last year, China promised drastic reforms for aid foreign investments. Xu Ping, lawyer at King&Wood Mallesons calls those plans "sweeping" in a review of the "2014 Draft" that has been released, although many restrictions remain in place.

Xu Ping, on the pharmaceutical and medical sector:
We also see a considerable change in the health care industry under 2014 Draft. 2014 Draft categorizes certain pharmaceutical products plagued with overcapacity to the “restricted” category (such as multivitamins and calcium) and categorizes narcotics and “A” class psychoactive drugs as “permitted”, which allows market screening instead of pure administrative regulation in the manufacture of these types of drugs . 
On the other hand, under 2014 Draft, we notice the government imposes tighter control over the establishment of foreign invested medical institutions. Medical institution was once categorized as “restricted” industry under 2007 Catalogue, which only allowed foreign investment in the form of joint ventures. Then under the current 2011 Catalogue, medical institution was removed from the catalogue completely suggesting that foreign investors should be “permitted” to invest in medical institutions without restrictions. However, in practice, the establishment of wholly foreign-owned medical institutions remains difficult in China, and, only recently, FTZ begins to allow wholly foreign-owned medical institutions to be established. Since 2014 Draft moves medical institution back to the “restricted” category, it suggests that foreign investment in medical institution will remain restricted in the near foreseeable future.
More in the King&Wood Mallesons newsletter, on the plans for manufacturing, the auto industry, pharmaceutical an medical, telecom and internet, real estate, education and services.

Xu Ping is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers´request form.  

Monday, November 17, 2014

Can academia function with Chinese characteristics? - Zhang Lijia

+Lijia Zhang 

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President Xi Jinping´s call for a "new type of thinktank with Chinese characteristics" has triggered off a old debate on the position of intellectuals towards their government. Author Zhang Lijia argues at her weblog the government should no longer silence the voice of its scholars.

Zhang Lijia:
Back in 1967, Noam Chomsky published his famous essay, "The Responsibility of Intellectuals", in the middle of a national crisis in America after the debacle of the Vietnam war. The essay was very critical of the intellectual culture in the US, especially public policy, which Chomsky believes is subservient to power. He argued that intelligentsia have an obligation to speak truth to power. For Chinese intellectuals, that's not a luxury they had in 1967, and probably won't have in the near future. 
In centuries past, Confucian scholars were frequently torn between their loyalty to the emperor and their duty to point out wrongs. Those who were true to their conscience often faced persecution. Historian Sima Qian was given the choice of suicide or castration. He endured the latter and completed his famed Shiji ( Historical Records). 
Intellectuals in contemporary China haven't fared much better, being tightly controlled by the Communist Party from 1949. In 1956, having consolidated power, Mao Zedong launched the Hundred Flowers Movement, inviting intellectuals to speak out. Taken aback by the overwhelming criticism, Mao struck back a year later with an "anti-rightist movement" which sent many who had voiced their honest views to jail or hard labour in the countryside. The Cultural Revolution witnessed more suffering of the intelligentsia. 
The reform era has made the cage bigger. In the past two decades, a growing number of intellectuals have ventured to express their views, taking advantage of market-driven media outlets, and more importantly, the internet, which is much harder to police. 
Xi's idea about a new type of think tank is seen by some as the regime's latest attempt to rein in public intellectuals who may try to challenge the party's monopoly on truth. 
If the authorities could rein in their authoritarian impulse to control everything, they would see that free debate can aid governance, as it would allow scholars to critically assess policies. Otherwise, creativity and pluralism will be stifled just as China needs them in its shift to an innovation-led economy. 
There may not be an intellectual spring where "a hundred flowers blossom and a hundred schools of thoughts contend" around the corner. But the era when "10,000 horses were all muted" is gone forever, too. 
In this internet age, no government can silence the voice of all intellectuals.
More at Zhang Lijia´s weblog.

Zhang Lijia is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers´request form.

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Friday, November 14, 2014

Hong Kong-Shanghai connect: a game changer - Wei Gu

Wei Gu
+Wei Gu 
With less than a week notice, a connection between Hong Kong and Shanghai stock exchanges will give international investors access to Chinese shares. A game-changer, says Mark Austen of the Asia Securities Industry & Financial Markets Association in a talk with WSJ wealth editor Wei Gu.

Wei Gu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers´request form.

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US-China visa deal: how the agencies get hit - Wei Gu

Wei Gu
+Wei Gu 
The recent deal between the US and China to allow their citizens visas for up to ten years might be win-win for most, the visa agencies are hit severely, writes WSJ wealth editor Wei Gu in Dow Jones. Emigrating services for Chinese are under pressure.

Wei Gu:
That business is already under pressure as countries such as Canada shut down programs that effectively allowed rich people to buy citizenship. China is the top source for investment-based immigration in countries such as the U.S., Canada, Australia, Cyprus and Portugal. 
The deal, reached Monday between U.S. President Barack Obama and Chinese President Xi Jinping to ease visa restrictions and grant 10-year multiple-entry visas for tourists and businesspeople, will reduce demand from rich Chinese for permanent residency in the U.S. "With a 10-year visa, some people won't bother getting a green card," said Bernard Wolfsdorf, a California-based immigration attorney at Wolfsdorf Rosenthal. 
Chinese looking to buy permanent residency sometimes pay tens of thousands of dollars in fees to the agencies, which are based in China and overseas. The visa deal came as China agreed with other Asia-Pacific countries to set up a regional network to track down corrupt officials. 
At the Investment Immigration Summit held in Hong Kong this week, industry executives were concerned. "People are waiting for the hammer to fall," said Jean Fran├žois Harvey, the organizer and global managing partner at Harvey Law Group. "There's a lot of nervousness in China."
More in Dow Jones.

Wei Gu is a speaker for the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers´ request form.

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The steps forward in the US-China climate deal - Sara Hsu

Sara Hsu
+Sara Hsu 
The climate deal between China and the US came under heavy criticism even before the ink of the signatures was dry. Despite those misgivings, China expert Sara Hsu sees some steps forward, she writes in The Diplomat.

Sara Hsu:
China has driven down the costs of renewable energy, particularly in the production of solar cells. China has also been investing heavily in its renewable energy supply structure, and currently has the largest renewable energy capacity in the world. The State Grid Corporation of China is working to integrate wind and solar-photovoltaic generation and storage devices into the main grid, and other efforts promise continuing strides in renewable capacity expansion. 
Some analysts’ responses to this climate agreement have not focused on China’s renewable energy pledge, and therefore have been quite negative, stating that China has an easy task since it has until 2030 to peak on emissions. This goal may be less stringent than the policy implemented in the U.S., but certainly the other half of the promise to increase renewable energy sources to 20 percent of energy consumption will pose a sufficient challenge. It is also worth keeping in mind that this agreement was not meant to represent a ceiling on climate change policies but rather a floor. As John Kerry wrote in his November 12 New York Times op-ed that “there is no question that all of us will need to do more to push toward the de-carbonization of the global economy. But in climate diplomacy …you have to start at the beginning, and this breakthrough marks a fresh beginning.” 
Certainly, the collaboration on research and execution described in the U.S.-China agreement will help improve the climate change outlook. The agreement expands the commitment to the U.S.-China Clean Energy Research Center, advances carbon capture, facilitates collaboration on phasing out hydrocarbons, establishes a low-carbon cities initiative, promotes trade in green technology goods, and initiates pilot programs in green energy use. These efforts move both nations in the right direction and represent clear strides toward intervening in the progression of climate change. China surely is making concerted attempts to secure our shared global future.
More in The Diplomat.

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Thursday, November 13, 2014

Chinese pick Chinese brands on Singles´Day - Shaun Rein

Shaun Rein
+Shaun Rein 
A major shift in consumers preferences in China is that from foreign brands to Chinese. Author Shaun Rein of The End of Copycat China: The Rise of Creativity, Innovation, and Individualism in Asia explains in CNBC how the top-5 brands at Singles´Day illustrates the growing China pride.

CNBC:
The top 5 brands, ranked by gross merchandise volume, were budget smartphone manufacturer Xiaomi, followed by telecommunications hardware and phone maker Huawei, consumer electronics and home appliances company Haier, furniture retailer Linshimuye and Japanese apparel retailer Uniqlo, an Alibaba spokesperson told CNBC via email on Wednesday. 
Top 5 ranking reflects "the growing pride Chinese consumers have in their homegrown brands", said Shaun Rein, founder and managing director of the China Market Research Group. "That's why they are buying brands like Xiaomi and Haier." 
"Uniqlo is one of the hottest brands in China now because they make clothing and [have a] marketing campaign that fit the aspirations of Chinese consumers unlike Louis Vuitton with their blond hair, blue eyed models," said Rein, who is also the author of 'The End of Copy Cat China: the Rise of Creativity, Innovation and Individualism in Asia.' Many Chinese consumers are unaware that the brand originates in Japan, he said. 
Alibaba on Wednesday revealed that the Singles' Day sale saw over 1.2 million large home appliances, 3 million lighting products, 200,000 bottles of laundry detergent and 50,000 new cars sold. 
"Those categories are very popular in China," said Rein. 
White goods makers tend to engage in aggressive marketing campaigns for Singles' Day, he said. Discounted laundry detergent, meanwhile, is a popular item as Chinese consumers prefer to have it delivered rather than carting it home. Finally, online car shopping is booming, he said, because consumers know what they are getting when they order one.
More at CNBC.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

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