China Herald: 11/01/2009

Friday, November 27, 2009

Upwards pressure on the minimum wage

Modern consumers in Guangzhou by Renato @ Mainland China via Flickr

Reading the news in China is an art in itself, but when the Global Times reported officials of the southern Chinese province Guangdong were thinking of raising the monthly minimum wage from its current 860 Renminbi (86 euro) to at least 1,000 Renminbi (100 euro) it was a green flag for a new phase in China's labor relations.
Already in October reports emerged about a collective bargaining system in China.
As the export industry in China started to feel the chill of the global economic crisis at the end of 2008, beginning of 2009, many of the gains made in previous years like new legislation on labor contracts and labor arbitration, were silently stalled, as were the ongoing increases of the provincial minimum wages. In 2007, 2008 prosperous provinces like Shanghai faced an increase of its minimum wages sometimes four or five times per year. Both the official increases and efforts to actually execute those raises were equally put on hold as the effect of the diminishing of China's export industry was still unclear.
But the effects were limited. Many of the migrant workers returned home and were able to pick up other jobs. Very soon, the 2007 prediction by the Chinese Academy of Social Sciences that China was heading for a shortage of labor by 2009, proved to be true. As the export industry slowly started to pick up in Southern China at the end of 2009, many of the previous migrant workers were no longer available for the low end jobs in Guangdong.
The call by Cui Renquan, director general of the Bureau of Human resources and social security in Guangzhou, the capital of Guangdong province, reflects that watershed. China might no longer be a pool of cheap labor, working under appalling conditions. Cui Renquan:

The wage policy is more than just revenue distribution; it means weeding out weak companies. Some enterprises survive by exploiting workers with low salaries and do not invest in advanced technology, thus do not further develop the industry. If policy makers adopt Cui’s proposal, these companies will have to choose between updating their technology or withdrawing from the market. Even though these companies can contribute jobs and taxes, these are not outweighed by the environmental pollution and labor disputes that result.

2020 emission targets "a lowball bid" - Charlie McElwee

China Cargo McDonnel Douglas MD-11 take off

by Maltesen via Flickr

Environmental lawyer Charlie McElwee tries to makes sense out of China's emission targets for 2020 ahead of the Copenhagen summit, and is not happy, he writes in his weblog.

A carbon specific goal that will drive carbon emission measurement capacity building, so far so good; the bad news is the notable margin isn’t nearly notable enough. As stated above, given China’s projected GDP growth rates, the amount of carbon that China will continue to emit into the atmosphere will continue to increase at a mind-boggling rate. Since this proposal doesn’t actually result in any additional reductions of carbon over and above what China is currently doing (although there are no guarantees it would continue with the same energy intensity goals, for instance, post-2010), it is hard to see how this announcement does much for projected atmospheric carbon levels.

McElwee's conclusion: When you look at the predicted economic growth China will have doubled its 2005 carbon emissions by 2030.

I think this is a lowball bid, but if there is to be significant improvement in the intensity improvement percentage, China is going to expect the developed countries to pay up. All in all, good concept, disappointing initial proposal, but room for improvement; it certainly doesn’t make a Copenhagen deal any lesslikely.

Charlie McElwee by Fantake via Flickr

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Charlie McElwee is a speaker at the China Speakers Bureau. When you want to share his insights at your conference, do get in touch.

Climate change direct threat for China's rulers - Andrew Leung

Modern wind energy plant in rural scenery.

Image via Wikipedia

For China's ruling class, climate change is seen as an imminent threat that should be dealt with very fast, professor Andrew Leung told SolveClimate.com ahead of the coming climate conference in Kopenhagen. It tough 2020 emission targets should be seen from that perspective: a severe security risk.

“In the West, when we refer to climate change, it is in the context of a looming … risk to the trees and for ourselves and our children’s children.

"For China, it’s a clear and present danger. It is threatening the stability of the communist party, so it has been elevated to the level of national security,”

China currently gets most of its energy from fossil fuels. The country is rich in coal, but coal is highly polluting and threatens the health of China’s increasingly urbanized workforce. In its cities, air quality is poor.

Fresh water supplies, needed for both health and producing energy, are also threatened with increasing competition from India as the Himalayan glaciers melt due to climate change.

It is in China’s interests to diversify away from fossil fuels and to urbanize as cleanly as possible, Leung argues.

He notes that China has already started to do this. It has become a world leader in solar and hydroelectric power, and it is a growing force in wind power.

More at SolveClimate.

Andrew Leung by Fantake via Flickr

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Professor Andrew Leung is a speaker at the China Speakers Bureau. Do you need him at your conference or meeting? Do get in touch.

Thursday, November 26, 2009

Recipes for survival - Arthur Kroeber

by Fantake via Flickr

Despite its predicted 8 percent economic growth, China is still facing a crucial time, tells Arthurs Kroeber the Australian Inquisitr.

“The Global Financial Crisis has accelerated the impetus for change, with different regions within China responding in different ways, Mr Kroeber said.

“Sustained recovery now depends on the strength of property and infrastructure investment in the hinterland, and on the government’s ability to increase the efficiency of the financial system and break down local protectionism that impedes domestic trade.

“Rebalancing within China also means government policy is now aimed at strengthening the role of consumer spending, increasing energy efficiency and reducing pollution.

“Rapid economic growth has also increased the capacity for outward investment by Chinese firms, especially the 150 large state enterprises controlling the ‘commanding heights’ of the Chinese economy.

“China’s outward direct investments tripled to US$55 billion in 2008 and are expected to rise further in coming years with Chinese outward investment set to play a constructive ongoing role in fostering global economic growth,” he said.

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Arthur Kroeber is also a speaker at the China Speakers Bureau. When you need him at your conference, do let us know.

Tuesday, November 24, 2009

The US press got it wrong on Obama - Howard French

Howard French by Fantake via Flickr

The prestigious Columbia Journalism Review has been publishing a two part interview with Howard French, former foreign correspondent for the New York Times in both Tokyo and Shanghai on how the US media got it wrong when they reported Barack Obama's recent trip to Asia and especially China as a horse-race.
The observations have more to do with the news culture in the US than with China, Howard French says, but do have an influence on the relations between China and the US.

The unstated element for me in all of this coverage of Obama’s visit is a kind of hysterical insecurity in the American mind about the possibility—or reality, depending on how you look at it—of American decline. China being the most obvious and immediate symbol of American vulnerability and decline. You put these two things together, the hysterical insta-pundit on the one hand and the hysterical anxiety on the other hand, you end up with this kind of coverage that says essentially that Obama goes to China and doesn’t get instant, public, overt gratification on issues A through Zed and therefore it was a failed trip, or we’re losing ground to China or we have no more standing or we have no more clout or the Chinese moment is upon us—any number of variations on this decline-related theme.

More notable observations at the CJR in part one and part two.

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Howard French is currently teaching journalism at the Columbia University Graduate School. He is also a speaker at the China Speakers Bureau. When you want to share his observations, do let us know.

Saturday, November 21, 2009

The iPhone debate: what can Apple do

Image via Wikipedia

Last week Shaun Rein advised Apple what they should do to save their iPhone in China, after their sales appeared to be minimal. His advice (and you can read a longer edition here) had three elements:

Listen to local consumers
Pick China Mobile as a partner rather than China Unicom
Treat China as a part of the global market, not as a separate one

Not everybody agreed and in the comments a debate emerged. PTaylor wrote to Shaun Rein:

This is not a very well informed critique of what Apple is doing in China:

1: The monthly subscription plan problem is a decision by the State Owned telecom company, Unicom. Apple knows that 80% of phones in China are sold outside the carrier channel (through retailers). Their hands are tied though because MIIT and the carriers are paranoid that the iPhone is going to disrupt the telecom market in China.

2. Unicom is the only choice Apple has for the 3G market. China Mobile -- the largest carrier by far -- has been forced to use the China-developed TD-SCDMA standard. Only Unicom's signal (CDMA) will be compatible with the iPhone.

3. Apple has been trying to get the phone into the market for two years. The Chinese government's ridiculous meddling with the market (banning Wi-Fi on mobile phones is just one small example) is the problem.

Not surprisingly, our mostly well-informed Shaun Rein was not amused by the comment and wrote back:

Thanks for your comments and insights. I agree with much of what you said -- you are correct in outlining some of the obstacles Apple had in China.

I always like it when people say it is all the government's fault and there is nothing companies can do to get around it. That is sometimes true but smart companies will evolve business plans for local conditions to factor in local regulations and market conditions. Apple did not do that well enough.

When people say that, they just don't know enough about how to get things done in China or, as is often the case, local execs do know what to do but they can't get buy-i from the home office.

For instance, eBay failed in China more because of meddling from the home office than from folks in China -- they were actually quite good but just ignored.

So, Ptaylor, my advice -- learn how to deal with obstacles rather than just

Shaun Rein by Fantake via Flickr

complain about them.

So who do you think is right? PTaylor or Shaun Rein?

Update: The China Law Blog add their arguments. They largely agree with Shaun Rein, but have a few smart observations to add themselves.

Friday, November 20, 2009

Why strengthening the Renminbi does not help - Shaun Rein

the 44th President of the United States...Bara...

'Wrong' by jmtimages via Flickr

Leading economists like Nobel-prize winner Paul Krugman, IMF managing director Dominique Strauss-Kahn and even US president Barack Obama pushed China to revalue its currency, the Renminbi. Shaun Rein explains in Forbes why strengthening the Chinese currency even more - it went already up 20 percent - is not going to help the United States, or anybody else.

Revaluing it right now would jeopardize the world's fledgling economic recovery. It is better for American businesses for China to maintain current yuan rates until the worldwide recovery is on a firmer footing.

Shaun Rein has three arguments:
First, a stronger Renminbi would make Chinese imports even more expensive, just ahead of the holiday season. Wal-Mart would be hit dramatically.
Second, a stronger Renminbi would jeopardize China's currently expected economic growth of eight percent. And, the weak dollar is the problem, not the strength of other currencies.
Shaun Rein:

As nations rebalance their holdings towards euros, Australian dollars, Brazilian real and Japanese yen, the dollar continues to weaken. Even retail investors are jumping on the bandwagon. This flight will not end until the dollar reverses course or, at the very least, remains stable, and it's dangerous because it means countries will be less likely to buy Treasury bills and finance America's recovery.

Wednesday, November 18, 2009

Barbie misses target in Shanghai - Paul French

Barbie via Wikipedia

The famous doll Barbie was received with many cheers as its groundbreaking store opened in Shanghai earlier this year. But Barbie has been missing its target as it seems to appeal more to the Americans than to the Shanghainese, a problem that sounds very familiar for more foreign brands that try to enter the China market.
Retail guru Paul French tells toy giant Mattel might be on the wrong track: in Bloomberg:

“Every retail store operates at a loss when it opens, but they’ve been open long enough that it should be working by now,” said Paul French, founder of Shanghai-based market research company Access Asia. “They overestimated their brand recognition in China. I just think the concept is wrong.”

Sales targets are down 30 percent.

Paul French by Fantake via Flickr

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Paul French is a speaker at the China Speakers Bureau. If you need his input at your conference or meeting, do get in touch.

Most-sought speakers for November 2009: China-US relations galore

Still no.1 via Wikipedia

When you are reading these words, two historical events might be over. First, and you might have noticed that one, is the first visit of US president Barack Obama to China. The second one, many of you might not have noticed, but Europe might have its first minister of foreign affairs.
While Europe getting its first president and formal representative in the rest of the world could have a been a watershed moment - and might actually be with hindsight - the 27 European member states have for the time being sought for not-so powerful representatives in Europe, that would not come in the way of the very divided policies of 27 member states.

How does our November list of most-sought speakers fit into those considerations? When you see who is actually leading the China debate, you see that our three top-speakers, Kaiser Kuo, Shaun Rein and William Overholt are all Americans. Actually six out of our top-10 have at least roots in the US, three are European and on South-African. Notably, also none of the top-10 is Chinese, but we will address that issue in a different article.
So, who better than Barack Obama can head our top-10? Despite all the talk about changing relations, the debate is still a very US-centered, and that is perhaps something the rest of the world, including Europe, should worry.

In our top-10 we note that Kaiser Kuo not only has kept the no.1 position over Shaun Rein, but done so with a huge margin. Kaiser Kuo has been giving a range of notable speeches, addressing the influence of the internet on the US-China relations, as we see in our speakers corner.

Our November top-10 (October in brackets)

Kaiser Kuo (1)
Shaun Rein (2)
William Overholt (3)

Our famous speaker from Luxembourg by Fantake via Flickr
Jasper Becker (-)
Tom Doctoroff (6)
Rupert Hoogewerf (9)
Jeremy Goldkorn (8)
William Bao Bean (7)
Arthur Kroeber (-)
Annette Nijs (4)

Tuesday, November 17, 2009

China's rich are relatively young - Rupert Hoogewerf

Image by Fantake via Flickr

Compared to the rich in the developed nations, China's well-to-do are relatively young, tells Rupert Hoogewerf, composer of the Hurun rich list, the New York Times.

Typically, a Chinese individual worth $150 million or more is about 50 years old — about 15 years younger than someone in that category in Britain or the United States, Mr. Hoogewerf said.

The average age of someone with 100 million yuan, or about $15 million, is 43. The approximately 825,000 Chinese with personal wealth of 10 million yuan are on average as young as 39, according to Hurun’s data — again, about 15 years younger than their counterparts in America or Europe.

“Much of this wealth has only been created since the 1980s — in other words, a solid generation later than in Hong Kong or Taiwan. You’d have to look back to the late nineteenth century in the United States or to the industrial revolution in Britain, to find anything comparable to the wave of entrepreneurs who are now starting up in China,” Mr. Hoogewerf said.

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Rupert Hoogewerf is a speaker at the China Speakers Bureau. Do you need him at your conference or meeting? Do get in touch.

Friday, November 13, 2009

Chinese support one-child policy - Shaun Rein

by Fantake via Flickr

As the trip by US president Obama to China comes near, our Shaun Rein continues in Forbes to debunk common myths the outside world might have about China. Earlier he took on three business myths, today focuses on the Chinese genes that prescribe a high saving rate and the one-child policy.
A large majority of the Chinese not only support the policies of their government, but also specific ones like the one-child policy, Rein argues:

In fact, the government, worried about an aging population, is encouraging urban couples who are both only children to have two children themselves. Yet there have been few takers. Many parents don't want to assume the costs of private schools and extracurricular activities like piano lessons for multiple kids. They would rather focus on rearing and spoiling one child, as they were reared and spoiled when they grew up.

Moreover, many women no longer want to take a break from their careers, and many are too spoiled themselves to make the sacrifices necessary to care for multiple children. Grandparents commonly take care of grandchildren while both parents work.

More at Forbes.

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Shaun Rein is a speaker at the China Speakers Bureau. When you need him at your conference, do let us know.

Shaun Rein by Fantake via Flickr

Thursday, November 12, 2009

Public tendering goes clean - Paul French

China-hand Paul French sounds a bit amazed as his discovers that efforts to cut back China's tradition of corruption in public tenders actually seems to work out. In the Ethical Corporation:

More than one foreign company has found themselves (let’s be charitable here) unwittingly involved in a dodgy deal. But perhaps no more.

China’s ministry of supervision has introduced a new system of tendering for government procurement contracts that some are calling state of the art and far in advance of anything in Europe or the US, and it looks like they may be right.

French is genuinely amazed:

I sometimes have a bit of trouble with this column. I hear about something interesting in China that sounds like a good story. I go after it hoping that it will be a positive story and not negative, but, of course, what initially appears positive in China often goes sour. Take the recent stories we’ve covered on the rise of charitable donations in the wake of the Sichuan earthquake last year and then the government siphoning of the cash – a positive became a negative with a bit of digging.

Paul French by Fantake via Flickr

Not in this case, it seems.

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Paul French is a speaker at the China Speakers Bureau. When you need him at your conference, do give us a call.

Liabilities add pressure on future - Victor Shih

Victor Shih by Fantake via Flickr

Political scientist Victor Shih is only halfway through a project finding out how huge China's financial rescue package has actually been, but he is already worried. Not that China's collapse is imminent, but the country has invested a far larger percentage of its GDP into saving the economy, compared to other countries. In his weblog:

it would be mistaken to argue that China accomplished 9% growth without getting into massive debt. In fact, it got into much more de facto public debt as a share of GDP than the US or Europe did. If Cpolers remember a conversation about the rise of deficit this year in China, which put official debt this year at a modest 25% of GDP. However, the reason growth is so high this year is due mainly to investment. In addition to the 4 trln RMB central government package, local governments also rolled out additional trillions in investment projects. In OECD countries, much of these projects will be financed through the official budget, but in China, local governments set up urban development companies to raise this money as “corporate loans” from banks. Thus, around 70-80% of this trillions in investment was financed through bank loans.

Now, local government have taken the opportunity to roll out massive new infrastructural projects, that might require more investments in the years to come, Shih argues:

Does this mean a collapse? certainly not necessarily as the government holds a lot of assets. However, as with any country, we should also pay attention to the liabilities.

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Victor Shih is a speaker at the China Speakers Bureau. Do you need his insights at your conference or other meeting? Do let us know.

Tuesday, November 10, 2009

No rush on Chinese domain names - Sam Flemming

Sam Flemming by Fantake via Flickr

Chinese domain names have been written untill recently in Latin letters, but although officially now Chinese and other non-Latin characters are possible in url's, there is not real eagerness to use that possibility, despite governmental encouragement, says Sam Flemming in PC World.

Domains in Chinese script could appeal mainly to users who are elderly or live in rural Chinese areas, said Sam Flemming, founder and chairman of CIC, an Internet word-of-mouth research company in Shanghai. Those are the main users that may not be used to typing Web addresses in English or in Pinyin, a phonetic spelling system often used online to replace Chinese characters with Latin ones.

"For people that are currently online, they're much more used to it," said Flemming.

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Sam Flemming is a speaker at the China Speakers Bureau. When you are interested in having him as a speaker, do let us know.

The looming housing bubble of 2010 - Arthur Kroeber

Shanghai via Wikipedia

Without government action, China is heading for a housing bubble by the second half of 2010, tells Arthur Kroeber Radio Australia. Many people see investment in housing property as their retirement fund.
Arthur Kroeber:

Housing is really the focus because there really isn't an effective pension system in China so individuals think of investments in property as their best insurance policy for old age. So in addition to the pressure created by literraly 10 or 15-million people moving into Chinese cities from the countryside every year and needing to be housed, on top of that you have this pressure from people already in the cities who want to buy their second house because that's essentially their retirement plan. So every time you get extra money in the system as you have now, that puts tremendous upward pressure on housing prices and makes it very difficult for ordinary families on just living on normal incomes to think about buying a house. So I think that's going to be a major problem for the government next year and they're going to have to come up with a new set of economic policies that balances the need for continued stimulus to boost growth while at the same time trying to keep

Arthur Kroeber by Fantake via Flickr

housing prices under control.

Then Radio Australia deviates into what this might mean for Australia.

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Arthur Kroeber is a speaker at the China Speakers Bureau. When you need him at your conference or other meetings, do let us know.

Monday, November 09, 2009

No panic after website got blocked - Jeremy Goldkorn

Image by Fantake via Flickr

Media expert Jeremy Goldkorn saw his website Danwei blocked, but the seasoned business man did not panic, although he lost 30 percent of his traffic overnight, he tells the CIB Magazine. And, although recognized as a successful entrepreneur, it does not mean he is making big bucks:

Despite these numbers, the website still loses money every month (Goldkorn describes the overall company as marginally profitable). “I have always been looking for a business model for the website, but it is a loss-leader,” says Goldkorn. “What it is is a platform for us to prove our expertise and then people have paid us to do other things.” These additional activities include research — often on Internet word of mouth and what Chinese people are saying about specific companies/organizations —and giving speeches. Goldkorn estimates he probably gets one paid speaking gig a month, and though they are generally in the Chinese mainland or Hong Kong, he will sometimes be flown to Europe or the United States to speak on subjects related to China and its media.

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Jeremy Goldkorn is a speaker at the China Speakers Bureau. When you need him for your conference, do get in touch.

Saturday, November 07, 2009

How can Apple save iPhone in China? - Shaun Rein

Image via Wikipedia

Apple's partner China Unicom sold since its 30 October debut only 5,000 iPhones, while some market analysts predicted a sale of millions. Shaun Rein explains in Forbes how Apple and China Unicom had it all wrong and how they can save the iPhone by changing strategies fast.
When the official iPhone launched, its cracked edition was already very popular and had actually been selling for a premium at China's early adopters. A few million iPhone were already in China when Apple basically tried to tap into what could have been their market, if they would have acted faster and smarter.
Since China's digital vanguard is changing its gadgets very fast, not all is lost, but according to Shaun Rein a drastic change of strategy is a condition.
1. Listen to local consumers:

The phone is being sold packaged with monthly subscription plans, just as in the U.S., but the vast majority of Chinese prefer to buy pay-as-you-go charge cards. Top-up cards can be bought and recharged cheaply at street vendors everywhere in less than 30 seconds, with no identification required. Subscribing by the month is a pain.

2. Pick China Mobile rather than China Unicom as a partner:

Our research suggests that most consumers believe China Mobile has better signal stability than China Unicom, especially in regional cities beyond Shanghai and Beijing, where more and more business trips and vacations are taking place. People told us they didn't want to change carriers, because they didn't want to worry about weak signals when traveling, even if that meant staying with China Mobile's slower connection. There is also no phone number portability between China Mobile and China Unicom, and consumers don't want to change their numbers just for a new phone.

3. Launch globally at once:

Finally, one of Apple's biggest mistakes was that it didn't launch the iPhone around the world all at once. It took far too long to get to China. In today's world, companies can no longer be strongly Americentric, starting product launches in the U.S. alone and only gradually reaching other markets as supply chains catch up. The new growth markets will be in places like China, India and Brazil, where consumers are still spending. Consumers in those places don't want to wait years to get a product they read about online the moment it comes out.

Much more at Forbes.

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Shaun Rein is also a speaker at the China Speakers Bureau. When you need him at your

Shaun Rein by Fantake via Flickr

conference, do let us know.

Friday, November 06, 2009

Why Zong Qinghou could beat Danone - Paul French

Paul French by Fantake via Flickr

Retail expert Paul French comes in Forbes with a few reasons why in the epic battle between French giant Danone and its now former China partner Wahaha, the CEO of Wahaha Zong Qinghou comes out as the winner. Just as in the case of many more foreign companies in China, their Chinese counterparts (competitors, partners or the fatal combination of both) seem to be better able to understand the Chinese customers, and act unrestrained by foreign headquarters.
Forbes:

But perhaps the best is yet to come for Zong and Wahaha. The end of the relationship with Danone will allow the Chinese company to make decisions more freely than when they were working with the Europeans. "It's great for Wahaha," says Paul French, marketing director at Access Asia, a consulting company that follows China's beverage business. In particular, French says, Wahaha is likely to increase the number of unconventionally flavored products it sells through its huge domestic sales channel. "Danone was very conservative [compared with Wahaha] when it came to flavors," says French.

Wahaha's research team has fruit-flavored milk in the pipeline that is likely to be a winner, French predicted. "You're going to see a lot of new subbrands, too," he says. Because of Wahaha's huge distribution network in China, Danone's loss could be bad news for Wahaha's rivals.

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Paul French is also a speaker at the China Speakers Bureau. When you want to share his insights, do let us know.

Wednesday, November 04, 2009

Disney's missing link in China

Disney - Big Thunder Mountain Railroad at Night

Image by Joe Penniston via Flickr

The long-awaited approval of the new Disney park in Shanghai by the central government in Beijing is reason enough to be cheerful. No other project has been on so many drawing tables for such a long time, at least ten years.
Many parts of Shanghai had already enjoyed the arrival of the new Disney Park, as time-after-time the deal got into trouble. Mostly because the eager Shanghai authorities were unable to secure the blessing from the central government. But - and that is now conveniently forgotten - because Disney itself has some misgivings about its operation in Shanghai.
The Shanghai-park - Shanghai municipality has been talking to more potential operators than Disney alone - was initially the product of the unfruitful concept of a competitive relationship between Hong Kong and Shanghai. What Hong Kong had, Shanghai needed to have better, bigger, huger. In the case of the Disney park, Hong Kong has proved it is doing a very poor job in a park that is too small and too poorly organized to be a big success.
In all cases, both Disney and the government have been calling off the negotiations repeatedly. It needed a financial crisis to navigate the deal through the central government.
Meanwhile, Shanghai and the 80 million people on easy traveling distance to the new park have been working very hard over the past years to improve their spending power, making the park possible. Only five years ago, entertainment experts were convinced a Disney Park would not have been possible in Shanghai, because of the lack of financial means of the potential audience. That has improved quite a lot over the past five years and will improve even more in the years to come.
That does not mean all is well. Outside China Disney is a mainly a media company, while operating entertainment parks is just a small part of a much larger operation. It is conveniently forgotten that it can never be a media company in China, at least not in this stage. Just read Bloomberg here:

Disney, the world’s largest media company, has discussed opening a park in Shanghai, its fourth outside of the U.S., for more than ten years. The park will provide Disney with a way to expand its China business without risk of regulatory hurdles that come with movies and television shows, said David Bank, an analyst with RBC Capital Markets in New York.

“It gives Disney an opportunity to monetize its brand without necessarily having to produce filmed content,” Bank said. “And that’s the real key to making money in China for the media companies.”

Let's put Mr. Bank straight here: China's media regulations do not allow Disney or any other foreign media company to operate as a media company. The company has tried, based on its own misconception of its opportunities in China, to get permission to operate also ventures in the media industry. That has been a few times the reason for Disney to leave the negotiation table. For anybody who is a bit familiar with China it was clear that this demand would never be met.
Now, the media aspirations of Disney are not even mentioned in the reports and I assume that Disney has accepted its loss here. It should restrain our cheerful mood a bit, though. What Disney gets at best is a huge, well operated fun park. It will not become a media company in China for the near future.

Monday, November 02, 2009

US manufacturing is alive and well - William Overholt

Image by Fantake via Flickr

Has US manufacturing moved to China, asks Bloomberg a group of experts. No, manufacturing is alive and kicking in the US, says also William Overholt. Manufacturers are doing more with less people, but...

Still, the idea that job losses mean U.S. manufacturing has hollowed out is a “myth,” said William Overholt, a senior research fellow at Harvard University’sJohn F. Kennedy School of Government in Cambridge, Massachusetts. All industrialized and industrializing countries go through the same process as their manufacturing becomes more sophisticated and productivity increases.

The U.S. lost 2.6 million factory jobs from 1994 to 2004, while China lost 25 million, according to a study Overholt did for the Santa Monica, California-based Rand Corp.

“The familiar views of the fate of U.S. manufacturing are basically a combination of paranoia and propaganda,” Overholt said. “The idea that America’s manufacturing economy is dying is the silliest nonsense.”

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William Overholt is a speaker at the China Speakers Bureau. When you need his insights at your conference, do get in touch.