Thursday, June 30, 2011

China relaxes procurement rules on innovation - Shaun Rein

Shaun Rein
China's regulators have been scrapping preferential treatment of local firm to win procurement contracts from the government, originally meant to strengthen indigenous innovation. "It is a sign the government is listening to the needs of foreign companies," says Shaun Rein in the China Daily.
Shaun Rein, managing director of Shanghai-based China Market Research Group, said the decision is important for the Chinese government because "it shows they are listening to the needs of the foreign business community by removing barriers".

"The government is listening and adhering to global standards and laws and is intent on continuing to create a favorable investment environment for foreign firms," Rein said.

China's indigenous innovation policies are part of an effort to increase the level of domestic innovation and have been a key component to China's economic development for several years.

But a revised policy in late 2009 to prevent companies that hold property outside China from winning government contracts caused more controversy. More than 30 industry groups, from most of the world's major technology firms, wrote a letter to the Chinese government expressing their concern over the government procurement measures.

"These policies caused a lot of fear that China was becoming hostile to foreign investment and was becoming protectionist," Rein said...

Rein said China needs to wield its soft power more effectively.

"The past year and a half has been a tough time for China's image in the world stemming from the Google incident. The government more proactively needs to show why China is a great place to invest," Rein said.
More in the China Daily.

Shaun Rein is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.
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Wednesday, June 29, 2011

When East and West meet for business - Bill Dodson

Bill Dodson
Chinese and Western business practices differ, quite a lot. Bill Dodson recalls on his weblog a due diligence trip into Zhejiang province, visiting a company that offered to their Western visitors two accounting books.  The Western visitors were shocked. A different modus operandi.
One of the brothers and an assistant, a young woman in a factory smock, brought out two great ledgers, hand-written. Two books? the Europeans queried.

“Oh, one book is for us and the other for the tax authorities,” one of the brothers answered blithely. “They don’t want us to report too much income, so we have to keep the records elsewhere.,” he explained. Apparently, the difference in actual vs. reported was negotiated and channeled to tax patrons. Neither of the brothers considered maintaining at least two sets of books or tax negotiations or contorted shareholding structures at all improper. It was just the way things ran in China. Visits to the remaining two targets revealed the same modus operandi.

It’s no wonder, then, that Chinese businesses seem genuinely aggrieved that Western shareholders and stock exchanges consider their business dealings improper at best, down-right illegal at their most dramatic. After all, what’s worked for a society for thousands of years must be good for the rest of the world.
More in Bill Dodson's weblog.

Bill Dodson is a speaker at the China Speakers Bureau. Do you need him at your meeting of conference? Do get in touch.
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Mark Obama Ndesandno joins China Speakers Bureau

Mark Obama Ndesandjo 
The Shenzhen-based business man, artist and charity activist Mark Obama Ndesandjo has kindly agreed to join China Speakers Bureau. In a few years time, he has has helped to put corporate social responsibility on the local agenda and is helping companies to enter the challenging China market.

Two years ago, he wrote a semi-biographical novel, Nairobi to Shenzhen, focusing on how his character found his way into Shenzhen, after he lost his job after 9/11. The novel has earlier this year been published in Chinese and his memories are expected later this year He using his excellent bridge-building talents as a multicultural, talent, who had his home in Keynia, the US and how China.

Are you interested in having him on your meeting or conference? Do get in touch.



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Tuesday, June 28, 2011

Baidu goes semantic in box search - Kaiser Kuo

Kaiser Kuo
China's leading search engine Baidu is leapfrogging from Google and Bing by adding more semantics into their box search, making it much smarter, explains their spokesperson Kaiser Kuo to Penn-Olson. "Getting relevant results is even more important for mobile."

Q&A at the website of Penn-Olson:
Their PR man Kaiser Kuo says, “60% of queries on Baidu include results from the box platform”...

I put it to Kaiser Kuo that it might be seen as unfair when a Baidu-related product fills a users’ entire screen after their search result; he countered, “The search results are still done algorithmically, so the most relevant still comes up first. The box platform is an open platform, to showcase your data, and it has a large ecosystem of developers.”

Indeed, a search for Douban.fm, a popular music-steaming site, brings up a music player at the top of the search results (pictured, top), allowing you to jump into Douban’s music live-stream with just one click. Also a search for the very vague term “online music” results in an online player that belongs to the relatively small music site YiShouGe.com.

For China’s developers, the process is similar to most app stores: create your frame that ties into Baidu’s box platform, and then submit it to Baidu. Plus, says Kuo, “Baidu has its own developer fund,” to encourage smaller devs to get on board as well...

Where is Baidu heading with its smart results? “It dovetails with mobile,” explains Kaiser Kuo, “because on mobile it’s even more important to get relevant results, on a limited sized screen. Also, we see a future of quick to power-on mobile devices, where these semantic terms could be spoken, or of course typed, and it’ll understand semantically what you ask.”
More at the weblog of Penn-Olson.

Kaiser Kuo is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.
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Social unrest in China: mostly an Asian affair? - Bill Dodson

Bill Dodson
Bill Dodson has been writing extensively about social unrest in China and what it means for foreign companies. In his weblog he focuses on the fact that most strikes have been at factories owned by Japanese, Taiwanese and some Hongkongnese. Some observations.
One of the interesting points I turned up in my research for the report was the overwhelming number of companies at which workers are staging proletariat-style revolts are Asian: Taiwanese and Japanese, mainly, with some Hong Kong investors I suspect are predominantly Chinese Mainlanders “round-tripping”; that is, setting up HK investment vehicles to re-invest in the Mainland as foreign companies: helps in reducing local tax burdens and makes it easier to get their income out of China.

I’ve always been of the mind Asian investors tend to treat their employees as liabilities, disposable; while Western companies invested for the long-term in China tend to treat their staff as assets to take care of and encourage. People don’t like being treated as liabilities. Of course, their are exceptions in both camps; however, I’ve found few exceptions over the years.
More at Bill Dodson's weblog

Bill Dodson is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.
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Japan adds spy bases to watch China - Wendell Minnick

Wendell Minnick
Japan is building signals intelli­gence (SIGINT) stations along the Ryukyu Island chain to monitor Chinese naval and maritime activities, writes defense expert Wendell Minnick on his weblog.
“China’s military expansion is conspicuous, and the military balance is changing in the East China Sea,” said Sumihiko Kawamura, a retired rear admiral who is deputy director of the Okazaki Institute, Tokyo. “China has been ramping up moves to expand its maritime in­terests, thereby intensifying friction with Japan.” The interlocking facilities will provide the country’s military with both communications intelligence (COMINT) and electronic intelli­gence (ELINT) capabilities.

China has intensified posturing over its ter­ritorial claims in the area, said Peter Woolley, a Japan defense specialist. Actions include overflights by Chinese surveillance aircraft and maritime intrusions by the Chinese Navy and “rogue fishing vessels,” he said.
More on Wendell Minnick's weblog.


Wendell Minnick is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.
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China's local debts still higher than officially estimated - Victor Shih

Victor Shih
China's financial institutions have been releasing assessments on the total of debts local governments have, writes Victor Shih in a guest blog at the Financial Times. But they are not yet close to the real debts of 15 to 20 trillion Renminbi.
Here is how we arrive at these numbers. First of all, we have to understand that the National Audit Office is like the Congressional Budget Office and only cares about debt directly owed by local government organs or debt directly guaranteed by local government organs.

It does NOT care about liabilities of central and local governmental entities, which were not guaranteed by the government. Chart 3 of the report states that the audit uncovered Rmb4,970bn in local government financing vehicle (LGFV) debt as of the end of 2010, and another Rmb5,700bn or so owed by local government organs and “business units subsidised by the budget.”

However, based on the figures previously released by the CBRC and the PBOC, we know that the Rmb4,970bn LGFV debt figure is way too low. The discrepancy between the CBRC and PBOC estimates and the NAO number arises from the fact that the NAO was only looking for LGFV debt in which the local government has issued decrees or guarantees to underwrite. Thus, LGFV debt which is guaranteed by another company or is collateralised by land was not part of the NAO audit.
More analysis from Victor Shih in the Financial Times

Victor Shih is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.
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Living as a migrant worker "Are we too dirty?" - Tricia Wang

tricia1Tricia Wang

Sociologist Tricia Wang is trying to blend in as a migrant working in Wuhan and reports on her weblog about her experiences. "Are we too dirty for your eyes?"
When we sat down on the empty seat, I accidentally lightly brushed my backpack against the man sitting to my left. I immediately apologized.  But he didn't respond, he just looked alarmed that I had touched him and gave me a glaring look that told me immediately that I shouldn't even be sitting near him. He wiped off the part of his arm that my bag had brushed as if I had dumped dirt on his suit.

His action alone made me super conscious of my physical condition -  the dirt on my toes, my oily face, and my blackened clothing from working with food vendors. I hadn't showered in two days and that's all I kept thinking after he looked at me.  I glanced around around and saw people staring at us. I immediately made a boundary in my head and called them "city people." As Yang Jie kept talking, I kept noticing the "city people" in their daily showered bodies, freshly washed clothing, and dirt-free toes.

I then received a text message so I pulled my phone out. I immediately noticed the man next to me look at me curiously - he saw that I not only had a smartphone, but probably what looked like a real iphone (it is a real iphone). I texted back to my friend in English, and this is when he became super aware that something was off - it's hard to explain the look on his face, but he just kept looking over my shoulder as if his eyeballs were going to pop out. He then looked at  Yang Jie up and down and then at me up and down.

The more he looked, the more I just glared at him and the more upset I became. I wanted to say out loud, "what are you looking at? Do you have a problem? Aren't we too dirty for your eyes?"  But I was with Yang Jie and I didn't want to make a scene. I'm sure she receives this kind of treatment every day and she has learned to ignore it. It angered me that I could feel his judgement seeping onto me, and I could feel that the minute he saw me texting in English his level of disdain at me decrease. Texting in English in combination with owning an iphone are signifiers of an education and he picked up on it immediately.
More, including a fast growing number of comments, at Tricia Wang's weblog.

Tricia Wang is a speaker at the China Speakers Bureau. When you need her at your meeting or conference, do get in touch.
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Location: Wuhan, Hubei, China

Again no F-16's for Taiwan - Wendell Minnick

Wendell Minnick
The US have again blocked a US$ 8.7 bn Taiwanese order for F-16's, writes Wendell Minnick in Defense News. The move to please China, might cost the US up to annual 16,000 jobs, according to Lockheed Martin.

In Defense News:
Taiwan's requests for F-16C/Ds and an upgrade package for 146 aging F-16A/B fighters have been on hold since 2006 and 2009, respectively. The U.S. government blocked three earlier LoR attempts for C/Ds made between 2006 and 2007.

Pro-Taiwan groups in Washington are urging Taiwan to formally request the right to resubmit the LoR before the opportunity passes.

"They need to [resubmit] if they're going to take advantage of this window," said Rupert Hammond-Chambers, president of the U.S.-Taiwan Business Council. "If they do nothing, the moment will pass."

Support for an F-16 sale has gained momentum over the past month as members of the U.S. Congress, Lockheed and pro-Taiwan lobby groups have been working in concert to push the White House to release the fighters.

"They have submitted an LoR on three occasions and had it rejected," said Mark Stokes, a former U.S. defense official, now with the Project 2049 Institute. He said this is one reason the U.S. and Taiwan should bring back the annual arms sales talks held between 1982 and 2001.

"At least Taiwan could make its requests formally" to the U.S. government, he said.
More details in Defense News.

Wendell Minnick is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.

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Inflation is _not_ under control - Shaun Rein

Shaun Rein
China's premier Wen Jiabao, Jim O’Neill, Chairman of Goldman Sachs’ Asset Management, argued this, and an analyst at Royal Bank of Canada says inflation is under control, but our Shaun Rein begs to differ, in CNBC.
I asked my office landlord recently if rent would go up 10 percent when our contract ends at the end of this year. She laughed and told me 20-30 percent at least. Taxi prices will rise 20 percent in Shanghai and other cities soon. The Shanghai government has said taxi fares will be raised after the public discussion period in June. Fuel surcharges have also gone up in Shenzhen and Beijing.

Plus tax breaks implemented during the crisis are being rescinded. In other words, a perfect storm of rising wages, rents and commodities will force most companies to begin transferring prices to the end consumer. With brownouts set to hit 10 manufacturing oriented provinces this summer, pricing pressures will only continue.

In order to stave off potentially destabilizing inflation and a housing bubble, the government should leave tightening measures in place in the short-term. Until the U.S. dollar regains its strength or America ends its wars in the Middle East, causing commodity prices to drop, there is no way inflation is a short-term issue for China.
More arguments in CNBC.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.
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Monday, June 27, 2011

China Daily reviews The Chinese Dream - Helen Wang

Helen Wang
The China Daily USA reviews Helen Wang The Chinese Dream: The Rise of the World's Largest Middle Class and What It Means to You. An interview about the fraternizing between China and the US.

A fragment from the China Daily:
A culture of fraternizing among nations is already beginning to emerge, Wang says.

"China is picking up ideas and learning like crazy from the West, while Eastern culture and philosophy is so hot in the United States. The differences between these two cultures are there, but people, especially those from the academic and business communities, are more aware of these than before.

"My book is a small contribution to this convergence of interests and tendencies from both cultures," Wang adds.

The Chinese Dream has an obvious resonance with the idea of The Great American Dream. American historian James Truslow Adams defined the concept as "life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement regardless of social class or circumstances of birth".

It also brings to mind Martin Luther King Jr.'s now-mythical public address at a civil rights march in Washington DC in 1963, making an impassioned case for racial equality. The latter, along with Abraham Lincoln's Gettysburg Address, inspired Wang to leave Chinese shores and seek a life in the US in the late 1980s.

"They seemed to breathe fresh air in my life and my thinking," she recalls. "I was young, I wanted to experience something radically different."
More in the China Daily.

Helen Wang is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch.
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The "honey sex trap": not the Chinese style

Foreign Correspondent trailer 8
As a small boy I enjoyed reading at my parents' attic all the redundant copies of the Readers Digest, offering me a first look into the adventures of the Cold War. My favorites were all those stories about seductive Russian women, who tried to get state secrets out of those brave men, defending western values: diplomats, politicians and journalists. Honey traps, they were called.

Decades later, when I was preparing for my stay in China as a foreign correspondent, I was of course eager to explore more in-depth this issue in this other major communist nation. Unfortunately, as with more issues, China dealt with this issue in a rather different way than the Russian practices. Having sex was off limits for China's secret agents, I discovered. My other colleagues and also diplomats confirmed my observation:the  China secret service did not offer sex for secrets, even when you pretended you have really very interesting things to tell.

So, we turned this around. When we suspected somebody to be spying on us, we tried to have sex. If they agreed, we knew they were _not_ spying on us. If sex was not on the agenda, they were spies and we dumped them.

When I saw the news - provided to us by Wikileaks - that a Chinese minister was trapped by getting involved with a Chinese spy, I was confused for a minute. Fortunately, finance minister Jin Renqing was trapped by a Taiwanese spy, although she pretended she was of the mainland. Minister Jin must have known better. Mainland spies do not have sex when in duty, Taiwanese might.

Unless the policies have changed of course. I should check that out.
(Earlier published at Fons Tuinstra's Home)
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Sunday, June 26, 2011

Ai Weiwei, Hu jia release illustrate switch in China's EU relations

China Premier Wen Jiabao deliver the Report on...Image via Wikipedia
Premier Wen Jiabao
The release of two famous dissidents in China, Ai Weiwei and Hu Jia, comes - with all their restrictions - at a telling moment: premier Wen Jiabao's visit to Europe. While it remains difficult to connect such diverse events in Chinese politics very clearly, they do not happen without reason. In this case they might illustrate that China is emphasizing its EU relations over those with the US.

During my time as a foreign correspondent in China those high-profile releases seemed to happen more often. I do not have any statistics, but compared to the late 1990s, early this century, there simply seemed to be now less high-profile dissents that could be released. Since I was based in Shanghai, I did not close check the ongoing stream of foreign visitors to Beijing, but I knew that when high-profile dissidents would be released, high-place US visitors were due.

It was often even worse: most of these dissidents were rounded up in the weeks before those US visits to China, as if forces in China were looking for bargaining power ahead of such visits. I knew that when dissents were rounded up, I should look up the itinerary of US dignitaries. It was never hundred percent sure, who would be behind those arrests. Foreign media often blamed 'China' or the central government, but it was as likely a moment for rogue security forces to embarrass their central leadership in an effort to improve their own bargaining position towards the central government.

One thing was sure: this routine never happened when European leaders visited Beijing.

That routine was disrupted as the Hu Jintao crew took over from Jiang Zemin. Only the release of Ai Weiwei and Hu Jia brought back the memories about that practice, from a decade ago. While we will probably never know what is really going on behind the Chinese curtains, it is important to note that Wen Jiabao's visit to Europe triggered this off. Chinese support for the Euro and increased investments into Europe are other elements in this global changed from the US towards Europe.
(Earlier published in the Fons Tuinstra's home).
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Saturday, June 25, 2011

What did the US gain from Kissinger's China move? - Jasper Becker

Henry Kissinger, at the World Economic Forum's...Henry Kissinger via Wikipedia
Former state secretary of state Henry Kissinger rightly claims to be the architect of US-China relations, tells Jasper Becker in The Australian. But was supporting Mao Zedong and the Communist Party in the interest of America, he wonders.

In the Australian:
The most stimulating view so far has come from British writer Jasper Becker, who lives in Beijing, and whose Hungry Ghosts dramatically revealed the extent of the horrors of Mao's Great Leap Forward, which killed more than 30 million people.

Becker says Kissinger rightly claims to be the chief architect of the China-US relationship, "one of the pillars of the international order as crucial to understanding world history as Britain and America's decision to make an ally of Stalin in order to defeat Hitler, the result of which was the establishment of a Soviet empire in Europe rather than a German one".

At the time, Kissinger says, the Soviet Union seemed more dangerous and expansionist than China - though Becker thinks "there wasn't much to choose between them", with China having sent almost half a million troops to Korea and Vietnam as well as to Burma and Cambodia, and having financed and trained insurgencies in a dozen countries.

Becker asks: "What exactly did America ever gain from it? It certainly enabled China's rulers to stay in power despite Mao's catastrophic rule. If Beijing and Moscow had gone to war, surely it would have been to America's great advantage" with Cambodia saved from the Khmer Rouge horrors, the US possibly victorious in Vietnam, and the threats to Taiwan and South Korea quashed.

But "even when he meets Mao - senile and dribbling - Kissinger can't help being blown away by his supposed brilliance. Yet Mao was by then recognised even by his followers as a mad monster.

"Whoever followed Mao would have had to rescue China from its total isolation and restore the economy. They would have had to go cap in hand to America for help, and Washington could dictate its own terms. Instead, Nixon turned
Jasper BeckerJasper Becker by Fantake via Flickr
up in Beijing as a supplicant."

In return for Mao's blessing, "the Chinese persuaded the Americans to withdraw from Taiwan, and then to support China's murderous proteges, the Khmer Rouge, in Cambodia, forced them to lose the war in Vietnam, and to sacrifice Tibet.

"In truth, the Chinese couldn't believe their luck in finding such a naive and biddable partner as Kissinger. He gratefully accepts whatever the Chinese leaders tell him at face value."
More in The Australian.

Jasper Becker is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.
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Friday, June 24, 2011

Buying Prada suits, not shares - Shaun Rein

Shaun Rein
Prada is not doing as well as Gucci and Louis Vuitton in branding themselves in China, and Shaun Rein tells at CNBC why he would buy their suits, but not their shares. China might be skipping import taxes on luxury goods for stimulate sales, so having a decent retail operation in China is crucial.

Also: Shaun Rein expects China to become a world financial center faster than most think, with the Renminbi as a reserve currency.

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.

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Thursday, June 23, 2011

Millionaires pick UK for their education - Rupert Hoogewerf

Eton College, England.Eton College via Wikipedia
Paris might be the hot spot for luxury shopping by China's rich, when they have to pick an education they go for England's top universities, especially Eton and Harrow, says Hurun China's rich list founder Rupert Hoogewerf in The Telegraph.
"What I'm constantly hearing from Chinese millionaires is that they like England as a place to get their children educated," said Rupert Hoogewerf, the publisher of the Hurun Report magazine and the leading expert on China's new rich.

"You go to France for fine wine and luxury living, to Italy to see the ancient sights, but to a British boarding school to get a proper education." The scions of China's new rich already make up a considerable portion of foreign students, with nearly a third of the 10,030 non-British students coming from Hong Kong and China in 2010, according to the Independent School Council.

Some are the children of leading Communist Party figures – so-called 'Princelings' and others from the new breed of property-owning families that have capitalised on the Chinese economic miracle.
More in The Telegraph
Rupert HoogewerfRupert Hoogewerf by Fantake via Flickr
Rupert Hoogewerf is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.
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Fat Childrens' health problems - Paul French

Paul French
Bad teeth and type 2 diabetes are just two of the problems China's fat children develop, tells Paul French in an interview with The Daily Telegraph. Paul French is the co-author of the bestseller Fat China: How Expanding Waistlines are Changing a Nation.
"The kids have a bad diet, a sedentary lifestyle and very little knowledge about sports," said Paul French, the author of Fat China, a book about China's changing diet.

"Type 2 diabetes is a huge problem, and dentists are complaining that they are pulling second teeth in children as young as 12," he added...

The number of obese people has risen from 18?million in 2005 to 100?million last year, or nearly eight per cent of the population, while 500?million, or 39 per cent, are overweight.

China remains far behind the U.S., where 74 per cent of adults are overweight, and the U.K., where the figure was 61 per cent in 2009.

"The Chinese are now blase about food. They over-order at restaurants and sometimes just walk away, to show they can," said Mr French.

He said the hot dog competition was "a celebration of gluttony", a sign that the country no longer had to worry about whether there would be enough food. China was still in the grip of mass starvation less than half a century ago under Chairman Mao, which led to the death of 30 million people.
More on obesity of children in China in The Daily Telegraph.

Paul French is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.
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Wednesday, June 22, 2011

Legal reform and more needed for innovation - Paul French

 Paul French
The lack of an independent legal system is holding back China's innovative power; protecting the rights of entrepreneurs and innovators is key, business analyst Paul French tells in NPR. And then there is social welfare, health care pensions and a few other things.
"If you're going to innovate, if you're going to be entrepreneurial, if you're going to create and invent things, you need a legal system that can protect your invention," says Paul French, who works for the Shanghai consulting firm Access Asia and has lived in China for nearly 20 years.

"The government should take the lead on that, and an independent legal system needs to be able to do that, and to respect the rights of entrepreneurs and innovators," he says. "And at the moment, that is simply not the case here."

French says that intellectual property rights is one of many issues that need to be dealt with if China is going to move up to the next level.

"The big picture would be the environment; the big picture would be social welfare — health care and pensions," he says. "Then it would be education, and the ability for students and academics to challenge the consensus, to challenge the official version of things."

Continuing down his list of reforms needed in China, French says, "We need to have freedom of the press, so that confidence in the stock market can be maintained. We're going to need better ethical and corporate governance, and that's going to mean a lot more transparency, both from government and from corporations."

Any one of those issues on its own would be hard enough to reform; the fact that China needs to address all of them is a monumental and risky task. Modern Chinese society is simply becoming too complex to be contained within the old political and social framework.
More in NPR

Paul French is a speaker at the China Speakers Bureau. When you need him at your meeting and conference, do get in touch.
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Soft landing expected for China stocks - William Bao Bean

beancnWilliam Bao Bean
The fairy tales of sky-high valuations for China internet companies at exchanges in the US seem over, yet again. Financial analyst and VC William Bao Bean expects a return to realistic valuations, in a soft landing, he tells The Australian.

The Australian:
Shares of online bookseller E-Commerce China Dangdang, which surged 87 per cent on their New York Stock Exchange debut in December and peaked even higher in January, fell below their IPO price for the first time last week.

Renren's shares jumped 29 per cent on their debut a month ago but sank back below their IPO price of $US14 the next week, and were trading at $US7.90 in New York.

And Baidu's shares have fallen 20 per cent from a closing peak seven weeks ago, wiping out about $US10.7 billion in market value .

In roughly the same period, the Nasdaq Composite index has fallen 7.6 per cent from a closing peak in late April and China's benchmark stock index has fallen 11.5 per cent from a closing peak that month.

"There are fewer and fewer and fewer reasons to expect any increase in the stock prices - there are fewer positive catalysts, and investors are looking for reasons to sell," said William Bao Bean, managing director of investment at SingTel Innov8, a venture-capital unit of Singapore Telecommunications.

"I think what you'll see is a gradual deflation. The stocks have to grow into their valuations."
More on the China Internet bubble in The Australian.

William Bao Bean is a speaker at the China Speakers Bureau. When you need him at your meeting of conference, do get in touch.
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Tuesday, June 21, 2011

Why Wal-Mart loses in China - Shaun Rein

A typical Wal-Mart discount department store i...Big store in China are not cheap via Wikipedia
Top management of Wal-Mart in China is leaving 'for personal reasons', signalling all is not well at the major retailer. Shaun Rein explains in CNBC why the US firm loses market share in China and how it can rethink its strategy.

Wal-Mart has lost market share from 8 to 5.5 percent, according to Shaun Rein's China Market Research Group:
Wal-Mart made the mistake of leaning too heavily on the big box retailer format like in the U.S., rather than smaller, conveniently located retail outlets. Expecting China to develop the same way towards big box retailing, as America did, is the same mistake Home Depot [HD  34.77   0.24  (+0.7%)   ] and Best Buy [BBY  31.54   0.53  (+1.71%)   ] made. Both of those retailers ultimately retreated from the market. China may have high compound annual revenue growth rates, but traffic and the lack of free parking means consumers often prefer to shop in neighborhood stores. A government ban on free plastic shopping bags has also resulted in consumers shopping more often, and buying less each time, further fueling the popularity of stores closer to home...

Wal-Mart surprisingly has struggled with consumer perception and their branding. They espouse the 'everyday low price' concept, yet are positioned relatively high in the market when compared to street vendors that are truly low price. Our research suggests that the consumers who spend the most at Wal-Mart and account for most of their revenue tend to be upwardly mobile, middle class, or wealthy. They are not looking at Wal-Mart as a low price destination but rather as a location where they can buy safe, high-quality products...

Rising costs and more demanding consumers are changing the retail landscape in China. Wal-Mart needs to adjust its strategy by shrinking the size and locations of its stores, going upscale in product selection and ambiance, and by differentiating its product lines. Unless it does that, Wal-Mart might end up another casualty of the fast growth but hard to win Chinese retail market.
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Shaun Rein
More arguments in CNBC.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.
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Monday, June 20, 2011

China's agression in the South China Sea - Wendell Minnick

Wendell Minnick
Chinese vessels have been harassing over the past few months Vietnamese and Philippino fishing and oil exploration ships, in a deviation from the 2002 Declaration on the Conduct of Parties in the South China Sea (DOC), China claims to stick with, defense expert Wendell Minnick writes on his weblog.
“China’s claims to ‘indisputable sovereignty’ over the South China Sea [have] no basis in International law, especially the United Nations Convention on Law of the Sea,” said Carl Thayer, a regional maritime specialist at the Australian Defence Force Academy. The most disturbing Chinese claim is a “nine-dash mark U-shaped map” that covers 80 percent of the South China Sea, he said.

Chinese Defense Minister Gen. Liang Guanglie tried to calm fears over rising tensions during the 10th Shangri-La Dialogue, held here June 3-5 and sponsored by the International Institute of Strategic Studies, London.
A list of the incidents:
Some 2011 South China Sea incidents:

Feb. 25: A Chinese frigate fired warning shots at three Filipino fishing boats near the Jackson atoll near Palawan Island, Philippines.

March 2: Two Chinese maritime patrol vessels threatened to ram a Philippine government energy research vessel, the M/V Venture, conducting a seismic survey in the Reed Bank area near Palawan Island.

May: China announces a unilateral fishing ban for the northern part of the South China Sea from May to August.

May: Vietnam alleges Chinese naval vessels fired on four Vietnamese fishing vessels near East London Reef and Cross Island.

May: Chinese vessels laid steel posts and a buoy in the Amy Douglas Bank, southwest of Reed Bank within the Philippines Exclusive Economic Zones.

May 11: Two unidentified fighter jets, alleged to be Chinese, were sighted near Palawan Island.

May 23: Philippine President Benigno Aquino III warned Chinese Defense Minister Gen. Liang Guanglie during his visit to Manila of a possible arms race if tensions worsened over South China Sea disputes.

May 26: Three Chinese state-operated Ocean Marine Surveillance vessels harassed the Binh Minh 02, a vessel owned by the oil company PetroVietnam, cutting a towed survey cable. The incident occurred within Vietnam’s Exclusive Economic Zone.

June 9: A Chinese fishing boat rammed a PetroVietnam vessel conducting an oil survey within Vietnam’s EEZ. It is the second Chinese attack on a Vietnamese PetroVietnam vessel in the past two weeks.
More details on his weblog.

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