economy - The trend to leave China

While the world is still in the middle of another China hype and moving manufactering operations to this workplace of the world, it is good to signal also an opposite trend. Yesterday I talked with the manager of a major manufactering operation in Dongguan, Guangdong province, and he is actually thinking of moving his operation to Malaysia.
What are his arguments. First, he has a problem with the quality in China. Because of the huge demand from the world, Chinese companies have no incentive anymore to improve their quality, since they will sell anyway. Production costs are going up, including the salaries, making his part of China no longer competitive with other Asian countries. Thirdly, he expects a political backlash from both the US and Europe against products from China, WTO or no WTO. "I want to be save with my products," he says, "and assemble them in Malaysia." A part might still come from China, but it might not be that important anymore.

internet - Berkeley's China's Digital Future

I just had another look at the schedule for the conference at the University of Berkeley I will attend later this month. The field of practitioners from China itself has improved quite a lot, and that is of course quite important. Not all of them are still 100 percent sure they will go, but a conference like this does need a strong representation from China.

media - Stories on reform heat up

Is it real change or again windowdressing? Media like the Wall Street Journal signal changes or even a shake-up at the Strait Times. I'm not that sure, even though now officially private and foreign investors can have minority stakes in media companies. At my meeting with the group of SMG managers they complained about the freedom there was on the internet compared to their possibilities. It was not fair, said one of them.
It might take some time before they have the freedom to really compete with a relative free medium like the internet.

Burning your fingers - the WTO column

(Today in Chinabiz)

Shanghai – You know what my problem is? I’m too honest. Alright, I might have more problems, but being honest is really a problem I have to deal with urgently. Real consultants do not have that problem. They screw their clients, their clients know they are being screwed, but that is no problem. They are performing an act that makes the Beijing opera look pale.

Real consultants know how to play the Pavlov effect that hits the markets every now and then when it concerns China. Everybody wants to move in, even though the idea itself might not be that clever. Consultants cannot tell a potential client he is stupid by trying to enter the China market. They would lose good business. They would even lose better follow-up business when their client really gets into trouble. And they would lose even more follow-up business, since they can never advise a client how to withdraw from this market, when they have never entered it.
So, this week I was sitting in the lounge of the Hyatt with a group of private bankers investigating their future in the Chinese market. One of them had unfortunately already read one of these columns where I claimed that Shanghai would never outsource three things: eating, having sex and dealing with their money. He knew I was a skeptic on their business, so I hoped for the China-effect. They belonged to a very renowned bank and could not afford not to burn their fingers.
That is an essential part of the consulting game: even when you agree that entering the market looks rather crazy, you are still going to do it. So, very fast the discussion moved into practical problems: who would be the best to do the job? A local guy or a Hong Kong guy? Someone perhaps a guy from Singapore? Girls did not seem to matter in this part of the game.
I advised them to take a very kind, softhearted American manager, who had very little China-experience. He would get screwed, but that was what they wanted anyway, I suggested.

I came very fast into a cynical mood. Of course no Shanghainese to run the office, because he would screw them. No Hong Kong or Taiwan manager, because they would have a tough job in building up any business among the Shanghainese. And certainly nobody from Singapore, because they do not realize how different they are from the Chinese, although they might be Chinese themselves.
So, actually, nobody is fit for the job, concluded one of the private bankers. He was right. Nobody can do this job that is so much based on trust. Shanghainese will never give their money to a foreign private bank, since unlike Chinese banks foreign banks incidentally go bankrupt. Shanghainese do not trust Taiwanese or Hongkongese. They would trust the naïve American, but would not think he would so a good job, since you want your banker to be a little bit evil when it concerns others. The Shanghainese would certainly not trust another Shanghainese to deal with their money.

So, there you go with a business that is based on trust, I realized. And there I threw my future as a consultant out of the window, well, virtually, since the windows in the Jin Mao building cannot open.

This bank will come to China. They will get a real consultant they will pay a lot of money. They will lose a lot of money, and they will be happy ever after.

Fons Tuinstra

PS: When I wrote this article, I had not yet seen the piece Ben Dolven did for the Far Eastern Economic Review on the new American president of the Jinjiang Group. (Subscription or a hacker needed to read the article).

Update: Just also got some feedback from the bankers, after they saw my column. They enjoyed the conversation, but their take is slightly more positive, they say. That is the spirit!

media - Traditional media in a learning curve

This morning I met a group of eager learners from the Shanghai Media Group. They are preparing themselves for a two-month training course in the US and I gave them a basic introduction on the 'State of the Media' and my ideas on how the internet will affect us as journalists and media organizations. A few well come to the Bloggercon in Shanghai to see for themselves what weblogs are and how they work.

economy - Inflations hits as economy steams ahead

Worries about inflation in China are concerning experts, writes the New York Times, while the economy keeps on growing in high speed, causing possibly more outages as also the weather heats up.

media - Bertelsmann and News Corp smell deals

German Bertelsmann and News Corp are in talks about media cooperation, writes Dow Jones. That would not be the first time. Despite ongoing media reforms the government has been very reluctant to give real power to private enterpreneurs or foreign companies. And it is still talks.

internet - Final announcement Bloggercon Shanghai

Webloggers’ portal Living in China and the Shanghai Foreign Correspondents Club will host a meeting in Shanghai at Saturday evening and Sunday morning 17/18 April that will coincide with the Bloggercon II that will take place at the Harvard Law School in the United States. At the third floor of Sasha’s you will be able to follow three of the more interesting sessions through a webcast (audio only), follow examples of live-blogging from Sasha’s and Harvard on a screen and participate in chatrooms surrounding the meeting at Harvard. You can find the full schedule here and bring your own laptop: Sasha’s has its own free wireless connection, but you might have to bring your own extension cord.

In another part of the room you will be able to meet foreign correspondents, media people and webloggers from Shanghai, Beijing, Suzhou, Hangzou and San Francisco. Drinks will be available for 30 Rmb and finger food will be for free.

Our schedule looks as follows (but feel free to bring your own laptop and deviate from our schedule):

The meeting room will be available from 7:30 PM, while official activities start around 8:00 PM
8:00 PM-8:15PM: short introduction by the Shanghai organizers
8:15 PM – 8:45 PM: National Anthem, opening remarks by Dave Winer
Session 1: 9:00 PM – 10.15 PM: What is Journalism? Moderated by Jay Rosen
Session 2: 10:30 PM- 11:45 PM: Blogging as a Business, by Jeff Jarvis
Break from 11:45PM – 1:30 AM we will use for the introduction of some of the participants, discussion about the items that have come up and proposals for a follow up.
Session 3: 1:30 AM – 2:45 AM: Creating a global cyber common, by Rebecca MacKinnon
While we have no direct contact with the US that would allow us to participate in the sessions themselves, both Jay Rosen and Rebecca MacKinnon have started already online discussions on their subjects that would allow us to participate ahead of the meeting.
Please email to RSVP and for more information.

internet - All systems down

Life of an internet junk can be tough. This morning, nine o'clock my phone line went dead, and so did my ADSL connections. I rushed out to a Starbucks in Pudong but forgot my access code. Now hacking into a corporate system. Life is not easy.
More later.

people - New breed of manager does not retire

This evening Ari van der Steenhoven, China-manager of the middle-sized chemical company DSM from the Netherlands will formally retire after ten years in China, very formally, because he belongs to a new breed of managers in China, that sees new opportunities in this country.
"When you ever quote me, you are in deep trouble," he told me ten years ago when we met for the first time. Since then things have changed and Ari participated in live radio broadcasts and was interviewed for my book on '15 misunderstandings about China and the Chinese'. (Only in Dutch at this stage.)
He has put China on the DSM agenda and was one of the first foreign managers who refused to leave China after 2, 3 years. Most foreign managers did leave China the moment they started to understand the country, destroying much valuable knowledge. DSM in China is five times bigger than five years ago and intends to grow in an even higher speed.
Ari will stay on in China, as retirement is not really on his agenda yet. He is part of also a new trend, experienced China managers who do not go back to their own country or a tropical island, but keep on using their experience here.
Publicity is still not his favorite hobby (although he could do it very good). Even for this internal publication they had to look very well to find even a picture! (See the last page).

internet - More news tomorrow on Bloggercon Shanghai

economy - More beggars in the cities?

Jim Yardley of the New York Times sees more beggars on the street and links that with China's modernization. He quotes local government measures to stop the number of beggars.
I'm not that sure the number actually went up: counting beggars is not an easy job. In Beijing they traditionally gathered around the compounds for diplomats and journalists, but in Shanghai I never saw that kind of concentration. Is the number going up? I see the merchants becoming more aggressive, and that is of course also a hidden kind of begging.

media - CCTV as the Chinese Al Jazeera

"To build a Chinese Al Jazeera", that is how Li Xiguang of Tsinghua University describes his idea on how the new CCTV International that is going to be launced next month should look like in the daily quote of the Chinabiz-email service, giving a nice flavor to the media discussion.
The Central TV station wants to get rid of its boring image of a government mouthpiece, says the original article in the South China Morning Post. Would now Al Jazeera be a good role model? The Arabic TV station could at least not be blamed to be a mouthpiece of Arab governments, and that seems to worry some governments overthere. Mr. Li is probably not getting it his way.
First reviews (I do not watch Chinese TV when I can avoid it, but should perhaps change that for a few months) are not flattering for the new Australian anchor man Edwin Maher.

economy - China Life, Lucent, others try to clean house

A massive Spring cleaning seems in the air this morning. China's largest insurance company China Life tries to explain its way out of the US stock regulator's inquiry and US telecommunication equipment producerLucent fired four of its top people in China for taking bribes.
China Life blames its predecessor for breaking the insurances laws, the current company is only very new, set up in June 2003, so could not have done that much wrong. Problem is the perception of the investors that they bought the shares because it is such a well-established company in China. That now might not always be an asset.

politics - China on death watch as Zhao Ziyang falls sick

The former premier Zhou Ziyang, the highest victim of the Tiananmen events in 1989, is seriously sick and has put the security departments on the highest alert, report Western media. Expect an upsurge in filtering and difficulties in the internet traffic.

media - Reuters challenges the trends

The 157-year old newswire Reuters, employing 2,400 journalists worldwide, is going to charge for its business news, the Wall Street Journal discovered.
Not really a China-issue, but important enough to report about because it goes against some important trends at the internet. Thanks to the internet news has become a commodity that has become increasingly for free. I'm not paying for my news anymore, and you do not have to. Some media, like the Financial Times, have been trying to charge for part of their content. I would just skip the paid part, just like I would do it for other websites that charge money.
Reuters can only get away with that move if other newswires would follow. And when others would follow they would act like a cartel, and get into legal problems. The giants are struggling to survive, and, yes, the qualification dinosaurs comes again to mind.
Reuters now gets less then ten percent of its revenue from its media activity, the rest comes from its financial data. Logic says that only stopping providing information to media would make sense, business-wise. But then: who would provide us with a similar service?
The China Herald will remain free.

energy - 280m ton oil discovered

China has discovered new oilfields in the Shengli oilfield, holding 280 million tons of oil, releaving some of the pressure on the import of energy to fuel its economic growth, the China Daily reports.

economy - Four reasons why the Renminbi will not revalue - China Daily

The China Daily rubs it in again: apart from political pressure from the US there is no reason to change the current peg of the Renminbi to the US dollar.

wifi - Enjoying the internet at Starbucks

Freedom is a relative thing, as we know from the discussions on the internet. But sitting in the sun, sipping coffee at Starbucks and talking to you is a step forward. The Shanghainese are very critical, as usual. "You still have to pay the coffee," they complain. "It is too expensive."

economy - No China rush after CEPA

Hong Kong companies are not rushing into China, after the free-trade agreement CEPA got into place, Dow Jones reports.
"Yet the free-trade side of the deal added comparatively little to what China already has done, or promised to do, for all countries as part of its entry into the World Trade Organization. Far from being a new "back door" that would allow foreign multinationals to route big new investments through Hong Kong, CEPA is turning out to be attractive mainly to smaller firms, with interest concentrated in just a couple of sectors," comments the newswire.

trade - The Iron Lady heads for Washington

A flattering portrait of vice-premier Wu Yi, or the Iron Lady, in Business Week. Madame Wu is heading for the US for tough trade talks. She will be up to the challenge.

media - Debates hit the blogosphere

The China Digital News reports on two different but both remarkable debates on the Chinese media. Professor Bosco reports about the hate-mail he got after he criticized the China Daily for their explicit pictures of the killed US contractors in Iraq. Nationalism and good arguments seldom seem to go together. It also has a translation of an article on the crackdown on China's more aggressive state-owned media, whose editors have been punished severely. While I disagree with the general "all in China is going bad" approach of the analysis, there are powerful conservative forces trying to rein in the few media that make a difference, so much is clear.

media - Teaching the SMG on US media

On Friday I will move another notch up in the media food chain as I will teach a group of fourteen managers of the Shanghai Media Group (SMG) on the kind invitation of the journalism school of the Shanghai International Studies University.
The SMG traditionally combines all radio and tv broadcasting stations in Shanghai, but has been expanding to print and internet publications too.
The groups should have been already for a two-month training course at the journalism school of Columbia University, but because of its struggle against terrorism, the US was unable to provide visas on time. Well, quite an honor to replace the professors of this prestigious journalism school, but I believe the participants will be happy to leave for the US next month - if they get their visas.
The US are very effectively destroying a lucrative market here, not only for training and education, also many international conferences are thinking of relocating to places outside the US because of the increasing visa problems. Source at the US consulate suggest that in the near future the problems might only increase.
Anyway: if gives me a good opportunity to meet these decision makers on China's media and use some of my expertise.

jobs - Sexy photo's to beat job discrimination

A really amazing article in the China Daily on the job discrimination female graduates are facing, and their way to beat it. It all ends with a 'scientific' analysis of a specialist at the Peking University, but rather shocking otherwise.

internet - On hoaxes

Do you have friends you would follow blindly? It is not my habit, but last night I got an email about a virus at a volatile moment - Saturday evening after meeting some other friends. I send out a warning to my address book and it took only minutes to discover the disgraceful embarrassment: it is a hoax. Fortunately it is not a harmful one.
So what have I learned? First, I do not have too many friends who would follow me blindly. I should be working on that. Second, it is a good way of getting in touch with people you have not seen for a long time. And thirdly, it is a good way to clean up your address book.
This on the positive side.