Internet – Registering millions of customers

The Shenzhen-based chat service QQ, operated by the Tencent company, is under orders to register all its customers, Global Voices reported a few days ago. The local police, in charge of keeping order at the internet, wants is to collect the identities of million of its users. How many customers they actually have is unclear since many users have a multitude of identities for different purposes.
Registering itself is so much part of the way how China is administered, I'm not sure whether it really means that much.
One of the bloggers suggests that the Shenzhen public security is overstepping its authority by asking users from all over the country and even abroad to register. But the logistical challenges seem almost unthinkable. Last year March the company’s servers got into problem as six million customers were online at the same time. That means there are at least six million identities to register, unless some of these users talked to themselves of course.

Internet – Growth continues at lower speed

New figures of the China Internet Network Information Centre (CINIC) show that growth of the number of internet users stabilized around 18 percent. In the first half of this year their number grew with nine million to 103 million. The slowdown in growth started to emerge last year, after years where the number doubled or even tripled.
The initially staggering growth was triggered off by a highly proactive government policies and the slowdown suggests that the priority of the government has moved away from fast growth after the penetration grade in the three larger cities, Beijing, Shanghai and Guangzhou saw more than 50 percent of their households online. Wiring up smaller cities and the country-side is harder, as local governments might perhaps face other challenges.Reuters said that state media suggested that China expects to have 120 million users by the end of this year, but that seems highly unlikely unless policies focus on fast growth again.

Hitting the brakes – the WTO column

(Later also at Chinabiz)
It was very good the CNN anchorman did not hear my laughter when he asked his colleague in Beijing the other day whether the revaluation of the Renminbi was a face-saving operation on the side of the Chinese government. When one government would have saved its face, be it in a very minimal way, then it was the US government who has been sending government official over on a monthly basis for the past decade to plead for a floating currency in China.

Only domestic reasons have triggered off the change in how China’s financial authorities manage the Renminbi and the change this week is directly related to the failure to stem China’s break pace economic growth. The 9.5 percent economic growth for the first half of 2005 is a serious reason for concern. Sustainable growth seems impossible and China’s destabilization of global markets costs dearly. A fast economic growth has also another long-term disadvantage. Keeping its citizens happy with economic growth is only possible as long as growth is possible. The end of those possibilities comes earlier in sight when that growth is as high as it is now. In that way slowing down the economy also makes politically sense.

Trying to slow down real estate seems to have failed, although the effects of the most recent tax measures still have to be seen. But since local governments have a profound interest in maintaining especially growth of its real estate, the central government might find itself in a difficult position when it really wants to halt growth in that industry.
Making China more expensive for the rest of the world makes therefore makes economically much sense and offers a more sensible explanation than any face-saving operation in international relations. More substantial strengthening of the Renminbi seems logic.
There are more indications that show the central authorities are killing more holy cows that have survived since the new government got into place.

At first sight this little article in the China Daily on the growing pressure on the labor market in the northeastern city of Harbin seems hardly worthwhile mentioning. It describes how supply and demand at the local market grow apart. A migrant worker, used as an example, is looking for a 600 Renminbi per month job in a restaurant, but cannot get more than 400 and decides not to take it, also because those meager salaries are often not paid at all.

First, the shortage of millions of migrant workers that started to emerge early last year in the southern provinces Guangdong and Fujian is not only continuing into 2005, but even expanding to other regions. Last year it was the unthinkable happening in China: factories could not get enough workers to push their teddy bears and other goodies for export out.
Most quoted reason was that because of changes in government policies that were beneficial for the country side, like scrapping the agricultural taxes. For migrant workers staying at home was bringing them as much money as going down to China’s low-end production belt.

What is more important in the article about Harbin is that is actually seems to suggest a change in how the government is dealing with pressures on the labor market. Up to not so long ago local governments were under orders to do anything to prevent wages from going up, a policy that was executed in a rather successful way in the past decade. Preventing China from becoming more expensive has been standing policy over much of the last decade. Those days seem to be over. Together with the revaluation of the Renminbi, allowing wages to rise constitutes a profound change in standing policies.

Fons Tuinstra

economy - They unpegged the thing

Just having an off-day because Belgium is celebrating its national day and China decides to unpeg the Renminbi. Fortunately enough others can follow it too. A bit strange these Belgians, when they throw a party, they close down all their stores, so nobody can go shopping. That is just the other way around in Shanghai. Many links also at Chinabiz.
Got tangled up, very close to the Belgium royal family. The official parade was even more boring than the Shanghainese going up and down Huai Hai Road with inflattable hammers, only the Belgians show the real stuff. Low-flying F16's was cool, but you cannot do it when you have too many skycrapers.
The people's party was much more fun than the ones in Shanghai, it looked more like a Beijing Temple fair. Music everywhere, food, drinks and a relaxed atmosphere. Strange to see that the people are so divided but still celebrate national day that much.

labor - Shortages expand to northeast

An acute shortage of workers is noted in the northeastern city of Harbin, the China Daily writes today. Since early 2004 the southern provinces of Guangdong and Fujian were for the first confronted with a shortage of migrant workers in China. Just as in the southern parts of China, Harbin officials point at the low wages as the main reason for the shortage.

"It is a strange phenomenon," Men Xianjun, director of the Harbin Municipal Labour Market said. "On one side, there are many job seekers queuing in the labour markets. On the other side, many places are suffering severe labour shortages. "The obvious reason for this is that the two sides cannot reach a satisfying price."

media - Dealing with the Chinese governments

Just watched another BBC business program where confused reporters tried to make sense out of the ongoing bidding war between Shanghai and Nanjing based automotive companies for MG Rover's bankrupt assets. How does that work, said the anchor man, a "totalitarian regime" and then two different governments fighting each other. Always a bit of a nuisance when China does not behave according to the cliches media have to rely on.

A global march with Japanese characteristics – The WTO column

(later also at Chinabiz)
China’s starting global march shows, at least superficial, interesting similarities with Japan’s road into the global markets, now decades ago. China’s companies have enough money to acquire foreign companies, they try to do so, although just like Japanese companies initially not in a very smart way. Japan did so the same with Columbia Pictures, Rockefeller Center, Pebble Beach as a reader pointed out, after reading my previous column.The first Chinese car, the Landwind has entered recently the European market, triggering off laughs, fears and a huge media interest. Those who are old enough to remember the first Japanese cars and other products entering the developed markets might see the similarities. Nobody could image that those inferior products from Asia could convince the spoiled consumers in the West. They proved to be wrong, Japanese companies did not wipe out its Western competition but did capture a sizable market share and even introduced new management styles that changed the way how companies conducted their business.

Is China conquering the world economy Japanese style? The history does not repeat itself, my professors already warned me during my history study and I think they are also right in this case. While it is tempting to pick some easy similarities, the differences seem more compelling.
First, China is different in size and in the level of development. Japan as a whole could and had to lift off to a higher economic level because it was much more developed and could not rely on cheap production for a long time. Unlike China, Japan had to focus much faster on quality.
Second, the Japanese management style facilitated global expansion much more than the Chinese management style, if something like that exists. In some industries Japan developed a previously unknown efficiency combined with very cost-effective logistical systems that have changed many of their Western competitors beyond recognition. It might take a while, but when the Japanese start, eh, marching, it is very hard to stop them.
While a similar Chinese management style might still emerge, the chances are not huge it will happen. What makes Chinese management so different from Japanese it its lack of direction. In every moment of the process, planning, after signing contracts, during the execution of plans, continues changes are not only possible, but normal. Even when there appear to be consensus about the route to take, new discussions will emerge and new directions will be explored. That Chinese flexibility and – indeed – creativity creates an uncertainty that drives business people from other cultures, including the Japanese, crazy. Chinese companies might do things cheaper, doing it more efficient might be tougher.
Japan had systems in place that could steer all its noses into the same direction: strong coherent government policies, its domestic organizations, its media, and its culture. All these unifying elements are not in place in China. China is institutionally much more diverse and lacks communication tools to let their business people walk in the same direction, even if it wanted it to happen.

So, the basic sentiment is a search to do things cheaper. That made China into the workplace of the world, and that might drive its global economic emergence in de decades to come. No bells and whistles, no expensive consultants, no heavy investments in brands. That might be the real cultural clash between Chinese and Western companies: the devastating price wars.
Domestically Chinese firms are used to those corporate killing fields that have brought down prices for teddy bears, shoes, TV-screens and mobile phones to their absolute lowest prices. But that struggle might be hard to transplant to other parts of the world, where a strong regulated labor markets, fixed wages, compensations and other costs might not allow a similar gruesome competition.
Its new ‘Landwind’ five-door SUV is selling 40 percent cheaper than its European competitors sell. I do no see how they could make the car that cheaply in Europe itself.

Fons Tuinstra

protest - Next: environmental riots in Xinchang

Howard French used the next riot against a ten-year old pharmaceutical in Xinchang, Zhejiang provincec - 250 kilometer south of Shanghai, to illustrate the rising tide of environmental protests.

But the angry residents in this village 180 miles south of Shanghai had learned their lessons, too, they said, having studied reports of riots in towns near and far that have swept rural China in recent months. Sneaking over mountain paths and wading through rice paddies, they made their way to a pharmaceuticals plant, they said, determined to pursue a showdown over the environmental threat they say it poses.
As many as 15,000 people massed here Sunday night and waged a pitched battle with the authorities, overturning police cars and throwing stones for hours, undeterred by thick clouds of tear gas.

Villagers learned about the succesful riots elsewhere in Zhejiang, the article says, not through new technologies, but throught the traditional media, even though they were heavily censored:

In Xinchang, however, residents say new technology, like the cellphone, has played little part. Instead, many residents say they were moved to action after years of unhappiness about industrial pollution by copies of newspaper headlines from Dongyang. That city, a mere 50 miles away, was the scene this spring of one of China's biggest riots, in which more than 10,000 residents routed the police in a riot over pollution from a pesticide factory.
Despite tight controls on news coverage of the incident, the riot in Dongyang, where the chemical factory remains closed months later, has firmly entered Chinese folklore as proof that determined citizens acting en masse can force the authorities to reverse course and address their needs.

international relations - "A new Nazi state"

"We may be seeing in China the first true fascist society on the model of Nazi Germany, where you have this incredible resource base in a commercial economy with strong nationalism, which the military was able to reach into and ramp up incredible production," a senior defense official said.

A quote, picked up from Chinabiz, that was published earlier in a 'special report' in the Washington Times, not to be confused with the Washington Post. Juicy quote indeed from the Pentagon. I have seen similar comparisons between Nazi Germany and the US. Bit of an unsubtle way to deal with history.

Maurice 'Hank' Greenberg

media - Mr. Shanghai back in action

Former AIG chairman Greenberg might be ousted from his former company, but he is preparing a come back. Today he offers his two-cent opinion in the (unlinkable) Financial Times:

Suspicion of Chinese intentions is undermining a rational approach to doing business with China.

And:

The rhetoric from Washington is increasingly shrill and several bills in Congress threaten arbitrary sanctions on Chinese products. This is short-sighted and wrong.

internet - Shanghai bloggers conference set for November

The already announced conference of Chinese webloggers in Shanghai is looking for volunteers and according to Dave Winer the dates are set for 5 and 6 November. That is still far away, so better not book your flights yet.

media - Sex, bloggers and a crackdown

Crackdowns, sex and the internet come together in this article published in the British daily The Independent. While an ideal mixture to fabricate and interesting story for an ignorant audience, it displays such a level of ignorance that I decided to comment on it; mostly I try to ignore this level of nonsense. But in this article too much ignorance comes together.
I do not try to debunk every untrue story, but here are half a dozen:

1.There is no reason to assume that sex bloggers have triggered off efforts of the Chinese government to further its control over cyberspace; earlier famous sex bloggers got even a very friendly and open reception by the traditional media who used their popularity to discuss sex-related issues.
2.The internet population of China is no longer growing by millions each month but by millions each year. Growth of the number of internet users started to slow down last years after in the bigger cities, Beijing, Shanghai and Guangzhou more than half of the households got connected to the internet. Growth figures are dramatically down.
3.The authorities have not hired web watch dogs to monitor anonymously what the ‘netizens’ are reading about. They routinely outsource this work to operators themselves who deploy a system of key word filters and ‘volunteers’ to watch discussions. Figures on the number of internet police (varying from 30,000 to 50,0000 are fabricated by the Chinese propaganda machine to show how the government is doing everything to protect their people from evil.
4. The Ministry of Culture is not responsible for overseeing the internet; a large group of government offices meddles in here, mostly on a local level, and the ministry of culture is compared to other official parties a rather hapless ministry.
5. The central committee of the communist party is not in charge of issuing orders to specific blog-hosting providers but local police authorities in the place where the service is hosted would perform that task if deemed necessary.
6. Traditional media have always been after the Japanese for the way they have been dealing with their historical record during World War II; earlier this year the internet was indeed the main cause for the short-lived demonstrations.

The Landwind

economy - Debunking the China car myth

Der Spiegel talks to Dutch car retailer Peter Bijle
velds who finds himself selling a Chinese car, the Landwind, in in Europe. The price, 40 percent cheaper, is the main selling argument 17,000 euro for a five-door SUV, and of course the myth of the Chinese car.

Then he pokes his finger at another cheaply made part of the car. "The work is really pretty bad." If that wasn't already enough to keep one from buying the car, he then adds: "The motor is also a little bit weak."

It is a bad car, is the message, although Bijlveld sold already all the 200 cars he obtained and he intends to sell another 4,000 this year. Then, the first Japanese cars were greeted in a similar way when they entered the European and US markets. At least, it might take be bit of time to make a real car for those markets. (tip by Bing Feng Teahouse)