SMG English channel: what do you think of it?

Dong Jiabao

A week ago the new English channel of the Shanghai Media Group (SMG) was launched and the expectations were pretty high before the launch.
Michele Tung, or Dong Jiabao, even launched a weblog to go along with the program and asked me to comment on what is happening at the new channel.
There is no official website for the channel and that is of course a bad start when most of your potential viewers have a busy online life. I have been too busy to watch TV in the past week and there is no way to watch the programs after they have been broadcasted. I have met one person who watched five minutes of the opening ceremony and was less than flattering about it, but then five minutes might not be enough to write off a whole channel.
Tung's website does not show any of the programs yet and the online commenting community has been eerie silent on the new project.
Who has seen the program? What do you think of it?

China's future - a must read

I only started to read China Into the Future: Making Sense of the World's Most Dynamic Economy yesterday in a shopping mall while I was waiting for a friend. I was sold right away: the book is doing what other books failed to do, they predicted China's collapse or depicted it as the next world power.
When you are living for a while in China, you know that things are a little big more complicated, but in an effort to reach the larger audience, most authors rely on easy to consume tidbits. Not this book. A more thorough review will follow later, but I'm sure enough I can advise you to purchase it.

Looking for the better mutual funds

Regular readers of this weblog might remember that I started last year to advise some friends on what Chinese stocks to invest in. I reported initially regularly about it, but as things go, we were all too busy to get involved in the nitty gritty of the stock market and hoped our mutual funds would do well.
This week we had a review of the results and to be honest with you, they were not good. Not because we lost our invested capital, as some of my foreign friends and readers had predicted, but because we our initial investment only grew with 90 percent. That was under-average as some mutual funds performed much better with returns of up to 150 percent.
Since there are no real indications for a negative sentiment on the market, my friends not only decided to increase their initial investment, but also to shift to a larger number of better performing mutual funds. With the help of the Chinese edition of Morning Star we are now trying to identify those better ones. We can now see the performance of most funds over two, and sometimes three years and have a close look at their portfolios.
In terms of performance, we not only look at the total growth of the funds, but also look for a pattern. In 2006 anybody could have made a profit, since the market only went up. In 2007 the market was much more volatile, so if a mutual funds performs better in 2007 than in 2006 it shows the better management skills.
Comparing the companies the better performing funds invest in with the others shows also interesting patterns. Telecom is well represented, but remarkably China Unicom is doing much better than the larger other three, China Mobile, China Netcom and China Telecom. Now, with the possible break-up of China Unicom, I only see that investment in a positive light.
Banking is well represented too, but the second-tier banks like the Industrial Bank or the Merchant bank have the preference of the better mutual funds. ICBC, Bank of China, the Bank of Communication: none are in their portefolios.
I have not seen any airlines in those lists and logistics (against my expectation) was also not heavily represented. Oil of course was, retail not.
Well, we are still roaming the Morning Star database, but if you have good ideas on where we could put our money, do let us know.

Trying to get pay

Migrant workers in Zhengzhou prevent a contractor from leaving by sleeping around his car. (h/t CDT).
What makes the situation interesting is that the People's Daily, the communist newspaper, has picked up the original story by the Henan Commercial Newspaper, indicating this kind of protest is at least condoned.

The sinking of the South China Morning Post

Interlocals gives an overview of the competitive market for daily papers in Hong Kong and the analysis for the South China Morning Post does not look good.

The most gloomy might be South China Morning Post and SCMP. Although it continues to make money and its revenue and profit increase by 8% and more than 30% respectively, its sales is going down to barely 100,000 copies. Most of its revenue come from company notices such as IPO. But the regulation requiring listed companies to issue notice on newspapers is going to be cancelled. In other words, its revenue will decrease a lot (about 50 million). And I do not have any information on its new development.

It show the same trend like in other developed media landscapes: the printed daily papers still make a profit, sometimes a huge profit, but the days are numbered if they to not reinvent themselves online. That messages seems to have been missed by the Post for years.

Chinese business style and mahjong - the WTO column

Analysts of China's emerging economic force have been looking intensively at the country's cultural heritage to explain the Chinese way of thinking and operating. Confucius has been a popular focus point for theories on China's emerging market, but I have been sceptical about that, since only a very small elite has been exposed to this kind of teachings. Parts of his heritage might have found its way to the broader population, but I always found China's writing system a much more compelling explanation, forcing Chinese children at an early age to excel in memorizing and forcing their creativity - I do find Chinese can be very creative - in a very tight framework of existing rules, before they start to play with it. Then, playing with rules in any setting is a major Chinese asset, where my country men in the Netherlands are obsessed by sticking to the rules.

Only over the past holidays I started to realize how important it is for China observers to include mahjong into the way of framing China. Of course, I knew that mahjong was the most played game in China. Mostly in the summer when the windows used to be open, you could hear in every neighborhood the familiar clicking of the stones. When I was incidentally able to watch a game, mostly onlookers are not encouraged to join, I was amazed about the intensity the players threw themselves into this business. Although gambling and money can play a role, when no money is involved the game is no less intensive. Also, the time spend on this game must still outweighs the time internet users are playing games online. I mistakenly compared mahjong with the boring games I would play back in Europe, games that were mostly a social activity. Boy, was i wrong.
Over the past week I was invited to participate in same games. Friends of me were lacking a fourth person and, although a few initial misgivings at my side, I decided to participate. I must say, it was magic.
One of the better players kept an eye on my stones too and explained the rules of the game while playing. The game seems highly structured, but has some many rules that work out differently in different situations, it becomes a highly creative battle game. It demands very high analytical and strategic skills that seem simple as they are explained, but when the speed of the game goes up, experience starts to count.
Key of the game is grabbing fast opportunities the moment they occur. That happens mostly in a split-second. The better overview you have, what kind of stones have been played, what kind of stones are your partners dumping, the more sophisticated you can play. It does not help all the time: luck is a very important factor in the game, but with better skills you can make better use of that luck. In the first set of games, I won quite a lot and that was not based on my skills, although I did get very professional help.

Doesn't that sound familiar like a basic structure of doing business in China? There is no long term. In the long term there will be a new game with new opportunities, where you might be better than the previous time. Watching a fast changing environment within a rather rigid framework, is another feature needed to optimize your chances to cash in.

This game has been played by hundred of millions of Chinese and has been a training ground for - limited - business skills. So, when you want to know how to do business in China, it is better to play mahjong than learn how to write Chinese characters or read Confucius. One warning: people do get addicted. Don't blame me if you get hooked to the game.

Fons Tuinstra

HK labor dissidents decide to work with Chinese trade union

In a rather unexpected revision of their policies, dissident labor groups in Hong Kong have decided to work with rather than against China's only trade union, the All China Federation of Trade Unions (ACFTU).
The China Labour Bulletin, set up by long-time labor activist Han Dongfang, announced in its latest bulletin it would abolish its own program to put pressure on multinationals in China to improve workers' conditions.

However, with the implementation of the Labour Contract Law on 1 January 2008, we now believe multinationals will be best served working directly with local branches of the All-China Federation of Trade Unions (ACFTU). Factory-level unions are legally empowered and encouraged by the government to negotiate collective contracts and we believe the time is right for the union to engage in genuine collective bargaining rather than the largely pro forma “collective consultations” it has promoted up until this point.

Han has been denouncing the state-led ACFTU as a rather useless instrument, organized by the state, when it concerns labor rights, a viewpoint he carried out during international conferences in 2007. The international trade unions are heavily divided in de way they deal with the ACFTU. Some have continued a long-term boycot, because they do not consider the ACFTU as a representative of the workers, but rather as a government unit, pursuing policies of the communist party, including industrial peace at the expense of workers' rights.
Other trade unions have embraced the ACFTU as equals and have over the past few years started to deal with the union, afraid they would otherwise be squeezed out even more in the ongoing globalization process.
Hong Kong based labor dissidents have been funded partly by the international trade unions and their strong anti-China approach was needed to guarantee that NGO-funding over the past decades. It also has put them in a position, where they would never be able to work in China in a more than marginal fashion.
The about-face of Han Dongfang indicates that the pendulum is shifting towards engaging the ACFTU and that might at least in theory offer also a way to the Hong Kong based NGO is play a role in this process.

Defining your influence: end of the year number game

Robert Scoble

At the end of the year many bloggers and other new media people have a look at their traffic numbers in a desperate effort to value their efforts over the past year. Before you dive into them in a serious way, you should have a look at these remarks by Scobleizer, one of the leading IT-bloggers in the US.
Hoping for some input from your audience, like Paul Midler does, is of course a way, but might not work very well, especially if you are working in a rather limited niche market, the English-language China business. Let's remember that while the China business in itself is pretty huge, unlike the US IT-scene, much of the participants do not follow the online discussion or are not that familiar in participating in it. That might all change, and we should work get to get there, but our audiences are still pretty tiny.
Scoble's effort to define our influence is a nice one: are you being noticed, are you triggering off online conversations, are a few of his criteria.
Taking your online publication to the next level: that is a nice challenge for 2008. Best of luck to all of you and best wishes for the next phase.

The stock market next year: to 7,000

Shanghai stock market

Analysts are having their say about the Shanghai Stock Market, like here in the International Herald Tribune, and return to a more gloomy assessment, just like most of them did last year. The year 2007 has been, despite some severe drops, a stellar year for the stock market. There is nothing wrong with being cautious:

"It was a nice rally," UBS economist Jonathan Anderson wrote in a recent report. The market in 2008 "may not be nearly as exciting."

The basics for the fast growing stock market, be it perhaps on a lower level than 2007, are still in place. My local experts expect that the SSE index - now slightly over 5,000 - will pass the 7,000 benchmark by June, despite efforts by the central government to cool down the economy. Only opening up the international currency exchange could allow Chinese investors a way to invest their money elsewhere, and that move does not seem to be on the political agenda, since it obvious has also severe negative consequences.
Last week I have talked to people getting more capital from abroad to invest on the Chinese stock exchanges, signaling that the liquidity might only grow.
Also our own internal benchmark looks positive. We have a close family member who, when she started to invest at the Shanghai stock market, signaled a dive of the market for the next five years. Only after she withdrew from the market, the index went up again. To be sure I inquired last week: she has not intention to return to the market, so we are safe and can look forward to another stellar year.