Today should be fun for me. This afternoon my Morman buddy is dragging the owners of a multi-hundred million US public firm to Hong Kong, China, and the Philippines, to consider call centers, internet marketing, and education/seminar businesses. The folks being dragged in had sent some question ahead of time:
QUOTE
(a) Does the Mandarin Hotel in Hong Kong have laundry service?
(b) Do they accept Amex and Visa cards?
(c) How much cash should we carry with us?
(d) Investing in China scares us. What should we do?
UNQUOTE
I answered the questions at the end of this post.
Tell me this is not true! Well, now, little ones, don't be afraid, just do what I do, when I do it, and everything will be just fine :0)
Emerging market, treacherous. These rich hillbillies are fortunate to have wandered into the Shop of Jay as their first stop.
I am printing up these links for their night time reading. Some of my posts on SI, some balanced reports from the Economist and Foreign Affairs, and some trash from Dow Jones:
economist.com
China's economy
Aug 23rd 2001
China's economy, the world's second-largest (by 1998 GDP measured at purchasing-power parity), has been gradually opening up since Deng Xiaoping introduced market reforms 20 years ago. China is now on the brink of joining the World Trade Organisation, a result of a November 1999 deal between America and China. But China's reforms have far to go. The country's banks are still coping with bad loans; its overstaffed, inefficient state-owned enterprises urgently need restructuring; and the private sector, promising in theory, is still squeezed. Economic progress has been uneven, with the coast far outpacing China's sprawling interior.
As China's leaders deliberate over how far and how fast to reform, foreign investors, ever ambivalent, are watching with trepidation and interest. The prospect of WTO membership provides some encouragement. So too does a slate of proposed financial-services reforms, including recent talk of cleaning up the stock exchanges. (Shanghai was the world's best-performing stockmarket in 2000.)
economist.com
China's economic challenge to East Asia
A panda breaks the formation
Aug 23rd 2001 | HONG KONG
From The Economist print edition
As a new industrial giant stirs, East Asia's economies fear they must adapt
“I'VE been asking everyone in East and South-East Asia: ‘What is your competitive response to China?' I have yet to hear a satisfactory answer,” says Victor Fung, a de facto ambassador of Hong Kong's business elite. Most of China's neighbours react to the mainland's industrial rise with a mix of alarm and despair. Japan, South Korea and Taiwan fear a “hollowing out” of their industries, as factories move to low-cost China. South-East Asia worries about “dislocation” in trade and investment flows. Kenichi Ohmae, a veteran Japanese consultant, predicts that China's rise will cause a “second Asian crisis”, more severe and drawn-out than that of 1997-98.
It all boils down to this: what will the rest of East Asia do for a living now that virtually everything can be made more cheaply in China? If the fear is correct, adjustment may be painful. For China's rise threatens an end to East Asia's traditional model for economic development.
economist.com
The giant stirs
Apr 5th 2001
From The Economist print edition
In the search for well-governed companies in Asia, all eyes are now on China
AMONG veteran investors in Asia, a consensus is evolving. Ask, for instance, Samson Li at the Bank of East Asia, Hong Kong’s largest family bank and one of the region’s best-connected. In the early 1990s, the bank had 45% of its money in Hong Kong and Singapore, and the remaining 55% in Thailand, Malaysia, Indonesia and the Philippines. These days, the portfolio looks rather different. The bank keeps an even larger chunk (60%) of its money in Hong Kong and Singapore, but the rest is now entirely in mainland China and South Korea. Its exposure to Thailand, Indonesia, Malaysia and the Philippines is zero. “I hate them and will never trust them any more,” says Mr Li.
This transfer of affection away from South-East Asia and toward China has been the most striking development in East Asian finance since the crisis. Looking at foreign direct investment (FDI), for instance, Indonesia’s inflow of $6 billion in 1996 turned into a net outflow of $4 billion last year. China, by contrast, received almost $40 billion. This worries South-East Asians. “We watch very closely the FDI numbers, and how China is sucking in a very large part of the total available,” says Singapore’s trade minister, George Yeo.
economist.com
China's economy
Persuading the reluctant spenders
Aug 25th 2001 | BEIJING
From The Economist print edition
As its exports fall, China is trying to boost its domestic economy
Reuters
Get article background
THE figures appear impressive. Officials proclaim that China really has turned the corner after several years of declining growth. Growth is widely predicted to reach 7.5-8% this year. That may be down a fraction from last year's 8%, but it would still be remarkably healthy for a country suffering from a sharp contraction in its export growth as a result of the global slowdown. Indeed, some Chinese economists are predicting that, for the next two or three years, the country will enjoy an unusually stable period of sustained high growth coupled with low inflation.
There is more good news. China's accession to the World Trade Organisation (WTO), likely to happen next year, may bring in another surge of foreign investment, which already is greater than in any other developing country. In the first half of this year, contracted foreign investment soared by nearly 40% compared with the same period a year ago. Officials say China's successful bid to stage the Olympic Games in 2008 will stimulate industries ranging from tourism to construction, adding as much as 0.3 percentage points to China's annual GDP growth.
Government statistics based on surveys of residents in big Chinese cities suggest that consumers are gradually becoming more confident…
economist.com
China's stockmarket reforms
Second board, second thoughts
Aug 2nd 2001 | BEIJING
From The Economist print edition
Shelving plans for a high-tech board
CHINA'S leaders are getting cold feet about setting up a second-board stockmarket, where listing requirements are looser, to help start-up technology firms on the mainland raise funding. Despite long preparations to establish such a market in the southern, free-wheeling city of Shenzhen, the launch, originally expected late last year, has once again been delayed.
The main reason for the dithering is the abysmal performance of second boards elsewhere, after the bursting of the high-tech bubble. Advocates of a second board in China say a coolness everywhere for technology stocks makes this precisely the right time for a launch. Better, they argue, that China's less-than-discerning investors be aware of the risks, rather than turn the new market into a casino like the main market for “A” shares (see chart).
economist.com
Water in China
In deep
Aug 16th 2001 | DANJIANGKOU, HUBEI PROVINCE
From The Economist print edition
Following up on Mao's big idea
WITH much of northern China fast running out of water, the government is favouring a plan championed by Chairman Mao half a century ago. Water would be diverted to the north from the Yangtze River basin hundreds of kilometres to the south. Chinese officials say work on what would be one of the world's biggest water diversion schemes is likely to start next year. But quite apart from being colossally expensive, the project may well do more harm than good.
economist.com
Semiconductor manufacturers
The great chip glut
Aug 9th 2001 | KUCHING, SARAWAK
From The Economist print edition
East Asia has become addicted to making microchips. The result could be chronic global overcapacity for this basic high-tech commodity
…
The big foundries in Taiwan and Singapore are more open about their difficulties, but no more intent on cutting capacity. UMC reported a loss for the second quarter and says that capacity utilisation crashed from 70% in the first quarter to under 30% now—about the same as at TSMC. Even so, none of them plans to cut capacity seriously. UMC will close some fabs, but only to upgrade them to higher technologies. The Malaysians are adding capacity as fast as they can. Besides the new fab in Borneo, this year they also opened a foundry on the mainland.
All this is nothing beside the capacity that is about to come onstream in China. In Shanghai alone two new fabs are under construction, another two are on the drawing board, and over a dozen more are in the early planning stages. As ever in Asia, the government is not far behind the scenes. The fab project that has caused the greatest excitement, for instance, happens to be chaired by the son of Jiang Zemin, China's president. China is likely to outdo its neighbours in chip making. Its universities produce more engineers than the rest of East Asia combined, and the people they churn out still demand only a fraction of their counterparts' salaries. And China, alone in the region, has a huge domestic market to feed. It is the only country in the world where sales of computers and mobile phones are still booming.
…
economist.com
Tea in China
A scandal brewing
Aug 23rd 2001 | HONG KONG
From The Economist print edition
The fake cuppa
THE best tea in China is said to be grown on the hills around the eastern town of Hangzhou. It is called Longjing, named after the village where it was first grown. The Chinese have been praising Longjing for centuries. Poems have been written about it. It is very expensive. A few leaves, enough to make a small cup, can cost the equivalent of $3.50. However, a shadow has fallen over Longjing tea. Inferior imitations have appeared on the market.
This is serious. It is one thing for the Chinese to fake western goods such as compact discs; but their inestimable tea is another matter. The tea is protected by regulations enacted by the People's Congress of Zhejiang, the province of which Hangzhou is the capital. The authorities have let it be known that transgressors will be severely punished. In a swoop on a Shanghai market, inspectors seized more than 60 samples of various teas, among them Longjing, for examination.
The best quality Longjing is harvested only during a two-week period, usually between April 5th and 21st, after which the weather tends to turn humid. A sifu, or tea-leaf master, will lightly roast the leaves to seal their flavour. In brewing the tea the water should be hot, but not too hot. After five minutes, the brew is ready to be sipped accompanied by expressions of bliss of a sort that in the West accompany bottles of over-priced wine. Before this year's harvest, one addict was reported to have secured her Longjing by bidding the equivalent of $1,200 for 50 grammes. In a country where the average pay for a city worker is no more than $1,100 a year, many Chinese were appalled by such extravagance. But think of the fragrance, she said, the delicate taste...
foreignaffairs.org
China's Coming Transformation
by George Gilboy and Eric Heginbotham
From Foreign Affairs, July/August 2001
500-word preview
George Gilboy and Eric Heginbotham are Ph.D. candidates in political science at the Massachusetts Institute of Technology. Gilboy studies industrial technology development and economic institutions in China. Heginbotham studies Chinese civil-military relations and grand strategy. Both have lived in China for more than five years.
THE MAIN EVENT
Social forces unleashed by China's economic reform over the last 20 years are now driving inexorably toward a fundamental transformation of Chinese politics. Since the suppression of the 1989 student protests in Tiananmen Square, China's leaders have struggled to maintain the political status quo, even while pursuing rapid economic reform. The result today is a nonadaptive, brittle state that is unable to cope with an increasingly organized, complex, and robust society. Further efforts to resist political change will only squander the benefits of social and economic dynamism, perpetuate the government's costly battle to contain the populace, drive politics toward increasingly tense domestic confrontation, and ultimately threaten the system with collapse.
Many of today's senior Chinese officials recognize this dilemma but have powerful personal motivations to resist change. The next generation of Chinese leaders, however -- set to take office in 2002-3 -- is both more supportive of reform and less constrained by Tiananmen-era political baggage. These new leaders will likely respond to the dilemma, therefore, by accelerating political liberalization.
This does not imply that China will soon become a Western-style democracy. Rather, the coming steps in reform will likely include measures to legitimize independent social organization, give citizen groups increased input in policymaking (in exchange for some limits on their activities), and develop greater intraparty democracy. These changes will be difficult, and in the near term, they are as likely to throw China into domestic turmoil as they are to create a stable partial democracy.
This coming political reformation is the main event in China, and it has critical implications for Sino-U.S. relations. Events such as the recent collision of a U.S. spy plane with a Chinese fighter jet near Hainan Island, the detention of foreign academics in China, or even rhetorical skirmishes across the Taiwan Strait cannot by themselves derail or even significantly delay the forces of change. The event most likely to disrupt the coming reform effort would be the emergence of a clearly adversarial relationship between the United States and China -- a new cold war. Such a development would reinforce the position of Chinese conservatives and militarists and weaken the forces that are currently driving change. Accordingly, U.S. policy should be restrained and carefully calibrated to maintain regional security while encouraging continued reform and liberalization in China.
BRITTLE STATE
China's current leaders view politics through the prism of two central episodes in their political lives: the Cultural Revolution of the mid-1960s and the 1989 Tiananmen Square demonstrations. The Cultural Revolution made today's leaders averse to radicalism and mass action, and the Tiananmen demonstrations made them wary of social and political liberalization. These two experiences have framed the boundaries of "safe" and "stable" politics in China -- not too radical, not too liberal.
In the days leading . . .
feer.com
U.S.-TAIWAN RELATIONS
U.S. Holds Tighter To Taiwan's Hand
Chinese war games, intended to send a message to Taiwan, prompt a U.S. Navy response on the high seas. The Bush administration meanwhile works behind the scenes on improving military cooperation with Taiwan's forces
By David Lague/HONG KONG and TAIPEI
Issue cover-dated August 30, 2001
AS WARNINGS GO, it could not have been clearer. Like a drumbeat from Hong Kong's pro-Beijing press, China has for months publicized manoeuvres and a massive build-up by the People's Liberation Army culminating in a simulated assault on outlying Taiwanese islands.
Message 16170966
Message 16172978
Message 16178484
Chugs, Jay
P.S. My answers to their easy questions ...
(a) Does the Mandarin Hotel in Hong Kong have laundry service?
"Yes, better than in New York"
(b) Do they accept Amex and Visa cards?
"If it is financial, it is accepted, differing only in price, with Amex transaction prices more than Visa transaction prices"
(c) How much cash should we carry with us?
"As much as you guys can afford to lose"
(d) Investing in China scares us. What should we do?
Invest in Canada as an alternative, but come visit and have a look, just for laughs. |
