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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: energyplay who wrote (55674)	11/6/2004 11:23:33 PM
From: RealMuLan	Read Replies (5) \| Respond to of 74559

energyplay, This US$100 billion is an accumulated number for the last decade or so. And this is actually a low end number, it might be much higher than this. Since a lot of these companies are offered on the stock market (A-share), so most of them keep it a secret, until they could not, like this Changhong company (just look at the market share of Apex product in the US in the last couple of years). And some researcher said about 5% of all Chinese exports since 2001 or so are resulting in bad debt, or so-called "account receivable'. >>1) How did these "importers" get credit to purchase goods from the A/R and finance people ?<< Before 2000, most of Chinese exports used L/C (Letter of credit) system, and had to go through the bank, so not much of bad debt happened. But after 2001 or so, only 20% Chinese exports use L/C and 80% use O/A (open account) or D/A (Documents Against Acceptance). Bad debt/long-term account receivable resulting from exports then started to grow tremendously. Under O/A or D/A systme, a lot of these importers don't use credit to purchase goods, they just import the goods for "free" and return the money after they sold them. And a lot of them do not return the money even after they sold them. That is why they say "66% of so-called account receivable" are deliberate cheating. The importers have the money, but just do not return to the Chinese manufactures. And a lot of Chinese companies dare not push because they are afraid the importers would not buy from them again. Only 11% of Chinese companies that have export business have established their own credit monitoring system. And among these 11%, 93% are JV companies. So excluding JV companies, only less than 1% of all Chinese exporting companies have ever established their own credit monitoring system. And a lot of them, especially small and medium size companies, do not join the export credit insurance either (there are two Chinese gov. insurance companies provide this type of insurance). So when their foreign creditors do not pay them back, they cannot do anything except spend big money to hire the US, or other local, lawyers to file the law suit. The result is after a couple of years of fighting, they are lucky to get pennies on a dollar back, or maybe not even that! >>How long has that importer been in business - and who owns the importer ? Wouldn't be anyone who happens to be friends with maybe local politicians or other factory investors...<< The most famous case is this US distributor of Changhong --APEX at(http://www.apexdigitalinc.com/) They owe Changhong for US$510 million (4.2 billion Yuan) since 2002. And now after >2 years, the money still have not got paid. I think Apex brand product has been on the US market for at least 4-5 years now, may be longer. But it is only since 2002, they start to drag their feet to pay back the Chinese manufacturers. I am not sure who owns Apex, but definitely some US citizens. No, they do not have any relations with any high-ranking Chinese officials. And Apex is only one of the many "dirty" importers. Although I am almost certain that some small bad distributors are perhaps overseas Chinese, whether they are from China, Taiwan or HK, doesn't matter. Mainland Chinese are sort of gullible. Too many Chinese exporting companies only pay attention to have order from overseas, and keep the factories open even if without getting paid (it is not unusual that a lot of these small, medium size factories owe workers pay for several months, and this long-term account receivable problem should be a part of the reason for some factories. Other reasons are corruption and embezzlement). Many of these factories do not even think about there is a possibility that they might not get paid by some foreign importers until it was too late. >>Russain style 'capitalism' comes to China...<< Can you illustrate this a little bit more? I do not aware of Russian's export do not get paid either. >>2) Think that royalty will get paid for EVERY unit produced - or just some of them....maybe the royalty will get paid after the "importer" pays...<< Here is a list for DVD royalty claimed by those blood sucking multinational companies for each single player: Dolby US$1-2, 6C (Hitachi, Panasonic,JVC, Toshiba,TimeWarner,IBM...) ask for US$4; Sony, Pioneer, Philips ask for US$5 Tompson ask for US$1-1.5 DTS wants to ask for US$10,and MPEG-LA wants to ask US$4, these two are still under negociation. No. Chinese exporters have to pay as soon as the machine is out of the Chinese border. Those blood suckers do not care whether the goods are sold or not, or whether the importers have paid or not. That is why there are over a hundred DVD player manufacturers in China have closed down. They have lost all their money. Now just think about the tremendous increase of Chinese exports since 2003, how many of them will eventually get paid??? >>3) How did this grow to 100 Billion ? Did someone hire Enron's finance people ?<< I mention above that the accounting changing for exports from L/C to O/A or D/A contributes to this. Most of these $100 billion are accumulated since 2002. All in all, cheap labor is an understatement for sure. It is free labor! And it will end someday sooner rather than later.

To: energyplay who wrote (55674)	11/6/2004 11:28:40 PM
From: RealMuLan	Read Replies (1) \| Respond to of 74559

And worst yet to come. The financial market in China has not open yet, the blood sucking multi-national corps. already start to think how to suck the blood out of China's banks. Citi bank already applied for closed to 2 dozens of patent right on so-called financial product, such as certain sell system, or some so-called method, blah, blah... And as soon as Chinese banks open to the international business, they will have to start to pay the hefty royalty to the multinational companies. So personally, I am a firm believer of piracy!<g>