China News & Commentary by MeetChinaBiz

I. Macro Issues

Economy

"Made-in-China" Will Get Expensive in 2008 (02/17/2008) "Made-in-China" will surely get pricier in 2008 due to a growing list of woes: reduction/elimination of export VAT refunds...soaring energy/material prices... already rising labor costs further propelled by the newly enacted Labor Laws...quickened appreciation of RMB against the Dollar...a waning US consumer demand dampening producers' economy of scale... Here is a good article that offers some further details on some of those issues mentioned above read more...

Snow Storms Relaxes National Credit Squeeze Policy (02/17/2008) The recent snow storms that had paralyzed parts of China's southern and central regions have temporarily forced the government to relax its credit squeeze imposed since late last year. read more...

Regulations & Policies

How China's New Labor Laws Will Raise Standard of Living and Prices (02/17/2008) China's notarious rock-bottom labor cost has kept global inflation at bay for much of this decade. The newly enacted employment laws will likely change that soon. read more...

Social & Political

A Picture is Worth A Thousand Words (3/23/2008) When so much of the society is consuming, and consumed by, fake products (and for that matter, forgery, fraud and falsehood), the 'sign of the times' may be best captured by a picture, or two. The recent 'fake tiger photos' scandal has created such a national fervor in China, its impact is likely very profound, ranging from a never-before official apology from CCTV (China's ultimate propaganda apparatus, for its association with another fake photo) in the near run, to truth-telling and accountability, a trend suddenly in vogue during the latest congressional meetings, in the long run... read more...

...And You Thought "Guanxi" Was Simply A Dry Concept? (3/23/2008) Annual spending by the Chinese government on providing cars, overseas travel and free food and drinks for government officials and party cadres could exceed RMB 900 bn (USD 112.5 bn), or more than 30% of government revenue, according to a controversial analysis by a Chinese professor a couple of years ago. While you may not find official drinking during lunchtime a common affair in the most developed areas of the country, in smaller and remote places (recall the "3C's of China"?) it is an indispensable lubricant for business, public or private, as illustrated in this NYT article... read more...

The "Great Firewall" of China (02/05/2008) If you ever wondered why those Chinese companies' websites (those ending in ".cn" which indicates that they are hosted within China) you visited were so slow, now you know the answer! In fact, internet users in China experience exactly the opposite problem -- that websites hosted outside of China would load very slowly, if at all, due to delay or blockage by this system. Many export-oriented Chinese companies have since opted to have their websites hosted in the US for the convenience of their Western customers and prospects. You will notice that their url will end in ".com" instead of ".com.cn". As for why there seemed to be a higher probability for emails to get lost when to and/or from China, aside from this 'firewall', the professional spammers are to blame too... read more...

Trade

Why A Seeming Dichotomy In Export Control? (01/14/08) While the “Military Catch-All” Regulations implemented by the US Dept. of Comm. in June of 2007 was largely viewed as increased US government scrutiny of technology exports to China, a recent New York Times article revealed that some weapons experts were questioning why rules were eased in a number of cases where the beneficiaries included such companies as Boeing (who might be under siege following Airbus's move to build its largest overseas A320 assembly plant in Tianjin last year) and ICT industry players (who could use some help in a market with cut-throat competition, not to mention an impending 3G launch adding to the aggrevation)... read more...

II. Business & Industries Consumer McKinsey Survey Claims Chinese Consumers Favor Domestic Brands (02/17/2008) A recent McKinsey survey finds that most Chinese consumers say they trust domestic products more than foreign ones. Please compare this finding with that of UPS's below... read more... UPS Survey Finds Chinese Urban Consumers Fond of US Products (02/17/2008) Seemingly defying the findings quoted immediately above, a 2006 UPS survey of Chinese urban, middle class consumers found that they crave for US movie/music, skincare products, sneakers and jeans. How do we make sense of this inconsistency? For those who are shopping for 'utility', the key is “Price-performance Ratio”. That explains the local brand preference given comparable quality. For those shopping for 'vanity', the secret is “Conspicuous Consumption”. That explains why US and other Western products (services included) do extremely well in certain categories and why China is the fastest growing market for luxury goods. read more... Education US Universities Rush to Set Up Outposts Abroad (02/17/2008) No longer satisfied with student and faculty exchanges or 3+1/2+2/1+3 programs, American schools are eager to export US education 'wholesale' -- and charge US college tuitions on foreign lands. The truth is, in terms of carrying all the right ingredients in making a product sellable in China (or any other foreign markets for that matter), there is hardly any better product than a US degree. read more... also see How to Sell to China and What Sells in China Finance Bottomed Out, or Bottom Has Fallen Out? (03/29/2008) China's first privately-owned Minsheng Bank is liquidating its foreign stock-destined fund due to a 50+% drop in value since its launch half a year ago. The fund is one of a few pioneering ones set up under the government QDII program designed to allow Chinese citizens to invest in foreign shares. They all had had limited appeal to investors because of a better performing domestic market earlier, although to date the Shanghai Composite index has also fallen over 40% since its Oct '07 peak. All this ahead of the Olympics? In fact not all 'face' may have been lost given the global slump. But Beijing has nonetheless temporarily waived the corporate taxes from mutual funds. read more... Sourcing "Made-in-China" Will Get Expensive in 2008 (02/17/2008) "Made-in-China" will surely get pricier in 2008 due to a growing list of woes: reduction/elimination of export VAT refunds...soaring energy/material prices... already rising labor costs further propelled by the newly enacted Labor Laws...quickened appreciation of RMB against the Dollar...a waning US consumer demand dampening producers' economy of scale... Here is a good article that offers some further details on some of those issues mentioned above read more... Toy Maker's Suppliers Go West (02/17/2008) Driven by rising costs, Hasbro's China-based suppliers are increasingly moving production away from China's coastal industrial regions. read more... Sports & Entertainment How NBA China Keeps Scoring Big (01/14/2058) Without even a team or game played, NBA's China subsidiary is already valued at $2.3bn, as derived from the latest $250mn joint investment by Disney and 4 Chinese players (Bank of China, China Merchant Bank, Legend and Hong Kong billionnaire Li Kashing's Hutchison Whampoa). New York Times calls the N.B.A. "one of the China’s most notable imports". Apparently it is something the Chinese themselves can neither produce nor easily emulate, and full of "vanity" as opposed to "utility", some key ingredients in successfully selling into China. read more...

III. Special Topics 2008 Olympics Olympics Water Diversion: A Winning, or Collision, Course? China will reportedly run out of fresh water before it runs out of oil. Incidentally it subsidizes the price of both. There is a saying in Chinese that water from afar can't quench thirst afoot. In its Olympian endeavor to bring in water from distant provinces to satisfy the needs of its 2008 Games, China is risking hanging its future out to dry... read more... China's Sky-high Ambition (02/17/2008) For years, Beijing has ranked as one of the world's most polluted cities. To win the Games, Beijing promised a "Green Olympics" and undertook environmental initiatives now considered models for the rest of China. But greening Beijing has not meant slowing it down. Officials also have encouraged an astonishing urbanization boom that has made any environmental gains seem modest, even illusory. read more... Beijing Voices Regret on Spielberg's Reason to Resign (02/17/2008) In spite of its insistence on keeping politics out of sport, the Olympics organizing committee (Bocog) joined the foreign ministry in defending China's stance on Darfur which had been cited by Mr Spielberg as the reason for his resignation. read more... Marathon King Still Concerned about Beijing Air Quality (02/17/2008) Marathon world record holder Haile Gebrselassie will decide in the next two months whether to run in the endurance event at this year's Olympics despite fears that Beijing's air pollution will damage his health. read more... Empty Olympic Promises (02/17/2008) Many social and environmental 'blowbacks' are spelling worries for the Olympics and more, such as human rights issues (much of which is in fact directly related to social and economic inequality and environmental degradation issues at large), air pollution, information and press freedom (please also refer to the "Great Firewall" piece above), and Darfur (see more details in this section)... read more... Currency Fed Chief Ready to Cut Rates Further (02/17/2008) Ben Bernanke, Chairman of the Federal Reserve, signaled recently a willingness to continue cutting interest rates to tackle the US economic slowdown, although he saw an "improving picture" over the course of the year. read more... RMB vs. Dollar Appreciation Pace May Quicken (02/17/2008) The RMB has started to appreciate more rapidly in recent months. In the short run, the Fed's recent cuts seem likely to delay much expected rate rises by the People's Bank of China. In the long run, China will have no choice but to allow its currency to appreciate faster. read more... Environment Olympics Water Diversion: A Winning, or Collision, Course? China will reportedly run out of fresh water before it runs out of oil. Incidentally it subsidizes the price of both. There is a saying in Chinese that water from afar can't quench thirst afoot. In its Olympian endeavor to bring in water from distant provinces to satisfy the needs of its 2008 Games, China is risking hanging its future out to dry... read more... China's Sky-high Amibition (02/17/2008) For years, Beijing has ranked as one of the world's most polluted cities. To win the Games, Beijing promised a "Green Olympics" and undertook environmental initiatives now considered models for the rest of China. But greening Beijing has not meant slowing it down. Officials also have encouraged an astonishing urbanization boom that has made any environmental gains seem modest, even illusory. read more... Overseas Investments Buying Global Brands (02/17/2008) In merger/acquisition transactions, while many deep-pocketed Chinese companies are willing to pay for established marketing and distribution capabilities, i.e., a 'utility' they cannot 'manufacture' themselves, well-established brands can also fetch a much better deal than the operations or products behind them. Think IBM PC. Another example is UK's MG Rover. Please refer to the highlighted portion in the attached article. read more...

CHINA in 2008: The beginning of an end, or the end of a beginning?... 2008 is the Year of the Mouse/Rat, which happens to be the first of the 12 animals in the Chinese Zodiac.		...Challenge or opportunity?
While many fear for the worst after the Olympics, some are ready to proclaim the year to be the first of a "Pax Sinica era", thanks to China's fast, seemingly unstoppable growth. And its 'irrationally exuberant' stock market seems to 'attest' to it. read more...		Is the glass half empty or half full? Today many US small-and-midsize companies (SMEs) see China as a grim challenge with the potential to drive them out of business. Yet many others have learned to play in a global economy fostered by the WTO. We need to keep in mind two key concepts: first, the word 'China' may not mean a country read more...

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