Tolerate no more...China no longer buffers world inflation. Nor is it content with its 'World's Low-cost Factory' status; Idolize no more...China, especially its young, no longer blindly admires the West. Nor would they readily worship the 'rich and beautiful' like they used to; Fantasize no more...most small investors betted the central government would do all it could (if only for Face's sake) to ensure a stock market bull-run until the Olympics were over. Big mistake so far... But not all are at loss when the government starts behaving less like a Big Brother like it used to...

By Shawn He Yuxun
Jul. 6, 2008

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... Apparently the China Price "levee" can no longer keep the world's inflation at bay. Weighed down by a variety of 'adversities', much of the Chinese manufacturing sector is now 'under water'.

... Many privately-owned SMEs have simply gone belly up -- a massive wave of which already occurred during the Chinese New Year holiday in February, particularly in the Pearl River Delta area. Yet more shall follow during the upcoming shutdown on behalf of the Olympics, especially in the Bo Sea Delta region around Beijing.

... But don't cry for these manufacturing bosses. Far from being down and out, they have simply cashed out.

... Together with those still in business but looking to diversify and/or climb up the ladder, they are eagerly looking for a 'greener pasture' to invest, particularly overseas, from real properties to the intellectual ones like new technologies or business/product concepts. M&As, especially the reversed kind in the SME space, will likely pick up...

... Suddenly a seldom heard-of China Investment Promotion Agency (CIPA) is all over the map; In association with the 4th US-China Strategic Economic Dialogue held in Maryland mid-June, CIPA delegations, led by a few of its deputy heads, visited 11 states (including MA, MO and NC), with an officially emphasized objective to encourage Chinese investment in the US.

... China is no longer satisfied being just the world's manufacturing plant. Consolidation (20 or more top-tier SOEs are expected to merge each year in the next 2 years), vertical integration (streamlining industry value chains through M&As) and in general, moving up the ladder, are now the name of the game.

... On our latest trip (12th) to China, I came across a remarkable example of a privately-owned, indigenous Chinese company that went from being a small, no-name specialty chemicals distributor to what now is a market-maker for certain commodities in China/world markets (and who is now being courted by big-name hedge funds on Wall Street).

... Meanwhile, another type of courtship tango is proceeding.

... Many Western firms are now drawn to China's millions of youth (often dubbed "Balinghou" in Chinese media, pronounced baa-ling-hoe, meaning 'born after the 80's') as newfound retail patrons. But some are also discovering that the latter can sometimes get on their tail as a patriotic mob of "angry youth" (Fenqing, pronounced fen-ching, in Chinese), as exemplified by the recent boycott campaign of Carrefour, a French supermarket chain that has enjoyed much success in China.

... By and large, China, especially its young, has since its opening in the late 70's been a rather eager "worshiper" of the West.

... On the other hand, however, the memories of the Western warships during the 1800's that knocked open China's door and brought what eventually became a century of defeat and humiliation (to a millennia-old empire that used to pride itself as the center of the world) still, on occasion, return to haunt the national psyche. (And some recent events, from Tibet Riots to torch relays, from CNN to Carrefour, provided a perfect such occasion.)

... The "Balinghous", having grown up alongside (and grew somewhat overconfident in the process) China's latest economic rise but rather oblivious of the turmoil just before their time, they represent a new China that dare say 'no' to anyone, on anything, at any cost...

... Like their counterparts around the world, they readily idolize the 'rich and beautiful'. But the "puppy love" fast diminishes as they graduate from school and enter a society where opportunity and income gaps widen, and socio-political tensions rise, as staggeringly as its GDP growth.

... They want their voices heard, not just on the web, but also on the streets:

... Anti-West protests around the globe in April... Complaints and condemnation of celebrity donors whose donation to the earthquake relief efforts did not seem to commensurate with their perceived wealth in May... Anti-corruption riot in Weng'an in the southwestern province of Guizhou just days ago (which not only set government/police buildings and vehicles, but also national sensation, on fire), to name just a few examples...

... In fact the Weng'an incident has fast turned into yet another "PR headache" (following already a handful so far this year) for the country's top leadership, who, unlike its predecessors of yesteryears, has fortunately been through some steep learning curve since the SARS days.

... They have appeared to be test-driving 'transparence' (e.g., their handling of the recent quake rescue/relief efforts, including a first-ever press conference held by the PLA, has won wide praises) and 'truth-telling' lately, even though it may not be able to right all 'wrongs' (nor bring all their local 'underlings' up to speed) overnight.

... They also seem to be experimenting with other 'forces', such as market forces (examples include the desire to use industry standards as a legitimate, non-political entry-barrier to foster 'indigenous innovation') and activism (e.g., allowing NGOs and volunteerism to flourish following the recent quake).

... So perhaps not all is sad when an "innocent age" is coming to an end...