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that book about china

In case you haven’t heard the news, four new US-China air routes have been announced. Beginning in 2009, the routes will run between: (a) Philadelphia-Beijing; (b) Chicago-Beijing; (c) NY-Shanghai; and (d) Detroit-Shanghai. Great news, but the announcement made me wonder how much thought went into the choices here.

One organization pairs up municipalities as a part of its charter - Sister Cities International. Local government types are involved, and the point is to get your hometown matched up with a “sister city,” or a “twin town”. They say that it’s a diplomacy network, but I suspect that it’s just an excuse for the occasional cross-border boondoggle. No matter the point, it’s always fun to see what city is a sister of what other city.

When I was in Chengdu and discovered that its sister city was Phoenix, I thought: now, that makes sense. Both are western towns, landlocked, and geographically isolated. Traveling over the years, I’ve found myself amazed at how well some of the cities are matched. Just take a look at these examples from China:

1. Shanghai / San Francisco. That kind of makes sense. Both are rather romantic towns with old-fashioned architecture. Tons of tourists.

2. Guangzhou / Los Angeles. Like LA, Guangzhou is a city of immigrants, and it has no real geographic center. Gertrude Stein once said of Los Angeles that the problem was “when you get there, there isn’t any there there.” That pretty much describes the ‘Zhou.

3. Hainan / Hawaii. Tropical island, Hainan, paired up with Maui, Hawaii? That’s a no-brainer.

4. Harbin / Minneapolis. Two cities where the locals don’t just live in the snow - they get off on it. If you want to show a lady in Harbin what a gentleman you are, take her out for an ice cream in the dead of winter. I bet that one makes perfect sense to a Minnesotan.

5. Xishuanbanna / Austin. There’s something to this link. Both are smaller places that are laid back and have tons of character.

6. Beijing / NY & DC. Beijing, the harlot! She’s two-timing it with Washington DC and New York. The double pairing makes sense, though, if you think about it.

7. Qingdao / Miami. Both magnets for retirees.

8. Hefei / Columbus. Hefei in Anhui Province and Columbus, Ohio? Now, that’s just pure genius.

A more complete list of China’s sister cities can be found here. Welcome to leave your own comments related.

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Alcatel-Lucent has settled its bribery case with the US Justice Department. The telecoms giant was busted for bribing Chinese officials, the graft having come in the form of lavish trips for their Chinese guests.

The cost of the trips was estimated at hundreds of millions of US dollars, and we can assume that the benefit to the company was in excess of what it had “invested”. And yet the company was ordered to pay only US$2.5mn! This is the brand of democracy we’re talking about when we note the rest of world wants to be more like us.

The multinationals should really create a new business ratio for benchmarking China efforts of this nature. Call it “ROB” - return on bribes. Consider it like an “ROE”, but, more specifically, for graft payouts. Alcatel-Lucent is going to end up paying $2.5mn, but they will have presumably receive hundreds of millions in benefit - and no one is going to jail - hey, that’s a nice “ROB”.

From the article:

The US Justice Department alleged that during those years, Lucent sponsored Chinese official trips to the U.S., Europe, Australia and other countries on the grounds of “factory visits” and “training.” In fact, Lucent had already outsourced most of its manufacturing overseas, and there weren’t any facilities for Chinese officials to see in the traveling destinations. Most of the trips, according to the Department, lasted for two weeks and cost 25,000-55,000 US dollars each.

Analysts say China is a lucrative telecom market, but also one where there’s a high level of business bribery. A case concerning Siemens is still under a bribery probe. But the Lucent case serves as a wakeup call to multinationals in China who are trying to find the balance between playing the “hidden rules of the game” in China and Western business codes.

And in Chinese, here.

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The Pew Research Center has published a survey of global attitudes towards China. It’s a simple barometer that asks citizens of various countries whether they have a favorable or unfavorable view. The survey suggests that attitudes are connected to politics, but I see a more direct trade-related link.

Economies that have seen their export sectors devastated have strong negative views towards China. Turkey is one telling example with 53% expressing a negative view. Turkey used to make for Europe many products, but much of that has now gone to China.

Similarly, Italian goods are being made in China, and negative views on China are at 61%. Germany and Japan are both strongly negative towards China, and I think this is about a weakened industrial base in both of those economies.

On the positive side now. In South America, the Chileans are 62% in favor of China. I doubt that Chile has lost anyting to China. I don’t have the numbers in front of me, but I know that China is buying a lot of Chilean wines. Chilean is among my favorite wine in China, and the price-to-quality ratio is on target. I don’t know what else is happening in Chile except wine, but I’m guessing Chile is an easy beneficiary of China’s rise and that few domestic industries are being turned upside down as a result of China’s advantage.

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Japan shot down a ballistic missile in space, high over the Pacific Ocean. This was done in coordination with the United States, and the only thing we can wonder is what China makes of all this. The reaction from Beijing was said to be “muted”, though it added that it “hoped Tokyo’s actions would be positive for peace and trust in Asia.”

China destroyed one of its own satellites in space, leading to great concern over China’s military intentions. I quite like China’s speechlessness over Japan’s recent missile testing, and I wonder where this is all going to lead. None of know what China intends, though it insists “we come in peace”.

When it comes to military involvement, Japan has cold feet - the result of lingering regrets over World War II - but with the US and China both making overtures to Tokyo, it’s going to be interesting to see what role Japan plays in the region in future. The Japan-US missile test is said to be about North Korea, but I can’t help but think this is just as much, if not more, about China.

admin China

Li & Fung is looking to double operations in India over the next three years. Today, India accounts for 6% of the revenue. What I wonder is how much of this expansion has to do with rising prices in China.

Even more interesting is that the firm has claimed the expansion will allow the company to leverage the large talent pool of global managers in India. Now, if a Hong Kong company can’t find leadership talent in Mainland China, what does that tell you?

For those who don’t know the company, Li & Fung is one of the largest companies of its kind in the world. Formerly considered a trading company, they do the same thing that outsourcing firms do, but on a much grander scale. They are best known in garments and they have made brand name product for some of the biggest fashion companies in the world. With over 20,000 employees, the firm had reported annual turnover of $10bn last year, and they have offices in over 40 countries.

For more on their business model, I recommend the book, “Competing in a Flat World”, written by Victor Fung, William Fung and Jerry Wind, Professor of Marketing at The Wharton School. The book is available at Amazon.com.

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Well, it looks as if business people working with China are not the only ones to suffer from contract manipulation by the Chinese.

Japan signed a joint communique with Beijing earlier this month only to discover that the Chinese quietly deleted two terms from the contract without notifying the other side that they had done so. I’ve actually had this done to me when working with Chinese lawyers, and it is one very strong argument for not letting attorneys for the other side draft any agreements if it can be done by your own people. While this sort of unilateral change is done all the time in China, this kind of alternation is “unthinkable from the viewpoint of customary international practice, and inexplicable.” From Commentary:

“The Chinese deleted two references in the jointly-approved communiqué. The first omitted statement noted that Japan expressed its hope that Beijing would increase the value of the renminbi. The other deleted reference relates to China’s participation in the Energy Charter Treaty. The Japanese government delivered a formal protest on Friday.”

This latest development comes just as historians have uncovered evidence that suggests that the Nanjing Massacre was preceded by a genocide that was even greater. Hat tip to Pan Asian Biz:

U.S. archives just researched have unveiled that the Japanese massacred more than 500,000 Chinese BEFORE entering Nanjing and killing 300,000 more. A telegram from then US ambassador to Germany reads - “Today the news from the Far East is worse than ever and I have read yours and Secretary Hull’s statement as to Japanese brutality. The Japanese Ambassador here boasted a day or two ago of his country’s having killed 500,000 Chinese people.”

Developments between Japan and China will continue to prove interesting in the coming years.

admin China

There’s been quite a lot of commentary on Bloomberg’s visit to China, and an editorial in the NY Sun caught my attention this morning:

Mr. Bloomberg didn’t turn in a perfect performance — we’d have preferred he included Taiwan and democracy activists in Hong Kong on his itinerary. But it was a strong performance. With polls showing voter dissatisfaction with the existing candidates, all the more reason for Mr. Bloomberg to get into the presidential race. We’ve not endorsed him, but we were the first and have been the most persistent in urging him to run, and his performance in China only increases the logic of his entering the lists.

To be frank, I am really not sure about the appropriateness of Bloomberg’s visit. He’s just a presidential hopeful. Who is he to speak as if he represents the United States, and let’s not kid ourselves. His efforts were to give the US public (and possibly the Chinese) a chance to see what he looks like in action.

I wonder whether Bloomberg’s visit was coordinated with those who form and manage US foreign policy. While it is interesting for the US public to get a feel for how a presidential hopeful might handle China - is he tough enough? - it is a far more important from a foreign policy pespective to ensure that the United States deals with China on a single front. If a politician in China were to visit the United States, you had better believe that whatever came out of that representative’s mouth was the word of central government officials.

China does not commonly allow low-level officials to speak on its behalf - in fact, it doesn’t like officials in Taiwan or Tibet speaking at all - and while it was not suggested that Bloomberg was representing the view of the Bush administration in his talks, what concerns me is that the Chinese might see this visit as proof that democracy is kind of messy. If Bloomberg’s speech was approved by the Bush administration, that is certainly another matter, but then should we not expect all presidential hopefuls to get the chance to swing through China? Maybe a China visit will become a necessary part of every election and we can look forward to “the Shanghai caucus”

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Earlier today, a Chinese couple that worked on Wall Street was found guilty of insider trading. They cleared a reported $600,000 gain through inside tips. I was sent the news item by someone who reads our website here, and I might not have posted this, except check out their courtroom defense.Their attorney claimed argued that there was a “cultural basis” for their actions - i.e., insider trading is a common practice in China. That could be the opening for every Chinese national living in America who is accused of a crime - just say that China made you do it.

admin China