Many in the U.S. believe “China is in a bubble.” This may be the case, but it is not a sentiment shared by average Chinese. In South China, compared with a couple of years ago, the buzz has gone, and people are no longer as optimistic as they once were. There’s more grumbling about corruption. Macroeconomic numbers suggest rocketing growth, but on the ground there’s this odd feeling that the air has been let out of the tire.

Looking into my crystal ball, I suggested that Premier Wen Jiabao would instead focus his address on the yawning gap between rich and poor in China. I had to do some looking around online, but here’s something that I picked up today from a news agency out of Latin America:

The speech touched on many issues, but on a number of occasions the premier spoke about the need to make China a fairer society. “We will not only make the ‘pie’ of social wealth bigger by developing the economy, but also distribute it well,” Mr Wen told about 3,000 delegates, returning to a theme that he has often spoken about during his premiership. “[We will] resolutely reverse the widening income gap,” he added later, in a speech that lasted more than two hours.

I would have preferred to quote NY Times, but there was no explicit mention of this aspect in their article, “China Premier Details Economic Plan.”

Now, what do we make of all that earlier commentary coming from the U.S. on a possible currency revaluation out of China? These weren’t predictions at all, it turns out, but are signs of desperation from an American economy that is in much worse shape than many of its leaders are willing to admit. Beijing knows this, by the way.

Audio books are a public good.

They get material to those who struggle with learning disabilities, and they are helpful to so many who simply can’t find the time to read. Others are disadvantaged in other ways. I know someone who gets travel sick when reading from a book on a plane. Another, a close family friend, is struggling through advanced stages of ALS (Lou Gehrig’s Disease) and can no longer hold a book, or turn a page.

Several months ago, when Audible.com got in touch and asked whether I wouldn’t mind narrating Poorly Made in China, I agreed to get involved.

At one point or another, I have purchased and listened to books that are professionally narrated, and I have found many such productions to be lacking. The few author-narrated books I’ve managed to catch, including Elizabeth Gilbert’s Eat, Pray, Love and Malcolm Gladwell’s What the Dog Saw convinced that there is at least some value in having an author read his or her own material.

The audio version of Poorly Made in China runs 8 hours and 3 minutes. For those interested, a sample is available on Audible.com.

Others have written about Chinese efforts to rebrand popular Western trademarks. One that I found particularly amusing was a slight twist on the “Esprit” brand. Pictured at the top here, this backpack has a logo that mimics the original but uses a brand that looks a lot more like like “Spit.” Companies worry that counterfeiters will dilute their brand, and this sort of example drives home that point.

Sometimes copied names are not similar at all, though. Consider the second and third pictures here. One is of a ball carrying the logo for Wilson Sporting Goods. This other is for a Guangzhou-based sporting company called Menlow.

Wilson versus Menlow? Without looking at the pictures, you’d think that the two names are nothing alike, but consider what’s been done: The scripted “W” from Wilson has been turned upside down so that it becomes the “M” in Menlow. They’ve done something similar with the “N,” changing it into a “W.” They preserved the tall, scripted “L,” and the net effect is a logo that from a distance and without too much thought looks quite a lot like the original!

I’ve often passed a Menlow shop in Guangzhou and wondered what executives at Wilson would make of the logo. Do they even know that the logo or the copycat company exists? Would also be a little more than curious to see how a Chinese court would handle any claim of copyright infringement. My bet is that “Spit” might find trouble, but that Menlow would be allowed to carry on — even though its logo appears similar and it is also in the business of selling the same kinds of sporting goods.

China will announce a major shift in economic policy, and that shift will have little (or nothing) to do with the currency exchange rate. China’s economic policy shift will please the U.S. a little, while satisfying its own people more. Any new economic policy introduced will have far less to do with an attempt to rebalance the global economy. It will have instead more to do with an effort to reduce wealth disparity in China.

This is from a two-hour, online “town hall meeting” led by Premier Wen Jiabao. There’s a bit of “satisfying its own people” and “effort to reduce wealth disparity” here:

Turning to the yawning gap between rich and poor, Wen said Beijing would strive to boost wages and make it easier for migrant workers to settle with their families in smaller cities. ”If the wealth of a society is concentrated in the hands of a few people, then that’s unfair and that society is doomed to be unstable,” Wen said.

How do I do it? I honestly don’t know.

Anyway, it’s at least a bit interesting that Beijing is claiming to take an active role in increasing wages when market forces are more likely the cause. According to NYT, labor rates have been bid up as much as 20% in recent months. Seems to be happening all on its own.

**UPDATE: A number of local newspapers are pushing now for reform of the household registration system that has divided urban dwellers and rural folk, though Wen Jiabao’s government already hinted they were looking into making it easier for migrant workers to move about the country. Thought I would link to the relevant news event since this ties into new efforts to bridge the rich-poor gap in China.

I took this picture in South China 7-Eleven shop. For those who don’t know, it is not uncommon for Chinese to mix red wine with carbonated beverages like Sprite. You can probably imagine why they would want do so — soda adds sparkle. On this other mixture, though, I can’t guess why someone would want to combine wine with concentrated fruit juice, unless the point is only to dilute the alcoholic beverage. If it’s about sweetening the wine, perhaps wine makers could come up with a variety that is different for the Chinese market. If it’s about the magic of cranberries, then perhaps they could try fermenting that fruit instead.

There are probably some China marketing gurus who will say, “this is another example of a company that is localizing their product for the China market.” In the end, it was probably not a marketing decision, but a project that came about for business reasons. This campaign might merely be an example of what happens when finance directors play at marketing.

Less than 24 hours before a potentially historic tainted drywall case was to commence — one that will determine the procedures for fixing houses — the Chinese company that was to provide the manufacturers’ defense shocked participants by dropping out.

U.S. District Court Judge Eldon E. Fallon will proceed with the case, but with Chinese manufacturer Knauf Plasterboard Tianjin Ltd. Co. out of the picture, there will be no defense cross-examination and no defense witnesses. The witnesses lined up this week to testify for the company will be sent home.

The tainted drywall case is one of the more serious involving quality failures out of China. Total damages are estimated to run $15 billion to $25 billion, making it a “Katrina II” for the US Southeast.*

One of the problems associated with product failures out of China has been the difficulty with which victims are able to obtain justice through the courts. To date, there has been no definitive explanation for bad drywall, other than to suggest that it was “fake” drywall. Some have guessed that the product was manufactured with an organic substance in which bacteria could thrive.

While some are in denial and everyone waits for answers to questions and solutions to problems, some groups are doing what they can to help those affected. Palm Beach County property owners who’ve found themselves stuck can at least look forward to a 70% discount on their property taxes.

_________

* Hurricane Katrina damages were estimated at $125 billion.

O’Neil thinks the Chinese could allow the yuan to strengthen by as much as 5%. “I have a strong opinion that they’re close to moving the exchange rate,” O’Neill said in a telephone interview from London after China’s central bank told lenders on Feb. 12 to set aside larger reserves. “Something’s brewing. It could happen anytime.”

Agreed that something is afoot, but I don’t believe it’s going to be a simple currency revaluation. Since I haven’t been wrong too often, maybe it’s time I went out on a limb. Here is what I expect: China will announce a major shift in economic policy, and that shift will have little (or nothing) to do with the currency exchange rate. China’s economic policy shift will please the U.S. a little, while satisfying its own people more. Any new economic policy introduced will have far less to do with an attempt to rebalance the global economy. It will have instead more to do with an effort to reduce wealth disparity in China.

Wish that I had the time here to go into a more detailed explanation, but suffice it to say that while the economic stimulus has led to fast GDP growth, too many of China’s laobaixing have been left out.  Many in the U.S. believe “China is in a bubble.” This may be the case, but it is not a sentiment shared by average Chinese. In South China, compared with a couple of years ago, the buzz has gone, and people are no longer as optimistic as they once were. There’s more grumbling about corruption. Macroeconomic numbers suggest rocketing growth, but on the ground there’s this odd feeling that the air has been let out of the tire.

The Chinese government has a sense of it I think, and official comments made just prior to Chinese New Year were probably meant to address this malaise. The big question is, what kind of economic policy will have the effect of lifting prospects for average Chinese? Currency appreciation is a too-blunt tool applied to a sophisticated problem. For a number of reasons, it was also the wrong time for the Obama administration to push for such a revaluation (and the way it was done, let’s not go there). America wants currency appreciation because it wants China to purchase more American goods. If that’s the case, the answer might actually lie in in getting more disposable income into the right Chinese hands.

Let’s see what China announces…

Even as Toyota is getting much press for its problems with accelerator pedal assemblies, I find the melamine case far more disturbing, because (a) it involved an artful attempt to circumvent third party controls, (b) it was an activity practice by a large group of unscrupulous actors, and (c) because those who were engaged in the most recent milk powder cases knew precisely the harmful health effects of melamine.

Making matters worse has been the government’s wrongheaded response. Beijing reacted to this year’s melamine scandal with a heavy-handed cover-up. Chinese journalists have been warned not to report details surrounding milk cases. Parents of children sickened by melamine-tainted products who have attempted to organize themselves to protest or seek compensation risk being sent to jail for “social disruption.”

China’s state-directed legal system has failed to provide justice to victims. The government meted out severe punishment to only a small number of perpetrators engaged in the distribution and production of poisoned milk—two were executed—and a far greater number were let off the hook. China’s response to past scandals has been to protect industry with a government shield, so no one should be surprised when fraud recurs in such an environment.

At this time, many are looking at what’s happening to Toyota and saying, “Japan has problems, too.” The suggestion in this article is that such a view is misguided. Even with Toyota’s major recall, Japan ought to be seen as an example for all that China might accomplish in the next few years, and here I am thinking about a culture that values quality for its own sake and an incredible attention to detail, an economy that values building market share and long-range opportunities over get-rich-quick schemes.