Thursday, February 09, 2017

Disappearance of Xiao Jianhua: a show of power - Victor Shih


Victor Shih
The still unresolved disappearance of billionaire Xiao Jianhua from Hong Kong has sent shivers among the financial elite. Right-fully so, says political analyst Victor Shih to Today. China´s central government wants to show who is in charge.

Today:
On the economic front, the implications are less clear. While confidence in the city could be shaken, talk of capital flight from Hong Kong might be premature, experts say. 
The timing of Mr Xiao’s case ahead of a major party congress later this year suggests an attempt by China to pre-empt any surprises during the meeting. 
“Observers like myself had thought Mr Xiao would be safe because he conducted transactions for multiple political elites in China, which is a good hedging strategy,” Associate Professor Victor Shih of the University of California, San Diego told the Financial Times. 
“If he does not resurface soon, then this hedging strategy will be shown to no longer be a foolproof way of protecting oneself,” noted the expert in Chinese political economy.
More in Today.

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Tuesday, February 07, 2017

China´s Twilight Years - Howard French

Howard French
While many analysts expect China to grab chances when the US is changing its global position, eminent China experts Howard French sees the opposite is happening. With a shrinking and aging population, China´s power is diminishing, he argues in The Atlantic. While the US have chances.

Howard French:
Under President Xi Jinping, China has until very recently appeared to be a global juggernaut—hugely expanding its economic and political relations with Africa; building artificial islands in the South China Sea, an immense body of water that it now proclaims almost entirely its own; launching the Asian Infrastructure Investment Bank, with ambitions to rival the World Bank. The new bank is expected to support a Chinese initiative called One Belt, One Road, a collection of rail, road, and port projects designed to lash China to the rest of Asia and even Europe. 
Projects like these aim not only to boost China’s already formidable commercial power but also to restore the global centrality that Chinese consider their birthright. 
As if this were not enough to worry the U.S., China has also showed interest in moving into America’s backyard. Easily the most dramatic symbol of this appetite is a Chinese billionaire’s plan to build across Nicaragua a canal that would dwarf the American-built Panama Canal. But this project is stalled, an apparent victim of recent stock-market crashes in China... 
Not so long ago, conventional wisdom in China held that the country’s economy would soon overtake America’s in size, achieving a GDP perhaps double or triple that of the U.S. later this century. As demographic reality sets in, however, some Chinese experts now say that the country’s economic output may never match that of the U.S. 
With American Baby Boomers entering retirement, the United States has its own pressing social-safety-net costs. What is often neglected in debates about swelling entitlement spending, however, is how much better America’s position is than other countries’. Once again, numbers tell the story best: By the end of the century, China’s population is projected to dip below 1 billion for the first time since 1980. At the same time, America’s population is expected to hit 450 million. Which is to say, China’s population will go from roughly four and a half times as large as America’s to scarcely more than twice its size. 
Even as China’s workforce shrinks, America’s is expected to increase by 31 percent from 2010 to 2050. This growing labor supply will boost economic growth, strengthen the tax base, and relieve pressure on the Social Security system. At the same time, Americans will continue to enjoy a substantial advantage over the Chinese in terms of per capita income. This advantage in wealth will continue to underwrite U.S. security commitments and capabilities around the world.
More in the Atlantic.

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Monday, February 06, 2017

2017: Even sharper drop in outbound investments - Shaun Rein

Shaun Rein
At the end of 2016 a sharp decline in outbound investments by China became clear as financial restrictions kicked in. Business analyst Shaun Rein expects the curtailing measures to last for at least six months into 2017, he tells the South China Morning Post.

The South China Morning Post:
Shaun Rein, managing director of China Market Research Group, said he expected outbound investment from China into the United States to drop sharply in the first three to six months of 2017. 
“First, the capital controls are very serious. Right now Chinese companies are hesitant to make an acquisition overseas because they’re worried that they won’t be able to get the approval to convert for foreign exchange. That situation should get better in general as fears of a currency collapse are alleviated,” he said. 
Fears that President Donald Trump may implement trade policies that target China will also weigh on investment, Rein said. 
“Chinese companies and Chinese tourists both are concerned that they won’t feel welcome in the United States any more. They’re scared that Trump will target them and target China,” he said. That, in turn, would boost investment into other markets like Europe and Australia.
More in the South China Morning Post.

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Financial restrictions hurt China´s outbound investments - Victor Shih


Victor Shih
Fast declining foreign reserves have pushed China´s financial authorities into severely restricting the outflow of capital. Outbound investment, like the Vancouver real estate industry, might be under pressure, says financial analyst Victor Shih in the Vancouver Sun.

The Vancouver Sun:
The new edict demands a written pledge that yuan converted into U.S. dollars will not be used to buy property overseas. It also creates a government black list and harsher penalties for violators. 
The new rules came into effect on Jan. 1, causing uncertainty in global real estate markets from London to San Francisco and, of course, Vancouver. 
Some have been doing back-of-the-napkin calculations to guess at what a sharper chokehold on Chinese funds could mean for a market already reeling from the additional property tax for foreign buyers. 
Others wonder how this latest move might compare with past attempts to cool the outflow of Chinese money. 
“I think this round of (foreign-exchange) crackdown is much more strictly enforced and (will be) longer lasting,” said Victor Shih, associate professor at the University of California, San Diego, who is researching the impact of elite networks in China. “Prior to the end of last year, even low-level private bank clients for major Chinese and transnational banks can easily transfer money from mainland accounts to offshore (ones.)   
Chinese authorities have now stopped this, he said. 
“In addition, when exchanging any amount of money in China, one now needs to specify the beneficiaries of the exchanged foreign currency, whether it be an overseas university, a tour group or a hotel,” Shih said. 
China’s foreign-exchange reserve has been rapidly emptying since 2015, he added. 
“Because money supply in China today is over US$20 trillion, even if a fraction of the money of the money supply were to get out, it can quickly wipe out China’s reserves. Thus, (Beijing) has to impose increasingly draconian restrictions on capital flows.”
More in the Vancouver Sun.

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An uplifting book on a sad subject: review of Lotus by Zhang Lijia


Zhang Lijia
Commentator Dan Southerland of Radio Free Asia is clearly touched by the moving book Lotus: A Novel by journalist Zhang Lijia on the life of prostitutes in China. "An uplifting book on a sad subject," he says about the book.

Radio Free Asia:
A second book, titled simply Lotus, is a novel that provides deep insights into the lives of the migrant Chinese workers whose cheap labor has created China’s economic miracle. 
Among those workers, thousands of women who feel crushed by assembly-line factory work in the big cities have turned to prostitution.  A character named Lotus is one of them. 
Author Lijia Zhang creates a sympathetic portrait of this young prostitute, at the same time shedding light on the plight of China’s migrant workers. 
As journalist and writer Ian Johnson says in a review, Zhang's book opens a window into “a land of underground sex trade, corrupt police, desperate migrants, and flawed characters trying to make the right decisions.”... 
Her sympathetic portrayal of the life of a prostitute named Lotus working at a massage parlor in the economically booming city of Shenzhen also turns out to be a love story and a testament to one woman’s strength. 
Lotus’s story begins as a typical one for many migrant workers, the unsung heroes of China’s economic rise. 
Her massage parlor in Shenzhen lies hundreds of miles to the southeast of her rural village in Sichuan Province, and she can rarely afford to make a trip home. 
Her main aim in life is to send money home to assist her family and ultimately to help her brother Shadan realize his dream of entering a university.  He would be the first in his poor village to achieve this goal. 
Her family has been told that Lotus is working in a Sichuan restaurant in Shenzhen and not as prostitute. 
Like so many migrant workers, she had arrived in Shenzhen to work in a factory outside the city. Her cousin, nicknamed “Little Red,” had talked her into taking the job. But after her cousin died in a fire at the factory, she decided to find work in the city. 
When her lack of a high school diploma disqualified her from the best jobs, she turned to prostitution, first as a street walker and later in a massage parlor, often fronts for prostitution. 
While officially illegal, prostitution has become an industry in China that would appear to be hard to eliminate, though police do launch periodic campaigns against it.  One of the most dramatic scenes in the novel describes a raid on her massage parlor in which some of Lotus’s friends are beaten. 
The camaraderie among the girls while under detention, their jokes about their plight, and the offer of one to share what little money she has to pay off the police becomes one of the most touching moments in the book. 
It’s hard to imagine that a book on this sad subject could be uplifting, but this one is.
More at Radio Free Asia.

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Thursday, February 02, 2017

Xiao Jianhua: the bag man of the powerful - Rupert Hoogewerf

Rupert Hoogewerf
China´s powerful families use so-called "bag men" to deal with their wealth. The disappeared billionaire Xiao Jianhua was such a bag man, according to China rich list producer Rupert Hoogewerf, including the family or president Xi Jinping to the Financial Times. Finding information on Xiao had been tough.

The Financial Times:
Mr Xiao Jianhua has long had strong connections with the families of Communist party leaders, but he was much more than a bagman by the time he was spirited back to mainland China by Beijing’s agents on the eve of the Chinese lunar New Year. 
Living for the past few years in self-imposed exile at the luxurious Four Seasons hotel and apartment complex in Hong Kong, Mr Xiao had become one of China’s richest men, a multi-billionaire in dollar terms with investments focused on banks and insurance. 
According to the Hurun Report, the young man who began his business career selling personal computers near his old university was worth US$6 billion (S$8.5 billion) by 2016. 
Mr Rupert Hoogewerf, chairman of the Hurun Report, said Mr Xiao had used his knowledge of capital markets and leverage to build a big empire. But, he said, it is extremely difficult to work out his wealth because he has “a myriad highly complex structures”. 
“He’s considered to be extremely intelligent and extremely low-profile,” said Mr Hoogewerf. “Within investor circles, he’s pretty respected because he comes from Peking University so he’s not some hillbilly who’s gone into the business of capital markets.” 
From his Four Seasons vantage point overlooking the busy harbour of Hong Kong, Mr Xiao held court attended by a bevy of female bodyguards, managed his business affairs and represented the government of Antigua and Barbuda.
More in the Financial Times.

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Where to put your investments under Trump? - Shaun Rein

Shaun Rein
US-president Donald Trump is hitting world trade like an unguided missile and many investors wonder where to put their money now China seems next on his agenda, says Shanghai-based business analyst Shaun Rein in the South China Morning Post. "(Trump) likes to use chaos in order to negotiate." Australia and Europe could be winning.

The South China Morning Post:
The two weeks of volatility since Donald Trump took office have fuelled anxiety that investments in China will be the next victims of his hostile, unpredictable policies, analysts say. 
“It’s a fearful time right now,” said Shaun Rein, managing director of China Market Research Group. “When we talk to investors, they don’t know where to put their money.” 
International investors have been given a blunt reminder that US presidential pledges can do real harm to the global market.... 
Trump has vowed to impose a 45 per cent tariff on Chinese imports and label Beijing a currency manipulator. His administration has also angered China by talking tough on Taiwan and the South China Sea disputes – tough stances Rein believes Trump will be maintained in his dealings with China. 
“He likes to use chaos in order to negotiate,” he said. “My guess is he is going to take a strong stand and criticise China on trade, currency and its military.”... 
Looking at the positives, however, Rein is advising his clients to invest in naval weapons companies, which might benefit from China bolstering its navy to tighten its grip on the South China Sea. 
Food producers in Australia, New Zealand and Europe might also see surging demand from Chinese consumers if agricultural imports from the US were reduced, he adds. 
“Chinese consumers are still spending a lot,” he said. “There is going to be more tension between America and China. Consumers will have to buy food and commodities from Australia and Europe.” 
Meantime, tourism in Asian countries could gain from a sharp decline in Chinese travelers heading to the US, Rein said. 
“Many will start to think it’s unsafe because they see all the protests,” he said, and worry they are going to be targeted by “ultra-white nationalists who do not like Asians”.
More in the South China Morning Post.

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Who is Xiao Jianhua - Rupert Hoogewerf


Rupert Hoogewerf
Billionaire Xiao Jianhua suddenly disappeared this week from Hong Kong, triggering off rumors of him being kidnapped into mainland China. The South China Morning Post says it received confirmation. China´rich list expert Rupert Hoogewerf or Hurun gives in AP some background on this business partner of some of Xi Jinping´s relatives.

AP:
A wide-reaching anti-corruption crackdown led by Chinese President Xi Jinping has snared dozens of executives at state companies. Chinese state media said in 2013 that Xiao controlled nine publicly listed companies and had stakes in more than 30 financial institutions. 
The New York Times reported in 2014 that a company Xiao co-founded paid $2.4 million to buy shares in an investment firm held by Xi's sister and brother-in-law. 
Rupert Hoogewerf, the Hurun Report's publisher, said Xiao holds the reputation of a "maverick visionary" who makes major decisions on his own and has gone to lengths to obscure Tomorrow Group's holdings, which include banks and securities companies. 
"He's one of the kings of capital of China," Hoogewerf said. "There's not many people moving money in the same way."
More in AP.

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Monday, January 30, 2017

China might be better geared for a trade war than the US - Arthur Kroeber

Arthur Kroeber
Donald Trump is still rolling up his sleeves, while many analysts are still wondering who might be better equipped for a shake-out between China and the US. For now, leading economist Arthur Kroeber puts his bets on on China, he tells CNBC.

CNBC:
While China will suffer from a trade war with the United States, some experts say the Asian giant has more resilience than the U.S. 
The "Chinese government has plenty of financial resources to step in," said Arthur Kroeber, founding partner of Hong Kong-based financial services and research firm Gavekal Dragonomics. "I think the Chinese government has looked at this and is prepared to act," Kroeber said, speaking by phone from Beijing.... 
"There's an array of things China could do that are not trade related that would enable them to persuade in a personal way," Kroeber said, adding that Beijing could also make China a tougher business environment for U.S. companies operating there.
More at CNBC.

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The two conflicting worldviews of Trump and Xi - Kaiser Kuo

Kaiser Kuo
Two very different worldviews conflicted with each other at the just-concluded World Economic Forum in Davos: those of Donald Trump and Xi Jinping, although Trump was not physically present. Journalist Kaiser Kuo attended, and looked increasing amazement to the developing scenes, he writes at SupChina. "I do see two different worldviews. And I know which one I find much, much more compelling."

Kaiser Kuo:
Of course, there’s a rather glaring irony that an autocrat at the head of a technocratic authoritarian state whose experiments in capitalism began only 37 years ago is now one of the lone voices for free trade. And there’s the fact that while compared with other emerging economies, China’s may be relatively open but certainly isn’t when compared with the economies of developed countries: Many sectors remain heavily protected. But China is, as Xi duly noted, a country that has both benefited from and suffered the ravages of globalization, in its massive wealth disparity and nightmarish environmental problems. 
Xi also got in some good none-too-subtle digs at Trump: “When encountering difficulty, we should not complain, blame others, or run away from responsibilities,” he sniped. And he reaffirmed his commitment to the Paris climate change agreement: “The Paris climate deal is a hard-won achievement…all signatories should stick to it rather than walk away.” He did stop short of denying to the president that climate change was a Chinese hoax. 
No one in their right mind would believe that Xi is staking a claim as inheritor to the entirety of the grand liberal tradition. His years in office so far have been marked by a disturbing deepening of illiberalism in China. And yet it’s easy to see how Trump’s hostility to free trade regimes is giving China an opening — and that should Trump actually tear up NAFTA, a China-centered free trade zone might, as Nouriel Roubini noted in one session I reported, extend all the way to Mexico. 
On Friday, the last day of Davos, as the writers were finishing up their last summaries in the late afternoon, across the Atlantic, the Trump inauguration was underway. Some of us tuned in to hear Trump’s dark descriptions of American “carnage.” (I couldn’t watch, but you could hear people repeating snatches of it in disbelief.) 
It was, as Trump adviser Steve Bannon told the Washington Post shortly after the speech, “an unvarnished declaration of the basic principles of his populist and kind of nationalist movement.” Indeed it was. “I think it’d be good if people compare Xi’s speech at Davos and President Trump’s speech in his inaugural,” said Bannon. “You’ll see two different worldviews.” 
I do see two different worldviews. And I know which one I find much, much more compelling.
More at SupChina.

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How to end double standards for US-listed Chinese companies - Paul Gillis

Paul Gillis
Oversight of Chinese companies listed in the US has been ongoing troublesome, as auditors miss access to much information considered a state-secret in China. Peking University accounting professor Paul Gillis told the  U.S.-China Security and Economic Commission 26 January how to solve the conundrum. (here in pdf)

Paul Gillis:
In my opinion, the major problem with respect to U.S. listed Chinese companies is the inability of the PCAOB to conduct inspections of China based accounting firms. This has resulted in a situation where there is a double standard in regulation. All auditors of companies listed in the U.S. must be inspected, except for auditors of Chinese companies (and companies of a few other minor countries), which are not inspected. While this fact is routinely disclosed in the issuer’s filings, the double standard makes a mockery of U.S. regulation. 
In my view, there are two alternatives to eliminate the double standards. First, Sarbanes Oxley could be amended to remove the requirement that the PCAOB inspect foreign accounting firms. Instead, the PCAOB could follow the lead of the European Union and negotiate regulatory equivalency under which the PCAOB would accept the work of Chinese regulators as their own. I do not think this is the best option, since I think it is unlikely that Chinese regulators will rigorously examine overseas listed companies nor do they have the necessary expertise in U.S. accounting and auditing rules. 
The second option is to terminate the registration with the PCAOB of any auditors that the PCAOB is unable to inspect. The U.S. should require companies that seek to list in the U.S. to agree to follow all U.S. laws. If China determines that a company has state secrets that cannot be disclosed, a company with such secrets should not be permitted to list in the U.S. 
Termination of accounting firm registrations would lead to the delisting of shares of companies audited by the deregistered firms, since financial statements audited by a PCAOB registered accounting firm are a requirement for continued listing. Delisted companies are likely to seek to relist in China or Hong Kong, although they may be required to restructure to eliminate control structures and/or variable interest entity arrangements that may not be permitted in the other jurisdiction. The PCAOB has so far been unwilling to go this far, likely due to opposition from capital markets. 
Another problem with U.S. regulation is the overlapping jurisdiction of financial regulators. There is little secret that there is considerable tension between the SEC and the PCAOB. I believe this both confuses Chinese regulators as well as creating opportunities for Chinese bureaucrats to play one regulator off the other. I think Congress should consider abolishing the PCAOB, transferring the inspection and enforcement activities to the SEC and sending standard setting back to the American Institute of CPAs.
The full statement by Paul Gillis.(pdf)

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Getting to know your China investors might be tough - Victor Shih

Victor Shih


Some concern emerged in Canada when an investment company Leadon Investment Inc had invested US$1 billion in local hotels. Getting to know who is behind those investment vehicles with a China background might be very hard to discover, says financial analyst Victor Shih to the Vancouver Sun.

The Vancouver Sun:
“The problem is that wealthy Asian investors are practised at setting up a series of shell companies to hide their identities,” said Victor Shih, who used to work for the Carlyle Group’s hedge fund arm in New York and is researching the impact of elite networks in China at the University of California, San Diego.
Victoria-based BCIMC is choosing to sell at a time when international capital, especially from mainland China, has shown keen interest in hotel properties as well as trophy office space across North America. 
China’s Anbang Insurance Group paid almost $2 billion for the Waldorf Astoria in New York in 2014. In Canada, Bluesky Hotels and Resorts Inc, a company that says it is backed by capital from Hong Kong and that is connected to Anbang, bought InnVest Real Estate Investment Trust and its 90-plus hotels in Canada in a $2.1 billion deal last year. Anbang also later, through InnVest, bought the Fairmont Vancouver Airport hotel. Anbang also paid over $1 billion to buy the Bentall Centre in downtown Vancouver.
Of interest in all these deals is the federal government’s threshold for reviewing foreign acquisitions, which is $600 million. In April, it will move to $700 million. 
It’s not known exactly what questions or hurdles must be cleared in order for deals to get the green light from Ottawa. Law firms have, in the past, suggested a basic list might at least include information about controlling shareholders. 
Shih has observed Anbang’s various deals as well as the ones that have not proceeded because of intense scrutiny over not being able to tell who owns it. 
As the yuan weakens and as Chinese growth slows, there is rapidly rising demand among Chinese and Hong Kong investors to diversify out of the region,” Shih said. “That has created a windfall for sellers in North America.”  
As for the risks of not being able to understand the ownership of acquiring companies when there is a large deal, he said: “First, the layers of shell companies buyers use make it difficult to ascertain whether buyers obtained the funds legally or ethically to begin with. Besides corruption income, millions of Chinese investors have been defrauded of billions of dollars by unscrupulous criminals. Obviously, funds derived from fraud would be problematic. 
“More recently, the other risk is the imposition of strict capital control by the Chinese government, which prevented Chinese investors from delivering funds to overseas sellers. That has already created problems for a number of property and entertainment deals in the U.S.”
More in the Vancouver Sun. Victor Shih is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

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Friday, January 27, 2017

Asahi leaving Tsingtao as market disappoints - Shaun Rein

Shaun Rein
Asahi is selling its minority stake in Tsingtao beer as the beer market in China is not giving it the gain it expected since it entered in 2009, says business analyst Shaun Rein to Bloomberg. “Tsingtao is in trouble,” said Rein. “It’s not premium enough, and it’s not cheap enough.”

Bloomberg:
The overall beer market in China has declined 6 percent in volume since 2013, according to Euromonitor International. Tsingtao, with about 15 percent market share, trails China Resource Beer Holdings Co.’s popular Snow brand, which had 22 percent of the China market in 2015, Euromonitor data show. 
As the Chinese economy slows, mid-market brands like Tsingtao are squeezed, according to Shaun Rein, managing director of China Market Research Group. Some consumers are looking for lower-priced beers, he said, while more affluent Chinese are switching to pricier craft beers or wine. 
“Tsingtao is in trouble,” said Rein. “It’s not premium enough, and it’s not cheap enough.”
More in Bloomberg.

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Why writing in English makes me freer - Zhang Lijia

Zhang Lijia
Author Zhang Lijia of the recently published Lotus: A Novel is a native from Nanjing, but writes in English. Writing in her chosen language makes her feel more free, she explains in an interview with Mengfei Chen of the LA Review of Books.

The LA Review of Books:
Interestingly, writing in English frees me literally as well. It frees me from any inhibition I may have: if I had written the novel in Chinese, I am sure the sex scene would be less explicit. Without the constraints, I can also be bold as I experiment with the language. Because English is not my native tongue, I use different words and I structure my sentences differently, consciously and unconsciously. Of course, my experiment doesn’t always work. But I enjoy the adventure. 
The challenges are obvious. After diligently studying English for 30 years, I have yet to command the language completely. I write slowly, too slowly, in fact; I don’t understand the subtle meanings of certain words; and I am still confused by the use of the definite and indefinite article! 
I find the relationship between the writer and the chosen language fascinating. I speak Chinese with a slight Nanjing accent. [NB: In many parts of China, this accent is viewed as a fairly déclassé one, definitely inferior to that of Beijing, where Zhang has long been based.] When speaking English, I’ve tried to cultivate a refined accent. [NB: She speaks English with what Americans might describe as a BBC accent.] Maybe there’s another reason that I went for English — it makes me feel more sophisticated than I actually am. I probably have not gotten rid of a sense of inferiority because of my worker’s background! 
In addition to a romance and coming-of-age story, readers will be given insights to a full range of Chinese social issues, including corruption, taxation, educational inequities, rural to urban migration among others.  How did you balance the desire and need to include explanatory information about China for readers who might not necessarily know very much about the country with the narrative and characters? 
From the very beginning, I intended to use prostitution as an interesting window to observe the social tensions brought by the reforms and opening up. So I had to provide context to western readers who probably don’t know a great deal about China. In the earlier drafts, I often dumped too much information to a degree that it slowed the narrative drive. Also in earlier drafts, my writing in such parts tended to be journalistic. I cut back some background information – if a reader really wants to know more about certain aspect, he/she can easily Google it. I then sprinkled the necessary information and delivered it in a less journalistic way.
More in the LA Review of Books.

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China´s rich spend more time on travel - Rupert Hoogewerf

Rupert Hoogewerf
Surveys by the Hurun China Rich List not only show that China´s affluent have spent more money in 2016, but increasingly do to while traveling, says Hurun chairman Rupert Hoogewerf in the Luxury Daily. The number of days per month they travel went up again.

The Luxury Daily:
Purchases made while abroad are seen as part of the travel experience for many Chinese consumers looking for goods unavailable at home or unique to a specific location. 
Hurun found that many affluent Chinese are reserving more days for traveling. 
“Chinese luxury consumers continue to be extremely busy, away on business trips for eight days a month on average, up one day year-over-year,” said Mr. Hoogewerf. “Despite this, they take 10 days for holiday, three more days than last year, whilst the super-rich take five more days than last year to 15 and go abroad 3.4 times a year on average, twice for traveling,” he said.
More in the Luxury Daily.

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Thursday, January 26, 2017

Comparing China´s generations - Tom Doctoroff

Tom Doctoroff
Marketing guru Tom Doctoroff explores his insights in the different generations he saw in China, born in both the 1980s and 1990s, in a lecture for the Asia Society, just before leaving China after 18 years. "They want a free mind, but within a framework," he tells his audience.

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Wednesday, January 25, 2017

How bike-sharing differs from ride-sharing - Jeffrey Towson

Jeffrey Towson
After the wars, and eventual merger, of the car-sharing companies, attention has turned to the bike-sharing firms. But bike-sharing is fundamentally different, warns Peking University business professor Jeffrey Towson in E27, and history will not repeat itself. Bike-sharing is not part of the sharing economy, he explains.

E27:
Both companies have their apps, but Ofo lowers friction by linking the app to WeChat without having to download a separate app. The users can either register their mobile phone or log in via WeChat account and unlock bikes on the streets at their convenience. 
While many business analysts predict how the two rivals will merge eventually, Jeffrey Towson, consultant and professor at Guanghua Peking University, thinks otherwise. He explains why bike-sharing is nothing like ride-sharing of Didi and Uber. The professor compares the bike-sharing economy to a vending machine business than a ride-sharing one. 
“Unlike ride-sharing, bike-sharing does not have a network effect,” he says. “The ride-sharing experience is a two-sided network, in which additional riders increases the networks’ value to the drivers and each new driver increases to value each rider. Through customer rating and recording of wait-time, the service gradually improves as its user population grows.” 
“The problem with bike-sharing, however, is that there is no second population of drivers using the platforms and providing the bikes,” he adds. “The bikes are constantly replenished by companies themselves as opposed to each rider adding any value to the other riders. It seems that bike-sharing isn’t really part of the sharing economy.”
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