On the China market, the iPhone does not make a difference - Ben Cavender

Ben Cavender

Once Apple's iPhone was a much-wanted device for the picky Chinese consumers. But those glamorous days are over as domestic brands offer more than their US competitor, says branding analyst Ben Cavender to Patently Apple.

Patently Apple:

Ben Cavender, a senior analyst at Shanghai-based consultancy China Market Research Group, said the novelty of the iPhone attracted throngs of Chinese shoppers to Apple stores a decade ago, but many consumers in the country have since developed an affinity for local smartphone brands. 

Cavender added that "At that time, Apple was offering a product that was so much better and so different that it made sense for people to show up at the store to buy something. In 2018, it’s not clear what Apple is selling that’s dramatically different or better than anything else on the market."

More at Patently Apple.

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Renminbi: not yet close to US dollar as world currency - Wang Haiyan

China's Renminbi is not coming close to the US dollar as the world's reserve currency, says business analyst Wang Haiyan to Money Talks. Even though more trade is done in the Chinese currency, the US dollar is still dominant. China cannot expect export to save its economy but relies on domestic consumption. But that transition is not going overnight, Wang adds.

Wang Haiyan is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more experts on the ongoing trade war between China and the US? Do check out this list. 

The US-China trade war: in for the long haul - Arthur Kroeber

Arthur Kroeber

The trade war between the US and China might only be starting, the fight is going to be one for the long haul, says economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know®, according to Dow Jones. “The U.S. and China are in for a long and acrimonious confrontation,” he says.

Dow Jones:

Officially, the U.S. is imposing tariffs on Chinese imports as a hard-nosed but hopefully temporary tactic to force China to treat U.S. companies and goods more fairly. Yet, Beijing has shown no sign of caving to U.S. demands that, in totality, entail a wholesale end of the industrial policy that has long guided Chinese economic development. Some suspect the U.S. goal isn’t a negotiated solution, but to disentangle the two economies permanently. 

“The U.S. and China are in for a long and acrimonious confrontation,” Arthur Kroeber of Gavekal Dragonomics, a China-based research firm, wrote last week. This isn’t driven by President Trump alone, he wrote, but “by a powerful coalition of security and economic officials who believe the U.S. is entering an existential conflict with China for global economic, technological and geopolitical dominance.”.. 

Mr. Trump is mainly motivated by the U.S. trade deficit with China. Tariffs aren’t likely to fix the imbalance: If a company shifts production from China to Vietnam to avoid U.S. tariffs, America’s trade deficit with Vietnam will go up while its deficit with China goes down. But China critics who don’t share Mr. Trump’s deficit obsession see a different benefit. 

Tariffs and other penalties, such as forthcoming restrictions on the export of key technologies, weaken China’s appeal as a destination for foreign investment and start to unravel the supply chains that tie the U.S. to China. The longer tariffs remain in place, the more multinationals that want to sell to the U.S. will seek alternatives to China to source production. Taiwan and Thailand are already marketing themselves as alternatives. 

Yet, moving a supply chain out of China is harder than it sounds. Mr. Kroeber notes in an interview that China doesn’t offer just low labor costs, it also has well-developed infrastructure and logistics, skilled labor such as engineers, and access to China’s own huge internal market. “That can’t be matched somewhere else.” Multinationals may need two supply chains: one with access to the U.S., and one with access to China. They would then have to decide whether their U.S.-centric or China-centric supply chain serves the rest of the world. 

In the short run, China would clearly be the loser: It still depends heavily on the U.S. for intellectual property, know-how and investment, and as a market for exports.

More in Dow Jones.

Arthur Kroeber 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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Why I sold my US stocks for Chinese equity - Jim Rogers

Jim Rogers

Renowned investor Jim Rogers, author of Street Smarts: Adventures on the Road and in the Markets sold his US stocks and changed them for Chinese equities, he told at Yicai Global. For him, the Belt and Road initiative fits into his optimistic view on China' economy, he adds.

Yicai Global:

China’s market has been bottoming out, while US shares have reached a record high, Rogers said at a recent investment forum in Beijing, according to a report in China Business Journal. The billionaire investor buys on the dip, he added. 

This is not the first time that Rogers has bought into a market trough. He invested in a large number of Austrian securities in 1984 when the country’s bourse was reaching its lowest point. The market sprang back to life a year later, surging 145 percent and handing Rogers a tidy return. 

The 76-year-old, who co-founded the Quantum Fund with George Soros in 1970, has a reputation for being a visionary international investor and one of US’ most successful securities brokers. 

The Belt and Road initiative is another source of his confidence in the Chinese market. The project will be vital to anyone who wants to make money, Rogers said, adding that he will closely monitor it for business and investment opportunities.

More at Yicai Global.

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Why "House of Cards" got a massive following in China - Tom Doctoroff

Tom Doctoroff

"House of Cards" might be a cynical parody on US politics, millions of Chinese also enjoyed the Netflix production and hade it a huge impact in China. Cultural expert and China expert Tom Doctoroff, author of What Chinese Want: Culture, Communism, and China's Modern Consumer, explains to the Washington Post why. "It essentially confirmed that our government is not so different than theirs."

The Washington Post:

For international viewers under unfriendly regimes, this well-produced caricature of Washington proffers an unspoken truth about the duplicity of American power. And their governments have been all too happy to have their citizens believe that these dark shenanigans are realistic. 

Since its debut, the show has reached millions of viewers in China, as well as top leaders of the Communist Party. Netflix isn’t available in China (and it doesn’t release any data about viewership), but “House of Cards” has received millions of downloads through pirated torrents and third-party streaming websites like SohuTV, which secured the rights from Netflix for the show’s early seasons. Sohu ranked the second season, which features a Chinese oligarch trying to influence a U.S. election and a trade war between Beijing and Washington, as the most popular American show on its site after its 2014 release. According to the site, the first season received 24.5 million views in China, with the largest portion coming from residents of Beijing and government employees. 

“ ‘House of Cards’ had a huge impact in China,” said Tom Doctoroff, the chief cultural insights officer at Prophet, a brand and marketing consultancy, and an expert on the Chinese market, “because it essentially confirmed that our government is not so different than theirs. People took a great deal of satisfaction and maybe a little schadenfreude in that.” 

The show also portrayed Beijing as the United States’ adversarial equal while reaffirming Chinese propaganda about American double talk on democracy and human rights. President Xi Jinping famously referenced the show during a visit to the United States in 2015. Cui Tiankai, China’s ambassador to Washington, said in 2014 that “House of Cards” embodied “some of the characteristics and corruption that is present in American politics ” and that it highlighted the disadvantages of bipartisan politics.

More in the Washington Post.

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This trade war is insane - Jim Rogers

Jim Rogers

China is not going to bend over for Donald Trump, they have nobody to answer to but themselves, says Asia investor Jim Rogers, author of Street Smarts: Adventures on the Road and in the Markets. "This trade war is insane to start with," he adds.

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Explaining Alibaba's Single's Day - Ashley Dudarenok

Ashley Dudarenok

11.11 is Alibaba's Single's Day, an annual online shopping festival and marketing expert Ashley Dudarenok explains where it is coming from. Last year Alibaba had a turnover of US$25 billion, while competitor JD claimed US$19 billion for the 11-day festival. Ashey on the power of data.


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How long format videos become popular in China - Ashley Dudarenok

Ashley Dudarenok

Short entertaining videos of 15-30 seconds were hot in China a few years ago, but the internet population is moving to a long format, that is three minutes, says vlogger and marketeer Ashley Dudarenok on her vlog. Viewers really want to be part of your life, she says.

Ashley Dudarenok is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.

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NAFTA's 2.0 China poison pill will not work - Harry Broadman

Harry Broadman

Former NAFTA negotiator Harry Broadman predicts in Forbes the new trade agreement between the US, Canada and Mexico might not work in the way president Donald Trump wants it to.

Harry Broadman:

The victory proclaimed by the Trump Administration for its renegotiation of a “modernized” North American Free Trade Agreement (NAFTA) is a hollow one. 

 Despite many months of wrangling with our closest neighbors to the North and South of us—our second and third largest trading partners—in fact, few substantive changes have been introduced to the 1994 pact. But that hasn’t stopped the White House from touting the deal. Why?  Because Mr. Trump and his trade team see NAFTA 2.0 as the model to tame nations outside our hemisphere—especially the use of it as the vehicle to proliferate a poison pill lying at the heart of the agreement the U.S. wants to be deployed to corner China and clip its wings from engaging in pernicious trade practices. 

But there are two fundamental barriers to this scenario playing out.  First, Washington will find it tough going to sell this framework to countries with whom there isn’t a pre-existing agreement similar to NAFTA to be amended.  Second, as a practical matter, the U.S.-inserted Chinese poison pill will turn out to be of little therapeutic value, not only for changing Beijing’s conduct but also for inducing other countries to actually exercise this provision. 

Following the announcement on September 30, 2018 concluding the negotiation of the new “United States Mexico Canada Agreement” (USMCA), initially the press focused on the most apparent accomplishment to come out from tension-filled trade talks: the seemingly innocuous re-branding of the original NAFTA. ( whose name I will admit to having fondness for, in part since I was a member of the early 1990s NAFTA negotiation team). 

Perhaps it’s a bit unfair to blame the press for its undue attention to the change in name, which quickly proved to be an awkward choice.  After all, even the President’s top economic advisor, Larry Kudlow, had trouble pronouncing the new moniker the day of the announcement. 

But what didn’t fully sink into the press was the substantive import of the dropping of the words “Free Trade” from the new deal. The change is no accident.

More in Forbes.

Harry Broadman 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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Why women are high on China's rich list - Rupert Hoogewerf

Rupert Hoogewerf

Women might be scarce at China's political platforms, but on the China rich list, they are doing very well, says Hurun China Rich List publisher Rupert Hoogewerf tells the China Daily. "China accounts for 60 percent of the world's most successful female entrepreneurs, while Chinese women make up one-fifth of the world's female population," he says.

The China Daily:

With 150 billion yuan ($21.7 billion) in wealth, Yang (Huiyan) tops the list, followed by Wu Yajun (58.5 billion yuan), chairwoman of Longfor Properties and Chen Li Hua (50.5 billion yuan), chairwoman of Fu Wah International Group. 

The list calculates the personal wealth, not the family wealth, of women entrepreneurs. Most of the names on the list are from real estate and manufacturing. 

"China accounts for 60 percent of the world's most successful female entrepreneurs, while Chinese women make up one-fifth of the world's female population," said Rupert Hoogewerf, chairman and chief researcher at Hurun Report. "Reform and opening-up, as well as entrepreneurship of Chinese women, can be the reason behind this story," he added.

More at the China Daily.

Rupert Hoogewerf 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 list.

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US companies not ready to leave China - Arthur Kroeber

Arthur Kroeber

One of the purposes of Trump's trade war is convincing US companies to leave China. But they are not yet ready to move, says economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know®, in the Channel News Asia. And when they move, they might before countries like Vietnam over the US, he adds.

Channels News Asia:

The trade hawks are cleverly using targeted tariffs to make it more difficult for companies to export from China.

(US Trade Representative)“Lighthizer wants US corporations to move into other locations,” says Arthur Kroeber, managing director of Gavekal Dragonomics. His Beijing-based research group has clients who are considering doing just that, though no one has yet pulled the trigger. 

“Vietnam is the obvious alternative but there are still too many potholes,” he says. Companies “don’t want to be the one to fill in the potholes. They want to wait for others to pioneer and then see if it makes sense to move.”

More at the Channel News Asia.

Arthur Kroeber 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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China misses the point on Africa - Howard French

Howard French

China routinely dismisses accusations it is copying the behavior of former colonial powers in Africa, but is missing the point, says journalist Howard French, author of China's Second Continent: How a Million Migrants Are Building a New Empire in Africa, at the Sydney Morning Herald.

The SMH:

Many (Chinese) arrive with hierarchical views of culture and race that tend to place Africans at the bottom, said Howard French, a former New York Times correspondent who wrote the 2014 book China's Second Continent, which chronicles the lives of Chinese settlers in Africa. 

Accusations of discrimination have even emerged on a major state-sponsored project: a 482-km Chinese-built railroad between Nairobi and Mombasa. The train has become a national symbol of both progress and Chinese-Kenyan cooperation, though positive reviews have at times been overshadowed by concern over its $US4 billion price tag.

But in July, The Standard, a Kenyan newspaper, published a report describing an atmosphere of "neo-colonialism" for Kenyan railway workers under Chinese management. Some have been subjected to demeaning punishment, it said, while Kenyan engineers have been prevented from driving the train, except when journalists are present.

When asked about the controversy, China's foreign ministry spokesman suggested that Western news organisations had blown the matter out of proportion in an effort to "sow discord in China's relations with African countries." French, the author of China's Second Continent, said that when it comes to Africa, China has had a tendency to dismiss criticism of its conduct by noting that the West, not China, fuelled the slave trade and colonised the continent.

But that misses the point, French said, by ignoring the treatment of Africans today. "Their experience is that they are being treated in flagrantly disgusting, racialised ways," French said.

More at the Sydney

 Morning Herald. Howard French 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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Trade war will lead to higher consumer prices - Victor Shih

Victor Shih

Tariffs in the ongoing trade war are taxes, so it is unavoidable consumer prices will go up, says financial analyst Victor Shih, author of Factions and Finance in China: Elite Conflict and Inflation, at The Point. Some increases might be taken by the distributors, and consumers are not yet worried because the US economy is now doing very well, Shih says. But that could change in the months to come when the effects of the trade war kick in.

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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Currency devaluation: a tricky way to fight the trade war - Victor Shih

Victor Shih

Devaluating the Chinese Yuan can be an attractive, but also dangerous way for China to deal with the effect of the ongoing trade war, says financial and political analyst Victor Shih, author of Factions and Finance in China: Elite Conflict and Inflation to Reuters. " It is likely that corruption is returning, which will undermine Chinese capital control measures."

Reuters:

Victor Shih, an associate professor of political economy at the University of California, San Diego, says currency devaluation could be an attractive option for China to offset the impact of the trade war. 

But he warned the tactic had limits, as it "could create a panic on the renminbi which becomes difficult to control"... 

Shih estimates that even a modest 20 percent reduction in exports to the United States could cause the monthly trade surplus to drop by $8 billion to $10 billion, nearly a third of the average. In addition, a reduction in foreign direct investment, which brought $136 billion into China last year, would also reduce forex inflows substantially, he added. 

In China's stock and bond markets, where sentiment is far more fragile, foreign inflows could easily reverse. For example, during the first three trading days this week, foreign investors sold a net $14 billion of mainland stocks under the cross-border Connect scheme, reversing weeks of net purchases. 

The most recent data from the State Administration of Foreign Exchange (SAFE) shows that China had total foreign liabilities of $5.3 trillion at the end of the second quarter, of which $1.13 trillion was portfolio investments - equity and debt securities that foreign investors could attempt to offload in the event of market panic. 

Broader SAFE data showed China's total external debt, excluding Hong Kong and Macau, at $1.84 trillion at the end of the first quarter, an increase of $455 billion from the end of 2016. 

Although not all of those exposures are at risk of fleeing China's shores, analysts say they put the size of China's $3 trillion in foreign exchange reserves into perspective. Shih said existing capital controls were very stringent. 

"Even the billionaire class faces tight restrictions in terms of where they can invest money," he said. "However, there are still ways, and it is likely that corruption is returning, which will undermine Chinese capital control measures."

More at Reuters. 

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What the heck is Bytedance - Ashley Dudarenok

Ashley Dudarenok

The unicorn Bytedance is worth US$750 billion, an international big hit on news distribution, exploiting AI in a sensational way, but hardly known to many. China veteran Ashley Dudarenok explains why is not owned by Alibaba, Tencent but independent on the market, and making a blast.

Ashley Dudarenok is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Dropping numbers, more new faces in 2018 China rich list - Rupert Hoogewerf

Rupert Hoogewerf

Dropping stock markets have caused a bloodshed at the 2018 Hurun Rich List where 11% dropped off the list compared to 2017. But also 219 new faces entered the list, says Rupert Hoogewerf, Hurun Report Chairman and Chief Researcher at their website. Alibaba's Jack Ma became number one again, pushing out real estate tycoons.

The Hurun 2018 China Rich List:

l  Only 1893 individuals made the cut this year, down 11% from 2130 individuals last year. This is the first drop in the size of the list since 2012. Hurun Report Chairman and Chief Researcher Rupert Hoogewerf said: “A 20% drop in the stock exchange, on the back of a slowing economy and the US-China trade war, resulted in 456 drop-offs this year, the highest since records began twenty years ago.” 

l  Despite the drop, the number of individuals making the cut of CNY 2 billion is up 89% compared with five years ago, and four-fold that of 10 years ago at the time of the financial crisis. 20 years ago, only eight individuals had CNY 2 billion.

l  Jack Ma Yun, 54, & family shot back to Number One in China for the second time in four years. Ma’s wealth increased by US$10bn to US$39bn, on the back of a hike in the valuation of Alipay mothership Ant Financial. ‘Real Estate Tycoon’ Xu Jiayin, 60, of Evergrande and last year’s richest person, claimed second place, followed byPony Ma Huateng of Tencent. Rupert Hoogewerf said: “The Big Three are pulling away from the rest.” 

l  New faces. There were 219 new faces, led by 38-year old Colin Huang Zheng of e-commerce giant Pinduoduo. Huang started Pinduoduo only 3 years ago and is today worth US$14bn. 5 new faces shot straight into the Top 100 of the Hurun Rich List. Others include ‘Battery King’ Zeng Yuqun of CATL, a battery maker for the e-car industry, and ‘Blockchain King’ Zhan Ketuan of Bitmain. Rupert Hoogewerf said, “The scalability of the market coupled with a strong investor ecosystem is creating big new businesses fast.” 

l  Others that grew fast included ‘Hot Pot Power Couple’ Zhang Yong and wife Shu Ping, whose wealth shot up ten-fold on the back of an IPO last month. Zhang Yiming, 35, of news aggregator ByteDance, is reportedly in discussion to raise money on a valuation of a staggering US$75bn. Lei Jun of smartphone maker Xiaomi grew 62% to US$16bn to break into the Top 10. Wang Xing of Meituan-Dianping shot up 39 places to 58^th. 

l  Down. Wu Gang, 41, and Huang Xiaojie, both of JD Capital saw their wealth drop 85%, Meitu’s Wu Xinhong and Cai Wensheng saw their wealth drop over 50%, Jiang Bin and wife Hu Shuangmei of acoustic component maker GoerTek saw their wealth drop by over 50%, last year’s richest self-made women ‘Touchscreen Queen’ Zhou Qunfei and husband Zheng Junlong saw their wealth drop 45%.

More at the Hurun website.

Rupert Hoogewerf 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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In China, small print can kill you - Paul Gillis

Paul Gillis

Registering offshore, through so-called VIE' or variable interest entities, is more popular than ever for Chinese companies, even though the Chinese government tries to stop this circumventing trick. Tencent Music Entertainment was the last one to use it for its IPO and get away with it because investors seldom read the disclosure, says Paul Gillis, accounting professor at the Peking University, at the Nikkei Asian Review. And for good reasons.

The Nikkei Asian Review:

As with the Tencent Music prospectus, VIE risks are regularly disclosed in the IPO process -- for those paying enough attention. 

Referring to Tencent Music's discussion of its use of VIEs, Paul Gillis, an accounting professor at Peking University in Beijing, said: "It is extensively disclosed, but the filling is 300 pages long. Many investors do not read it." 

Meanwhile, it remains unclear when Beijing will move forward with the draft foreign investment law, as Tencent Music's prospectus notes. 

Said Gillis, "If investors cannot stand ambiguity, they should stay out of China."

More at the Nikkei Asian Review.

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Picky Chinese consumers are not cheap to get - Ashley Dudarenok

Ashley Dudarenok

Marketing veteran Ashley Dudarenok explains on her daily vlog why thinking that China is cheap is a misconception. Picky Chinese consumers like to consume, but not necessarily what you have to offer, she tells. So, decent market research is an important starting point.

Ashey Dudarenok is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.

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How the US is becoming nastier in the US-China trade war - Arthur Kroeber

Arthur Kroeber

Those who hope worst is over in the trade war the US is conducting against China might be very wrong, wrote economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know®, last week, according to Goldseek.com.

Goldseek.com:

Gavekal’s Arthur Kroeber pointed out in a bulletin this week (which Over My Shoulder members can read here) “the forces pawing the ground for a fight with China are far stronger, and the reins on them far weaker, than was the case in the NAFTA and trans-Atlantic scuffles.”  

He also points out that US businesses with China exposure are caught in the middle and not trying to fight the White House on this. 

Kroeber also highlighted this Axios report that the Trump administration is planning a major broadside against China in the next few weeks. That means the relief markets are presently feeling may not last long.

More in Goldseek.com.

Arthur Kroeber 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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Promising investment prospects in North Korea - Jim Rogers

Jim Rogers

For investors the prospects for North-Korea are similar to China in 1978, says superinvestor Jim Rogers, author of Street Smarts: Adventures on the Road and in the Markets,  according to the Korean medium Hankyoreh. “If North Korea introduces reforms and openness, it will achieve rapid economic growth in the double digits or higher.”

Hankyroreh:

“If North Korea introduces reforms and openness, it will achieve rapid economic growth in the double digits or higher.” 

Speaking in an Oct. 2 interview on the Traffic Broadcasting System (TBS) program “Kim Eo-jun’s News Factory,” world-renowned investor Jim Rogers, chairman of Rogers Holdings, said North Korea is currently “in a similar situation to China when Deng Xiaoping came to power in 1978.” 

“The positive changes happening in North Korea will make the entire Korean Peninsula a very suitable target for investment,” he predicted. 

Rogers also offered a positive appraisal of South Korean President Moon Jae-in’s policies for their role in guiding North Korea toward reforms and openness. 

“If President Moon’s North Korea policies succeed, South and North Korea will be able to save a great deal of money and bring tremendous peace not just to the Korean Peninsula but the world,” he said. 

“I sincerely hope and believe President Moon’s North Korea policies will succeed,” he added. 

Rogers pointed to North Korea’s abundant workforce and natural resources as factors making it an appealing investment target. 

“ With [North Korean leader Kim Jong-un] attempting changes, the combination of South Korean knowledge, capital, and know-how with North Korea’s human and natural resources will make a tremendous Korea that even Japan won’t be able to match,” he predicted.

More in Hanyoreh.

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