The Chief Asia Inspector Blog

10 years of magic

Today, is exactly the 10th year anniversary of the incorporation of my first business in Hong Kong, SEBO : it was indeed launched on the first working day of the China ruling.
At that time I was confident the business environment wouldn't be affected by the China ruling, and I think time has proved me right.

Indeed Hong Kong has gone through hard times (98 crisis, SARS,...) pretty well and has shown an amazing ability to stay ahead of other financial centers in Asia.

10 years ago, lots of people predicted that Singapore or Shanghai would soon take over Hong Kong as a leading financial center but they have been proven wrong big time! The competition with Singapore is no more and the financial core and immaterial economy ( holdings, funds, lawyers,...) is strongly based in Hong Kong and is progressing each year.

The main downside I have seen in the past 10 years is the pollution which reaches some days unbearable levels. I believe it is the duty of the Hong Kong people to allow effective resources and means to tackle it very seriously as it might be the trigger to Hong Kong unexpected decline...

Except this worrying pollution, Hong Kong is still a magic place to do business and, I am sure, will still be in 10 years time !

All bets are on with China gambling craze !

I read earlier this week about how Macau's gaming revenue surged 22% in 2006, surpassing for the first time the Las Vegas (where AsiaInspection will exhibit next week - by the way...) as the world's biggest casino market.

Seven new casinos opened in Macau last year, bringing the total to 24. The number of gaming tables doubled in the period to 2,762, according to Macau's Gaming Inspection and Coordination Bureau.
And this trends seems here to stay : in total, 2.2 billion people live within five hours' flying time of Macau, compared with 410 million in the same radius of Las Vegas.

I have always been intruiged and fascinated to see how Chinese people can be both disciplined, hard working, and at the same time crazy about gambling, to an extent we seldom see in Western countries...

Letter from a China lover

I received recently the email below from Peter McGuire, an Englishman living in Shenzhen. I thought I would publish it (with his consent), since I really enjoyed reading his story and his answer to "those who bash China and Chinese people"... Here it is :

"Hello Mr. Breteau,

Today, for the first time, I read your page 'Straight talk from an Asia insider' and very interesting it was too.  Written in English by a Frenchman, that makes it doubly so and I thank you, truly amazing.

I suspect that I am somewhat older than you are and in my old age I've stored some interesting memories of the UK.  So here's some useless tit-bits for you to pass on to those that like to 'bash' China and the Chinese.

I grew up or, "woz brung up" as they would say, in west London. And well I remember the effects of the 'London Smog'.  In a real 'pea-souper' you really couldn't see more than fifty yards or, 45.72 metres if you've a metric bent.  What nobody talks about was the effect on ones body of living, eating, and breathing in that smog-laden atmosphere.
Often, my faeces were a deep-green colour, the result of ingesting smoke from so many coal-fires, day in and day out.  And 'Yes!', I've seen pollution in GuangDong but, it's really nothing compared to those London 'pea-soupers'.

As a small boy, the river Thames was never far away and always an attraction, although fishing in it was a complete waste of time. Though, on those hot summer days the cool water beckoned.  However, that quick refreshing dip invariable resulted in an upset stomach or worse, a visit to the hospital for a stomach-pump. I don't think that any river in China could be worse and several of them may actually be better.

Then, still a 'small-boy, on September 26th, 1962 at the grand old age of 151/2 (born Feb.19th 1947)  I joined the Royal Air Force. I think that my family were quite excited by the prospect of me coming home in uniform but, I don't recall that anyone objected due to my young age.  Nor did they mention the 'child labour laws'.  Probably because such laws didn't exist and now, it's a crime?  Anyways, I benefited from the experience and never felt exploited by it.

As for changes in China ?  I've lived and worked here for 7 1/2 years, and in all my life and all the places that I've been to, I've never witnessed so much change in such a short time.  Of those 71/2 years I have driven myself around for 5 of them and that's the best way to experience change in China.  Travelling about on roads that weren't there last week to places that aren't even on the map yet.  And, to make those stay at home Europeans green with envy, I drive about in my Chinese built Great-Wall SUV that has all the 'bells and whistles' and cost less than €14,000.  And, better still, I fill it with gas at €0.54 per litre.

Well I must be off. I have to hop into me Great-Wall and be off to exploit some Chinese colleagues at dinner, again.

Best Regards,

Peter McGuire."

The Chinese Market: not so naive

I picked up a good book this week: China’s New Culture of Cool, by Cynthia Chan, LiAnne Yu and Christopher Ireland (who, by the way, is a woman) who all work at Cheskin Consultancy. (And they all write blogs - but not very often). Anyway… I was interested in their idea that the days of being able to market a product in China by sticking a dragon on the side of the box are over. Chinese consumers are becoming more sophisticated so marketing localization has to become more sophisticated too, to keep up with them. But I think the next step of sophistication will be when the dragons work again because people think they’re “kitch”. They’ll be like Mao t-shirts are these days – ie, so bad they’re good!

China living

Talk talk china is complaining that most Chinese cities are dirty and ugly. Oh please -  if you want clean and pretty, go see a Disney movie. If you want excitement and industry and fun and entertainment for insomniacs and craziness and districts which are so grand even their street signs are oversized - when you're adventurous enough to step outside your office district then come to urban China!

When Mao rhymes with money

Thirty years after his death the Mao Zedong  industry is booming in China. Just to the side of his house there are stalls selling Mao posters, pens and clothing. While this blatant capitalism might have been scorned by Mao, it is embraced by the new China.

From humble beginning to leader of the Communist party in 1949, reuniting China after many years of chaos and war, Mao is a hero in the eyes of many in China – admired not only as the founder of modern China but as a self-made man.
In the early 1990s, according to a story told by many Chinese taxi drivers, an eight-car traffic accident in Guangzhou resulted in injuries to seven of the drivers involved. The eighth, unharmed, had a Mao portrait attached to his windshield as a talisman. The incident fuelled a Mao fever (“Mao re”), a neo-folk religion with superstitious overtones. Read on!

Quick-fire backfire

                                                  

It is debatable what the EU is trying to do by imposing quick-fire textile quotas on China, now that the restrictive Multi-Fibre Agreement is no more. According to this Guardian article, if it wanted more jobs at home, it is likely to fail.  If it was also trying to look out for its own little guys - developing countries such as Morocco and Tunisia - I would suggest that it is likely to fail in that too. Who looks like the big winner, the guy making all the sweaters now that the dragon’s claws have been ever so slightly dulled? Not the weak or vulnerable, but instead: that other racy Asian economy - India.

AsiaInspection’s tours have shot up like a lunar rocket in India: we made eight times our usual number of inspections there this year. Not that China seems to be suffering too much (at this stage); inspections there have increased threefold.

If you imagine the Asian economies are rising like dough (go on, do it just for a moment), it’s funny how if someone tries to squash a bit back into its pan, another bit puffs out somewhere else. In fact, it seems that all the EU has managed to do is irritate their own importers, retailers and inflation rates. Whoops!

Romancing the Wall

I know I’m like the big kid who takes great delight in telling his little sisters that Santa Claus doesn’t exist, but I have to tell you the Great Wall of China is not visible from the moon. The idea that it is dates from 1893 and was written in Chinese school textbooks as fact, but had to be quietly expunged when astronaut Yang Liwei returned from China’s first manned space mission in 2003 and said he couldn’t see it when orbiting the earth. (I think his being the messenger of that piece of news makes him a braver man than all his hurtling above the earth does!)

In my case, the grinch who exploded the myth with dynamite as if it were crumbling wall stone was Julia Lovell, the erudite young author of The Great Wall: China Against the World. She also says that, in reality, the wall was not the continuous impenetrable defense system of an isolationist kingdom, but was in fact several walls built at different times by different dynasties. Contrary to popular belief, they weren’t particularly good at insulating China from marauders and Lovell says that building them was “a last resort strategy, a symbol of political and military weakness”.

Funny enough, the legend that the Great Wall is mighty enough to keep out all comers was created by western Jesuits and traders in the 1700s. Their aim? To praise the Chinese government to the heavens, so that preachers and sellers would be allowed access to Chinese souls and consumers alike. Three centuries later, and I guess access for one out of two ain’t bad!

Confucian Capitalism Confusion

Someone asked me the other day what “Economic Confucianism” is. A once-trendy, now jeered-at concept, that’s what. The main idea is that all Chinese business success stems from guanxi (formalized social relations), which stems from Confucian concern for hierarchies and family relationships. But not only are these shaky premises, their proponents turned a blind eye to Confucius’ doubt that profit could be generated honorably and utter contempt for it: “The gentleman understands what is right; the lesser man understands profit”. So marrying Confucius with the bottom line looks as impossible as reconciling communism to business.
But, wait – the Chinese have managed that last impossibility! So perhaps capitalism can be mixed with certain, well-chosen Confucianism chunks as well? Confucius is certainly still in favor with business motivational speakers, especially when it comes to preparation: “the mechanic that would perfect his work must first sharpen his tools”, “Dig a well before you are thirsty” etc. Does anybody out there feel qualified to rescue the wise counselor from the shallows of quote-a-day?

Taking the "fast" out of "fast food"

Here's a blunt indicator of Chinese financial (if not physical) health: fast food chain KFC took nearly a decade until 1996 to set up 100 restaurants in China; now, only ten years on, it already has over 1200 more, and is adding at a rate of 250 a year. The Chinese dig the Colonel: their taste for chicken makes KFC the largest fast food chain in the country, but McDonalds - and 660 other restaurant chains - aren't far behind. The current push is towards drive-thrus.

Why, in a country famed for its delicious noodles and dumplings, are the people salivating for fried chicken and burgers? As prices have come down slightly and disposable income has gone up rather a lot, it's not necessarily the "rice vs. Ronald McDonald" battle you might think. Rather, it’s a case of adding to, not replacing, the traditional diet with American food. China, of course, has a welcoming culture of entertaining family and clients with food; so now people simply eat out more often because they can.

I've found, as this student has, that people in China go to American-style fast food joints for:
the novelty (especially if they're visiting the city - fast food is still near-exclusive to the big eastern cities), the relative cleanliness, the relaxed atmosphere which allows them, unlike in many noodle shops, to linger over their food (ironic as this may be), and the toys - which become lucrative collectors items.

Food is way down the list - people never get filled up by french fries as much as they do by rice, egg and vegetables. But then - we’re not exactly talking haute cuisine!