And so it happened.
China officially now has its own NASDAQ. The GEM, recently started as of last week, is the equivalent to NYC's NASDAQ and will allow companies as young as three years old with net profit of 10 million RMB and net assets of about 20 million RMB ($3 million) to sell stocks to the public.
What will this do? The growth enterprise market aims to allow SME's to more actively grow its investor population all the while creating new jobs.
The story is the same abroad. Give money to small business owners to promote job creation; invest in new technology companies so the stock market overall will have a boom.
The only difference though is that most countries can't afford to do so right now. Despite economic stimulus packages, there are too many ingrained problems that first need to be fixed before any of these goals can be achieved.
This is not true in China. The Chinese government has smartly used the economic crisis to literally push forth an entirely new economic outlook.
Why have they been able to do so? Because the Chinese saved their money. Because there is a huge amount in reserves here that not only makes China the world's bank now, but it has allotted its own money to create things like the GEM.
It's starting out of Beijing and it's second cohort in Shenzhen, a burgeoning port city right across from Hong Kong.
But the real goal is to key in on Shanghai and further push to make it an international trade center.
I think this is really smart for two reasons:
1) it allows for a wider industrial expansion. While China's own economic stimulus package of $586 billion last year focused on state firms in industries like real estate and construction, the GEM allows for the non-public sector to generate capital.
2) GEM provides a way for the Chinese government to use all its pent-up capital. By creating the GEM, investment can actually happen in contrast to just hoarding a ridiculous amount of money.
For anyone who is familiar with Thomas Friedman's op-ed pieces in the NYT, I always feel bad for the guy because I get the sense that's he always lamenting about how one day he was in Beijing and the other he was in Calcutta followed by a trip to Singapore and so forth where he meets investors and inventors of new high-tech technology that just makes the U.S. look bad.
But I think if the Chinese pull this off with the GEM, given that right now isn't the most sound economic time internationally to invest, this will just be one more example of how the U.S. is lagging behind and give some more resonance to Friedman's preaching.
Saturday, May 2, 2009
Sunday, April 19, 2009
On Characters (文字)
For whatever reason, whenever I tell friends I moved out to Shanghai to improve my Mandarin the usual response I get is, "Oh, you must be fluent now."
No! There are so many characters and so many different combinations of characters that I really don't think anyone is fluent. In fact, I'm pretty sure there are still characters being discovered today by scholars that even they can't be fully fluent.
Granted, there are native speakers who can perfectly hold a conversation. But as anyone who started with CHI 101 can tell you, characters are all distinct and each represent something that together form a huge conglomerate of pictures.
That for me is the appeal of Mandarin. You always have to try to figure out what each character represents, and at the same time, try to figure out how one characters works with another.
Let me give some examples for those who have been asking me what Mandarin is like:
Take the word 'diplomacy'. In Chinese it's 外交. The first character 外 wai(4) means outside, or foreigner and the second is 交 jiao(1) meaning communication. This makes sense: foreign communication.
So does the word for 'foundation'. In Chinese it's 基础. The first character 基 ji(1) means basic, as in 基本 for basically, and 础 chu(3) ground.
Now, where things get funny are with characters like the following: 风花雪月. The first character means wind, the second flower, the third snow, and the fourth moon. Put together they mean empty speech.
I recently came across this phrase in a book called 'China is not happy' and when I asked how the above makes sense, the response was: it doesn't. That's how it is.
This is only one of many examples of how, if the literal meaning of each character is put together with others, you're left confused as to how the actual meaning works out.
But that's the puzzle behind the language and that's why given the huge number of characters that exists it's impossible to be truly fluent.
On a completely different note, the weekend was chill. Got to get lost in more parts in Puxi, had dinner with some Pton friends on Saturday, and went to this salsa/reggaeton night at Zapatas last night. I have never seen a more enthused crowd dancing to Don Omar, especially this song http://www.youtube.com/watch?v=tFvedbMGbJo
No! There are so many characters and so many different combinations of characters that I really don't think anyone is fluent. In fact, I'm pretty sure there are still characters being discovered today by scholars that even they can't be fully fluent.
Granted, there are native speakers who can perfectly hold a conversation. But as anyone who started with CHI 101 can tell you, characters are all distinct and each represent something that together form a huge conglomerate of pictures.
That for me is the appeal of Mandarin. You always have to try to figure out what each character represents, and at the same time, try to figure out how one characters works with another.
Let me give some examples for those who have been asking me what Mandarin is like:
Take the word 'diplomacy'. In Chinese it's 外交. The first character 外 wai(4) means outside, or foreigner and the second is 交 jiao(1) meaning communication. This makes sense: foreign communication.
So does the word for 'foundation'. In Chinese it's 基础. The first character 基 ji(1) means basic, as in 基本 for basically, and 础 chu(3) ground.
Now, where things get funny are with characters like the following: 风花雪月. The first character means wind, the second flower, the third snow, and the fourth moon. Put together they mean empty speech.
I recently came across this phrase in a book called 'China is not happy' and when I asked how the above makes sense, the response was: it doesn't. That's how it is.
This is only one of many examples of how, if the literal meaning of each character is put together with others, you're left confused as to how the actual meaning works out.
But that's the puzzle behind the language and that's why given the huge number of characters that exists it's impossible to be truly fluent.
On a completely different note, the weekend was chill. Got to get lost in more parts in Puxi, had dinner with some Pton friends on Saturday, and went to this salsa/reggaeton night at Zapatas last night. I have never seen a more enthused crowd dancing to Don Omar, especially this song http://www.youtube.com/watch?v=tFvedbMGbJo
Thursday, April 16, 2009
Random Chinese classical poetry heard around China (现今中国的古典诗词)
This past Friday I went to this Investor's Forum where a bunch of young entrepeneurs gathered to do the typical hobnobbing and exchanging of business cards.
During the presentation, which had to deal with the current state of financing in Shanghai, one of the presenters out of nowhere used this long phrase in Mandarin which I had trouble following. Everyone laughed after he said it, so I figured it must've been something good, so after the talk I went to the guy and asked him what exactly did you say to get such a response from the audience.
It turns out he was quoting the famous Chinese poet Li Bai in using his words to describe how he sees the future economic forecast.
The quote goes something like this : " 挂席候海色乘风下长川" A rough translation is "Lifting your sails using the winds to sail down the Gorge."
Like many financial institutions hope for these days, the presenter commented, we should hope to move in the direction Li Bai describes.
Now, the reason why I wanted to write a few quick thoughts on this is because classical thought can be heard everywhere in everyday conversation here in China and to use it is almost expected of you.
While there are plenty of commonly used aphorisms back in the states, I've definitely noticed a stronger tie in of cultural speech here in business conversation and political soundbites.
Adages, like " 三人行，必有我师 (If you walk with 2 people, at least 1 can be your teacher), can be randomnly heard and I think really dictates a form of mentality adopted here which reflects the significance Chinese people have given to historical and literary documents.
Imagine you heard a bunch of random people walking down 5th ave. quoting Emerson or Heraclitus.
My reaction would probably be the same as ours. But it's nothing really new here in the Middle Kingdom.
During the presentation, which had to deal with the current state of financing in Shanghai, one of the presenters out of nowhere used this long phrase in Mandarin which I had trouble following. Everyone laughed after he said it, so I figured it must've been something good, so after the talk I went to the guy and asked him what exactly did you say to get such a response from the audience.
It turns out he was quoting the famous Chinese poet Li Bai in using his words to describe how he sees the future economic forecast.
The quote goes something like this : " 挂席候海色乘风下长川" A rough translation is "Lifting your sails using the winds to sail down the Gorge."
Like many financial institutions hope for these days, the presenter commented, we should hope to move in the direction Li Bai describes.
Now, the reason why I wanted to write a few quick thoughts on this is because classical thought can be heard everywhere in everyday conversation here in China and to use it is almost expected of you.
While there are plenty of commonly used aphorisms back in the states, I've definitely noticed a stronger tie in of cultural speech here in business conversation and political soundbites.
Adages, like " 三人行，必有我师 (If you walk with 2 people, at least 1 can be your teacher), can be randomnly heard and I think really dictates a form of mentality adopted here which reflects the significance Chinese people have given to historical and literary documents.
Imagine you heard a bunch of random people walking down 5th ave. quoting Emerson or Heraclitus.
My reaction would probably be the same as ours. But it's nothing really new here in the Middle Kingdom.
Friday, April 3, 2009
Shanghai World Expo 2010 (城市让生活更美好)
城市让生活更美好 - This slogan, 口号, that can be seen all throughout the city is what's being used to promote the Shanghai World Exposition 2010. Literally meaning "Better City, Better Life," it's hard to miss the blue mascot waving everywhere in train stations and all the posters put up to remind everyone that come May 1st, 2010 an approximate 80 million tourists will come to China, 70 of whom are expected to be Chinese.
Yesterday, I mentioned how the World Expo in Shanghai was just another way of putting the city in the spotlight as mainland China's financial center. In an article in today's Huffington Post, the point is raised that the U.S., unlike most other participating countries in the Expo, have still not set up their pavilion for the show. http://www.huffingtonpost.com/blythe-mcgarvie/g20-and-the-shanghai-worl_b_182650.html
Before reading this article, I had been asking friends what exactly is the point of this event. Some responses I got were that back in the day these Expos were actually important because they provided the venue where people like Alexander Bell could go and show off their invention and have the world quickly latch on to the innovation.
But my thinking was so what about today?
The article gives a nice summary of the background and relevance of the Expo today. In it we learn that the last Expo was in 2005 in Aichi, Japan. About 24 million people attended. For 2010, countries like France and Germany are expected to promote their food and beverages along with their architecture by creating different venues to showcase their national products. Canada is said to be constructing a Cirque du Soleil building themed around 'play.
Basically, the Expo, it seems, is the venue where the world can bring whatever they want to marketize and try to catch the attention of a huge market here in China.
What will the U.S. promote? I have no idea.
Yesterday, I mentioned how the World Expo in Shanghai was just another way of putting the city in the spotlight as mainland China's financial center. In an article in today's Huffington Post, the point is raised that the U.S., unlike most other participating countries in the Expo, have still not set up their pavilion for the show. http://www.huffingtonpost.com/blythe-mcgarvie/g20-and-the-shanghai-worl_b_182650.html
Before reading this article, I had been asking friends what exactly is the point of this event. Some responses I got were that back in the day these Expos were actually important because they provided the venue where people like Alexander Bell could go and show off their invention and have the world quickly latch on to the innovation.
But my thinking was so what about today?
The article gives a nice summary of the background and relevance of the Expo today. In it we learn that the last Expo was in 2005 in Aichi, Japan. About 24 million people attended. For 2010, countries like France and Germany are expected to promote their food and beverages along with their architecture by creating different venues to showcase their national products. Canada is said to be constructing a Cirque du Soleil building themed around 'play.
Basically, the Expo, it seems, is the venue where the world can bring whatever they want to marketize and try to catch the attention of a huge market here in China.
What will the U.S. promote? I have no idea.
Thursday, April 2, 2009
Henninger's Is this the end of capitalism? (资本主义结束了吗？) & Shanghai
In an op-ed piece in today's Wall Street Journal, Daniel Henninger basically jots down everything that's going on in the world today. The U.S. failed to regulate the housing crising, France is pushing for a world regulator (IMF? who would've thought), China wants a global currency, Germany doesn't want to spend as much as the U.S. has, etc. etc. http://online.wsj.com/article/SB123862779016180329.html
Aside from this, Henninger doesn't really say anything new despite the catchy title of the piece. Just that given the current financial crisis this may allow economics to dictate politics. Meaning given the vulnerability of the U.S. right now this has created favorable conditions for what Fareed Zakaria calls "the rise of the rest" (read his Post American World) http://www.amazon.com/Post-American-World-Fareed-Zakaria/dp/0393334805/ref=sr_1_1?ie=UTF8&s=books&qid=1238662581&sr=1-1
What I do think Henniger is right on about is in the last paragraph of the piece: "I'm thinking that the two happiest G-men in London are Hu Jintao of China and Lula da Silva of Brazil. Their game is catching up with the West. It's a lot easier to play ball in the G-20 league if in the future the competition will be running in slow motion."
Yesterday's post talked about China's growing presence in Latin America, and likewise, how Brazil, as LA's major player, is continuing to grow its presence in China (just recently the first LA firm, a Brazilian firm, was given a license to practice here in Shanghai http://www.noronhaadvogados.com.br/)
I can't agree more with how Lula and Hu Jintao are savoring this moment to make their countries' influence grow.
But given that I'm currently living in Shanghai I can only really write about what I see China is doing to savor this moment, and not so much about how this is happening in Brazil.
So I'll give an example. Last night I met with my language partner who is a 30 year old financial analyst working for a local bank. She studied in Singapore and decided to come back to China because she strongly believes Shanghai is the place to be.
Between her broken English and my broken Mandarin, I learned that the Chinese government is doing all it can to promote Shanghai as the international hub for all foreign nations, U.S. notwithstanding, to do business. From allowing foreign nations to directly be in contact with banks in Shanghai and swapping currencies like with the recently announced deal with Argentina, the Chinese government wants Shanghai to be their international spotlight that attracts foreign invesment. According to Chinese officials, there's no longer a need for NYC.
It's no wonder, then, why the government is doing all it can to prepare for the 2010 World Exposition to be held in? Shanghai.
Even in Hong Kong, which traditionally was the financial hub of East Asia, there's a growing worry that its being outshadowed by its neighbor to the north. http://www.marketwatch.com/news/story/hong-kongs-eyes-look-toward/story.aspx?guid=%7BA3F46C17-51AB-43C8-B5C4-09D869AA399D%7D&dist=msr_1
So will capitalism end? Of course not.
The focal points where capital is concentrated in, though, are definitely shifting.
Aside from this, Henninger doesn't really say anything new despite the catchy title of the piece. Just that given the current financial crisis this may allow economics to dictate politics. Meaning given the vulnerability of the U.S. right now this has created favorable conditions for what Fareed Zakaria calls "the rise of the rest" (read his Post American World) http://www.amazon.com/Post-American-World-Fareed-Zakaria/dp/0393334805/ref=sr_1_1?ie=UTF8&s=books&qid=1238662581&sr=1-1
What I do think Henniger is right on about is in the last paragraph of the piece: "I'm thinking that the two happiest G-men in London are Hu Jintao of China and Lula da Silva of Brazil. Their game is catching up with the West. It's a lot easier to play ball in the G-20 league if in the future the competition will be running in slow motion."
Yesterday's post talked about China's growing presence in Latin America, and likewise, how Brazil, as LA's major player, is continuing to grow its presence in China (just recently the first LA firm, a Brazilian firm, was given a license to practice here in Shanghai http://www.noronhaadvogados.com.br/)
I can't agree more with how Lula and Hu Jintao are savoring this moment to make their countries' influence grow.
But given that I'm currently living in Shanghai I can only really write about what I see China is doing to savor this moment, and not so much about how this is happening in Brazil.
So I'll give an example. Last night I met with my language partner who is a 30 year old financial analyst working for a local bank. She studied in Singapore and decided to come back to China because she strongly believes Shanghai is the place to be.
Between her broken English and my broken Mandarin, I learned that the Chinese government is doing all it can to promote Shanghai as the international hub for all foreign nations, U.S. notwithstanding, to do business. From allowing foreign nations to directly be in contact with banks in Shanghai and swapping currencies like with the recently announced deal with Argentina, the Chinese government wants Shanghai to be their international spotlight that attracts foreign invesment. According to Chinese officials, there's no longer a need for NYC.
It's no wonder, then, why the government is doing all it can to prepare for the 2010 World Exposition to be held in? Shanghai.
Even in Hong Kong, which traditionally was the financial hub of East Asia, there's a growing worry that its being outshadowed by its neighbor to the north. http://www.marketwatch.com/news/story/hong-kongs-eyes-look-toward/story.aspx?guid=%7BA3F46C17-51AB-43C8-B5C4-09D869AA399D%7D&dist=msr_1
So will capitalism end? Of course not.
The focal points where capital is concentrated in, though, are definitely shifting.
Wednesday, April 1, 2009
Finance in China and Latin America (中国和拉美国家的交易)
I mentioned in passing in my Intro to this blog that as part of my job for the firm I'm working for, I do research and work with Latin American clients who are looking to do business in China, and conversely, work with Chinese clients who want to acquire Latin American companies, or start new venture capital deals.
Recently, there's been a lot of press about how China is trying to push for a global currency, which was quickly denounced by U.S. officials.(http://news.yahoo.com/s/ap/20090325/ap_on_re_as/as_china_global_currency)
But China has not stopped here. In a recent article in the China Daily News (http://www.chinadaily.com.cn/china/2009-03/31/content_7635007.htm) China has pushed for a $10 billion swap in Chinese and Argentinean currencies where Argentina no longer has to pay China in dollars but now in yuans. This allows Argentina to get rid of adminstrative steps necessary to change from its pesos to dollars, gives it access to hard currency, and shores up liquidity.
This deal was announced in Medellin, Colombia at the Inter-American Development Bank meeting. Argentina is the first country China has made this kind of deal with but is only the second largest economy in LA as Brazil boasts the most trade with China, currently making up about 40% of LA's trade with China.
China's presence in Latin America is growing. From the mineral resource industry where China is looking to buy inordinate amounts of resources, especially in Peru and Chile, to how best use newly discovered minerals in Brazil to combat climate change (check out this piece from February in the Financial Times on minerals found in Brazil's 'terra preta do indio' http://www.ft.com/cms/s/2/67843ec0-020b-11de-8199-000077b07658.html)
So it goes without saying that being involved in these merger and acquisition deals is highly relevant today. Tentatively, the Chinese government has so far released relevant guidelines that touch on what it hopes to achieve with this deal in LA.
For now, though, as Brazilian officials are responding to how China's role in the region will emerge in the future, a gente tem que ver o que é que vai acontecer.
Recently, there's been a lot of press about how China is trying to push for a global currency, which was quickly denounced by U.S. officials.(http://news.yahoo.com/s/ap/20090325/ap_on_re_as/as_china_global_currency)
But China has not stopped here. In a recent article in the China Daily News (http://www.chinadaily.com.cn/china/2009-03/31/content_7635007.htm) China has pushed for a $10 billion swap in Chinese and Argentinean currencies where Argentina no longer has to pay China in dollars but now in yuans. This allows Argentina to get rid of adminstrative steps necessary to change from its pesos to dollars, gives it access to hard currency, and shores up liquidity.
This deal was announced in Medellin, Colombia at the Inter-American Development Bank meeting. Argentina is the first country China has made this kind of deal with but is only the second largest economy in LA as Brazil boasts the most trade with China, currently making up about 40% of LA's trade with China.
China's presence in Latin America is growing. From the mineral resource industry where China is looking to buy inordinate amounts of resources, especially in Peru and Chile, to how best use newly discovered minerals in Brazil to combat climate change (check out this piece from February in the Financial Times on minerals found in Brazil's 'terra preta do indio' http://www.ft.com/cms/s/2/67843ec0-020b-11de-8199-000077b07658.html)
So it goes without saying that being involved in these merger and acquisition deals is highly relevant today. Tentatively, the Chinese government has so far released relevant guidelines that touch on what it hopes to achieve with this deal in LA.
For now, though, as Brazilian officials are responding to how China's role in the region will emerge in the future, a gente tem que ver o que é que vai acontecer.
Tuesday, March 31, 2009
Huiyuan and Anti-monopoly law (反垄断法 )
About two weeks ago, there was a strong buzz here in China about a recent ruling by China's Ministry of Commerce to reject Coca Cola's bid to acquire Huiyuan, China's largest natural juice brand.
Now, the reason why this case was closely followed was because it would have been the largest foreign acquisition of a Chinese company to date. The case brought into focus a new Chinese anti-monopoly law that was first implemented in August 2008 and has since been modified with more provisions and regulations to provide greater transparency for the anti-trust investigation process.
The transaction was supposed to happen in this way: Coca-Cola would buy Huiyuan's issued shares and any convertible bonds for $2.3 billion and also committed to invest in China over $2 billion over the next three years.
But the review committee decided this transaction would prevent potential competition in China's juice market given that Huiyuan has about 40% of that market and this would boost Coca Cola's share in the market to over 20%.
So what's the big deal that Coca-Cola got its bid rejected? The big deal is how China's Ministry of Commerce responded.
In their official announcement ( here in Chinese http://www.mofcom.gov.cn/aarticle/b/c/200903/20090306108617.html ) MOC gave no real legal basis for their decision but instead insisted that the acquisition would negatively affect the domestic market. Basically, the announcement reads that the effect of consolidation on national economic development would be deleterious.
The thing is, though, in a previous transaction where InBev acquired Anheiser-Busch (http://archives.chicagotribune.com/2008/nov/19/business/chi-wed-brf2-inbev-nov19) the regulations MOC imposed were less stringent and got the OK for the transaction.
In a word, China's Anti-monopoly law is very new and this has brought and will bring lots of questions about how MOC makes its decisions. Some say Coca Cola's failed bid shows that the Chinese government is serious about its anti-monopoly law. Others contend it's just pure protectionism at its best and, if anything, it was how China could get back at the U.S. for rejecting their acquisition of the American oil company, Unocal, back in 2005 (nanpin.china.com.cn/english/2005/Aug/137165.htm ).
Whatever the viewpoint is, the idea is this: anti-monopoly in Chinese law is changing and being revised every day and as this happens there will be less foreign acquisitions and a stronger stance taken by China on this front.
Now, the reason why this case was closely followed was because it would have been the largest foreign acquisition of a Chinese company to date. The case brought into focus a new Chinese anti-monopoly law that was first implemented in August 2008 and has since been modified with more provisions and regulations to provide greater transparency for the anti-trust investigation process.
The transaction was supposed to happen in this way: Coca-Cola would buy Huiyuan's issued shares and any convertible bonds for $2.3 billion and also committed to invest in China over $2 billion over the next three years.
But the review committee decided this transaction would prevent potential competition in China's juice market given that Huiyuan has about 40% of that market and this would boost Coca Cola's share in the market to over 20%.
So what's the big deal that Coca-Cola got its bid rejected? The big deal is how China's Ministry of Commerce responded.
In their official announcement ( here in Chinese http://www.mofcom.gov.cn/aarticle/b/c/200903/20090306108617.html ) MOC gave no real legal basis for their decision but instead insisted that the acquisition would negatively affect the domestic market. Basically, the announcement reads that the effect of consolidation on national economic development would be deleterious.
The thing is, though, in a previous transaction where InBev acquired Anheiser-Busch (http://archives.chicagotribune.com/2008/nov/19/business/chi-wed-brf2-inbev-nov19) the regulations MOC imposed were less stringent and got the OK for the transaction.
In a word, China's Anti-monopoly law is very new and this has brought and will bring lots of questions about how MOC makes its decisions. Some say Coca Cola's failed bid shows that the Chinese government is serious about its anti-monopoly law. Others contend it's just pure protectionism at its best and, if anything, it was how China could get back at the U.S. for rejecting their acquisition of the American oil company, Unocal, back in 2005 (nanpin.china.com.cn/english/2005/Aug/137165.htm ).
Whatever the viewpoint is, the idea is this: anti-monopoly in Chinese law is changing and being revised every day and as this happens there will be less foreign acquisitions and a stronger stance taken by China on this front.
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