Tuesday, June 24, 2008

Chinese people power translated to decline in visits to France

By China Watcher

It is confirmed that there has been a two-third decline (about 70%) in Chinese tourists to France this summer.

The French Ambassador to China commented that over the past few weeks he has personally witnessed a sharp decline in the number of Chinese people traveling to France based on the number of visas issued.

I believe that the government has not imposed a blanket boycott of French cities in the Chinese tourist map but I was led to understand that the people are fed up with the French unfair support of the Dalai Lama during the recent Tibetan protests and the shameful disturbances to the torch relay in Paris not too long ago. Furthermore, the French Mayor is an anti-China supporter and he has also openly declared his pro-Dalai Lama stance.

Mr. Ladsous told the press that in the first few weeks of this month, the embassy was issuing an average of just 300-400 tourist visas per week, down from about 2,000 a week over the same period last year

Qin Gang, spokesman for China's Foreign Ministry, said recently that the Chinese government follows the principle that people from different countries should enjoy more exchanges so as to better understand each other.

I do not agree with the Shanghai Morning News, that the recent decrease in the number of Shanghai residents traveling to Europe - including France - is due to difficulties in getting visas and rising airfares. In fact, there are statistics which proved that the travel bookings to the other parts of the world have actually increased.

An opinion polls conducted by this blog (though with a small number of respondents) has shown that many Chinese now have negative feelings toward France.

The damage to France's image is irreversible and it will take a while before the Chinese people could forget the whole incident.

The Chinese people are very practical in its social human interaction and seek cooperation from people throughout the world but it must be seen to be based on sound reasoning and judgment. The past events this year alone provided sufficient evidences that the French people do not respect Chinese people opinions but more so based on one-sided prejudicial stance and narrowly focus only on one aspect of the relations, that is, human rights compliance. Even on this matter, they were blinded by their clear hatred of the majority Han Chinese and supported the Tibetan protesters who were actually human rights and law offenders (in the actual sense) when they initiated the riots in the few Chinese provinces.

From the historical standpoint, China-France relations have solidified throughout many years in which there were sincere official meetings and people to people exchanges but lately, there are very few of such “building blocks” since the ascension of the government of Mr.Sarkozy.

With the rise of China as an economic superpower, it is essential that France should take heed that by going against the government they are also antagonizing the Chinese people (who are very proud of its achievements) for the sake of pleasing the many anti-China critics of which I shall refrain from naming them here.

Western reports that investments have moved from China to Vietnam are overblown with devious intent

By China Watcher

Continuing the topic of my earlier article titled “Is it a wise decision to move investments from China to Vietnam?”, I have come across a good write-up by Mr. Alfred Romann on the relocation of factories in China to Indo-China, which is thoughtful and more importantly, there are lots of truth as compared to the many bias articles coming from anti-China media like the New York Times or Los Angeles Times.

Extract of the article:

“There is no sign of ‘evacuation’ from coastal provinces to date, and no market share losses in traditional labour-intensive sectors. In short, no indication at the macro level that exporters might be in trouble,” a consultant wrote in a recent note.

What’s more, Chinese exporters do not appear to be losing their edge. According to official data, which looks at bigger companies in a number of sectors, light industry reported an increase in profitability in 2007 as export manufacturers passed on costs by hiking prices. The share of exports out of Guangdong is dropping, but exports from neighboring provinces like Fujian, Zhejiang and Jiangsu are rising. The sum leaves the total share of exports from the region virtually flat at about 60 percent.

“Once we account for this fact, there’s very little support left for the idea that producers are fleeing the coastal areas in significant numbers,” the consultant added.

Timothy Kim is a good example. In the last decade, Kim has seen his company expand exponentially. A business that was once two people with a phone and a desk is now a multi-million dollar international enterprise with a large showroom in Hong Kong and a fully integrated factory in Dongguan, in the Pearl River Delta manufacturing hub that produces about 60 percent of China’s exports.

“Everybody says we have to go to Vietnam… Wrong. Stupid,” says Kim.

Kim’s Silver Star Kitchenware makes all kinds of metal kitchen products. His large showroom in the New Territories is jam packed with pots, pans, ladles, thermos, forks, knives, strainers and woks. The showroom is shining with metal. Kim makes every part of the product in-house.

“We make everything: The screws, handles, everything. This industry is a materials industry. Material is 70 percent. Labor is maybe 20 percent. Vietnam cannot compete,” Kim says. “This is a materials business and you can’t get good materials anywhere else.

“You want quality, you have to do it under one roof. Upstream and downstream are important,” he says. “Labour costs in Vietnam and China are about the same in real terms.”

Vietnam’s infrastructure is weak and its labor pool is not always cheaper than China’s. It has a population of 86 million and its US$2 billion economy is a fraction of China’s but up until last year, it was growing at more than 8 percent annually.

China may no longer be the cheapest manufacturing locale but manufacturers have boosted their efficiency to compensate and passed on some of the increased costs to suppliers. China also has a relatively good infrastructure, plenty of manpower and access to quality raw materials – whether domestically produced or imported in vast quantities. Companies are moving out of traditional manufacturing hubs like the Pearl River Delta but they are often smaller companies with little value-added. “China is actually keen to develop high-end production and also get rid of low-end production plants that are contributing to pollution,” said Sherman Chan, an economist at Moody’s.

Costs and regulations have been getting more onerous across China for several years, with officials often targeting high polluting enterprises. The issue came to the foreground before 2006 when the small South Korean operators started leaving China, often under the cover of night.

Kim, of Kitchen Star Silverware, has a long list of reasons why moving to other locations makes very little sense. Finding quality materials in Vietnam or Cambodia is very difficult, he says. Stability is measured in months, not years. Quality employees are not always easy to find and there is not the plentiful supply that can still be tapped in the Pearl River Delta. And, while inflation has hit China, it is nothing compared to what it has done to Vietnam.

Still, operating in China can be tricky and old models may no longer work.

“You must restructure your company into Chinese style combined with American or European style,” says Kim. “More scientific.”

In conclusion, China is still a good place for investments provided it is of the right type which fits into the government’s 10-year industrialization growth plan. Inflation occurs in every parts of the world and I confidently believe that the Chinese government has the determination and the expertise to micro-manage this particular hindrance to sustainable economic growth.

Thursday, June 19, 2008

Olympic torch relay celebrated joyfully by locals in Kashgar, Xinjiang

By China Watcher

Contrary to what was reported by the Western Media (particularly the anti-China New York Times), the torch relay in Kashgar was a success with the locals being able to display their traditional Uighurs cultures and dances in conjunction with the fun-filled event.

Though the Muslim Uighurs are now in the minority, I noted that the unique traditional cultures and customs are still very much alive and are being practiced openly by the Chinese government contradicting, once again, what was being stated by the Western media.

Because of the possibility of sabotage by the Uighurs rebels or separatists, the soldiers are present to ensure that the procession of the Olympic torch and the various performances are not disturbed by these troublemakers. Considering that there were two suspicious militant plots that occurred this year, one involving an attempt to bring down an airliner flying to Beijing and the other to kidnap foreigners and carry out suicide attacks at the Olympics, the precautions undertaken by the government are understandable.

Xinjiang governor, Ismail Tiliwaldi, told the audience comprising government officials, womenfolk and children that the Olympic relay torch is part of the motherland celebration and Xinjiang is an integral part of this momentous and historical occasion.

The West tried to portray the cheering bystanders as “choreographed acts”, I would choose to use the word as “well planned security measures” given the risk of dangers posed by the rebels as what had happened in security lapses in Pakistan and Iraq. I sincerely believe that protecting innocent lives is much more important than allowing the people to move freely whereby security can be compromised.

Western media selectively interviewed those poor Uighurs who have remained steadfastly against the Han Chinese influence even though the government has promoted minority educational and financial assistance programs for them. Obviously, the comments would not be friendly but these are extensively used to portray the necessary image of an “anti-Chinese” atmosphere for its targeted audience in the US or Europe. From the manner the many articles that have been written, there is underlying devious agenda to promote and encourage an independent East Turkestan.

Just to give you an idea of what the journalist had written, I extracted from the article what the Uighur woman has commented on the event: “We weren't allowed to go and see it. But even if we were, I think people would have stayed away anyway." If foreign reporters were banned from talking to the locals watching the event, how did he manage to interview the Uighur woman?

The writer commented that there were hardly any Uighur languages being used for the torch event. Is this a fair comment and observation? I think the pictures here would be able to reveal whether the writer is being honest in his work.

It is a known fact that the Uighurs resented the migration of Han Chinese to the under developed region but if the province is an integral part of China, I think there should not be any restrictions on such movement within the country as this is the fundamental right of a citizen to seek a living elsewhere if he cannot do so in his own birth place.

Also economically, the investments from these entrepreneurs and skilled laborers from the rich coastal provinces would help to accelerate the development of these backward areas. When the white settlers moved to the West in the US during the 19th Century by imposing its so called western cultures and uprooting the Indians from its ancestral homes, it is even worse. I rarely see any current efforts to preserve the “uncivilized” cultures of such deprived people in the US.

The torch relay is definitely a pride for China, both for Chinese residents and the Chinese overseas and we do not need Westerners especially those with a hidden agenda to add his or her opinions which will not help to promote unity among its 56 ethnic groups in China.

Go China, Go Olympics, Go Sichuan, Go Kashgar……and without forgetting, Go Tibet.

Monday, June 16, 2008

China makes embarrassing exit from the World Cup’s qualification 2010

By China Watcher

With the Summer Olympics just around the corner, I will continue to add my comments on the sporting development in China besides politics.

Shameful, that is the only word to describe Chinese football fortunes in the prevailing World Cup Asia qualification campaign.

The defeat by Iraq on home ground (in Tianjin) by 2-1 was the final nail into the coffin of the already tattered and uninspiring performance from a team which lacks creativeness and is “goal-shy” in front of the many opposing goal mouths. China drew their first three games in the group but consecutive home defeats spelt an end to their campaign – this time a first round exit. The loss will drive the football crazy fans further away from the many big provincial stadiums which, at times, were only partially filled in the Chinese Super League.

China coach Vladimir Petrovic felt that luck was not on his side as the Chinese did possess two goal bound shots which were saved on the line and that the Iraqis successfully converted the only two scoring opportunities to goal. Even if the two shots were counted as goals, and the team wins by a 3-2 margin, do you think that it is sufficient to take the Chinese team further to the final round and to the World Cup finals? The Chinese team is ranked number 9 in Asia, a drop from a high of number 5, a few years ago. If you cannot even win against mediocre teams from Asia, how could you provide a decent challenge to the competitive teams from Europe and South America?

I do agree that luck is a quintessential part of sport like soccer but if you were to take a hard look at the overall World Cup campaign, the Chinese players just fell short of the qualities to take them to the next round.

Most of the players lack the basic football techniques – straight simple precise and short passing evidently lacking in the team play. And the Chinese players also loved to play safe and not being adventurous to penetrate opposing defenses. Whenever there is a coordinated attack to the opposing half, you would have noticed that there is a clear lack of supporting play from the midfielders and other fellow colleagues who are nowhere to be found. Although at times, they tried to play fast flowing football, it is not fluid and it breaks down quite often. Further, it lacks quality playmakers who can actually read and dictate the game and provided pin-point passing to the forwards and support at the backs. Understanding (bordering telepathy communication) among the players is also absent and it is needed when you employ certain attacking strategies like 1-2 passing etc. The forwards also lack the necessary sting to threaten the defense and in this compartment it evidently lacks deadly strikers who can convert half a chance into goal.

I noticed that there is still hope in the younger breed of national players who are more aggressive and have been able to add the necessary vitality and boost to the senior team especially in the last two games.

If you do not have the quality material on hand, there is no point in hiring the best coaches from around the world. In reality, you cannot turn ordinary dogs into a pack of hunting wolves. You would obviously need to locate “baby-wolves” from the new breed of dogs and nurture them gradually into an efficient and effective hunting unit.

If I have a say in the running of the soccer business in China, I would revamp the whole Chinese FA, beginning with the dismissal of the Head, Xie Yalong. The running of football should be left to the people who are capable and have a strong passion for the game and there should not be interference from the political spheres, hopefully.

Soccer should be run like a business entity with Manager, Chief Executive Officer and Chairman – each with a different role to play. If the objectives are not met, there will be responsibilities and accountabilities and if it is satisfied then there will be ample rewards as well. The same would apply to the players.

Players must be developed at a very young age. Establishment of professionally-run soccer academies in every province is crucial in providing the teaching of soccer skills at an appropriate age. Before the school participants are selected to join the academy, it is important that they do not pick up the bad habits that are prevalent among the current batch of national and club players – hot tempered, incompatible lifestyle, poor discipline, both on and off the field and if I am not wrong, some are even involved in gangsters and corruption activities.

Not too long ago, the Chinese soccer scenes were littered with allegations of corruptions among the people involved in the beautiful game – officials, referees and players. This is an area which must be tackled and cleaned up before the next phase of soccer development can takes place.

I am impressed with the Dutch development of soccer, in which every professional club is responsible for uncovering talent and nurturing them into a complete and successful player with the right aptitudes and attitudes. Just look at how the Dutch is able to continuous develop new talents after the older batch had gone into retirement. One good example is the talented Wesley Sneider, a product of Ajax Amsterdam Academy, who might just be the most sought after player after the completion of Euro Soccer 2008.

China is blessed with a large pool of school-going children, due to its huge population of 1.35 billion, to tap from in order to reverse its soccer fortunes. Every year, in China, there is an estimated 13 million new entrants into Primary 1, which is larger than the whole population of Holland. I do not think it will be difficult to find a “Maradona” or a “Pele” among the school kids if there are proper and sincere programs to uncover talents at the newly established soccer academies or institutes.

I always believe that the organization of soccer in China is in a total mess and this has led to the decline in soccer standards or stagnation in the level of play in China over the past decade. It is important to accept this reality and adopt radical methods to turn China into a feared and truly world-class soccer team – for both men and women, not only in Asia but throughout the world.

Forget about now, let us look at 2018.

Monday, June 9, 2008

Is it a wise decision to move investments out from China to Vietnam?

By China Watcher

Just a few months ago, everyone was talking about making Vietnam a second destination for investments and establishing a manufacturing base, due to the prediction that China’s investment climate was now too complex and risky and that a major correction was due at any time. Vietnam was the darling of international investors and as an “emerging tiger”, it cannot be a wrong choice.

The Japanese and the Taiwanese were the first to shift or re-locate its factories in China to Vietnam due to China’s increasingly tight labor situation and the incessant hike in wages. Japanese political and historical riff with China before the present administration of Fukuda’s crafted a strategy to “Look Away From China”. The then Taiwan’s leader, Chen Shui-Bian also aggressively promoted its technology based companies to invest in countries other than China, especially in South-East Asia in order not to be overly dependent on its political “nemesis” or in short, not to be “black-mailed” in times of any potential political conflict.

Since last month, Vietnam’s currency, the Dong, began its gradual slide downwards. The statistical figures coming from the government department were also not that hopeful. Last week, there were warnings by economists of a financial crisis looming ahead and a possible financial meltdown of the Vietnam’s economy. If the financial planners and decision makers in the Vietnamese government make the wrong call in the months ahead, there is a big possibility of a ballooning trade deficit giving rise to a runaway inflation which may set the country back to its previous economic state.

Over the past decade, Vietnam had enjoyed a stable economic growth of about 8 per cent a year.

The growth of a middle class has also created demand for motorbikes, fanciful cell-phones and designer clothes.

The new confidence in the government in successfully turning the once centrally planned economy to a vibrant capitalist based economy also heralded a spree of spending as if there is no tomorrow. Inflation started to rise last November and is now in the double digit zone.

Recent data however confirmed that everything is not alright. Official data showed inflation last month hit 25 per cent. Data also showed the trade deficit for the first five months of this year hit US$11.1 billion (S$15.14 billion), close to the US$12.4 billion for all of last year. Soaring imports are the main cause and a slowdown in foreign direct investment to finance the deficit will reduce the already small foreign reserves. This will raise worries that the country could run out of foreign reserves to defend its own currency's value.

One market analyst commented that a sharp devaluation of the Vietnamese Dong is imminent in the coming months and possibly, in the range of 20 to 30 percent. Critics blamed the sorrowful state to the government’s poor and uncoordinated economic policies.

Although some foreign investors are entrenched in the country for the long-term but confidence has largely evaporated from the domestic business sector. Even at giveaway prices for the so-called blue chip companies at the local stock bourse, there are no takers. Credit rating agencies have cut their credit outlook for Vietnam to negative. And foreign investors are now taking their money elsewhere, depriving Vietnam of a key support for its growth and import appetite.

The financial industry will be shaken by a mountain of bad loans in the event of such eventuality and to restore confidence, there is high possibility that state banks may need to borrow abroad like from the IMF and World Bank.

In comparison, China is certainly better managed and the country is big enough to absorb shocks like this. Any currency speculators will think twice before trying to attack the Yuan due to the Chinese huge foreign reserves, now estimated at US$1.7 trillion.

In hindsight, those companies who stay put in China are considering how fortunate that they did not follow its counterpart footsteps’ to move out to Vietnam or other emerging low cost nations.

Though the West had been persistent in trying to run down China by highlighting China’s insurmountable problems related to environmental degradation and economic bottlenecks, China still remains the number one foreign investors’ destination in the latest survey from a reputable international magazine.