China Challenges

What Chinese Students Going to the US Want

Inside Higher Education says:

HOUSTON – The number of Chinese undergraduates on U.S. campuses has risen rapidly in recent years – increasing 43 percent in the past year alone – prompting many college administrators to ask how they can better position their institutions in the China market. At the annual NAFSA: Association of International Educators conference here, experts offered insight into who the new Chinese applicants are and why they choose the colleges that they do.

As is well-known, one main cause of the increase in Chinese students pursuing undergraduate degrees abroad is the country’s increasing wealth. Furthermore, the government’s one-child policy has created a situation in which many families can invest their savings in a single child’s education. But just how substantial are these savings? How much can students pay?

Zinch China, a consulting company, posed that question in a phone survey of 18,000 Chinese students. The data show that the market is divided into two main segments: 25 percent of students can afford to pay less than $10,000 a year, and thus are truly in need of financial aid, while 53 percent can afford to spend $40,000 or more annually.

Read more: http://www.insidehighered.com/news/2012/05/31/new-survey-chinese-students-motivations-picking-colleges#ixzz1wUTZe0nT

More soul-searching as foreigner helps out

The Shanghai Daily reports:

AN Italian teacher working at the Tongji University volunteered to cordon off people from a burning bus yesterday morning before police reached the site.

No one was injured, and a firefighter wrote about the incident on the Internet to express his gratitude to the teacher. But the post triggered a heated debate online about why it's always foreigners who are the heroes, stepping in to help others.

Some blamed the dearth of Chinese good Samaritans on current society's prevailing philosophy of self-protection, while others attributed it to the lack of first aid training among citizens.

Marco Scaioni, 43, came to the city about six months ago to work at Tongji University's College of Surveying and Geo-Informatics.

The expat professor was riding a bike to the university about 10am when he approached the university gate.

"I suddenly heard a big bang, explosion, when I'm on my bike," he said.

Read more: http://www.shanghaidaily.com/nsp/Metro/2012/05/30/More%2Bsoulsearching%2Bas%2Bforeigner%2Bhelps%2Bout/

China's New Privatization Plan Faces Push-Back Risk

Reuters reports:

China's new push to open state controlled industries may look bold after a decade of stuttering privatization progress, but Beijing faces stiff resistance from vested interests in its effort to extend its World Trade Organisation dividend.

Beijing's leaders, its top think-tanks, the World Bank and private sector economists all largely agree that for China to build on reform-fired growth after its first decade of WTO membership, state firms must be more competitive and capital better allocated.

The question is whether publication this week of detailed plans to allow private investment in highways, health care and railways will really help dilute state involvement in a range of industries where top executives enjoy ministerial level status and firms get preferential access to capital and contracts.

"The issue is not just about writing a document," said Yao Wei, China economist at Societe Generale in Hong Kong. "Is it a level playing ground? You ask private firms for money, but when they go to banks, can they get the same lending terms as state-owned firms? Do they get subsidies like state-owned firms?"

China's basic privatization policy was published in 2010, the so-called New 36-Clauses. Inertia and a lack of detailed guidelines saw the initiative stall, following the pattern of failure seen since 2005 — when the 36 Clauses were first issued.

Resistance from government-backed giants is no small thing. Big state banks, which dominate the sector, profit massively from the guaranteed spread between lending and deposit rates, while state-owned enterprises get spared competition for the best contracts.

Read more: http://www.cnbc.com/id/47558799

In China, more money but not more happiness, study says

The LA TImes reports:

The economy may have boomed in China, but happiness hasn't boomed along with it, according to a University of Southern California study released Monday. Happiness levels dropped and then bounced back over the last two decades, changing little on the whole even as Chinese incomes grew at least fourfold.

The swings in the level of happiness seem to be tied to unemployment, said economics professor Richard A. Easterlin, a pioneering scholar in the happiness field and one of the authors of the report published in the Proceedings of the National Academy of Sciences. Other factors that have dragged down happiness levels are increased inequality and the disappearance of the social safety net.

“When unemployment is up, not only do the unemployed become less happy, but the employed feel greater insecurity,” Easterlin said. “The clear lesson from China is how important it is for people’s happiness to have jobs and a fair amount of certainty about those jobs, as well as a social safety net.”

Happiness is under the microscope in China, which economists have eyed as a real-life laboratory to study how money, inequality and change are tied to our satisfaction with life.

Read more: http://latimesblogs.latimes.com/world_now/2012/05/china-happiness.html?goback=%2Egde_2640270_member_115712511

China Soft-Power Watch: the Yang Rui 'Foreign Bitch' Factor

James Fallows writes:

On his Sina Weibo account, Dialogue host Yang Rui let loose with an anti-foreigner rant so extreme that on first reading I was sure it had to be a parody. Only it wasn't. It's as if you heard a Stephen Colbert "in character" riff on his show -- and then suddenly realized he wasn't kidding. To put it further in context, it's as if a well-known figure whose trademark was urbane earnestness -- again let's say Ted Koppel, or Charlie Rose -- let rip with a David Duke-style diatribe and evidently meant it.

The paragraph below was all one tweet from Yang Rui -- you can really say more in 140 Chinese characters than 140 English letters! -- as translated in a dispatch by the WSJ's Josh Chin:

The Public Security Bureau wants to clean out the foreign trash: To arrest foreign thugs and protect innocent girls, they need to concentrate on the disaster zones in [student district] Wudaokou and [drinking district] Sanlitun. Cut off the foreign snake heads. People who can't find jobs in the U.S. and Europe come to China to grab our money, engage in human trafficking and spread deceitful lies to encourage emigration. Foreign spies seek out Chinese girls to mask their espionage and pretend to be tourists while compiling maps and GPS data for Japan, Korea and the West. We kicked out that foreign bitch and closed Al-Jazeera's Beijing bureau. We should shut up those who demonize China and send them packing.

The "foreign bitch" he refers to is Melissa Chan, a U.S. citizen working for Al Jazeera, who did really impressive work from China over the past five years and then was expelled.

Read more: http://www.theatlantic.com/international/archive/2012/05/china-soft-power-watch-the-yang-rui-foreign-bitch-factor/257403/

After slamming brakes on growth, China reaches for stimulus

LA Times reports:

BEIJING — After months of careful tinkering aimed at slowing China's supercharged economy, Chinese officials may have gotten more than they bargained for: The nation's economic engine is decelerating with alarming speed.

Industrial production in April hit its slowest pace in more than three years, while growth in exports sputtered and imports were flat.

In response, China's central bank over the weekend said it would ease reserve requirements for the nation's banks. The move frees about $70 billion for lending to stimulate the economy. But some economists said more aggressive action was required to keep China from a hard landing.

A sharp downturn in China would be a blow for the global economy and in particular California, which has long been a beneficiary of booming trade with China.

The deceleration is already being felt at Southern California ports. In the first three months of this year, container traffic through the ports of Los Angeles and Long Beach was up just 0.6% compared with the first quarter of 2011, largely because of slowing shipments from China.

Growth in exports is weakening as well. China is now California's third-largest export market, behind Mexico and Canada, snapping up a record $14.2 billion of computers, wine, citrus and other products last year. But California exports to the Middle Kingdom barely budged in the first quarter, up only 0.4% from the first three months of 2011.

Ross DeVol, chief research officer at the Santa Monica-based Milken Institute, said California would weather a soft landing by China just fine. "But it all depends on how much China's economy will slow," he said.

Read more: http://www.latimes.com/business/la-fi-china-slowdown-20120515,0,3560805.story?goback=%2Egde_2966312_member_115565071

Shanghai’s Billionaires Owe Their Fortunes to Real Estate

Micheal Cole writes:

Real estate investors, manufacturers and professional investors are the wealthiest people in Shanghai, according to Shanghai Wealth Report 2012, which tracks the wealth of China’s super-rich.

The report, which was published on Friday by Hurun Report and the Australia-based independent financial adviser Gao Fu Wealth Management detailed China’s biggest billionaires and the sources of their wealth.

Read more: http://www.mingtiandi.com/real-estate/20120513/shanghais-billionaires-owe-their-fortunes-to-real-estate/?utm_source=mtd+real+estate+list&utm_campaign=1a31228e16-RSS_EMAIL_CAMPAIGN&utm_medium=email

Guanxi and Contracts in China

Silk Road Internatioonal Blog says:

Some fantastic opportunities to learn about China are more and more available in the US. While in the US this month I attended a couple of sessions of the UVU Doing Business with China seminar in Utah.

First, Andrew Hupert presented a great keynote address on Guanxi. All that needs to be said/known about this can be read in his great ebook: Guanxi for the Busy American. You can buy it at Smashwords. Some highlights include:

1. Relationships come before any contract (Guanxi as Due Diligence).

2. Relationships come after all contracts and work are completed (Guanxi Best Practices).

3. Get these relationships right or have never ending frustrations (Guanxi Myths and Realities).

Second, in a follow up on this, in a break out session on working with Chinese in the US, the Chinese speaker said two things that I found very interesting.

1. There is a “misunderstanding” that Chinese don’t follow contracts. She said, this isn’t true, they just understand things differently.

Read more: http://silkroadintl.net/blog/2012/05/11/guanxi-and-contracts-a-chinese-explaination-from-the-us/

Five Reasons China's Banks Are Not Taking Over The U.S. Banking System

Forbes says:

The Federal Reserve’s decision this week to green light the expansion plans of three massive state-owned Chinese banks, including the first-ever takeover of a group of U.S. bank branches by a Chinese lender, got tremendous media attention and seemed to play into general fears about China flexing its muscles in America’s backyard.

But while China’s big banks and some parts of China’s government appear to be trying to play a bigger role in the global financial system, China’s banks will not play a meaningful role in the U.S. any time soon. Here are five reasons why:

Read more: http://www.forbes.com/sites/nathanvardi/2012/05/10/five-reasons-chinas-banks-are-not-taking-over-the-u-s-banking-system/

Academic Fraud in China

Tom at the Seeing Red in China writes:

The following is a guest post from Hannah who writes on her blog ChinaB.org

My Chinese friend turned to me the other day and said “What time is it? I got a plane to Shenzhen to catch.”

“Shenzhen? What are you doing going there on a Sunday night?”

She looked suddenly embarrassed and told me quietly that she was taking a PhD qualifying exam for someone. The first question that came to mind was why?; why this thirty-some-year-old was being flown out to Shenzhen to take a PhD exam. I have known her for two years, and she is a very kind and curious woman, but by no means a mover and shaker. Her English is pretty good, and if she had any other hidden talents, she kept them very well hidden.

“There is an English part to the exam, but it’s on a couple of different subjects. The girl I’m taking it for is overseas at grad school and can’t come back to China just for the test. My company [a study abroad facilitator who sends Chinese students overseas] helped her get into grad school, so her father asked my boss if he had any employees who could take the PhD test for her. I look the most like her, so he interviewed me then said I could do it.”

Moral quandary aside, I was a bit worried for both parties. Could she pass the test? What if she didn’t?

“He’s already paying for my flight and giving me 5000 RMB.”

Well, that’s not a little money.

She flushed in embarrassment again. “My father’s giving me a lot of pressure to make money, he says I’m underpaid and I need to step up, so whenever I can find a side gig, I take it.”

Read more: http://seeingredinchina.com/2012/05/07/the-case-of-the-phd-cheat-guest-post/

A China JV Success Story

The Foreign Entreprenuers in China blog explains:

We are a custom electronic transformer manufacturer with 26 years in the business and 32 employees in our home country, of which 18 are involved in manufacturing our low volume and highly specialized products in house (while our JV in China produces the higher volume product). China represents 20% of our turnover and we supply to contract manufacturers.

We currently have a joint venture with a medium sized SOE where we own 35% of the shares in the company and hold one seat on the Board of three people. The joint venture company has 250 full time staff plus another 150 contract workers. Our partner is an SOE Group of 20 companies all in the electronics sector. The Group has been in the business for over 50 years and our specific company within it started making transformers and inductors for Japanese companies back in the early 1980’s. Basically we bought into a going concern, not a start up.

Why Did Our China Experience Start?

Custom transformer manufacturing is a labour intensive process and for that reason we decided to go to China in 1999 to find a manufacturing company we could work with. Our Head Engineer was Chinese and had seen the need, well before Management woke up to the fact, that we were losing the competitive fight in our home market to international distributors who were already sourcing out of Asia.

Read more: http://www.foreignentrepreneursinchina.com/2012/05/a-china-joint-venture-success-story-part-i/

Apple Discovers a New Market in China: Rich Boyfriends

The HBR blog says:

So Chinese users are cobbling together an iPhone experience from a variety of sources, and the overall experience is not very good. The comment Tim Cook made to analysts recently suggesting that Apple is focused on delivering a phone with "off-the-charts user experience that customers want to use every day of their lives" sounds like pure hyperbole from the Chinese perspective. The iPhone may very well be the best smart phone on the planet when it's living in its own ecosystem, but its functionality and user experience quickly dissipate when it leaves its natural environment. And then there's the price — $700 in a country where managers typically make $1,000 a month.

Who in their right mind would buy this phone? I asked 70 midlevel Chinese executives in a class I was teaching. None of the 45 men owned (or wanted to own) an iPhone. But ownership was almost universal among the 25 fashionable women. The stunning results of this impromptu survey prompted further investigation. Apparently, a lot if not most of the new iPhone users in China are women, and many women I spoke to said they had acquired their phones as gifts from husbands or rich boyfriends. For a gift that exudes exclusivity, functionality is secondary; slow downloads, sparse content, and kludgy fixes may not be important. Maybe on the next quarterly call, Tim Cook will tell analysts that Apple is now focused on selling expensive fashion accessories.

Read more: http://blogs.hbr.org/cs/2012/05/apple_discovers_a_new_market_i.html?referral=00563&cm_mmc=email-_-newsletter-_-daily_alert-_-alert_date&utm_source=newsletter_daily_alert&utm_medium=email&utm_campaign=alert_date

Feeding China

The Beijing Review says:

China's grain imports in 2011 surpassed 61 million tons, indicating that its overall self-sufficiency rate in grain was less than 90 percent.

For the past few years, China has insisted that, to ensure national food security, 95 percent is the bottom line of the country's grain self-sufficiency requirement.

"But now the volume of imported grain has reached 10.7 percent of the domestic grain output. I am afraid this will affect grain security if the imported amount keeps increasing," said Chen Xiwen, Director of the Office for the Communist Party of China (CPC) Central Committee's Leading Group on Rural Work, in March.

The supply of other major agricultural produce in China also depends increasingly on the international market. According to Customs statistics, China imported about 4 million tons of corn from the United States and 52.6 million tons of soybeans from overseas markets in 2011.

To avoid becoming too reliant on imports, Chen suggested that the country increase its grain output by protecting arable land and further improving agriculture through science and technology.

Read more: http://www.bjreview.com/Cover_Stories_Series_2012/2012-04/27/content_449510.htm

How much do multinational companies reply on China’s market for revenue?

OffBeat China says:

The answer may disappoint many – to a lot of multinational companies, China is still a relatively small market. As shown in the chart published by Netease, Carrefour supermarkets, which can be seen everywhere in China, only got 10% of its 2011 global revenue from China. Coca Cola got about 7%. The only company that will have a hard time leaving China is probably KFC, which got nearly half of global revenue from China (49.8%).

Read more: http://offbeatchina.com/infographic-how-much-do-multinational-companies-reply-on-chinas-market?goback=%2Egde_36656_member_109908180

China Shuts Coke Plant Over Chlorine

WSJ reports:

BEIJING—Regulators in northern China shut down production at a beverage plant owned by Coca-Cola Co. after finding chlorine in a batch of drinks made in February.

The food-safety regulator in Shanxi province said Saturday that during an April inspection it found that a batch of drinks produced by Coca-Cola (Shanxi) Beverage Ltd. was made with water containing chlorine. The statement, from the Shanxi Provincial Bureau of Quality and Technical Supervision, refers to the suspension as a penalty for the chlorine levels.

Read more: http://online.wsj.com/article/SB10001424052702303916904577375370450310902.html?mod=rss_asia_whats_news#printMode

Price of a Job Saved by China Tire Duties: Nearly $1 Million – Report

The WSJ reports:

President Obama was so proud of the jobs saved by shutting off imports of Chinese tires he cited the action in his 2012 State of the Union Address. According to analysts Gary Hufbauer and Sean Lowry of the Peterson Institute for International Economics, known for its support of free trade, the victory had a heck of a cost: at least $936, 000 for each job saved.

Read more: http://blogs.wsj.com/chinarealtime/2012/04/27/price-of-a-job-saved-by-china-tire-duties-nearly-1-million-report/

The Startling Plight of China's Leftover Ladies

Foreign Policy says:

The Spicy Love Doctor was running late. A well-heeled crowd one recent Sunday afternoon had packed into the second-floor lounge of Beijing's Trends Building -- home to the publishing offices of several glossy magazines, including the Chinese editions of Cosmopolitan, Esquire, and Harper's Bazaar -- to hear Wu Di, a contributor to China's Cosmopolitan and author of an alluring new book, I Know Why You're Left. The poised, professional crowd, outfitted in black blazers, leather boots, and trendy thick-framed glasses, was composed mostly of women in their mid-20s to mid-30s -- prime Cosmo readers and all there waiting patiently to hear Wu, who typically charges $160 an hour for "private romance counseling," explain their surprising plight: being single women in a country with a startling excess of men.

When at last she sauntered to the front of the room, microphone in hand, Wu, a pert, married 43-year-old who resembles a brunette Suze Orman (and whose chief advertised credential, it turns out, is an MBA from the University of Houston), surveyed her audience. Then she broke out into a practiced grin and, in the relentlessly chipper staccato common to Chinese public speakers, launched into her talk: a mix of sisterly homily, lovemaking tips, and economics lecture. It's unrealistic to expect that you will be madly in love with one person forever, she warned, or even that passion can be the right guide to marriage. Her authority? No less than the wandering eye of Bill Clinton, which, she told her solemnly attentive audience, "proves that there is no method to sustain feverish lust between long-married couples."

The majority of her talk was devoted not to such timeless aphorisms, but to describing a new conundrum in China: the plight of its sheng nu, or "leftover ladies." In popular parlance, sheng nu refers to women above a certain age -- some say 27, others 30 -- who are unmarried and presumably "left over," too old to be desirable. Increasingly, sheng nu are a topic of alternating humor and alarm for Chinese newspaper columnists, TV sitcoms, reality dating shows, and studies by government bodies like the All-China Women's Federation; according to its 2010 survey, more than 90 percent of male respondents agreed that women should marry before age 27 or risk being forever undesired.

Read more: http://www.foreignpolicy.com/articles/2012/04/23/the_startling_plight_of_china_s_leftover_ladies

Corruption Nation

The New Yorker says:

In December, 2006, police in the Chinese territory of Macau arrested Ao Man Long, the region’s secretary for transport and public works, who had been collecting kickbacks over a period of seven years. Investigators found that he and his family had received more than a hundred million U.S. dollars, which he had detailed in a collection of “friendship notebooks.” The indictment itemized so many individual bribes that reading it aloud at his trial took seven hours. Ao was sentenced to the maximum penalty—twenty-eight-and-a-half years—and the judge said that, were a sentencing limit not in place, the scale of the offenses merited a prison term of three hundred and sixty years. For taxpayers, it was not a victimless crime: a major bridge in Macau, for which Ao is said to have received $1.7 million in kickbacks, was reportedly built of such poor quality that it may be need to be overhauled only seven years after it was built.

The astonishing thing about the Ao Man Long case is that it is not astonishing. The scale, the audacity, the damage to the public good—all of it is in keeping with a pattern of epic corruption that has become the most dangerous side effect of, and threat to, China’s boom.

Read more: http://www.newyorker.com/online/blogs/evanosnos/2012/04/chinas-public-servants-why-bo-xilai-matters.html#entry-more

'Made in Japan' Engineers Find Second Life in China

CNBC reports:

Their technical skills helped Japan's corporate giants sweep all before them in the 1980s, and now thousands of ageing Japanese engineers are finding a new lease of life in booming China.

"My profession is going out of business in Japan," said 59-year-old Masayuki Aida, who made moulds for a Tokyo-based firm for 30 years but has spent most of his 50s in Dongguan, a gritty manufacturing hub in southern China's Pearl River Delta.

With the incessant noise of car horns and a pervasive smell of chemicals, the dusty streets of industrial Dongguan are a far cry from Tokyo or Osaka. Construction sites dot the city while beggars clutching tin cans approach cars at every intersection.

For Aida and many like him nearing the national retirement age of 60 the choice was simple - face a few years without an income as Japan raises the age at which employees get their pension or work for mainland Chinese and Hong Kong companies.

"People aren't making products in Japan anymore," said Aida, who makes moulds for goods ranging from toys and earphones to coffee machines. "I wanted to pass on to younger generations all the knowledge and technology about moulds I had obtained."

Read more: http://www.cnbc.com/id/47069233

 

China's Investment Driven Growth Makes Sense

Slate says:

I had a hazy intention to write an anecdote-driven piece arguing that all this hysteria about China's level of investment is overblown, but fortunately for me Ryan Avent wrote a column with actual data to make the same point. China is adding capital at an extremely rapid rate for the fairly good reason that it's a country with an extremely low level of capital goods per person.

This seemed fairly obvious to me on an anecdotal level even just based on a government-affiliated tour that deliberately avoided visits to any of the poorest parts of the country. I saw people living in shacks, bicycles being used to transport wholesale quantities of socks, vast quantities of laundry drying in the open air in Shanghai, workers digging holes with shovels, etc. It's important not to confuse rates with flows.

Read more: http://www.slate.com/blogs/moneybox/2012/04/12/china_s_investment_driven_growth_makes_sense.html?wpisrc=newsletter_tis

Reforming China’s vast shadow banking sector

The CER reports:

Wu Ying’s rise to riches was like a Horatio Alger story on steroids. A native of Zhejiang province, Wu dropped out of college to work in a beauty salon, then later opened her own salon down the street. By 2006, at the age of 25, Wu had built a conglomerate of hotels and other businesses and had accumulated assets of US$569.4 million, making her the nation’s sixth-richest woman, according to the Hurun Report.

But then the success story went wrong. The police arrested her in 2007, confiscating more than 100 luxury apartments and dozens of cars and businesses. Her alleged crime was financial fraud: Wu had raised US$112 million from 11 people by promising outsized returns. She was sentenced to death in 2009, and China’s supreme court is now preparing to review her case.

Wu’s harsh sentence triggered an uproar. For many, it hammered home the realization that China cannot continue to allow the informal lending sector to operate in a state of quasi-legitimacy. Soliciting the public for funding, as the prosecution argues Wu has done, is illegal. However, it has become so commonplace as to seem tacitly approved.

Read more: http://chinaeconomicreview.com/node/56999

Forget Slowdown, China Already 'Re-accelerating': Economist

CNBC reports:

China's economy is accelerating again and inflation will tick up by the second half of the year after bottoming out in February, according to David Carbon, Managing Director of Economics and Currencies at DBS Bank.

"We look at the numbers and China gave us a touch and go three, four months ago, so it's no longer a question of hard or soft landing," Carbon told CNBC on Monday. "China has already taken off again, as has most of Asia."

Gross domestic product (GDP) figures to be released Friday may indicate that the economy is expanding faster than the official target of 7.5 percent for 2012, Carbon added. "We look at the broad body of data including GDP, which will be out at the end of this week. China is already re-accelerating again."

The latest data on inflation and bank lending also reflect a strengthening Chinese economy. Inflation in China came in at a higher than expected 3.6 percent in March, according to government data Monday, after hitting 3.3 percent in February. China's big four state banks extended almost 300 billion yuan ($47.50 billion) in new local-currency loans in March, the official Securities Times reported on Saturday, citing unidentified sources.

Read more: http://www.cnbc.com/id/46990157

2020 Chinese Consumer Report: A Summary for Busy People

The Foreign Entrepreneurs in China Blog wrote recently:

McKinsey has just released their consumer and insights report “Meet the 2020 Chinese Consumer”, that hopes to identify trends that may influence companies´ long to medium term strategic thinking.

Introduction:

-Consumption, rather than investment, will be the driving force for GDP growth. It will account for 43 percent of total GDP growth by 2020, compared with a forecast contribution from investment of 38 percent, internal research suggests.

-Transition from investment-led to consumption-led growth will depend on several factors: continuous rapid urbanization, government measures to improve social security and boost private consumption (aggressive measures to boost private consumption are a key plank of the latest five-year plan), and financial sector and industrial reforms that will lead to the creation of service sector employment and increase income.

Changing Demographics:

Many of the changes taking place are common features of rapid industrialization: rising incomes, urban living, better education, postponed life stages, and greater mobility, for example. But there are also some unique factors:

1.Shift in Consumer Profile: from Value Consumer to Mainstream Consumer

-Per capita disposable income of urban consumers will double between 2010 and 2020, from about $4,000 to about $8,000.

-“Mainstream” consumers (relatively wealthy households-annual disposable income of between $16,000 and $34,00) is expected to reach 51 percent of the urban population compared to 6 percent at present.

-Why is this important for companies?
82% of the consumers fall currently into the “value” category ($ 6,000 to $16,000 annual disposable income), which has clear implications for companies that must decide between targeting the smaller group of afluent/mainstream consumers or stretch their brands to serve value consumers. This will not be the case in 2020.

-Currently, around 85 percent of mainstream consumers are living in the top 100 wealthiest cities. Another 10 percent of mainstream consumers live in the next 300 cities today, but this percentage will swell to nearly 30 percent by 2020.

Read more: http://www.foreignentrepreneursinchina.com/2012/03/2020-chinese-consumer-report-a-summary-for-busy-people/

U.S. vs. China. Can We Please Get Rid of the Scorekeepers?

Stan Abrams writes:

As much as I dislike commentators of the U.S.-China bilateral relationship that insist on looking at everything as a zero-sum game, where every advantage or success of one nation is seen as a negative for the other, there is another category of knuckleheaded chatterers out there who are even worse. These are the scorekeepers, folks who love uncovering meaningless statistics in order to . . . well, I don’t know exactly. Instill fear? Gin up concern? Interest in reading a blog or book?

Dan Newman appropriately posted a good example of the scorekeeper article on the Motley Fool blog.

Read more: http://www.chinahearsay.com/u-s-vs-china-can-we-please-get-rid-of-the-scorekeepers/

China's Dueling Economic Theories

Businessweek reports:

Should China push for radical reform or return to a more government-directed economy? It’s a familiar question made more urgent by the downfall of Bo Xilai, seen by many as a leader of the Communist Party’s conservative faction. A recent People’s Daily editorial that strongly supported more reform, plus a call by the World Bank and a research arm of China’s Cabinet for a smaller state role in financing and industry, have highlighted the issues. “The debate will be messy,” wrote Standard Chartered China economist Stephen Green in a March 1 report. However, he added, “something good is stirring in Beijing.”

Read more: http://www.businessweek.com/articles/2012-03-22/chinas-dueling-economic-theories

Who Succeds With China Product Sourcing?

Dan Harris says:

Had lunch the other day with a long-time client who has been involved with international outsourcing for more than twenty years and involved with sourcing product from China for at least ten. We talked a lot about what separates companies that do well in sourcing product from China from those that fail.

He sees the following as determinative:

• Those who go into China to save “small money” fail. They go in to save ten percent, but that ten percent gets eaten up “pretty quickly by either quality control problems or greater than domestic monitoring costs. He is of the view that one should not even bother sourcing product from China unless the savings will be at least “15%, probably more.”

• Those who go into China “half-way” usually fail. If you are going to outsource your product to China, you must spend the time in China making sure your product is being manufactured correctly there. Spending time at your China factory will itself go a long way towards convincing the Chinese factory that you are serious about quality. That in turn will increase the chances of your receiving quality product.

• Those who require their Chinese suppliers to sign “real contracts” are also more likely to succeed. He sees this as further evidence of seriousness. “If you are not taking the relationship seriously, why should your product supplier.”

Read more: http://www.chinalawblog.com/2012/03/who-succeds-with-china-product-sourcing.html

RMB 10 Bil Leaving China Each Year in Pockets of the Wealthy

Micheal Cole writes:

A recent report in Beijing’s Legal Evening News, reveals that based on the number of investor immigrants and the minimum investments required to qualify for investor visa programs in various countires, no less than RMB 10 billion ($1.57 billion) has left the country through investments by wealthy Chinese individuals each year since 2009.

Given that the report based its findings on the minimum investment amount required by the governments of the United States, Canada and Australia, the actual amount of cash expatriated is likely to have been much higher. Investor emigrants to those three countries are believed to account for 80 percent of the total number of Chinese emigres.

Read more: http://www.mingtiandi.com/real-estate/20120317/rmb-10-bil-leaving-china-each-year-in-pockets-of-the-wealthy/?utm_source=mtd+real+estate+list&utm_campaign=2169a47231-RSS_EMAIL_CAMPAIGN&utm_medium=email

An acclaimed Apple critic made up the details

Marketplace reports:

Apple got a lot of attention recently over conditions in the Chinese factories that make its iPhones and iPads. The public radio show "This American Life" aired an electrifying account of one man’s visit to several factories. The man was Mike Daisey, a storyteller who is widely credited with making people think differently about how their Apple products are made.

It’s Daisey’s story about visiting a Foxconn factory in China where Apple manufactures iPhones and other products. With the help of a Chinese translator, Daisey finds underage workers, poisoned workers, maimed workers, and dismal factory conditions for those who make iPhones and iPads.

“I’m telling you that in my first two hours at my first day at that gate I met workers who were 14 years old…13 years old…12," Daisey recounted. "Do you really think Apple doesn’t know?”

Daisey told This American Life and numerous other news outlets that his account was all true.

But it wasn’t.

Read more: http://www.marketplace.org/topics/life/ieconomy/acclaimed-apple-critic-made-details

Niall Ferguson on China

Quote of the Day -

“It is one of our comforting and enduring myths that as China becomes more modern and sophisticated, more like us, it will come to adopt our values. I’m not sure it’s going to be like that. [Chinese students during the Lhasa riots in 2008] were very hostile to the criticism of the Chinese government. The key insight for me is that rather than pro-democracy feelings increasing as China grows economically, it is a radical, shrill nationalism that is emerging. There is an enthusiastic embrace of the economic benefits of the market but resentment of Western cultural hegemony. The attitude is: if we make it economically, we don’t have to kowtow to you culturally."

Source: http://shanghaiist.com/2012/03/13/niall_ferguson_on_the_shrill_nation.php

Five Chinese Business Leaders Every American Should Know About

From Business Insurance Quotes:

We could learn something from the way business is being done in China. Their unmatched work ethic has resulted in China hosting some of the most influential businessmen and women in the world. The following five business leaders command their respective markets with such prowess, they are a force to be reckoned with. Many have made their way up from humble upbringings to become among the wealthiest, most powerful people in the world.

Read more: http://www.businessinsurance.org/5-chinese-business-leaders-every-american-should-know-about/

Chinese workers enjoy life after ‘luoci’

The FT reports:

China is famous for having perhaps the most fickle workforce on earth. Up to 30 per cent of staff commonly leave in any given year. They are usually driven by a mixture of greed and ambition – the quest for higher salaries, faster promotions, a bigger car or a better secretary.

But since last year, more and more workers have been handing in their notice before they get that next job, often for lifestyle reasons – a phenomenon known in China as luoci, or “naked resignation”.

Read more: http://www.ft.com/intl/cms/s/0/004ee68c-678a-11e1-b6a1-00144feabdc0.html#axzz1oh8M2gkc

Poll of single women shows age 29 is key to 'left-over' feeling

Shanghai Daily says:

SINGLE women at the age of 29 in Shanghai tend to believe themselves as "leftovers," according to a recent survey carried out by the country's biggest matchmaking website.

Near 2,000 single women in the city took part in the survey, 35 percent of whom felt they were "leftovers." Near 60 percent of the self-proclaimed "leftovers" are 29 years old. About 30 percent of them find the title insulting, but most don't make any effort to get married, said Jiayuan.com, the survey's organizing website.

Single interviewees said that from the age of 26, they started to feel different about their single status, and the concern reached a peak when they were approaching their 30s.

Meanwhile, single women who have passed the marriage age - for example, women born during the 1960s - care less about their marital status, and they don't consider themselves "leftovers."

The survey showed that about 78 percent of the "leftovers" feel an urgency to find a husband or boyfriend, but only 18 percent are willing to take action. About 41 percent said they still "believe in love," but don't have much motivation to pursue a relationship. Almost 20 percent said they are not confident in finding an ideal and stable relationship at all.

"I have blind dated I don't know how many men," said 30-year-old Lily Zhang, a white-collar worker. "But with none of them did I expect to develop a relationship."

Read more: http://www.shanghaidaily.com/article/print.asp?id=496025

Apple’s Job Creation Data Spurs an Economic Debate

The NY Times reports:

Apple has made its first attempt to quantify how many American jobs can be credited to the sale of its iPads and other products, a group that includes the Apple engineers who design the devices and the drivers who deliver them — even the people who build the trucks that get them there.

On Friday, the company published the results of a study it commissioned saying that it had “created or supported” 514,000 American jobs. The study is an effort to show that Apple’s benefit to the American job market goes far beyond the 47,000 people it directly employs here.

Apple, based in Cupertino, Calif., released the study on its Web site but declined to say why it published the results. The company’s employment practices have come under closer examination. Apple and other high-tech companies, including Internet companies, employ relatively few people compared with other stalwarts of American business, like General Motors and General Electric in their heyday.

Apple, which is now the world’s most valuable company, has created more jobs overseas, approximately 700,000 through a network of suppliers that make iPhones, iPads and other products.

The accuracy of the Apple jobs calculation in the United States may well be debated among economists for years. “Apple has a big effect, and big is about as precise as I can make it,” said Gary P. Pisano, a professor of business administration at Harvard Business School. “It’s hard to say the exact size.”

David Autor, an economics professor at the Massachusetts Institute of Technology, said via e-mail that the “entire business of claiming ‘direct and indirect’ job creation is disreputable” because most of the workers Apple is taking credit for would have been employed elsewhere in the company’s absence.

Read more: http://www.nytimes.com/2012/03/05/technology/apple-study-on-job-creation-spurs-an-economic-debate.html?_r=1&nl=todaysheadlines&emc=edit_ae_20120305&pagewanted=print

Per Capita, The U.S. Is Far Ahead Of China

Mark Perry writes:

There's been a discussion in the last two issues of The Gartman Letter (subscription required) about the relative size of China's economy on a per-capita basis, and then adjusted for Purchasing Power Parity. Here are some contributions to that discussion:

1. According to the IMF, China's per-capita GDP in 2011 was $5,200, putting it on par with the per-capita GDP of Angola ($5,061), Macedonia ($5,012) and Algeria ($5,001).

2. Adjusting for Purchasing Power Parity, China's per-capita GDP in 2011 increases to $8,400, putting it on par with Ecuador ($8,335) and Belize ($8,275).

3. Comparing the U.S. to China: Per-capita GDP (in 2011 dollars) in the U.S. first reached a level of $5,200 back in 1850, more than 160 years ago (see chart), and reached $8,400 back in 1905, more than a century ago.

Read more: http://seekingalpha.com/article/408751-per-capita-the-u-s-is-a-decade-ahead-of-china?source=email_global_markets&ifp=0

China in 2030

The Economist says:

CHINA’S economic reforms have seen few breakthroughs in the past few years, or so the analysts tend to think. As the country prepares for big changes due in its top leadership after a Communist Party congress late this year, senior officials are becoming even less inclined than usual to take risks that might damage their careers. And with the economy still growing rapidly, despite the rest of the world’s problems, many of them see no urgent need for change.

The World Bank thinks differently. In a 468-page report, “China 2030”, it has set out a huge range of policy measures it says are needed in order to prevent the country from eventually falling into a “middle-income trap” of much slower growth. Its suggestions range from weakening the grip of state-owned enterprises to letting the market play a bigger role in the setting of interest rates. Such ideas have been aired by others before, but World Bank officials suggest there is a chance their report could help nudge China into action.

It will certainly be widely noted in China. Unlike the bank’s last report of this kind (“China 2020”, published in 1997), this one was co-authored with a government think-tank, the Development Research Centre (DRC) of the State Council. The DRC is an influential organisation which supplies the government with policy advice. The finance ministry was also involved. A deputy prime minister, Li Keqiang, who is expected to take over as prime minister from Wen Jiabao next year, is thought to have played an active role in arranging this co-operation between officialdom and the bank.

Read more: http://www.economist.com/blogs/analects/2012/02/china-and-world-bank

AmCham 2011-2012 China Business Report

AmCham Shanghai 2011-2012 China Business Report notes:

78 percent of companies surveyed report that they are “profitable” or “very profitable,” roughly matching results from 2010;

80 percent of companies surveyed report revenue growth in 2011 over 2010, down from 87 percent who said revenue increased in 2010 from 2009 in last year’s survey;

62 percent of companies report importing or finished goods from the U.S. into China to support their China operations.

Read more: http://www.amcham-shanghai.org/AmChamPortal/MCMS/Presentation/Template/Content.aspx?Type=32&Guid=%7B2BFDB52B-85B6-42DC-B530-1BC7A33F2F37%7D

China: A Country Where No One is Secure

Guo Yuhua, professor of sociology at Tsinghua University writes:

What is the most common feeling in China today? I think many people would say disappointment. This feeling comes from the insufficient improvement in their lives that people are achieving amid rapid economic growth. It also comes from the contrast between the degree to which individual social status is rising and the idea of the "rise of a great and powerful nation."

One phenomenon is a good example of such disappointment: A group of young college graduates "escaping and returning" to Beijing, Shanghai and Guangzhou.

Their reasons for "fleeing" are not difficult to imagine. Work pressure in these extremely large cities is high, competition is intense and the cost of living is high. So the young people chose to move to small and medium-sized cities to start their careers. The reason they returned to the big cities was that in many small and medium-sized cities ability, knowledge or even a diploma are not what open doors. Instead, what are required are networks of relationships. Family background also makes it difficult for young people from common families to better their lives, and they do not see a way out.

The disappointment of being unable to extricate oneself from difficulty is, of course, not restricted to college graduates. In opportunities for education, employment, promotions and overall improvement of their lives, people are discovering that society's resources and opportunities are increasingly concentrated in the hands of a few. People in the middle and lower strata of society are becoming increasingly marginalized and are finding that improving their lives is getting harder.

Read more: http://english.caixin.com/2012-01-17/100349432_all.html

Minimum Wage Levels Across China

China Briefing says:

Feb. 22 – As wage levels in China have recently come under scrutiny (Foxconn, a key supplier for Apple, raised salaries at their China factories by 25 percent earlier this week following international criticism), the country’s actual minimum wage levels have been in place for decades and have been rapidly rising across the board.

The Chinese government, as a matter of national policy, has been increasing minimum wage levels by 15 percent to 25 percent annually for the past three years. Rates vary by region and are set by each respective local government – calculated in tandem with a number of other indicators, including relations to the local housing market. They are also set to rise over the coming years as China looks to shift its economy towards a more balanced consumer society. To achieve that goal, Chinese citizens need to have increasing levels of disposable income.

Read more: http://www.china-briefing.com/news/2012/02/22/minimum-wage-levels-across-china.html

5 Ways China is Pushing Foreigners Out

Micheal Cole writes:

1. New social benefit taxes on expatriate employees

Starting in 2012 foreign employees (who are at least 90% employed by foreign companies) are now being charged 48% of their salary for social benefits that they will never collect. The Chinese government can spin this how they like, but this is essentially a tax on foreign companies operating in China.

2. The end of incentives for foreign investment in key industries

China no longer wants foreign-funded automobile factories or polysilicon plants — so you folks can just stay in Detroit, or Wolfsburg or wherever.

Read more: http://www.mingtiandi.com/management/bureaucracy/20120216/china-expert-approaching-5-reasons-why-china-wants-foreigners-out/?utm_source=mtd+real+estate+list&utm_campaign=4963911d0c-RSS_EMAIL_CAMPAIGN&utm_medium=email

Could Chinese Basketball Ever Produce a Jeremy Lin?

Time says:

Could China, an Olympic powerhouse and homeland of Yao Ming, produce such a gifted, confident point guard?

The answer for now is, most likely, no. In the U.S., Lin was underrated by pro and college scouts because he is Asian-American. Chinese fans are indignant about a stereotyping in the States that assumes Americans of Chinese descent can be good engineers or software designers, but not brash NBA stars. The criticism is absolutely fair. But in China, Lin may not have been picked for stardom either. Firstly, at a mere 6’3”—relatively short by basketball standards—Lin might not have registered with Chinese basketball scouts, who in their quest for suitable kids to funnel into the state sports system are obsessed with height over any individual passion for hoops. That’s why the Chinese basketball league has had a history of producing strong centers—big men like 7’6” Yao or 6’11” Mengke Bateer, the ethnic Mongolian who played briefly in the NBA—but does poorly when it comes to developing point guards like Lin. The problem is compounded by the Chinese sports system’s focus on endless drills and discipline over the kind of creative play needed for successful point guards.

Read more: http://globalspin.blogs.time.com/2012/02/15/linsanity-strikes-china-but-could-chinese-basketball-ever-produce-a-jeremy-lin/?xid=newsletter-weekly#ixzz1mzZ3WkBL

How China's Government Becomes Ever More Like America's

The Globalist says:

Americans have worried for some time about China gaining too much power too fast. All the more reason, then, to celebrate that Communist China is beginning to resemble the United States in some remarkable ways. Or so one would think, writes Stephan Richter, president of The Globalist Research Center.

Read more: http://www.theglobalist.com/StoryId.aspx?StoryId=9536

What's Next For Guangdong?

Gordon Orr writes:

As the province becomes less central to Chinese exports, foreign investments have started to decline. Foreign direct investment in Guangdong grew by 24% a year in the 1990s, but rose by only 5% annually thereafter, compared to China's 10% a year.

Guangdong will need highly trained workers to cater to more advanced sectors. But it doesn't seem to have people with those skills. Only 9% of Guangdong's population — a smaller proportion than the national average of 10% — has a college degree. There aren't enough people in Guangdong who can work in the industries that the government has prioritized, such as pharmaceuticals, high-tech, and renewable energy.

Moreover, the proportion of people under the age of 15 in Guangdong has fallen to 17% compared to 25% in 2000. That means there will be fewer young people entering the workforce in the next 10 years. The government will have to turn older workers into lower-skilled service providers, which will require a lot of retraining. Besides, older workers are harder to retrain and retain.

Read more: http://blogs.hbr.org/cs/2012/02/what_next_for_guangdong.html

The Apple Boycott: People Are Spouting Nonsense about Chinese Manufacturing

Forbes says:

Wages paid to manufacturing workers in China are not determined by the productivity of those specific workers. They are not determined by US wages, by the profits that Apple makes nor even by the good intentions of the creative types that purchase Apple products. They are determined by the wages paid by other jobs in China and that is itself determined by the average level of productivity across the Chinese economy.

But now to the specific complaints that are being made. There are three that are being repeated around the intertubes as being particularly outrageous.

The first is the spate of suicides at the Foxconn plants. Suicides did indeed take place and each and every one an individual tragedy. Both for those who died and for those they left behind to mourn them. However, we are talking about some 18 suicides in 2010. What we actually want to know is whether that is a high or a low number. Suicide does happen in every society and country, so before we start blaming working conditions we’d like to know whether that rate is higher or lower than that in the surrounding society.

The general suicide rate in China is 22 per 100,000 people. That is a high rate by international standards but that is the one that we should be looking at to try and judge the suicide rate at Foxconn.

Read more: http://www.forbes.com/sites/timworstall/2012/01/29/the-apple-boycott-people-are-spouting-nonsense-about-chinese-manufacturing/?utm_source=twitterfeed&utm_medium=twitter

Chinese Shoppers Putting Premium On “Made In USA” Labels

The Jing Daily says:

Already, we’ve seen interest sparking in China in American-made heritage brands over the past year. Last month, the Wisconsin-based shoemaker Allen Edmonds — one of the only two American high-end men’s shoemakers still producing domestically (along with Alden), and the choice of presidents and CEOs for decades — announced plans to enter the China market this year while keeping its manufacturing base firmly in the US. One month before that, the denim brand 7 For All Mankind (which produces its products in the US of imported denim) launched in Macau, looking to get a piece of the lucrative premium denim market in the Greater China region.

For its part, Levi’s, which has revitalized its brand in the United States by creating special jean lines using American-made denim from North Carolina, has stopped short of selling these US-made lines in China, but has experimented with a new range of jeans made from Japanese denim, which carry a correspondingly high price tag of 1,499 yuan (US$236).

Read more: http://www.jingdaily.com/en/luxury/chinese-shoppers-putting-premium-on-made-in-usa-labels/

Wuhu-oops! Anhui City Reverses Relaxation of Real Estate Rules

Micheal Cole writes:

Major disappointment was in store today for investors anticipating an end to China’s restrictions on its real estate markets as an eastern China city which had offered been the first to offer relaxed policies on residential property purchases abruptly reversed itself.

Only last Thursday, the city of Wuhu in eastern China’s Anhui province had offered subsidies on new home purchases as well as waiving deed taxes in an effort to revive the city’s real estate market. In response to what some observers saw as a potential return to the good old days of China real estate speculation, an index tracking Shanghai-listed real estate companies had surged 4 percent following the news.

However, the central government’s commitment to bringing down real estate prices was reaffirmed today as Wuhu announced in a statement on the city government’s website that it was temporarily suspending its home subsidy policy so it can “study details on how to implement the rules.” Sound like someone got schooled by their friends in Beijing, doesn’t it?

Read more:http://www.mingtiandi.com/real-estate/20120213/wuhu-oops-anhui-city-reverses-relaxation-of-real-estate-rules/?utm_source=mtd+real+estate+list&utm_campaign=1c161f4a12-RSS_EMAIL_CAMPAIGN&utm_medium=email

Hong Kong versus the Chinese Mainland

The Economist reports:

DESPITE a plethora of festive new-year dragons and a few days of holiday, it has been a season of ill will in Hong Kong. On January 15th a young Mandarin-speaking girl dropped some dried noodles she had been nibbling on a Hong Kong underground train. Perhaps her family, from mainland China, did not know that eating and drinking is banned on the spotless metro. When a local Cantonese speaker objected to the noodle-eating in bad Mandarin, a quarrel erupted. The whole incident, recorded on a mobile phone, was soon viewed online by millions in Hong Kong and in China.

“That’s what mainlanders are like,” was perhaps the nastiest thing said by any Hong Konger in the metro carriage. But soon a well-known loudmouth professor at Peking University was suggesting that some in the former colony were “British running dogs”. This caused some Hong Kongers to take to the streets to protest. On February 1st another group took out a full-page advertisement in a Hong Kong newspaper complaining about mainland “locusts” swarming into the territory; it called for the government to stop the “infiltration”.

Read more: http://www.economist.com/node/21546051

China: How to Translate Hard Power at Home Into Soft Power Abroad

Frank Ching writes:

“The overall strength of Chinese culture and its international influence is not commensurate with China’s international status,” President Hu Jintao wrote in a January article. “The international culture of the West is strong while we are weak.”

China is taking this cultural war seriously, on both domestic and international fronts. Beginning January 1, two-thirds of entertainment programs on China’s 34 satellite channels, including game shows, dating shows and celebrity talk shows, were deemed “vulgar” and cut, making way for programs that “promote traditional virtues and socialist core values.”

Externally, China has set up more than 300 Confucius Institutes and more than 350 classrooms in 96 nations, many linked with universities, to teach Chinese language and culture. In 2010, China produced a promotional film, featuring such celebrities as basketball star Yao Ming and Hong Kong businessman Li Ka-shing, to polish its image.

Read more: http://yaleglobal.yale.edu/content/china-soft-power-abroad?utm_source=YaleGlobal+Newsletter&utm_campaign=2fa1e24a00-Newsletter9_14_2010&utm_medium=email

Hackers steal Foxconn's data in retaliation for poor treatment of workers

Shanghaiist notes:

SwaggSec, the hacker group responsible for the security breach, apparently claims they were motivated to attack Foxconn because of the poor treatment of Foxconn's labor force, a situation that's virtually made the name Foxconn synonymous with suicide in popular culture.

Of course, Microsoft's Internet Explorer (recently touted as the user-friendliest web browser for stupid persons) is to blame for all of this, since an unpatched Internet Explorer vulnerability used by a Foxconn worker was exploited to access the company's internal data.

Read more: http://shanghaiist.com/2012/02/09/foxconn_hacked_by_online_crusaders.php

In HK, Expectant Mainland Mothers Keen to Get to the Emergency Room on Time

Bill Dodson says:

The Hong Kong woman told me that Mainlanders gather at any of a handful of towns at MTR metro stations on the Mainland side of the border. The MTR is the Hong-Kong company that runs the city’s subway system. Just after their water has broken, and while in labor, the Mainland mothers-to-be rush to the metro line to the emergency rooms of hospitals on the HK side of the border. Talk about an uncomfortable – and possibly, unsightly – ride for other passengers on the unfortunate carriage. The emergency rooms of publicly funded hospitals are obligated to accept all-comers. The result for the newborn? Instant HK passport, education and social services.

Read more: http://thisischinablog.com/2012/02/01/in-hk-expectant-mainland-mothers-keen-to-get-to-the-emergency-room-on-time/

Chinese Consumers are falling out of love with Fakes

The Economist says:

In 2009, roughly 30% of mobile phones in the country were thought to be shanzhai—a popular term for clever fakes. The Business Software Alliance, a trade group, claims that nearly four-fifths of the software sold in China in 2010 was pirated. In December the US Trade Representative issued its annual report on the world’s most “notorious” counterfeit markets. Of the 30-odd markets identified, eight were in China. Some, such as Beijing’s Silk Street market, are well-known. The report also points the finger at Taobao, an online marketplace owned by Alibaba, China’s biggest e-commerce firm. That may be unfair. Taobao has clamped down so hard recently that it is enduring protests by angry vendors.

Still, as China grows richer, life is growing harder for fakers. A recent study of China’s luxury market by Bain, a consultancy, concludes that “demand for counterfeit products is decreasing fast.” McKinsey, another consultancy, found that the proportion of consumers who said they were willing to buy fake jewellery dropped from 31% in 2008 to 12% last year. This is good news for all brands, not just the blingy ones. “Consumers are looking for the real thing, and they are increasingly willing and able to afford it,” say the authors.

Read more: http://www.economist.com/node/21542819