If you have any questions or concerns please respond to toni.zhou@ogilvy.com
The Daily China News Update is produced by Charles Silverman
(01/17/13)
Business & Economics
Newswire
Iron Man Joins China’s TCL to Challenge Apple Smartphones (Bloomberg) ................ 4
Analysis: Property risk reigniting as China economy turns corner (Reuters) ........... 5
Print
Deloitte Tightens Client Screening After China Scandals (The Wall Street Journal) . 8
China Signs Steel Deal in Iran (The Wall Street Journal) ................................................... 9
Hope for Home Buyers in China (The Wall Street Journal)............................................ 10
China Still Rules BP's World (The Wall Street Journal) .................................................... 12
China Starts Losing Edge as World's Factory Floor (The Wall Street Journal) ........... 13
China’s high-speed rail gets back on track (The Financial Times) .............................. 15
Online
Beijing ‘Airpocalypse’ Reflected in Online Shopping Stats (THE WSJ CHINA REAL
TIME REPORT BLOG) ................................................................................................................... 17
Stepping Down as CEO, Alibaba’s Jack Ma Likens Himself to ET (THE WSJ CHINA
REAL TIME REPORT BLOG) ....................................................................................................... 18
Symantec Appoints New President For Greater China (chinatechnews.com) ......... 18
Chinese Tech Companies Have Come A Long Way, But Have Further To Go, If Their
Performance At This Year’s CES Is Any Indication (beijingcream.com).................... 19
HK and China: a special relationship (The FT Beyond BRICs Blog) ............................. 21
China FDI levels off, at record levels (The FT Beyond BRICs Blog)................................ 21
Alibaba: IPO question returns (The FT Beyond BRICs Blog).......................................... 22
China Advertising 2012 (China Internet Watch Blog) ...................................................... 24
360Buy Founds Major Cloud Research Center in Beijing (techinasia.com) .............. 25
Rumor: Alibaba Hires IPO Underwriters, Ready to Raise $4 Billion This Year
(techinasia.com) ........................................................................................................................... 26
Chinese Gamers Ponder How Public Opinion Should Shape Game Development
(techinasia.com) ........................................................................................................................... 26
Just Short of 2 Years Old, WeChat App Surpasses 300 Million Users (techinasia.com)
............................................................................................................................................................ 27
Chinese Energy Company Accused Of Misleading Investors
(chinasourcingnews.com) ......................................................................................................... 28
Burger King Drops Coca-Cola In China (chinasourcingnews.com) ............................. 28
Baidu’s Approach to Mobile: Build the Groundwork (technode.com)......................... 29
Alibaba CEO Jack Ma Call It Quits, Still Pulling Strings from Behind the Screen
(technode.com).............................................................................................................................. 30
Alipay Shares Insights into Chinese Online Consuming Behaviors (technode.com)
............................................................................................................................................................ 30
Tencent Weixin Reaches 300 Million Users, But the Team Slows Down
(technode.com).............................................................................................................................. 31
Politics & Law
Newswire
China Set to Exit Slowdown as Government Supports Infrast (Bloomberg) .............. 32
Print
China Arrests 7 in New Effort to Stop Tibetan Self-Immolations (The New York
Times) .............................................................................................................................................. 34
Online
Same Bed, Different Dreams for China’s Leaders, Critics (THE WSJ CHINA REAL
TIME REPORT BLOG) ................................................................................................................... 35
As Chinese Debate the Need for Political Reform, an Outspoken Blogger Is
Attacked (Time World Blog) ...................................................................................................... 36
How Did a Chinese Official Realize the Dream of Home Ownership 31 Times?
(tealeafnation.com) ..................................................................................................................... 37
When Two Chinese Women Found the Courage to Report Abuse, They Were
Ignored (tealeafnation.com)..................................................................................................... 39
Miscellaneous
Print
Smoke hasn’t cleared yet on facts surrounding China bombing (MCCLATCHY
NEWSPAPERS) ............................................................................................................................... 41
Online
Girl murdered in Shenzhen, some on Weibo are pointing finger at social media
(thenanfang.com) ........................................................................................................................ 42
Deadly Fire Launches Debate Around Underground Child Care (THE WSJ CHINA
REAL TIME REPORT BLOG) ....................................................................................................... 42
China’s Zheng Jie Scores Impressive Upset at Australian Open (THE WSJ CHINA
REAL TIME REPORT BLOG) ....................................................................................................... 44
One Restaurant Owner's Quest to Promote Organic Produce in China
(theatlantic.com) .......................................................................................................................... 45
It's Harder Than Ever to Catch a Cab in Beijing (theatlantic.com) ............................... 45
Aghast Over Beijing's Air Pollution? This Was Pittsburgh Not That Long Ago
(theatlantic.com) .......................................................................................................................... 47
Tourists at Jilin Ice Festival Shoot Arrows at Live Roosters (chinasmack.com) ...... 49
BREAKING NEWS: WEI DI OUT AT THE CFA (wildeastfootball.net) ............................. 51
Security audit finds dev OUTSOURCED his JOB to China to goof off at work
(theregister.co.uk) ....................................................................................................................... 51
"Beyond Index" - Can 'Airpocalypse' be China's 'Silent Spring'?
(greenleapforward.com) ............................................................................................................ 52
Getting Weird Server Hits from China? It May Not Be Hackers… (techinasia.com) 55
Business & Economics
Newswire
Iron Man Joins China’s TCL to Challenge Apple Smartphones (Bloomberg)
By Tim Culpan - Jan 16, 2013
http://www.bloomberg.com/news/2013-01-16/iron-man-joins-china-s-tcl-to-challenge-apple-smartphones.ht
ml
To take on Apple Inc. (AAPL) and Samsung Electronics Co. in the global smartphone market, China’s TCL Corp.
(000100) is enlisting a strong ally: Iron Man.
In a product-placement deal for Paramount Pictures Corp.’s third Iron Man movie, Robert Downey Jr.’s character
Tony Stark will battle his latest nemesis, the Mandarin, using TCL’s products. Some real-world features, such as
handheld devices interacting with televisions, will be replicated on-screen.
TCL, which also makes camcorders and rice cookers, is doing whatever it can to move upmarket, a familiar path
taken in previous decades by Japanese and South Korean electronics and car companies. Along with compatriots
ZTE Corp. (763), Huawei Technologies Co. and Lenovo Group Ltd. (992), TCL is seeking to expand sales and brand
credibility by convincing overseas consumers that their smartphones are just as advanced and appealing as those
offered by market leaders.
“I think they are good enough for a certain segment of the market,” Andy Hargreaves, an analyst at Pacific Crest
Securities LLC in Portland, Oregon, said in an interview. “It’s a pricing game, if they can come in with a lower price,
they can probably gain share.”
More than 1.2 billion smartphones will be sold this year, according to Gartner Inc., surpassing record sales of 821
million units in 2012. Consumers and businesses are increasingly opting for versatile and powerful handheld
devices over personal computers, the Stamford, Connecticut-based researcher said.
Brand Awareness
Founded in 1981, Huizhou, China-based TCL is a seller of appliances, telecommunications devices and home
electronics. Apart from its own brand, the company, which employs 60,000, manufactures Thomson TVs and
Alcatel mobile phones, according to its website.
“I believe our new generation of products are as good as those from Samsung and Apple,” Tomson Li, TCL’s
chairman and co-founder, said in an interview at the International Consumer Electronics Show in Las Vegas last
week. “This Iron Man cooperation is very useful for us to promote the TCL brand in the global market, including
the U.S. and China.”
To support the marketing effort, Li sealed a deal last week to rename Grauman’s Chinese Theater in Los Angeles
as TCL Chinese Theater, buying naming rights for the cultural landmark along the Hollywood Walk of Fame.
Even so, movie magic and impressive technical specifications may not be enough to convince buyers and retailers
to take a risk against more established names, according to Stephen Baker, an analyst at NPD Group Inc.
Track Record
“They don’t have a track record,” Baker said. “Consumers don’t know who they are, but also distribution channels
don’t know who they are, or don’t trust them. If that’s what they think it takes to get trust and sales, then there’s
a misreading of the electronics business in general.”
Lenovo, the world’s second-largest PC vendor, is another company trying to expand its global footprint with
smartphones. While it’s the only Chinese enterprise to rank among the world’s top technology brands, the
Beijing-based company still trails Apple, Samsung and Sony Corp., according to researcher Strategy Analytics.
Chief Executive Officer Yang Yuanqing is betting that Lenovo’s computing credentials will convince consumers to
cross over to its mobile devices.
“We call our strategy a PC-plus strategy. When a phone becomes a smartphone, the voice conversation is not a
key use,” Yang said at CES. “Surfing the Internet and checking e-mail becomes the key application, so that’s
similar to a PC.”
Consumer Devices
Lenovo plans to increase its marketing budget this year with a focus on consumer devices such as its K900
smartphone and Yoga touch-screen laptop, Yang said. The Horizon Table PC, another product unveiled at CES,
features a 27-inch (69 centimeter) touch-screen panel that enables multiple users to play games.
“We don’t have a strong brand,” Yang said. “Particularly with smartphones, you need to expand into the telecom
channels, you need to spend money.”
Lenovo’s handsets will break even “soon” as they are introduced in markets outside of China, including Russia and
Vietnam, he said.
For ZTE and Huawei, the world’s No. 4 and No. 6 mobile handset vendors, moving from low-end feature phones
to high-end smartphones depends on convincing consumers and wireless carriers that their devices are just as
good, reliable and functional as their more famous competitors.
“ZTE is one of the best in terms of quality,” Cheng Lixin, chief executive officer of ZTE’s U.S. unit, said at CES. He
estimates ZTE is ranked fifth with 5 percent of the U.S. market. “Our return rate at AT&T is below 1 percent.”
Unique Features
More than 63 percent of ZTE’s sales come from Asia, including 46 percent from China, according 2011 data
compiled by Bloomberg.
At CES, Huawei’s product demonstrations included Consumer Marketing Officer Richard Yu pouring water on the
Shenzhen, China-based company’s latest handset before dropping it on the ground to prove its hardiness.
Another device sporting the world’s largest smartphone display, at 6.1 inches, may help Huawei gain attention as
it aims to become more competitive in the high-end market, Bloomberg Industries analyst John Butler wrote in a
report.
TCL, Lenovo and ZTE’s efforts have resulted in higher valuations compared with other Chinese companies. ZTE is
trading at a premium of 123 percent, and Lenovo at 63 percent, over the Hong Kong Hang Seng Index, based on
trailing 12-month price- earnings multiples. TCL carries a 88 percent premium over the Shenzen Stock Exchange
Constituent A-Share Index on the same basis, according to data compiled by Bloomberg.
To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net
To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net; Tom Giles at
tgiles5@bloomberg.net
Analysis: Property risk reigniting as China economy turns corner (Reuters)
By Kevin Yao and Xiaoyi Shao
BEIJING | Wed Jan 16, 2013
http://www.reuters.com/article/2013/01/16/us-china-economy-property-idUSBRE90F1L720130116
(Reuters) - Business is booming in Beijing's real estate offices -- good news for property agents like Zhang
Huanhuan, but a headache for China's policymakers as worries resurface about the sustainability of investment in
the sector.
"We've got off to a flying start in 2013 -- transactions are picking up, so are prices," said Zhang, a saleswoman
at an outlet of Maitian Real Estate Agency Co. in the capital.
Recent sales included six high-end apartments at a condominium in Beijing's Dongzhimen area, a neighborhood
favored by the city's expatriates, she said.
Government data on Friday is likely to show China's annual economic growth rebounded to 7.8 percent in the
fourth-quarter of 2012 from 7.4 percent in the third, snapping seven straight quarters of weaker expansion.
Chinese leaders may by reassured that the economy has finally turned the corner -- even though the recovery is
likely to be tepid -- but they face a delicate policy balance amid worrying signs of a renewed property frenzy.
The home buying spree has not been confined to Beijing.
New home prices in 70 major Chinese cities rose 0.3 percent in November from October -- the fourth month in the
last five to show a rise -- a modest increase but the most, nonetheless, in 19 months, official data showed.
"The first phase of 44 suites of our project launched last week has almost sold out, with only 6 suites left," said a
salesman surnamed Qua, marketing a development by Wharf Holdings (0004.HK) in Hang, capital of eastern
province of Zhejiang.
"We will launch the second phase of over 300 suites and so far about 2,000 prospective buyers had registered
buying interest for our project."
UNLEASHED DEMAND
The new leaders of the ruling Communist Party have promised to keep pro-growth policies in place in 2013, amid
expectations they will speed up migration to China's burgeoning cities by overhauling the rigid household
registration, or "humor", system, which could unleash fresh housing demand.
While reaffirming existing property cooling policies to fend off speculation, they may be tolerating a modest
pick-up in the property sector to aid an economic recovery still heavily reliant on investment, analysts say.
Without stability, Xi Jin ping and Lid Keating, who are due to take over as President and Premier, respectively, in
March, have no chance of delivering a slew of reforms they say are needed now to tackle the financial, industrial
and income imbalances that threaten China's future development.
"Policymakers have reiterated that they don't want to relax property measures, but it will be hard for them to
further tighten in an overall economic climate where the recovery is still not on a strong footing," said Louis Kumis,
chief China economist at Royal Bank of Scotland in Hong Kong.
"They continue to express their desire to rein in housing prices, even though that turns out to be hard to do in the
face of the fundamental drivers like income growth and urbanization."
The property sector is a pillar of the economy, and investment in the sector accounted for 14.4 percent of GDP in
the first nine months of 2012.
Analysts at Capital Economics estimate that investment in residential property alone accounted for 8.8 percent of
GDP in 2012, up from 8.5 percent in 2011 and 4.3 percent in 2002.
That is well above the peak for real estate investment in the United States in the middle of the last decade and is
also above the peak real estate investment rates recorded in South Korea and Japan during their periods of rapid
growth.
PROPERTY CURBS TO STAY
China's home prices started to rebound in mid-2012, as the People's Bank of China began to ratchet up its policy
easing as part of Beijing's growth-supporting policies.
Analysts believe government curbs on home purchases and prices will prevent sharp increases for now. Those
polled by Reuters in December expected China's national housing prices should rise an annual 7 percent in 2013
and 5 percent in 2014.
A 25 percent jump in housing prices in 2009 prompted the government to take a raft of measures, including
lending curbs, higher mortgage rates and restrictions on the number of homes each family can buy, in a bid to
deflate housing bubbles.
Some analysts fear the authorities could tighten property policies further if they believe bubbles are building up
again, undermining the still-fragile recovery.
City authorities in Beijing have stopped issuing pre-sales permits to developers found raising prices on their new
property projects, as one of the ad hoc controls to curb housing inflation, said a senior executive of a developer
in Beijing.
"The new home prices in Beijing are controlled by the government rather than the market forces while the recent
rebounding of second-hand house market reflects the true property market," said the executive, who declined to
be named.
Second-hand home prices in Beijing in December jumped 10.7 percent from a year earlier while Shanghai's prices
also up 10 percent, data from a property consultancy Centralize showed.
Property prices in big cities are already high, after rocketing following Beijing's 4 trillion yuan ($643 billion)
stimulus package in 2008-09 to counter the global crisis. Flats near the city's main financial street fetch 100,000
yuan per square meter, far beyond the reach of ordinary salary-earners.
Many Chinese academics have called for market-based levers, such as property taxes, to deal with speculative
demand, following the example of Singapore and Hong Kong.
But a senior tax official said in remarks published on Monday that China may postpone expanding a trial property
tax in Chongqing and Shanghai, nationwide.
UPHILL BATTLE
The PROC, which cut benchmark interest rates twice in mid-2012 and cut banks reserve ratios three times since
late 2011, has since switched to short-term cash injections via open market operation, apparently fearful of
fanning price pressures.
But while the central bank may be wary of cutting interest rates and bank reserve ratios again after data showing
consumer inflation in December quickened to a seven-month high of 2.5 percent, analysts expect it to keep the
credit tab open.
China's social financing, a broad measure of liquidity in the economy that include corporate bonds and trust loans,
jumped an annual 23 percent to a record 15.8 trillion yuan in 2012, while new loans rose 10 percent to 8.2 trillion
yuan.
"There is still a need to stabilize growth this year and policy will still be relatively loose," said Zhao Xijun, vice dean
of the School of Finance at Renaming University in Beijing.
"Bank lending and social financing will continue to expand appropriately this year, even though the government
worries whether the increased money will go to the property sector."
(Editing by Alex Richardson)
Print
Deloitte Tightens Client Screening After China Scandals (The Wall Street Journal)
By MARIKO SANCHANTA And DUNCAN MAVIN
January 16, 2013
http://online.wsj.com/article/SB10001424127887323468604578245201953713258.html
A spate of recent accounting scandals in China has forced Deloitte Touche Tohmatsu Ltd. to beef up its audit work
and tighten the process for screening new clients, according to the head of the firm's Asia practice.
Deloitte's Asia Pacific CEO, Chaly Mah, said the firm has specifically changed the work it does to test cash balances
and introduced more stringent tests to determine whether to take on potential clients, for instance.
"We have a multilayer process but if you have clients that are less than honest it is not easy," he said in an
interview with The Wall Street Journal.
Deloitte is currently embroiled in a dispute with the U.S. Securities and Exchange Commission over the firm's
work in China. The SEC brought an administrative proceeding against it and other accounting firms for refusing to
hand over documents sought in investigations of alleged accounting frauds at nine Chinese companies. The
auditors say that handing over such documents would breach Chinese law.
Mr. Mah said he believes the firm wasn't "unfairly targeted" by the SEC. "This is about access to working papers,"
he said.
U.S. regulators have attempted to investigate alleged fraud at some Chinese companies, and the SEC has filed
several lawsuits in relation to those issues. But the SEC has been unable to get information from the China-based
firms that audit many of these companies, including Chinese affiliates of the Big Four - Deloitte,
PricewaterhouseCoopers, Ernst & Young and KPMG.
Dozens of Chinese companies have raised billions of dollars in the past decade listing their shares on U.S. and
Canadian exchanges. But the share prices of some of those companies have plummeted amid questions about
their bookkeeping and financial disclosures. In Canada, the top securities regulator accused Ernst & Young's
Canadian affiliate of missing problems during its audit on Sino-Forest Corp., a Chinese timber company listed on
the Toronto Stock Exchange that filed for bankruptcy protection amid allegations of accounting fraud.
Deloitte, the second-biggest auditing firm in the world after PwC, said its margins in China had recently been
squeezed by a slowdown in economic growth and capital markets. But the company is still on track to increase the
numbers of employees in the Chinese market to 15,000 by 2015, from 13,000 now.
Deloitte will on Thursday also announce its formal entry into Myanmar, what it calls the "biggest opportunity" in
Asia. It follows a raft of multinationals hoping to profit from the formerly closed nation, including Coca-Cola Co.,
KO 0.00% Visa Inc. V -0.16% and Taiwanese smartphone marker HTC Corp. 2498.TW +0.52% Through a
partnership with the local company Myanmar Vigour, Deloitte said it will be able to offer everything from
accounting services and financial advisory to clients there.
Mr. Mah said Myanmar Vigour is already profitable and he noted that staffing costs in the country are low. "In
Myanmar accounting graduates make $150 a month, after they earn their CPA, they might make $250-$300 a
month," he said.
While Myanmar offers a lot of potential for foreign consulting firms as well as their clients, the risks are high too,
especially given the lack of developed regulation. Mr. Mah said his firm was following its clients into the frontier
economy. As for the risks, he said: "We have a very strict bar for client relationships. We won't get involved with
corrupt or opaque clients."
Mr. Mah said Deloitte's Japanese clients were particularly interested in Myanmar as a manufacturing hub, given
the recent tensions with China over territorial spats. "(The Japanese) are not looking at China anymore, they are
all looking at Southeast Asia and Myanmar is attractive for its low cost base," he said.
Write to Mariko Sanchanta and Duncan Mavin at mariko.sanchanta@wsj.com and duncan.mavin@wsj.com
China Signs Steel Deal in Iran (The Wall Street Journal)
By CHUIN-WEI YAP
January 16, 2013
http://online.wsj.com/article/SB10001424127887323468604578245062626996592.html
BEIJING—A large Chinese state-owned company said it signed a $712 million dollar contract to help build a steel
plant in Iran, signaling that Beijing isn't ready to join Western nations in increasing pressure on Tehran over its
nuclear program.
A unit of state-owned metals giant China Nonferrous Metal Mining Group said in a statement Wednesday it will
provide engineering design, equipment supply and installation, construction and training services for the Iran
Butia steel plant.
China has consistently defended its economic ties with Iran, which is under U.S. and European Union sanctions for
its alleged nuclear weapons program. Five months ago, China's foreign ministry urged Washington to revoke
sanctions it had imposed on Bank of Kunlun Co., a unit of China National Petroleum Corp., warning that they
damaged China's interests and Sino-U.S. relations.
China and Iran have normal, fair and transparent business relations in the areas of energy and trade, foreign
ministry spokesman Qin Gang said at the time.
China Nonferrous' Shenzhen-listed engineering and construction arm—China Nonferrous Metal Industry's Foreign
Engineering & Construction Co. 000758.SZ +1.20% —will handle the work. The latest deal adds to the company's
nearly decade-old history in Iran. When complete in four years' time, the plant is expected to be able to produce
2 million metric tons of sponge iron and 1.5 million tons of steel billets a year.
China, like other big buyers of Iranian oil, has slashed its oil purchases from Iran, and in so doing has escaped
threatened U.S. sanctions against importers of Iran's oil introduced a year ago.
In the first 11 months of last year, customs data show the country imported an average 356,000 barrels a day of
Iranian crude, down 22% from a year earlier, although the extent this was the result of U.S. pressure or a
Sino-Iranian dispute over crude pricing, which disrupted shipments in the first few months of the year, is unclear.
A new test of China's resolve to maintain its economic and political ties with Iran, and Washington's readiness to
confront Beijing, will come in May or June with the next six-monthly review of whether buyers of Iranian crude are
continuing to reduce their shipments.
China Nonferrous' unit has several other projects in Iran, mostly assisting Iranian companies building factories
producing aluminum, alumina and ferroalloys. China Nonferrous didn't respond to a call for comment Wednesday.
The deal is unlikely to be aimed at supplying China with Iranian steel. China's steel sector suffers from
overcapacity, and imports account for barely 2% of its total steel consumption.
However, Iran is a long-standing, albeit small-volume exporter of iron ore to China, trailing major suppliers
Australia, Brazil, India and South Africa. China heavily depends on iron-ore shipments for steelmaking.
Though Tehran provided just 2% of China's total ore imports, Beijing has long nurtured Iran among a slate of
alternative suppliers to offset other exporters' domination of the trade.
Despite a recent spat over Chinese commerce ministry accusations in December 2011 of fraud in Iranian iron-ore
sales, China kept the volume of imports from the country unchanged at nearly 16 million tons last year.
The China Nonferrous deal might not trigger strong protests from the U.S. given the relatively small scale, and
steel's less strategic role compared with crude oil.
"Energy is a major revenue source for Iran, while metals account for relatively less, so I don't think this will be as
big of an issue," said North Square Blue Oak analyst Frank Tang. "In any case, even against [the risk of]
international sanctions, it's not been the case that China always follows international decisions."
The value of Iran's crude sales to China in the first 11 months last year reached $15.7 billion, a sizable chunk of
an overall $50 billion in bilateral trade, according to government data. Trade in iron ore in the same period was
valued at near $1.7 billion.
Write to Chuin-Wei Yap at chuin-wei.yap@wsj.com
Hope for Home Buyers in China (The Wall Street Journal)
Updated January 16, 2013
By TOM ORLIK in Beijing and ESTHER FUNG in Shanghai
http://online.wsj.com/article/SB10001424127887324235104578242043338468974.html
Kay Sun, a 32 year-old administrative assistant put down a deposit last month on a 2.85 million yuan ($460,000)
one-bedroom apartment in Shanghai.
It was a financial stretch for the single Ms. Sun, who works at an information-technology firm in a position that
typically pays about 15,000 yuan a month. She needed money from her parents to fund the down payment.
Her move may seem bold, but she isn't atypical. Around China, signs are growing that a government campaign to
bring housing prices closer in line with incomes is starting to bear fruit.
That is breathing new life into China's real-estate market and economy. Data slated for release Friday is expected
to show growth in gross domestic product accelerating to 7.8% year on year in the fourth quarter, up from 7.4%
in the third.
Since 2009, average disposable income in China's cities has risen around 43%, but house prices only 11%
according to official data. An average-priced apartment purchased outright would now cost around 16 years of
average income, still high by international comparisons but down from a high of 21 years in 2007. That raises
hopes that millions of young professionals will be able to get a hand on the first rung of the housing ladder,
buoying demand.
In Shanghai, the campaign—which includes purchase restrictions on multiple homes and higher down-payment
requirements—has kept average property prices flat for two years, according to data from property consultancy
SouFun. Meanwhile, Ms. Sun said her salary rose by more than 10% on average each year, typical of many
white-collar Chinese workers, placing her at a point where a house purchase seemed within reach.
"It's not cheap, but the location is good," she says of the apartment in a high-rise building in a residential district
north of the Shanghai Bund. "I heard that prices may start rising this year, so I thought, better to buy now, since
I can afford it."
Chinese house buyers pay a much higher multiple of their incomes on purchases than do buyers in the U.S., where
prices are typically a midsingle digit multiple of average income. In 2010, as prices approached astronomical
heights, the government stepped in to halt escalation, allowing incomes some space to catch up.
Three years after government controls curtailed growth, Chinese developers have turned cautiously optimistic.
China Vanke, the mainland's largest developer by revenue, reported Jan. 7 that sales more than doubled in
December from a year earlier, with sales for the year as a whole up 16.2%.
Stocks of major developers have rallied. Shares in Hong Kong-listed China Overseas Land & Investment Ltd.
0688.HK -0.80% are among the best-performing on the territory's stock exchange, up more than 90% from the
start of 2012, compared with 26% for the overall market.
"Home buyers are returning to the market in droves. One asked me recently, 'I bought a home on the third floor
at a new launch, is that OK'? I said, count yourself lucky you managed to get a unit." said Yang Jun, a real-estate
agent in Shanghai.
Stronger sales are pushing developers to break ground on new projects. New floor area under construction was
up 6.3% year on year in November, after spending much of the year in negative territory.
"We will see stronger construction in 2013," said Jinsong Du, China property analyst at Credit Suisse CSGN.VX
+0.62% .
Real estate is the single biggest driver of output in China's economy. According to the International Monetary
Fund, it accounts for about 12% of the total. Factoring in the impact on everything from steel and cement to
furniture and home appliances, the sector's contribution is even higher.
"Steel mills anticipate stronger demand from real estate in the year ahead" said Graeme Train, metals analyst at
Macquarie. China's steel production rose 15% year on year in November after flat-lining in the first half of the year.
Rising iron-ore prices have prompted Australia's Fortescue Metals Group FMG.AU -1.31% to resuscitate its plans
for $1.2 billion in stalled investment projects.
Leaders now seem less nervous about a property bubble. Officials from the Ministry of Housing and Urban Rural
Development have said the government will support owners looking to upgrade as well as first-time buyers,
raising the prospect they will get better access to mortgage loans.
Developers caution that the recovery has come from a low base. "Although transactions in major cities rose
significantly in 2012 from 2011, this is based on the low growth rates in 2010 and 2011," said Tan Huajie, Vanke's
board secretary.
There are plenty of risks for the market. Three years of government controls have left developers with higher debt
and unsold inventory. There is enough residential property currently under construction to meet about five years
of demand, without new projects being started, up from 2.9 years in 2009.
A return to the boom years for China's property isn't in the cards. Keeping apartments affordable for first-time
buyers is a priority for the government, including Vice Premier Li Keqiang who has been a prime force behind the
push to build millions of subsidized homes for low-income households.
China's house prices are edging back up now, with SouFun data showing average prices up 0.03% year on year
in January, ending eight months of declines.
Analysts caution that a sharp rise in prices would likely trigger a return of strict controls by the government.
"We will be looking to invest in smaller-scale projects this year," said Freddy Lee, chief executive of major
developer Shui On Land 0272.HK +0.53% . Mr. Lee said that the developer suffered from cash flow issues
following heavy investment into large-scale, mixed used projects in recent years.
Write to Tom Orlik at Thomas.orlik@wsj.com and Esther Fung at esther.fung@dowjones.com
China Still Rules BP's World (The Wall Street Journal)
By LIAM DENNING
January 16, 2013
http://online.wsj.com/article/SB10001424127887323783704578245961023947332.html
After a decade or so of relying on Chinese growth to fuel rising prices, energy bulls can look forward to…another
two decades of relying on China.
BP released its latest long-term outlook on global energy trends Wednesday. Overall, investors in fossil fuels—oil,
natural gas, and coal—will be cheered. Annual rates of growth in demand are moderating, but fossil fuels are still
set to account for 82% of global energy consumption in 2030, down only a bit from 2011's 87%.
China remains the make-or-break factor, though. Between 2000 and 2011, when fuel prices boomed, China
accounted for 55% of the growth in global energy consumption. Under BP's assumptions, China's share of extra
demand between 2011 and 2030 is 43%.
That is less, but still critically large. This is especially the case when you consider that the Middle East and the
former Soviet Union are also becoming more important in the mix of energy demand. As major energy exporters,
they are tied to China's continuing success. If it weakens, so does growth in their economies—and energy
consumption.
Taken together, the three regions accounted for 69% of global energy-demand growth between 2000 and 2011.
BP's projections still have them at 57% out to 2030.
Of the three fuels, coal is the most dependent on China, with the country set to account for 61% of global demand
growth out to 2030. For oil, it is 43%; for gas, just 25%.
China's continuing importance may be a source of comfort for investors—hey, you go with what you know, right?
But the country's model of breakneck investment in infrastructure is showing signs of strain, and not just in
economic terms: Take a look at the recent footage of Beijing's hazardous smog. For energy bulls, dependence on
China could yet turn from a rock of support to a slippery slope.
Write to Liam Denning at liam.denning@wsj.com
China Starts Losing Edge as World's Factory Floor (The Wall Street Journal)
Updated January 16, 2013
http://online.wsj.com/article/SB10001424127887323783704578245241751969774.html
BEIJING—China is losing its competitive edge as a low-cost manufacturing base, new data suggest, with makers
of everything from handbags to shirts to basic electronic components relocating to cheaper locales like Southeast
Asia.
The shift—illustrated in weakened foreign investment in China—has pluses and minuses for an economy key to
global growth. Beijing wants to shift to higher-value production and to see incomes rise. But a de-emphasis on
manufacturing puts pressure on leaders to make sure jobs are created in other sectors to keep the world's No. 2
economy humming.
Total foreign direct investment flowing into China fell 3.7% in 2012 to $111.72 billion, the Ministry of Commerce
said Wednesday, the first annual decline since the fallout from the global financial crisis in 2009.
Then, a 13% fall in foreign investment into China reflected dire conditions for business in the U.S. and Europe, and
global risk aversion, which choked off capital flows. Economists say the drop in 2012 is also partly cyclical, driven
by slowing overall growth in China and Europe's prolonged debt crisis.
But it also is the result of a long-term trend of rising wages and other costs that have made China less attractive,
especially for basic manufacturing, economists say.
By contrast, foreign direct investment into Indonesia was up 27% in the first nine months of last year.
Coronet SpA, an Italian maker of synthetic leather with production in the southern Chinese province of
Guangdong, plans a new factory in Vietnam to take advantage of lower labor costs and to be closer to its
customers in the shoe and handbag businesses, many of which have already moved there.
"A lot of our customers are already moving a part of their business in Far Eastern countries with lower working
cost," said Jarno Tagliarini, Coronet chief executive. "Considering all the countries available, we think that
Vietnam is the most developed one."
Foreign capital helped build China into a low-cost manufacturing powerhouse and global growth engine. But its
increasingly urban population now has higher expectations in terms of wages and working conditions and louder
objections to the pollution that often comes with low-level manufacturing—demands that have eroded China's
cost advantage.
China's leaders are moving to shift the economy away from its traditional reliance on low-end manufacturing and
heavy investment spending, seeking to build a stronger consumer base at home. A breakdown of Wednesday's
figures suggests a tentative move in that direction: While foreign direct investment in manufacturing contracted
by 6.2% in 2012, investment in the service sector excluding the property market rose 4.8%.
"We know we can't keep relying on a low-cost competitive advantage. We need to accelerate the value-added
upgrading of our products," said Commerce Ministry spokesman Shen Danyang at a news briefing Wednesday.
Mr. Shen acknowledged the trend of companies investing elsewhere, though he attempted to play it down.
"We have noticed some migration by companies, but this is a normal migration. It's not accurate to say there has
been a large-scale shift of manufacturing [foreign investment] to other countries," he said. But he added, "You
couldn't say we are happy to see this development. We still hope to actively attract foreign investment."
Commerce Minister Chen Deming on Tuesday gave a tepid forecast for investment in 2013, saying it will likely be
about the same as last year.
China's foreign-investment data come with some uncertainty. Another set of numbers from China's central bank
that includes profits that foreign firms reinvest there shows growth in the first nine months of 2012, according to
an analysis by Thilo Hanemann, research director at Rhodium Group. But the figures, which he said may be
subject to significant revisions, also show investment growth close to zero over the past two years.
With the lion's share of investment in China now coming from domestic sources, the impact of falling foreign
investment on growth will be limited. But an erosion of manufacturing's importance underlines the challenge for
China's leaders in finding new sources of growth in domestic consumption and higher-level industry.
For China's neighbors, the trend means more opportunities. Southeast Asian nations, which claimed 2% of global
foreign investment in the wake of the 1997 Asian financial crisis, now account for about 7.6%, approaching
China's 8.1%, according to HSBC HSBA.LN +0.56% calculations.
Asian firms accounted for much of the investment drop in China. Investment from 10 Asian economies—Hong
Kong, Taiwan, Macau, Japan, the Philippines, Thailand, Malaysia, Singapore, Indonesia and South Korea—fell
4.8% last year and accounted for about 82% of the total. Hong Kong was the single biggest investor, reflecting in
part money from mainland investors being recycled back into the country.
One country that could play a decisive role in speeding up the shift away from China is Japan. Japanese
investment into China rose 16% from a year earlier, but worsening relations over a set of disputed islands could
prompt Japanese firms to look elsewhere. In September, Japanese cars and businesses were ransacked by rioters
in anti-Japan protests across China.
Many Japanese companies are already looking for a second production base to hedge their China exposure. For
example, while foreign investment into Vietnam declined by 15% in 2012, a reflection of macroeconomic
challenges there such as high inflation, investment from Japan into Vietnam more than doubled due in part to
Japanese companies' efforts to look for alternatives to China.
In Thailand and Vietnam, Japan was the single largest source of investment last year. In Indonesia, it was second
behind Singapore.
Minoru Ikeda of the Shanghai office of the privately funded Japan-China Economic Relations and Trade Centre,
says the center—which encourages Japanese investment in China—has seen inquiries about new ventures dry up;
as of Wednesday his team hadn't handled any new investment-related inquiries since tensions peaked.
In an October survey of Japanese companies by the government-linked Japan External Trade Organization, 52%
of respondents planned to expand business operations in China over the next one to two years, down from 67%
in the survey the previous year.
Yoichi Maie, director of Jetro's China and North Asia Division, said there were several reasons for the decline,
notably rising labor costs, and that political tensions were not the most important factor.
Mr. Maie also stressed that there are limits to the ability of Japanese companies to diversify away from China.
"There is no alternative to China for Japanese companies," he said. "No other country—except for the
U.S.States—offers such a large market and highly established production networks."
A shift to other countries doesn't mean companies are abandoning China. In a survey of about 300 members of
the American Chamber of Commerce in China, 58% said the country remains in the top three investment priorities,
up from 47% in 2011. But only 20% said China was their No. 1 investment priority last year, compared with 31%
in 2011.
Many are also looking at moving from China's coastal manufacturing cities to its lower-cost inland regions. A poll
in May by the Federation of Hong Kong Industries showed that about 10% of Hong Kong companies located in
China's Pearl River Delta are considering a move to Southeast Asia due to rising costs, while 13% are considering
moving to inland provinces.
HSBC economist Trinh Nguyen estimates that Chinese manufacturing wages rose by around 20% per year
between 2005 and 2011, giving companies a strong incentive to start looking elsewhere for labor-intensive
production.
"The total amount of capital flowing in China will be still robust, but the growth will decelerate. The nature of
[foreign investment] will become more domestic-market-oriented than export-oriented," Ms. Nguyen said.
Not all of the shift out of China involves low-end industries such as garment-making. Wintek Corp., 2384.TW
+1.07% a Taiwanese company with about 50,000 workers globally that makes smartphone components for
companies including Apple Inc., AAPL +4.15% said in October it will invest $930 million in four new plants in
Vietnam to make displays and touch screens.
A Wintek spokesman said the company is still committed to expanding its existing facilities in the southern
Chinese city of Dongguan and the province of Jiangsu, two traditional hubs for Chinese manufacturing. "To
mitigate the impact from rising labor and rental costs, we are producing more value-added products in our
Dongguan and Jiangsu factories," he said.
—Yajun Zhang
and Tom Orlik in Beijing, Mitsuru Obe in Tokyo and Colum Murphy in Shanghai
China’s high-speed rail gets back on track (The Financial Times)
By Simon Rabinovitch
Wednesday, January 16
http://www.washingtonpost.com/world/asia_pacific/chinas-high-speed-rail-gets-back-on-track/2013/01/16/db
508eea-5ffd-11e2-a389-ee565c81c565_story.html
BAZHOU, China — What a difference a year makes for China’s high-speed rail ambitions, and for the Chinese
economy.
After being abandoned and left to lie dormant, the scrubby farm fields around Bazhou, in northern China, have
sprouted rail bridges, elevated track beds and neat rows of workers’ dormitories. The fields are well on their way
to becoming a link in the country’s rapidly expanding high-speed rail network.
It is a sharp turnaround from late 2011, when China slammed the brakes on its rail program, suspending virtually
all new investment after a bullet-train crash killed 40 people and raised questions about the quality of the track
that had already been laid.
The revival of rail investment and infrastructure spending, which started around the middle of last year, was a
crucial factor in China’s economic recovery. When Beijing reports its latest growth figures Friday, the numbers are
widely expected to show that the economy accelerated in the fourth quarter, breaking a run of nearly two
consecutive years of slower growth.
Full-year growth in 2012 probably fell short of 8 percent, the lowest in more than a decade, but the momentum
in the final quarter has fueled investor optimism that China will again be the world’s strongest-performing big
economy this year, helping to make up for the struggles in the United States and Europe.
“The end of 2011 was probably the worst in terms of the amount of money spent on infrastructure. It nearly came
to a halt,” said Ken Peng, an economist with BNP Paribas in Beijing. “The bounce back in infrastructure investment
was clearly the main driver of the rebound.”
Investment accounts for nearly half of China’s gross domestic product, making it as big an engine of growth as
consumption and exports combined. Railway construction is only about 2 percent of that, but its importance is far
greater, stoking demand for steel and helping shape business sentiment.
A small city a little more than an hour’s drive from Beijing, Bazhou was at the sharp end of the cancellation of rail
projects in 2011. It was meant to serve as a station on a line connecting the cities of Tianjin and Baoding, but the
workforce laying the track shrank overnight from 600 to 20.
“When they stopped building rail, it led to thousands of companies, including state-run steelmakers, cutting
production,” said Wang Mengshu, deputy chief engineer at the China Railway Tunnel Group. “These companies
appealed to the central authorities and said, ‘If we don’t get back to building rail, we’ll be finished and workers
won’t get paid.’ ”
The government was initially in no rush to restart construction. In December 2011, it published a report that
blamed dozens of officials and businesses by name for causing the deadly bullet-train crash through lax
application of safety standards. Railway plans also suffered aftershocks from the corruption investigation that led
to Liu Zhijun’s removal from office as railway minister two years ago.
But in early 2012, as the depth of the economic slowdown became clearer, Wen Jiabao, China’s premier, signaled
that it was time for rail investment to resume. He visited train manufacturers and railway construction sites,
giving the industry a vote of confidence.
That was quickly translated into a series of budget increases for the Railway Ministry, from $64.3 billion at the
start of the year to more than $96.5 billion by the end of the year. Investment shot up in the second half, rising
80 percent from a year earlier in September and October.
With high-speed trains now running a little more slowly than before, with few apparent glitches, Wang says
China’s railway boom is set to run for years to come. “Our rail system is still far from sufficient, and building more
high-speed lines is a necessity,” he said.
He noted that China has 58,000 miles of track for a population of 1.3 billion, whereas the United States has nearly
three times that amount of track — 143,000 miles — for a population of 300 million.
Construction has fallen quiet again recently in Bazhou, but that is because of the deep winter freeze in the
country’s north. A security guard at the base of a 98-foot-high rail bridge that had been built just before the cold
weather arrived said workers were expected to return in full force after the Chinese lunar new year festival in
February.
The railway boom has also started to change the daily commutes of urban residents throughout China, with
central planners approving more than 60 subway and light-rail lines last year. Beijing this month opened four new
or extended subway lines, which were brimming with passengers within hours.
Looked at from the perspective of Chinese growth, though, there is one big downside. As the size of the country’s
rail network expands, the rate of increase in new investment will inevitably decline because so much has already
been built. According to Peng, 2013 could mark the peak for rail construction.
“Right now, this is the strongest moment for investment,” he said. “But later on this year, we will start to see some
constraints. Growth will slow.”
— Financial Times
Online
Beijing ‘Airpocalypse’ Reflected in Online Shopping Stats (THE WSJ CHINA REAL
TIME REPORT BLOG)
January 16, 2013
http://blogs.wsj.com/chinarealtime/2013/01/16/beijing-airpocalypse-reflected-in-online-shopping-stats/?mod
=WSJBlog
Health-conscious Chinese citizens were understandably concerned after air pollution in Beijing and other parts of
northern China spiked over the weekend. How concerned? A glance at data from data from e-commerce giant
Alibaba’s online shopping sites Taobao and Tmall, which saw searches for facemasks and other anti-pollution
products skyrocket in tandem with levels airborne particulate matter, offers a sense.
On Saturday in Beijing, the concentration of the smallest and most dangerous air pollution particles, known as
PM2.5, climbed to 886 micrograms per cubic meter, a level 35 times the World Health Organization’s
recommended standard.
The image below displays the rise in searches for the term “PM2.5,” which consumers were using to find a range
of goods on Taobao—from air purifiers to medicines—that might protect them from the smog, a spokeswoman for
Alibaba said.
Searches for face masks on Taobao surged 15% in a two-day period ending January 12, up from the same period
a quarter earlier. Actual purchases of face masks jumped 130% in the same time frame, according to information
provided by Alibaba. Consumers in Beijing purchased approximately 10,000 facemasks on Taobao and Tmall in
the first two days that the air pollution ballooned, Alibaba said.
Doctors and environmental experts say people are right to be concerned. Exposure to PM2.5, which can penetrate
body tissue, can have serious health effects.
In the short term, some area hospitals have seen a rise in the number of patients seeking treatment for
respiratory problems. David Dai, a physician for Tianjin United Family Hospital, said he saw an increase of 50% in
the number of patients reporting difficulty breathing.
Air pollution spikes can also trigger premature deaths of those already afflicted with heart and lung problems. In
a 2012 study examining the health effects of air pollution, environmental organization Greenpeace projected that
poor air quality would cause the deaths of nearly 8,600 people in the Chinese cities of Shanghai, Guangzhou, Xi’an
and Beijing in 2012. The study (pdf) also projected air pollution would cause $1.08 billion worth of economic
losses over the course of the year.
In the long term, numerous studies have shown that air pollution can increase the risk of heart and lung disease.
A 2010 study from the American Heart Association (pdf) found that extended exposure over time to high levels of
air pollution can increase the risk of cardiac inflammation and mortality.
The study recommends a decrease in exposure to air pollutants, such as limiting outdoor exercise and travel to
places in which pollution is high.
The study also said central air conditioners can reduce indoor exposure to particulate matter from the outdoors,
though that’s small consolation Beijing, where central air conditioning is rare in all but the most expensive of
apartments and beyond the reach of most households. One central air-conditioning system on Taobao was listed
at more than 20,000 yuan ($3,200) on Wednesday.
– Laurie Burkitt. Follow her on Twitter @lburkitt
Stepping Down as CEO, Alibaba’s Jack Ma Likens Himself to ET (THE WSJ CHINA
REAL TIME REPORT BLOG)
January 16, 2013
http://blogs.wsj.com/chinarealtime/2013/01/16/alibabas-jack-ma-i-am-no-longer-young-for-the-internet-busi
ness/?mod=WSJBlog
Jack Ma’s resignation Tuesday as chief executive of Alibaba isn’t exactly a surprise — last year, Mr. Ma began
laying the groundwork for his departure as chief, giving his nine presidents more responsibility to make their own
decisions.
But the eccentric entrepreneur, who will remain chairman of the e-commerce giant he founded in 1999, is
certainly making a colorful exit as chief. In an email to staff announcing his resignation this coming May, Mr. Ma
had some interesting things to say:
“At 48, I am no longer ‘young’ for the Internet business.” Try telling that to Jeff Bezos the CEO and founder of
Alibaba’s larger U.S. competitor Amazon.com AMZN -0.99% — he’s 49 years old. Mr. Ma is also not much older
than two other major Chinese Internet pioneers: Baidu’s Robin Li is 44, and Tencent’s Pony Ma is 41. Other
comparisons: Zynga ZNGA -1.35% founder and CEO Mark Pincus is 46 Google GOOG -1.40% founders Larry Page
and Sergey Brin are both 39 Yahoo's YHOO +2.66% Marissa Mayer is 37 Groupon's GRPN -4.21% Andrew Mason
is 32 and Facebook's FB -0.40% Mark Zuckerberg is 28.
“The Internet belongs to young people. This year, most of the Alibaba leaders who were born in the 1960s will
retreat from management and execution roles as we hand over leadership responsibility to colleagues from the
70s and 80s generations. Because, we believe that they understand the future better than us, and they have a
better chance at seizing the future.”
He likened himself to ET, the cinematic extraterrestrial: “Succeeding a founder CEO is a difficult job, especially
taking over from a CEO with such a distinct personality who is very ‘ET’-like; this requires great courage and the
willingness to make sacrifices,” he wrote.
Check out the full letter from Mr. Ma to his staff at Digits.
Symantec Appoints New President For Greater China (chinatechnews.com)
January 17, 2013
http://www.chinatechnews.com/2013/01/17/19047-symantec-appoints-new-president-for-greater-china
Security software provider Symantec announced the appointment of Chi-Ho Christopher Lin as its new global vice
president and president for Greater China.
In September 2012, Symantec's former president for China region Andy Wu departed the company. After that,
the work of China region was temporarily led by Bernard Kwok, president for Symantec's Asia Pacific and Japan
region.
Lin has over 25 years of working experience in the telecom and information technology industry. He held various
executive positions in multinational companies, including Sun Microsystems, Opnext Inc., Lucent Technologies,
AT&T, Siemens, and Bell Communications Research.
Prior to joining Symantec, Lin worked for Microsoft as general manager of enterprise and partner division of
Greater China and he was responsible for the company's enterprise-level business sales in Greater China.
Between the year 2008 to 2010, Lin was Greater China president of Sun Microsystems. Between the year 2001
and 2008, he was senior vice president of the New Jersey-headquartered fiber emerging enterprise Opnext,
leading the company's global sales and market operation.
Chinese Tech Companies Have Come A Long Way, But Have Further To Go, If
Their Performance At This Year’s CES Is Any Indication (beijingcream.com)
By John Artman January 16, 2013
http://beijingcream.com/2013/01/chinese-tech-companies-at-this-years-consumer-electronics-show/
I’ll be honest, I joined the “Consumer-Electronics-Show-is-irrelevant” bandwagon after so many years of really
cool but never released gadgets in technology. That said, there have been a few interesting stories to come out
of this year’s four-day CES in Las Vegas, which ended January 13: 4K TV sets (aka UltraHD), 50 Cent trying to
capitalize on the headphone success of other rappers (again), and — most relevant to readers of this site — the
presence of Chinese companies.
Adrianne Jeffries, writing in the Verge (linked above), does a great job of breaking down the strengths of Hisense,
Haier, Huawei, etc., and points out some very obvious weaknesses. As her post is meant more as a summary,
there are some points that could be expanded upon, as well as PR BS that just begs to be called out.
“…their executives are surprisingly candid.”
Huawei’s head of consumer electronics Richard Yu all but spat hot fire. Yu called Samsung’s plastic “cheap” and
dismissed recent accusations that Huawei is a national security threat by saying that the US government “gives
some noise.”
This is nothing new. Calling your competitors’ products “cheap” doesn’t strike me as candid. Rather, it is the
typically bombastic and inflammatory shock tactics that Chinese tech media have grown to expect from their tech
leaders.
There are many examples of CEOs flaming each other on social media, belittling others’ products and strategy,
and general belligerency.
It’s understandable that tech reporters in the US expect a bit more diplomacy from executives; Steve Jobs seems
to be the only major tech personality that showed a willingness to completely trash other products. The landscape
here is quite different: weaknesses in the rule of law and an inadequate intellectual property protection system
requires companies (not just tech) to be cutthroat, creating buckets of bad blood.
Overconfidence
The Chinese are the underdogs in the electronics industry, and they have a newcomer’s verve. They also have a
great deal of confidence, however, having already established themselves in the most populous country on the
planet. There seems to be a sense of manifest destiny, a belief that global takeover is simply in their cards.
I’m highlighting this just because of how little I’m surprised that Chinese companies have a big head. A huge part
of the Chinese psyche, reinforced through biased education and media, goes something like this: “China is
awesome. Always has been, always will. We weren’t for a while because foreigners kept us down, but now we’re
back. Everybody watch out.”
With this comes some ridiculous PR statements from Hisense about market share.1 It doesn’t surprise me that
Hisense would perform well in China or even Malaysia (with its large ethnic Chinese population), but Europe? I
spent about an hour looking for market share information on Hisense, but found very little — their European
website was last updated in 2010.
The Challenge for Chinese Companies
This cannot be said too many times: Just because you’ve been very successful in China2 does not guarantee you
will be successful outside. This has become a bit of a truism both for Chinese companies going into developed
markets as well as companies from developed markets coming into China — Home Depot, Best Buy, and Groupon
being great examples.
The colors in Iron Man on TCL’s 110-inch TV looked so bland that a guest at the booth wondered if the movie might
have been a subpar pirated copy. Haier’s booth featured an iPad knockoff so blatant visitors first wondered if the
company was using real iPads. Its name? The HaiPad.
And the Chinese marketing is also a bit off — an elaborate music and dance routine at Hisense’s booth basically
screamed “we’re foreign!” and the press materials for the Top Brands From China event were nigh-indecipherable.
Chinese people can be very quick to pull the “you-don’t-understand-China” card.3 Granted, there is quite a bit of
misunderstanding of China, its people, and its companies, but this is no excuse for the Chinese to apply the same
intellectual laziness when learning about the outside world.
This is what every single Chinese company has to fight against if they truly want a positive global brand presence.
At this point, no one even seems sure how to pronounce Huawei (it’s “hwa-way”).
These companies have shown great prowess and a drive to succeed in their home market, but there still seems to
be a lack of understanding of what appeals to Western consumers and how to present your product. The
above-mentioned song and dance at the Hisense booth is something you’d probably see at a Chinese trade show
(or banquet, or cheap 24-hour dim sum restaurant, or overpriced Chinese bar), but the fact that Hisense chose to
do the same at one of the largest consumer tech events in the world shows how much they still have to learn.
I completely agree that Chinese technology companies are set to take off globally (and perhaps dominate in
certain sectors and areas), but it won’t be before they invest more in brand image, hire the appropriate
consultants,4 and transcend their current China-focused mentality.
~
1“You’ve probably seen stuff this week saying ‘well hey, Hisense can come in and spend a lot of money and get
a very big booth and it doesn’t make them a tier one,’” Hisense product manager Chris Porter toldThe Verge. “Well
you know what? We already are a tier one. We’re tier one in China, we’re number one market share there, over
twice the market share of Samsung. Australia, South Africa, Malaysia, Europe, same thing. It’s not like we’re
trying to buy our way into tier one, we’re just letting people know who Hisense really is.”
2 With its protectionism and support for domestic companies, a very obvious price advantage, and intimate
understanding of Chinese consumer preference.
3 If I had a nickel…
4 I, of course, am available for a nominal fee.
(Image CNET)
HK and China: a special relationship (The FT Beyond BRICs Blog)
Jan 16, 2013
by Andrew Bowman
http://blogs.ft.com/beyond-brics/2013/01/16/hk-and-china-a-special-relationship/#axzz2I5Y7BTvK
From time to time concerns are raised that Hong Kong could one day be eclipsed by financial centres on the
Chinese mainland, notably Shanghai. But such fears are overblown according to a new report from HSBC’s Donna
Kwok, which says Hong Kong has quite enough advantages to avoid being put in the shade any time soon.
Of course, one could say it’s no surprise to hear HSBC highlighting the merits of the city which serves as its Asian
headquarters.
Nonetheless, the report makes some interesting points. Hong Kong is still the main economic gateway to China,
placed in the middle of the prosperous Pearl River Delta, and well endowed with strong rule of law and open,
internationally-orientated markets. Its go-between-of-choice status is strikingly reflected in the FDI stats:
(See Chart)
What is more, it will take many years for a city like Shanghai, let alone Shenzhen, “to build the same level of
experience, pool of globally competitive talent and depth of market infrastructure that Hong Kong already
possesses”. In the meantime, Kwok says,
the city is providing a controlled environment in which Beijing can test and finetune its plans to liberalize its own
financial system, including the offshore RMB market and the opening of the capital account.
It was, after all, the first place in which Chinese mainland companies listed (1993), the first place to develop
offshore renminbi-based financial services (2004), and the first place to launch offshore renminbi bonds. It is well
placed to be a prime benificiary of the rise of the redback, with HSBC expecting Rmb deposits to grow sharply up
to 2015:
(See Chart)
Expect it to remain not only an “indispensable go-between” for those seeking to access China, but also to become
a gateway from which Chinese finance reaches out to the rest of the world.
As well as finance though, Hong Kong has the opportunity to reap benefits from more mundane ties in trade and
tourism. For every one Chinese visitor to Singapore, 20 go to Hong Kong. Spending from Chinese visitors will,
they estimate, make up a third of Hong Kong’s GDP by 2015.
None of this is without risks. Stronger ties to China make it more vulnerable to mainland economic slowdown and
political interference – and it will have to avoid complacency in maintaining the high regulatory standards which
make it so attractive internationally. Perhaps though, as the report notes optimistically, Hong Kong could serve to
export good practice to the mainland rather than import the mainland’s problems.
China FDI levels off, at record levels (The FT Beyond BRICs Blog)
Jan 16, 2013
by Stefan Wagstyl
http://blogs.ft.com/beyond-brics/2013/01/16/china-fdi-levelling-off-at-record-levels/#axzz2I5Y7BTvK
China’s foreign direct investment inflows last year totalled $111.7bn, according to commerce ministry figures
published on Wednesday. For the bears, the headline fact is that it fell 4 per cent in the first annual decline since
the global financial crisis struck in 2008-9.
But the bulls prefer to emphasise that this is only just short of 2011′s all-time peak of $116bn. In other words,
FDI into China is still flowing at record levels – and that’s despite a significant drop from the crisis-hit eurozone.
The bulls surely have the better of the argument.
After the heady growth of the last two decades, it should be no surprise to see a levelling off of inflows, especially
when the 2008 crisis and its aftermath is taken into account.
Also, a certain amount of slowing should be expected as foreign investors steadily focus less on China’s low-cost
export manufacturing sector and more on its domestic markets, including the fast-growing service industries.
The numbers showed FDI into services fell by only 2.6 per cent to $53.8bn, compared to a 6.2 per cent drop in
manufacturing investment inflows to $48.9bn. And when property investment, which dropped 10.3 per cent, is
excluded, FDI into services rose 4.8 per cent.
Chen Deming, commerce minister, said this week that the trend of China’s economy is generally good in 2013,
and domestic consumption and investment is likely to maintain steady growth. Despite uncertainties, the scale of
foreign direct investment is likely to be the same as that of 2012.
According to the ministry website, Chen said:
In the future, the development of environmental protection and ecological industries and construction of small
and medium-sized cities and towns possess huge potential, which is also the new business opportunity for foreign
investment.
The commerce ministry figures showed investors from Europe and Asia cut Chinese FDI particularly sharply.
Inflows out of the European Union dropped 3.8 percent in 2012 from a year ago to $6.1bn, those from Asian
economies – including Hong Kong, Japan and Singapore – fell 4.8 per cent to $95.7 billion. Investment from the
United States rose 4.5 percent on the year to $3.1bn.
The ministry played down the importance of recent moves by export-oriented manufacturers to establish plants
in other low-wage economies, including as Bangladesh, Indonesia and the Philippines.
According to Reuters, Shen Danyang, a commerce ministry spokesman, said: “It is true that some manufacturing
companies are moving out of China. But one point I want to remind you is that, so far, there is no big-scale
pull-out of foreign investment.”
Meanwhile, market-watchers will be looking out for China’s fourth quarter GDP data, due on Friday. The figures
are expected to show China’s annual GDP growth recovered to 7.8 per cent from 7.4 per cent in the third – the
smallest increase since early 2009.
But for foreign companies that have decided to go into China, these quarterly ups and downs matter less than the
long-term prospect – this is the world’s second-largest economy and they want to be there.
Alibaba: IPO question returns (The FT Beyond BRICs Blog)
Jan 16, 2013
by Pan Kwan Yuk
http://blogs.ft.com/beyond-brics/2013/01/16/alibaba-the-ipo-question-rears-its-head-again/#axzz2I5Y7BTvK
You can almost hear the investment bankers salivating.
News on Tuesday that Jack Ma will step down as chief executive officer of Alibaba, the Chinese ecommerce giant
that he founded, quickly had analysts and the tech industry buzzing with speculation that Ma is priming the
company for an initial public offering.
If true, it would be, in the words of one analyst, “the mother of all IPOs”.
Just one problem though. Ma himself appeared to be in no rush.
According to Andrew Ross Sorkin over at DealBook, which first broke the story of Ma relinquishing the CEO role
(he will stay on as executive chairman), the 48-year-old godfather of the Chinese internet said an IPO was still a
way off.
But you can’t blame people for getting ahead of themselves.
The global equities market had a torrid year last year, with overseas-listed Chinese companies in particular
tainted by a series of accounting fraud allegations. So bankers and investors are understandably looking for
business where they can.
An Alibaba IPO has been valued at least $40bn. And there is an argument to be made that it would be in Alibaba’s
economic interest to go public sooner rather than later.
As Kara Swisher at AllThingsD noted, under the terms of a recent deal with Yahoo (where Alibaba bought back half
of the 40 per cent stake Yahoo owned in it), Alibaba has the right to buy back half of Yahoo’s remaining stake if
the company goes public before December 2015. So the sooner it IPOs, the sooner it can regain this stake. For a
fast-growing company like Alibaba, which saw profit more than tripled to $781.7m in the nine months to end of
June on sales of $2.9bn, that would make sense.
Eric Jackson over at Forbes offered other reasons for an Alibaba IPO – some more plausible than others.
As I’ve noted before, the year 2014 when spoken in Mandarin, happens to sound like the Chinese word for
“death.” That means that Alibaba would be much more likely to IPO this year (2013) or in 2015. But, for the
reasons mentioned above, Alibaba and its employees would be better off IPO’ing sooner than later to own more
of the company they’ve built….
… The US government recently took Alibaba off its list of “notorious markets.” This is a list of companies that
knowingly do business with people who don’t respect copyrights and other moral standards set out by the US
government. This allows Alibaba to IPO in the US immediately.
Alibaba’s recent restructuring of the business – which saw it broken up into 25 different units led by different
executives – coupled with the Yahoo stake buyback and a delisting of a Hong Kong unit have also fed speculation
that an IPO is afoot.
But with Ma appearing to have brushed aside the idea, only one thing is certain for now: there will be more
rumours and speculation in the months ahead.
In the meantime, check out the FT’s past interviews and profiles in the links below.
China Advertising 2012 (China Internet Watch Blog)
by CIW TEAM STAFF on JANUARY 16, 2013
http://www.chinainternetwatch.com/1904/china-advertising-2012/
2012 is the trouble times of Chinese advertising. Whether the food security crisis aroused by the toxicant capsules,
Diaoyu Island incident or the hit of the Voice of China, we could see the influence of media.
The Overview Statistics of China Advertising 2012
In 2012, the advertising market was more than 652.8 billion yuan (USD 104.7 billion), where we didn’t see much
grow compared with that in 2011 (649.3 billion yuan, about USD 104.15 billion). TV ads accounted for more than
80%, keeping its safe lead, but only increased by 1.4% under the restrictions of resources and policies. Both of
magazine and radio ads up by 9.4%. Suffering the shock of the Internet, ads on newspapers down by 7.3%.
(See Chart)
The north and northeast areas in China suffered relatively obvious decrease in ad spend, which were 7% and 9%.
The ad spend in south, central and southwest areas saw increasing growth of 13%, 10% and 2% respectively.
(See Chart)
The top 5 industries with the highest advertising spending were still cosmetics, beverage, pharmaceutical,
agribusiness and food. It was worth mentioning that the ad spend in food & beverage category grew by 20% and
18% respectively compared with that of last year. Though intervened by the political environment, the spending
ratio of auto industry didn’t change a lot.
(See Chart)
Most of the top 10 advertisers were from FMCG. P&G kept its lead but still lowered the ad spend by 30%.
Environmental factors in pharmaceutical industry had marked influenced on Hayao Group, whose advertising
spending declined for 29%.
Three Fascinating Stories in 2012
1.Sino-Japanese Crisis’
In Sep 2012, Diaoyu incident inevitably influenced the operation of Japanese manufactures. The spontaneous
anti-Japanese demonstrations, Japanese car industry suffered tough declines in sales. According to statistics from
Sina, the sales of Toyota, Nissan, Honda, Suzuki and Mazda decreased for 61.1%, 44%, 54.2%, 32.6% and
27.6% respectively.
(See Chart)
The poor sales performance directly influenced the ads spending of Japanese car industry. Also, the media
intermitting the ads of Japanese products was the explanation of the decline. Things were quite normal in July and
August but dropped dramatically in September.
(See Chart)
In contrast, other car brands experienced rapid growth. The ad spending growth of Land Rover exceeded 1800%
in October and so it did with Germany Volkswagen. Chinese-made cars, represented by BYD, also increased the
ad spending since August.
Until then, the after-effects still exist. According to statistics, Japanese car export to China declined to 82%, and
Toyota even halted production in China.
Japanese car industry was not alone. Japanese electronic products industry had been similarly battered. The
advertising spending of Canon, Nikon, Sony and or so had been decreasing since August and Canon’s spending
even dropped for 99%.
2. The Voice of China, The Hit Last Summer
What is the most popular TV programs in 2012? Certainly the Voice of China is. Marketers won’t ignore this kind
of public carnival. Instead, they started an advertising war on this platform. The very evidence is that the
15-second ad price soared 500,000 yuan (USD80,200) from 150,000 yuan at the beginning and still more
advertisers wanted to join in.
But does being part of this carnival guarantee the ad impacts? Maybe the answer is no. Take those embedded ads
as an example. During the final section of the Voice of China, there were 461 pieces of embedded ads in total,
covering 86 brands. Most of them appeared in the mouth of the host or acknowledgement in the end. With too
direct expression and too much similarity and too much intensity and audience’s selective retention, few ads could
be memorized.
3.The Fight Between JDB and Wong Lo Kat
JDB and Wong Lo Kat used to be brothers and both of them sell herbal tea. They separated and started a war ever
since the brand lawsuit.
JDB was quite active in this competition. Except for entitling several variety shows such as the Voice of China, JDB
took good advantage of offline and online media to promote its brand. Take its cooperation with the Voice of China
as an example. JDB not only provided tons of money for this program, but also took part in the pre-planning and
after-publicity to ensure the consistency between the brand and the program. With the success of the Voice of
China, JDB also harvested great performance in sales.
Summary and Prospect
In summary, the growth of Chinese advertising market was slowing down 2012, especially in those industries
influenced by the government policies. The online media has great potential in the long run, but TV media are still
the first choice of most advertisers. Chinese domestic brand is improving the sense of brand promotion and
marketing strategy to be more influential in the market.
360Buy Founds Major Cloud Research Center in Beijing (techinasia.com)
Jan 17, 2013
by C. Custer
http://www.techinasia.com/360buy-founds-major-cloud-research-center-beijing/
Chinese e-commerce giant 360Buy is taking to the cloud, or so it appears with the company’s announcement
yesterday of the launch of a major cloud computing research center located in Beijing’s tech-friendly Haidian
district. The new research center, founded in partnership with Renmin University, encompasses 10,000 square
meters and will be able to employ up to 1,500 workers.
At yesterday’s launch meeting, 360Buy chief strategist Zhao Guoqing explained the decision:
As one of China’s most influential e-commerce websites, 360Buy is in the processof expanding its scope, and we
must use scientific methods [to do so] that are based on the multifaceted demands of users and the behavior of
consumers [...] in the US, England, and the other 500 strongest global companies, more than 90 percent of their
important investments and strategic decisions are based on deep data analysis[.]
To that end, the cloud research center will primarily be a facility for hardcore number-crunching rather than the
source of a 360Buy-branded entry into the cloud storage market or anything like that. Since 360Buy is engaged
in a battle with Alibaba and a few other players for space in the Chinese e-commerce market, every little bit counts,
and 360Buy will hope that this new cloud research center will allow the company to move with confidence when
they’re making strategic shifts or investments.
(via Sina Tech)
Rumor: Alibaba Hires IPO Underwriters, Ready to Raise $4 Billion This Year
(techinasia.com)
Jan 16, 2013
by Steven Millward
http://www.techinasia.com/report-alibaba-ipo-2013-credit-suisse-goldman-sachs/
It was just yesterday that Alibaba founder Jack Ma said he’d be retiring from his CEO role at the e-commerce giant
in May. And now Bloomberg suggests that Ma’s passing of the baton will not slow Alibaba’s progress towards an
IPO. Indeed, the site says today that Alibaba has hired Credit Suisse and Goldman Sachs to arrange the public
offering, which looks likely to raise $3 billion to $4 billion. For now, this is a rumor.
Alibaba will probably list in Hong Kong, not following the same path of local rivals such as Baidu, which listed in
the US. The IPO looks set to be China’s biggest ever tech IPO. Alibaba runs China’s largest C2C shopping site,
Taobao, the biggest online mall, Tmall, the most-used e-payment platform, Alipay, and several other products.
The financing that Alibaba raised for the partial Yahoo ownership buyback last September effectively valued the
whole Alibaba Group at $40 billion.
Ma will remain as Alibaba Group’s chairman, but his successor as CEO has yet to be named. Yesterday Ma said that,
at 48 years of age, he was too old to be running an internet business, and indicated that he was keen to promote
someone internally to the top job.
(Source: Bloomberg)
Chinese Gamers Ponder How Public Opinion Should Shape Game Development
(techinasia.com)
Jan 16, 2013
by C. Custer
http://www.techinasia.com/chinese-gamers-ponder-public-opinion-shape-game-development/
Should you make games based on what the public wants, or based on something inside yourself or your company
that you want to express? It’s a fundamental question that cuts right to the heart of game development, and it’s
a question that Netease games and its readers took on this week with its ongoing discussion series Dispute (I
wrote about a previous edition of dispute concerning copying in game development in China here).
This week’s poll put the question to gamers: what should the driving force behind game development be? The
results reveal that while many games want their own desires put first, a significant amount are also happy to see
games focus on what’s best for them rather than trying to cater to the whims of the gaming masses:
(See Chart)
As with every week, the Dispute section also includes some debate from gaming insiders, but this week the most
incisive comment on the site comes not from a game developer but gamers themselves. One featured comment
from a 31-year-old male gamer reads:
The people who best understand how games should be played are often not the people with the most money.
Nowadays many big developers are focused at every level from research to operations on how to get gamers to
spend money while in the game, and how to satisfy a specific demographic of gamers that have money to dig
profits out of them. Given that, there’s no way the games [produced by this system] are going to be all that great.
It’s a bit like how beautiful soccer stadiums are built to the standards of rich businessmen rather than children
who like playing soccer.
The soccer metaphor may be a bit off, but the point about in-game transactions being the primary focus of game
development is well taken; that is a plague that we’ve noticed affects many casual games (for numerous
examples, see my Weibo Game Reviews series, especially this one).
Another commenter made another salient point about the games industry in China, and in doing so also
introduced a much more effective metaphor:
Satisfying players [should be] the result, not the original intention [...] worldwide, more people eat at KFC and
McDonalds than anywhere else, but would any of those people be willing only to eat at KFC and McDonalds for the
rest of their lives? If game developers decide that as long as gamers are happy they’re happy, then the result will
be that everyone sees you can make money from doing the same thing, and in the end we’ll all be playing the
same fast-food games. Why is there so much nostalgia in gaming these days? Because today’s games are too
weak and they only care about what players think, [companies] that just cared about making a great game like
the old days are fewer and fewer.
These guys are talking about Chinese games and Chinese game developers, of course, but there are more than
a few lessons in here for Western game developers and publishers as well. Although the Western games industry
is probably more focused on critics’ sentiment than on player sentiment about a game (higher Metacritic scores
mean higher sales) the point about revenue-focused development rather than game-focused development is a
global phenomenon, and it’s good to see gamers in China calling it like it is.
(via Netease Games)
Just Short of 2
(techinasia.com)
Years
Old,
WeChat
App
Surpasses
300
Million
Users
Jan 16, 2013
by Steven Millward
http://www.techinasia.com/confirmed-wechat-surpasses-300-million-users/
The makers of WeChat said recently that the messaging app will likely soon surpass 300 million registered users
– and now that has officially happened. The massive milestone is confirmed by Tencent (HKG:0700) CEO Pony Ma
himself, who hailed the huge growth in the Whatsapp-style app since its launch on January 21st, 2011.
WeChat went global in April of 2012 with an English name (it’s called Weixin in China), and its growth seems to
have accelerated a bit since that time (see the graph below). But it’s still not clear how many WeChat users are
overseas, though an analyst’s heatmap that we looked at this week suggests that it’s seeing a lot of traction in
India and Southeast Asia. Indeed, those are the focus areas for Tencent in its push to make WeChat into China’s
first big social media export.
The road to 300 million registered users has not been easy. Just last week, WeChat temporarily seemed to have
implemented keyword blocking for politically sensitive phrases in Chinese – but that was soon turned off after a
backlash over how it was affecting users worldwide.
Here’s our updated graph, using four official data points from Tencent, showing WeChat’s growth over the past
two years. Note that it added its last 100 million in the space of just four months:
(See Image)
[Source: QQ Tech - article in Chinese]
Chinese
Energy
Company
(chinasourcingnews.com)
Accused
Of
Misleading
Investors
January 17, 2013 | By Editorial Staff
http://www.chinasourcingnews.com/2013/01/17/294669-chinese-energy-company-accused-of-misleading-inv
estors/
The U.S.-based law firm of Cohen Milstein Sellers & Toll PLLC has filed a class action complaint in the United States
District Court for the Southern District of New York on behalf of purchasers of common stock of Longwei Petroleum
Investment Holding Limited from May 17, 2010, through January 3, 2013, inclusive.
Longwei is an energy company engaged in the wholesale distribution of finished petroleum products in China. The
complaint alleges that throughout the period, defendants made materially false and misleading statements, and
omitted materially adverse facts, about Longwei's business and financial condition.
Specifically, the complaint alleges Longwei failed to disclose a material related party investment totaling USD32
million made by Longwei's subsidiary, Shanxi Zhinghe Energy Conversion Co. Ltd.; Longwei failed to disclose that
Yongjun Cai, its CEO, was a minority owner of three of Longwei's operating subsidiaries; and Longwei greatly
exaggerated its wholesale fuel sales.
As a result of these materially false and misleading statements, Longwei's stock was allegedly artificially inflated
during the period. On January 3, 2013, an Internet report published by Geoinvesting.com disclosed these
potentially materially false and misleading statements and omissions. On this news, Longwei's stock reportedly
fell 73%, closing at $0.62 per share on January 3, 2013, down from $2.30 per share on January 2, 2013.
Burger King Drops Coca-Cola In China (chinasourcingnews.com)
January 16, 2013 | By Editorial Staff
http://www.chinasourcingnews.com/2013/01/16/494667-burger-king-drops-coca-cola-in-china/
U.S. food and beverage giant PepsiCo has established a strategic partnership with the fast food provider Burger
King in China.
According to the agreement signed by the two parties, PepsiCo will become the exclusive supplier of soft drinks in
Burger King's chain restaurants in mainland China. Starting from January 1, 2013, these restaurants will provide
PepsiCo's software drinks, including Pepsi-Cola, 7UP, Mirinda, Lipton, Tropicana, and other products by PepsiCo.
Burger King reportedly has more than 100 chain restaurants across China.
Prior to the cooperation, Burger King sold Coca-Cola products in its Chinese restaurants. It is also the first time for
the two companies to cooperate in China, although they formed partnership in other markets like U.S, Latin
America, Russia, and Turkey.
Founded in 1953 and headquartered in Miami-Dade County, Florida, United States, Burger King is a global chain
of hamburger fast food restaurants. Its first Chinese site opened in Shanghai in 2005.
Baidu’s Approach to Mobile: Build the Groundwork (technode.com)
By Ben Chiang on January 15, 2013
http://technode.com/2013/01/15/baidus-approach-to-mobile-build-the-groundwork/
At a conference held by local business magazine BusinessValue over last weekend, Robin Li, founder and CEO of
Chinese search juggernaut, shared with audiences – mostly Chinese Internet product managers – his reflections
on local innovation, the company’s legacy of recruiting and training product managers and its mobile strategy.
Mr. Zhang Peng, editor-in-chief of the periodical kicked off his dialogue with Li by asking the latter’s recent
reclusion. Li responded saying he’s been keeping a low profile since ever and doesn’t really feel like being
recognized by too many people. Given Mr. Li’s attendance at one of the most popular Chinese TV talk shows and
even gave nationwide audience an eyeful of his Tango routine, I take the answer as a metaphor of “I’d better
spend more time watching out for my business as companies like 360 are posing some challenges.” He circulated
an internal email to all Baidu staff calling for the wolf spirit to mobilize the morale and the elimination of xiaozi
(Bourgeoisie), or, people who put more thoughts on life quality in lieu of workloads after Qihoo 360’s
home-brewed search engine chewed up more than 10% of Chinese search market. 360 stocks enjoyed an uptick
since the search launch as Baidu’s price stagnated a little bit.
Mr. Li went on to express his excitement of Internet and mobile Internet, pointing out that Internet has created
so many new trades and he’s excited about mobile Internet. He pinpointed much hope into Baidu’s mobile efforts,
ruling over it directly. He also revealed that he has meetings with the company’s mobile division at least once per
week. After last year’s restructure, Baidu’s Mobile Cloud division emerged as one of the company’s spotlights.
Baidu Developer Center
One of the major causes why Mr. Li sharpened his company’s focus on mobile, could be revealed in his thought
that “people’s need of having easy access to information hasn’t been changed or disrupted, however the way how
people access to information has been seriously changed due to the plethora of mobile devices and advancing of
technologies.
Mr. Zhang then drew Tencent’s Weixin as an example of Chinese company’s success on mobile front, while Li
defensed Baidu’s mobile efforts by pointing at the future. Baidu’s approach to mobile Internet, according to him,
is to build an ecosystem to enable 3rd party innovations based on the infrastructure. Baidu is still in the process
of seed sowing on mobile end.
When being asked about his reflections on Baidu’s product managers, drawing on his own experience with Baidu,
Li shared some very interesting points. Back in 2000, when he came back to China to found Baidu, there were only
about 10 million netizens compared to last year’s 538 million. The title of internet product manager didn’t even
exist then. There weren’t any PMs. Baidu had to make the compromise to hire people from various backgrounds,
ranging from bartenders, sales to anyone with good sense of figuring out what Chinese internet users really need,
and then trained some of the top-notch Chinese PMs out of them. That’s one of the major differences between
Chinese and Silicon Valley product managers, he said. In the Sates, one is supposed to be majored in Computer
Science, work in a IT company for several years before obtaining a MBA degree and then find the new course of
crafting Internet products in a promising Internet company like Facebook or Twitter.
Mr. Li also had some comments on Apple’s Siri, saying that the service is more of entertaining less of practical use
at this moment, to him, current technology isn’t mature and sophisticated enough to make the service a decent
option, but still, he believes that audio assistants like Siri are progressing.
Alibaba CEO Jack Ma Call It Quits, Still Pulling Strings from Behind the Screen
(technode.com)
By Ben Chiang on January 17, 2013
http://technode.com/2013/01/17/alibaba-ceo-jack-ma-call-it-quits-still-pulling-strings-from-behind-the-screen
/
Jack Ma, the legendary founder/CEO and spiritual leader of Chinese ecommerce conglomerate Alibaba announced
to step down as CEO of Alibaba by May 10th of this year, citing his “not young anymore” and “opening up room
for the younger generations”. He’ll remain as chairman of the group though.
The announcement came after Alibaba’s latest restructure in which Alibaba was reorganized into 25 business units.
The third time over a time span of about a year and a half. In June of 2011, Alibaba spun off Taobao into three
independent entities including Taobao the marketplace (taobao.com), Taobao Mall (tmall.com) and Etao.com,
aligned with other entities like Alipay and Aliyun. Then in last July, Mr. Ma reshuffled Alibaba’s subsidiaries to form
seven business segments in a so-called “One Company” strategy which didn’t last long.
Mr. Ma said that the group would find a new CEO and announce the appointment on May 10th, also the 10th
anniversary of Taobao.com.
Still Pulling Strings From Behind the Screen
Even resigning his post, 48-year-old Mr. Ma was thought to be keeping pulling the strings from behind the screen.
He’d still map out important strategies and make big decisions for the company. The speculation was kinda
confirmed by Alibaba PR director Yang Leilei’s response to media inquiries saying that “Mr. Ma will remain as
chairman and make corporate-level strategies and decisions.”
Alipay Shares Insights into Chinese Online Consuming Behaviors (technode.com)
By Ben Chiang on January 16, 2013
http://technode.com/2013/01/16/alipay-shares-insights-into-chinese-online-consuming-behaviors/
Alipay, the largest and most popular Chinese online payment service, just shared its insights into its users’ online
shopping behavior over the past year, given the service’s de facto dominating position in Chinese online payment
market – Alipay claimed more than 3 million registered accounts in 2010 while according to a fresh new stats
released yesterday by CNNIC (China Internet Network Information Center) that as of last December China
crossed 564 million netizens – the insights literally reflect Chinese people’s online consuming behaviors in
general.
According to Alipay, though economically developed Zhejiang (14.85%), Guangdong (14.06%), Shanghai,
Beijing and Jiangsu topped the five spots by average annual spending, underdeveloped regions experienced
fastest growth compared to the big guys as tier 4 cities grew 64% yoy in online payment users and 68% yoy in
payment amounts.
The plethora of mobile devices also boosted mobile payments in last year, according to Alipay, mobile payments
via the service saw a stunning 546% growth from a year earlier. An interesting finding regarding mobile payment
is that, people in small cities preferred paying through mobile channel as the fact reflects that mobile devices is
more prevalent than PC in underdeveloped areas.
Alipay CFO Jing Dongxian told us that in 2012 the service enjoyed a daily transaction volume of more than RMB
6 billion yuan (US$ 964 million).
Rumor has it that Alipay looks to ramp up its mobile app to ride on the trend of mobile payment, Mr. Jing partly
confirmed the rumor, saying that Alipay has been working on some features to turn your mobile phone into a
wallet. He believed that with the advancing of mobile internet, the line between online and offline payment would
be blurred, mobile Alipay could become what dubbed on-the-field pay or cloud pay in the foreseeable future.
Tencent Weixin Reaches 300 Million Users, But the Team Slows Down
(technode.com)
By Tracey Xiang on January 16, 2013
http://technode.com/2013/01/16/tencent-weixin-reaches-300-million-users/
It takes Weixin, Tencent’s mobile messaging app, no more than two years to reach 300 million registered users,
as announced by Weixin team. Launched on January 21st, 2011, Weixin has become one of the most used mobile
apps in China. And its international expansion is expected to be the first case of a Chinese internet product with
a sense-making international presence.
With an English name, WeChat, Weixin started its international expansion not long after its launch. In October
2011, an English version was and services became available in the U.S., Japan and to users of regions that use
traditional Chinese. In December that year, users in one hundred countries could bundle WeChat with their mobile
phone numbers. Later it enabled Facebook connection to please overseas users. Now it plans to place servers in
the U.S. and southeast Asian countries.
Slowing Down on Purpose
Growing too fast, Weixin was about to become a full-fledged platform, with Moments, a path-like sharing feature,
for users to share content, Official Accounts for enterprises and media to interact with audiences, and Weixin
Membership card for offline merchants to do customer relationship management.
Before long, Wexin became everything the public expected the mobile Internet to be, media platform, mobile
entertainment center, mobile shopping marketplace, the one app connecting the online world and the offline
commerce world, and so on.
Its monetization potential became one of the hottest topics. Online content marketing talent started studying the
new platform. MFHUI, an online cosmetics retailer, successfully sold products through Weixin. Tenpay, the
payment solution of Tencent’s, planned to enable direct payments within Weixin in early 2013. Rumor went that
Weixin was testing HTML5-based mobile games, which echoes what Pony Ma, Tencent CEO, pointed out the the
first money Chinese internet companies would make from mobile end must be mobile games.
Instead of allowing all the mentioned to grow out of control, Weixin team adjusted policies to restrict the growth.
For instance, it reduced the number of messages that official accounts could send to audience from three to one
a day, to be less bother to users.
On the other hand, third parties came to realized that it wasn’t an almighty platform. A journalist from a local print
newspaper announced they were about to drop Weixin as a prime distribution channel, saying its system isn’t
good for reaching more readers and good interactions — at least not so good as Weibo (article in Chinese).
As Dai Zhikang, who leads the Tencent’s lifestyle e-commerce service, put it, “Weixin developed too fast. How did
you feel about Weixin one year ago? You cannot feel the same one year later. At first we used Weixin to save
money as sending text messages costs money. Later it was for sending pictures. Now we use it for
group-messaging and voice messages, and for the Moments. Your ideas, including some for building an O2O
business on top of it, are different one year later.”
Politics & Law
Newswire
China Set to Exit Slowdown as Government Supports Infrast (Bloomberg)
By Bloomberg News - Jan 16, 2013
http://www.bloomberg.com/news/2013-01-16/china-set-to-exit-slowdown-as-government-supports-infrastruct
ure.html
China’s economy is set to exit a seven-quarter slowdown as the government rolls out infrastructure projects and
limited inflation lets officials hold off from tightening monetary policy.
The National Bureau of Statistics will report tomorrow that gross domestic product expanded 7.8 percent in the
fourth quarter from a year earlier, according to the median estimate of 53 economists surveyed by Bloomberg
News. That’s up from a three-year low of 7.4 percent in the previous period.
The risk is that the rebound may fade in the second half as the boost from railways and road projects ebbs and the
government grapples with rising inflation and the expansion of shadow banking. While the nation is set to reverse
its slide in economic growth, the pace remains short of the 10 percent average of the past two decades as higher
wages and weakness in global demand limit export gains.
“The current recovery is being driven mostly by monetary and fiscal policy easing,” said Zhang Zhiwei, chief China
economist at Nomura Holdings Inc. in Hong Kong. “Once the momentum of policy easing slows, growth may trend
down again.”
Tomorrow’s report will also include the latest monthly data. Factory output probably rose 10.2 percent in
December from a year earlier, up from 10.1 percent in November, while retail sales advanced 15.1 percent after
a 14.9 percent gain the prior month, according to median analyst estimates.
Investment Pace
Fixed-asset investment excluding rural areas may have increased 20.7 percent for the full year, based on
economist forecasts, the same pace as in the first 11 months of 2012.
Improving investor confidence in China’s outlook has lifted stocks and the currency. The Shanghai Composite
Index (SHCOMP), the nation’s benchmark gauge, has advanced 18 percent from an almost four-year low on Dec.
3. The yuan traded this week at a 19-year high against the dollar.
Zhang sees the recovery fading, projecting expansion of 7.3 percent in the second half after 8.1 percent in the
first half. The central bank may raise interest rates twice in the second half to limit inflation, said Zhang, who
previously worked for the International Monetary Fund. “Policy will turn gradually from the current very loose
stance to a more cautious one,” he said.
Inflation accelerated more than forecast to 2.5 percent in December, statistics bureau data showed on Jan. 11,
while new local-currency loans had a greater-than-estimated drop. A broader measure of financing surged 28
percent, highlighting the economic rebound’s increasing dependence on non-bank credit that may add risks.
Data Skepticism
Analysts at companies including UBS AG and Australia & New Zealand Banking Group Ltd. questioned an
unexpectedly large increase in December’s exports, saying it may fail to capture the true picture.
“The recovery so far is led by accelerating public investment and stronger exports to Asian countries,” said Joy
Yang, chief Greater China economist at Mirae Asset Securities (HK) Ltd., a former IMF researcher. “However, we
have not seen clear signs of recovery in the private sector and in addition, consumption this year will likely be
capped by slower wage growth and rising unemployment pressures.”
Auto sales in China rose 4.3 percent to 19.3 million last year, missing official projections for deliveries of as many
as 20 million made in July.
Nike Orders
Nike Inc., the world’s largest sporting-goods company, said Dec. 20 that it continued to see its business in China
deteriorate as orders decreased 7 percent in its fiscal second quarter ended Nov. 30.
The central bank has paused from its monetary easing since July after two interest-rate cuts and three reductions
in lenders’ reserve requirements starting in November 2011. At the same time, the government has accelerated
investment-project approvals, trimmed fees for exporters and increased spending on infrastructure.
Economists are split on whether China will ease monetary policy this year as the ruling Communist Party
completes a once- a-decade leadership transition. While 12 of 19 analysts surveyed last month forecast a cut in
banks’ reserve requirements, 13 of 28 see no change in the benchmark lending rate, with nine projecting an
increase and six seeing a reduction.
Full-year expansion in 2012 was probably 7.7 percent, the weakest since 1999, and may pick up to 8.1 percent
this year before slowing to 8 percent in 2014, based on analyst forecasts.
China has eschewed the scale of the 4 trillion yuan ($586 billion) fiscal stimulus announced in 2008 and eased
monetary policy less than economists expected last year.
Growth Quality
Authorities will seek a higher “quality and efficiency” of growth in 2013 while deepening reforms in the economy,
according to a Xinhua News Agency report on Dec. 16 after the annual central economic work conference in
Beijing.
Government officials seem satisfied with growth of around 7 percent to 8 percent as suggested by their policy
approach, said Wang Qinwei, a London-based economist with Capital Economics Ltd. who previously worked at
the People’s Bank of China. “A large stimulus would make the domestic investment imbalance worse and with
credit growth peaking over the last couple of months, we expect the recent economic momentum to fade later this
year.”
--Zheng Lifei. With assistance from Ailing Tan in Singapore and Cynthia Li in Hong Kong. Editors: Scott Lanman,
Sunil Jagtiani
To contact Bloomberg News staff for this story: Zheng Lifei in Beijing at lzheng32@bloomberg.net
To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net
Print
China Arrests 7 in New Effort to Stop Tibetan Self-Immolations (The New York
Times)
By ANDREW JACOBS
Published: January 16, 2013
http://www.nytimes.com/2013/01/17/world/asia/china-arrests-7-in-new-effort-to-stop-tibetan-self-immolation
s.html
BEIJING — The authorities in northwest China have detained seven people they say organized the fatal
self-immolation of a Tibetan villager in October, photographed his burning body and then sent the images abroad.
The arrests, announced Tuesday by Xinhua, the official news agency, suggest that the Chinese government is
increasing the use of its newest strategy against the politically motivated suicides in Tibetan areas of China:
punishing friends and relatives of those who self-immolate.
The Xinhua report blamed a Tibetan advocacy group in India for convincing the villager, Sangye Gyatso, a
27-year-old father of two, that self-immolation was a “heroic deed” and that it would improve his family’s
standing.
A spokesman for the group, the Tibetan Youth Congress, rejected the accusations, calling them “ridiculous.”
With the accumulated toll of self-immolations approaching 100, Beijing has been scrambling to find effective
deterrents to such acts, which began in 2009 as a desperate attempt to publicize what many Tibetans consider
heavy-handed Chinese policies. In the early months of the crisis, officials sought to demonize self-immolators as
terrorists or mentally deranged people. The authorities also locked down the most restive towns and monasteries,
preventing monks from leaving or foreign journalists from entering.
Such measures appear to have done little to quell the protests, prompting officials to try new tactics. In Tongren
County, in Qinghai Province, the authorities recently issued new regulations that permanently revoke public
benefits for the families of self-immolators and cancel government-financed projects in their hometowns. If a
monk or nun visits the home of a self-immolator, their monastery is to be shut down as punishment, according to
the rules.
In recent weeks, more than a dozen people across the region have been charged with inciting self-immolations or
accused of spreading information about the incidents via text message or e-mail. Last month, eight people were
detained on accusations of trying to publicize a self-immolation near a government office in Luchu County in
Gansu Province. Among those arrested, exile groups say, was a relative of the deceased.
In October, four young Tibetans in Sichuan Province were given sentences ranging from 7 to 11 years; two were
convicted of encouraging their friend to self-immolate, and the other two for leaking news of the incident to
“outside contacts.”
In the most recent case in Gansu Province, Xinhua said one of the seven detained men, a Buddhist monk named
Khyi Gyatso, had joined the Tibetan Youth Congress in Dharamsala, India, after escaping in 2000. But the monk,
Xinhua said, stayed in touch with his boyhood friend, Sangye Gyatso, and persuaded him through phone calls and
e-mails to “contribute to the cause of Tibetans” by setting himself on fire.
Xinhua said Sangye Gyatso — whom it described as a convicted thief, perennially unemployed and a chronic
womanizer — fell under the monk’s sway. He later told three friends about the time and place of his
self-immolation so they could take photographs and share them with overseas groups, including representatives
of the Dalai Lama, the exiled spiritual leader regarded by China as a subversive. “Shortly thereafter,” Xinhua said,
“the Dalai clique launched a high-profile ‘propaganda’ campaign on the well-orchestrated incident, claiming there
was a ‘humanitarian crisis’ in China and calling for the international community to interfere.”
Tenzin Norsang, joint secretary of Tibetan of Youth Congress in Dharamsala, said the group had no connection to
Sangye Gyatso’s death, adding that the intense government restrictions and monitoring limited communication
between Tibetans in China and abroad.
“Those who are self-immolating have been living under Chinese rule for more than 50 years — they don’t need
anyone to tell them what to do,” he said. “Instead of blaming outsiders, the Chinese government could end the
self-immolations by re-examining and changing their own repressive policies.”
Online
Same Bed, Different Dreams for China’s Leaders, Critics (THE WSJ CHINA REAL
TIME REPORT BLOG)
January 16, 2013
http://blogs.wsj.com/chinarealtime/2013/01/16/same-bed-different-dreams-for-chinas-leaders-critics/?mod=
WSJBlog
China has been doing a lot of dreaming lately. Analyzing these dreams might have driven Sigmund Freud to
despair.
The dream sequences started appearing ahead of the Communist Party’s national congress in November as the
state media served up the “China Dream” as a counterpoint to the “American Dream” – which was portrayed as
too crass and materialistic.
But it wasn’t until new Communist Party chief Xi Jinping embraced it in a now famous speech at the National
Museum at the end of November that the notion went viral. Speaking at an exhibit on “The Path to Renewal ” —
and with the entire standing committee of the party’s Politburo looking on — he defined the “Chinese dream” in
terms of “the great rejuvenation of the Chinese nation.”
With a nod to the exhibit’s references to the Opium Wars, he noted the nation’s weakness in the past and pointed
to the need for strength in the future (in Chinese). He expressed his hopes for “getting things done” and reaching
a modest level of prosperity by the time of the ruling party’s 100th anniversary in 2021.
Soon after, fellow Politburo standing committee member and former propaganda boss Liu Yunshan chimed in with
his own dream analysis, focusing on the need for socialism with Chinese characteristics if the dream is to come
true (video in Chinese).
Since then, the official media have been sacrificing their own sleep in the great cause of cultivating this dream.
The party’s flagship paper, the People’s Daily, has given the theme the kind of space that writers usually only
dream about. In one commentary called the People and Their Voices, the party’s flagship paper echoed the
“getting things done” refrain, saying this was the way to make the China dream come true. Wu Mingju, a
propaganda apparatchik from Chengdu, intoned that the secret was for the party’s cadres to go down to the grass
roots levels and work hard.
Another “voice of the people” came from Wei Xiaodong at the party’s Central Academy of Socialism who described
the task as “thinking of the people and gaining their support.”
And a Global Times commentator offered another contribution to the officially sanctioned dreaming, saying that
his dream was for China to become a sea power with a blue water navy (in Chinese).
But the party might also be reminded of the Chinese expression “sleeping in the same bed but having different
dreams.” While propaganda officials may share the same space with the rest of us, there are different views of the
future.
One such unauthorized dream came from the Southern Weekly – the feisty Guangzhou newspaper that has once
again been at the center of a tug of war between the party’s propaganda arm and journalists who want a bit more
room for critical reporting. The latest dispute centered on a New Year’s editorial titled “A China Dream, a Dream
of Constitutionalism,” which party censors allegedly pulled at the last minute in favor of a different editorial
praising the party.
The commentary that failed to make it into print had this to say: “Only if constitutionalism is realized and power
effectively checked can citizens voice their criticisms of power loudly and confidently, and only then can every
person believe in their hearts that they are free to live their own lives. Only then can we build a truly free and
strong nation.”(A note of thanks to Hong Kong University’s China Media Project for its deft translation.)
Threats of a strike and street protests outside the paper’s offices in Guangzhou ensued before the dispute was
finally put to rest.
But the censored version of the commentary was still visible online. On one little known website, I99, a user
writing under the name “silent China” posted the text of the original editorial under a photo of young people
holding up a Chinese flag that appeared to have been taken during the Tiananmen Square protests in 1989.
Eventually, the unauthorized dreams were so disturbing that “China dream” was blocked in searches on Sina
Corp.’s Weibo microblogging service.
For some people, perhaps their vision of the future is an Impossible Dream.
– William Kazer and Olivia Geng
As Chinese Debate the Need for Political Reform, an Outspoken Blogger Is
Attacked (Time World Blog)
By Hannah Beech
Jan. 16, 2013
http://world.time.com/2013/01/16/as-chinese-debate-the-need-for-political-reform-an-outspoken-blogger-is-a
ttacked/
China is suffering its coldest winter in decades. But the chill didn’t stop some 10,000 fans from lining up in three
cities to get a signed copy of Li Chengpeng’s latest book, Everybody in the World Knows. With 6.6 million followers
on Weibo, China’s version of Twitter, the former investigative journalist is one of China’s most trenchant social
critics — even if his latest book had thousands of words excised by censors. Yet on his book tour this month, Li was
silenced by authorities who told him that he could take “no questions from readers, no talking at all — not even
‘happy new year’ or ‘thank you.’” At a book signing in Chengdu, the southwestern Chinese city that is his
hometown, Li responded to the gag order with sartorial subversion, wearing a black face mask.
Li may have been momentarily hushed, but that didn’t stop his enemies from acting out. At an event in Beijing on
Sunday, a man who identified himself as a Maoist tossed a wrapped kitchen knife at Li. (The weapon missed its
target.) Li was also punched by another man who reportedly considered his book an attack on China itself. Soon
after, a shaken Li contacted my colleague and me, wanting to talk that night in Beijing. (I have interviewed him
before.) But just before we set off to see him, Li sent an apologetic text: “The police are taking me away to talk.
Can’t meet you anymore.”
On Jan. 15, when Li had moved on to Shenzhen — the boomtown where Deng Xiaoping unleashed his famous
economic reforms — he was finally able to talk by phone. More than 3,000 people had shown up that day at his
book signing, the kind of adulation an author craves. But Li was dejected. Mysterious men snapped his photo,
while others yelled, “Down with traitor Li Chengpeng.” His luggage, full of important documents, had gone missing.
The knife-wielding man in Beijing has been released. “The excessive concentration of power in China has resulted
in the law being controlled by the powerful,” says Li. “If there is not even freedom of speech, then I’m not
optimistic about political reform at all.”
It has been just two months since China’s new leader Xi Jinping became the most powerful man in the world’s
most populous nation. After a decade of paralysis under Xi’s predecessor Hu Jintao, hopes have proliferated that
Xi — a grinning, vigorous figure whose father was a reformist Communist Party elder — might prove more open
to political liberalization. To expect Xi to suddenly tear down the Bamboo Curtain just weeks into a 10-year tenure
is unrealistic. But beyond the lip service the new Chinese Communist Party chief has paid to tackling corruption
and promoting the constitution, there’s not much to indicate any major commitment toward reforming China
politically. Hu himself talked an awful lot about reform when he first came to power. It didn’t happen.
Earlier this month, journalists at Southern Weekend, one of the most respected newspapers in the country, went
on strike to protest mounting censorship. Their strike gained support from tens of thousands of Chinese, including
a gaggle of pinup actresses, former Google China head Kai-Fu Lee and blogger Li. A last-minute deal brought the
journalists back to the newsroom. But some have said privately that they are worried about retribution and
continuing censorship. Chinese security agents have harassed celebrities who supported the Southern Weekend
journalists.
The online support for Southern Weekend and the long lines at Li’s book signings prove that the Chinese public
expects far more from its leaders than when Hu took power in 2002. A new stratum of middle-class Chinese has
more to protect and recognizes the checks on unbridled power democratic reforms can bring. “We all hope our
country can be stable and wealthy,” Li told TIME. “Our criticism is our expression of patriotism. We try to change,
not to overthrow.”
Just as Li was in Beijing for his book event, pollution in the Chinese capital soared to record hazardous levels. The
pall was so toxic it far surpassed the highest notch on the yardstick the U.S. uses to measure pollution, causing
American monitoring equipment in Beijing to label the pollution “beyond index.” One of the reasons for the
noxious air is a spike in people burning coal to keep warm during this freezing winter. Previously, Chinese
authorities tended to underplay the smog, referring to it as “fog” and arguing implausibly that Beijing’s air has
improved every year for the past 14 years. But this horrible air was hard to ignore. Even the People’s Daily, the
Communist Party’s mouthpiece, ran a front-page story on the pollution. The capital will eventually defrost and
winds always clear away the pollution for a time. But a Beijing spring that heralds lasting political reform? Don’t
hold your breath.
— With reporting by Chengcheng Jiang / Beijing
How Did a Chinese Official Realize the Dream of Home Ownership 31 Times?
(tealeafnation.com)
January 16, 2013 | by Minami Funakoshi
http://www.tealeafnation.com/2013/01/how-did-a-chinese-official-realize-the-dream-of-home-ownership-31-ti
mes/
In modern China, a home is a symbol of financial independence, social status, and success. Many people toil away
to realize this “Chinese Dream” of owning a home, even if it means working tirelessly to pay off the mortgage,
becoming what the Chinese call a fangnu — a “slave to the house.”
Introducing a new Internet persona: “house sister”
So when the Chinese public heard that a girl in her early twenties named Zhai Jiazeng owned eleven
government-subsidized “affordable apartments” in Zhengzhou, the capital of Henan province, they were shocked.
“How many people do you think there are that can’t afford to buy houses! We must kill these termites!” wrote
@刘斌笑对人生, a user on Sina Weibo, a Chinese microblogging platform. Web users took to calling Zhai Jiazeng
fangmei, or “house sister.” The word fangmei, no doubt stemming from the word fangnu, accentuates the gap
between the lifestyles of ordinary Chinese citizens and corrupt government officials.
The scandal first erupted last year on October 31, 2012, when one Web user wrote on Sina Weibo, China’s Twitter,
that Zhai Zhenfeng, the girl’s father, “flipped” — i.e. bought and quickly resold at a profit — over 300 subsidized
apartments. Through this transaction alone, Zhai allegedly made 60 million RMB (about US$10 million). Some
who have purchased the apartments from Zhai stated that he had charged 50,000 RMB (about US$ 8,000) extra
as agency fee. Within 16 hours of its posting, this information had been shared over 3,000 times.
About two months later, on December 26, Hong Kong’s Sing Pao newspaper wrote via Weibo about Zhai’s
daughter’s own substantial holdings. On January 13, 2013, after eighteen days of investigation, the Zhengzhou
police announced their decision to arrest Mr. Zhai.
Along with members of his family, Mr. Zhai, former director of the housing administration bureau in Henan, owns
a total of 31 different apartments, according to recent reports. Fourteen of the 31 apartments belong to Zhai’s son,
Zhai Zhenghong; eleven belong to daughter Zhai Jiazeng; and four belong to wife Li Shuping.
Results of recent investigations seem to refute Zhai’s claim of innocence, portraying him instead as a shockingly
prolific criminal. According to Zhengzhou police reports, Zhai not only embezzled 30 million RMB (about US$4.8
million) in public funds, he also violated the one-child policy, and while he was at it, household registration
regulations, which stipulate that a Chinese citizen can only possess one hukou, or permanent residency permit
(every one in Zhai’s family possessed two).
How did he do it?
Observers appear to assume that Mr. Zhai’s scheme involved availing himself of a well-meaning government
policy, although the precise details remain unclear.
Mindful of the potentially crushing costs of housing as prices spiralled, starting in 2007 the Chinese government
sponsored an “affordable housing project” that promised to provide inexpensive housing for low-income
households. In the first eight months of 2012, the government invested 820 billion RMB (about US$132 billion) in
the project. Jiang Weixin, the current Minister of Housing and Urban-Rural Construction, announced the ministry’s
plan to construct 4.6 million affordable housing units in 2013.
Despite such efforts, however, demand for affordable housing exceeds its availability. To cope with the situation,
some regions such as Chongqing use a lottery system to allocate government-subsidized apartments to eligible
low-income residents.
Zhai Zhenfeng, who operates a real estate company whose registered capital reached 8 million RMB (about
US$1.3 million) in 2002, does not come close to qualifying for the housing subsidy. When asked how he obtained
his apartments in an interview with Beijing News, Zhai answered that it was the result of his wife “doing eleven
years of business” in the real estate world, as well as family savings.
Mistrust of officialdom rears its head, again
Faced with yet another case of local government corruption, Chinese Web users responded with disgust and
disappointment. “Why do such officials exist? They’re completely useless…shouldn’t we just get rid of the ministry
altogether and get the people to oversee everything?” wrote @招财猫_y. “Our nation has already rotted to the
extreme…the officials’ words have lost all integrity whatsoever,” wrote @超级大老虎. Another Web user, @爱
与巴巴拉, wrote simply, “Kill them.” Perhaps tellingly, this post has not been deleted by censors.
Other Web users viewed this scandal as further proof of the inequality that exists in today’s Chinese society. @
妈妈爱宝贝99, whose handle literally means “mommy loves her darling,” lamented, “Ordinary citizens can’t
afford a house, and even just giving birth to a child requires us to go through countless procedures. Look at this
official: He has multiple houses and more than one child. This is what we call ‘distinctly Chinese.’” Another user,
@黑黑黑黑黑黑皮, commented, “One third of those who live in ‘affordable housing’ drive around in BMWs. One
half of them either have favorable relationships or power and status.”
Perhaps what angered the public the most is Zhai Zhenfeng’s disregard for the many Chinese citizens who work
tirelessly to pay their housing bills, giving the hyperbolic name “mortgage slave” the ring of truth. In a market of
limited subsidized housing stock, observers seem to feel that Zhai used his status to steal what rightly belongs to
them. Weibo user @涟涟雨迤逦行 asked: “The girls who have no choice but to work, the girls who cry tears of
blood…what of them? Who can answer them?”
When Two Chinese Women Found the Courage to Report Abuse, They Were
Ignored (tealeafnation.com)
January 16, 2013 | by Thomas Stevenson
http://www.tealeafnation.com/2013/01/when-two-chinese-women-found-the-courage-to-report-abuse-they-w
ere-ignored/
In June, I found myself placing a call to the Shanghai police. My twenty-year old friend, Lily , slumped on a nearby
couch with her face in her hands. She would not call herself, she said, because “The police will not do anything.”
Given her ex-boyfriend’s abusive past, and his incessant calling, texting, and stalking, I insisted that the
authorities would have no choice.
I had met this young woman and her Shanghai boyfriend, Adam, a few months earlier. Though more than ten
years her senior, he seemed decent enough: the three of us played cards together and even went out on a few
occasions. But, as Lily and I got closer, she confided her misgivings about the relationship. As Adam’s parents
aged, she said, there was mounting pressure for her to marry him and start a family. She wasn’t ready for the
commitment. “And besides,” she added, “sometimes we fight.” “Every couple fights,” I told her. “Well…” she
continued, sensing I had not understood, “sometimes he hits me.” And then added, hastily, “But he is a good
man.”
As time wore on, her assessment of Adam’s character rang increasingly false. On a visit to the apartment she and
Adam shared, she pointed out a shattered pane in the glass divide between the living room and the balcony. “I
broke that,” she said with self-reproach, “when he locked me out there for a day.” On another occasion, when we
went to the park, a heavy layer of foundation, a silk scarf, and sleeves could not hide the cuts and contusions on
her lips, neck, and arms. When she finally fled his apartment one summer evening, she arrived at my place
bearing a tiny, immobilized terrier, its hind leg broken when the boyfriend flung it against a wall. The more I
learned about their relationship, the more it seemed like a nightmare, rather than a marriage waiting to happen.
Someone at the police station answered. I asked for an English speaker, and was heartened to hear a woman’s
voice on the line. I endeavored to explain the extent of the abuse, and how Lily’s ex-boyfriend was, as we spoke,
putting the screws to every one of their mutual friends in an effort to discover her new address. The policewoman
listened for a minute or two, then asked if she could speak to my friend. I passed the phone. I must have turned
my own face to the floor, because I was startled moments later by Lily’s shriek and the sound of her cell phone
shattering against the wall.
Lily took a few minutes to calm down. Apparently, the officer had explained that the calls, texts, and stalking were
all ways of showing love. “He obviously cares about you and wants to be with you,” the policewoman reasoned.
“You should go back to him.”
*****
My friend Lindsey also acquired an admirer at the age of twenty. As he was a complete stranger, she did not
accept his letters or little gifts of flowers and chocolate. Undeterred, he started throwing them through her open
apartment window. The gesture lost some of its romance over the months that followed — especially after Lindsey
learned the man had been watching her shower from the building opposite.
Throughout this one-way romance, she told me, her message was clear: “I am not interested in you. Please leave
me alone.” But, rather than leaving her alone, the young man became more and more obsessed. He started
showing up at her apartment and pounding on the door. Lindsey ignored him. One muggy afternoon, when she
propped the door to get some air, her suitor crept inside. When Lindsey caught him rummaging through her things,
he started; wild-eyed, he snatched up a knife and started slashing her chairs, pillows, and bedclothes. Lindsey
said she ran down the hall, banging on her neighbors’ doors until one finally opened. She hid inside. Moments later,
her suitor arrived and threatened to stab the bewildered neighbor if he protected her again.
At this point, Lindsey, like my other friend, called a Hail Mary: she went to the police. “Flowers and chocolates?”
came the response. “This guy must really like you! Don’t you think you should give him a chance?” When Lindsey
insisted she had no interest in the man — and, at this point, had good reason to fear him — the police dug
themselves deeper: “Well, if this has continued over time, you must have given him some encouragement.” In the
end, Lindsey had to threaten a lawsuit to get the police’s cooperation. Her stalker was instructed to stay off the
floor where she lived. She continued to see him around her housing complex.
*****
Two accounts can only carry so much weight. Yet the striking similarities between them suggest something
disturbing about gender dynamics in China.
First, these accounts reveal a reluctance to label any behavior, however heinous, “harassment” or “abuse.”
Lindsey endured months of unwanted attention, involving the police only when her stalker ransacked her
apartment. Lily was battered, physically and emotionally, all the while insisting her boyfriend was “a good man.”
As with many victims of abuse, naïveté played a role. But she did not arrive at this character assessment alone.
Many people around her — people she considered friends — knew of Adam’s violent episodes and yet urged her
to marry him. After all, didn’t he keep a roof over her head? In China, the normalness of violence toward women
caused Lindsey and Lily to set their respective thresholds for “harassment” and “abuse” far too high.
Then, when they found the strength to call “abuse” by its proper name, authorities took no heed. In both cases,
they dismissed, de-legitimized, and otherwise explained away my friends’ trepidation and terror. Shouldn’t the
cops have shown a little more concern — if not out of human decency, then out of professional obligation?
But the cognitive process behind their indifference may be most alarming of all. Though fundamentally about
abuse, Lily and Lindsey’s accounts also contained details which, if taken out of context, reflected well on their
respective tormentors (e.g. chocolates and love letters). When one officer after another urged these women to
give their abusive partners “a chance,” it was as if they had only registered these endearing sidenotes. They
weren’t willfully ignoring everything else — the savage beatings, the stalking. These things simply made no
impression, like a footprint in the sea.
In the past month, gruesome violence against women in India has exploded into international news. In the streets
of New Delhi, that society has been forced to grapple with its age-old gender favoritism. Meanwhile, China—where
at least one quarter of women suffer domestic abuse — serves as an uncomfortable reminder that unseen,
smoldering violence, coupled with institutional indifference, is more than enough to keep millions of women living
in fear.
Note: All names in this article have been changed.
Miscellaneous
Print
Smoke hasn’t cleared yet on facts surrounding China bombing (MCCLATCHY
NEWSPAPERS)
BY TOM LASSETER
http://www.miamiherald.com/2013/01/16/3185871/smoke-hasnt-cleared-yet-on-facts.html
BEIJING -- Questions have continued to linger this week over one of the largest reported bombings to hit China
in recent years, a blast Friday that killed 11 people and wounded more than 30 and was apparently followed by
an attempted coverup by local powerbrokers.
Little has been revealed about the alleged culprit, who died in the incident. He is identified in the Chinese press as
a disgruntled coal miner named Gao Wanfeng, born in 1958, who is said to have served time in prison in the past
and is accused of torching his home early on the morning of the explosion.
The blast ripped into a commuter bus operated by a mining company in the far northeastern province of
Heilongjiang about 6:30 a.m. Friday and hit another vehicle in the opposite lane, according to the official Xinhua
newswire.
A local newspaper on Tuesday quoted a neighbor of Gao as saying that his most recent job was with the
Zhongxing Mineral Industry Co. and that he’d been injured in a mining accident last summer. Although it did not
name Zhongxing, which owned the bus, the state-controlled Global Times in Beijing noted that Gao “had disputes
over injury compensation with a mine owner.”
The Global Times on Wednesday referred to Gao in one online report as a “suicide bomber,” and in another version
of the story – both online and in print – as a “bomber.”
If Gao was, in fact, motivated by disagreement with a mining company, his story would fall in line with a deep
stretch of public grievances in China rooted in a sense that ordinary people have little recourse when confronted
by problems with officials or big business. Although bombings such as the one in Heilongjiang are rare, protests
are not.
“It was after reaching no agreement after multiple negotiations that he adopted the extreme act of burning down
houses and bombing people,” said one online user based in the city of Shuangyashan, where the explosion
happened. “Now the social divisions are serious, it’s not at all surprising that something like this happened!”
Many others posting on Sina Weibo, a Twitter-like microblog, voiced similar opinions. While not condoning the
bloodshed, they viewed it in the context of broader social frustrations.
“He could only release his anger on other people, there will be more things like this later on,” said another person,
writing from the southern coastal province of Fujian.
Xinhua ran a report on Tuesday saying that in the aftermath of the explosion, representatives of a coal mine,
which was not identified, gave hush money to the injured, told them not to give interviews and threatened to
withhold funds for medical treatment if they spoke “carelessly.” Local officials also offered bribes to one or more
journalists, according to Xinhua, presumably to persuade them not to report on the incident.
“Due to the insufficient information being released, the public has many suspicions about the truth of the matter,”
according to Xinhua.
Reporting on the incident has been at times confusing.
A short initial story from Xinhua on the day of the attack said that people were killed “after a minibus collided with
a coach.” Later on Friday, Xinhua acknowledged that previous reports blaming the collision for the explosion
“proved to be inaccurate.”
Police said that “Gao Wanfeng is suspected of placing the explosives on a commuter bus,” Xinhua subsequently
reported, but gave no details of what sort of materials he might have used. A separate Xinhua piece said that
authorities had concluded the detonation “was not an accident.”
Researcher Joyce Zhang in Beijing contributed.
Online
Girl murdered in Shenzhen, some on Weibo are pointing finger at social media
(thenanfang.com)
Posted: 01/16/2013
http://www.thenanfang.com/blog/girl-murdered-in-shenzhen-some-on-weibo-are-pointing-finger-at-social-me
dia/
A tragic story has surfaced in Shenzhen that some say points to the danger of broadcasting one’s location on social
media channels.
A high school student in Shenzhen named Tsang Yue Laitong was expected to return home last Saturday, and her
family became concerned after she never showed up. At around 10pm that night, the 16-year old’s aunt phoned
the Shenzhen police department to report her missing. She told the cops her niece had planned to meet a friend
for dinner on Guanlan Street in Shenzhen but hadn’t returned.
The Shenzhen Police posted info on its Weibo account in an effort to her, as did many of her friends.
Unfortunately, every parent’s worst nightmare became a reality: Tsang’s body was found in an abandoned shop
about 24 hours later.
Tsang’s friends and family are obviously devastated. They describe her as incredibly likeable; she was born in
Zhuhai but raised in Shenzhen.
Her death is a trending topic on Weibo because she frequently used the micro-blogging service to update friends
on her whereabouts. Some say posting this information so publicly can lead to trouble; however there’s no
indication yet that her murderer found her through Weibo.
A group of students created a video tribute to Tsang, which can be viewed here. It has been viewed almost 50,000
times at the time of this writing.
(Source: Sina)
Deadly Fire Launches Debate Around Underground Child Care (THE WSJ CHINA
REAL TIME REPORT BLOG)
January 16, 2013
http://blogs.wsj.com/chinarealtime/2013/01/16/deadly-fire-launches-debate-around-underground-child-care/?
mod=WSJBlog
A fire that broke out at a foster home in impoverished Lankao County in central China’s Henan province earlier this
month claimed seven lives, including six orphans, launching the children’s foster mother into the center of
controversy.
But it has also brought to light underground and under-regulated system of care for abandoned children.
China’s media since the incident have been focusing on Yuan Lihai. The former street vendor for years has taken
in abandoned children, many with physical or developmental disabilities. She told Lens magazine in an interview
last year (in Chinese) that in 1986 she was paid 20 yuan ($3.2) by a local hospital to “get rid of” a dead baby boy
born with cleft palate, only to find out the baby was still breathing. That baby was the first child she adopted, she
told the magazine. The article, summarized here in English, drew considerable online interest at the time.
The fire at the foster home on Jan. 4 left six orphans and a grown resident dead and a 10-year-old boy injured.
Six local officials, including the deputy chief who oversees social welfare in Lankao, were suspended from their
posts for further investigation, county government said.
Wu Changsheng, deputy chief of Lankao county, has said Ms. Yuan shouldn’t have been allowed to adopt because
she has her own children and isn’t financially capable, according to the state-run Xinhua news agency. Foster
parents must be childless, capable of raising and educating the children and only adopt one child, according to
China’s adoption law. But local authorities “tacitly approved” Ms. Yuan’s adoptions because they believed she was
doing a good deed, Mr. Wu said in the Xinhua report.
Local government officials have been under fire in the media. But in their defense, they have said the county lacks
a children’s welfare center, and that they are still applying to build one (in Chinese).
The closest orphanage is located in Kaifeng, a city about 25 miles from the county.
Some criticism, meanwhile, has also targeted Ms. Yuan, who used to be called “the mother of Lankao” before the
incident. Alleged charges include her attempts to get additional government allowances for low-income
households. In recent years, Ms. Yuan, her husband and 18 orphans have been given a monthly allowance of 87
yuan, the People’s Daily Online reported (in Chinese).
Her family has heatedly denied that, saying Ms. Yuan acted out of kindness and is heartbroken over the tragedy.
Guo Haiyang, Ms. Yuan’s son-in-law told Xinhua that baby milk powder alone costs them 1,000 yuan a quarter.
“We’re making a profit out of this? We can barely make ends meet!” he said, according to the news agency.
When asked about potential criminal charges, Ms. Yuan said to the Beijing News (in Chinese), “Throwing away the
kids is not a crime? People from the government not doing a thing is not a crime? Me picking up the kids is a
crime?”
“If I don’t adopt them, and just let them die of hunger and cold. Is it a crime?”
There are only 406 state-run orphanages for the 615,000 registered orphans, according to the Ministry of Civil
Affairs, and the Lankao tragedy is not the first incident involving death of children that has caught nationwide
attention.
Five children, ranging in age from nine to 13, who were found dead late last year inside a trash bin in the
southwestern province of Guizhou. The children, all male and all surnamed Tao, died of carbon monoxide
poisoning after lighting a fire inside the bin and climbing inside to take shelter after temperatures fell to around
40 degrees Fahrenheit, Xinhua said, citing local police.
In other cases, local officials seem to have a better idea about where to find or “borrow” orphans. A man asked a
Buddhist monk if he could lend the local government a dozen orphans, a video clip on the Chinese Twitter-like
microblogging site Sina Weibo last week showed.
It turned out the man works for the social welfare department of Rongcheng District, Jieyang, south China’s
Guangdong province, and the monk –Shi Yaokai– is the abbot at the Zifeng Temple, who has been adopting
abandoned babies since 1996, Xinhua said.
The Guangdong provincial government started an inspection of orphanages across the province after the Lankao
tragedy. The Rongcheng officials had told their bosses previously that they had a nursery for orphans but in fact
they were not running such a facility, China Daily reported.
The abbot told Xinhua that some children were abandoned by their parents, while others were sent to the temple
by the local government and hospitals.
– Qi Liyan
China’s Zheng Jie Scores Impressive Upset at Australian Open (THE WSJ CHINA
REAL TIME REPORT BLOG)
January 16, 2013
http://blogs.wsj.com/chinarealtime/2013/01/16/zheng-jie-upsets-stosur-joins-li-na-in-australian-open-third-ro
und/?mod=WSJBlog
Chengdu native Zheng Jie broke Australian hearts on Wednesday, coming from behind to upset ninth seed
Samantha Stosur 6-4, 1-6, 7-5 in the second round of the Australian Open on Wednesday.
Things didn’t look good for Zheng, who trailed 2-5 in the third set before steamrolling through the next five games
to take the match in two hours and 42 minutes. She was helped by a flurry of unforced errors from Stosur, who
revealed later that she was battling mental demons.
“It just kept happening point after point after point,” said Stosur, who won the US Open in 2011. “Crazy things
start popping into your head, and before you know it, you’re back on even terms,” she added, admitting that her
combustion was “probably a bit of a choke”.
Prior to her final push in the third set, Zheng said, she was reminiscing about her first time on a center court back
in 2006.
“I [was] thinking, ‘How many times I can play [somewhere] like this court? I need to keep fighting and enjoy the
match’,” said the right-hander.
Zheng, the world No. 40, said her never-give-up attitude is something she was taught as a youngster. “I know I’m
not tall, I’m not strong. My coaches [told] me, ‘If you want to go far, you need keep fighting for every ball and
focus for every point,’” the 29-year-old said.
China’s third-ranked female will face off against good friend and 18th seed Julia Goerges from Germany on Friday,
who she has teamed up with on the doubles court.
“She calls me J.Z.; I call her J.G,” smiled Zheng, who holds a 2-0 head-to-head record over Goerges.
China’s top-ranked player, sixth seed Li Na, survived a tough second round match against Olga Govortsova. The
2011 finalist saved two set points at 3-5 in the second set, winning the next four games in succession to clinch a
6-2, 7-5 victory.
Taipei’s Yung-Jan Chan, a qualifier, had her chances against Serbian 13th seed Ana Ivanovic but fell 7-5, 1-6, 6-4.
– Gillian Tan
One Restaurant Owner's
(theatlantic.com)
Quest
to
Promote
Organic
Produce
in
China
JAN 16 2013
http://www.theatlantic.com/video/archive/2013/01/one-restaurant-owners-quest-to-promote-organic-produce
-in-china/267249/
Lifen Yang, a university-educated entrepreneur, originally thought starting a farm would be the best route to
growing healthier food. Having grown up in the countryside, however, she faced social pressure to stay in the city
and put her degree to work. "People have tried so hard to advance themselves, one can't just go back to farming,"
she explains. So she tries a "middle way:" opening Tusheng Restaurant in Kunming, in China's Yunnan Province,
where she sources most of the produce from her parents' farm. In the video below, from the food series The
Perennial Plate, Yang demonstrates how she makes tofu without the usual chemicals. "The movement of eating is
magical, if you really think about it," she says. "You put food in your mouth and then it becomes part of your
body."
(See Video)
The Perennial Plate, an ongoing travel series, writes that there is a movement growing in response to food-related
scandals in China. Previously, the series documented how farmers are using 1,300-year-old techniques to grow
rice in a sustainable way in Yunnan Province. The Perennial Plate was created by Daniel Klein and Mirra Fine, who
also shoot and edit the episodes. Check out more episodes from the series on the Atlantic Video channel.
For more information about The Perennial Plate, visit http://www.theperennialplate.com/.
It's Harder Than Ever to Catch a Cab in Beijing (theatlantic.com)
1 JAN 16 2013
http://www.theatlantic.com/international/archive/2013/01/its-harder-than-ever-to-catch-a-cab-in-beijing/267
239/
And the locals are not happy about it.
Chinese media is reporting en masse a story that,at first glance, seems impossible: During rush hour in Beijing,
taxis can be found parked idle at the curb in the busiest parts of the city, as would-be passengers struggle to find
a ride. As Beijing residents complain that it is becoming harder to hail a cab in the city, cabbies grumble that low
fares, high monthly fees, and gridlock make driving during rush hour a money-losing endeavor-and that it is hard
to scrape by even when driving conditions are good.
So many cabs, so few willing drivers
In one widely-circulated news report, a Beijing cab driver with over ten years' experience was quoted as saying
that "more than ten thousand" cabs could be found parked around the city's center during rush hour, their drivers
refusing to carry passengers until traffic subsided. Even when taxis do stop for passengers during peak traffic
times, they often refuse rides if they think that the road ahead will be congested.
"It takes half an hour to hail a cab during rush hour, and even then it depends on the driver's mood," complained
one Beijing commuter. "If you can't reach an agreement with the driver, they just leave." It is not uncommon for
cabbies to bargain for a higher fare than they would get on-meter.
But cab drivers in Beijing protest that the costs of running a taxi are too high to make a decent living under the
best traffic conditions, let alone during rush hour. According to a chart compiled by China Youth Daily, if a cab
driver in Beijing works every day of the week for 10 hours a day, the basic costs of running his cab -- including rent
paid to the cab company, car maintenance and gas -- come to around 30 RMB (about $4.83) per hour. This causes
many drivers to park their taxis during rush hour, when it can often take 40 minutes to travel a single kilometer
and leave cabbies earning less than their basic expenses.
"Who is willing to take part in a losing transaction?" one driver told China Youth Daily. "During rush hour,
profitability for taxis is too low! After accounting for taxi rental and gas, we simply don't make money, and
sometimes even take a loss. Why should I put myself through that? I'd rather lay low, get something to eat and
rest for a bit."
Searching for a solution
In recent years, the Beijing municipal government has taken action to remedy the issue, but they have primarily
focused on increased monitoring and higher punishments for drivers who refuse fares or try to overcharge
passengers. In April 2012, a 2,000 RMB fine was instituted for drivers who purposely take roundabout routes,
refuse passengers, bargain, or ditch customers before they reach their destination. In August 2012, GPS
monitoring of cabs was introduced; and on December 28, 2012, a new rule was introduced under which drivers
face a suspension of one to three years for refusing passengers or going off-meter.
But increasing punishment for drivers refusing fares has yet to prove effective; cabbies still refuse passengers by
pretending they don't see them, tell would-be riders that they've just gone on break, or simply stay off the road
during rush hour. Most importantly, punitive measures fail to resolve the root of the dilemma: it is no longer
profitable for cab drivers to carry passengers during peak times, when taxis are needed the most.
People's Daily Online quotes Xue Zhaofeng, the co-director of Beijing University's Institute for Law and Economics,
who believes that the Beijing municipal government's administration of the taxi industry is to blame. Xue told the
Daily: "Because current taxi fares do not reflect the time costs of taxi drivers, the expense of gas during peak
traffic times, and the danger of driving during bad weather, taxi drivers are avoiding customers when they are
most needed. This has caused drivers and their would-be passengers both to lose."
The same report cites Renmin University professor Mo Yuchuan as saying that, in the context of administrative
monopolies--when an individual or group occupies a lucrative "revolving door" between the government and a
market--it is difficult to resolve the issue. It follows that, in order for cab fares to reflect the needs of drivers and
the number of taxis on the road to reflect the needs of their customers, Beijing's taxi industry needs a move
towards free competition and market liberalization.
Netizens weigh in
Even China's Web users are weighing in with solutions. On Sina Weibo, A Chinese microblog platform that is
similar to Twitter, user @EXPOTAXI0395 commented, "The pricing mechanism for taxis could be made more
flexible. During morning and afternoon peak traffic times, fares could be raised accordingly, or government
subsidies increased, to make drivers more willing to do business." @jolin是颗麦芽糖 felt that "it's mostly those
shameless monthly rental fees" to blame.
Others expressed support for Beijing's downtrodden cabbies. @开车看海景 wrote, "I wouldn't be willing [to drive]
at rush hour either -- not with the waste of gas, the bad mood, and the high likelihood of an accident. If you think
cabbies make good money, calculate their earnings according to the time they put in. When converted into hours
and days spent working, they have the lowest salaries out there."
Until the awkward imbalance between the value of Beijing's taxi service and the price is resolved, and cabbies are
once again given proper incentive to carry passengers during rush hour, the residents of China's capital will have
to get used to playing a game of cat and mouse with increasingly grumpy drivers. Or, they could take the weary
advice of this author's cab-savvy friend: when you finally catch a taxi in Beijing, don't tell the driver where you
want to go--ask him where he's headed, and see if it's on his way.
Aghast Over Beijing's Air Pollution? This Was Pittsburgh Not That Long Ago
(theatlantic.com)
2 JAN 16 2013
http://www.theatlantic.com/technology/archive/2013/01/aghast-over-beijings-air-pollution-this-was-pittsburg
h-not-that-long-ago/267237/
Change takes a long time. Pittsburgh, for its part, did not enact smoke controls until more than a century after
travelers described it as hell with the lid off.
The photographs and measurements coming out of Beijing these days are horrifying. You can see the brown
clouds from space, and Chinese media has even been talking up the problem.
I've heard from some Americans saying, "Why don't they do something about this? How can they live like this?"
Etcetera. To an early 21st century American, particularly one living in northern California or a relatively
pollution-free Washington, DC, it seems crazy to live with such bad air.
But it was not always so.
As America became an industrial power during the 19th century, Pittsburgh emerged as the seat of metalworking,
iron and then steel. This was a city powered by coal. Soot and smoke covered the city. There was no blue sky.
Travelers from around the world visited Pittsburgh to see the wonder of American capitalism. The stories they tell
are like -- exactly, like -- the ones you hear today about China. (This is a story that I covered in some detail in my
book.)
A wry southerner observed, "If a sheet of white paper lie upon your desk for half an hour you may write on it with
your finger's end through the thin stratum of coal dust that has settled upon it during that interval." Another
traveler recounted, "Every body who has heard of Pittsburgh knows that it is the city of perpetual smoke, and
looks as if it were built above the descent to 'the bottomless pit,'" that is to say, hell. And yet, this dirty power also
happened to make a lot of people a lot of money. It was said, "He whose hands are the most sooty handles the
most money, and it is reasonable to infer is the richer man."
Everyone knew that the smoke covering their homes and clothes and trees was bad. But it made a certain group
of people a lot of money. And so they fought pollution controls.
And those people had friends.
So, while the American Academy of Arts and Sciences (granted, a less august institution back then) declared the
health hazards of smoke and wondered aloud whether corporations should be allowed to produce what it called
such "evil," a Pittsburgh doctor maintained that soot and smoke "only go throat-deep" and said that fire and
smoke "correct atmospheric impurities."
The politics of how this works are pretty simple. The smoke and the soot are something we recognize now as an
externality. A cost of doing business that the business doesn't have to pay because they can dump it on society.
Chinese citizens and activists and assorted air-breathers will have to get the polluting companies to internalize
these costs. The polluting companies don't want to internalize that cost. Here's Chicago's smoke inspector (yes
htere was such a title and in this case, he was named F.U. Adams) in 1896 laying out the rhetorical positions of the
two camps:
Viewed from the standpoint of the Smoke Inspector, the 1,600,000 people of Chicago are divided into two
classes--First, those who create a smoke nuisance; Second, those who are compelled to tolerate a smoke
nuisance. One class has radical champions who maintain that smoke is an irrepressible necessity; a concomitant
of the commercial and manufacturing supremacy of Chicago; that smoke not only is not unhealthy, but that it is
an actual disinfectant, and that the low death rate of the city can be largely attributed to the prevalence of smoke;
that the smoke ordinance and its enforcement are aimed at the interests of the Illinois coal operators; that the
advocates of smoke abatement are visionary sentimentalists, and in a general way they are emphatically opposed
to any agitation on the subject.
The other side has partisans no less radical, and equally emphatic in voicing the story of their wrongs. They
declare that the enforcement of the smoke ordinance is a farce; they demand that soft coal be excluded from the
city; they insist that its consumption entails an annual damage greater than the difference in cost between soft
and hard coal; they declare that the smoke nuisance is a positive menace to the health of citizens, that it has
resulted in an alarming increase in throat, lung and eye diseases; they point to ruined carpets, paintings, fabrics,
the soot-besmeared facades of buildings and to a smoke-beclouded sky, and demand that the Smoke Inspector
do his plain duty under the law.
It is impossible to reconcile the radical partisans of these two classes. It is fortunate that not many of our citizens
are so radical on either side of this most important question. There exists a growing contingent, around which is
crystallizing a sentiment that it is practical and possible to abate the smoke nuisance without endangering the
stupendous interests involved. The most intelligent and active members of this contingent are drawn from the
ranks of those formerly largely responsible for the smoke nuisance. They now oppose smoke for the same reason
that they once defended it.
They have made the discovery that it is cheaper to abate a smoke nuisance than to maintain one. And by reason
of this discovery the smoke nuisance in Chicago will be a relic of the past before the close of the present century.
Ah, you beautiful visionary sentimentalists! My asthma thanks you. But man, F.U. Adams was optimistic. Change
takes a long time. Pittsburgh, for its part, did not enact smoke controls until 1946! Yes, 1946! And they didn't
really get a handle on the smoke problem until well into the 1950s. That's, oh, 120 years after all those travelers
decried the place as hell with the lid off. I mean, this is what Pittsburgh looked like at noon, the lights all on
because so little sunlight could penetrate the pollution:
(See Image)
This is what passed for fresh air.
(See Image)
Until finally, one day, after a century of agitation, activists got smoke control measures passed. The sky started to
clear.
(See Image)
The fundamental struggle of any kind of pollution control is trying to get the polluters to internalize the costs of
their pollution. Because if they don't, the rest of us have to pay more. We -- i.e. all of society -- subsidize their
businesses through increased health care costs, declining values of certain kinds of housing, toxic land or water
or air. And the only reason they get away with it is that tracing the line of causality back to them -- even when the
air looks as disgusting as it does in these photographs -- is just that difficult. They hide their roles in the
complexity of the system.
So, next time you see one of the photos of Beijing's pollution and say, "Geez! The Chinese should do something
about this!" Just know that it took American activists over a century to win the precise same battle, and that
they're losing a similar one over climate change right this minute.
Tourists at Jilin Ice Festival Shoot Arrows at Live Roosters (chinasmack.com)
by Peter Barefoot on Wednesday, January 16, 2013
http://www.chinasmack.com/2013/pictures/tourists-at-jilin-ice-festival-shoot-arrows-at-live-roosters.html
From QQ:
Jilin Yanji Ice Festival Uses Roosters as Live Targets for Tourists to Shoot
2013 January 14, at the Jilin Province Yanji City Ice Festival, during the traditional Chinese-Korean traditional
archery event and in accordance with age-old folk custom, live roosters symbolizing prey were used as targets for
tourists to shoot at, causing controversy. Some tourists felt this was a little cruel.
(See Image)
A contestant shooting a rooster.
(See Image)
A shot rooster struggling.
(See Image)
A working staff “hanging a rooster”.
Comments from QQ:
腾讯中山市网友 囧小王:
According to the new year’s tradition here, we slaughter a pig. Is this also very cruel?
腾讯网友 Naruto: (responding to above)
Shooting roosters is completely about having fun at the expense of the chicken’s life!! It’s a method [to attract
tourists], OK? Don’t say that I am zhuangbi, but seeing this reminds me of the lyrics to the Beijing Olympics
theme song: You and me, heart to heart, from one world… I don’t want to say anything about it… Maybe this is
inevitable in the development of humanity, maybe Tao Yuanming’s Land of Idyllic Beauty is just a dream.
腾讯沈阳市网友 维宁: (responding to 囧小王)
You’re disingenuously changing the issue. Although poultry is also used as food, they are all quickly slaughtered,
lessening the pain. Them doing this is too cruel.
腾讯沈阳市网友 *^_毛毛桃_^*:
Too cruel, I can only say this is a disrespecting and disregarding of life. Any lifeforms–no matter what their
eventual end—-ought to be respected. I see some people saying we normally also kill pigs and chickens as well,
but that’s for the survival of us humans higher on the food chain, and then it is done quickly, part of the order of
nature, and not this kind of torturing to death. This is toying with life, not for simple survival. Because of the food
chain and circle of life, these animals have already become food for our survival, but must we also trample upon
their hearts?
腾讯哈尔滨市网友 ゛ King:
If you were to say it was for survival, for nutrition, and you killed the chickens quickly and ate them, then that’s
one thing.
But to toy with them alive like this? a href=”http://www.chinasmack.com/glossary#NND” target=”_blank”>Fuck,
aren’t you being too monstrous? Too brutal?
How about we hang you up there and shoot at you, would you like it?
Are the organizers willing to consider nothing in the pursuit of making money?
腾讯银川市网友 风雨兼程:
We are not against eating meat. People raising animals to be slaughtered, to provide food for humans, this is a
privilege the food chain has given humans. But only when we hold reverence towards life when we slaughter and
eat animals can we be called human. When a cat catches a mouse and plays with it, that is an animal, whose brain
is simple, training themselves. We are human because we can possess the most basic respect towards life, even
to the life that is to be consumed by us as food.
腾讯网友 向前看:
If you’re going to kill, kill swiftly. This gives people the creeps.
腾讯网友 牛雪超:
Killing pigs to eat their meat is for basic human survival, but this is completely treating life as if it were nothing.
腾讯网友 商报社区户外:
This is an act of bullying the small and weak. No one has the right to deprive other animals of their lives. What
does this prove? Bravery? Guts? To kill a chicken that is tied up is frankly the crap that spoiled dandies who don’t
even have the strength to truss a chicken would do. If you really have balls, take a gun and go kill the devils
[Japanese]. I can’t stand people who do things that even women would look down on doing.
腾讯网友 三三:
So fucking not something a human would come up with. Exactly how much money can shooting live roosters
possibly make? Perhaps you could make even more money if you tied yourselves there for tourists to shoot at you.
腾讯绍兴市网友 敬畏的静寂:
Always accusing things of being cruel and inhumane, why don’t you guys stop eating meat then? Be vegetarians,
or better yet, don’t eat anything.
腾讯巴彦淖尔市网友 Nina:
Wouldn’t it be too bloody if they’re shot? Are you not worried that it’ll scare the children? Are you not worried the
children might learn something negative? Just what kind of person came up with this stuff? So shameless!
腾讯沈阳市网友 じ☆ve小〆…:
Abolish this kind of cruel activity!!!
腾讯网友 原上松:
The media these days is really boring!!! You take the taxpayers’ money, but what are you guys paying attention
to [covering, reporting]??? What’s wrong with shooting roosters? Don’t eat meat if you really care, so damn
hypocritical!!! When did all of China suddenly become Buddhist? And to call it cruel! Ridiculous! In my opinion, our
country should set up more events like this, so those pansies and anti-mainstream men can regain some
manliness!!
腾讯武汉市网友 TOM:
Sometimes, humans are even worse than animals.
BREAKING NEWS: WEI DI OUT AT THE CFA (wildeastfootball.net)
Posted by bcheng on Thursday, January 17, 2013
http://wildeastfootball.net/2013/01/breaking-news-wei-di-out-at-the-cfa/
Reports are in that CFA head Wei Di was removed from his position this evening. It is currently not clear what has
brought about this decision.
The controversial Wei, with his background in aquatic sports, took over the CFA at the beginning of 2010 and
looked to usher in a new era and kick corruption out of the Chinese game. Along with his positive efforts on these
fronts, he attempted to some very unconventional changes and fired successful national team manager Gao
Hongbo, replacing him with the underwhelming Jose Antonio Camacho.
Speculation exists that this could have the imprimatur of the country’s new leader, a known football fan. Wei’s
replacement is Zhang Jian, not much is known about his resume yet, but he comes to the CFA after having served
as the head of the General Administration of Sports’ Policy and Regulations Department. Whether this choice
offers hints as to why Wei was fired is purely guesswork. Wei was expected to continue to serve for a number of
years and his replacement after only three years comes as a major shock. What is known is that Zhang has
declared that his first step will be to “set straight”the internal politics of the CFA and then use a “broad hatchet”
to bring about “revolution” in Chinese football.
We at WEF will be sure to provide further updates via twitter, weibo, and on here as we get them.
Security audit finds dev OUTSOURCED his JOB to China to goof off at work
(theregister.co.uk)
Cunning scheme netted him 'best in company' awards
By Iain Thomson in San Francisco
Posted in Business, 16th January 2013
http://www.theregister.co.uk/2013/01/16/developer_oursources_job_china/
A security audit of a US critical infrastructure company last year revealed that its star developer had outsourced
his own job to a Chinese subcontractor and was spending all his work time playing around on the internet.
The firm's telecommunications supplier Verizon was called in after the company set up a basic VPN system with
two-factor authentication so staff could work at home. The VPN traffic logs showed a regular series of logins to the
company's main server from Shenyang, China, using the credentials of the firm's top programmer, "Bob".
"The company's IT personnel were sure that the issue had to do with some kind of zero day malware that was able
to initiate VPN connections from Bob's desktop workstation via external proxy and then route that VPN traffic to
China, only to be routed back to their concentrator," said Verizon. "Yes, it is a bit of a convoluted theory, and like
most convoluted theories, an incorrect one."
After getting permission to study Bob's computer habits, Verizon investigators found that he had hired a software
consultancy in Shenyang to do his programming work for him, and had FedExed them his two-factor
authentication token so they could log into his account. He was paying them a fifth of his six-figure salary to do
the work and spent the rest of his time on other activities.
The analysis of his workstation found hundreds of PDF invoices from the Chinese contractors and determined that
Bob's typical work day consisted of:
9:00 a.m. – Arrive and surf Reddit for a couple of hours. Watch cat videos
11:30 a.m. – Take lunch
1:00 p.m. – Ebay time
2:00-ish p.m – Facebook updates, LinkedIn
4:30 p.m. – End-of-day update e-mail to management
5:00 p.m. – Go home
The scheme worked very well for Bob. In his performance assessments by the firm's human resources department,
he was the firm's top coder for many quarters and was considered expert in C, C++, Perl, Java, Ruby, PHP, and
Python.
Further investigation found that the enterprising Bob had actually taken jobs with other firms and had outsourced
that work too, netting him hundreds of thousands of dollars in profit as well as lots of time to hang around on
internet messaging boards and checking for a new Detective Mittens video.
Bob is no longer employed by the firm. ®
"Beyond
Index"
Can
(greenleapforward.com)
'Airpocalypse'
be
China's
'Silent
Spring'?
By Julian Wong Jan.15.2013
http://greenleapforward.com/2013/01/15/beyond-index-can-airpocalypse-be-chinas-silent-spring/
News over the past five days in many parts of northern China have centered around the unprecedented air
pollution shrouding several northern cities, including the capital.
The “Airpocalypse,” so dubbed by
micro-bloggers, has elicited a strong, unambiguous response frot the public and the media – causing many to call
a spade a spade by casting away euphemisms like fog in favor of more candid descriptors like smog and pollution.
It has also inspired this poignant music video lamenting the lost of Beijing to the evil forces of pollution:
It all started on or around January 10th, with report that a number of cities in the north were afflicted with almost
historic levels of air pollution. A sampling of Air Pollution Index (API) readings (on a scale of 0-500) on that day:
•
Shijiazhuang (Hebei province): 437, severely polluted
•
Handan (Hebei): 310, severely polluted
•
Baoding (Hebei): 268, heavily polluted
•
Hefei (Anhui): 270, heavily polluted
Then over the weekend, the air pollution, particularly (pardon the pun) shot off the charts, literally. Reports AP:
The Beijing Municipal Environmental Monitoring Center said on its website that the density of PM2.5 particulates
[i.e. fine particulate matter] had surpassed 700 micrograms per cubic meter in many parts of the city. The World
Health Organization considers a safe daily level to be 25 micrograms per cubic meter…
The U.S. Embassy also publishes data for PM2.5 on Twitter and interprets the data according to more stringent
standards [AQI or Air Quailty Index, but also on scale of 0-500].
In the 24-hour period up to 10 a.m. Sunday, it said 18 of the hourly readings were “beyond index.” The highest
number was 755, which corresponded to a PM2.5 density of 886 micrograms per cubic meter. The U.S.
Environmental Protection Agency’s air quality index goes up to only 500, and the agency advises that anything
greater than 300 would trigger a health warning of “emergency conditions,” with the entire population likely
affected.
In case you are still a doubter, a number of news outlets featured dystopic pictorials of the heavy smog: Xinhua,
People’s Daily and NPR
Broader Political Significance?
Perhaps just as remarkable as the off-the-chart air pollution readings was the reaction of the state-controlled
media – completely frank and unabashed. Ed Wong’s NY Time’s article provides an excellent summary of the
reactions of some party-controlled propaganda papers, citing hypercrtical editorials by People’s Daily, Global
Times (English; Chinese) and China Youth Daily. This has prompted the seasoned China watcher and prolific
editor of the Sinocism newsletter, Bill Bishop, to observe:
Media coverage of the crisis is remarkable. Clearly it is impossible to pretend that the air is not polluted or that the
health risks are not significant, so are the propaganda authorities just recognizing reality in allowing coverage? Or
is there something more going on here, as perhaps the new government wants to both demonstrate a
commitment to transparency and accountability as well as use this crisis to further the difficult reforms towards
a more sustainable development model?
Could this be China’s version of Silent Spring? Indeed, Premier-elect Li Keqiang promised decisive central
government action. Another emerging theme from the fall out of Airpocalypse also appears to be the concept of
“resposible media” and the obligations of news outlets to pursue the truth, as this editorial in China Youth Daily
urges.
A Worrying Health Trend
A Peking University/Greenpeace study released late last year reports that air pollution was linked to at least 8,572
premature deaths across four major Chinese cities (Beijing, Shanghai, Guangzhou and Xi’an) in 2012 alone. (Yet,
one expatriate doctor living in Beijing provocatively contends that even at an API of 500, the PM2.5 particulates
that one would inhale would be roughly equivalent to smoking just three-quarters of a cigarette.)
The harm is not contained to these four major cities. A joint Asia Development Bank and Tsinghua University
report released just yesterday claims that just 1% of 500 or so cities in China meet World Health Organization
standards. That report goes on to observe that air pollution levels in larger cities are significantly higher than
medium and small cities.
Such findings seem to be common sense and throw into question the proposals of
some (like McKinsey) who support the idea of China developing fewer mega-cities with populations of over 20
million inhabitants over more cities with fewer inhabitants, partly in the name of purported energy efficiency gains
that come with economies of scale in infrastructure. Apparently, nature has its breaking point. (Speaking of
nature, this article in Nature makes the same point.)
Who Did It?
Vance Wagner’s Live from Beijing blog takes a stab at summarizing the main culprits of the Airpocalypse:
1) Direct pollutant emissions from factories, vehicles, power plants, etc. across all of Northern China. Beijing has
made a lot of progress in recent years in controlling emissions within the city’s municipal boundaries, but the truth
is pollution is regional. Whatever happens in all the major provinces around Beijing – Tianjin, Hebei, Inner
Mongolia, Shanxi, etc., will effect Beijing. These provinces are developing rapidly – more factories, more power
plants, more cars, more coal burning – and it’s making Beijing’s efforts to clean up all that much more difficult…
2) Secondary pollution. The atmosphere is quite the chemical soup. While direct emissions matter, a lot of air
pollution is secondary, meaning that it is caused by directly emitted pollutants interacting with each other in the
atmosphere, giving rise to new forms of “secondary” pollution. Much PM2.5 is this secondary pollution. Of course,
the longer pollutants are allowed to interact with each other, the crazier and more extreme the secondary pollution
will become…
3) Weather. Anyone who has lived in Beijing knows that the primary factor influencing a blue sky day vs. a pea
soup sky day is the wind. If there are a few consecutive days where the winds are stagnant – or blowing lightly
from the south and trapping pollution against the mountains in northern and northwestern Beijing – the pollution
is going to accumulate rapidly. Throw in some increases in direct pollutant emissions from the cold weather, and
the chemical soup starts really brewing. The result? Spikes in temporary pollution, in this case all the way above
800 [in PM2.5 readings]…
This piece in ChinaDialogue identifies similar sources of air pollution.
What Needs to Be Done?
A qualitative understanding of the sources of air pollution only goes so far in, prominent environmental crusader
Ma Jun would argue. In his view, hard numbers are better. In a recent article, he prescribes a three-step
approach in tackling China’s air quality challenges:
[Th]he first step is to expand access to air-quality data – making pollution statistics more comprehensive, faster
and more consumer-friendly. The second is to give the public appropriate health warnings, both to reduce the
impact on health and to motivate people to get involved in cutting pollution. And the third is to identify sources of
pollution and come up with targeted and timetabled plans to cut that pollution.
On the first step, he cites progress like the announcement earlier this month that 74 cities are now required to
release real-time data of PM2.5 levels.
Now, we are reading that the Ministry of Environmental Protection has just released a circular 《关于进一步做好
重污染天气条件下空气质量监测警工作的通知》that urges local authorities to timely publicize air pollution trends in the
mass media. The circular also directs its gaze at the local governments of three mega-city regions –
Beijing-Tianjin-Hebei region, the Yangtze River Delta region and the Pearl River Delta region, recognizing, as
discussed above, that the air quality in these regions are especially vulnerable.
On the second step, Ma Jun identifies several mechanisms, including a Shanghai Air Quality mobile app (probably
not unlike the app portrayed by the screenshot above), which allows citizens to access air quality data at the tip
of their fingers. Of course, it was Ma Jun himself (and his oganization the Institute for Public & Environmental
Affairs) who started it all with the China Air Pollution Map. I would add that the Beijing American Embassy air
quality twitter feed (@beijingair) and Michael Zhao’s elegant but powerful air pollution visualization website China
Air Daily as valuable contributors to the information and warning ecosystem.
Needless to say, on the third step, the challenge of addressing these causes are complex and enormous. For a
thorough discussion of how to address mobile sources of air pollution, Mr. Wagner, also a senior researcher at the
International Council on Clean Transportation, has this to offer.
You Win Some You Lose Some
But not everyone is a loser in Airpocalypse – if you manufacture air purifiers or face masks, you are probably doing
nicely for now. The stock prices of public listed environmental companies also benefited from the otherwise bad
news. Some also think that this episode might serve to reignite, at least in China, early stage private equity
investment interest in what has otherwise been moribund clean energy and environmental sectors.
Anora Wang contributed research to this post.
Getting Weird Server Hits from China? It May Not Be Hackers… (techinasia.com)
Jan 17, 2013
by C. Custer
http://www.techinasia.com/weird-server-hits-china-hackers/
Today’s Register brings us an amusing story that also has a bit of a moral to it: although it can be easy to blame
Chinese hackers for everything, sometimes the answer to your tech mystery is something a bit more simple.
When a US tech company first noticed strange activity coming from China on its servers, the IT folks figured it was
likely the work of Chinese hackers using a malware exploit, even though the activity was all happening through
the user account of one of the firm’s top programmers. But when they had their ISP investigate the activity, it
turned out that there was actually no hacking involved. Instead, the top programmer — “Bob” — had hired a
Chinese software firm and outsourced his own job so that he could spend his workdays surfing Reddit and
shopping on Ebay.
This was actually a surprisingly profitable arrangement until Bob was discovered and fired. His outsourced work
had won him company awards, and he was even outsourcing freelance work he took on from other firms, all for
about one-fifth of his regular salary. After the freelance work, he often made more than his regular six-figure
salary for doing absolutely nothing other than forwarding his work along to contractors in Shenyang.
It’s actually sort of a genius plan, except for the fact that it ended up being pretty easy to trace. Still, I imagine
that Bob has moved on to a new software firm where he’s quietly doing the same exact thing, outsourcing his work
to China for a fraction of his salary while he kicks his own feet up and relaxes.
So to the next foreign company that finds strange hits coming from China on its servers, don’t assume it’s hackers!
Sure, it might be. But it might also be one of your own employees taking advantage of China’s deep programming
talent pool to get a little bit of extra rest and relaxation.
(via The Register)