This is China! blog » Go West!

Chinese Spring Festival and Labor Shortages in the Yangtze River Delta

Bill :D — Tue, 25 Jan 2011 13:35:00 +0000

The ineluctable Paul French, co-author most recently of Fat China, and China editor for the UK print and online periodical Ethical Corporation, recently interviewed me about the nature of labor shortages in the Yangtze River Delta (my stomping grounds) and how foreign companies are responding to the change in employment climate.

He also puts in a couple nice plugs for my book, China Inside Out.

You’ll find Paul’s interview with me on the state of the Yangtze River Delta on the page titled, “China Wages in 2011 and labour shortages in the Yangtze River Delta – A podcast with Bill Dodson”.

image credit: newshopper.sulekha.com

The Wukang Effect

Bill :D — Wed, 15 Dec 2010 13:44:05 +0000

A good American friend of mine who has been living in Shanghai for eight years has been hiding out to finish writing his book in a small town of 40,000 in Zhejiang province called Wukang, near Moganshan. He recently told me over cups of coffee in Shanghai that the local government in Wukang has finished its mission: its infrastructure projects are all but complete and they’ve moved most if not all the people from the surrounding countryside into flats in the city. Now, the city is populated with unemployed and unemployable country folk. Which brings me to a very nicely done white paper sent me by the Economist Intelligence Unit about the urbanization trend in China (about which I write in chapter 3 of my book, China Inside Out) and the market opportunities in what the report calls China’s Champs – the up-and-coming x-tier cities.

Some of the surprises (for me) in the report included:

Hefei ranked first as an up-and-coming potential money-maker for companies invested in the city;

Baotou (in Inner Mongolia) and Shenyang ranked second and third, respectively

Wuhu (no,. 7) ranked above lovely Xiamen (14th);

Anshan, in Liaoning Province, (no. 18) made it on the list at all (the city’s only redeeming feature is the great jade Buddha – recommended).

What struck me most about the list was that many of the cities are highly polluted (Hefei is terrible from automobile exhaust; Baotou is coal mining town; Shenyang is unpleasant, especially during the dust storms; and Changchun is simply toxic).

Now, that’s not to say the cities on the list do not have market potential; however, the report seemed more bullish to me than the average Economist output. The report estimates that urbanization and related wealth creation in the Champs cities will continue into 2035. The biggest obstacle the report suggested was perpetuation of the hukou, which essentially segregates country folk and city folk.

The report creatively identifies market opportunities in up-and-coming cities across eight categories: economy, consumer markets, IT connectivity, education, average wages, health care and industrial pollution. Suzhou ranked first for its output per head (yeah!), maturity of the economy and openness to trade, above Hangzhou, which ranked 10th for the same measure (in the never-ending battle between the two cities for who indeed has the most beautiful women – among other things).

In general, the white paper is a good read, and a good indicator of China’s boom towns over the next five to ten years. At least, it should get some armchair industrialists back out into the field. I am not as confident as the EIU, however, in the viability of the local economies over the next thirty years, based on my visits to many of these smoke-stack cities, and based on the fact that many of these cities are up-and-coming precisely because of local government economic gerrymandering, much like Wukang.Then again, Chinese cities across the board are increasingly finding their environmental sins catching up to them economically.

The report does not give weight to very real concerns that have the possibility over the next thirty years of putting the breaks on the micro-economies of these towns as well as China overall: the effects on GDP of pollution; of the loss of local ecologies and the cost of maintenance from the standpoint of livability – or of clean up; the costs to the local healthcare systems of pollution (with air pollution already killing an estimated 700,000 people per year throughout the country, and counting); the extent to which water is heavily subsidized and how rapidly dropping water tables in many of the regions in which the cities are located will have their water bills increased and perhaps water rationed from the near term on; and of the energy requirements of these cities (at least doubled over the next ten years; and only God knows the multiplier over the next twenty five years), and the extent to which the environment is able to continue supporting the opening of (by some accounts) as many as three new coal-fired power generation plants each week in China – with, of course, attendant pollution costs. Though, of course, there are business opportunities in the clean up itself, it would be naive to think local governments will slow down economic activity to give ready access to industrial “spoilers”, or that the revenue created through the clean-up would offset the costs already incurred to local health care and pension systems.

Finally, there’s what I call the Wukang effect, in which expensive, polluted cities are predominantly inhabited by an under-educated, under-employed majority that’s been moved into the cities from the countryside that makes substantially less money than the elite who live in high rises above the smog of the cities. Also, university graduates, despite the booming economy, are finding the job market practically nonexistent, with many bright young things making the same amount of money as migrant workers. In other words, come twenty-five years from now, there may not be the wealth at the level the report discusses; if, that is, consumers live long enough to spend all that supposed disposable income.

To get a copy of the EIU report, contact: Martha.McCubbin@grayling.com. Also, you’ll find a very nice infographic of China’s Champs here.

No Guangdong Redux in Suzhou

Bill :D — Mon, 28 Jun 2010 06:02:46 +0000

The Financial Times recently published two articles about the increasing number of protests in China after the Foxconn suicides and Honda plant shut-downs spotlighted employee dissatisfaction with salary levels and working conditions. I had written a few posts back how some smaller Western companies in the Suzhou area are being affected by the confidence-building actions down South; however, the FT’s coverage indicates something slightly different afoot in Suzhou’s industrial actions.

“Workers born after the 1980s and 1990s are concerned not just about pay but about safety, rights and respect,” Dong Baohua, professor of law at East China University of Politics and Law, told the FT. A strike leader at Suzhou NSG said “That strike is about pay, ours is about safety conditions,” referring to discontented worker actions in South China. I would go so far as to proffer that Suzhou is also one of the first manufacturing centers in China to upgrade its industrial policy to attract higher-value manufacturing, R&D and outsourcing services. It began those efforts as early as five years ago: one of the reasons for the outbreak of green algae on Lake Tai (Taihu) – Suzhou pushed lower-end manufacturing westward – to cities like Yixing and Wuxi – which would take the dirtier, more labor-intensive industries like textile and plastics manufacture. Suzhou industries typically have workers with far less education levels than higher-value producers and service sector offerings. Hence, a greater focus in the Greater Shanghai region on quality-of-life aspects of work.

Interestingly, a feature protests in the Yangtze River and Pearl River Deltas share is an extreme distrust workers have for the Party-sponsored and controlled unions in the companies. The trade unions are more a function of Party control and monitoring in the Party’s interests than in either advocating employer or employee concerns. “Low union credibility is contributing to unstable industrial relations, labor analysts say, adding that more disputes are inevitable.”

Of course, further protests are inevitable for plant managers who insist on keeping their heads buried in the sand, instead of acting proactively to address possible worker concerns.

Anti-Corruption Drives: Too much of a Good Thing?

Bill :D — Mon, 08 Mar 2010 03:34:52 +0000

Bo Xilai’s anti-corruption campaign still gets local Chinese news coverage, and now songs and text messages singing his praises have raised him to rock star status. Bo is mayor of Chongqing, a city-province in central China. Having done quite a lot of business there myself, I can certainly say Chongqing is the epicenter of the Wild West brand of doing business in the country. Oligarchies such as the Chang’an group run enterprises, townships in the province and the city proper. Chongqing is the only city in China in which I nearly throttled a local government official for being an unhelpful, arrogant snot.

The Financial Times writes that Bo’s campaign has been timed with the meeting of the National People’s Congress, to regain him the visibility he desires to be named to the Party’s Standing Committee in 2012. Conservatives hate that sort of glitter, especially as under their watch crime and the syndicates that run them have grown considerably the last ten years. The former mayor of Chongqing, He Guoqiang, is particularly embarrassed, as colleagues he had workedclosely with during his tenure in Chongqing are now up before judges, their fates all but signed, sealed and delivered.

And then, of course, the populist – almost cultish – attention Bo is receiving is drawing Hu Jintao’s own attention away from other matters, though citizens’ calls to clean up other cities with the same verve is becoming shrill.

In Chinese politics and society, it’s seldom a good idea to be louder than the boss.

Forget London Bridge

Bill :D — Fri, 05 Mar 2010 06:02:59 +0000

“The speed at which China is developing its road transport infrastructure is truly admirable. China currently has 3.5 million km (2.2 million miles) of road. More than half of that is low grade, according to Reuters. China had only 53,000 km of expressways in 2007. The country is intent on building 80,000 additional kilometers of expressway over the next ten years, surpassing the length of the continental United States interstate highway network. Of course, the development of the logistics infrastructure will have monumental affects on the ease and declining cost of shipping goods throughout the country, and to neighboring countries.

“However, China’s bridges seem to be falling down – or falling apart – almost as quickly as they put them up. The Henan Road bridge, a busy throughway that spans the Suzhou Creek in Shanghai, in mid-2009 developed cracks as long as four meters in length, with chunks falling off the structure shortly after renovaton. Workers from the company that built the bridge used garbage – including plastic foam and leather bags – mixed with glue to fill the yawning cracks. The workers repairing the newly-built 120-meter Hanzhongmen Bridge in Nanjing were less creative than the Suzhou Creek crew during December 2009, and simply poured superglue into cracks that were large enough to fit one’s hand through.

Read more of the article in my latest column on logistics and supply chain management, in the March/April issue of CHaINA Magazine …

Bubblicious

Bill :D — Fri, 26 Feb 2010 02:20:07 +0000

The Financial Times recently had an excellent analysis entitled, “No One Home,” which opened with the exploration of a newly constructed, completely empty town outside Kunming, in Yunnan Province. Kunming, the capital of the province, has become crowded as the economic center of southwest China (while Chongqing and Chengdu battle for pre-eminence of central China). The town was built with local government funds ostensibly for the people from the countryside encouraged to move to cities. The example sets the stage for the argument as to whether China’s property market is a bubble or not.

I have no doubt China’s property market is bubbly. However, I do believe the market can and will be moderated to a point that property prices will level out over the near term. Not collapse. The problem, though, will be longer term. With more than US$1.7 trillion having gone out to local governments in 2009 – one-third of GDP – and very little transparency and accountability as to how the funds are being spent, China will almost certainly have to revivify the same toxic-loans corporations it had used to relieve its banks of the weight of non-performing loans. As one commentator cites, a 30 per cent default rate would in effect wipe out the paid-in capital of top banks such as China Construction Bank and Bank of China. I would not be at all surprised if the default rate is twice that amount, given the opaqueness of the loan process, the questionable rationale behind the Urban Development Investment Corporations the local governments set up to receive the bank loans, and the sheer volume of mid- to high-end real estate actually under construction or recently finished – property no one just off the farm can possibly afford.

Having taken this shotgun approach to revving up the economy as the world plunged into the global economic downturn, China has used up its ammunition. It’s leadership needs to audit the loan placements and ensure the projects developed with the money are actually being used for productive infrastructure projects – which, all agree, China’s interior in particular is still in dire need of. If manufacturing and service sector productivity do not actually increase in line with the largest fiscal stimulus the world has ever seen (during peacetime), then China will almost certainly head into a double dip recession.

And the world will hold its breath to see what else the Chinese leadership has in its bag of tricks.

Further reading: China at risk of home grown financial crisis; China hits back at Fitch, saying banks sound

The Enron Effect and China

A Look Under the Hood at China’s Economic Engine

The Bubble Cometh

If it Looks Like a Bubble and It Smells Like a Bubble…

China is a Scam

There’s No Place Like Home: Worker Shortages

Bill :D — Tue, 23 Feb 2010 02:44:38 +0000

Several stories have appeared in international papers about the dearth of workers to fill Chinese factories. Guangdong, in particular, is being hit hard, with as few as one worker available for every two jobs; contrast that with four workers competing for every three jobs in the heady days of 2007, just months before the American buyer finally became exhausted buying stuff.

Workers typically came from the poorer parts of China, where job opportunities were scarce. Also, with the collapse in the prices of produce, farming was no longer the cash cow it used to be in the 1980s. Now, a generation later, and workers are better educated and have higher expectations for what employers should offer in terms of salary and benefits. Also, the majority of fiscal stimulus of 2009 went to the interior of China, to build much needed roads, highways, bridges and cities. Jobs are plentiful in the interior in a way they never have been in China’s long history.

The traditional Hong Kong and Taiwan model – prevalent throughout south and central China – of treating Mainland workers as modern-day sharecroppers is coming to end. So too, using cheap labor as an excuse to keep from modernizing equipment and updating manufacturing processes. Of course, this will take capital, which the Overseas Chinese model is anathema too. Overseas Chinese investors and Mainland Chinese investors who were able to build reserves are moving their factories either further inland along transportation routes with direct links to ports, or closing down completely and moving to the likes of Vietnam. The effect will be to accelerate China’s climb up the industrial value chain.

Western companies will experience some salary pressure; however, as Western companies typically pay better than Asian companies, and offer more hospitable surroundings in which to live, Western investors will see few changes from the normalization of the migrant “bulge” of workers that had made Guangdong the Workshop of the World.

The Trends Shaping China Business, Economics and Society

Looking for 8

August 5th, 2009

The powers that be have made it plain they will spend whatever it takes to reach the magic 8% annual GDP growth rate in 2009. But how does China actually measure its GDP, and why should the world care?

The Financial Times raises the question, and a lucid and well-written article by John Makin at the American Enterprise Institute provides some answers. China’s definition of GDP growth and America’s definition are starkly different, which has thrown into question the efficacy of China’s approach to stimulating its economy and measuring the impact of the of its US$560 billion package. America measures its growth (or decrease) in wealth (Gross Domestic Product) by guaging expenditure growth: defined as the sum of consumption, investment, government spending, and net exports. China does just the opposite: the Chinese Central government – still stuck in the soviet-style mindset of production-as-reality at all costs – measures production activity without taking into account inventory stocks or actual expenditures. The form of measurement is one of the reasons for China’s bloated State-owned enterprises and for some of the economic disasters in its very recent history.

So, if a sneaker company in Guangdong produces a hundred pairs of sneakers with an attached value of RMB 6,700 (about US$1,000 in 2009 currency), then the Chinese government tracks the value of the shipment as part of its GDP statistics; whereas the United States government measures the expenditure on the shoes plus the value of any remaining inventory. For China, this way of measuring growth in its economy reflects some level of reality so long as buyers are buying all that is produced. However, as was the case in the economic downturn of 2008-9, buyers in other countries dried up. So, the Chinese government encouraged export-driven factories to begin selling to Chinese consumers inside the country. However, the spending power as well as the appetite of Chinese consumers, though growing between 10% and 15% per annum, was far from the easy-spending Americans and the more frugal Europeans.

Makin writes in his article, “China: Bogus Boom”:

There are anecdotal reports of Chinese households buying washing machines that were aggressively shipped and counted as retail sales during the first half of the year. However, many of the households that purchased washing machines, or were virtually given such machines, have found them unusable because their homes lack either the running water or electricity (or both) necessary to make use of a modern appliance. Such problems arise when ambitious planners count shipments as retail sales while end-use demand may be absent. In such cases, the “sales” are made to happen by virtually giving away the products that have already been produced and counted as GDP growth.

So, to give the perception that China’s economy was actually on its way to meeting its 8% growth rate, it told the four largest banks in the country – all of which are State-owned – to open up lending specifically to State-owned Enterprises and to local governments for infrastructure projects. It didn’t matter whether the companies or governments produced anything with the money, or even how they spent it if they did, since the release of funds in and of itself would register as production in the Chinese economic view. In other words, the only thing that mattered was that the transaction itself would be registered as growth in GDP and – the powers that be hoped – encourage Chinese consumers to spend because the economy was outperforming other economies in the world.

The flood of money has already resulted in dubious projects appearing on the schedules of local governments. The Washington Post wrote:

A $3 billion metro rail system linking the southern manufacturing cities of Guangzhou, Dongguan and Shenzhen, for instance, has been criticized as a waste of money because there are already four railway lines linking the cities and the trains often run empty. Ditto a $4.5 billion highway connecting the Sichuan province cities of Chengdu, Zigong and Luzhou, because there are already highways from Chengdu to Zigong and from Zigong to Luzhou.

A bridge running from just outside Shanghai to a textile manufacturing center on the other side of a bay was also resurrected to create construction jobs. For years, its designers had been unable to get the $2 billion they needed to build it because its route would mostly duplicate that of another massive bridge that was already under construction.

That changed in November when at least six of the biggest employers at the other end of the bridge, in Shaoxing, went out of business. Even though there is less need because of the closures, blueprints for the second bridge were dusted off and, almost overnight, workers broke ground. The project is expected to employ about 250,000 people and indirectly provide jobs for 300,000 more.

Which, of course, is the most important goal of any economic initiative in China: to provide opportunities for its citizens to be able to make at least a modicum of living, if not actually be able to become wealthy one day.

Monies the State-owned enterprises and local governments have not yet slated for projects are flowing into the real estate and stock market bubbles the government had worked to deflate as late as last summer (2008). As Andy Xie, an independent economist, wrote for Caijing Magazine recently:

“The tough economy and easy credit conditions encouraged many companies to try profiting from asset appreciation. They borrowed money and put it into the stock market. And since China’s stock market has risen 70 percent since last November, many businesses feel vindicated for focusing on the asset market. This speculation spread to Hong Kong. Mainland money may have been behind a recent rise in the Hang Seng Index to 19,000 from 15,000, as well as Hong Kong luxury property sales. One way or another, it seems the money source was China’s lending binge.

Borrowing money for asset market speculation is not restricted to private companies. State-owned enterprises (SOEs) appear to be lending money to private companies at high interest rates, i.e. loan sharking, using money borrowed at low rates from state-owned banks. Of course, we can’t estimate the magnitude of such SOE lending. But it has replaced high interest rate financing in the gray economy.”

Even with the prospect of the asset bubbles bursting, I believe China will continue to bolster liberal lending policies to at least give the appearance to the rest of the world that China is actually creating wealth in its economy. What it is actually doing, though, is just pushing money around. The stock market will for the forseeable future remain the purview of the SOEs, shielded by inadequate transparency and restructuring of listings. Further, China is long way off from providing investors with additional, internationalized outlets for investment beyond buying domestic property. And then, the long-awaited return of the American buyer as saviour of China’s export sector will be a chimera, never to return in its original form and enthusiasm. The government will find tamping down the bubbles will be even more difficult to achieve than before. Inflation will have to be tamed by fiat, just as had been the case with electricity and oil in early 2008. However, the Yuan just might come down to a more sensible valuation, because China’s fundamentals will seem so out of whack with the economic statistics it presents the world.

Oh, that Crazy 8.

Posted in Globalization China | Edit | 4 Comments »

Work is Dead! Long Live Work!

July 30th, 2009

Several Westerners I’ve talked with here in China seem to be sketching a trend in the way people perceive and act on work. Instead of just working at a “job” or taking another “job” or looking to get promoted in their “job” they are either moving from a part-time “job” or no “job” at all to a Portfolio of Work. The portfolio contains several activities that are projects and/or actual businesses. For instance, one American I know is leading the start-up of a new factory that will produce goods for the American market. He has American partners – and Chinese money. But he has still formed another contract manufacturing business here in China with other Western friends.

One of those Western friends has gone from being GM of a factory in Suzhou to becoming an on-call advisor to HQ, a consultant to the staff at the factory, and a troublshooter for the supply chain. In addition, he hopes to go on to do something a bit more creative with his life.

Meanwhile, a Danish friend who ran a sales and service operation in China until last week is now a “global troubleshooter” for other operations in the world. He is also in talks to set up an Extreme Tours business with a friend in Shanghai that takes people to exotic lands and gives them exotic adventures, while at the same time planning a sports equipment import company that supplies the Danish market.

The motivation for all these guys and others with whom I’ve chatted seems to be a profound dissatisfaction with the corporate world. They see the bosses of their and other companies as having lost a great deal of credibility of late: greed, arbitrary decision-making, cronyism and a lack of appreciation for what these guys have contributed to the company as managers that have built company operations in China overshadow any heart-felt feelings they once may have had for their former employers. The newly independent have chosen to diversify their personal economic models and move toward work they personally find more satisfying. It could all be summed up with a general disgust for the present-day institution of “the job”. Certainly, the global economic downturn has magnified the causes of these fellows’ discontent, exacerbating the impact of lousy and sometimes self-interested decisions their bosses have made. Another impact of the Downturn is to make these pretty bright go-getters feel less secure about the traditional role of “the job” in their lives. Though corporations demand one’s living-breathing existence in exchange for a stable income, these young men – mostly in their early thirties – seem to feel that there is no covent between the organization and the individual beyond what the individuals at the top decide. Of course, the latest information and communications technologies facilitated their new approach to work, making it easier to stay linked with coworkers no matter where in the world they are working.

Ironically, here in China, international influences have been attempting to focus bright young Chinese to commit their lives to the Organization. Standard Chinese operating procedure is to pick and choose work and jobs as though sitting at a Chinese banquet table with a pair of chopsticks picking and choosing what morsel to pluck from what dish.

Perhaps in time, once more Chinese have upgraded their skills and better defined their abilities and the contributions they can make in a modern marketplace they too will be managing Portfolios of Work – not fully entrepreneur, but not a grunt, either.

Posted in China Services Sector, Expat Life, Globalization China, Social Trends | Edit | 1 Comment »

Thee Doth Protest Too Much

July 27th, 2009

Thousands protesting are big numbers, even by China’s reckoning. Especially if the protests occur in two separate regions in as many days, are violent, and have essentially the same reason: the rich getting richer in China by unashamedly gaming the system.

The Financial Times reports:

“The privatisation of a state steel group has been scrapped after an executive was beaten to death by workers angry at the threat to their jobs from a takeover of their company…The violent riot in north-east China late last week involved up to 30,000 workers, a reminder of the ongoing sensitivity about lay-offs from state companies in industries targeted for consolidation.”

Certainly, it doesn’t help when people become self- or otherwise-anointed emperors and treat co-workers like crap. I can certainly see from whence their anger stems:

The interim general manager sent by Jianlong to run Tonghua, Chen Guojun, had infuriated the workers with his high-handed attitude, according to comments posted on internet bulletin boards in China.

He had reportedly said that he would re-establish Tonghua “under the name of Chen” and lay off almost all the employees.

“With Tonghua Steel’s retired workers each receiving only Rmb200 ($29) a month for living expenses, Chen Guojun was paid an annual salary of Rmb3m,” the rights group reported.”

AP reported yesterday that just a couple hours drive from Suzhou, in Zhejiang province, 3,000 townsfolk went berserk at the local authority’s purportedly giving them the shaft in a land-for-spit deal the residents found wholly unfair:

More than 3,000 villagers in eastern China blocked a highway and clashed with police while protesting alleged official corruption in a land compensation deal…Ten residents of Shipu town, in Zhejiang province, were injured in the clash with more than 300 riot police Saturday…Another resident said thousands of people had been staging a sit-in on the land for nearly a week.

Without credible avenues for complaint and decision, local governments will continue to place citizens in positions in which residents must explode en masse to gain any kind of fair hearing at a supra-local level.

“The employee, who refused to give his name, said the villagers believed the land was worth three times the price the local government had set — 20,000 yuan (US$2,900) per mu. A mu is a Chinese measure of land equal to about 0.15 acres (0.06 hectares).

“The villagers want the local authorities to address the corruption and the central government to intervene in this case, but some local officials have been preventing this information from getting to the relevant authorities…”

So what set off this latest round of high-volume, high-action drama that has nothing to do with ethnic differences? In a word: stimulus package (ok, that’s two words). China’s stimulus package of some US$560 billion kicked off at the beginning of the year with the Central government ordering the banks to open the offers. Hundreds of millions of dollars have already been loaned out, re-inflating the stock market and property bubbles the government had worked to flatten two years ago. Now, local governments, State-owned enterprises and large privately-owned corporations with “special relationships” with bank lenders (read guanxi) are redistributing wealth in preferential ways. Indeed, the FT writes about the steel protests in the northeast:

The privately held Jianlong Group, one of China’s largest private steel companies, had first proposed taking over Tonghua in 2005, backed out of the deal when the economy slowed last year, but re-entered negotiations recently when industrial demand picked up.

Propelled by the government’s stimulus package, China produced steel at an annualised rate of 545m tonnes in June, a record level of output.”

AP writes of the Zhejiang protests that the land was recently sold to be developed into a science and technology park. In Shipu, Ningbo district. In the middle of nowheresville? Local administrators would be able to access bank loans for infrastructure development as well as the national level subsidies for new-and-high-tech projects. Clever.

Of course, the communications and information infrastructure the national government is putting in place will only enable citizens to band together more easily when it comes to voicing grievances. And as long as the powers-that-be continue to find it difficult to kick their millennia-old bad habits, encouraged by the prospect of untold wealth, more of these industrial actions will occur, with greater frequency and with groups in numbers that may one day mark the Ides of March on the Chinese calendar.

Posted in Uncategorized | Edit | 4 Comments »

Migrant Workers: Separate and Unequal

Dry Mouth in the Southwest

Bill :D — Tue, 23 Feb 2010 01:35:52 +0000

One of the nicer aspects of the turn to Spring in the Yangtze River Delta is that I won’t have to be running the electricity bill further up to keep warm. But at least I have electricity. Yunnan, and much of southwest China, has been suffering a drought that is drying its reservoirs. This is unfortunate as the southwest relies on the dams at the reservoirs to generate electricity. Unfortunately, the region may see electricity supply fall by as much as 20% during the first five months of the year.

As the WSJ points out, melting glaciers and drying riverbeds will affect China’s overall attempt to rely more on hydropower than on coal-generated electricity. As water becomes more dear, companies in the southwest and northwest of China can expect higher electricity bills – or grayer skies.

Addicted to Cheap Water

The Real Feel

Precious Little to Go Round

Productivity Key: Sexually Repressed Workers

Bill :D — Fri, 05 Feb 2010 03:38:56 +0000

Recent articles have helped me better understand how Chinese migrant workers can work twelve to fourteen hour shifts, seven days a week at the four construction sites within 15 minute’s walk of where I live: they’re sexually repressed, according to Zhang Feng, director of Guangdong provincial commission of population and family planning. Guangdong recently announced through a survey it had performed on the sexual habits and reproductive health of migrant workers that 36 percent hadn’t had sex in a very long time. Meanwhile, another 30% hire prostitutes, while yet another third said they have many sexual partners.

China’s residence permit laws make it near impossible for a migrant worker’s entire family to follow him or her to a new city. City administrations do not provide social services such as healthcare and education to the out-of-towners. Migrant workers are also amongst the first to be forced out of cities during high-visibility events like the Beijing Olympics and the PRC’s birthday.

Though the national government is considering a liberalization of the residence permit laws, and some cities, like Shanghai, have recently made it easier for migrants to change their residence permit, most men and women who leave their hometowns for work in larger cities will still find the going tough without their families. Perhaps the 100 million condoms the Guangdong government will dispense to workers will help relieve a bit of their anxiety.

China Redefines Luxury Branding

Bill :D — Wed, 27 Jan 2010 07:58:30 +0000

What do “Canto Motto”, “OChirly” or “Masfor.SU”, and BRJ (short for “The Best Raiment of Jauntiness”) all have in common? I am increasingly seeing these and similarly other odd sounding names on storefronts in second- and third-tier cities in China (I am partial to the “Time Lord” – as an avid Dr Who fan, Tom Baker generation – which sells clocks). Chinese brands masquerade, copy and elaborate on Western brands like Zara and Donna Karan to appeal to Chinese consumers who have broken through the ground floor of the new middle class from China’s socioeconomic basement. China’s interior will present Western brands serious competition in terms of name brand recognition and cachet as Chinese brands tailored to Chinese tastes entrench themselves in consumer orientations. Western brands in clothing and white goods and automobiles will also have difficulty appealing to cost conscious consumers in China’s interior as Chinese do indeed have more disposable income, but not enough to splurge on an LV bag or a Gucci pull-over – especially if the buyers’ friends and family are simply unfamiliar with or unappreciative of styles that reflect little of their tastes. And yet, it’s the x-tier cities in the interior – like Jingzhou , Shouguang , Jinjiang and Shuangliu- that are racking up adolescent double-digit GDP growth rates while the eastern seaboard settles for middle-aged single-digit growth. So, though Western brands do have a future in China’s roughed interior; the battle, though, will be uphill from here.

More reading: China’s hinterland picks up the baton, China turns its gaze inward for growth

Past posts:

Moving On Up

Drink a Bag of Tea