The New Investment Rules For China | The China Vortex - The Diigo Meta page

• 08 Oct 08
  

  Yule Heibel

  A fascinating article that makes me think about cultures (in the sense of how Ali Dastmalchian talked about global cultures at his presentation on 10/6/08), and how in turn different cultures will react to crisis and/ or enable some strategies while frustrating others.

  china financial_crisis usa globalization business

  • As I have said earlier, China and the US are two sides to the same coin, and it pays to look at them as one economy, as this Newsweek article does. It goes without saying that this crisis will have a profound effect on China, and I’m not optimistic about the capability of the Chinese central government in Beijing to deal with it as quickly as it should.
  • There is a simple reason for this: stimulating consumer spending depends, to a large extent, on the rollout of a national healthcare system; this is something which Beijing has tried to do since the early 90s, all without success. When it comes to the lack of a national healthcare system, the US and China are in the same boat, and the national governments are equally ineffective.

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      Yule Heibel on 2008-10-08

      That's the first time I've heard / read this: interesting idea, that lack of national health care is a retardant to consumer spending stimulus... Of course one could argue that investing in national health care is ...well, *investing*, and that w/out investment, a country goes to hell.
  • 9 more annotations...
  • • Avoid Shanghai and Beijing. Both have excellent universities, and Beijing has central government ministries while Shanghai is the commercial capital of China. In IT, companies have preferred to hire from Tsinghua for smart technology people. But there are major problems with both cities. First of all, staff turnover is too high, and costs are too high.
    • And when it comes to Internet/IT, I say that the Internet already has become a platform and there is plenty of talent around. Do you really need expensive people from the very best universities in China who may prove a pain to manage? If you don’t, second-tier people who are reliable and don’t ask for huge pay raises are good enough, and maybe even better. When hiring local talent, look for tortoises, not hares.
    • Your most loyal people will be the ones you hired and trained on the job. They will also be the ones who understand local market and conditions and connections.
    • Instead of going to Beijing and Shanghai, look at the 20 major city markets in China if you are thinking of selling to Chinese consumers.
    • If you want to get into China under the radar (in my opinion, always a wise strategy), these are places to look at very seriously. If you need knowledge workers, as in programming or game production or pharmaceuticals, pay special attention to the local universities, and partnering with them to hire their graduating students.
    • If you can help and offer investments which create jobs and upgrade the skill force, you are in a good position. Be sure to get your money and profit back within 15 years (by 2023). That is because if you are selling to Chinese consumers, you are selling to the current group who are in their 20s - 40s. By 2023, China’s demographics will fall off a cliff because of the one-child policy, and they will be in savings mode instead of spending mode.
    • When it comes to modernization, China is crossing a 30-foot chasm with a 20-foot rope, with each foot representing one year. China’s hardware development and infrastructure are very impressive and are the most modern in the world, as the Beijing Olympics showed. The hardest part to modernize is peoples’ mentality as the tainted milk scandal has shown. China’s aging demographics do not give it enough time to cross the chasm, so Chinese will get old before they get modern. When that happens, China will look like a bigger version of Japan, and will have all the problems Japan has today. Just hope that China has a national healthcare system in place by then.
    • Rural infrastructure is less developed, and so far, the Chinese government has made all the wrong moves in rural development by not supporting the development of rural collectives for the farmers.
    • This organization is partly responsible for the Sanlu tainted milk scandal, and is copied from the US. But the US has a surplus of land and shortage of farmers, while China has a shortage of land and excess of farmers!

Public Stiky Notes

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  Yule Heibel on 2008-10-08
  That's the first time I've heard / read this: interesting idea, that lack of national health care is a retardant to consumer spending stimulus... Of course one could argue that investing in national health care is ...well, *investing*, and that w/out investment, a country goes to hell.

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