China is scary, but we just have to get used to it.
Thanks for reading.
Showing posts with label China. Show all posts
Showing posts with label China. Show all posts
Sunday, October 5, 2014
Dalai Lama goes from being adored to ignored - the power of China
Alas, no country can now ignore the economic might of China. Just look at the Norwegians calling the snub of the Dalai Lama a 'necessary sacrifice'.
China is scary, but we just have to get used to it.
Thanks for reading.
China is scary, but we just have to get used to it.
Thanks for reading.
Thursday, May 15, 2014
Vietnam Mobs Burn Factories - A Tongue-In-Cheek Analysis
Couldn't resist commenting on the on-going mob situation in Vietnam. Here is what I think happened.
China's Ploy
China, being big brother China, the Center of the World China, is now keen to assert her sovereignty over the disputed territories in the South China Sea in a forceful and unambiguous manner.
What better way to do this than to place an oil rig about 200 miles off the coast of Vietnam and surround it with many Chinese Government ships? It was an 'in-your-face' move that cried out, "So what-cha gonna go about it?"
China had calculated that the Vietnamese probably couldn't do much. Yes, the usual diplomatic protests, but that would be about it. After all, the Vietnamese don't have have much military clout to start. This was woefully demonstrated in the search for missing MH 370. The Vietnamese Navy is small and somewhat antiquated. For a country with the length of her coastline, Vietnam has just 7 Frigates of which 5 are extremely old (Petya Class light frigates, designed in the 1950s and build for Soviet Navy in the 1960s) as well as 2 newer Gerpard 3.9 Class Frigates (delivered in 2011).
China's Attitude Towards Vietnam
Such an attitude towards Vietnam is not new. Few may remember the 1979 Chinese invasion of Vietnam (the brief Sino-Vietnamese War). China launched this offensive in response to Vietnam's invasion of Cambodia in 1978. It was a punitive mission by the Chinese - to punish the Vietnamese for not "kow-towing" to China's might. After capturing a few border cities, China pulled back.
Fast forward till today, China can afford to be even more recalcitrant with her Southern Neighbour. Why? Chinese economic might has grown tremendously in the past 3 decades since 1979. Vietnam has fallen back far behind. China, still Communist in name, is in reality one of the most capitalist countries in the world. Its economic dominance can also be seen by the huge rise of a very rich upper middle class who are now investing in prime property all over the world, including London and New York.
Listening to China's richest man - Wang Jian Lin - deliver his lecture at Tsinghua University, I find his talk no different from all the other Western CEOs or Business Professors that I have heard before. It is all about understanding the market, innovate new products, deliver and selling them for a hefty profit.
What Happened to Vietnam?
What happened to Vietnam from 1980 to 2014? Well, they are developing, but in relative terms China has pulled ahead in no uncertain terms.
I figured that the Vietnamese ex-Generals leading the country must have been rather slow and timid to change, unlike Deng Xiaopeng, who must have been so impressed by his visit to Singapore in 1976 that he unilaterally decided that China MUST do better than our little red dot. Given his clout as China's supreme leader back then, Deng laid the foundation for all of China's economic progress to happen.
Remember Deng's famous quote - "It doesn't matter whether it is a black cat or a white cat, as long as it catches mice." This is the supreme lesson in pragmatism.
China's Oil Rig
So, time to bully thy neighbour again. Plant a rig and watch the fun.
Lesson number 1 - In Life, The Strong Bully The Weak. Get Used To It.
Vietnam's Response Wasn't Too Bad In Theory
Now this part is exciting. Vietnam knew she couldn't do anything to stop the rig. If her Navy were stronger, perhaps she could send out her ships to harrass the rig and use all sorts of other tricks to impede the progress. But the Vietnamese Navy isn't capable of that, and China knows it.
So Vietnam decided to burn Chinese factories in Vietnam. Yeah baby, let the mobs and the hordes loose. Fuel their anger. It is a logical move. Vietnam was prepared to use civil unrest, within its own country, to try to make a statement to China. Burn their factors, hurt their private sector and state companies even if it meant that Chinese would cut back on investments.
Yes, Vietnam was desperate, I think. They couldn't think of any other way and decided to use this somewhat risky method. Either that, or they were foolish and didn't think through the consequences of using a mob of 10,000 people.
Lesson number 2 - Policy is only as good as execution.
The execution was utterly dismal. Turns out that their mobs and their hordes were either insufficiently briefed, or got carried away, or were just plain stupid that they indiscriminately burnt the factories they came across, including those belonging to countries like Singapore. Some reports indicate that they mistook
There is absolutely no reason at all why the Vietnamese Government would have asked their mobs to non-Chinese factories. It is shooting themselves in the foot many times over. But it happened. Why? We can only speculate what caused this snafu, but my pet theory is poor execution.
It could have gone like this. The top man could have passed down the orders to burn Chinese factories. The middle man told his ground commanders to rally the wokers to burn Chinese factories. The ground commanders rallied their troops and started to burn factories. Chinese or not? Who cares. Talk about careful target selection.
China Has The Last Laugh
I can only imagine the Chinese leadership falling out of their chairs, shrieking in laughter at the scale of absolute incompetence that their Vietnamese counterparts have shown.
Whoever proposed this daring ploy to place the rig would now be in line for a double promotion. Not only has the mission succeeded, it has had the knock-on effect of showing to the whole world how useless the Vietnamese Government and bureaucracy is. They can't even if organize a proper factor burning without burining the "correct" factories.
And The Joke Is Not Just on Vietnam
Lest we in Singapore think that this event has little impact on us, be mindful that the joke is not just on Vietnam, but on the whole of ASEAN. Be aware that China staged this provocation a week before an ASEAN summit. Who cares about ASEAN anyway. Check out this next blog piece, citing some sharp insights from the Economist magazine, where the "Asean Way" has been mocked.
Geez.
At the rate this is going, we'd all be speaking Mandarin-Chinese very soon.
我会讲华语,你会吗？
Happy Investing!
 |
| Factory on Fire in Vietnam |
China, being big brother China, the Center of the World China, is now keen to assert her sovereignty over the disputed territories in the South China Sea in a forceful and unambiguous manner.
 |
| Chinese oil rig Haiyang Shi You 981(C) is seen surrounded by Chinese Ships |
China had calculated that the Vietnamese probably couldn't do much. Yes, the usual diplomatic protests, but that would be about it. After all, the Vietnamese don't have have much military clout to start. This was woefully demonstrated in the search for missing MH 370. The Vietnamese Navy is small and somewhat antiquated. For a country with the length of her coastline, Vietnam has just 7 Frigates of which 5 are extremely old (Petya Class light frigates, designed in the 1950s and build for Soviet Navy in the 1960s) as well as 2 newer Gerpard 3.9 Class Frigates (delivered in 2011).
 |
| Sea-worthy? |
Such an attitude towards Vietnam is not new. Few may remember the 1979 Chinese invasion of Vietnam (the brief Sino-Vietnamese War). China launched this offensive in response to Vietnam's invasion of Cambodia in 1978. It was a punitive mission by the Chinese - to punish the Vietnamese for not "kow-towing" to China's might. After capturing a few border cities, China pulled back.
Fast forward till today, China can afford to be even more recalcitrant with her Southern Neighbour. Why? Chinese economic might has grown tremendously in the past 3 decades since 1979. Vietnam has fallen back far behind. China, still Communist in name, is in reality one of the most capitalist countries in the world. Its economic dominance can also be seen by the huge rise of a very rich upper middle class who are now investing in prime property all over the world, including London and New York.
 |
| They are rich, and there are so many of them. |
What Happened to Vietnam?
What happened to Vietnam from 1980 to 2014? Well, they are developing, but in relative terms China has pulled ahead in no uncertain terms.
 |
| Many motorbikes in Vietnam today |
Remember Deng's famous quote - "It doesn't matter whether it is a black cat or a white cat, as long as it catches mice." This is the supreme lesson in pragmatism.
China's Oil Rig
So, time to bully thy neighbour again. Plant a rig and watch the fun.
Lesson number 1 - In Life, The Strong Bully The Weak. Get Used To It.
Vietnam's Response Wasn't Too Bad In Theory
Now this part is exciting. Vietnam knew she couldn't do anything to stop the rig. If her Navy were stronger, perhaps she could send out her ships to harrass the rig and use all sorts of other tricks to impede the progress. But the Vietnamese Navy isn't capable of that, and China knows it.
So Vietnam decided to burn Chinese factories in Vietnam. Yeah baby, let the mobs and the hordes loose. Fuel their anger. It is a logical move. Vietnam was prepared to use civil unrest, within its own country, to try to make a statement to China. Burn their factors, hurt their private sector and state companies even if it meant that Chinese would cut back on investments.
Yes, Vietnam was desperate, I think. They couldn't think of any other way and decided to use this somewhat risky method. Either that, or they were foolish and didn't think through the consequences of using a mob of 10,000 people.
Lesson number 2 - Policy is only as good as execution.
The execution was utterly dismal. Turns out that their mobs and their hordes were either insufficiently briefed, or got carried away, or were just plain stupid that they indiscriminately burnt the factories they came across, including those belonging to countries like Singapore. Some reports indicate that they mistook
There is absolutely no reason at all why the Vietnamese Government would have asked their mobs to non-Chinese factories. It is shooting themselves in the foot many times over. But it happened. Why? We can only speculate what caused this snafu, but my pet theory is poor execution.
It could have gone like this. The top man could have passed down the orders to burn Chinese factories. The middle man told his ground commanders to rally the wokers to burn Chinese factories. The ground commanders rallied their troops and started to burn factories. Chinese or not? Who cares. Talk about careful target selection.
China Has The Last Laugh
I can only imagine the Chinese leadership falling out of their chairs, shrieking in laughter at the scale of absolute incompetence that their Vietnamese counterparts have shown.
Whoever proposed this daring ploy to place the rig would now be in line for a double promotion. Not only has the mission succeeded, it has had the knock-on effect of showing to the whole world how useless the Vietnamese Government and bureaucracy is. They can't even if organize a proper factor burning without burining the "correct" factories.
And The Joke Is Not Just on Vietnam
Lest we in Singapore think that this event has little impact on us, be mindful that the joke is not just on Vietnam, but on the whole of ASEAN. Be aware that China staged this provocation a week before an ASEAN summit. Who cares about ASEAN anyway. Check out this next blog piece, citing some sharp insights from the Economist magazine, where the "Asean Way" has been mocked.
Geez.
At the rate this is going, we'd all be speaking Mandarin-Chinese very soon.
我会讲华语,你会吗？
Happy Investing!
Friday, May 2, 2014
Li Ka Shing 李嘉誠爵士 into UK Utilities, Selling Everything in China
So what is HK Billionaire Li Ka Shing (b. 1928, net worth more than US$30bn) doing in UK and China?
Getting out of China & Hong Kong
While Li has publicly said that he was not abandoning China and Hong Kong, the actions of his companies seem to suggest otherwise. It has been reported that since 2010, the Li family has sold assets worth HK$186.8 billion (US$24.1 billion) located in China and Hong Kong, with 96.8% of the capital from the sale re-invested in Europe, especially in UK. He has not bought anything in China.
Li's maneuvers are considered by many as a leading indicator. According to some insiders, Li will always sell his assets 2-3 years before a crisis. According to Simon Black, he speculates that the impending Chinese credit crunch is the main reason why Li is evacuating China so quickly.
China's Shadow Banking - Of Global Concern
The shadow banking system alone is now worth 84% of GDP according to an estimate by JP Morgan. The IMF pegs total private credit at 230% of GDP, jumping by 100% in the last few years.
Historically, growth rates of these proportions have nearly always been followed by severe financial crises. And Chinese leaders are doing their best to engineer a ‘soft landing’.
If they’re successful, the world will only see major drops in global growth, stocks, property, and commodity prices. If they fail, the spillover could become pandemic.
Investments In The United Kingdom
Among Li's investments in Europe, he places more focus on the United Kingdom, reportedly because of UK's good investment environment and good legal system.
Some commentators have suggested that Li's preference for the UK can be attributed to his close relationship with HSBC bank. It is very obvious that Li's close business links with Michael Sandberg (ex Chairman of HSBC) go back many decades. Back in 1975, HSBC (led by Sandberg) had even saved one of Li's business from going under.
Utilities, Why Utilities?
Li's investments in the UK have largely been in British Utilities. See this graphic from 2011. It does look like Li had amassed a huge Utility Kingdom in the UK.
In the short run, savvy investors would observe that Utilities are pretty much recession proof industries. If indeed Li believes that China's impending credit crunch could hit the world hard, then parking his money in Utilities across UK (and Europe) makes a lot of financial sense. So his investment moves are coherent, pretty much protecting himself against any severe downside.
Over time, if UK grows and prospers, the Utilities will just have to become more valuable. Nothing too exciting, but solid bread & butter growth.
More recently, in mid 2012, Li paid 645 million pounds ($1 billion) cash for Wales & West Utilities Ltd. to almost double the size of the gas transmission businesses his companies control in the U.K.
“The price tag looks reasonable given the target company’s large-scale operations,” said Evan Li, a Hong Kong-based utility analyst at Standard Chartered Plc.
Buying Wales & West will give Li control of pipelines covering a quarter of the U.K.’s population as he steps up acquisitions in Europe following declines in valuations on concern the global economy will slow further. He led groups that acquired Northumbrian Water Group Plc for $7.5 billion including debt last year and Electricite de France SA’s U.K. power networks for 5.8 billion pounds in 2010.
Investments In Real Estate Development
Li's company, Hutchinson Whampoa, is also involved in the Convoys Wharf Project that I have blogged about previously, see this post. The Convoys Wharf project was very controversial. Boris Johnson (Mayor of London) had to step in to grant the Planning Permission, after the local council exceeded the statutory time limit.
China's Richest Man -王健林
China's richest man Wang Jian Lin has also gone into UK, buying up the One Nine Elms project. However, I don't think Wang has sold his property investments in Mainland China. Read more about 王健林 in my earlier blog post.
Hong Kong Knight Dragon
Knight Dragon, (controlled by Henry Cheng Kar Shun) has bought out the entire Greenwich redevelopment project, read my other blog post.
Li's Personal Advice for Individuals
Earlier this year, "Li Ka Shing teaches you how to buy a car and house in 5 years", advice went viral. It is a very good read, so please go read it if you haven't read it.
I would just focus on this graphic - "Always make yourself useful." I find this short advice extremely powerful, and more importantly, extremely and succinctly positive.
Happy Investing!
PS: I am now conducting a short reader survey to improve the blog. Please help!
PPS: Check out my new community forum here - http://londonproperty.vbulletin.net/
Important Disclaimer - . The views contained in this blog and blog post are entirely mine. We cannot be made responsible for any investment decisions you may, or may not, take. Nothing in this blog can be construed as professional investment advice, as we are NOT professional investors and we are ill qualified to give you any advice. Read the blog at YOUR own risk
 |
| Come, let's make money together. |
Getting out of China & Hong Kong
While Li has publicly said that he was not abandoning China and Hong Kong, the actions of his companies seem to suggest otherwise. It has been reported that since 2010, the Li family has sold assets worth HK$186.8 billion (US$24.1 billion) located in China and Hong Kong, with 96.8% of the capital from the sale re-invested in Europe, especially in UK. He has not bought anything in China.
Li's maneuvers are considered by many as a leading indicator. According to some insiders, Li will always sell his assets 2-3 years before a crisis. According to Simon Black, he speculates that the impending Chinese credit crunch is the main reason why Li is evacuating China so quickly.
China's Shadow Banking - Of Global Concern
The shadow banking system alone is now worth 84% of GDP according to an estimate by JP Morgan. The IMF pegs total private credit at 230% of GDP, jumping by 100% in the last few years.
 |
| Credit crunch coming? Li thinks so.... |
Historically, growth rates of these proportions have nearly always been followed by severe financial crises. And Chinese leaders are doing their best to engineer a ‘soft landing’.
If they’re successful, the world will only see major drops in global growth, stocks, property, and commodity prices. If they fail, the spillover could become pandemic.
Investments In The United Kingdom
Among Li's investments in Europe, he places more focus on the United Kingdom, reportedly because of UK's good investment environment and good legal system.
Some commentators have suggested that Li's preference for the UK can be attributed to his close relationship with HSBC bank. It is very obvious that Li's close business links with Michael Sandberg (ex Chairman of HSBC) go back many decades. Back in 1975, HSBC (led by Sandberg) had even saved one of Li's business from going under.
 |
| I'm happy to be in the UK! |
Utilities, Why Utilities?
Li's investments in the UK have largely been in British Utilities. See this graphic from 2011. It does look like Li had amassed a huge Utility Kingdom in the UK.
In the short run, savvy investors would observe that Utilities are pretty much recession proof industries. If indeed Li believes that China's impending credit crunch could hit the world hard, then parking his money in Utilities across UK (and Europe) makes a lot of financial sense. So his investment moves are coherent, pretty much protecting himself against any severe downside.
Over time, if UK grows and prospers, the Utilities will just have to become more valuable. Nothing too exciting, but solid bread & butter growth.
More recently, in mid 2012, Li paid 645 million pounds ($1 billion) cash for Wales & West Utilities Ltd. to almost double the size of the gas transmission businesses his companies control in the U.K.
“The price tag looks reasonable given the target company’s large-scale operations,” said Evan Li, a Hong Kong-based utility analyst at Standard Chartered Plc.
Buying Wales & West will give Li control of pipelines covering a quarter of the U.K.’s population as he steps up acquisitions in Europe following declines in valuations on concern the global economy will slow further. He led groups that acquired Northumbrian Water Group Plc for $7.5 billion including debt last year and Electricite de France SA’s U.K. power networks for 5.8 billion pounds in 2010.
Investments In Real Estate Development
Li's company, Hutchinson Whampoa, is also involved in the Convoys Wharf Project that I have blogged about previously, see this post. The Convoys Wharf project was very controversial. Boris Johnson (Mayor of London) had to step in to grant the Planning Permission, after the local council exceeded the statutory time limit.
China's Richest Man -王健林
China's richest man Wang Jian Lin has also gone into UK, buying up the One Nine Elms project. However, I don't think Wang has sold his property investments in Mainland China. Read more about 王健林 in my earlier blog post.
Hong Kong Knight Dragon
Knight Dragon, (controlled by Henry Cheng Kar Shun) has bought out the entire Greenwich redevelopment project, read my other blog post.
Li's Personal Advice for Individuals
Earlier this year, "Li Ka Shing teaches you how to buy a car and house in 5 years", advice went viral. It is a very good read, so please go read it if you haven't read it.
 |
| Thank you for the reminder, Mr Li. |
Happy Investing!
PS: I am now conducting a short reader survey to improve the blog. Please help!
PPS: Check out my new community forum here - http://londonproperty.vbulletin.net/
Important Disclaimer - . The views contained in this blog and blog post are entirely mine. We cannot be made responsible for any investment decisions you may, or may not, take. Nothing in this blog can be construed as professional investment advice, as we are NOT professional investors and we are ill qualified to give you any advice. Read the blog at YOUR own risk
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