| Bo Xilai and The Cultural Revolution Posted: 22 Jun 2012 01:01 AM PDT As China's top leaders decide the fate of disgraced former Chongqing party chief and one-time Politburo Standing Committee hopeful Bo Xilai, and as observers debate his legacy, Chris Buckley looks back to Bo's childhood and explores how the chaos of the Cultural Revolution may have shaped his rise and fall. From Reuters: At the start of the Cultural Revolution, the man at the centre of China's worst political scandal in decades was a student at the Number Four High School in Beijing, an elite cradle for "princelings", the sons of Communist leaders who had risen to power with Mao. The school became a crucible for conflicts unleashed with Mao's call to rebel in the name of his unyielding vision of communism. The era paralyzed the country politically, trigpicturgering social upheaval and economic malaise. One day in 1967, Bo and two brothers were paraded at the school by an angry group of student "Red Guards", and accused of resisting the Cultural Revolution just as their father, Vice Premier Bo Yibo, had been toppled along with dozens of Mao's former comrades and accused of betraying their leader. Their persecutors twisted their arms behind them and pressed their heads nearly to the ground while pulling back their hair to expose their faces, Duan Ruoshi, a fellow student at the Number Four school, wrote in a memoir published last year. "Despite the shouts of condemnation from all sides, Bo Yibo's sons exuded defiance and twisted their bodies in defiance against their oppressors," Duan wrote in the memoir published by "Remembrance", an online magazine about the Cultural Revolution. The ordeal was a lesson for Bo in the capricious currents of Communist Party power, which only a few months before seemed to promise him and other princelings a bright future as inheritors of the Chinese revolution.
The accounts in the report serve as a reminder that Bo has seen his share of turmoil in the past and any jail sentence that might result from the present investigation would not be his first. One retired academic who overheard comments from Bo's wife's sister told Buckley that Bo had "been through much worse than this. He's been through the Cultural Revolution. This is nothing." Separately, The Wall Street Journal profiles Chinese Billionaire Xu Ming and details his ties to the Bo family from their time in Dalian, ties which likely led to his detention shortly after Bo's sacking in March. Xu's fortunes have risen and fallen along with Bo, a common feature of the grey area between Chinese business and politics: Many business leaders in China rely on close relationships with party officials, who have sweeping powers to set policy, allocate government contracts, distribute credit from state banks and control the police, media and courts. The business leaders often nurture these relationships with various gifts and favors. Such relationships rarely are exposed, under a system in which the party forbids public scrutiny of its affairs. Business ties are often hidden through shell companies and offshore vehicles. The close relationship of a businessman with a political leader "was not anything unique to Bo Xilai," said Victor Shih, an expert on Chinese politics at Northwestern University. "It happens at every level of government. Find me a Chinese mayor who doesn't have these special relationships." The risk the entrepreneurs run is that when the party does periodically make an example of someone, as it has now with Mr. Bo, the person's associates and relatives are compromised as well. See also a report, via CDT, that Bo's wife has confessed to the murder of British businessman Neil Heywood.
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Post tags: Bo Xilai, Chongqing, corruption, Cultural Revolution, dalian, gu kailai, Neil Heywood, persecution, prison, scandal, state capitalism, xu ming
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| Report: Gu Kailai Confesses to Heywood Murder Posted: 22 Jun 2012 12:05 AM PDT The Asahi Shimbun is reporting that Gu Kailai has confessed to killing British businessman Neil Heywood to keep him from revealing the details of her large and illegal overseas remittances, according to Chinese Communist Party sources with knowledge of the investigation: The sources, who have read an interim investigation report circulated among senior party officials, said Gu, 53, admitted to killing her former associate after feeling "driven into a corner" by the investigation into her financial dealings and had provided a specific explanation about how she killed Heywood. The General Office of the Communist Party Central Committee, which serves as a secretariat for the party's General Secretary Hu Jintao–who is also China's president–drew up the interim report and the sources said officials have decided to indict Gu following her confession. The authorities are also investigating whether Bo, 62, was aware of his wife's deeds, the sources said. They have detained dozens of people associated with Bo–including his chauffeurs, close aides and secretaries from his time as mayor of Dalian, Liaoning province–and have also questioned hundreds of people who dealt with him, including corporate executives and entertainers. They believe Gu was receiving undeclared income from the early 1990s and that she transferred $6 billion to accounts in the names of relatives and acquaintances in the United States, Britain and elsewhere to conceal her illegal earnings. Heywood is thought to have helped her open accounts and exchange currencies.
Meanwhile, the Cambodian government announced that it will not extradite French architect Patrick Henri Devillers, who reportedly has ties to the Bo family and was arrested last week at China's request. A Cambodian Interior Ministry spokesman told Bloomberg Businessweek that Devillers has yet to be charged with a crime: "Cambodia decided to keep him in Cambodia," he said by phone today. "Concerned authorities are investigating into the case right now." China, Cambodia's biggest investor, is investigating accusations that Bo committed disciplinary violations in relation to his wife, Gu Kailai, who was arrested in April on suspicion that she was involved in the death of a British businessman. Devillers, an architect, had business ties to Gu, Britain's Telegraph newspaper reported in April. Cambodian authorities earlier said they would wait for China to submit evidence on Devillers before making a decision on whether to send him to Beijing. Under the two countries' extradition treaty, China has 60 days to provide evidence of a crime and Cambodia then has 60 days to respond, according to Khieu Sopheak.
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| Photo: Apartment building, Shangqiu, Henan, by Mark Hobbs Posted: 21 Jun 2012 09:58 PM PDT |
| Catchy Family Planning Slogans Posted: 21 Jun 2012 09:24 PM PDT Offbeat China translates many harsh family planning slogans from rural areas, which were collected by Netease. The family planning policy, better known as the one-child policy, has been set as China's basic state policy since 1980. For the past decades, China's countryside has been the most heavily-affected area. To maintain low birth rate and meet statistic requirements, local family planning officials have tried their best to come up with catchy slogans. Starting from 2007, China initiated the "Eraser" project to clear up these cold-blooded slogans and promote more humane ones. Nevertheless, many of these old slogans are well kept in people's hearts.
Most slogans are written in rhyme, and people are expected to remember them. Some include: Today, you escape from the one-child policy. When you come back, you will lose all you have. Vaginal ring after the first child. Sterilization after the second child. Those with excess pregnancy will get abortion and be sterilized. Those with excess children will be sterilized and fined.
And there is even a bilingual slogan in Uighur and Chinese from Xinjiang. 600 yuan reward and financial aid. To show love of the family planning policy.
See also: Abortion and Politics in China at Letters from China. Read more about the one-child policy via CDT.
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| In Beijing, Succession Shuffle Begins Posted: 21 Jun 2012 08:36 PM PDT As China approaches a once-in-a-decade leadership transition, and President Hu Jintao prepares to retire from the Chinese Communist Party later this year, Reuters reports that he may have already begun to take steps to retain influence by pushing ally and Beijing mayor Guo Jinlong as the capital's next party chief: Guo Jinlong, 64, the capital's mayor since 2008 and a Hu ally, is tipped to replace Liu Qi, 69, as Beijing party boss at the municipal party congress that opened on Friday, the sources with ties to the leadership told Reuters, requesting anonymity because of the political sensitivity of leadership changes. The city's party boss outranks the mayor. If confirmed, Guo would be a shoo-in to join the party's decision-making Politburo during the leadership change at the 18th national party congress later this year, the sources said. It was unclear when the Beijing congress would end and the announcement of the appointment made. The Beijing city government declined immediate comment.
The report notes that another possible choice as Beijing party boss is Hu Chunhua, who currently serves as the party's top official in Inner Mongolia.
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| Hu Xijin on Guiding Public Opinion Posted: 21 Jun 2012 02:46 PM PDT Since 2010, the U.S. embassy in Beijing has maintained a Twitter feed with hourly air quality readings. Beijingers distrustful of the city government's reports found ways to surmount the Great Firewall and access the embassy feed. Enormous discrepancies between embassy and local air quality measurements, combined with a few exceptionally bad days of smog last winter, seem to have lead the municipal government to improve its air quality monitors. After the U.S. consulate in Shanghai started its own feed this month, China claimed that air quality monitors at any foreign mission are illegal. The U.S. insists its monitors are intended solely for the consular community, but that has not quelled Chinese government spokespeople. Nor do the authorities think America is solely to blame. Global Times Chief Editor Hu Xijin excerpted his paper's June 7 editorial, "Confronting an Increasingly Active U.S. Embassy," in a Weibo post: HuXijin: One of the reasons for the U.S. embassy's growing activity is its group of followers within China. Through the Internet, they enter into a tacit agreement with the embassy, while also helping the embassy disseminate information through traditional media. This is a normal manifestation of the diversity of Chinese society. We cannot think of the whole thing as a "U.S. embassy conspiracy." This is often China's own problem. 胡锡进： 美使馆之所以越来越活跃，原因之一是中国国内有了一批它的追随者，他们通过互联网与美使馆默契互动，也通过一些传统媒体帮助美使馆做传播。这是中国社会多元化的正常表现，我们不能认为这全是"美国使馆的阴谋"，它在很多时候就是中国自己的问题。
Hu further commented on the article in a reply to his original post: HuXijin: China must assiduously guid mainstream public views in [the effective production and convergence of voices] in the public opinion space, clamping down on and balancing pro-U.S. and pro-Western voices. In nearly every country, including countries heavily influenced by the U.S., it is difficult for the pro-U.S. view to gain support. In China, however, at least on Weibo, has become an exception. This is a bit abnormal, and its causes are worthy of deep consideration. 胡锡进： 中国一定要认真引导主流公共意见在舆论场的有效发声和汇合，使这些意见对亲美和亲西方的声音形成强有力钳制和平衡。几乎在所有国家，包括美国影响巨大的国家，亲美的声音都很难在舆论场获得强势，而在中国至少微博现在成了例外。这有些反常，也值得深思它的成因。
As usual, netizens had a field day with Hu. Below is a sampling of over 1000 comments. Read more on CDT Chinese. Translated by Deng Bolun. ArabianYouth: The reason is that you can speak relatively freely on Weibo, so the people's vehement dissatisfaction comes spewing out. All other websites have been harmonized. If you can't see dissatisfaction, does this prove a happy society? @HuXijin 阿拉博童童：成因就是，微博相对可以言论自由，人民对国家强烈的不满可发泄出来。别的网站全被和谐了，你看不到不满就表示社会多美好？@胡锡进 KiMzzzzzZ: The Chinese people aren't pro-U.S., they're pro-conscience, pro-truth. KiMzzzzzZ：中國人民不是親美，是親良知，親真話 NiuniuLovesKaka: The mainstream you're talking about would be People's Daily, right? You should know, only on Weibo can you really sense the people's will. The People's Daily is just selling dog meat and calling it lamb. 牛牛爱卡卡：你所说的主流，是指人民日报吧？要知道，微博才真正体会民意，人民日报之流，无非是挂羊头卖狗肉 HappyIsEnough: Other than stirring up nationalist fervor among some people, what else can you do? Pursuing freedom and democracy is wrong. Pursuing better air quality is wrong. I know your children must have gone abroad. Are you f*cking evil? Turning a few normal young people into Maoists. 若是安好便足矣：你除了煽动部分人的民族气节，煽动人你还会搞什么，追求自由和民主有错，追求质量好点的空气有错，我知道你的孩子肯定是出国了，你他妈能不能这样邪恶啊，把一些正常的年轻人搞成一个个毛派 ChineseCitizen8: If I'm pro-U.S. or pro-West, that's my right. Do you want me be an [ass-licker] like you? @HuXijin 中国公民8：老子亲美亲西方是老子的自由，难道要老子和你一样舔菊花啊@胡锡进 KubiTranslatorLiu: We are far from being pro-U.S. We are looking forward to a better life. As for your comment "In nearly every country, including countries heavily influenced by the United States, it has been difficult for the pro-U.S. voice to attain a strong position," please have a look at the immigration policy on U.S. passport holders in the democratically elected governments of those countries heavily influenced by America. 苦逼的翻译刘：我们并不是亲美，我们是向往更好的生活，至于您说的"几乎在所有国家，包括美国影响巨大的国家，亲美的声音都很难在舆论场获得强势" ，请您看看那些美国影响巨大的国家的民选政府对持有美国护照的人的入境政策。 Zi-Fei-Yu: @HuXijin You use "clampdown" very well, very appropriately, just like someone who has practiced various [throat-clenching or wrestling moves]. Very good, and if you can't clamp down then couldn't you still remove our vocal chords for free? Perhaps it wouldn't be free. You still want fifty cents per bullet [for executions], isn't that right, Editor Hu? @SimaNan @KongQingdong @SongYangbiao @WuFatian 子-非-余： @胡锡进 钳制这个词用的非常好，恰如其分的好，如同练过锁喉功或者鹰爪功。很好，即使钳不住还可以给我们免费做个声带小手术吗？也有可能不是免费的，子弹还要五毛一颗呢，对吧，胡编？@司马南 @孔庆东 @宋阳标 @吴法天 GuyCalledBubbleBobble: Teacher Hu, if you tell us not to be pro-U.S., ask So-and-So's and So-and-So's "only children" to come back from the United States and then we'll see. You do the utmost to send your family to America and then ask the common people to not to be pro-U.S. Who are you fooling? 用泡泡龙名字的人：胡老师，如果说不要亲美，请某某的独生女儿，独生儿子等人从美国回来再说。拼命把自己家属送往美国，然后让百姓不亲美，你忽悠谁呢。 Laomu 1840: Your own [government] credibility is lacking, what use is it to blame others? What you should think about is why people don't trust you! Traditional media are all organized, it's only Weibo that can sound the voice of the people! Everyday it's guide this, guide that, and your way of thinking is always right. Now you're looking for volunteer Fifty Centers. In the end it's ordinary people who pick up the tab. Senior Fifty Center Sima Nan even secretly took his family and money to the United States. What else can you say??? 老木1840：你自己的公信力差，怪别人有用吗？你应该反思的是老百姓为什么不信任你！传统媒体都是组织的，只有微薄才能发出人民自己的声音！天天引导这个引导那个，还是那种自己一贯正确的思维啊，雇佣五毛不要花钱啊，最后还是老百姓买单。资深五毛司马南都偷偷把家人和资产转移到了美国了，你还说什么呢？？？ Bickermate: #HuXijin, if the public opinion space needs your guidance, can you still call it mainstream opinion? Do you represent the mainstream? What's the point of equating truth and progress with the U.S. and the West? This kind of logic wouldn't come out of a dog's ass. The people will support whatever best promotes social benefit. If you don't want to see pro-U.S. and pro-Western, then build a democratic government. What's the use of playing dumb all the time? 只配抬杠：#胡锡进#，舆论场里需要你引导的那还能叫主流意见？你代表主流了？你把真实和进步等同于美国和西方干嘛？狗屁不通的逻辑。哪个更能促进社会利益，人们就亲哪个，不想看到亲美亲西方，就建设民主政府。整天装憨有什么用？
© Anne.Henochowicz for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us
Post tags: air pollution, air quality, Hu xijin, transparency
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| Two Tibetans Self-immolate Posted: 21 Jun 2012 02:28 PM PDT Two more Tibetans have set themselves on fire in protest and one has died. The Washington Post reports: One of the two men who self-immolated Wednesday in Yushu prefecture, a heavily Tibetan area in west China's Qinghai province, died and the other was badly hurt, the Tibetan Youth Congress and China's Xinhua News Agency said. The cases add to about three dozen self-immolations over the past year in ethnic Tibetan areas of China in protest of what activists say is Beijing's heavy-handed rule in the region. The government has confirmed some but not all of them. Xinhua said the dead man was a local herder and the survivor migrated from Aba prefecture in Sichuan province. The Tibetan Youth Congress said by email that 24-year-old Tenzin Khedup died and it identified the injured man as Ngawang Norphel, 22. The group released photos of a charred body lying on the bed of a pickup truck and a video showing two men holding up Tibetan independence flags as flames engulf them. Both men stumble and fall in the seven-second video before one man rises and runs down the street in flames. High-pitched screaming can be heard but it's not clear who is making the sound.
Since 2009, dozens of Tibetans have used self-immolation as a means to protest against Beijing policies in Tibet. Radio Free Asia reports on the two recent cases: Carrying Tibetan flags and shouting pro-independence slogans, former monk Tenzin Khedup, 24, and Ngawang Norphel, 22, torched themselves in Dzatoe (in Chinese, Zaduo) township, Tridu (Chenduo) county, in the Yulshul (Yushu) Tibetan Autonomous Prefecture, the exile sources said. Tenzin Khedup died on the spot while his colleague, Ngawang Norphel was badly burned and is in serious condition at a hospital, according to Lobsang Sangay, a monk in India who is from the Zekar monastery in Yushul, quoting eyewitnesses. "They called for freedom for Tibet, the return of His Holiness the Dalai Lama to Tibet and for his long life. Both of them were carrying Tibetan flags in their hands at the time of the self-immolation," he said.
Authorities have waged a security crackdown in areas where self-immolations have been staged and have taken extreme measures to try to stamp out the protests. The Age reports: The hotel and dozens of others have since been shut, petrol sales have been tightly restricted and dozens of people taken into custody, according to Tibetan sources. Squads of orange-clad fire fighters, with fire trucks and four-wheeled buggies, have now joined clusters of police SWAT teams, riot police and paramilitaries in camouflage to prevent monks and Tibetan lay persons from making public spectacles of self-harm. They are armed with fire hydrants – carried in hand and concealed in rows under fire blankets – as well as semi-automatic weapons and long black poles apparently designed for the safe handling of burning bodies. Jokhang Temple has been stripped of most of its yak-butter candles, replaced by fluorescent lights, while identification checks are now required to enter monasteries and other public spaces.
Read more about protests by Tibetans and about recent self-immolations, via CDT.
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| Analyzing the Five-Year Plan for Internet Development Posted: 21 Jun 2012 01:48 PM PDT Last month, the Ministry of Industry and Information Technology released a five-year-plan for Internet development. Rogier Creemers of China Copyright and Media blog has translated the document in full. Creemers has now also posted his analysis of the document: The most important aspect of this document, however, seems to be security. Obviously, data leaks, phishing, privacy protection and viruses are real threats against the further development of Internet industries. At the same time, the Chinese government itself is often accused as being behind cyberattacks and online intelligence, something of which the US military, amongst others, seems very suspicious. Increased transparency and clarity about China's objectives would be very useful in this regard. Also, security seems to refer to censorship. The plan calls for enhancing "emergency response systems" to deal with "sudden incidents" and strengthening institutional and legal frameworks to further strengthen Internet supervision and management. This continues the trend of recent years, where new national and provincial-level Internet offices were established. Furthermore, the trend of co-opting Internet enterprises into self-discipline seems to be strengthened. Obviously, plans like these are general guidelines, and the interesting question remains how these objectives will be transposed into concrete policy and regulatory measures, especially in an environment changing as quickly as the Internet.
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| China, Vietnam Escalate South China Sea Row Posted: 21 Jun 2012 08:23 AM PDT China may have gained a weather-induced respite from its South China Sea rift with the Philippines last week, but the conflict steams on with its other neighbors. The New York Times reports that China's foreign ministry summoned the Vietnamese ambassador to protest a his country's new law claiming sovereignty to the Paracel and Spratly Islands: ''Vietnam's Maritime Law, declaring sovereignty and jurisdiction over the Paracel and Spratly Islands, is a serious violation of China's territorial sovereignty,'' a ministry statement said. ''China expresses its resolute and vehement opposition.'' The dispute between China and Vietnam over the law, which had been in the works for years, is the latest example of Beijing's determination to tell its Asian neighbors that the South China Sea is China's preserve. The Chinese statement comes two weeks before a meeting of foreign ministers of the Association of Southeast Asian Nations in Phnom Penh, Cambodia, which will be attended by Secretary of State Hillary Rodham Clinton and where the South China Sea dispute is expected to be high on the agenda.
China shot back diplomatically by raising the administrative status of a group of islands that includes the Spratlys (Xisha), Paracels (Nansha) and Macclesfield (Zhongsha), Zhongsha and Nansha islands, according to Xinhua News: The council has abolished the county-level Administration Office for Xisha, Zhongsha and Nansha Islands, which was also stationed on Yongxing Island, the statement said. A spokesperson of the Ministry of Civil Affairs said Thursday that the setting up of Sansha city will help to improve China's "administrative management on Xisha, Zhongsha and Nansha islands and their future development." "It is also conducive to protecting the oceanic environment of the South China Sea," the spokesperson said. China first discovered and named the reefs, islets and the surrounding waters of Xisha, Zhongsha and Nansha islands, and has exercised sovereignty control continuously over the area, the spokesperson said.
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| Rare White Paper Published on Rare Earths Posted: 21 Jun 2012 07:59 AM PDT China's State Council on Wednesday issued its first white paper on the controversial rare-earth metal sector, hailing its developmental achievements but also acknowledging the environmental consequences of and promising tighter standards for its mining practices. China Daily published the full text of the document: China is among the countries with relatively rich rare earth reserves. Since the 1950s, remarkable progress has been witnessed made in China's rare earth industry. After many years of effort, China has become the world's largest producer, consumer and exporter of rare earth products. While bringing benefits to mankind, the exploitation of rare earth has brought about increasingly significant problems regarding this resource and the environment. In the exploitation and utilization of rare earth, the rational utilization and effective protection of the environment pose common challenges for the world at large. In recent years, China has taken comprehensive measures in the links of mining, production and exporting of rare earth goods and strengthened efforts for the protection of the resource and the environment, endeavoring to ensure a sustainable and healthy development of this industry. With the in-depth development of economic globalization, China is involved in more extensive international exchanges and cooperation in the field of rare earth. Always honoring the rules and living up to its commitments, China has provided the world with large quantities of rare earth products. It will continue to follow the WTO rules, strengthen scientific management of this industry and supply rare earth products to the global market, so as to make its due contribution to the development and prosperity of the world economy. For some time now, some countries have been particularly fretful about the situation of China's rare earth industry and related policies, doing a lot of guesswork and conjuring up many stories. We hereby give a presentation about China's rare earth industry in order to further provide the international community with a better understanding of this issue.
The white paper likely drew scrutiny from China's trading partners, specifically the United States, European Union and Japan, who filed a WTO case in March to protest the export quota system China enforces on the rare earth industry. China defends its tight control over rare earth exports as a byproduct of its willingness to take on the environmental burden of extraction, and the white paper not only addressed the environmental angle extensively but also challenged foreign estimates of China's reserves. Most importantly, but perhaps not surprisingly, it also gave no sign that China would lift export quotas. Xinhua reports that the chief of the Rare Earth Office said that China meets global market demand despite the export controls, while another official defended the policy in a news conference, according to The New York Times: "The protection of the environment is never a pretext for gaining advantage or increasing economic returns," Su Bo, a deputy minister of industry, said at a news conference in Beijing.
For The Diplomat, editor Jason Miks asks University of Connecticut specialist Nicholas Leadbeeater about the environmental dangers related to rare earth mining: "I would say that the issue with rare earth mining is that the rare earth metals are in fact not all that rare, but they are found in small concentrations in ore and often found alongside things like uranium. Extraction of the rare earths from the ore is energy intensive and requires high temperatures as well as often needing significant quantities of hazardous chemicals like concentrated sulfuric acid," he told me. "The extraction process results in a lot of waste, some of it radioactive due to the uranium and other radioactive elements in the ore alongside the rare earths. In addition to this are the other environmental and health concerns of mining large areas for ore." So, with this in mind, what does the future hold? According to Leadbeater, it's "becoming increasingly obvious that, while rare earths are used in many 'environmentally friendly' applications such as hybrid cars, the supply of the key rare earths isn't sustainable on a long term basis." This means, he says, that industry is looking for alternatives to the rare earth components, "be this a complete redesign of their technology or else a way to make components more efficient," and so reducing the amount of rare earth required.
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Post tags: EU, exports, Japan, natural resources, rare earth elements, rare metals, United States, WTO
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| Photo: On The Shore, by Land of no cheese Posted: 21 Jun 2012 07:09 AM PDT |
| The Daily Twit (@chinahearsay links) – 6/21/12 Posted: 21 Jun 2012 05:10 AM PDT Nothing dramatic today in Beijing, which is expected as the city is stifling under a humid veil of what I'm going to refer to as Heavenly Mucus. Others know it as smog. Hard to get excited about anything with this sort of thing up in the sky. But the news goes on: Reuters: China factories in eighth month of contraction — The export market still blows, and it's been that way for a while now. Folks are now talking about a U-shaped recovery. Worse than a V, but hopefully not an L, or even a W. God forbid we experience a & or a @. Bloomberg: China Crude Imports From Iran Climb to Highest This Year — At the same time the U.S. is looking to crack down on Iran and tighten sanctions, the May numbers remind us all that China has other concerns. Reuters: China tests troubled waters with $1 billion rig for South China Sea — Two issues here. China needs energy in a bad way, and the South China Sea geopolitical disputes are going to stick around for a while. IHT: From Milk to Peas, a Chinese Food-Safety Mess — Nothing new here, but a very good round-up of recent food scandal news. If you're into that sort of thing. Good place to start if you are new to the topic. Global Times: 6,000 local residents deputized as food inspectors — Apparently someone in Shanghai was nostalgic for the days when armies of grannies with armbands policed neighborhoods looking for troublemakers. This seems like a rather clumsy way to fix the food safety problem, but I guess if the problem is this bad and your human resources are so lacking, some creativity is necessary. Beyond Brics: China makes it easier to buy equities — China has lowered thresholds and requirements for qualified foreign investors. The stock market here has been hating life amidst slow economic growth, so getting more cash into the market must sound like a good idea. There's a sucker born every minute who thinks he/she can pick winners better than the local competition. Good luck, guys. Morning Whistle: Rumour: Lashou cancelled IPO after accounting fraud exposed — As a socially responsible resident of China, I really shouldn't pass on rumors, but what the hell. Yesterday, the news was that Lashou had pulled out because the market for IPOs, particularly Chinese companies, sucks balls. Now the story gets more complicated. We'll have to keep an eye on this one. Bloomberg: Evergrande Slumps On Short-Seller Report: Hong Kong Mover — The latest target of short-seller Citron Research. Stock tanked in HK, so I guess mission accomplished. Whether the allegations are true or not remains to be seen. Financial Times: Forget Grexit, it's time to fret about 'Chindown' — Finally, and just for the record, columnist David Pilling has made it onto the China Hearsay "Enemies of Mankind" list for his use of the term "Chindown," which refers to the PRC economic slowdown and the effects on global demand. Pilling might be trying to poke fun at the execrable term "Grexit," but two wrongs do not make a right. Cut that shit out, Financial Times.
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| How Foxconn is Like a Salmon Boat Posted: 21 Jun 2012 02:47 AM PDT When I was in college (~1990) in California, the romantic summer job for those kids in desperate need of cash and willing to do anything to get it (like lose an arm) was to work on a salmon boat up in Alaska. I can't recall the details, but basically you worked insane hours for six weeks stuck on a boat. Some of those jobs paid very well, you didn't have the time or opportunity to spend your money, and you didn't even have to spend your entire summer vacation doing so. So here's my prediction for future expats: internships in Asian factories. Might be here in China, might be elsewhere, and I don't know which sweatshops will be around in a decade or two. But mark my words, this is eventually going to look attractive to Western kids with no other options: Foxconn is a well-known company for many reasons. But it's not necessary a company where students would like to do their internship. A report from Micgadget wrote that students from Xi'an Technological University don't really have a choice. All students who enrolled from 2010 must take up an internship role at Foxconn as part of the school's curriculum. Note that we aren't sure exactly what kind of work they will be doing, but hopefully it is something they can learn from rather than just a seat on the assembly line. (TechinAsia)
No, really. Paid internships are getting hard to find in places like the U.S., and while the Foxconn wages of roughly $240/month are still way too low to attract American kids on summer break, at least there's some money there. Let those wages rise a few more years and you never know. Give 'em some iCrap at cost, and they'll work for free. Besides, a few years from now, Foxconn might start having trouble finding Chinese kids willing to take these jobs. Spin this as a great CV builder and life experience, and they'll attract plenty of middle-class kids from the West. Of course, they'll be terrible workers, but nothing's perfect.
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| United Film vs. China Film Group: Pay Attention, Foreign Studios Posted: 21 Jun 2012 02:23 AM PDT  In the past few months, we've all been deluged with entertainment news about foreign studios cozying up to Chinese producers and distributors. Some of these deals have been more traditional inward investment ventures, like the DreamWorks tie-up, while others have been unprecedented, such as the outbound AMC acquisition.
Since the U.S. and China struck a deal on the foreign film quota, most of the talk has been about how it was a great win-win. Foreign studios get more of their product into the country, and local distributors will enjoy their piece of the action. With China's box office receipts rising quite dramatically over the past couple of years, everyone seems happy. Yes, but hold on a moment. I've seen a lot of distribution/licensing and Joint Venture deals over the past 13 years or so, and while everyone is still enjoying the honeymoon period, I have a pretty good idea of what might be coming in the out years. Coincidentally, one rather obvious potential area of friction between foreign studios and distributors is in the news, although this dispute concerns two domestic companies: Beijing-based film and television investment company United Film Investment recently filed suit against the China Film Group in the Beijing No.1 Intermediate People's Court. United alleges that the China Film Group violated a number of terms of the companies' agreement for the film My Own Swordsman, on which they cooperated, including "severe falsification" of box office profit reports. (Marbridge)
You don't need any special knowledge of the entertainment industry to understand what's going on here. Very familiar territory for most companies in China and quite a few foreign enterprises as well. Essentially, United Film was the owner of a product and made a deal with China Film Group to sell that product in return for a percentage of the revenues. Could have been anything — in this instance the product was the theatrical film "My Own Swordsman." Now that the product has been sold, the two parties are arguing over that revenue. As we've seen countless times before, the distributor is being accused of under-representing sales. (The accusations might also involve cost issues, but I'm assuming the dispute relates to gross receipts). If the allegations are true, that would mean the China Film Group actually sold more of the product than it disclosed to United Film, pocketing all the revenue from those sales itself. Sound familiar? I've had many clients who have either had this problem or have had to prepare against the possibility. For me, this typically crops up when negotiating and drafting a license/manufacturing/distribution agreement. The licensee is motivated to fake the documentation, so the agreement should always give the licensor the ability to perform local inspections, audit sales records, etc. Keeping multiple sets of books is a widespread practice that should be assumed. So the good news is that the legal system, and commercial agreements, gives parties like the studios the ability to investigate and keep their partners honest. Theoretically. The bad news is that it's easier said than done. One huge problem is that companies are quite expert at hiding information, and even if you pop in on someone to inspect their books, that doesn't necessarily mean that you will find the right data. Additionally, at least in my experience, many companies fail to utilize audit powers, even when they have local staff in China who could do so at low cost. It might be extremely difficult to uncover fraud, but if you don't even bother doing spot audits, you will definitely fail. I'm a cynic and usually look for the poor outcome. But here, we already know that games are being played with box office receipt records (the United Film dispute is not unique), and we know how foreign licensors fare in these kinds of situations. In other words, look for more of this in the future. How will the foreign studios react? Well, considering that many of the titles in question would have been barred entirely from the market in the past, I expect that the studios will be happy with whatever they can get and build from there. Beggars can't be choosers. On the other hand, that acceptance won't last forever, and eventually they will end up confronting their China distributors. Won't be for a few years, but it will happen eventually.
© Stan for China Hearsay, 2012 |
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