The Land Ownership System in China

It is state owned land ownership system in China. In China, you could only buy the rights to rent the land, and the land is still owned by the state. Usually, if the land is used for the residence buildings, it could be rent for 70 years. If the land is used for the commercial buildings, it could be rent for only 40 years.

Since the land is monopolized by the government, there are a lot of problems coming out. The government buys the land from the peasants very cheap, and then sells to the developer about ten more times through bidding. All the developers have to buy the land from the government. Under this condition, although the central government wants to lower the property price, it is still going up very fast. Since the land income covers about 1/3 to 1/2 in the local government finance.

During the transaction, the government usually forces the peasants or the residents to leave, and compensate them a little. Especially the peasants, they don’t have the skill to live in the city, but now they were forced to become a citizen, and they only have the money to live on about three to five years in the cities. It is naturally that there are a lot of conflicts during the moving. Recently it is much better, since the central government doesn’t allow the moving by force, but it still happens in some places.

Some dare peasants begin to save themselves. They build houses on their own land, and then sell to other people directly. Since they don’t need to pay tax and the house is not licensed, it is very cheap. And since more and more citizens in the cities could not afford the property price, they take the risk to buy the unlicensed house.

Personally I believe all the problem comes from the monopoly. Since the government is the only legal supplier of land, the property price will have to go up and up, especially when the RMB is increasing too. When will it be ended? People usually say in Beijing, the property price will not go down until the Olympic Games in 2008 and the in Shanghai, the property price will not go down until the World Expo in 2010. Who knows?

Vietnam and China

Vietnam is affected by China a lot from 2000 years ago until now. When I came here, I felt like in a southwest province of China, not like in a foreign country.
Vietnam doesn’t have a full industry system, so a lot of materials have to be imported. They import a lot from China. For example, about 80% of the building materials are imported from China.

The biggest difference of China and Vietnam is the land ownership. It is private owned in Vietnam. And it is said after years of the war, the government divided the land equally between the citizens. Each house covers a place about 5M X 10M square. Now almost all the citizens build a three story villa and open a small store on the ground floor. Wherever you go in the cities, you will find the seem-endlessly store street.

So I believe this feature brings two ways to do business in Vietnam. One way is to do wholesale, because there are so many stores, it is not difficult to find your customers at all. Second way is to build a big supermarket, and then you will have a big advantage over the small stores.

Resident Registration System in China

The resident registration is one of the points China receives the critics most frequently.

When China established the planned economy in 1950s, each resident had to be registered in one place, usually his birth place. If you wanted to move to another city, you had to be registered in the new place. But it is very difficult to change. First you had to find one company in the new city to receive you, second you had to get the old company’s permission, which was usually the most difficult point.

There were a lot of people, especially poor people moved from the original place to a new place without registration. If they were caught by the police, they would be treated like a criminal. Fine, beaten, jailed, everything was possible.

In 2003 a college student was caught in Shenzhen without registration, he argued and fought, and at last he was beaten to death. This was a big news in the year. And after that incident, the policy began to change. Now the police have no rights to jail anyone for without registration.

But the resident registration system still works, especially in the big cities like Beijing, Shanghai, and Shenzhen. If you move from someplace to Beijing without the registration, you have difficulty to find the highly paid job. Your kids will be charged extra more than other residents’ children. Even you are registered in Beijing, but you are married to a girl from another place, your wife could not be registered in Beijing, either. It is not before her 45 age until she could not be registered in Beijing. Sometimes I joked that to be registered in Beijing is more difficult to get the United Stated visa.

Of course, such system is not good for the economy and equality. But it is said that if the registration system is cancelled, everybody will rush to the big cities for the higher living standard, and it will be a disaster for the big cities. I don’t know so much about the nation level things, but I believe there is more ways to correct it and make it more human.

China stocks defy interest rate hike to record high

China's major stock index shrugged off the latest monetary tightening measures on Monday, rising more than two percent to hit an all-time high.

China’s stock market has been booming for more than one year, the index started from around 1500 in Aug 2006 to above 5400 today. More than 3 times in one year! Last Friday the central bank of China announced another 0.27 interest hike, and the index again, picked a lot on the news.

There are a lot of reasons for the booming. China exports a lot which brings big favorable balance. Then US pressed China to improve RMB, and then a lot of more money rushed into China.

But now the buying power comes from the funds, who receive the money from the common people. Are Chinese so rich? No. Usually they invest thounds of RMB which is all they have. But they still do it. Don’t they know the risk of the market? Yes, They do. But they have to.

In China, the assets like apartment is increasing dramatically, more than 10% per month, so the RMB is devaluing in China. The latest price index released is 6.5%. So if the common Chinese don’t put their money into Stock market, their money is decreasing!

That is what is going in China. Everybody knows the price of the market is too high, but everybody is “pushed” into the market.

Media Tek Buys ADI

iPhone sold 1 million within 6 days, it is a business miracle in the world. But there is another miracle maker in China in the mobile phone industry. That is Media Tech.

Media Tek Inc was founded in 1997, and it started to sell the cell phone chips to mainland China from 2004. Now, Media Tek covers the largest market share of cell phone chips in mainland China: 40%.

The Chinese maker of cell phone started to boom from 2002, and fell down in 2004. The reason is complicated, but one of the reasons is lack of technology support, especially the chips. Media Tek came in the right time. With Media Tek’s chips, the cell phone maker could launch a new model within very short time and low technology. So the Chinese cell phone maker began to recover with the help of Media Tek. Until now, only one Chinese cell phone maker doesn’t buy chips from Media Tek.

But there is a side effect. Since Media Tek made the cell phone development so easy, a lot of manufacturers began to make cell phone with the government’s certificate. They are called “black cell phone” in China. Now, a cell phone with windows CE, camera and GPS is sold about 200 US Dollars in China!!

It was just released that Media Tek bought Othello and Softfone from ADI, and got all the main technology of TD-SCDMA. What will happen in the 3G time? Media Tek no doubt will be an important player.

Chery Four Models Released

Sept 8 th of 2007, Chery held the promotion of “2007 New Models, Ten Years for A Million”, announcing the new models for the four brands: A5, Eastar, QQ and Cowin remain the selling price the same.

There are five brand new models: A518/MT, A520/AT, QQ311/AMT, QQ311 basic, and Eastar 2.0L.
A518 is the third 1.8L car after Eastar 1.8L and Tiggo318.
A520/AT is the first Automatic Transmission.

There are 76 important upgrades from appearance to inside.

The outlines of China cities

Today I’d like to tell some basics of china cities.

1. Economically
Economically, the most important metropolitans are:
A. Pearl River Delta
This is the most advanced area in China. The core cities are Shenzhen, Guangzhou. And a lot of satellite cities around them: Dongguan, Foshan, Huizhou.

This area is influenced by Hongkong a lot, and has advantage in electronics, communication, automobile and building materials.

B. Long River Delta
This is called the economic center of China. The core cities are Shanghai, Nanjing and Hangzhou. The satellite cities are Suzhou, Ningbo, Zhenjiang.

Shanghai is the financial center of China, and a lot of multinational companies set Shanghai as their headquarters in China. Zejiang Provice has the largest number of private companies in China.

C. Bohai Sea Area
This is the political and cultural center of China. The core cities are Beijing, Tianjin, Dalian and Qingdao. The satellite cities are Qinhangdao, Langfang, and Tangshan.

All the major commercial banks of China set Beijing as their headquarters, and the central bank of China also is located in Beijing.

These three areas cove about 80% of the total economy of China. If you want to do business with China, they are the best and in a lot of case the only choice.

2. Seven Capitals
In the long history of China, there are seven cities which were often set up as the capital of China. All of them are rich in history and culture. They are:
1) Beijing
2) Xian
3) Kaifeng
4) Luoyang
5) Anyang
6) Nanjing
7) Hangzhou

3. Beautiful Cities
1) Hangzhou.
2) Suzhou
3) Zhangjiajie
4) Dalian
5) Qingdao
6) Chengdu
7) Lhasa

4. Cities famous for their beautiful girls
1) Dalian
With the International Costume Festival held in Dalian each year, the Dalian girls know how to dress themselves up and they are born to be high with light complexion.

2) Chongqing
The Chongqing girls are hot. They eat a lot of hot food and they are dressed hot. They are not so tall, but they are so cute.

3) Shanghai
Shanghai girls are always the most modern girls in China, both in the mind and the dress. They always know how to dress up and catch up the fashion so quick.

4) Changsha
They are called “spicy girls” in China, similar with the Chongqing girls.

Drink in China

If you have the dinner with a Chinese the first time, usually, Chinese would like to propose a drink. But don't misunderstand it; Chinese don't drink so much as you think. They usually drink with the dinner. They don't go to the bar to drink so often. And what kind do they drink? Maybe it is beyond your imagination.

ALCOHOL

The Chinese Alcohol is made of wheat, and some of them very strong, the highest contains 86% alcohol as I know. Among them, there are some very famous brands. MAOTAI is the first brand and of course the most expensive brand. Erguotou is a popular one, and very cheap. These two are good for the beginner to taste Chinese alcohol. Even you are a drinker, maybe you are not used to the Chinese alcohol. I once saw a Japanese heavy drinker drank the Chinese alcohol too fast and got drunk in 5 minutes.

WINE

Chinese are not famous for wine, if you would like to try, I'd like to tell you the top three brands: Changyu, Changcheng and Dynasty.

RICE WINE

Rice wine is only produced in China, very singular and impressive. It tastes better if warmed. Don't miss it. Here is the top

BEER

Beer is like cigarette in China. Each place has its own brand. You could try when you move to a new place in China, as what I suggested yesterday.

Now, what do you want to drink?

Do you want a cigarette?

“Do you want a cigarette?” this maybe the most popular line when two Chinese businessmen meet to speak.

Yes, so many Chinese like to smoke, but it is far far less than Russia. I noticed there are very big ash trays everywhere in Moscow public places, even airport!!

COMMUNICATION
In China, Cigarettes mean different from western world. It is not only private, as in western world, it is a kind of communication with others. When you meet a stranger, an offer of cigarette will make both of you much closer.

SO MANY BRANDS
And usually the foreigners are astonished to find so many cigarettes brands in China! There are about 660 cities in China, and there are more than 700 cigarettes brands in China! Why? This comes from the planning economy. Each place wants to develop the local economy, so each of them wants a cigarettes plant in the local place, which is very profitable. At last, more than 700 brands were made out.

BIG DIFFERNCE IN PRICES
So many brands are positioned so differently, and so the price gap is bigger than you think. It is not like the difference of Marlboro and Winston in your street corner shop. It is from $0.25 to $ 10 per pack.

FACE
Yes, I admit it, Chinese hate to lose face. Unfortunately, the cigarettes are one of their tools to show off. If you smoke cheap, you are telling others you are poor, which is an insult for a rich man. Unreasonable, but real.

However, if you are a smoker, when you go to china, you find an interesting job to do. You could try a new brand whenever you go to a different place.

Sir, Do you want a cigarette?

Noelia and the media

Noelia is famous now, by a means I don’t want to comment. But the result is she becomes very famous.

I don’t know whether things like this happened before in the western world? But if Noelia now is in China, she maybe could not make such a buzz, because somebody else has already done the same thing intentionally or unintentionally.

In Taiwan, 2002, a girl named Qumeifeng, was just elected as the county congresswoman, almost at the same time, she was shot a half hour sex tape. The Taiwan local newspaper gave out a disc with the tape together with the newspaper for free. And then Qumeifeng became famous in the Chinese world. She quitted from the congress and then she began to hold concert, and now she is a VJ.

In mainland China, 2003, a girl with the nickname Muzimei, put her naked picture on her blog and wrote the details of her sex with the celebrities. She became very famous as a “writer beauty”.

I don’t care so much about their sex, but I do wonder who benefited from them? Media. The Taiwan newspaper sold a lot and rose up as a local newspaper. The website became popular almost overnight, and what a pity is this website is the beginner to promote blog in China, so blog became popular in China through a naked girl.

And now who will benefit from Noelia?

Ron Paul and Currency War

It is amazed to find out the internet popular candidate Ron Paul advocates for gold standard. Recently the bestseller in China is a book called Currency War written by Song Hongbing, which is about the gold standard, too. Is it a coincidence?

I don’t know so much about Ron Paul, and I guess his view is to restore gold standard to help US set up a stable financial system, while the writer of Currency War is different. China is opening its financial sector to the world, which you could find out from the cooperation between CCB and Bank of America, and it received a lot of concern from Chinese researchers. They are trying to find out a way to avoid the control of international capital. The Currency War points out a way, is it plausible?

The Currency War blames the financial crisis to private central banking. It controls one nation with circulation of fiat currency which is based on debt-based monetary system. The bankers “make” crisis through over or short liquidity. Yes, it sounds like a conspiracy.

I’m still studying on this point. Until now, I’m not sure which to blame? The debt-based monetary system or the private central bank?

Alibaba’s competitors in China

Before this topic, I’d like to explain more about China Internet. In China, the manufacturers don’t pay much attention to their own websites, like their foreign counterpart do. Maybe it is difficult to attract traffic. Especially the small-medium size companies like to be listed in the B2B websites, like www.alibaba.com, www.globalsources.com, and others. Because the websites provide more professional services and most of more, attract more buyers from overseas. So it is said www.alibaba.com is the biggest internet company in China, it has some reason.

www.alibaba.com is the biggest B2B website in China. But there are some other websites competing against it. They are:
1. www.made-in-china.com: it doesn’t do a lot of advertisement, but do a good service to the sellers, so although it is not so popular among the commons, it is famous among the professionals.
2. www.hc360.com: in fact, it started as a yellowpage like publisher, and do a good job in the internal trade. It just started to focus on the export and import.
3. www.globalsources.com: it is not a mainland company, and has a magazine published to help the promotion.

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Credit Card Delay Payment Interest

Yes, China is a country with many controls, which make the Chinese sometimes seem dumb, and when they find out it is not taken granted by the foreigners, they will rage and then have to accept it.

Today I’d like to discuss about the credit card. Credit card started to grow fast from 2002 in China; now maybe more than 100 millions credit cards have been issued. Even for me, a early user, don’t realize something in it. For Example, the delay payment interest. As I know, in USA, the interest is charged differently by different issuers, which varies from 9 to 17 percent. But in China, all the issuers charge the same: 18 percent!! You have no choice.

The anti-monopoly bill has just passed a couple of days ago in China. I believe it is another type of monopoly, but not sure when it will be erased.

Internet Novels: A Chinese Type Business?

Internet is the most global and at the same time the most local. Yes, you could surf the internet from anyplace of the world, but the most often visited website is the most localized site. For Example, in China the people surf Sina.com (SINA,Nasdaq) for news, and Sohu.com for finance news.

And, there is another phenomenon in China Internet industry. That is novel publication on Internet. Itwas about from 2002, the famous legend writer Huangyi put his latest novel on the internet, when the internet novels began to spread fast.

Yes, I know, Steven King once put his novel on the internet. But as I know, Chinese writers didn’t have that kind of treatment as him. Here is the difference:

1. The internet novels are usually by writers who are unknown to the public. So if the novels are not attractive, especially at the beginning, it is so difficult to spread.
2. Although there are some website pay the writers for their novels, like http://www.cmfu.com/ , http://www.xhsm.net/, but at the same time, there are much more website copy their novel for free. So the writer’s incomes are limited from the novels directly.
3. The quantity of writers is big, and the quantity of readers is very very big. The best-reviewed ZhuXian was reviewed by more than 30 millions readers.
4. The themes of the novels are various; some of them are rarely seen from the publications before . For example, the “back to history” type novel Xinsong. It said a young man went back to 1000 years ago and changed the history.
5. The writers make some income from the related computer games and movies. Zhuxian is famous for it. The ending of the novels were even after the release of the computer games!!

Canton Fair: The First Fair of China

Canton Fair is a brief name for China Import and Export Fair, which is called the first fair of China. It is true. Canton Fair started from 1957, originally named China Export Fair. After the establishment of People’s Republic China, China was blocked by the western world. The Canton Fair played an important role of communication. It is almost the only way for Chinese to look outside during a long time. Although a lot of exhibitions compete against Canton Fair, nowadays Canton Fair is still the First Fair of China for the time and varieties. It is a good start for the foreign buyers who are not so familiar with China.

You could also check the Canton Fair online: http://www.cantonfair.org.cn/en/index.asp