Jason will be speaking in the opening session, talking about the latest environmental business and policy trends in China, followed by Alexander Prautzsch of Ernst & Young and Linnet Kwok from WWF China. There will also be a speaker on environmental finance in China. Overall it looks to be an interesting and informative event. It is hosted by the European Union Chamber of Commerce in China, but is open to both members and non-members. Here are the event details:

Date: Tuesday, 2009-06-23
Time: 8:30 AM - 12:00 PM
Venue: European Chamber Shanghai Office  - Unit 2204, Shui on Plaza, 333 Huaihai Zhong Road, Luwan District, Shanghai 200021 (Next to the Taipingyang - Pacific Department Store at Huangpi S. Road subway station on Line 1)
Cost: Members: RMB 150, non-members: RMB 230
RSVP: Click here to register online

For a complete event rundown and agenda, please follow this link to the EUCCC’s website.

Jason Inch will be speaking on Thursday, April 23, at an event hosted by the Shanghai Canadian Chamber of Commerce. This event is open to all, including non-Canadians, for an entry of 75 RMB including one drink (50 RMB if you are a member). Jason will be talking about the recent indications of China’s economic recovery and what that implies for jobs and business expansion. Here is the complete event information:

Date: Thursday, 2009-04-23
Time: 6:30 - 8:30pm
Venue: VIP Room II, Level 3, Four Seasons Hotel Shanghai
Cost: CANCHAM Members: RMB50
Non-members: RMB75
RSVP: Fiona@cancham.sh.cn

On May 7, Jason will be speaking at the two-day Green Product & Business Forum in Shanghai. Chapter 9 of the Supertrends book focused on China’s environmental supertrend: The opportunities in cleantech, sustainable business, and energy efficiency in China. Jason will join a panel discussion on the first day of the event to talk about sustainable business in China. If you are with an NGO or non-profit, registration is 300 RMB, and for corporate attendees it is 1500 RMB. Given the huge opportunities in China’s environmental industries, this is an excellent opportunity to learn more.

Please let us know if you will be attending, it is great to meet blog readers in person.

In collaboration with one of China’s best foreign book specialist booksellers, Garden Books, the co-authors of Supertrends of Future China will be speaking at two events in April for readers in Shanghai and Beijing:

The first event is this weekend, Sunday April 12 from 3-5 PM at the Shanghai outlet of Garden Books (located on 325 Changle Road nearby Shanxi South Road). At this event, both James Yuann and Jason Inch will be there to share their ideas about China’s immediate economic future and how this relates to careers in China, investing, and starting a business. Further information can be found about the event at City Weekend.

The second event will be held the following weekend in Beijing on Saturday April 18 from 3-5 PM at the Sequoia Cafe (44 Guanghua Road by 2nd Ring Road East). There Jason Inch will speak on the economic crisis’ effects in China, the timeline for recovery, and how this impacts expats and foreign companies doing business here. Further information about the event is at Garden Books and on City Weekend.

By the way, the book is already on sale at Garden Books for those readers in China. The book has been available worldwide for several months now but they are the first retailer that we know of to carry our book in China.  Thanks!

Spark09, held in Shanghai on March 28,  was the inaugural hosting of a TED-style symposium of  interesting speakers coming together to interact with audiences in the sharing of new ideas in humanities, environment, science, business. It was an extraordinary event that I also attended along with several hundred people to see some amazing presentations.

James was honored to attend as a speaker. For those could not make it to the event but would like to see his speech, a video should become available in a few days’ time on his bio page at the Spark website.

If you would like to have James or myself speak about China’s economy and trends at your upcoming event, please get in touch with us.

That company, of course, is China’s bellwether Huawei Technologies - fuel to the fire for Huawei’s famed ‘wolf-culture‘ of hard work, passion, and ruthless competition.

I thought this news about Huawei was worth posting because it is a significant globally-recognized data point supporting the trend of China’s drive to be more innovative. In Supertrends of Future China, we noted China’s increased spending on R&D through its universities and research institutes (in various public and public-private partnerships), increased domestic patent filings, and relocation of multinational R&D centers to China (especially after new tax credits were introduced in 2007 / 2008’s revamping of corporate tax policy). All of these are indicators of a concerted effort to make China a more technology-intensive country, with two caveats.

First, it should be noted that WIPO patent filings are not an accurate reflection of domestic patent applications or patents granted overall. WIPO’s ranking refers to patents filed under the Patent Cooperation Treaty (PCT), in which a patent must be successfully filed in a signatory country or region before it is accepted under WIPO’s PCT for global protection. The PCT system enables the filing company to protect its intellectual property in 153 Contracting States with a single application, thereby significantly reducing costs and partially solving the problem of establishing and protecting IP in foreign territories.

Second, in terms of the individual company patent filings, Huawei coming in first for the first time does not necessarily indicate a broader trend of Chinese companies becoming more innovative. Filing under WIPO’s PCT could merely indicate how aggressively a company intends to defend patents abroad. WIPO’s PCT makes this much easier, as mentioned in the previous paragraph. Furthermore, a precipitous decline in patent filings in 2008 by Philips and Panasonic was more likely the true cause of Huawei’s placing first. With only one other Chinese company - ZTE - in the top 100, China’s strength in patenting versus that of global competitors is still negligible.

However, is there any additional evidence concerning patents that supports the contention that China is indeed becoming more innovative? For that, you could look to domestic applications and patents granted by the State Intellectual Property Office (SIPO). In this regard, China appears to be getting more innovative, with about 317,000 patents granted overall in 2008 (Jan - Nov 2008), up from about 301,000 patents granted in 2007 (Jan - Dec 2007). If you go back further, to 2006, less than 224,000 patents were granted. Globally, China ranks number three in patent-intensiveness, ahead of Germany and Korea (and behind world-leaders US and Japan).

All of the above figures, it should be stated, do not speak to the quality of the patents, and I have not provided a breakdown of patents by type (inventions vs. incremental improvements, for example), but an examination of the data on SIPO’s statistics page does show increases in invention and design patent categories that are slower than overall patent growth in China. Therefore one conclusion might be that China’s large number of patents filed owes more to brute force improvements rather than quality innovation.

Also, it will take China some time to reach the state of the art, but this is still a good indicator of progression on China’s long march up the global value-chain.

Chalk one more up for Huawei’s wolf-culture. At least for now, it is leader of the pack.

According to the article, which profiled the creator Wu Yongjian, a professor of design,

Chinese culture needed to be the essential element to embody the spirit of World Expo 2010. “A large number of mascot designs to express Chinese culture were inspired by images of pandas, monkeys and dragons, etc,” says Wu. “What I did was try to find another way to interpret China, a more abstract way.”

Perhaps referring to the Olympic Fuwa as an example of the oft-overused panda design motif, Wu’s explanation of how Haibao was conceived answers some of the Netizen-led criticisms of it apparently being the figment of the designer’s TV-addled mind.

After several changes to the initial submission of the Haibao character were made, a design was finalized that incorporated the imagery of the Chinese character ren - 人 - in the color of ocean blue, perhaps connecting the mascot to the host city Shanghai (the character for Shanghai’s hai is also one of the characters in Hai bao). Indeed, the deeper meaning of the mascot was expressed in the article in this way:

Like an ocean, Haibao symbolically represents a city where all values and ideologies can coexist.

Ummm, ok. Back in September 2008 John Pasden of the Sinosplice blog discussed how the five Olympic Fuwa of Friendliness were finally fading into obscurity. Today only the echoes of their alliteration remain, signaling the impermanence of all things. To John’s dismay however, in Shanghai the Fuwa have been replaced by the emergence of Haibao. As of late, Haibao is indeed everywhere. (The charmingly creative installation pictured above was found bordering the Jing’an Sculpture Park).

But back to the subject of the Shanghai Daily article, Haibao’s origins, Wu Yongjian’s dilemma is this: From the release of Haibao back in 2007, the creator has been accused by Netizens of the Chinese blogosphere of, to put it kindly, being influenced by Growing Pains, the classic 80s TV show, which became one of China’s most popular TV imports.  Ask any 80s or 90s-generation Chinese and they’ll likely know Chengzheng de Fannao and might even remember how Ben Seaver’s room was decorated:

Western readers will recognize the character on Ben’s wall as Gumby, an American icon of rubbery fun, so it is perhaps more correct to say the designer was influenced by Gumby rather than Growing Pains, but Mr. Wu is not going to come out and say, “Yes, I copied it!” The Daily article gives a measured and authentic-sounding explanation for how Haibao evolved, but the true initial conception of Haibao may never be known except to Mr. Wu himself. I am willing to give him the benefit of the doubt. Nevertheless, China has a large number of similar-looking logos and trademarks that could stand a bit of re-branding, in my opinion.

Although it is not exactly a Supertrend in and of itself, we put  the need for more brand development into our book’s chapter on the evolution of the service and retail sectors in China. I was also discussing this with a new friend who moved to Shanghai and set up shop as a brand consultant last year. Business is going well.  If you’re looking for a good brand-builder, drop me a line and I’ll put you in touch. I will also follow the topic of branding in a later post.

Happy Chinese New Year.

I am not normally one to attribute rhyme or reason to the movements of stock market indexes. In most cases, only a fool would say how a market is going to move on any given day. Yet today, with the news from China’s central government that it would encourage its domestic market to invest and consume more, it appears to have moved markets in a straight-forward correlation. Certainly, Chinese investors have come to expect the government to step in to prop up stock markets. Last week, it was a rumored $50 billion ‘buffer fund’ that prompted China investors to rally.

US investors are not so easy to impress. The Chinese spending package was not enough to dent the malaise over the US markets, which today were hit by the new of the bankruptcy filing of a major electronics retailer, Circuit City, and layoffs at the US subsidiary of DHL. Finally, the spectre of a slew of possibly negative economic data to be released later this week, including the trade balance, may be prompting caution.

But, back to China, the relatively huge gains in China and other Asian markets indicates, to me at least, that China’s economic news does have the power to help stimulate regional stock markets. But will the package, as China’s leaders claimed, actually help stabilize the world economy? Put another way, can China’s economy save the world’s?

To elaborate on that point, one must not imagine that China will quickly start spending its half trillion dollars to ramp up imports, thereby helping its trading partners. The main effects of this package will be to further push China’s economy toward domestically-fueled expansion via consumption and investment.  It is China’s biggest package ever, the equivalent a $2 trillion package for the US economy, but it will do little to help the world economy, other than encouraging a stable China.

China can afford the package without running a huge deficit, but is there any other cost? Inflation, possibly. One thing is clear, China is most definately now a Keynesian. I hope it can avoid the fate of Japan of the 90s, which tried, and is still trying, to spend its way out of the economic doldrums. Nobody wants to see another lost decade.

If you are interested in the book or if you are already a reader and you are in Shanghai this weekend, please Contact Us. We would love to see you there.

Thanks to all of our readers who have helped to make the book launch successful.

China Supertrends has been following the financial implications of the sub-prime crisis for a while now and will comment on this latest development and the state of China’s stock markets in a separate post. Today, Tuesday, September 16, was yet another blood-bath in the markets, but at a time like this it is worth remembering that China’s underlying economic fundamentals remain very strong.

In fact, China just came off yet another strong month of growth. If this is true, what causes the apparent contradiction of one of the world’s best performing economies having one of the worst-performing stock markets?

In brief answer to this complex question, let’s just say that the theory of decoupling - the idea that China and other developing countries are mature enough to continue to develop on their own during an economic decline in the US and elsewhere - is increasingly discredited.  We wrote as much in Supertrends: We are living in an inter-connected world, and nothing, not even neo-Mercantilist policies, a protected currency, nor the world’s largest foreign reserves, can resist the forces that are sweeping our world.  As John Donne famously said, no man is an island. This financial crisis calls to all governments to act.

China, with its strong economic performance in August and year-to-date, may appear to be in the eye of the storm, an island of calm and prosperity. Last week was the Mid-Autumn Festival, and the economists at China’s National Bureau of Statistics were producing new data faster than mooncakes at Wang Jia Sha. Virtually everything seems according to plan.

Starting with the drivers of the economy, consumption continued to show signs of strength, with retail sales maintaining a 23.2 percent pace of growth in August, only slightly lower than July’s 23.3 percent, the fastest rate since 1996, according to the Shanghai Daily.

The level of retail sales growth is far above the most recent inflation levels, meaning retail sales growth is not just about price increases, there is real growth there.  In fact, CPI - the consumer price index, or basic inflation - decreased to 4.9 percent in August, continuing the downward trend, but worrisome PPI - the prices producers are paying for raw materials and commodities - continued to climb, to 10.1 percent in August. PPI increases will, at some point, either result in decreased margins and profits as companies absorb the increases, or get passed on to consumers as price increases, so China is not out of inflationary woods yet.

Many were regarding the fight on inflation to be one of China’s core economic policies of 2008, but in a surprise move today the People’s Bank of China decided to cut interest rates by about a quarter percent, down from 7.47 percent to 7.2 percent and, in perhaps the most surprising move of all, cut the reserve ratio by a full one percent after having just increased it by one percent in June.  Now that the Olympics are over, micromanagement of the economy seems back in style.

But the message, that the economy is ready for a rate cut and wants to increase money supply, could be evidence that the PBOC overshot the mark and caused money supply to shrink too quickly, contributing to some of the summer’s abysmal stock and real estate performance.  Growth in M2, the money supply, decreased to 16 percent in August, down from 17.4 percent in June.  It is important to point out here that we are still talking about an increase of 16 percent, just that the rate of speed it was growing simply slowed down a little.

Is the PBOC acting wisely or foolishly? Time will tell if they are cutting too soon, a knee-jerk reaction to the latest sub-prime casualties, trying to prop up the falling stock and property markets, or if they are presciently avoiding a much harder crash in the wake of Fannie/Freddie/Lehman fallout and other factors yet to come.

While some of this data could be construed as negative, China had a lot of other positive economic results in August. For example, the trade surplus is up by 25.7 percent year-to-date, compared with Jan - Aug 2007 figures.

In August, with industrial output growth the lowest in 18 months, a mere 12.8 percent increase, exports decreased to 21.1 percent from 26.9 percent in July. Imports were down more dramatically, from 33.7 to 23.1 percent, mostly because of commodity import price decreases  (i.e. oil), so the trade surplus actually still got bigger. 

Though slowing its rate of increase slightly, clearly China’s export prowess is not affected significantly by the world-wide financial crises, and despite the 2008 increase in  the strength of the RMB exporters seem to have adapted. The sky, it woud seem, is not falling, though its perhaps a paler shade of grey. Ecnomists, analysts, and the Chinese media make a lot of dire proclamations about how the Chinese economy is in decline but this is better thought of as healthier, sustainable growth.

I could go on. FDI and other investments - still strong. Foreign reserve size- still troubling, but thanks to the Fannie Mae / Freddie Mac bailout, the 20 percent of reserves held in US mortgage debt appears safe.

So the question originally posed, why is there a contradiction? China’s strong economy (with all the usual provisos and assumptions about the data, of course) on the one hand, and its weak stock and property markets on the other. What gives?

Is this a sign that global markets cannot decouple and are doomed to falter together, or is it a sign that somebody needs to act more decisively?  Just as China became a stabilizing force in the Asian Financial Crisis of 1997, is there are way it could use its economic and financial strength to do so again?

No country is an island in our globalized world.  Everybody has a stake.  With the alarm bells sounding, can China passively wait for the U.S. to get through its bailouts, and hope that the world financial system remains intact?  Or does this bell ring for another?  Whom does the bell toll for?  China, it tolls for thee.