A Dozen Random Thoughts On China
Just completed my two week China trip and some thoughts remain from that trip that have yet to make it to the blog because they do not warrant their own post.
Here goes:
1. Shanghai cabs suck. There are not nearly enough of them and too many of the cab drivers are so new to town they do not know where anything is. I had one cab driver who did not know where the Bund was. I kid you not. The biggest problem though is that it always took 20-30 minutes to find an empty cab. One of the greatest perks of my staying in the Westin at the Bund Hotel was that there was always a cab right there. Using my billable hourly rate as a measure, the ready availability of cabs there more than paid for my room every single day.
2. Beijing cabs are even worse than Shanghai cabs. Not only do the drivers not know the city, they tend to be incredibly rude. They would assume that because Steve (co-blogger Steve Dickonson) speaks fluent Chinese, he should know the directions to wherever we were going and they would get really angry at him when he did not. Twice we exited a cab when it had become clear the cabbie did not know where to go and was unwilling to call anyone to find out.
3. Beijing is an absolutely great city as long as you don't breathe. I am certain there are people who turn down jobs there because of the pollution. Whither the Olympics?
4. Make absolutely sure your name is 100% correct on your airline ticket. If it is not, you run a very real risk of not getting on your flight. This has never happened to me, but a client told me of this having happened to them. If your passport says Douglas, your ticket better not say Doug.
5. Shanghai traffic is getting more orderly. There are now "traffic assistants" just about everywhere whose job (near as I can tell) is to scream at people on motorbikes and to make sure pedestrians obey the lights. Sure, the cars still pretty much ignore the signals and all but plow into pedestrians, improvements are happening.
6. Sun With Aqua Restaurant has absolutely world class sushi at less than world class prices, but its service is only so-so. It is quite a bit better (also quite a bit more expensive) than Hatsune, which is widely considered Beijing's best sushi restaurant.
7. I have come to like Shanghai style food. It lacks the pizazz of Sichuan or even Cantonese, but when done right, it is damn good.
8. The Chinese drink wine very differently than in the West. Before we went to dinner one night with our lawyer friends in Qingdao, we talked about Chinese wines and they asked me if I would like to drink wine at dinner. I immediately said yes, envisioning maybe two or three glasses instead of the infinite drinking of beer which usually happens at such dinners. Boy was I wrong. The wine flowed just like beer and probably half the glasses were chugged. We drank Huandong Chardonney all night and it was not half bad. This was the only brand of wine served in the restaurant and there were promotional posters for it all around.
9. China's stock market is out of control. Everyone talked about it way too much. People told me they were having trouble keeping employees who were leaving well paying jobs to day trade. People told me they were losing employee productivity because so many of their employees were day trading on the job. I would ask if people in China think the market can only go up and the answer I usually got was that they realize it can go down, but they are convinced it will not go down for many years. Can you say bubble?
10. There must be 20,000 empty condominium units just on the road from Qingdao city center to the airport, and yet the building of condos goes on apace there. I was also told there are huge numbers of ultra high end condos being built on the coastal road from Qingdao to Laoshan mountain. These condos are listed at between $350,000 to $1 million and virtually none of them are selling. Again, more and more are being built. So what is going on here? My guess is that the banks want to lend and people want to borrow and if anyone were to admit that these developments are not selling, there would have to be loan write-offs and nobody wants that. Can you say bubble?
11. A Chinese lawyer told me he now asks all of his Chinese clients who their foreign competitors are and then offers to see if he can put them out of business for operating illegally. This has become so lucrative for him that he does not even charge to determine if they are legal or not. He makes that determination for free and if they are, he charges a large flat fee for putting them under. He proudly gave me the name of a Seattle company I know (but do not represent) which was next on his list. He also said that come 2008, he would be suing foreign companies whose Chinese employees did not have written contracts.
12. Mooncake is China's fruitcake, except they are now making pretty decent chocolate mooncake and that is probably not possible with fruitcake.
As always, comments are welcome.
Comments (60)
Read through and enter the discussion by using the form at the endTravis Hodgkins - September 28, 2007 3:11 PM
Steve probably doesn't like it too much, but I sure enjoy it when he fights with cab drivers. Just the thought of it makes me smile. I swear Mandarin is never as beautiful as when it's being used in a heated argument-- except maybe during the recitation of poetry-- yeah, Mandarin and passion go hand-in-hand.
It sounds like you had a great China trip.
nanheyangrouchuan - September 28, 2007 3:28 PM
1. I always preferred the subway and walking to cabs, and it the cabbie may be lying about not knowing the city (and not being able to contact dispatch, which they used to do) just to drive you around and jack up the fare. And you are never right in a fight over the fare if the police arrive.
9. The Chinese stock markets are already artificially floated by Beijing. Those big insurance companies and "private" banks are still state controlled and receive funds to continue buying and driving up the index. In the US, a massive sell-off would be a stinging lesson in over-exuberance. In China, a massive sell-off would destroy the life savings of tens of millions of 20 to 80 somethings (because much of the disposable income of 20 somethings comes from their grandparents).
11. And you and others still defend China as a great place to do business?
Therese - September 28, 2007 7:10 PM
3. I've thrice turned down positions in Beijing. I hate the city's air (polluted and *dry*) so much.
11. As sick as that is, it's brilliant. Sounds rather like something that would occur back home.
12. My mother makes amazing fruitcake cookies as well as a fruitcake which her friend has nicknamed "Jack cake". She makes the fruitcake a year in advance and monthly defrosts them to apply a layer of whiskey. They're so much better than mooncakes (although I must admit to liking the nutty mooncakes).
Law Office of Todd L. Platek - September 28, 2007 7:13 PM
Dan, your Point 11. is very important, and I see that happening more. Recently a NY lawyer told me he was trying to do some on-line research to help a client clear certain hurdles in China, and was feeling frustrated. He was hoping he could make a long-distance phone call to the relevant Ministry (if he could figure out which one, and where, and who) to get details. All I could say was, "Toto, you're not in Kansas anymore."
The number of foreigners who employ such naive and ineffective methods may be much higher than I suspected, and therefore Chinese lawyers may have a field day targeting non-Chinese companies that conduct operations in China. This should be a wake-up call to all foreign organizations throughout China to perform their own internal due diligence to ensure that they are legally established and empowered to conduct their specific businesses, and if not, seek immediate remedial assistance from professionals.
Ben - September 28, 2007 7:33 PM
While I've had my share of bad cabbies in Beijing, and many that don't know their way around , most are pleasant and some are downright chatty (on the subjects of politics, Clinton, lamb kebabs, etc.). On the other hand, I have NEVER had a friendly cab driver in Shanghai. I speak Chinese, and could never get a peep out of a Shanghai cab driver. I don't know if it was dislike for hearing Mandarin or just a general gruff attitude, but I would take Beijing over Shanghai any day. Unfortunately, the pollution in Beijing may ultimately make me change my mind, but all things being equal, I think Beijing is an easy winner.
luc - September 28, 2007 8:05 PM
Steve:
Maybe you should visit our city,a small city in suzhou area.No heavy trafic in the downtown,things are organized,people are more friendly.People in big cities,sometimes they got them lost.
Stock market,quazy!Everyone's putting money into the stockmarket now.Definitely overvalued.
Most of chinese lawyers are still struggling for getting business.
warwick - September 28, 2007 8:16 PM
Yeah the air in beijing - its going to be a worrying olympics....green as in green algae choking the rivers.
Thanks for the comment about the law firm knocking out illegal foreign business.... in the process of setting up an RO and tid-bits like that to throw up to head office should hopefully lesson their feet dragging.
Law Office of Todd L. Platek - September 28, 2007 8:54 PM
Re: your points about cabs, don't you know that real men don't ask directions? You were supposed to sit back, smoke cigs, enjoy the ride and let the driver do his thing. After all, cabbies need jobs. Sooner or later you would have arrived. Pushy Americans.
Chris D - September 28, 2007 9:03 PM
My name is Christopher - My tickets routinely have my name spelled:
1. Christ,
2. Christop, or
3. Christophe
Never had a problem - knock on wood.
Chris D - September 28, 2007 9:06 PM
Oh, and I hate, Hate, HATE taxis. That's why I drive a motorcycle in Beijing as my primary mode of transport. I dread when it breaks down, which is almost monthly... The subway system is a joke and the buses are packed like sardines, so must resort to taxis some times. not fun.
Ben Ross - September 28, 2007 9:11 PM
Dan-
Great comments and observations. From my experience in BJ and SH, you are right on the money. I definitely back you up on the ridiculousness of the cab situation in Beijing. Last week I was in Chicago, a metropolitan area much larger than any Chinese city. I took cabs all week, and every time I did, I simply gave the cabbie an address and he knew EXACTLY where to go, even the ones who barely spoke English. In Beijing, I have had similar problems as you where the cab drivers simply do not know where your destination is. The real irony of this is that 99% of Beijing cab drivers are born and raised in Beijing, and probably 95% of Chicago cab drivers are born and raised in developing countries halfway across the globe...yet they somehow know where everything in Chicago is.
As for the....ahem...bubble. Similar phenomena are going on in Fuzhou. Several years ago the Fuzhou real estate market doubled in 2 years. Now everybody is convinced that the growth will continue in the future. Because of this, it's becoming increasingly rare to find rich Fuzhou people with only one condo. Usually they own three or four, using one to live in, and holding on to others, unfinished, as investments. So you have a situation like Qingdao where high-rises keep going up but the ones built two years ago are still empty....wait, were you saying something about a bubble?
nanheyangrouchuan - September 28, 2007 10:48 PM
"The number of foreigners who employ such naive and ineffective methods may be much higher than I suspected, and therefore Chinese lawyers may have a field day targeting non-Chinese companies that conduct operations in China."
The naiveness of the foreign business community may be due in part to the fact that for 15 years Beijing let the foreigners pretty much do as they please as long as the money, technology and expertise kept pouring in. The nationalist backlash you are seeing is partly due to the nationalism that Beijing pumps into Chinese kids from 4th grade onward.
Jriglo - September 28, 2007 11:08 PM
Dan
Been there done that; unfortunately if you have a very long name it will not even fit on you’re airline ticket. I tried using just my middle initial one time; airline check in counter namee no matche no boarde. I have to argue every time I board a plane in China. Don’t you just love traveling in China?
Terry - September 29, 2007 1:29 AM
Dan,
I am with Ben on the Beijing cabbies (I commute daily via cab from the burbs). A most friendly, courteous and chatty bunch in general and most from the surrounding Beijing countryside. You truly missed our blue sky days in Beijing by just one week.
On directions, think landmarks not street names and numbers. China has never been very big on precise addresses (state secret?) and this is one reason the post system is totally unreliable. Where else in the world does a major avenue change names every few blocks?
on no.11 - scary and not surprising. The funny thing is that most foreign firms have overheads resulting from compliance that makes it impossible to compete with non compliant local firms (thank you foreign corrupt practice act!!). Am thinking through the increased operational (squeeze) costs that might result from hiring a lawyer to go after chinese companies the same way.
JL - September 29, 2007 2:04 AM
What do you mean housing bubble? Don't you know those condos are only empty because they're waiting for people to be able to afford them? -And aren't you aware that the incomes will rise rapidly, indefinitely and that this won't cause inflation? And that people will have to buy them anyway because rules on residency don't allow renter's kids to go to local schools?
Or alternatively Zhou Average from Anhui (who's pay packet has been going down in real terms) will just save the cash he doesn't have to put into his native city of two million that 90% of Qingdaoese have never heard of. Leaving stretches of coastal urban wasteland and governments out of pocket from bailing out the real-estate developers.
chriswaugh_bj - September 29, 2007 6:49 AM
Ben Ross: In places like New Zealand and London, and I presume Chicago, taxi drivers are expected to have memorised the map of the entire metropolitan area before they get their licence, and they are tested on it. In China it is not the same.
And all Beijing cabbies are born within Beijing municipality. The big change has been allowing people from the outer suburbs (like my beloved Yanqing) to work as cabbies in the downtown area.
Dan: Both you and Ben Ross had an unusually rough experience with Beijing's cabbies. Most are pretty decent and efficient. I have had problems like you both describe, but still, most of the time, even when (in my younger days) I've been heading home in the wee small hours of the morning well under the influence, I've had nothing to complain about. Most of the time. I still remember one occasion when the driver tried to cheat me by taking the 4th ring instead of the 3rd when I fell asleep, but the meter said the price I would've paid had he taken the route I specified. Dan, I'm sorry you had such a rough experience of Beijing's cabbies. My only advice for any future visits to Beijing is: Stay well away from anything that attracts foreigners.
As for the air in Beijing, well, the pollution is nasty, but the fact is north China has always been dusty, and always will be. You could ban all the private cars and shut down all the industry and construction in all of north China for months before the Olympics and I'm sure the air would still be sub-par.
Pffefer - September 29, 2007 8:26 AM
I second Ben's observation on the cab drivers in Beijing vs. those in Shanghai. Beijing cab drivers are much more friendlier and talkative, while Shanghai drivers are more professional, I think. Maybe you guys did run into mostly dumb drivers, but I have had no problem whatsoever so far getting to where I needed to be just by telling the drivers where I wanted to go in either Beijing or Shanghai.
Is metropolitan Chicago really larger than any Chinese city? Even the biggest of them all, Chongqing?
Chris Carr - September 29, 2007 8:43 AM
Good post, Dan.
Caliboy - September 29, 2007 9:29 AM
Could the cabbie situation in Shanghai be a bit of racism? I'm a Chinese American (born in the US), but I have good enough mandarin that I don't obviously stick out as an American Born Chinese and living there for 2 years I only had positive experiences with Shanghai cabbies, including lots of great and interesting conversations. (Though once it rains, it's impossible to hail a cab).
Beijing cabbies on the other hand seem to either always be lost or pretending to be lost to jack up the fare.
China Law Blog - September 29, 2007 9:45 AM
Travis --
I guess Steve's fighting with cabbies is a sign of acceptance?
China Law Blog - September 29, 2007 9:48 AM
nh --
1. Perhaps, but I really think they just did not know. Shanghai can be a difficult city to walk in as streets sometimes just end.
9. Yes.
11. Increased law enforcement and legalisms is actually good for business.
China Law Blog - September 29, 2007 9:55 AM
Therese --
3. I believe it and I believe you are not alone in this.
11. Yes. It is exactly what would happen just about everywhere in the world.
12. I would think only the French could make fruitcake good. You should try the chocolate mooncakes.
China Law Blog - September 29, 2007 9:57 AM
Todd Platek --
You (and everyone else) had better believe this is happening. One of the conversations I kept having in China was how China wants to get rid of the marginal foreign businesses and it is stepping up efforts to do so. I see the labor law as one of the last straws. Foreign businesses with "off the book" employees are going to be taken down one by one with that one.
China Law Blog - September 29, 2007 9:58 AM
Ben --
I've had the exact opposite experience. Much better conversations with Shanghai cabbies than Beijing.
nanheyangrouchuan - September 29, 2007 9:59 AM
@Caliboy:
Beijing is one city I've never been to in China, but cabbies in Shanghai are purely after the money, I've been in cabs with locals while the cabbie meanders around side streets, enduring a storm of insults. There is a reason for the plastic bubble.
The cabs I've taken in Chongqing, Hangzhou, Guangzhou and Xian were always quick and the drivers were locals. The meters just run incredibly fast so when you get in and the initial fare is 5 RMB you think "woo hoo!" then watch it jump to 20 RMB 5 blocks later.
At least in Shanghai, and probably Beijing, cabbies rent the cars for the day and any money left over is theirs. So its not racism, its capitalism.
China Law Blog - September 29, 2007 9:59 AM
Luc --
You are so right. China is like everywhere else in that the smaller cities tend to be more easy going.
China Law Blog - September 29, 2007 10:00 AM
warwick --
Happy to oblige.
China Law Blog - September 29, 2007 10:00 AM
Todd Platek --
I don't smoke.
China Law Blog - September 29, 2007 10:01 AM
ChrisD --
Knock on wood. Life can be random.
China Law Blog - September 29, 2007 10:02 AM
Chris D --
Is there a crackdown going on against motorcycles though?
China Law Blog - September 29, 2007 10:03 AM
Ben Ross --
It's called standardized testing with no bribes.
China Law Blog - September 29, 2007 10:04 AM
nh --
Part of it is nationalism, part of it is increased legalization.
China Law Blog - September 29, 2007 10:06 AM
Jriglo --
Only problem I seem to encounter are flight delays.
China Law Blog - September 29, 2007 10:08 AM
Terry --
Problem was that our hotel was on Chaoyang park and the cabbies could not understand the "South" part.
At this point, I cannot see going after the Chinese companies as making much sense.
China Law Blog - September 29, 2007 10:10 AM
JL --
Yes, in 20 years there will be people to fill those condos. But they will be completely decrepit by then.
Reminds me of Houston during the boom years. My brother bought four rental houses there and on his last one, the bank wrote out the loan for $10,000 more than he had paid for the house. When my brother pointed this out, the bank told him not to worry, that the house would be worth $20,000 more within six months anyway. Then it all crashed.
China Law Blog - September 29, 2007 10:15 AM
Chris Waugh --
Stay well away from anything that attracts foreigners? You mean like the Marriott, Centro, Hatsune, and Suzie Wong's? That will be tough.
China Law Blog - September 29, 2007 10:15 AM
Pffefer --
Shanghai cabbies struck me as more professional than Beijing. Sorry.
China Law Blog - September 29, 2007 10:16 AM
Chris Carr --
Thanks.
China Law Blog - September 29, 2007 10:17 AM
Caliboy --
Are you saying my comments on Shanghai cabbies are racist or my difficulties in finding an empty cab show racism by the drivers? Either way, I think you are dead wrong.
Travis - September 29, 2007 12:29 PM
Yes, complete acceptance. Like the other comments have pointed out, cabbies in one city aren't unlike cabbies in any other city, and sometimes you just get a real moron. However, when Steve gets a moron in China, he's quite capable of telling the guy the situation and he's probably going to illuminate the cabbies' dim, milk-like perception of reality. Steve is that person that says exactly what I wish I would have said in any given situation if only I would have thought of it... and he does it in whatever language it needs to be done in.
Twofish - September 29, 2007 12:56 PM
11) means that China is adopting the US system of law and governance. Suppose your company bribes an official and get business. Who complains? Some public spirited individual.... Or the company that lost the contract?
The reason that things like the Foreign Corrupt Practices Act exists is *NOT* out of some altruistic desire to end corruption, it's because US companies want to save money and not get into bidding wars with each other. So if you break the FCPA and get a contract, the person who shows up at the US attorney's office is going to be either the person that lost the contract or a disgruntled employee that didn't get his share of the swag.
"Guanxi" and political payoffs are as much a part of the US system of law and governance as the Chinese system. The difference is that US has a system of laws, regulation, and informal understandings that helps regulate the system.
Is it better that in the US, to get something done, you hire lobbyists and lawyers and make political contributions rather than show up at the politician's doorstep with suitcases of cash? Absolutely. Because it makes the power game process more systematic and open, and it keeps things from getting too abusive.
The other thing is that most Chinese people hold foreign corporations to a higher standard because they believe the hype and think that foreign corporations are more honest and ethical than local ones. This is something that can be used as competitive advantage, and *is* being used as competitive advantage in finance.
The best run Chinese companies are trying to partner with foreign companies because they are trying to portray themselves as honest and ethical.
The nice thing about ethics and the law, is that it ethics, greed and self-interest are not opposites. The nice thing about the American financial system (which China is trying to copy) is that people structure the rules so that you follow the law, you do what is honest, and you end up making gobs and gobs of money doing it.
Twofish - September 29, 2007 1:11 PM
9) is incorrect. Banks don't own stocks.
Beijing does have a huge amount of control over the price of the stock market, and over the last few months it has tried to use that control to keep the stock market bubble limited. They aren't idiots and they know that if the bubble keeps going on, it will pop, and you will have millions of angry investors so they are trying to limit the bubble so that it doesn't pop suddenly.
As far as real estate, from a financial point of view, things look OK. The fact that people are holding lots of empty real estate is irrelevant. What is relevant is whether or not people who hold the empty condos are making payments on their mortgage. Suppose that the real estate market pops and the price of condos goes to zero. As long as the buyer is still paying the mortgage, it doesn't matter to the bank.
Where you get into problems is if the buyer plans to flip the condo and does not have the money to keep paying the mortgage, or if the building *is* occupied and mortgage payments are being made, but can't be if the tenant moves out.
Also the Chinese urban real estate market is weird because most urban people in China got a huge windfall in the late 1990s when the government signed over title to apartments from the state-owned enterprise over to the holder.
xiaolongxiami - September 29, 2007 1:16 PM
Okay, I'm not well-versed in the numbers behind the real estate market, but can someone tell me how there could be anything but a fairly massive meltdown when the glut of houses finally comes crashing down?
I've heard people say that the market will go through a small to medium correction, but am I way off in guessing the "correction", given the massive amount of aparatments being sold on speculation, would be huge?
It has been over three years since I was anywhere besides Sh. but even in provincial capitals like Jinan the amount of excess housing was... impressive, for lack of a better word.
haoqi xiansheng
David Scott Lewis - September 29, 2007 5:00 PM
Great post, Dan. However, I'm extremely disappointed that you didn't contact me during your jaunt to QD. I've had the pleasure of getting together with Steve a couple of times, but not with you. BTW, kudos on the blog award. At this point, CLB is one of the few I read. (Frankly, I'm tired of most of the China blogs.)
Regarding SH cabs, the worst experience I had was at SHA when the cab in the outermost lane tried to get me for an off-the-meter fare. Always avoid the cabs in the outer lanes at SHA. I've also heard a lot of stories, like flat rates of RMB 100 during a storm just to go a few miles, but never experienced this myself.
Regarding BJ cabbies, if they were any dumber, they wouldn't qualify as life forms. Just plain stupid. A guy raised in BJ (and we all know this can include the suburbs 50 miles away) who can't get to Beida or Tsinghua? Lots of morons like this. True, SH cabbies don't necessarily chat, but they seem to know the city. (Maybe I've been lucky.) In BJ, after living there for 1 1/2 years, their cabbies really are as dumb as wood.
Pollution in Beijing? Really? Not according to the CEO of I.T. United. Yes, it's awful. One reason for 1 1/2 years in BJ and the other 2 1/2 in Qingdao. BJ is more fun; QD is more livable. Besides, the "attractions" at the Feeling Club can match anything in BJ ... but be careful so you don't piss off any local guys. (This seems like more of an issue at Babyface, but it might really be a coin toss.)
Airline ticket: Absolutely true!! @Chris was lucky. But it's usually more of a problem on international flights, less so on domestic flights. And in the case of international flights, especially to the States, with DHS/TSA regulations, I can understand why it's a potential problem. The warning is to check your ticket when you get it, make sure (ABSOLUTELY sure) that they get your last name, first name in the correct order. LEWIS/DAVID works; DAVID/LEWIS does NOT. I've had this problem several times.
Beer and wine. Now this is good one. They drink warm beer and put ice cubes in their red wine. Go figure. TIC -- This Is China!! True, red wine shouldn't necessarily be at room temperature, but ice cubes? Cold red wine doesn't cut it. Neither does warm beer.
Of course, the stock market was undervalued a few years ago and is probably overvalued now. The Chinese need a place to gamble and real estate is out of control. The stock market provides a nice alternative. For this reason, the bubble may last a while until there is another alternative. The day trading at work part is funny. A lot of guys day trade at work; women are on MSN or QQ with their friends and 50 guys chasing them (even the ugly ones).
Only 20,000 empty condos in QD? ;-) Yes, it's totally absurd. Although QD is a much nicer place to live than BJ, I can't see where the economic growth is going to come from. True, the new Provincial eqivalent to a Governor is a great catch for SD, but can he really help the QD economy grow to match real estate prices? Another observation point: Ayis are now getting 2x what they were getting 3 years ago, more than what recent college grads from QD University make!! Crazy stuff. And the ayis are getting worse and worse. Lazy, uneducated, worthless slime. (I had a great ayi, but I lost her to wage inflation.) Something's wrong when a maid can make more money than a nurse or a college graduate with a four year degree.
Regarding the lawyers preying on foreign companies, unless a foreign firm brings new technology to China or can employ a gazillion people, expect a lot of problems ... more than can often be imagined. Selling into China: Forget it. You're too late. Using China as a manufacturing base: In the West, fine; in the East, forget it -- you're not necessarily wanted unless you can transfer (i.e., giveaway) technology.
Mooncake festival. In Long Beach this past week for a solar energy show, so I missed it. But it's a favorite for many Chinese. Personally, I don't like mooncakes. Yet, it might be the most fun of all the Chinese festivals. I give it two thumbs up. The October "Independence Week" holiday: Another nightmare; the infrastructure has trouble supporting hundreds of millions of mobile Chinese.
Dan, I'm holding you to break bread with me next time you're here in QD. Ditto for Steve. (And, Steve, I want to meet -- well, you know what I mean.)
Twofish - September 29, 2007 9:21 PM
xiaolongxiami: Okay, I'm not well-versed in the numbers behind the real estate market, but can someone tell me how there could be anything but a fairly massive meltdown when the glut of houses finally comes crashing down?
What happens in real estate crashes is often not that price drops but rather that houses become impossible to sell.
The question is to what extent problems in the real estate market gets transmitted to banks, and I'm somewhat optimistic that they won't cause the banks to fail. Once banks have problems then you really have a bad situation, because you end up with bank problems -> bad economy -> more bank problems.
The standard ways that banks fail in real estate busts don't seem to apply in this case. If the banks owned real estate, there would be big problems. If the banks made long term loans to real estate developers, there would be big problems. If the borrower of the loans can't make the mortgage payments, there would be big problems. None of these appear to be the case.
China Law Blog - September 29, 2007 9:53 PM
Travis --
That's Steve.
Jriglo - September 29, 2007 11:54 PM
David Lewis
I haven’t had any problems with international flights just domestic flights; the first thing they look at is my passport and then my ticket. There are only so many letters that they can fit on you’re ticket, my name is too long to fit on a ticket. I am assuming that David Lewis; and not David Scott Lewis is written in you’re passport. Try Joseph Anthony Riglo and see what happens; my name will not fit on any ticket. I check every one of my tickets but it doesn’t matter, if Anthony isn’t on my ticket I have to argue at the check in counter. Twice I haven’t been allowed to board a plane here. You might not have this problem in Shanghai or Beijing; but try boarding a plane in the middle of no where.
Xi Lei - September 30, 2007 6:46 AM
I spent my first night in Beijing in jail after my colleague get too angry at a cab driver who tried to rip him off. 5 years later, speaking fluent mandarin, they still try. Oh, and Guangzhou cab drivers are the worst ever!!
China Law Blog - September 30, 2007 7:28 AM
TwoFish --
I completely agree.
China Law Blog - September 30, 2007 7:30 AM
TwoFish (ii) --
I never said the banks owned stock.
What makes you so sure these empty condos have owners?
China Law Blog - September 30, 2007 7:31 AM
xiaolongxiami --
Good question. Anyone?
China Law Blog - September 30, 2007 7:44 AM
David Scott Lewis --
1. We arrived Qingdao from Shanghai at around 4 pm. Went to Crowne Plaza Hotel and showered up. Went to meet with lawyers at Wincon with whom we are working on some pending litigation. Then we went to dinner with the Wincon lawyers and then went back to hotel at 10:30 pm and went to bed. Returned to Shanghai next morning on a 9:15 am flight so we could make it on time to a 2 pm meeting. The Qingdao trip got all messed up due to a confusion on dates, etc., so we were lucky even to be able to do a quick fly-in. So that is why we did not look you up while there. But, I promise I will the next time.
2. Thanks for all the kudos. Much appreciated.
3. Oh yeah, I forgot even to mention what a nightmare it is waiting in line for cabs at the airport. We would avoid that by simply walking the five minutes to the street.
4. We must have had the same BJ cabbies.
5. QD is more livable than BJ.
6. Thanks for confirming the need to get one's name absolutely correct on airline tickets.
7. All of the beer I had this trip was rightously cold. Cold Qingdao is damn good on a hot day.
8. Interesting comments re stock and real estate markets. Will government prevent a crash? Can government prevent a crash?
9. What are Ayis getting in QD these days? In Shanghai?
10. I agree with you that unless the "foreign firm brings new technology to China or can employ a gazillion people, expect a lot of problems ... more than can often be imagined." Funny thing is that all the lawyers and good consultants in China know this, but the small business people keep insisting that the government "needs" them and "loves" them and would never do anything to make them leave. Cognitive dissonance.
11. "Selling into China: Forget it. You're too late." I completely disagree. It depends on the product.
12. "Using China as a manufacturing base: In the West, fine; in the East, forget it -- you're not necessarily wanted unless you can transfer (i.e., giveaway) technology." That's too strong. China very much wants high end, none to low polluting, industry.
13. Mooncake festival. Try the chocolate. They are good.
14. Next time I'm in Qingdao, we will break bread, drink warm beer, and red wine with ice cubes.
China Law Blog - September 30, 2007 7:46 AM
Twofish (iii) --
I like your analysis.
China Law Blog - September 30, 2007 7:48 AM
Jriglo --
The client who told me of this problem lives and works in the middle of nowhere and he has this problem on domestic flights.
China Law Blog - September 30, 2007 7:49 AM
Xi Lei --
Wow.
Eric Wang - September 30, 2007 12:15 PM
Read all your comments. Suprised to see so many same experiences with the cab drivers both in BJ and SH, even I am a Chinese. But to a great extent, that is exactly where the business opportunites are in China.....( because they do not know how and what to do better, that's why someone has to teach them to be better). By the way, Chinese lawyers in different cities are the same as the taxi drivers in differnt cities..... be cautious and clear on what directions you are asking for, or not asking for.....
China Law Blog - September 30, 2007 9:20 PM
Eric Wang --
Thanks for checking in. The good news is the Chinese government recognizes Chinese companies, in general, need to improve their service and that is one of the things it hopes to gain from the admittance of foreign companies.
Twofish - October 1, 2007 4:54 AM
In a system of tradeable land use rights, everything has to have an owner. Now it is possible that that owner is the real estate development company which is unable to unload the property, but that's still an owner.
Ron Efron - October 1, 2007 6:55 AM
Dan / Steve,
Forget taxis. Haven't you learned to stay away from them? when doing business in Beijing or Shanghai, you should ALWAYS rent a car and driver for the day. Cost are very reasonable. Call me if you need help with this.
Ron Efron
zuraffo - October 4, 2007 3:58 AM
Am quite sure the China bubble will pop some day but it will do so at a time of the PRC government choosing and in a way which will not destabilized the fundamentals. Certain speculators will lose big time.
Quite sure those empty properties have owners but Beijing might not necessary want to see the current owner make money out of those buildings at this moment.