Just arrived Seoul after a quasi-whirlwind China tour. Started in Shanghai, then went to Beijing and then to Qingdao. It had been around four months since I was in China last, and as is my habit, I am going to toss out my random thoughts from my trip.
Here is what I saw/thought.
1. Shanghai, Beijing and Qingdao all seem to be booming. However, those who are on the fringes of the boom, seem to be getting angrier by the day. in particular, Beijing cab drivers have gone from being the surliest in the world to bordering on being serial killers. My favorite was the one who told us to f–k our mothers after HE missed our hotel and then drove into a dead-end street after we told him to circle back. It’s tough living on $300 a month in a very expensive city. #7 below also does not help much in relieving their stress.
2. Three people (all foreigners) told me they have pretty much stopped eating out because they are afraid of the food. As one well-known China lawyer told me, “if I buy my own food, i have taken away one more potential trouble spot.” On the flip side, at least a dozen people said there’s no place they would rather be. China is where “everything” is happening. And fast.
3. I stayed at a brand new Crowne Plaza in Beijing. Though nominally an American hotel, it is very Chinese. One day, I remarked to Steve how the risk of staying in a brand new hotel is that the whole thing might just collapse on us because it has yet to stand the test of time. Very next day, there were sticks propping up a couple of mirror tiles on the ceiling by the elevator. After that, I was perpetually worried about the ones without the sticks.
4. One night a bunch of us had dinner at South Silk Road restaurant. The restaurant, owned by Beijing artist Fang Lijun, was gorgeous, with his paintings festooned everywhere. The food was excellent, as was the service. We then crossed the street and met some more people for drinks at the Pavillion, a high-end bar/restaurant. We were sitting outside when we all of a sudden started smelling something and then realized that a truck was going by spraying massive amounts of pesticide. We ran inside. I mention all this because Beijing does remain a city of contrasts. High end restaurants but spraying of pesticides at 9 at night without a care for the countless people in the path.
5. China does not have a housing market; it has a speculative market made up of people who buy property strictly as investments. Think of the condos as gold, not housing. A decent (not great) condo in Qingdao now costs around $500,000 but rents for only around $500 a month. Everyone said that half the condos in Qingdao are vacant, mostly bought by investors who don’t live in them. More and more are being built.
6. There were a number of important government type buildings that were 80-90% finished but then construction stopped. The explanation given to me by the Chinese lawyers was that they never made much sense in the first place, other than as vehicles for enriching bureaucrats’ pockets.
7. Man but I had some amazingly good food. All three cities are getting increasingly diverse and sophisticated in their offerings.
8. Beijing has more $300,000+ cars than any city in the world, I think. It is a good thing China’s peasants do not go to Beijing very often (other than as cab drivers). Not very subtle.
9. Had many discussions with Chinese lawyers. They are very frustrated with China’s court system. Their complaints are that there is little predictability and that the judges are random. Randomness/lack of caring/lack of scholarship were the big complaints. Why bother killing yourself on a brief and a hearing when the judges won’t read it and don’t really care?
10. China’s Internet was worse than it has been within the last five years. My old standby VPNs did not work to allow me to watch US TV shows or to get on Facebook. Again and again, people (both Chinese and non-Chinese) talked of how Beijing is doing what it can to try to stay ahead of the people and it is doing so with both carrots and sticks. The carrots are things like more accessible health care. The sticks are obvious.
11. Can China become a great economic power without massive improvements in the above, or will it get to a Thailand-like prosperity and then peter out? Or will it change?
12. While in Beijing I did a TV interview for a Hong Kong program on how American manufacturers are leaving China. I mentioned that as my firms’ manufacturing business declines, our creative services business is growing and more than taking up the slack. Five years ago, a large part of my firm’s business was in the Shanghai-Suzhou area and consisted mostly of manufacturing companies that were headquartered there. Five years ago, we did almost no business in Beijing. Beijing was for government and we were not very involved with that. Now, we do more business in Beijing than anywhere else. By far. Beijing has become the center for software, gaming, film, media, photography, sports and entertainment and various other creative service businesses and that is where we are seeing massive growth. We recently brought on a new lawyer (Mathew Alderson) whose practice focuses on these industries so I am sure that is clouding my view a bit, but at the same time, one of the reasons we brought Mathew on board was to handle the increasing number of such clients and to give me a foil for my Australia jokes. Are you seeing the same thing?
13. I have traveled all over Asia, North America, Europe and much of Latin America, and in no country of which I have been other than China do the people stand up on the airplane too early when landing and then try to push their way through. Am I making too much of this or should this be instructive on how business is done there?
14. I attended a talk given by co-blogger Steve Dickinson on how to protect your IP in China. The talk was put on by the China Helpdesk (a superb source for China IP info) and was geared a bit towards those in the creative industries. Steve mentioned how in virtually every instance where he has confronted IP and trade secret theft, it has germinated from an ex-employee or a customer. As Steve put it, it is almost always your “good friend who you have known for 17 years.” Two Chinese lawyers in attendance told Steve that of course that would be the case. At least one Westerner expressed surprise at this.
15. Didn’t get a cough from Beijing this time. Has it really gotten better?
16. Went by a number of massive buildings that were 80-90% finished when construction stopped. Best explanation I got for those was that the skimming had already been taken out of them, so no need to continue. Developer borrows $25 million, skims $5 million off the top and then hires his cronies to build and skims another $3-5 million off that and then why even bother continuing? This seems to happen most often with quasi-government type buildings.
Fire away people. What do you think?