An old friend from Vietnam in Beijing

On the occasion of the visit of the Vietnamese PM to China, another happy opportunity to see again an old friend (actually he is still a young man for me!) from from Hanoi. We know each other since 1990 and worked together when I was opening the market for Alcatel in Vietnam (that was quite an adventure!).
He surprised us last Christmas Eve by paying us an unexpected visit to our Beijing home. We are now in debt and will have to visit Hanoi, I know the city has changed tremendously since I worked there.
The visit of the PM was very successful and commercial relations with China should develop strongly. We might actually see what we can do there.

Mr. Tran loves photography, music and song writing. He brought one of his pictures as a gift. On Christmas he passed me his DVD of Vietnamese music, with the poems he wrote for it.


Only at the end of our (quick) lunch did I learn he was promoted… Now Minister of Industry and Trade of Vietnam, Mr. Tran Tuan Anh.
See you in Hanoi my friend!

Other surprising Apple products

Chinese love to copy, steal IPR, copy, whatever.
Just sometimes it looks a bit weird.
The lighter obviously does not intend to promote the iPhone but to look more “appealing”.

However sitting on an iToilet seat is a bit farfetched, isn’t it?
I don’t believe Apple will put a lawyer on this. But why not invent an Apple iToilet? Japanese and Chinese might go for it. But it needs WI-FI of course.

European Chamber Position Paper: disappointment

The latest Position Paper released by the European Chamber (EUCCC) confirms the general feeling of the business community: disappointment and unhappiness. And for good reasons.

The SCMP produced a pretty good analysis:
‘Disappointed’ EU businesses urge prompt reform and opening of market in China
SCMP article

Some excerpts:

The EUCCC has urged Beijing not to delay to deliver on promises it made years ago to create a level playing field for European businesses when their Chinese rivals have few limits on their investment in EU markets.

The business lobby group expressed, once again, its disappointment about stalled reforms that were announced in November 2012. It is not the first time foreign business associations have criticized the slower-than-expected process of reforming unproductive state firms and widening market access, or voiced concern about an increasingly hostile business environment and rising protectionism alongside sluggish growth in China.

“Unfortunately, the reform agenda still often appears to be confused, uncoordinated and subject to intense resistance from special interest groups and local governments,” the report said.
“In short, the decision [on economic reform] has yet to deliver on its promises, for European and private Chinese business alike. As it initially raised expectations quite significantly, this failure to follow through has contributed to rising level of pessimism.

Ties between Beijing and Brussels were challenged recently by a dispute on rising exports of cheap Chinese products in overcapacity sectors in EU markets. EU members said the flood of Chinese products threatened local production and put local employment at risk. The bloc also launched anti-dumping investigations and imposed high punitive tariffs on Chinese exports, especially on industrial products.

Beijing is unhappy with the EU connecting China’s overcapacity to a decision on whether and how to recognize China as a market economy, a status which is largely shrugged off by many economists in China but would be deemed a political triumph for Beijing.

In the report, the EU chamber also called for “reciprocity” in bilateral investment between EU and Chinese companies.
“It is an increasingly serious concern that reciprocal market access has yet to be fully extended to European business in China,” the report, adding that Chinese companies experience few limitations on buying European companies.

It also noted that 70% of the Chinese investment that flew into Europe last year came from SOE. Many of those investments were in advanced manufacturing and clean technology, which are priorities of China’s 13th five-year plan.
“It is therefore valid to question whether measures will be taken to close off participation by European business in China’s domestic market once their new technologies have been acquired by Chinese investors.”

Another good comment is from the Financial Times, see:
1 September 2016 – Europe lobby warns on China market barriers
Tom Mitchell and Christian Shepherd in Beijing
Financial Times article

Some excerpts:

“There is a small, rocky pathway to China [for foreign investors] and an autobahn from China to Europe,” said Jörg Wuttke, head of the EUCCC. “The increasing wave of Chinese investment into Europe, while European investment in China drops, highlights the lack of reciprocal market access.”
“It is almost impossible to imagine in the current climate that a European company would be permitted to make a significant investment in an equally prominent Chinese company with advanced technological capabilities,” the chamber said.

When the Australian government recently rejected a Chinese bid for its electricity grid by China State Grid on national security grounds, some foreign executives noted a similar sale in China to overseas investors would not be permitted by Beijing.
The Chinese government has not significantly reduced restrictions on foreign investors since it joined the World Trade Organization 15 years ago.

“It is no longer clear that reform is still a top priority,” Mr. Wuttke said, adding that “the current lack of reciprocity in market access is politically unsustainable”.

Many Chinese investments in Europe, such as Geely’s acquisition of Swedish carmaker Volvo in 2010, have been successful, saving thousands of local jobs.
But as attention has turned this year to pressure on EU and US steel mills from cheap Chinese exports, western governments’ patience with the barriers confronting foreign investors in China is wearing thin.

I can only agree with those complaints.
The main issues are lack of reciprocity, increasingly difficult market access, empty promises, delays in tackling overproduction and so on. China is “unhappy” the EU hesitates to grant Market Economy Status but many EU members feel China has failed to do its part.
Overall the mood in the business community is rather black than white. While some opportunities do still exist, many industries face a tide of nationalism, closed markets and unfair treatment.

See here more details provided by the EUCCC. Worth reading…
Executive_Summary_2016_2017[English Version]
Position_Paper_2016_2017_Launch_PPT[English Version]

PPP in China: long way to go

I think I can say I have been a pioneer in Beijing trying to launch the Olympic projects under a PPP scheme (Public Private Partnership). After studying how other countries successfully used PPP, I launched the big tenders (Bird’s Nest and others) under a PPP approach. While the Prequalification was a real success we were then hit with the lawyers who said we could not follow the PPP because of the new tendering laws. So, PPP was dead, virtually, and we tried to carry out the projects in a “creative” way. Some lawyers tried to convince me “China has PPP” but our discussion lasted 1 minute only, after I asked one question; the only real PPP project ever in China was the power plant Laibin B.

Recently China officially launched a series of “PPP projects”. While I do not agree with the approach and the format is not really PPP, it seemed like a nice try.
Well, the results are not good.

“UPDATE 1-China says to further pave way for private investors in infrastructure projects”
Reuters article

So far, fewer than one-quarter of projects announced by the government as PPPs have found private investors, official data shows.
Investors had signed up for 619 of 2,531 projects with a total value of 1 trillion yuan through the end of July 2016 according to the NDRC.

Reuters also pointed out in another article that the government trying to woo private capital has been a flop. Since March 2015 the NDRC has raised more than half of its target of 3.5 trillion RMB for PPP projects for bridges, roads, schools, hospitals. But over 90% comes from SOE according to a study by North Square Blue Oak. A real embarrassment for the government as it failed to attract the right private investors and SOE have been finding ways to monopolize the funding.

See also: “China’s private infrastructure firms face unexpected competition”
Yahoo Finance article

Some statements say it all:
“The government is willing to work with government firms, but co-operation with private companies is a shambles. None of the projects make financial sense.”

My experience showed most government officials (and not only in China) do not understand at all what is PPP. Explains why many projects fail as private companies do not see an interest.
As a former long-time chair of the European Chamber’s Working Group on Public procurement I kept a watch on PPP in China.


Biking and Chinese cultural conflict

On 29 August 2016 I was invited for a debate in Yenching Academy, in Beida (as we call it in Chinese). The students were all Chinese, the foreign students were not available.
The theme was Beijing air pollution. I gave a short introduction of my book “Toxic Capitalism”, the evolution of air pollution in Beijing and what we can do about it. Indeed, as I officially stated to the Beijing Government, traffic is a serious contributor to the air pollution and it is made worse by bad behavior of the drivers and the inaction of the traffic police.

See here the intro of the Academy from Yenching Academy

The Yenching Academy of Peking University builds bridges between China and the rest of the world through an interdisciplinary master’s program in China Studies for outstanding graduates from all over the globe. This initiative brings together young people who show promise to lead and innovate in their fields in an intensive learning environment where they can explore China and its role in the world – past, present, and future. The Academy aims to thereby shape a new generation of global citizens with a nuanced understanding of China and its role in the world.

Founded on the ideal of fostering global connections and dialogue, the Yenching Academy is a fully funded residential program offering a wide array of interdisciplinary courses on China within broadly defined fields of the Humanities and Social Sciences. Working closely with their academic mentors, Yenching Scholars are granted the flexibility to create their own study paths by choosing from six academic concentrations and a variety of extracurricular activities. Studying at the Academy represents a unique opportunity not only for intercultural and academic exchange, but also for personal and professional development.

Two Yenching scholars also gave a short intro for the debate, Ugne (Lithuania) and Ben (UK).

One of the main issues we have with using a bike instead of a car is the Chinese cultural and social “loss of face”. While in European countries even ministers go to work on their bike, Chinese object: it is a loss of face to go to a 5-star hotel or a business meeting on a bike. Furthermore girls who are looking for a husband have stringent requirements: he needs a good position, a house and a car. If not, bad luck.

Some in the audience said the bike trip could make too tired or make one sweat too much. As for myself I explained I have no problem to bike in the cold, the hot, rain or snow. It is a matter of being prepared (put the suit jacket and tie in a plastic bag!). Of course the poor biking lanes and dangerous car drivers are an issue indeed.
In the end, we all have to contribute for a better environment, it requires education, change of mindset and preparation.

I bike every day and just look at the enormous traffic jams and drivers looking for a parking spot.
As for rain protection, sadly to say, I had to buy the outfit in … USA, as Beijing rain caps are too badly made.
How did I go to Beida? It is the other side of Beijing. Well, simple: I jump on my bike to the subway station and then use the subway. The city has made enormous progress in building more subways and installing 68,000 public rental bicycles.