E&Y was forced to retract their research because this was a particularly egregious example of double-talk. The audit arm of E&Y had just finished their contract work for one of the Chinese banks planning an IPO and come up with one set of calculations. The sell side came up with a totally different set of numbers. This wasn’t about Beijing numbers versus Western numbers; this was about E&Y’s own internal consistency.
Any sort of “future” NPL calculation by definition has to be a forecast. The nature of lending in China changes by the year, and there’s simply no reliable historical data that can be used to calculate this NPL performance. Real estate lending, for example, has grown in triple-digits over the past 2-3 years. How is anyone supposed to accurately evaluate default rates in a novel industry that has ramped up from almost zero to trillions in less than a decade? That’s not an exaggeration, by the way… outstanding mortgage debt really was nearly zero in 1995, and now has surpassed $2 trillion+.
As far as your earlier post, Lord Lucan, I’m still as of yet unclear what point you’re trying to make, other than your utter disdain for the Bank of China and the WSJ. I’m not especially loyal to the WSJ, although I do subscribe to it. I also read the Economist (grudgingly) and the FT. There are certainly a myriad of perfectly legitimate reasons to doubt the financial legitimacy of the BOC’s valuation, many of which have been raised by any number of financial publications, but I have yet to see anyone in the “financial press” (which you introduced into this discussion) support your position that the successful IPO of the BOC was a result of political manipulation. And most definitely, I haven’t seen anyone mention the “note-issuance” non-issue (pun somewhat intended).
[quote]Find me one story written by any journalist which provides any analysis of any banking purchase by a foreign company of any Chinese bank.
[/quote]
I’m not at all clear what you’re asking. Are you rhetorically asking the question in order to suggest that the financial press (other than the Economist) have not written articles about the foreign equity deals that Chinese banks have been putting together over the past year? Or are you actually asking for references so you can study the depth of this analysis?
Oh, maybe I’m starting to understand you now. Perhaps you are suggesting that foreign investors lack your special insight into the Chinese banking system, and thus their fools gold pursuit of the recent BOC IPO. These articles might disabuse you of that mindset. There’s clearly plenty of informed pessimism about China’s BOC prospects.
I’m not even sure why we stay on the “financial press” tangent. You’re the one that brought up the term in defense of your position, namely that the BOC IPO has been referred to as “international aid”. And now, you appear to have turned this thread into a personal platform for an all-around assault on the financial press (other than the Economist). I don’t have any interest in defending the press, so let me just ask you this…
… other than Lord Lucan, what other authoritative source has referred to the BOC IPO as “international aid”?
… other than Lord Lucan, what other authoritative source has suggested that the BOC IPO is related to the BOC’s position as a note-issuing bank in Hong Kong?
… and what valuation does Lord Lucan, in his statistical mastery of the challenges facing the BOC, think appropriate for this IPO? If Lord Lucan believes that the $100b valuation for the BOC is inaccurate and the international investor community has been misled… what is the proper valuation? Is it $50b? Is it $1b? Is it $10.37 and a pack of chewing gum?
And you think this is unusual, right? The most important thing to grasp here of course is that the numbers were produced for different purposes, one set including forecasts, the other set, not. This sounds very familiar. Didn’t I just say that?
Anyway, not only is it not unusual for a firm to produce two different estimates of NPLs for two different purposes, the same securities firm can have a range of different forecasts and recommendations for the same stock depending on who the recommendations are for or whether, say, they are based on technical or fundamental analysis. All very normal. What is not normal here is that E&Y retracted the entire figures after Beijing’s outburst. Well, toadying up to China is of course normal, and E&Y must have been mad to release those figures without putting them to the CCP first. Especially given the IPO roadshow was starting at the same time. Madness.
Hmmm. Fascinating. I’m not sure you’re going to answer my question, are you?
Ah, the old pretend not to understand the question gambit. I’m afraid you’re going to have to do better than that!
I have yet to find my assertion that “the successful IPO of the BOC was a result of political manipulation” as I did not believe that it was and would not have made such a statement. Foreign banks are buying Chinese banks because they feel that they have to have some exposure to Chinese banking, even if they have no idea what they’re buying. Simple as that. That the Chinese banks are just part of the Chinese financial system which is firmly in the control of the CCP, then I suppose you could argue everything is political. I don’t know of any country where the sale of state banks is not a political issue and where the sale is not very carefully manipulated by the government/ruling authority.
[quote=“cctang”][quote]Find me one story written by any journalist which provides any analysis of any banking purchase by a foreign company of any Chinese bank.
[/quote]
I’m not at all clear what you’re asking. [/quote]
Hands up who else doesn’t understand this question.
[quote=“cctang”]Are you rhetorically asking the question in order to suggest that the financial press (other than the Economist) have not written articles about the foreign equity deals that Chinese banks have been putting together over the past year? Or are you actually asking for references so you can study the depth of this analysis?
Oh, maybe I’m starting to understand you now. Perhaps you are suggesting that foreign investors …[/quote]
Who mentioned “foreign investors”? I was talking about journalists. Foreign investors don’t get their insights into China from the press! You rather patronisingly advised me to “read the WSJ” assuming, as you appear to, that I need to read a newspaper in order to “learn” about banking and that when I have caught up with your level of knowledge, you will engage me in debate. I ask you to show me examples of analysis in the foreign press that shows a deep level of understanding of (a) banking (b) China (c) banking in China (d) international banking M&A involving Chinese banks (e) specific measurement of NPLs and banking earnings growth rates and sources of operating income and all the other stuff banks look for when valuing other banks. This is because I have not been able to find any.
You see now you’re laying on the sarcasm simply because someone called you on the financial shit. But yet you feel qualified to tell me to go and read a newspaper as if I had just come down to earth from outer space in a bubble. If you can’t walk the walk, don’t talk the talk. Now, some educational material.
Yeah, well, whatever. Standard stuff, the banks are rubbish but they might end up being really good. Should have pointed out the problem that if a foreign bank actually gained sufficient control of a bank to really improve operations the bank would end up being classified as “foreign” making the whole venture pointless. This regulation (25%, I believe) will have to change, but don’t hold your breath. Obviously if it does change then a foreign bank does not need to buy a rubbish local bank to do local business, and should just do what HSBC appears to have done, which is buy a little bank which has lots of branches which can be used to advertise HSBC products at least and be turned into HSBC branches in a best-case scenario. Or the Citibank consortium, which is looking at getting almost all of a local bank in anticipation of the law being changed, by which time it hopes to have turned its little local bank into a half decent bank, given that it has control of the board. Those that have bought the other banks have neither control nor the makings of a half-decent bank, but it is more expensive to stay away than to get one’s hands dirty. That’s the point.
This is just an advert for McKinsey in the FT. I know McKinsey are better than this article would suggest, so it’s not fair to comment on it, as you don’t get their real research for free.
This FEER article should be good. However, it falls into the trap of applying Western economic ideas to China (because China is now a capitalist country now you see), and makes some strange claims such as: “China’s financial system does an outstanding job of mobilizing savings.” and “Speeding the move to a fully market-based financial system will relieve, rather than exacerbate, social tensions in the long run.” without providing any supporting arguments.
“…such a shift will stimulate job creation in the strongest areas of China’s economy and increase tax revenues to fund social programs.”
Job creation in the strongest areas of the economy is not a problem, job and wealth creation in the other 85% of China is. Unsurprisingly, the CCP has fed gullible Westerners and its own population the story that China’s problems are in fact that things are too good, and we need to slow that ragingly successful economy down a bit. Peasants don’t buy that, of course, and the nouveau rich and sons of high-ranking cadres (not you understand a mutually exclusive group) know full well that this is like a pride of lions voting to become vegetarian. And look how successful it has been! Only a few months after the government announced its cooling measures, lo and behold the government announced its cooling measures had been successful, and house price growth in Shanghai has officially fallen from whatever made-up figure it was before the policies, to a new and much lower made-up figure at the moment. As someone who actually owns property in Shanghai, I have to inform any gullible Westerners that actually believe this nonsense the CCP puts out that the housing market in Shanghai is rip-roaring away like blue fuck and I’d get stuck in with a vengeance if I were you. I am predicting a four-fold increase in the next five years on my little investment in the suburbs where a flat is very cheap indeed. (There is a company of 50 Irish salesmen in Shanghai flogging away at property to the rich Irish investor, and if you can get something cheap – take it. We can start another thread if you like)
A better way to maximise tax receipts is to increase the efficiency of collection. I am amused also at the assumption any increase in tax revenues is “to fund social programs”. Interfering with the way taxes are levied and collected in the provinces will certainly mean provincial cadres’ retirement funds will have to be financed from alternative sources, and I suppose that making up that shortfall would be a “social program” of sorts.
Lots of references to GDP and productivity – more fantasy numbers. The article is based on the premise that if the Chinese banking system were more like the Western system everything would be OK, and Western banks can teach the Chinese how to lend money. I have worked with Western banks in China, mainly doing loan documentation reviews and JV formation due diligence. The article refers to the problem of loans without collateral. The reason loans are given out without collateral (other than government-directed lending) is that collateral is worthless in China and there is no way to sue through the courts to make use of collateral-backed loans. One example is of a certain large English bank that lent US$5mn to the Fa Ren (legally responsible person) of a company in China on the basis of certain company documentation which was all genuine. This person disappeared with the money. He was caught by the police, who let him go. This is by no means unusual. Normally, it is merely a case of a companies assets having been valued at a ridiculous amount, only to find out that the land use right certificate is not valid, or being valid, was given by a person with no authority to do so who disappears. NPLs tend to be a politico-legal problem making Western credit risk scoring irrelevant in many cases. Consumer lending would be easier, except that using Western risk scoring methods would not result in many loans due to the problems of low income, lack of assets, legal residence, inability to check current indebtedness, and obscurity of income sources.
Problems with bonds are similar to problems with equity. An inability to value a company means an inability to gauge how likely it is to be able to repay its bond. Bond defaults usually end up in bankruptcy, in China that means back to the courts, meaning all is lost. Full marks to the FEER (well, McKinsey, as the FEER can’t afford and doesn’t want proper financial journos any more) for mentioning the cost of capital, and even hinting at the CAPM. However, guessing at how much capital costs for any given firm in China is hard enough if it’s a straightforward strongly growing manufacturing company in the black, working out aggregates for industries, or the country as a whole is almost pointless. Of course it has to be done, but there is no need to have faith in the results of any such calculation.
Surprisingly good article. Actually getting down to the real issue: Politics. That Beijing imposes ridiculous targets for unprofitable projects on provincial governments, and now seems keen to take away the only way they can finance them: directed lending from regional branches of state banks. Getting quotes from van der Kamp and Jim Walker, people who know what they’re talking about, and not merely applying first-year Economics 101 to China by changing references to whatever other country you wrote about last week into references to China by using Global Replace. Thanks for this one.
Same old. Nothing new there. ironically Citigroup and HSBC are not “suddenly clambering all over each other to buy stakes in China’s troubled banks”. They are the two that stand out as being able to afford anything they want, but have taken two markedly different approaches, which in turn are different from the approaches taken buy all the other banks (buy anything quickly).
[quote=“cctang”]I’m not even sure why we stay on the “financial press” tangent. You’re the one that brought up the term in defense of your position, namely that the BOC IPO has been referred to as “international aid”. And now, you appear to have turned this thread into a personal platform for an all-around assault on the financial press (other than the Economist). I don’t have any interest in defending the press, so let me just ask you this…
… other than Lord Lucan, what other authoritative source has referred to the BOC IPO as “international aid”?
… other than Lord Lucan, what other authoritative source has suggested that the BOC IPO is related to the BOC’s position as a note-issuing bank in Hong Kong?
… and what valuation does Lord Lucan, in his statistical mastery of the challenges facing the BOC, think appropriate for this IPO? If Lord Lucan believes that the $100b valuation for the BOC is inaccurate and the international investor community has been misled… what is the proper valuation? Is it $50b? Is it $1b? Is it $10.37 and a pack of chewing gum?[/quote]
I notice you have changed this part of your post, [was this added in from another post? It just suddenly appeared] but still have not answered any of my questions, and instead have asked a lot of entirely irrelevant questions. Your last one is interesting. The answer is: the market price is correct. Any equity is worth as much as someone is willing to pay for it. To even pose that question shows a fundamental misunderstanding of the way a market works.
This entire discussion of banks in China has now become irrelevant to the thread topic. There is very little point in continuing in a different thread as you insist on putting words in my mouth. I never suggested the possibility of the IPO price being unreasonable as I could have no knowledge of the value to the purchasers of their investment, that is for them to decide, however, of all the issues raised, you have chosen to misrepresent me as making a comment on the IPO price. Nor did I say that I thought the IPO was a success due to political manipulation, yet you chose to misrepresent me as having said that it was. I note also that a flippant comment about IPOs being like “international aid” has now, in your words, become my “position”. Whatever nerve that comment touched, it was clearly a raw one.
We were discussing the foreign press because you sarcastically and rather condescendingly suggested I read the WSJ to improve my knowledge of China. This annoyed me, so I decided to find out if you actually know anything about finance or China other than what you quote from the press and if you are indeed qualified to patronise other posters. I am still waiting. I have made my points by argument, not by quoting others, or engaging in the parading of academic credentials which so often is the basis for internet arguments. If I think the WSJ is crap, and that most of what appears in the press about China is not much cop, it is an expression of opinion. You are entitled to express your opinion. So far you have not done so, you have merely expressed astonishment that I could possibly disagree with the thrust of press coverage and that I dare to criticise it as being superficial. So what? It is no rebuttal to an argument to quote a journalist and say “he said the opposite, and he’s a journalist, and you’re not, so he must be right and you must be wrong.” I am not that interested in reviewing the press either. But I am not basing my arguments on what the press says. So make whatever point you want, but don’t put words in my mouth. That’s cheating.
As you have not shown any interest in the substantive discussion, the Chinese banking system, but merely want to argue for the sake of it (and you are now in effect arguing with yourself as “Lord Lucan” did not say the things you attribute to him) I will be making no further comments on the IPOs of Chinese state-owned banks.
I have a feeling that our problem is fundamentally different views of the system of government in the PRC, and the role of banks within it. Perhaps we should have started off by defining our terms and reaching some common ground on what it is that Chinese banks are for.
Still I wonder if the mods will make an new thread over this matter or not…
Anyway, as it is clear, maintining the competitiveness of a company by selling below cost and raising NPL’s is a smart way to get your job done. As long as you can prove your company is doing the best to the growth of the Great Chinese Empire, you will get your money to fund your deals. So who cares if there is only retirement funds for CCP members, because all the money collected from taxes is to artificially increase China’s GDP? As long as they can throw money out there (a loan to peace of the peasants!!!) and no one really cares, China will artificially grow - well, one thing we know is growing in China - pollution and the deserts…
Some interesting reading in this thread; I hope it doesn’t get floundered. May I suggest to the mods that the posts on the BoC IPO be moved to the Business Forum, perhaps with the title of “The Mainland Economy?”
Yes, or “Banking in China (political)” to differentiate it from retail banking (opening accounts, etc)
It really has nothing to do with Taiwanese independence and was just a bad-tempered spat between me and cctang who I’m sure is a lovely chap and it should never have happened and I’m sorry and I don’t know what came over me it must be the huge amount of morphine* I am taking every day ha ha ha wheeeeeeeeeeeeeeeeeeeeeeeeee
[*EDIT: Er, legally prescribed by a doctor for post-operative pain, I hasten to add. Ahem.]
I really try to stay away from meta-discussions of discussions… since they usually serve no purpose but for the soothing of egos. But just for records’ sake, here is your “flippant” remark which brought us down the path of this discussion about the financial press:
Basically this transaction is a handout to the Chinese government, it has even been referred to as a form of international “aid” in the financial press.
I’ll take your word for it that your comment about the BOC IPO was flippant; as long as you agree that it was a “market” decision based on investors aware of the risks (even if no one can understand them)… we don’t really have any disagreement there. More importantly, it really distracts from the point here. The WSJ entered into this thread only because I was trying to figure out which financial press shared your opinion on any of these points.
Just to bring this back on topic. I made the point that the BOC listing in HK was a significant choice because it implies substantial professional dollars related to the Hong Kong exchange. The implication is that if Taiwan had a leadership willing to be more open economically and politically to cross-strait integration, some of these SOEs could be listing in Taipei rather than HK. That was the point.
And to keep the discussion on topic, recent online survey out of HK (mentioned in today’s press) suggests that a majority of HK professionals are expecting to increase the percentage of their workload on the mainland in the upcoming year. Those surveyed already spend something like 47% of their work week across the border, mostly in Shenzhen. The commute from Taipei to Xiamen or Shanghai is longer than the commute from HK to Shenzhen, but there’s tremendous opportunity for Taiwanese professionals to get the best of both worlds by living and working on both sides of the strait.
I’m in full agreement that the barriers need to come down, but I think your above point is not a strong one. Even if Taiwan were completely open shop for mainland business, and even if Beijing had the notion of listing in Taiwan to gain favor with the Taiwanese financial sector or to foster general integration, I doubt they would do so for one simple reason: BoC,even though it’s a sketchy bank by international standards, can get a much better deal in a strong local market like HK than it could in a dodgy one like Taiwan’s. Company’s list in the best market they can get onto for good reason. Listings on reputable exchanges bring more takers. Now perhaps some crappier companies would like to list on the Taiwan exchange so they can get some real money rather than the funny stuff they’d get from a Shanghai listing, but do you really think they’d prefer to do so if they could manage to list in HK? If Taiwan really wants to build a reputable exchange, are these the sorts of companies that they should be trying to attract to their exchange? Finally, there is no way in hell that a PRC flagship company like BoC is ever going to be allowed to fall under the regulation of ROC securities authorities. I think it about as likely as pigs flying out of my ass.
Aaaargh! A lot of the on topic stuff has been moved too! I’m going to quote what I think is on topic as I think the thread has been split off rather than posts moved and it could be re-assembled.
I’ve highlighted the posts I think are about Taiwan. That’s a discussion about how to get the corruption out of politics etc. here. Then there are suggestions about what to do to make Taiwan’s economy less reliant on China. Part of the independence argument surely?
What do the rest of the gang think? Righto. Lashings of ginger ale and off to play with Timmy!
[color=red]IMHO this is on topic for Taiwan independence thread…[/color]
See, now this is the kind of Lord Lucan thinking that I can get behind.
I see mr_boogie misinterpreted this as “bringing in foreign talent”. That’s not the point, of course. If we look at the issue objectively, Taiwan’s major competitive advantage for at least the next decade (but slipping quickly) is its cultural and economic ties with the mainland. It will succeed not on the basis of offering really comfortable homes and negotiable signs for European ex-pats; it will succeed by combining an established financial/legal system with plenty of domain knowledge of mainland China. Taiwan is already at a huge disadvantage when compared to Hong Kong since its legal/financial system never reached the objective professional standard that was achieved in HK; but now it’s making the task even more difficult by essentially throwing anyone that expects to deal with mainland China off the island.[/quote]
[color=red]IMHO this is on topic for Taiwan independence thread…[/color]
[quote=“mr_boogie”]cctang, I do believe that Taiwan has to push the foreign talents before they start moving to HK or China. Good thing that up till now, there is no real investment in HK for IC design centers, or it would be a complete blow on Taiwan’s future aspirations.
Tomorrow, the Taiwanese will start their show in Taipei, and the inovations are mostly from US or European IC centers. Nothing much new will come at Computex. This is the tendency that Taiwan has to invert.
And no one is asking for really confortable homes and negotiable signs for European ex-pats -> I was talking in general as for any foreigner from a developed country that has capacity, creativity and talent to come to Taiwan and develop himself in a good environment - no matter what he is good about. This guys cost a lot less to generate than people from the universities. Do you really think that all the Portuguese brains are in Portugal, where the sallary for an Engineer is of about 1000€?[/quote]
[color=red]IMHO this is on topic for Taiwan independence thread…[/color]
Not necessarily. You forget that the reason for the position in the first place is the inherently “corrupt” nature of Taiwanese politics. If you think that is a racist statement, then I can quote 23 million Taiwanese people saying the same thing. The job has to go to someone who will be seen as uncorruptible in the Chinese/Taiwanese sphere of influence. It would be almost improssible to find a Chinese/Taiwanese person who would be believed by Taiwanese to be uncorruptible. Almost impossible. Someone plucked out of Europe or America however with a track record of incorruptibility and put in the chair for five years is likely to be a lot more credible. I would specifically prohibit the person from being Taiwanese or mainland Chinese. It worked in HK. The chairman was a gweilo. Personally, I would appoint a retired British policeman or a Commonwealth judge. Or Nelson Mandela. Or me.
You either want an arm’s length truly independent ICAC chairman or you don’t. Once you start watering it down then you are back to the likes of the head of the Securities and Futures Commission chairman being accused of securities fraud. Okay. Let’s make the heads of the triads head of the ICAC on a rotating basis. I mean after all, it’s the triads that run the country anyway. Compared to the politicos, they’re squeaky clean.
You see, even having one white policeman here would bring out the little nationalists and racists in Taiwan. One white judge. A white man telling the monkeys on drugs in the presidential office how to run a small country in Asia. (God knows we’ve run a few in our time! The rather more successful ones, too, I might add!) Bloody foreigners telling us what to do in our own country! What do they think this is - Hong Kong?! Colonialism! Pah! (Meanwhile, the greatest colonialists of the last 100 years, the Americans, shite ice cream in different flavours. And the Japanese? Oh we love them!) Nope, you know we are shit hot at making ickle Asian countries work. We will make your island work on a BOT basis for 50 years and this time we promise not to shoot the natives. Worth a try?
I tell you one thing: The triads here would cack their bags if the HK police and ICAC were brought over here and organised in appropriate numbers. Which is another reason it will never happen.[/quote]
[color=red]IMHO this is on topic for Taiwan independence thread…[/color]
[quote=“cctang”][quote]Not necessarily. You forget that the reason for the position in the first place is the inherently “corrupt” nature of Taiwanese politics. If you think that is a racist statement, then I can quote 23 million Taiwanese people saying the same thing.[/quote]I’ll judge whether the position is racist by your answer to one question: do you believe US-trained ethnic Chinese could take this position?
You mean… perhaps like the European professionals in charge of Thompson CSF, the French arms manufacturer accused of paying bribes/commissions in order to gain contracts for the Lafayette frigate deal?
Singapore and Hong Kong are both ethnic Chinese communities recognized world-wide as having low levels of systematic corruption. This is not an ethnic or cultural problem; this is a Taiwanese structural problem. It will be addressed when the structure is addressed, not when we bring in an “incorruptible” white man from abroad. If the solution really was to seek out foreign assistance, then why shouldn’t Taiwan recruit an equally talented bureaucrat out of either Hong Kong or Singapore… even if he falls within the “Chinese sphere of influence”?[/quote]
[color=red]IMHO this is on topic for Taiwan independence thread…[/color]
[quote=“mr_boogie”]I have to say that I agree with Lord in terms of bringing some damn person with a clean record to rule this damn country.
You want names? Jean-Claude Juncker, actual PM of Luxembourg, and they guy who everyone wanted to be running the EU (instead of that portuguese good-for-nothing). Strong, authoritarian, speaks a lot of languages, knows more about Economy than most people would ever dream (for some reason he is called Mr. Euro). Also, a guy who doesn’t care about what others say about him. He just follows his own way. Without any doubt one of the most important persons in Europe.
Because what Taiwan needs is Corporate Governance. It needs someone from outside with a good record on cleaning companies to be in just checking things. Look at TSMC, they have no problems hiring top people to audit their work. Let us be frank - you need top people to do top stuff, no matter what bread or sex they are and like.[/quote]
[color=red]IMHO this is on topic for Taiwan independence thread…[/color]
[quote=“Lord Lucan”][quote=“cctang”][quote]Not necessarily. You forget that the reason for the position in the first place is the inherently “corrupt” nature of Taiwanese politics. If you think that is a racist statement, then I can quote 23 million Taiwanese people saying the same thing.[/quote]I’ll judge whether the position is racist by your answer to one question: do you believe US-trained ethnic Chinese could take this position?
You mean… perhaps like the European professionals in charge of Thompson CSF, the French arms manufacturer accused of paying bribes/commissions in order to gain contracts for the Lafayette frigate deal?[/quote]
No, not like them. Exactly not like them. I wouldn’t dig up Stalin or Hitler to run it either. a US-trained ethnic Chinese could run it certainly if his/her connections with Taiwan or China did not open the way to undue influence. I’m sure the methods various countries’ secret services use to vet people could be used to assess that. In any case, anyone chosen would have to undergo a reasonably deep vet.
Yes. I mean Chinese sphere of influence in terms of “able to be bribed by the Chinese or Taiwanese government”. Obviously that sounds laughable when we consider the self-bribing politicians we have at the moment, but there are of course people out there all over the world with strong principles. Ideally you would hire a Taiwanese ex-cop or judge, but, well, they’re kind of part of the problem. Someone clean from HK or Singapore sufficiently well paid would on the face of it be very hard to bribe and very suitable. Might be easier all the same to find a non-Chinese to do it. It doesn’t really matter. Ideally, this person would only be making enemies among the underworld, not at high political levels. I don’t see the Taiwanese government or the CCP taking out a hit on him. I would definitely look at trying to hire ex-HK ICAC staff, whom I imagine are predominantly ethnicly Chinese. There is no reason the ICAC chairmanship wouldn’t be seen as a valuable and high-status role, a guardian of the integrity of the political process. Something a US-educated Taiwanese/Chinese person, or any lawyer or law enforcement officer from anywhere would aspire to be. It would certainly be one of the highest-paid political jobs in the world. It would have to be. You would almost certainly have to exclude mainland-born recently naturalised US citizens, though, even if merely on grounds of national security or let’s face it, common sense. ABC applicants would almost certainly have to be of non-PRC origin.
Is no-one going to rise to the bait and charge me with “colonialism” and “imperialism”?[/quote]
[color=red]IMHO this is on topic for Taiwan independence thread…[/color]
[quote=“ShrimpCrackers”][quote=“Lord Lucan”]
Sadly this is for reasons other than a lot of new inventions.
My crack dealer analogy: The point essentially is that no matter how efficiently you run a factory you cannot reduce your costs below zero in the long term, even using prison labour. Let’s leave out the Mexican then. He could have been Peurto Rican. It’s just an analogy. In the manufacturing value chain, the manufacturer in China is not the one making all the money. The inventors, designers, and distributors/retailers (in the target market) are the ones making all the money. Taiwan needs a new business paradigm. Taiwan needs to invent things that no-one else has and sell them round the world, or provide services no-one else can and sell them to Europeans and Americans. Otherwise Taiwan is still just driving the lorry.
So, we need an education system that teaches people to think, and to get the entire brains of all China operations back in Taiwan. Direct links. Twenty 747s a day between Shanghai and Taipei. We need design schools and educational support services for the mainland machine operators and middle managers in Taiwan who will be brought here for training. We need universities that are going to teach people from all over the world what the Taiwanese know about business in China, and which of course they will pay dearly for. We need international research institutes and media centres in Taipei. We need the AP Regional Operations Centre, not talk about it. We need open work permits for all and freedom of labour. We need to use what little freedom of movement we have in Asia to make Taiwan a centre for people to base their operations in. This is not rocket science, and Taiwan has the money for it. None of this involves any loss of sovereignty. It does require leadership and statesmanship to pull off though.
Why are none of the political parties talking about any of this? A chance to make Taiwan one of the richest and most successful places in Asia, in the world is being thrown away. There should be 50 foreigners employed by central government writing speeches, manuals, guidebooks, adverts, sorting out the standard of English at governmental level, taking the Indians on at their own game. Outsource to Taiwan. All manner of foreign experts on everything need to be brought in and asked how we are going to do this. There is no need to reinvent the wheel. Once the place starts looking like an international centre for business in China, then we need a band of world-class English teachers to ensure the standard of teaching is good. Then we bring in educational experts to design curricula that prepare the next generation of inventors and problem solvers. And so on and so on. In 20 years all major Taiwanese companies doing business in China would be located here, as would a large number of foreign ones. There needs to be a huge global expatriate community here, replacing HK and Singapore and Shanghai. For once, ideas like this are not limited by funds. Anyone want to even talk about it?[/quote]
When I did a small stint for TAITRA (http://www.taitra.com.tw), many corporations said they already do business with China so they weren’t interested (although ironically they ended up dealing with factories in China, owned by companies listed under TAITRA anyway). So the “outsource to Taiwan” problem is that Taiwan does OEM, not a name brand. So more corporations seem to have gone to China. It seems like there needs to be a perception change? I don’t know how to word my meaning effectively but it should be sufficient.
Phillippe Starck (http://en.wikipedia.org/wiki/Philippe_Starck) said a year ago that Taiwan basically made everything but as an OEM, and not under its own brands, and that it was time for Taiwan to build strong brands as it has everything it needs.
I tend to agree.
However you’ll need someone with say, someone with whom various government officials will listen to. As for getting more foreigners to come to Taiwan, I’m working on that, you’ll see results (hopefully) in half a year.[/quote]
As long as we’re talking about the Chinese banking industry…
I’ll just say that it’s remarkable both how nascent it all is, and how far it’s come. Up until about 12 months ago, I paid for everything in cash. Refrigerators, bicycles, televisions… I’ve literally paid for things with 20K RMB in cash. That’s just how it was done. I remember trying to pay with foreign cards, but you’d only get lucky in major hotels.
But in the span of the last 12 months, that’s changed. My new BOC changcheng debit card is accepted at most retailers (everyone except the little stands), and now it’s just swipe + sign before I walk about with my new jacket. Getting a card took me all of 5 minutes; you fill out an application, deposit some cash, and the local branch will give you a card right on the spot. (Maybe this is already typical in Europe/Taiwan; I’m sheltered, I only have US cards.)
Now I’m even using the card for online airline bookings… which is immediately confirmed by 3 simultaneous SMS messages from a) the booking site reporting the transaction, b) the airline confirming my seating, c) Bank of China confirming the withdrawal.
Granted, not exactly a revolutionary step… but for Chinese banks, it’s a pretty remarkable change in a very, very short amount of time.
In terms of actual financial products, still a long way to go. On the retail side, the establishment of a domestic credit reporting agency is a huge requirement. For now, personal credit is limited to secured debts (cars and homes) and education loans, but once the credit issue is resolved… I think its potential will be tremendous. It might really be the catalyst for an explosion in consumer activity.
[quote=“cctang”]As long as we’re talking about the Chinese banking industry…
I’ll just say that it’s remarkable both how nascent it all is, and how far it’s come. Up until about 12 months ago, I paid for everything in cash. Refrigerators, bicycles, televisions… I’ve literally paid for things with 20K RMB in cash. That’s just how it was done. I remember trying to pay with foreign cards, but you’d only get lucky in major hotels.
But in the span of the last 12 months, that’s changed. My new BOC changcheng debit card is accepted at most retailers (everyone except the little stands), and now it’s just swipe + sign before I walk about with my new jacket. Getting a card took me all of 5 minutes; you fill out an application, deposit some cash, and the local branch will give you a card right on the spot. (Maybe this is already typical in Europe/Taiwan; I’m sheltered, I only have US cards.)
Now I’m even using the card for online airline bookings… which is immediately confirmed by 3 simultaneous SMS messages from a) the booking site reporting the transaction, b) the airline confirming my seating, c) Bank of China confirming the withdrawal.
Granted, not exactly a revolutionary step… but for Chinese banks, it’s a pretty remarkable change in a very, very short amount of time.
In terms of actual financial products, still a long way to go. On the retail side, the establishment of a domestic credit reporting agency is a huge requirement. For now, personal credit is limited to secured debts (cars and homes) and education loans, but once the credit issue is resolved… I think its potential will be tremendous. It might really be the catalyst for an explosion in consumer activity.[/quote]
*I was hoping you’d answer some of Lord Lucan’s insightful although opinionated questions and answers about banking, only to see this post that almost assumes that your banking experiences are somehow relevant to those experienced by the majority of the coastal cities in China, even less the rural ones.
I mean I could make a post that says;
“Taiwan is the greatest in the world, my uncle often invites me into his $150,000 USD a year exclusive club and I enjoy the incredible 5 star food and other great luxuries Taiwan has the offer. Eating away at the rare caviar topped desserts and declining the offer of a $5,000 bottle of wine, I think back that just 10 years ago such was not the case, as I was still eating at outside vendors late at night, still burning in the hot humid air, sweeping away the mosquitos. But here I am, 10 years later, with 3 women massaging my back, my legs, and my arms simultaneously after a nice swim in the olympic sized pool decorated with 15 meter tall columns made out of marble straight from Italy.”.
Although all of this was true, it still stands to say that for the everyday man in Taiwan it could be better and after I exit the club I still have to work my ass off for a living.
That doesn’t change anything about the banking situation in China. Although CommerceBank gives me my business credit card, debit, and personal credit card the same 30 minutes as I applied, is open everyday till 8pm, with zero ATM fees from any bank as well as zero fees period, it doesn’t change the fact that Chinese banks suffer from bad loans and poor policy.
Infusing the Chinese banks with cash via foreign investment and flotations (equivalent to throwing cash at them) is not a great solution when bad loans, kickbacks, and wink wink/one hand wipes the other are a systemic problem in Chinese institutions. Until major structural changes are made to the Big Four Banks, I will never put money or faith in them (I lie cuz I did have to when I lived there, but only Bank of China). Unfortunately, it will either take foreign competition or foreign banking experience ie management to solve this crisis. Either way, it’s a long cultural habit, gee over 5000 years old worth of corruption and cronyism, that will take generations to break. As a HKer who has benefited from Britannia’s largesse and tyranny a la Rome, I welcome the Brits and those resourceful, but crazy Scots to the halls of the Ministry of Banking or whatever they call it.
(yes, I am making fun of the 5000 year old myth of culture) (I think at that time, the Shang were winos, into human sacrifice, shamanism along with an extraordinary bronze industry, social-labor organization, etc).
The Chinese banking industry will be opening up to direct foreign competition later this year, which is precisely why the IPO is necessary now.
I think the emphasis on the NPL ratio (and possible negative equity) is a little myopic. Total NPL as a percentage of GDP is more than manageable, far more manageable than Gordon Chang predicted only 3-4 years ago. That’s not to say they’re not significant issues (especially for foreign investors taking an equity position!), but their real importance is what they indicate about the path of future growth as opposed to past historical policy. Loan portfolios at all of the major banks are growing so quickly (30%+ annually), proper risk management and the introduction of new forms of lending will make all of this a moot point.
I’m certainly more paranoid when working with the Chinese banks as well. The stories about local embezzlement via faked stamps/loan agreements are a real concern. I’m scaling up my commercial borrowing on a very slow scale… and if given the choice between BOC and BofA in 12 months, I might prefer going with a Bank of America account.
But I’m still of the opinion that compared to the other bridges the Chinese economy has had to cross, this stuff is child’s play. Note that there were plenty of left-leaning voices within the PRC who insisted a public listing of the BOC would be a crime, viewing it as the selling off of core Chinese public assets at a significant discount to their underlying value. Ironic, since voices in the West think they over-paid for the same assets… but that’s typically the sign of a “good deal”.
From the Chinese perspective, I think the discount is worthwhile. The importance of foreign management + expertise for all of the above reasons are critical. But also paint me nationalist, for I happen to think the Chinese can manage to conquer this issue without bending our knee ot the Queen.
As far as ShrimpCracker’s post… again, can someone translate ShrimpCracker-ese? Actually, no, I take it back. I think his suggestion is that my luck with the debit card and BOC was some how an exclusive experience? It really wasn’t.
I had 200 RMB in cash + government ID, and walked into the local branch of BOC in a non-first-tier Chinese city. I waited in line about 10 minutes, filled out a form, talked to the service rep at the counter for about 10 minutes, pressed a button indicating whether I was “pleased” with his service (he was pleased I gave him 4/4 stars), and walked out with my debit card. I walked to the store next door just to check it out, and was able to pick up for my cousin a nice fake-leather jacket for 100 RMB, paying with a swipe/sign.