1 Talking Point 5 The Week in 60 Seconds 6 Property Week in China 7 China Consumer 8 Banking and Finance 9 Chinese Character 11 Internet and Tech 13 Rail and Infrastructure 22 July 2011 14 Society and Culture Issue 116 17 And Finally www.weekinchina.com 18 The Back Page

“Beijing, we have a pork problem” m o c . n i e t s p e a t i n e b . w w w

y b g u in How China’s favourite meat is driving inflation o k y n o a t B s t l t h a e g b k u o r o l a r G M B C d B n S a H Week in China Talking Point 22 July 2011

Making a pig’s ear of it Why the Chinese government is so worried by rising pork prices

High pork diet: rapidly rising cost of the nation’s favourite meat is causing disquiet and fuelling inflation

“ wimmers told where they can As WiC has earlier reported (see The risk looks real enough (a Seat safely,” ran the eye-catching issue 100), Chinese farmers rou- study released by an accredited headline in the Shanghai Daily. tinely feed their pigs the additive lab of the World Anti-Doping The newspaper was reporting on clenbuterol to help keep them lean Agency found that 22 of 28 trav- efforts to stop foreign swim teams (and fetch a better price). This un- ellers returning from China tested bringing their own pork to the 14th scrupulous practice is a particular positive for clenbuterol) so Shang- FINA World Championships in problem for athletes as clenbuterol hai had to take action. Its solution: Shanghai. is a banned substance. Get caught it has guaranteed that a desig- Instead, the city’s Food and Drug with it during a dope test and they nated group of restaurants will Photo Source: Reuters Administration wanted them to face a two year ban (see WiC61 for serve uncontaminated pork to for- rely on official advice on where they the story of previous athletes eign swimmers. could eat out safely, i.e. without un- claiming to have been undone by Ordinary Shanghainese will take wittingly ingesting clenbuterol. suspect sausages). little comfort from the special treat- 1 Week in China Talking Point 22 July 2011

ment for their visitors. But they Why the recent price spike? think that explains why China’s have another, more pressing prob- Regular readers of WiC will recall pork industry is so dysfunctional. lem: the price of pork is soaring. In this isn’t the first time that prices It cites Ministry of Agriculture sta- fact, it’s hard to pick up a Chinese have risen by an alarming percent- tistics that show China’s hog stock newspaper and not see a headline age. Back in 2008 a similar thing mid-year at 453 million, which is on the subject. happened. marginally higher – by 0.8% – In fact, Caijing magazine notes than 2010. The context… that there have been six occa- If supply hasn’t fallen, the price In May the price of pork rose (year- sions since 1985 when pork prices rises can only be explained by rising on-year) 75% – going past its former have risen by more than 10% demand, Caijing suggests. high in 2008. There wasn’t much (year-on-year), and three occa- As China gets richer, it is eating better news in June when it leapt sions when they have jumped by more meat. According to Paul again by 57% on the previous year. more than half. French and Matthew Crabbe, au- By any standards, these are huge There is a tendency to blame thors of Fat China, an account of the jumps, and have hit the wallets of the price swings on diseases such country’s increasing struggle with local shoppers. as swine flu. But Caijing doesn’t obesity, the average Chinese has The Chinese are among the world’s top consumers of pork, re- ports the Financial Times, eating 37kg per person annually. And be- cause pork is the nation’s favourite meat, its price has a major impact on consumer sentiment. There aren’t many countries where the prime minister would comment on the cost of pork – but China is one of them. As ever, Pre- mier Wen Jiabao was given the task of assuring the public of his deter- mination to deal with events. “Sta- bilising the pork market is a responsibility the government must not shirk,” he pronounced solemnly last week.

There’s the link to inflation, too? Yes, Wen will be more than aware of it. The Chinese Academy of Social Sciences estimates that pork makes up a third of the food components of the CPI, or 10% of the CPI as a whole – making it one of the most influential constituents. Food – and especially pork – is also a much more volatile compo- nent of the index. Compare the 57% price spike for pork in June to the more moderate year-over-year in- crease of 3% for non-food compo-

Renminbi (RMB) is currently not freely convertible and conversion of RMB through banks in Hong Kong is subject to certain restrictions. Clients should be reminded of nents. Taken together, these factors conversion risk in RMB products. In addition, there is a liquidity risk associated with RMB products, especially if such investments do not have an active secondary market and their prices have large bid/offer spreads. RMB products in Hong Kong are denominated and settled in RMB deliverable in Hong Kong, which represents a market which is different from that of RMB deliverable in Mainland China. For individual clients, conversion of RMB is subject to the daily limit in Hong Kong, the clients may have to allow time mean that some economists refer to for the conversion of RMB from/to another currency of an amount exceeding the daily limit. HSBC operates in various jurisdictions through its affiliates, including, but not limited to, HSBC Bank plc, authorised and regulated by the Financial Services Authority, The the CPI as the ‘China Pig Index’, says Hongkong and Shanghai Banking Corporation Limited, HSBC Securities (USA) Inc., member of NYSE, FINRA and SIPC, and HSBC Bank USA, NA. 11-056 * Source: Bloomberg Dim Sum Bond League Table, 2010 - May 2011, excludes self-led and synthetic RMB bonds the Wall Street Journal. 2 Week in China Talking Point 22 July 2011

doubled their intake of pork over the last five years.

Why is supply failing to keep up with demand? Here much of the blame rests with the structure of the pork industry. China has 65 million pig farms but 40% of them slaughter less than 50 pigs a year i.e. they’re tiny. “Foreign experience shows that when large scale farming accounts for 80% of the market, pork prices will stabilise and industry risks will be controlled,” Caijing reports. The preponderance of small- scale farms instead leads to boom- and-bust cycles. When prices are low, smallholding farmers make losses and scale back on hog breed- ing (last year farmers were said to be losing Rmb500 on each pig sold). But when prices are high, they get bank loans to build up their hog- geries – only to find a large increase in supply threatens to depress prices paid in the market. The current situation is compli- cated by yet another destabilising factor: the price of feed. Even at higher prices the average pig Not a bargain: pork costs 57% more than a year ago farmer is struggling to profit on each animal he slaughters. Feed enough to turn sleeping boars into years ago – is evidently still not big corn has risen to Rmb2.4 per kilo- feisty Casanovas. By way of com- enough to stabilise the market. The gram, which is about Rmb0.5 parison, at the beginning of 2008 Chinese Academy of Social Sciences higher than in the same period the ratio that had farmers piping estimates the strategic reserve of last year. old-time love songs into the sty pork at just 300,000 metric tonnes, The Wall Street Journal reports was above 10.” offering little in the way of cushion. that when the price of a pig is six All told, this suggests supply will Other new measures are being times the price of corn, a farmer can continue to lag demand – keeping designed to deal with the industry’s break-even. Last year the ratio fell to inflation high. structural weaknesses, especially a money-losing 4.76, which discour- the Rmb2.5 billion spend on a pro- aged breeding, and by the start of What is the government’s re- gramme to encourage the growth the year – even after pork prices had sponse? of larger scale farms. Ultimately risen – the ratio was still 6.6. To retreat to the bacon bunker. Last this is the real solution, but it won’t According to government data, Thursday it released some meat happen fast. In the meantime a the ratio has now improved to 8.5, from its strategic reserve, ostensi- subsidy of Rmb100 per sow has which suggests that farmers are bly to halt the rise in pork prices. been promised, to counter feed back into a better period com- But the move was largely symbolic. costs and encourage the smaller Photo Source: Reuters mercially. The 200,000 metric tonnes that will farms to breed more pigs. “That is above the level required arrive at market represents just Not everyone is pleased by the for farmers to break-even,” admits 0.4% of annual pork consumption. government’s intervention. Ren the Journal, “but probably not high China’s pork reserve – created four Zhiqiang, a real estate boss (and 3 Week in China Talking Point 22 July 2011

one of China’s most-read blog- gers), wrote on his weibo: “Throughout Chinese history pig Planet China farmers never required govern- Strange but true stories from the new China ment guidance. Don’t today’s farmers know how to raise pigs? DATE WITH DANGER. When a 39 year-old music teacher appeared on TV Do they have to depend on gov- dating show Happy League, he charmed audiences by serenading the ernment coordination?” female contestants. But his 15 minutes of fame proved his undoing and But one likely beneficiary of the according to the Jiang Nan Times, the eligible bachelor will now be regretting his TV exposure. situation is the US. China is pro- That’s because a TV viewer recognised him as a fugitive whose real jected to exceed its previous 2008 name was Wu Gang. The newspaper says police in Heilongjiang then record of 112,963 metric tonnes of reopened an investigation and have since arrested the TV crooner for a American pork imports by year end. murder committed in Jilin 13 years ago. A police officer involved on the case told Xinhua: “He had become Hogging the headlines? accustomed to his new identity and fooling everyone around him – so he Alongside the wider industry news, didn’t think twice about going on the show. He had managed to escape the there have also been rumours of law for so long that he became overconfident about not being caught.” malpractice at two of the country’s largest pork suppliers. In late June, China Yurun Food holder Zhu Yicai bought 8.5 mil- Zhongpin says the analysis is lost $2 billion of market value on lion shares. He reaffirmed that faulty and will respond to the speculation that Muddy Waters, a profits were up in the first six claims on an investor call today – of- shortseller, would soon accuse it of months, largely thanks to rising fering greater details of its suppli- overstating its pig stocks. prices. ers. But the case adds another twist Carson Block, head of Muddy Wa- Then this week China Economic to the pork supply numbers. Given ters, then denied the claims. “I had Review took aim at another pork that two of the biggest four pork never even heard of China Yurun,” firm, Nasdaq-listed Zhongpin Inc, firms in China have had to reiterate he said. “Somebody obviously used with the claim that its supply that their figures are accurate, it our name.” chain could not have supported shows how sceptical the market has Yurun recovered some of its the sales being reported. This saw become that the country is produc- poise last week when major share- the stock plunge 23%. ing as much pork as it needs. n

The dreaded ‘D’ word

Following on from our Talking Point last week, the potential for a US government debt default has continued to grab headlines in China. Local agency Dagong Global Rating has annnounced that America’s rating is on review for a downgrade (it previously cut Treasury debt to A+ in November last year, judging US government paper no longer risk-free). And Dagong says a further Illustration: www.benitaepstein.com downgrade is just a matter of time, given the size of US borrowing. CCTV also ran a special show on Monday evening in Separately, the Securities Daily insisted that the which it predicted a default would lead to the end of risks associated with Chinese local government debt the current global financial system, and raised the “can’t compare” with the looming US bond crisis. possibility of a return to the gold standard.

4 Week in China The Week in 60 Seconds 22 July 2011

China’s buying oil (again) The major news items from China this week were...

China’s quest for oil supply saw the country double 1down on its controversial investment in Canadian ‘tar sands’ this week. CNOOC will pay $2.1 billion for strug- gling producer OPTI Canada, thought to have at least 195 million barrels of reserves. (PetroChina also paid $1.8 bil- lion for a stake in two similar projects last year). OPTI de- clared bankruptcy last week, so most of the price tag will be paid to creditors, assuming the deal gets regulatory ap- proval later this year. Tar sands are a costly oil resource, at an estimated $27 a barrel to extract. Also on oil: last month’s spill in the Bohai Sea has led to tar balls washing up on the Chinese coastline more than 170km away.

The simmering dispute between Xinjiang’s indige- Bowing out: Yao Ming retires from the NBA 2nous Uighur population and its Han Chinese admin- istrators boiled over again, with police firing on a group Little seems to dent the popularity of Apple’s prod- of 100 protestors in Hotan on Monday. At least 18 are 4ucts in China, with sales up sixfold in the last three thought to have been killed in the latest row over land months. iPhone sales in particular helped push third- seizures (even more serious riots occurred in 2009). quarter revenues to $3.8 billion in the country. And there could still be more to come. “I firmly believe that we’re Concerns over working conditions at the world’s just scratching the surface right now,” Tim Cook, the 3largest contract electronics manufacturer resurfaced, company’s chief operating officer, told investors on with news of another death at a Foxconn factory. The 21 Tuesday. Apple had a 7% share of the smartphone mar- year-old employee had only been working for the firm ket over the first three months of this year, according to (which makes iPhones and iPads for Apple) for 20 days China Daily, selling 19 million iPhones. before he fell to his death on Tuesday. The company has battled media allegations on working conditions since a Giant of Chinese basketball Yao Ming officially called spate of employee suicides last year. It’s not clear 5time on his playing career on Wednesday, putting an whether the latest death was an accident or suicide. end to weeks of speculation. The Houston Rockets cen- tre made it to the NBA playoffs four times and partici- pated in eight all-star games, but has suffered from recurring injuries.

China’s manufacturing sector could shrink in July, 6according to preliminary data from HSBC’s pur- chasing managers index. The gauge fell to 48.9 for July (scores under 50 suggest a decline in output). If the final reading on August 1 is similar, it would mark the first contraction in manufacturing since July 2010, and the Photo Source: Reuters lowest reading in 28 months. HSBC’s preliminary index, known as the Flash PMI, is based on 85-90% of responses to a survey of more than Apple’s Cook and Jobs delight in growing China sales 400 companies. n 5 Week in China Property 22 July 2011

Lift going down Otis in PR storm after equipment malfunctions

hen Elisha Otis took an axe thought I was finished.” Wto the hoist rope supporting Otis says it’s cooperating with the his elevator at the 1854 World’s Fair, government’s investigation into the most onlookers thought he was accident but is yet to comment on done for. For half a second, he might what it thinks to have been the have regretted the decision. But cause. The malfunctioning escalator then his elevator’s brakes engaged was still under warranty (the line as planned. opened in 2009), and is supposed That demonstration gave the to be checked every 15 days. It passed world it’s first ‘safety elevator’ and an inspection by an Otis mainte- launched Otis and his company on nance engineer on June 22, accord- its journey as a major force in esca- ing to Xinhua. lator and elevator manufacturing. But there has also been specula- In China, foreign companies have tion that subway operators may tended to be the beneficiaries when have been skimping on costs by safety scandals break (the dairy in- buying light-duty escalators, less ca- dustry being an obvious example). pable of handling high-volume pas- But even for international firms, senger flow in Chinese conditions. reputations built up over decades Otis denied this directly for the Elevator heaven? can be lost in a much shorter time- Beijing Zoo station. “I'm responsible frame. And a couple of mishaps over for telling you this: all the Otis esca- build 50,000 skyscrapers over the the past few months have seen Otis’ lators used in subway projects are next 15 years (defined as buildings own image called into question. heavy-duty escalators. You can tell over 30 floors), estimates McKinsey. Back in December, an Otis escala- from the type,” said Li Mingjie, Otis is also the current market tor in the Shenzhen Metro reversed spokeswoman for Otis China. leader in China, with a 20% share, suddenly, injuring 25. But the real That hasn’t stopped a flood of according to 21CN Business Herald. crisis came earlier this month. On criticism coming in the Otis direc- The escalator market is just as im- July 5th, an escalator at the Beijing tion. “[Otis has] unavoidable re- portant – with 44% of the world’s es- Zoo metro station also went into re- sponsibility for the accident,” Zhang calators now in China. verse. This time the consequences Juming, a senior quality official in “As the results of the investiga- were far more serious. At least 30 Beijing told reporters. His initial re- tion have not yet come out, we are people were injured, and a 13 year- view suggested that “design and not yet able to make a clear forecast old boy was killed. manufacturing faults” caused the about future [sales],” an Otis offi- It was a PR storm for the com- malfunction. cial stonewalled to the 21CN. But it pany. Photos of the injured being In the meantime, the General Ad- will be hoping to keep its reputa- moved to hospital on gurneys fea- ministration of Quality Supervision tion largely intact. “Purchasers, in- tured prominently in the local me- has ordered that all escalators of the cluding government buyers, prefer dia, as did their acounts of the acci- same model (OTIS 513 MPE) be shut foreign brands over domestic ones Photo Source: Shutterstock dent. “First there was a crashing down pending safety tests (there are and a single accident won’t change sound, then the rising escalator 257 in Beijing alone). their thinking much,” Peng Jin- started going down,” one victim told Last year, China installed more sheng, an expert with the Beijing the China Daily. “Then wave after than half of the world’s new eleva- Chamber of Elevator Commerce wave of people began falling. I tors, and the country is expected to told the China Daily. n 6 Week in China China Consumer 22 July 2011

Wrong shipment Furniture retailer accused of scamming clients

Chinese idiom warns: “Fish company’s so-called imports were Aeyes can’t be passed off as actually domestically produced in pearls, and bitter flea-bane can’t Dongguan in Guangdong province. pretend to be tea.” They were then transported to It means you shouldn’t sell some- Shanghai’s Waigaoqiao Free Trade thing fake and call it genuine. Zone before being sent back to the DaVinci, a high-end furniture company’s warehouse. Dolce vita (but) della Dongguan chain for top brands like Armani That meant they didn’t even get a Casa, Fendi Casa and Versace Home, “swim” from Italy, of course. No demonstrates that the “Made in is learning that in the modern day. problem: “Staying at the bonded China” stigma is alive and well at Last week, the Shanghai-based com- zone for a day, the products changed home as well as abroad. Chinese pany came under fire after state from domestically-produced ones consumers still see foreign products broadcaster CCTV reported that to imported ones,” says Zhou Guo- as better in quality and design (and some of DaVinci’s goods were being liang, a customs official. worth a higher price). made in China and then sent off to DaVinci at first denied any wrong- But on Tuesday the Shanghai Italy to be re-imported back to the doing. “We have never bought furni- Daily changed tack, blaming shop- country as Italian goods. ture made in China, shipped it out pers as much as DaVinci for the fake The practice is dubbed “you shui” and shipped it back,” insisted a tear- furniture fiasco. or swimming. Government officials ful Doris Phua, the chief executive, “As long as our purchasing pattern said prices are marked up signifi- last week. is dominated by vanity and flamboy- cantly once the Chinese-made fur- Then it changed its tune, apolo- ance, we will continue to fall for niture has gone for a ‘swim’. gising to its customers and suppli- cheap mimicry clad in luxury pack- Confusion over the origin of its ers. The retailer issued a statement aging,” the newspaper lamented. products isn’t Da Vinci’s only prob- saying that it will “accept supervi- Industry insiders also tried to as- lem. As it turns out, the Shanghai- sion from the government, media sign some responsibility to the gov- based company also hasn’t been up- and the public,” and has “started ernment for the DaVinci debacle. front about materials the furniture self-inspection.” Headlined the Zhu Changling, president of is made from. “Rare wood” was, in Shanghai Daily: “DaVinci sorry for China Furniture Industry Associa- some cases, polymer and other misleading clients.” tion, told Xinhua that the supervi- chemicals, says the China Daily. It is certainly not the first time a sion and management of imported One shopper noticed that her tel- Chinese company has been accused goods has long been inadequate. He evision cabinet gave off a strong of assigning foreign provenance to also wanted to see more severe pun- chemical smell, prompting her to re- domestic goods. In 2006, Order ishment for offenders like DaVinci port it to CCTV. Test results showed Flooring, a floor material firm (at this stage the company hasn’t that it was made from resin and fibre claiming to have been established even confirmed if it will pay re- wood and not the “solid wood” ad- in Germany in 1903, was shown to funds to shoppers but best-case un- vertised. Other shoppers began to be a Chinese company with an eight der Chinese law is that they get dou- post details on weibo (a Chinese year history. ble their money back, according to Photo Source: China Imagine Twitter-equivalent) of shoddily- Similarly, in 2008 Guangzhou Ji- the Shanghai Daily). made DaVinci products. ahe Cosmetics publicly apologised Unless the government cracks Subsequent investigation from for claiming that its cosmetics down harder on similar scams, Xinhua found that, during the first brand Marubi was Japanese. there will be plenty more cases in half of the year, about 10% of the Of course, the DaVinci case future, says Zhu. n 7 Week in China Banking and Finance 22 July 2011

Lending binge New report reveals scale of unofficial loans

ans of the British television se- eas like wealth-management prod- Fries Doctor Who are aware that ucts and letter-of-credit financing. the Tardis is a lot bigger than it WiC has reported on these trends looks. So too is China’s banking sys- too; in trust lending (issues 53, 74 tem, according to the latest in a se- and 78) and in commodity-backed Loaned from the shadows ries of reports on Chinese credit financing in soya and copper growth released by HSBC. (WiC110 and WiC103). fuelled by 44 cents of new credit, a Authored by Zhang Zhiming, Here it’s worth reiterating the dis- record high. No wonder, then, that HSBC’s Head of China Research, the tinction between ‘shadow’ banking the PBoC is determined to change new report looks at lending that falls and ‘informal’ lending. Trust loans the terms of the debate. outside areas traditionally meas- and commodity-backed financing The one important positive in ured (and guided) by policymakers. are examples of shadow banking. Zhang’s report is that shadow bank Take the current data, in which The banks are doing the lending, al- lending – much of it beyond official credit conditions look tight if the ref- though often away from their own reach – shows signs of being priced erence points are bank loans or M2 balance sheets. As bank bosses have more by the market than by direc- money supply (which have both been been told to cut back on loans to tive from above. Offered as evidence cut by half since late 2009). clients, their sponsorship of newer are the higher yields on wealth But if the analysis goes beyond loan products has picked up. management products, or the rate loan quotas and M2 growth, the By contrast, informal lending is companies are charging each other story changes significantly, Zhang conducted outside licenced finan- for bank-arranged entrusted loans says. In fact, when a range of alter- cial channels, so we catch glimpses (Phone firm Ningbo Bird lent a prop- native financing options is added to of it more anecdotally. WiC has re- erty company money at 18%, reports the tally (to create a ‘total social fi- ported on the private lending cul- Bloomberg). nancing’ or TSF number, in econo- ture of Wenzhou (WiC63), as well as Not that the shadow banking mist-speak), talk of a cutback in cases in which informal lending sector is entirely unconnected to credit looks like a myth. schemes have collapsed in Inner the more traditional world of gov- According to Zhang, ‘total social Mongolia (WiC109) and in Xiamen ernment directive. New announce- financing’ as a concept was first in- (WiC114). ments on administrative tighten- troduced by officials from the Peo- So what are Zhang’s main conclu- ing quickly transmit to off-balance ple’s Bank of China about a year ago. sions on the credit picture being sheet lending, putting up the ef- At the time, regulators were report- drawn by TSF-style analysis? fective cost of borrowing across ing success in slowing down the Incredibly, 47% of all new loans the system. surge in bank loans triggered by the are coming from the shadow sector But the higher rates in shadow country’s massive stimulus cam- (in 2002 bank loans made up almost lending contrast with policy limits paign. But they were worried that 100% of new lending). Thanks to set for traditional loans and deposits bank loans were only part of the pic- that, true loan growth is far from at the banks. And eventually, they ture. Credit was finding its way into slowing. suggest a natural brake on some of the real economy from new sources. Another finding is that China’s the expansion in wider credit. In part that reflected growth in economic growth is now more re- In the medium term, Zhang won- the corporate bond market, where liant on credit than ever before, with ders if all this off-balance sheet ac- Photo Source: Reuters new issuance was growing at a total social financing making up tivity heralds another step towards faster pace than traditional lending. 44% of first quarter GDP growth. a more liberalised interest rate en- But mostly it signalled a boom Put another way, that means that vironment. A case of the tail wag- in off-balance sheet lending, in ar- each dollar of new growth is being ging the dog, perhaps? n 8 Week in China Chinese Character 22 July 2011

The great escape Why Du Shuanghua could be the emblem of modern Chinese capitalism

very few months, China’s news- Epapers shudder with concern about the state’s ‘advance’ and the private sector’s ‘retreat’. But fre- quently the two sides of Chinese business depend on one another, as the story of one of the country’s richest tycoons shows. Buccaneering steel man Du Shuanghua has recently partnered with a second state-owned firm in need of turnaround. In this respect, private and state sectors hope to ad- vance together. Hebei-born Du could be called the quintessential Chinese entre- preneur, prospering not so much in spite of state intervention but be- cause of it. In fact, China’s economic system worked so well for Du that his wealth peaked during the 2008 financial crisis (at $5.1 billion ac- cording to Hurun), making him then the nation’s second wealthiest man – at just 43 years of age. On the face of it, Du’s steel career doesn’t make much sense. Not only did he start out with very little cap- Du: the ultimate comeback kid of Chinese business ital (in a capital-intensive business), but he also managed to build his man – he was a sales director for the business. He then moved back to firm at a time when China’s leaders state-owned Shougang Group, a com- his hometown in Hebei, and started have tried repeatedly to cut back on pany favoured by Deng Xiaoping. So the HengShui Jinghua Steel Pipe steel-making overcapacity. Du also when young Du left high school he Company two years later. By 2003 survived mention in the 2009 ‘Rio took a job at his father’s firm instead his combined businesses were mak- Tinto Four’ corruption trial, as well of going to university. That intro- ing $125 million in profit and re- as a subsequent takeover attempt duced him to the industry early and portedly had half of the national by a local state-owned rival. by 1991, when he was just 22, Du had market for steel pipes. So what is his secret? One answer started his first steel firm. Paying What came next would catapult is his connections. Du’s real genius for the Beijing Xinghua Welfare Du into the ranks of the very rich in has been to leverage his father’s re- Steel factory wasn’t as hard as you’d just five years. In March 2003, he cut

Photo Source: CFP lationships to build one of the think, reports China Economic a deal with the city government of country’s largest privately-owned Weekly magazine. Du was allowed Rizhao in Shandong to build a steel firms. to pay for the land, equipment and world-class steel mill. And access to Du’s father was no ordinary steel materials as money came in from credit was once again the order of 9 Week in China Chinese Character 22 July 2011

the day – Du is thought to have stumped up just $24 million to build the mill, with the remaining 90% of debt supplied by local banks. Rizhao Steel’s location and tech- nology were not the only reasons for its subsequent success. Critically, it also managed to access inexpen- sive iron ore in spite of its lack of an importing license. That advantage was revealed during the trial of four Rio Tinto employees in August 2009. Local media said Du’s written deposition admitted paying one of the defendants (Wang Yong) at least $9 million – allegedly in order to re- ceive relatively cheap ore. No charges were brought against Du himself but he was soon strug- Held in ore: Rizhao’s raw materials arrive at port gling to fend off rivals’ interest in his empire. In the following weeks state-owned companies buys Du po- ores from India. he signed over two-thirds of Rizhao litical leverage (and time) in his on- That was the easy part. Much to the local government-backed going negotiations with Shandong more difficult was to reshape the Shandong Steel, in what looked like Steel and the provincial govern- company’s sales and purchasing de- a forced sale. ment. But it turns out that it’s prof- partments. “To get rid of accumu- But the Shandong Steel bosses itable as well. Four months after Du lated long-term structural defects, reckoned without Du’s guile (a story and his team took Yingkou Medium we are bound to affect entrenched WiC has written about before, see is- Plate (YMP) under their wing in Feb- interest groups,” admitted a sur- sue 99). He managed to postpone ruary, it is already claiming nearly prisingly frank Rizhao Steel press re- any asset transfer until a price could $8 million in profit. That’s not too lease, as Du decreed that raw mate- be agreed (and with a reported valu- bad considering YMP lost almost rials no longer needed to be sourced ation of $6.1 billion, that’s looking $150 million last year. exclusively from Minmetals affili- increasingly difficult in the current China Weekly magazine says Du ates. He’s also expanded the mar- financial environment). To make it got Minmetals to agree to the deal keting team and brought in a cul- sufficiently difficult to ‘purchase’ by simply promising: “If you let me ture of sales targets. Rizhao, he also injected 30% of the do it, I’ll bear the losses alone and The partnerships between Du firm into Hong Kong-listed Kai Yuan we’ll split the profits.” Minmetals and the state-owned firms may be Holdings (in which he’s also a sig- appears to have been as good as its unusual in terms of how they’re nificant shareholder). word. According to the magazine, structured, but that’s probably all. Since then Du’s gone on to Du ended up with a 32% stake in “Cooperation between state-owned broaden his connections and in- YMP through Rizhao Steel. (A busi- and private enterprises should not come streams – by working with ness associate of his holds an addi- be mutually exclusive,” Du says. state-owned firms. In March we tional 20%). All told, Du’s reputation locally is wrote about his deal to reform YMP’s troubles started in 2008. starting to resemble something of a struggling steel plate maker “Before the economic crisis [it] had cross between the late British cor- Yingkou Medium Plate (a subsidiary been a good business, putting more porate troubleshooter, John Harvey- of China Minmetals). By June he’d emphasis on market efficiency,” an Jones and 19th century steel indus- also agreed to take on machine- employee told China Weekly. Then try baron Andrew Carnegie. And maker CERI (Yingkou) Equipment the crisis hit, and YMP struggled to with his ability to escape from Photo Source: Reuters Development and Manufacturing (a adapt to plunging prices. After ar- seemingly impossible situations – subsidiary of China Metallurgical riving, Du lifted morale by raising virtually all assumed Shandong Group Corporation). wages and scored a quick win by Steel would swallow Rizhao – per- It’s possible that turning around shifting to cheaper (but lower grade) haps add in Harry Houdini too. n 10 Week in China Internet & Tech 22 July 2011

The chips are down Boardroom spat at SMIC – and the CEO’s exit – worry investors

n March tycoon Huang Guangyu itability after five straight annual Advisors, said Wang clashed repeat- Ilaunched a successful effort – losses. But rather than give him a edly with Datang over strategy. from his prison cell – to unseat the large bonus, shareholders including Datang is under pressure itself chairman of the company he had government-owned Datang Tele- from Sasac’s directives that all but founded, Gome. Few thought that com Technology then voted against the largest SOEs should consolidate there would be similar boardroom his re-election. He was forced to re- into bigger enterprises (see WiC90). drama in the remainder of the year. sign last Friday. And it was hoping that a merger Until now, that is. In the last three Why fire Wang? “The changes are with SMIC would pre-empt moves weeks, SMIC, China’s largest contract due more to politics than the funda- from outside that it restructure, chipmaker, has seen its board fire the mentals of the company. David Wang says CBN. chief executive, and two of its Whether an SMIC/Datang tie- largest shareholders bash heads up is in the best interest of an- in a public feud. That’s hardly other shareholder, CIC, is more good news for a company that has debatable. The sovereign wealth only recently turned a profit for fund invested $250 million for the first time since 2004. an 11.6% stake in the foundry Let’s backtrack a little: SMIC back in April, rendering it the was founded in 2000 as part of a second largest investor after national policy to promote a tech Datang. But analysts say a link- champion. But it lacked the scale up with Datang could well un- and technology of nimbler, more dermine SMIC’s expansion cost-effective competitors like Tai- abroad. Overseas clients, espe- wan Semiconductor Manufactur- cially those in the US, are wary of ing (TSMC), United Microelec- giving big orders to Chinese com- tronics (UMC: also Taiwanese) and panies that are clearly state- Abu Dhabi’s Global Foundries. Now without Wang: SMIC offices owned, says CBN (witness SMIC’s recent distractions be- Huawei’s problems). gan when its chairman Jiang was performing quite well and didn’t CIC and Datang are now in rival Shangzhou died in late June. Jiang make any major mistakes,” a Taipei- camps. When Jiang died, Datang lob- had recruited David Wang, a Tai- based chip analyst told the China bied aggressively for Simon Yang, wanese industry veteran, to help Daily. “There is a possibility that the the company’s chief operating offi- him put the company back on track. central government wants to consol- cer, to replace Wang. The attempt Wang joined in in November 2009 idate the sector. China doesn’t need was rebuffed by the board, including and was “very, very focused on de- so many small foundries.” a supporting vote from CIC, says the livering the numbers and execut- The speculation is that Datang, Financial Times. ing,” according to Steven Pelayo, the company’s largest shareholder, The fear is that the boardroom then regional head of technology at has been looking to merge with squabble will serve as a major dis- HSBC in Hong Kong. The transfor- SMIC to create an integrated tech traction, taking SMIC away from its mation effort had been so complete, firm that makes both chips and tele- more profitable recent path. “This is “the company should have just coms equipment. This ambition a deeply worrying development,” a Photo Source: Reuters changed its name,” Pelayo thought may have been thwarted by Wang’s person close to the board told the at the time. appointment as company chief. FT. “Finally this company was start- As a result Wang had nursed SMIC Michael Clendenin, managing di- ing to move in the right direction, back to health, returning it to prof- rector at research company RedTech and now everything is falling apart 11 Week in China Internet & Technology 22 July 2011

again.” Concerned by events, in- how to exploit it commercially. Plans small portion of users before a full vestors sent SMIC shares down 11% announced last week to launch a vir- rollout later in the year,” a Sina in- this week on the Hong Kong stock tual currency mark the first push to sider told Reuters. exchange. monetise Sina’s online platform. Not everyone is hopeful that But there were signs that CIC and Similar to Facebook Credits, Weibi will make money. “Sina Weibo Datang were trying to reach a truce Weibo’s currency – called Weibi – has accumulated a large number of this week by appointing Zhang can be used for online payments to game users on its platform and the Wenyi, a former Chinese govern- buy online goods and services on introduction of Weibi can facilitate ment minister, as the acting chief Weibo, as well as applications (like payments to different game devel- executive while the board looks for games) that run on its platform. opers,” Yu Yi, analyst at consultancy Wang’s replacement. Other Chinese internet giants like Analysys International, told the Tencent, Sohu and NetEase already Global Times. “But whether it can have their own virtual currencies. generate profits will depend on user Sina says that Weibi will be ex- willingness to pay.” changed 1 for 1 with the Chinese To encourage take-up of the cur- Weibo wonga yuan. The first batch of applications rency, Sina will not charge applica- Sina monetises platform to use Weibi will mostly be online tion developers for the first year in games but there will also be an e- which Weibi payment is integrated ina, which owns Weibo, China’s commerce app, says tech blog into their products. Smost popular microblogging Technode.com. In future, developers accepting platform (with more than 140 mil- “Weibi is in the development Weibi will probably have to pay back lion users) is fast learning how to en- stage now, but it will be launched a share of revenue, when they con- gage a massive audience. Next up is very soon in the third quarter to a vert it back to yuan. n

Who’s Hu: Wang Wenjing Profiles of China’s business leaders

Getting started Local sales agents told Wang that some customers Wang Wenjing's talent was obvious from an early in the city were no longer interested in purchasing age. At 15 years-old, he started at Jiangxi financial software, but rather solutions that could University of Finance and Economics, where he help with company management across various majored in accountancy. Upon graduating in divisions. If this was the trend in one of the most 1983, he went to work in the finance division of developed manufacturing regions, Wang knew it an adjunct to the State Council, where he met was only a matter of time until companies across his future business partner Su Qiqiang. China wanted the same thing. UF thus made a strategic shift towards making Big Break enterprise resource planning (ERP) applications. By In the mid-eighties, Wang and Su were tasked 2002 it was the ERP market leader in China; and a with the job of introducing computer systems year later, it started to export solutions to Southeast to process the central government's accounts. Asia and Japan. During the implementation of the project, Wang realised that computerisation of accounting Wang: ahead in cloud? Need to know was going to be a gamechanger. He and Su In 2010, UF's net profit was Rmb332 million, and as both quit their government jobs and went to a leading software firm it began to attract Beijing's electronics district, Zhongguancun, to set up a company, international interest. UF Software. Success came quickly: in 1991, the company's Microsoft is rumoured to have offered $1 billion for the firm in financial software was accredited by the Ministry of Finance and 2005. Wang declined. He also said no to Steve Ballmer when the in the same year UF became China's leading provider of financial CEO of Microsoft flew to Beijing in 2007 in search of a strategic software. Although Su left the company in 1993 to focus on investment. A year later, the companies did come to some

Photo Source: China Imagine software sales, UF continued to grow: by 1998, turnover was understanding, becoming global strategic partners. Rmb180 million ($27 million). Having made the change from financial software to ERP applications, UF says it is now getting ready for the next transition, Growth into cloud computing. If it can do so successfully, it hopes to A trip to Dongguan in 1996 changed the focus of UF's business. maintain its place at the forefront of China's IT industry.

12 Week in China Rail and Infrastructure 22 July 2011

Costly delays Embarrassment for high-speed train bosses

ussolini may have a ques- them without air conditioning the Mtionable legacy but the for- entire time). mer dictator is said to have solved Railway officials barely had one of Italy’s most chronic prob- time to apologise to passengers lems: he got the trains to run on before the next incident was be- time. ing reported. This time the prob- How? According to his biogra- lems appeared to be man-made. A pher Denis Mack Smith, he told his faulty instrument (the panto- Fascist black-shirts to shoot drivers graph, for the engineers in WiC’s if they failed to keep to schedule. readership) led to a power loss on Don’t blame me... A draconian measure, indeed. But one train, then causing 29 more Party officials in China may be trains to be delayed. “Many micro-bloggers said they thinking creatively about how they “No one explained, we waited for would not choose high-speed trains can solve an embarrassing locomo- two hours,” one exasperated pas- over flying] after this incident,” ex- tive problem of their own: a series of senger told Xinhua. explained China Daily. “Punctuality delays on the Beijing to Shanghai Another malfunction last and the ability to operate regardless high-speed rail line. Wednesday meant passengers were- of the weather were meant to be its The flagship service was sup- disembarked and switched to other advantages.” posed to highlight China’s engi- trains, contributing to a final tally of Reportedly, local airlines sig- neering prowess. But since opening, only 85% of trips being completed nalled their own disdain by hiking it has done anything but. on time over the first two weeks. ticket prices back up to pre-opening The railway was already under Performances like that would re- levels (so Rmb900 a ticket now to fire for its price tag ($34 billion), as quire Japanese railway men to fly from Beijing to Shanghai instead well as disappointment that it reach for their harakiri swords. But of Rmb400). wouldn’t be run as fast as officials there were also signs of a little sat- The Ministry’s case wasn’t helped had first promised (topping off at isfaction from the Japanese, with by news that corners may have been 300km/h instead of 350 km/h). the Sankei Shimbum going with cut at ancillary projects too. Those concerns were overlooked the headline: “China’s pirated Travellers at the Nanjing South when the line was launched on the Shinkansen (bullet train) was soon Station – a major hub for the first of July – to coincide with the out of order.” For why the Japanese high-speed line – had to trudge 90th anniversary of the Chinese might feel such vindication, see through ankle-deep water last Communist Party. But the halo WiC114. week after heavy rain turned it around the project soon started to Xinhua did its best to put a more into a muddy bog. fade. During the second week, serv- positive spin on events. “It’s a ‘new- ‘Asia’s largest train station’ (ac- ice was disrupted three times in four born’, we should be more patient,” it cording to the Yangtze Evening Post) days, stoking criticism that the proj- pleaded, before even going on to ar- had its brand new granite floor torn ect had been rushed to completion gue that the power outages proved out just days after it was signed-off ahead of the big day. the safe operation of the system. as ready’. The reason was a familiar The first incident was blamed on Railway Ministry spokesman Wang one. “It was just thrown down too Photo Source: Reuters mother nature: heavy rains dam- Yongping concurred: “With these quickly to make it ready in time for aged electric cables, causing a power problems exposed and solved, the opening ceremony [on July 1],” a outage and delaying 19 trains in China’s [HSR] will become better.” construction worker told the South Shandong for several hours (and left The public was less impressed. China Morning Post. n 13 Week in China Society and Culture 22 July 2011

Bay’s robots learn Chinese New Hollywood blockbuster features big product placement from China

ichael Bay, king of the sum- Mmer movie spectacle, was in charm offensive mode on a trip to Shanghai last week, to promote his latest blockbuster Transformers: Dark of the Moon. “One of my best memories is when I was a kid and I spent four months studying Chinese history. China has such a rich and amazing culture, as well as a great history,” he gushed to local media. Of course, since becoming an adult Bay has switched enthusi- asms: now he’s much more into gi- ant robots. And very profitably so as far as the Transformers franchise is concerned. Dark of the Moon is also expected to prove another ma- jor hit when it is released in China this week. The film, which features actor Shia LaBeouf and the Victoria’s Se- cret model-turned actress Rosie Huntington-Whiteley (she’s replac- ing Megan Fox) has already grossed $762 million worldwide. And that’s just for ticket sales. The media has also identified 68 brands paying for product place- ment in the film, which has brought additional revenue totalling $400 million. As part of the commercial Likes her branded goods: Huntington-Whitely effort, audiences around the world will get to see four, less familiar Two of the country’s largest elec- But the most controversial brand brands on display from China. tronics makers are also big adver- to get the Transformers treatment Which ones? Metersbonwe cloth- tisers. TCL’s flat-panel televisions is Yili milk, which was implicated in ing is first up, having debuted in the appear frequently, and Lenovo also the melamine scandal in 2008. previous Transformers instalment, manages a series of close-up shots Asian-American actor Ken Jeong Revenge of the Fallen. for its computers. (The Chinese PC is seen holding a carton of milk as Photo Source: Reuters Moviegoers don’t have long to maker seems to have taken a page he delivers the (hardly immortal) wait, with Shia Labeouf donning a from Apple’s playbook by putting line: “I’m not talking to you until I Metersbonwe t-shirt just five min- its logo prominently on the back finish my Shuhua milk.” utes into the action. of monitors). Shuhua is a brand owned by Yili 14 Week in China Society and Culture 22 July 2011

Ready to Conca Chinese league Record signing brings Argentine footballer to China

n 1893 Willie Groves set a record Ias the first footballer to merit a three figure transfer fee, when Aston Villa paid just over £100 to buy the Scot from West Brom. To today’s generation of profes- sional footballers that will seem a piddling sum – Manchester City’s Carlos Tevez reputedly takes just Operates on batteries or Shuhua milk four minutes to earn £100. Over in China, another Argentin- Group. “Michael Bay was, like, what? who felt that it portrayed Mao as ian is smiling, having set a transfer The milk isn’t even distributed in materialistic. But the film’s direc- record of his own. Dario Conca is the US,” says Liu Siru at Filmworks, a tors denied accusations of product- now China’s “most expensive soc- marketing company that helped the placement. cer import,” reports Xinhua. The four Chinese firms get their prod- “It is definitely not. It is a detail of footballer has joined Guangzhou ucts in the blockbuster. our prop design,” says co-director Evergrande for a fee of $10 million, Liu also told the China Daily that Han Sanping. (By this WiC infers in a deal that will see him play for it took five months to come up with that the movie would have suffered the southern Chinese club for three the milk-drinking scene, and that without the scene’s inclusion). and a half years. Yili had first wanted one of the ro- Chinese audiences also have a WiC has written before about bots (Bumblebee, for Transformers history of irritation when it comes high-spending Evergrande. Prop- fans) to guzzle the drink. to more blatant product placement. erty mogul Xu Jiayin has pumped Bay wasn’t keen – even children Feng Xiaogang’s hit Aftershock, significant funds into the club since know robots don’t drink milk – so about the 1976 Tangshan earth- acquiring it two seasons ago, break- Yili buckled. “There are always con- quake, tried to cash-in too, but was ing the transfer record twice last flicts between filmmakers and then criticised for attempting to year with the purchase of players business,” Liu acknowledged profit from the disaster. from Brazil. Money, it seems, can sagely, “but I have to say, the final Reaction to the latest Trans- indeed buy success: the team cur- scenes are a delight.” formers film couldn’t be more dif- rently tops the Chinese Super Product placement is a feature of ferent. Chinese audiences feel a pa- League by nine points. That has the Chinese films too, of course. Even triotic twinge when they see added benefit of being good public- the propaganda flick Beginning of homegrown products in Western ity for Xu’s real estate firm, also the Great Revival – made to celebrate films, says the Economic Observer. called Guangzhou Evergrande. the 90th anniversary of the found- That they feature at all will be However, Xu’s motives are not ing of the Chinese Communist Party taken as a sign of China’s growing only commercial. He is another of – is not immune. In one scene, the economic importance. the Chinese billionaires apparently actor playing Mao Zedong accepts a “When I read that there are sev- intent on helping to clean up Chi- gift of a gold Omega watch from his eral Chinese product placements in nese football (WiC wrote about girlfriend (presumably to help him Transformers 3 I felt so proud,” one Wang Jianlin, boss of Dalian Wanda count down more accurately to netizen wrote on Sina Weibo. “It is so Group in issue 113). Photo Source: Reuters judgement day for the bourgeoisie). exciting to know that we have man- Prior to his arrival, the The camera zooms in and the aged to place our products in a Hol- Guangzhou club had been rele- Swiss luxury brand is visible to all. lywood blockbuster film. This is def- gated and disgraced for its part in a This annoyed some cinemagoers, initely a source of national pride!” match-fixing scandal. Now with a 15 Week in China Society and Culture 22 July 2011

South Korean coach and a host of foreign talent, it’s enjoying some- thing of a renaissance. Conca made his debut for the club last week, helping it to a 5-0 vic- tory over Nanchang Hengyuan with his first goal. The former captain of Brazilian club Fluminese is the high- est-calibre foreign import to reach Chinese shores thus far. Inevitably, he’s already being described as Guangzhou’s very own Lionel Messi. WiC doubts if Conca is quite in that class. But he didn’t come cheap. The China Daily reports he is earn- ing $7 million a year for his services, which puts him in the top 50 for world football. In fact, local publication Soccer News reports that he twice turned “Yes, $7 million!”: Conca down the Chinese offer, before fi- nally telling the chairman of his He told Nanfang Daily: “Euro- precedent. Back in 2007, Alex Fer- Brazilian club that he could no pean heavyweight media such as guson publicly asked referees in longer refuse: “I have never seen so La Gazzetta dello Sport and Corriere England to afford the then Man- much money in my life!” dello Sport have started to pay at- chester United star Ronaldo more Evergrande club chairman, Liu tention to the China Super League, protection from bad tackles. And Yongzhuo has said the team is now which is all because there is a player tackling in China can be especially targeting victory in the AFC Cham- of the year from the Brazilian awful. Liu may have in mind a ca- pions League – the Asian version of league willing to come to China to reer-ending challenge on Beijing Europe’s Champion League. He play. This in their view is unthink- Guoan’s goalkeeper by Tan Wang- wants to lift the trophy within five able, but becomes a reality. Conca song, then playing for Tianjin Teda years and says he will keep signing makes a small step as an individ- (see WiC21). foreign players until that goal is re- ual, which becomes a big step for In his debut match, Conca did get alised. However, in a telling remark Chinese football.” a minor roughing-up from the op- Liu admitted the negotiations with Somewhat more controversially, position, but not enough to enrage Conca had been extended ones, pri- Liu has asked other Chinese teams the 50,000 watching fans. But it marily because “top class players re- to avoid injuring Conca through prompted Liu to remind the Beijing main unwilling to play here”. cynical fouls – as this would be yet Times: “To protect Conca is to pro- Still, Liu is optimistic that will another blow to the league’s repu- tect the art of football – only by tak- change and reckons the profile of Chi- tation, he says. ing the skill-oriented road can Chi- nese football is already on the rise. Such a request is not without nese football have a good future.” n

Explosive returns

Photo Source: China Imagine “It’s a bit like looking for gold in a minefield”

* Anthony Bolton on the risks of investing in Chinese firms. He runs a fund specialising in China and suffered losses on two small firms in his portfolio, which have been accused of fraud. He told the Financial Times he was now spending more time on due diligence.

16 Week in China And Finally 22 July 2011

Swimming in muck Publicity event sees politicians and residents plunge into Pearl River

o with the flow – that’s the event showcasing the ongoing clean succeeding in mastering swimming Gmotto when it comes to politi- up of the Pearl River, more than skills in such a short time,” he told cians swimming in Chinese rivers. 2,000 locals competed in the 800 his junior colleague. As WiC has mentioned before, metre race. Zhang could afford to be mag- Mao Zedong was partial to a river WiC commends their courage. Al- nanimous, as he had just won the dip himself, culminating in a fa- though China News Service points race himself. mous outing on the Yangtze. out that the Guangzhou government Pausing long enough only to de- After a year out of the public will invest Rmb5.5 billion in clean-up mist their goggles, fellow racers then view, he was suddenly back in the activities this year, there is still some queued up to laud Zhang’s achieve- headlines in 1966, having powered way to go before the Pearl can be ment. Fairly typical was an executive nine miles downstream in just over classed as safe for swimming. from China Southern Power Grid, an hour. The Chinese press reported Apparently, the classification of who confided to the Guangzhou Daily it euphorically; Western media that trying to keep up had left him was suspicious of what looked “short of breath”. like a world-record time. And Others were less impressed from a 73 year-old too… with the race order, including In fact, the pace was so quick Yuan Weishi, a local academic. It that Mao was soon being invited was typical for officials to “spare to compete internationally. One no effort to avoid stealing the such request arrived from limelight from their superiors, Canada: “We are told that you even in a game,” Yuan noted on swam nine miles in the excellent his weibo. time of 1 hour 5 minutes,” con- WiC has to agree that Wan’s sil- gratulated the World Professional ver medal might not stand up to Marathon Swimming Federation. scrutiny. To his credit, the mayor “This should put you in line for “Look, it’s clean!” admitted that he couldn’t have the championships...since the even completed the race “with- record for the 10 mile Quebec swim, water quality has recently gone up a out the help of flotation materials”. set last year by one of the fastest notch, although the South China No such support was needed for swimmers in the world…was four Morning Post thought that the new Mao back in 1966, of course. And it hours 35 minutes”. level suggests suitability for factory sounds like he could have swum The sceptics were missing the usage, and not for the front crawl. even faster, having stopped at one point. The swim had been stage- One race participant revealed point to advise a local lady on her managed, sure enough. But Mao’s that the river was still so murky that backstroke. time counted for little compared he could not see his fingers in front This led to “spasms of cheers” with the political theatre of the river of him as he swam. from the riverbank, from spectators plunge, which was designed to With an unlikely venue came an already overcome by the signifi- demonstrate his continuing vitality. unlikely result: Guangzhou mayor cance of the day’s events. “Our re- Similarly, we need to keep our eye Wan Qingliang came second in the spected and beloved leader Chair- Photo source: China Imagine on the symbolism (rather than the race, despite learning to swim only man Mao is in such wonderful immediate outcome) of another high a few days before. It was a tremen- health”, the newspapers reported. profile swim, this time in the south- dous effort, thought local Party sec- “This is the greatest happiness for… ern city of Guangzhou last Saturday. retary Zhang Guangning. “You de- revolutionary people throughout In the sixth year of an annual serve to be our role model for the world.” n 17 Week in China The Back Page 22 July 2011

Photo of the Week Photo Source: Reuters

Wendi Deng is getting plaudits on the Chinese web for her ‘tiger wife’ defence of husband Rupert Murdoch. Reacting swiftly, she slapped a man who tried to attack the mogul with a custard pie

Where is it? In Numbers Some of the places referred to in this issue 65,148 Heilongjiang Chinese tourists to the Maldives over the first five months of this year – the largest group by nationality. (Italians came second with 47,000).

Xinjiang Inner Mongolia Beijing Rmb3,326 Hebei The average monthly wage in Shenzhen, according to a municipal government survey. That’s about 4% higher than at the end of last China year and has low-cost manufacturers worrying they’ll have to leave Shanghai the city.

Jiangxi 6 Shanghai’s ranking on a new list of international financial centres, Xiamen Guangdong according to a Xinhua-Dow Jones report. That’s two places higher Guangzhou Dongguan Hong Kong than last year, as the Chinese city leapfrogs Paris and Frankfurt.

With 1.3 billion people, 293 languages and an often opaque business culture, China can often seem as mysterious as the Mona Lisa. Our easy-to-search website now helps you to find some of the answers. It contains a growing archive of more than 2,200 WiC articles. And the site has another advantage: subscribers are able to read us on the move each week via their Blackberry or iPhone. To get our weekly email and access the site, you’ll need to go to www.weekinchina.com/welcome/ and sign up. It takes just a couple of minutes to register. Sign up today!

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