1 Talking Point 6 Week in 60 Seconds 7 Energy and Resources Week in China 8 China Tourist 9 China and the World 12 Cross Strait 13 China Consumer 15 Environment 18 October 2013 16 Society and Culture Issue 212 20 And Finally www.weekinchina.com 21 The Back Page Debt ceiling drama m o c . n i e t s p e a t i n e b . w w w

Short fuse: Beijing angered as Washington plays politics with the full faith

and credit of the United States, risking a global crisis Brought to you by Week in China Talking Point 18 October 2013

Beijing floored by US ceiling Xi steals limelight at APEC but China frets about its dollar debt holdings

by dysfunction in Congress. Thankfully, the unthinkable didn’t happen and with just a few hours to spare before the midnight deadline a deal was brokered on Wednesday to raise the ceiling (though only till February) and end the government shutdown. Though left dangerously late, mar - kets were still relieved that the im - mediate threat of America defaulting on its government bonds had passed. Not that anyone has emerged from the debacle with much confi - dence in the current state of US governance. “Our country came to the brink of disaster,” said Senate majority leader Harry Reid. Veteran Repub - lican Senator Lindsey Graham made perhaps the most signifi - cant admission when he told CNN Was he praying for a deal on the debt ceiling? John Kerry in Bali in the wake of the deal “our sys - tem here is completely broken”. hoto calls at APEC conferences of purple, it may even have reflected Indeed, the Chinese remain Pusually rouse the mildest of at - Kerry’s mood as he was steered to worried that this won’t be the last tention and normally that’s only the outermost fringes for the tradi - time US politicians flirt with de - thanks to amusement at the garish tional photo. While Kerry stood on fault – with it likely we could go shirts that some of the leaders look tiptoe at the back, Chinese president through a repeat of the exercise to be wearing under sufferance Xi Jinping was front-and-centre, early next year. Notably, 144 Re - (something that we remarked upon beaming. If a picture really tells a publican congressmen voted in WiC44). But in Bali this month story, the moment was full of sym - against Wednesday’s disaster- the buzz was less about what was bolism, with American influence averting deal (a greater number being worn at the summit and clearly subordinate. than those who voted for it). As more about who hadn’t turned up, Meanwhile, as the biggest holder HSBC’s chief economist Stephen after Barack Obama stayed at home of US debt, the Chinese also wanted King points out, perhaps the to face the crisis over the federal their voice heard in Washington, as scariest outcome of the week: shutdown and a looming sovereign fears grew that the Americans “Many Republicans voted on default. might not raise their debt ceiling. Wednesday night in favour of de - P h o t

o In his place, he sent Secretary of As the week dragged on, patience fault.”

S o u r State John Kerry, who soon looked wore thinner. Anger grew in the All in all then, it wasn’t a great c e :

R e suitably uncomfortable in a long- Chinese state media that the rest of week for Uncle Sam’s image u t e r s

flowing Balinese shirt. A deep shade the world could be dragged down abroad... 1

Week in China Talking Point 18 October 2013

Back to APEC: the no-show was a blow to American standing in the region? Obama regretted that he had been forced to cancel “critical meetings in Asia” and accepted that the debt ceiling row was tarnishing the US reputation. “Whenever we do these things, it hurts our credibility around the world,” he admitted. “It makes it look like we don’t have our act together. And that’s not some - thing we should welcome.” He missed out the APEC Leaders Meeting in Bali on October 7-8, fol - lowed by the East Asia Summit in Brunei over the following two days. The impact is likely to be felt in two main policy areas. Firstly, the no-show could lead to further de - lays in Washington’s efforts to seal the so-called Trans-Pacific Partner - ship (we discussed the TPP in WiC172). Beijing regards the TPP as an attempted sidelining of its own interests in the region (partly be - cause it touches on a number of contentious policy areas like greater protection for intellectual property and a reduced role for state enter - “At least I turned up”: President Xi Jinping with his wife Peng Liyuan prises, but mostly because the Chi - nese haven’t been invited to join the As America prevaricates, China’s neighbours view Washington as an pact). So it has opted to forge re - commercial clout grows. Peter Drys - essential counterbalance to Beijing gional trade ties instead (most no - dale, who heads the East Asia Forum in the region, so Obama’s non-ap - tably with ASEAN and Taiwan; see at the Australian National Univer - pearance rankled (one Asian diplo - WiC67) and is also talking about set - sity, says that the Chinese share of mat privately described the ting up yet another trade group, the East Asian trade doubled to 20% be - decision to send Kerry instead as Regional Comprehensive Economic tween 2000 and 2012, while the US “stark raving mad”, according to Partnership. The plan is to invite proportion fell from 19.5% to 9.5%. The Economist). most of the TPP candidates (not It’s a similar story in Southeast Asia. Others went on record to urge America, of course), plus a few non- In Brunei Premier Li Keqiang pre - Washington to stay active in the re - APEC members like India. dicted that China’s two-way trade gion, including Singapore’s Prime Aware that talks on the TPP have with ASEAN economies will reach $1 Minister Lee Hsien Loong, who ex - been dragging on for years, the trillion by 2020, more than double plained that America plays a role Obama administration had prom - last year’s amount. “which no other country can re - ised to complete negotiations by The East Asia Summit focused place: not China, not Japan, not any the end of 2013. But without the more on security issues with Kerry other power”. Hence there was president in Asia, there was less op - calling on the six parties claiming extra disappointment when P h o t

o portunity to push for a deal. Ta all or part of the South China Sea to Obama’s team was also forced to

S o u r Kung Pao, a pro-China newspaper in agree on a code of conduct to re - cancel his proposed trip to Kuala c e :

R e Hong Kong, likened it to having “an solve disputes peacefully. But that Lumpur, postpone a visit to Jakarta u t e r s

orchestra without a conductor”. rang a bit hollow. Many of China’s (for the third time) and drop a 2 Week in China Talking Point 18 October 2013

planned stop in Manila. der of civilians. But he then turned Richard Haass, president of the to the specifics of the debt dispute Council of Foreign Relations, was as further evidence of Washington’s concerned by the symbolism, damaging impact beyond its own telling Politico.com that the no- borders. “As US politicians of both show “makes a mockery” of Wash - political parties are still shuffling ington’s Asian “pivot” – supposedly back and forth between the White a key foreign policy theme for House and Capitol Hill without Obama’s administration. striking a viable deal to bring nor - Without fuller US engagement in mality to the body politic they brag the region, Haass says, smaller about, it is perhaps a good time for countries will be more likely to bow the befuddled world to start consid - to Chinese demands, while stronger ering building a de-Americanised ones like Japan will feel that they world,” he demanded. will have to take it upon themselves “Such alarming days when the to stand up to the Chinese. destinies of others are in the hands “One can hear the tectonic plates of a hypocritical nation have to be shifting in a part of the world des - terminated,” the commentary con - tined to shape much of the trajec - tinued. “Instead of honouring its tory of the 21st century,” he What Asia pivot, says Haass duties as a responsible leading lamented. power, a self-serving Washington All of this activity contrasted has abused its superpower status So what did the Chinese do in Bali with Obama’s absence, delighting and introduced even more chaos and Brunei? the Global Times, which reported into the world.” Xi and his prime minister, Li Ke - that Xi had found himself “in the qiang pressed the flesh at the two driver’s seat” at the APEC gathering. Elsewhere, some of the Chinese summits, as well as touching down The Economist agreed, describing views were a little different? in several Asian capitals before and the Chinese president as “oozing Alongside sniping at Washington’s after the main meetings. personal authority and commercial weakness, there were signs of self- Prior to arrival in Bali, Xi visited clout at every stop”, while Ta Kung reflection in the social media. De - Malaysia, signing pledges to boost Pao went further, gushing that Xi spite the chaos on Capitol Hill, not bilateral trade to $160 billion by was now “the brightest political star everyone was persuaded of the su - 2017, up from $95 billion last year. on the Asian diplomatic platform”. periority of Beijing’s one-party rule. He also met the Indonesian presi - In contrast, Washington had been “A government that can shut down, dent in Jakarta, becoming the first diminished: “America has lost an no matter how big the impact on foreign leader to address Indone - important chance to perform… the everyone’s lives, is a good thing,” sia’s parliament. influence of the US is questioned noted one netizen. “It shows that Pointedly, Xi sought to bolster more and more.” power can be checked, and the gov - APEC’s primacy in trade policy, argu - ernment can’t spend money how - ing that it should play “a leading and What did the Chinese say about the ever it wants.” coordinating role” in regional free- debt crisis in Washington? Jiayang Fang, writing in the New trade integration and warning that The leadership chose its words cau - Yorker, noticed a similar mood, cit - other arrangements should serve co - tiously. But it has been a different ing another online contributor, who operative purposes, with “an open story for the state media, which has wrote: “This is the meaning of mind-set, not a closed one”. used the shutdown to mount a checks and balances. No single dic - Li went to Bangkok after the sum - wider critique of the United States tator makes the decision. And to mit in Brunei, delivering the first and its political system. Liu Chang, a think, Americans put this much ef - speech by a foreign leader to the staff writer at Xinhua, was particu - fort into determining their budget P h o t

o Thai legislature in over a decade and larly caustic in an English-language and preventing waste. So much so

S o u r making more commitments to commentary that eviscerated the that the entire government will c e :

R e boost bilateral trade to new highs. Americans for a series of evils, in - close if a majority cannot agree…” u t e r s Next, he visited Vietnam. cluding spying, torture and the mur - For others, Washington’s plight 3 Week in China Talking Point 18 October 2013

stirred familiar fury about graft in China. “I wish our government Planet China would shut down and let corrupt of - Strange but true stories from the new China ficials have a taste of it,” one person suggested. “In China, if the econ - omy goes wrong, the ordinary work - SKINNY BRIDE, TO GO. Isn’t she a little overdressed to be going for a ers lose their jobs,” said another. latte? On a recent trip to Tianjin, WiC spotted the bride-to-be below outside “But in America, it’s the officials a Costa Coffee outlet. She wasn’t alone. We then counted dozens of brides who have to go home.” and grooms waiting to have their own picture taken at the same spot. The But most of all, the media com - building’s relative grandeur may be why it’s a favourite with photographers. Wedding photos are big business in China with 10 million couples getting mentary looked at how a debt de - married annually and spending an average of Rmb3,526 on celebratory fault in Washington would harm snaps (see WiC152). Aside from the customary pictures taken on the day, Chinese interests, sending a jolt standard practice is for the bride and groom to be snapped ahead of the through the international markets ceremony. Donning a wide array of outfits, the photos are then turned into a and driving down the value of Bei - glossy book for friends and relatives. That suggests to WiC that Costa must jing’s dollar-denominated foreign doing rather well in brand awareness terms in the city, given that it seems to reserves. be featuring in so many local wedding photos. The chain – a regular “A US default can be seen as a hy - presence on British high streets – is making a push to grow in China but it’s drogen bomb for the world econ - choice of location in Tianjin looks like a good one. omy,” Xu Hongcai, a director at the China Centre for International Eco - nomic Exchanges, told the Global Times. “It will have a deadly impact on the global financial system and damage the American image”. Fortunately Xu thought the im - pact would be so horrific that the Americans “will do anything to pre - vent that from happening” and cor - rectly predicted that a deal would be reached. Despite this, there was no deny - ing Chinese anger that they felt hostage to events. The diatribe in Xinhua made this point too, rumi - nating that the international com - munity was “highly agonised” because its dollar assets were “in jeopardy”. Beijing, of course, holds $1.3 trillion of US Treasury bonds. The situation even made for an global trade and investment is still within that percentage the share of unlikely ally in Tokyo, the second- dollar-dominated. US Treasuries has actually increased largest holder of US sovereign debt Take foreign reserves, where pol - since the global financial crisis. at $1.14 trillion, with references to icymakers have been trying to ad - “We started investing more in US similar concerns from Japanese fi - dress the conundrum of wanting to government debt because it seemed nance minister Taro Aso. “The US see the dollar diminish in signifi - so safe and invested less in agency must avoid a situation where it can - cance, but not necessarily in value. bonds (especially government- not pay and its triple-A ranking Is a transition already underway? sponsored mortgage companies plunges all of a sudden,” Aso urged. Data from the US Treasury indicates Fannie Mae and Freddie Mac). Now, Chinese frustration is that, de - that the proportion of dollar assets we should look at options outside spite the country’s rapid ascent to in China’s reserves had fallen to 49% US government debt,” Tang Jie, a re - number two ranking in the inter - of the total by June last year, down searcher at Renmin University, told national economy, the world’s from 69% three years previously. But the Financial Times. 4 Week in China Talking Point 18 October 2013

David Li, an economics professor demands that China has more say Yet the renminbi can hardly at Tsinghua University, told the at international financial institu - claim to be an imminent threat to same newspaper this week that the tions like the IMF (Xi renewed calls the dollar as the world’s major re - Chinese have been too slow to di - in Jakarta last week for the creation serve currency. It ranks 8th as a versify away from US Treasuries. of an Asian Infrastructure Invest - traded currency with just a 1.49% Rather than continuing to rack up ment Bank, led by China). And at share (40.14% globally for the dol - US government debt, Li argues that home, it puts the onus on speeding lar) and is 12th in payment terms China should buy 5% of the shares up domestic reforms needed be - (0.84% share versus the greenback’s of the multinationals operating in fore the yuan can take on a more 37.93%). Similarly, it doesn’t feature the Chinese market, increase hold - prominent role in global financial in the foreign exchange holdings of ings of the safest non-US sovereign markets. Earlier this month we many central banks. According to bonds like Germany and Australia, mentioned the new free trade area IMF data, only 3% of forex reserves and purchase 5% of the shares of in Shanghai, which is expected to fall into the ‘other currencies’ cate - public utility firms in the world’s serve as a pilot zone for testing gory in which the renminbi would more mature markets. That would freer convertibility of the renminbi be classified. be a far better use of Chinese (see WiC211). Then again, that looks likely to money, Li says. And although the timing looks co - change. The debacle over the debt Why hasn’t China done this be - incidental, the People’s Bank of ceiling and the American govern - fore? Li’s suggestion is that Beijing China signed another major swap ment’s credit (hitherto unthreat - sees political logic in holding US agreement last Thursday, worth ened since 1791) feel to some like an debt as a “bonding instrument”. Rmb350 billion ($57.43 billion) with epochal moment. Almost a century Being Washington’s leading credi - the European Central Bank, marking ago the First World War struck a tor tones down American attacks another effort to continue the inter - blow to sterling’s preeminence. The on sensitive issues (such as alleged nationalisation of its currency (for brinksmanship in Washington this currency manipulation or subsidies more on this process see our Focus week might one day be regarded as for state companies). Issue: Ready for the RMB ). The central the beginning of the end of the dol - Despite this, Chinese calls for a bank has signed currency swaps lar’s dominance and another wider choice of reserve currencies amounting to Rmb2.2 trillion with 22 foothold in the slow but sure rise of are getting louder. The campaign countries and regions, according to the renminbi (which hit a historic has been broadly based, including Xinhua. high against the dollar this week). n

Missing the mark

Does it matter how a visa is fixed to Competition this week. your passport? If you are in India or Because the archers hail from China, it certainly does. the disputed region, Chinese Because both nations are highly embassy staff in Delhi stapled their bureaucratic, you ask? Well, that visas into the two girls’ passports might be part of the problem but the rather than stick them in, as they real issue is Arunachal Pradesh, or would normally do. South Tibet as the Chinese refer to it. But when they got to the airport For over sixty years China has laid the girls were then prevented from claim to this 84,000-square kilometre flying because of their irregular strip of the lower Himalayas, although documents. Despite their protests, India has administered the region. they were unable to travel to the

I The ownership row remains tournament. l l u s t r a unresolved: hence, the fiasco The incident led to an outcry in t i o n :

surrounding two teenage athletes from w India and there are even calls for the w w

. Arunachal who were meant to travel to b Indian prime minister to take China’s e n i t a the central Chinese city of Wuxi to foreign ministry to task over the affair e p s t e take part in the World Youth Archery

i when he visits later this month. n . c o m

5 Week in China The Week in 60 Seconds 18 October 2013

Exports in shock drop The major news items from China this week were...

China’s exports dropped 0.3% from the same month 1last year to $185.6 billion, well short of forecasts of 5.5% growth. One reason September’s figures look so bad is that a year ago exporters were exaggerating their sales as a way to bring in funds (to dodge foreign exchange re - strictions). More worryingly, consumer prices rose 3.1% as food costs advanced the most since May 2012.

Another high-ranking government official is being 2investigated. This week Ji Jianye, mayor of Nanjing in Jiangsu has been placed under an internal disciplinary probe by the top graft watchdog over economic viola - tions, says the Global Times. Ji’s case is alleged to be re - Happier times: Ji Jianye waves the Olympic flag lated to Rmb20 million ($3.3 million) of illicit money. There is further speculation that Ji is caught up in the worth Rmb1.2 billion, gives Alibaba 51% of Tianhong. Sep - case of Zhu Xingliang, a businessman in Suzhou who arately, last week Alibaba made a $200 million invest - was arrested recently. ment in ShopRunner, an online retailer in the US that competes with Amazon, showcasing its ambition to ex - Chinese travel booking site Ctrip has raised $800 mil - pand internationally. 3lion in a convertible bond sale with a coupon of 1.25% and a conversion premium at 42.5%, the highest for a HSBC has received regulatory approval for a sub- Chinese issuer since 2007. Meanwhile, Qunar, another 5branch in Shanghai’s new free-trade zone. It will leading online travel service, has also filed for a public focus first on international business banking and is ex - offering on the New York Stock Exchange in the hope of pected to launch early next year, according to a state - raising $125 million. ment. Analysts say foreign companies registered in the zone may be allowed to list in Shanghai, which would China’s largest e-commerce firm Alibaba Group has further liberalise China’s account and permit non-Chi - 4taken control of Tianhong Asset Management to ac - nese companies to raise capital from the world’s fourth- celerate its push into online financial services. The deal, largest stock market.

Greenland Group, a state-owned developer, has 6agreed to buy a 70% stake in New York’s Atlantic Yards, a 22-acre residential and commercial property project in Brooklyn. Greenland reckons that the total in - vestment will likely exceed $5 billion. The transaction is the biggest of its kind by a Chinese developer in the US.

Danone cut its full-year growth forecast to 5% as it struggles to restore Chinese consumer confidence in

P 7 h o t

o its baby milk products following a safety scare that

S o u r prompted the French dairy giant to recall thousands of c e :

R e products over the summer. Shares in the group were u t e r s Alibaba’s Ma has bought an asset management firm down 4.3% in early trading on Wednesday. n 6 Week in China Energy and Resources 18 October 2013

Shedding light Who is the man looking to acquire Suntech?

hen it comes to investing, 2007. When the sky fell in on much WCheng Kin-ming likes to bot - of China’s solar industry in late 2012 tom-fish. The Chinese financier (see WiC169), Cheng spent HK$200 (also known as Zheng Jianming million buying a 30% stake in Shun - when his name is rendered in feng. Both Shunfeng and Cheng’s pinyin) made his first major move privately-held company then em - Shunfeng: big solar ambitions in 2003 when he bought the entire barked on a shopping spree, includ - 34th floor of the China Merchants ing a 20% stake in LDK Solar, another Observer put it bluntly, claiming Building in Hong Kong. He smartly debt-saddled solar wafer maker. that Shunfeng’s might just be the picked the bottom of the property Still, the choice of Shunfeng as “smokescreen” to give the Wuxi gov - market in the city, with the SARS the preferred bidder has puzzled ernment (now the administrator) outbreak creating panic. When some creditors, especially as it was more bargaining power when nego - Cheng sold the bulk of his Hong chosen over more established play - tiating terms with other bidders, as Kong properties about five years ers including GCL-Poly (see WiC141). well as dealing with some of Sun - later, he made a gain of HK$500 It also looks like Cheng will re - tech’s Chinese creditors. million ($64.48 million). quire quite a bit of leverage to pull But Shunfeng’s company secre - Now he is indulging in some of the transaction off. Shunfeng had tary Xie Wenjie told the 21CN Busi - his riskiest bottom-fishing yet. just Rmb2.5 billion ($408 million) in ness Herald that the firm won over Cheng – who once worked as a re - total assets – against Rmb2.8 billion the Wuxi government because it searcher with the State Council in of liabilities – as of June. And before guaranteed to maintain Suntech’s pre-tycoon days – is the preferred a recent share sale raising about brand, as well as promising no lay - bidder for bankrupt solar power gi - HK$1 billion, Shunfeng only had offs. But Xie didn’t rule out bringing ant Suntech. Rmb460 million in cash. By com - in a strategic partner with more in - Suntech defaulted on $541 mil - parison Suntech has Rmb10.7 billion dustry expertise, as well as access to lion of convertible notes in March of debt. further financing. (see WiC200) and has been looking “It looks like a leveraged buyout Resuscitating Suntech will be no for a white knight to mount a rescue with a snake swallowing an ele - easy task, particularly for a man (Warren Buffett was a rumoured phant,” the China Times wrote, won - like Cheng with little more than a buyer but no bid materialised). dering how Shunfeng would be able year’s experience in the solar in - Last Tuesday, a Hong Kong-listed to restructure its much bigger rival. dustry. company controlled by Cheng said News of the deal propelled Shun - More experienced operators it had made an offer for Suntech’s feng’s share price upwards nonethe - seem less interested. The Southern key assets in China including the less. The company’s stock has al - Weekend has reported that the Suntech brand and its patents, plus ready surged 50% since it placed a Yingli Group – which has displaced two gigawatts of production capac - bid for Suntech’s assets. As of Tues - Suntech as the world’s biggest solar ity and a research and development day, Cheng’s 30% stake was worth panel maker – sent a 47-person unit. That same day the municipal HK$2.3 billion. “Even Warren Buffett team to Suntech’s headquarters in government of Wuxi, where Sun - couldn’t match a return that is ten- July to carry out due diligence but tech is headquartered, said Cheng fold in 10 months,” the Shanghai Se - eventually decided to pull out. Per - P h o t

o had been selected as the “preferred curities News noted with some haps Yingli is in negotiating mode.

S o u r bidder”. amazement. But if not – and it thinks Suntech c e :

R e The potential buyer is Shunfeng Other analysts suspect that this is can’t be salvaged – that seems u t e r s Photovoltaic, which was founded in a far-from-done deal. The Economic pretty ominous. n 7 Week in China China Tourist 18 October 2013

He likes holidays Fosun’s boss betting billions building hotels

re Guo Guangchang’s invest - more are in the works. Just last Ament decisions guided by his month, Raffles opened its first hotel wife’s shopping habits? In 2011, the in Sanya. Starwood’s Westin Hotel president of Fosun, China’s largest also debuted its new resort on the is - private conglomerate, told reporters land early this month. that he had bought a 9.5% stake in Fosun’s latest investment isn’t a the Greek jewellery and luxury great surprise. Guo is outspoken goods retailer Folli Follie because about his plan to overhaul China’s “my wife loves the brand too much”. huge but relatively underdeveloped Guo wants an Atlantis too Two years later he’s just an - tourism industry. “I love travelling nounced that Fosun has struck a but being on the road (in China) is equity firm Carlyle bought a stake in deal with hotel operator Kerzner to not just joyful but also painful,” he Mandarin Hotel, a mid-market build the Atlantis resort on Hainan confides, adding that he went to chain, following an earlier invest - island, after spending a memorable Dubai because he was fed up with ment in Hangzhou-based New Cen - holiday at the Atlantis Dubai (see the long queues at Hong Kong’s tury Hotel in 2007. Prax Capital in - photo) during China’s National Day Ocean Park. vested in Shandong-based hotel and holiday week. To that end, Fosun announced restaurant operator Blue Horizon “I often ask my wife: can you find that its tourism division will invest Group in 2008, while SAIF Partners a holiday destination where our as much as Rmb100 billion in bought a stake in Shenzhen-based family can have fun shopping and tourism-related properties in China operator Vienna Hotel Group in eating,” Guo told a press conference. (without revealing a timeline). The 2007, says the Wall Street Journal. “We found such a place and that’s conglomerate also grabbed head - Chinese tourists are already the Atlantis Dubai.” lines earlier this year when it an - world’s biggest spenders. Last year Atlantis Sanya, which is sched - nounced plans to acquire the re - they spent $102 billion, a 40% in - uled to open in 2016, will set Guo maining stake in Club Med from crease from the year before, and back Rmb10 billion ($1.5 billion). French group AXA (Fosun already enough to take them above the Ger - The resort will be wholly-owned by owns 19.3% in the resort operator). mans and the Americans, says the Fosun but operated by Kerzner, Club Med recently opened a second United Nations World Tourism Or - which manages another property resort in China, with three more ganisation. in the Atlantis franchise in the Ba - planned by 2015. They are also becoming more so - hamas. The 153-acre resort will in - “The increase in investment in phisticated in their travel prefer - clude 1,300 hotel rooms, 18 bars the tourism business is to cater to ences. Instead of joining tour groups, and restaurants, a water park and a the changes we see in consumer be - the majority are going abroad with dolphin show. haviour,” Guo told International Fi - their own itineraries, travelling Atlantis Sanya will face stiff com - nance News. “As incomes rise, Chi - alone or with family and friends. A petition for guests. The beach re - nese consumers now seek out survey from Chinese International sorts of Sanya are already a hugely experiences as a major part of their Travel Monitor earlier this year re - popular destination for Chinese consumption. And as they become vealed that 62% of travellers said travellers. Over 22 million overnight more educated, they also become they prefer to travel independently, P h o stays were registered in Hainan in more aware of the quality of the while a hotelier report said that only t o

S o u the first eight months of the year, places they visit. So Fosun is posi - 30% of their Chinese guests were ar - r c e :

S most of them by domestic tourists. tioned to capture these changes.” riving in larger groups. In 2011 the in - h u t t e r To accommodate the inflow, Sanya Other investors are drawing sim - dependent-versus-group ratio was s t o c k has more than 200 hotels and many ilar conclusions. Last year, private evenly split. n 8 Week in China China and the World 18 October 2013

Palatial investments Flurry of UK deals announced, including a plan to rebuild Crystal Palace

he National Museum in Beijing Tunveiled a new exhibition re - cently of the gifts received over the years by the Chinese government from foreign heads of state and dig - nataries. It’s a fascinating assemblage, dat - ing back to presents given to Mao Zedong, as well as including those more recently given to President Xi Jinping. WiC was not altogether sur - prised to discover that the costliest and most elaborate gifts tended to come from African despots, as well as the ever-cordial Kim family of North Korea. However, we were also struck by some of the British cadeaux. Some presents were func - tional, such as the silver cigarette box given to Deng Xiaoping by Mar - garet Thatcher. Others were more quirky, like the 10 Downing Street inkhorn, courtesy of Tony Blair. However, it was the gift from cur - rent prime minister David Cameron Osborne: doesn’t want Britain to resent China’s success, but celebrate it that caught our eye. An embossed water jug, it looked simultaneously don is making much more of an ef - And Osborne arrived in Beijing the least imaginative and least ex - fort to win Chinese favour. As we this week with other sweeteners too. pensive of the hundreds of offerings reported in WiC211, visa restrictions According to the Financial Times, received by the Chinese state. In - for the Chinese are to be greatly re - the Chancellor of the Exchequer un - deed, in a period in which relations laxed to encourage more tourists veiled a bold new measure that the between Beijing and London have and businesspeople to visit Britain. newspaper described as “rolling out been strained – mostly owing to the This was welcomed as a gesture of the red carpet for Chinese banks”. taboo subject of Tibet – the unim - goodwill (the Chinese greatly re - The FT reported that a newly an - pressive jug offered an apt symbol sented the onerous requirements nounced policy will help them “to of diplomatic discord. of the previous visa regime, which expand in London, offering to break But things look to be taking a they thought “treated them like down regulatory barriers to rein - more promising turn, after two criminals” according to a British force London’s position as a global frosty years in which China made tourism executive). renminbi hub”. The move is a po - P h o t

o plain its displeasure with the The timing couldn’t have been tential game-changer as it promises

S o u r British government. Instead of a better, coming as it did just days be - to allow China’s biggest banks to run c e :

R e jug, there was a more practical gift fore UK finance minister George Os - their wholesale operations through u t e r s

bestowed last week in a sign Lon - borne’s trip to China. branches. That will permit the big 9 Week in China China and the World 18 October 2013

state-owned banks like ICBC and Bank of China access to “the vast re - sources of their main operations in Beijing,” says the FT, and also en - sures they will be “largely subject to Chinese regulation”. Currently these banks operate their London operations as sub - sidiaries, which means they are sub - ject to tight controls in areas like capital cushions and liquidity buffers. They say that this restricts their growth and the amounts they can lend. British financiers have long agreed that this has the unwel - come effect too of holding back Lon - don’s ambitions to become an off - shore banking centre for China’s currency, the renminbi. Apparently, Osborne has declared it his “per - sonal mission” to ensure that the British capital doesn’t miss out on fulfilling this role. The chancellor told an audience Ni Zhaoxing: plans to spend $800 million to rebuild Crystal Palace in Beijing that “a great nation like China should have a global cur - Britain’s trade with China to $100 zone at Nine Elms). rency” and that London – as the billion by 2015 – added that no Slightly more controversial was global leader in foreign exchange other country in the West is more the most recent Chinese foray into trading – was the logical place to de - open to Chinese investment. To that London real estate. That followed velop further usage of the renminbi end, a couple of major deals accom - the news last week that the pri - outside China. The FT adds that Os - panied his visit. Announced first: a vately-owned Shanghai Zhongrong borne believes his new initiative to partnership between British firms Group wants to spend $800 million open the door to big Chinese banks and Beijing Construction Engineer - rebuilding Crystal Palace. Its bil - “will be seen as proof that Britain is ing Group will develop a 160-acre lionaire owner Ni Zhaoxing says his prepared to do whatever it takes to site near Manchester Airport cost - ambition is to resurrect the Victo - attract Chinese investment and ing £800 million ($1.28 billion) and rian cast iron-and-glass master - business”. generate five million square feet of piece that burned down in the In a speech at Peking University business space. Possibly even more 1930s. Johnson sounded excited Osborne continued the charm of - significant: another partnership, too, calling the project a “brilliant, fensive. “There are some in the West this time between France’s EDF and original and simple vision” with who see China growing and they are the Chinese General Nuclear Power the idea to put the structure on a nervous,” he said. “They think of the Group to build the first new nuclear hill in the same London park where world as a cake – and the bigger the plant in the UK since 1995, at Hink - it once stood for 80 years. “South slice that China takes, the smaller ley Point. London will once again acquire a the slice they will get. I utterly reject Also on the trip with Osborne world class cultural attraction,” is this pessimistic view. If we make the was Boris Johnson, the London Johnson’s verdict. whole cake bigger, then all our peo - mayor, intent on attracting invest - The original Crystal Palace was ples will benefit. I don’t want Britain ment for the capital. He too had built to house the 1851 Great Exhibi - P h o t o to resent China’s success, I want us something to cheer, as Chinese in - tion and Ni says the new version will

S o u r c to celebrate it. I don’t want to resist vestors pumped £3 billion into de - include a concert hall, a convention e :

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a your economic progress, I want veloping London property (most of and exhibition centre, and naturally g i n e

C Britain to share in it.” the money is going into the Royal a “six-star” hotel. But local residents h i n a Osborne – who wants to double Albert Dock and the regeneration have already been expressing their 10 Week in China China and the World 18 October 2013

Bo Jo finds his China mojo: London Mayor Boris Johnson visited Shanghai this week to drum up investment

concerns. Some worry about the loss the Asian financial crisis sent the property. He’s also in the oil busi - of the park’s open space, others that Shanghai real estate market into the ness: since 2005 a subsidiary has the project will morph into a casino. doldrums. Ni bought three plots of been buying up land in Canada, to Design and culture critic Stephen land “overgrown with weeds” in the drill for light crude. Another sub - Bayley told Marketplace, a radio nascent Lujiazui financial district in sidiary – New York Capital Energy show, that the Chinese replica could Pudong, a move that The Capital Corporation – also won approval end up being “muddled kitsch”, not terms as a stunning gamble. He then from the US Department of En - unlike the attempt to recreate Aus - began construction of his first high- ergy to become a major share - tria’s Hallstatt in Guangdong (see end commercial project, Zhongrong holder in Crimson Exploration, an WiC114). International Mall. Eventually Ni American oil firm. It has expertise Who is Ni, the developer who would construct 300,000 square in drilling for shale oil, owning promises his new Crystal Palace will metres of mall and office space in 95,000 acres of claims in four US be “a jewel in the crown for the UK Lujiazui, solidifying his mogul sta - states. This month it completed a and the world”? According to Chi - tus (he’s now worth Rmb7.75 billion merger with Contango Oil and nese magazine The Capital, he was according to Forbes). Gas, creating a company with $1 born in 1956 in Zhejiang province Ni’s dreams of reviving Crystal billion of proven reserves. and emblematic of the entrepre - Palace are in keeping with other He’s also branching out into fi - neurial drive that has powered projects he has on the go. For exam - nancial services in Hong Kong (al - China’s growth in recent decades. ple, he’s spending Rmb10 billion on though we should clarify that his Like many of the tycoons WiC has a giant tourism development at the Zhongrong Group has no connec - profiled over the years he left school base of the Wuyun Mountain near tion to Zhongrong Trust, whose at 15. In his case, he then toiled in the Hangzhou (on completion it will problem loans we detailed in fields as a farmer till the age of 25, feature a conference centre, mu - WiC177.) the point at which he had saved seum, hotel, mall and office space). The cigar-loving Ni looks to be enough funds to open a small fac - And in what the Cambodian gov - just the sort of cash-rich business - tory. In 1991 he founded the Zhon - ernment terms “a wonder second man that Mayor ‘Bo Jo’ is keen to en - grong Group to invest in property. only to Angkor Watt” Ni is also tice to London. As such, Johnson will His initial capital was just building a 3.5 million-square metre be hoping that planning permission P h o t

o Rmb10,000 ($1,639), but Ni had mega resort there too. goes through as smoothly and that

S o u r soon built nine apartment blocks in Other major complexes are slated Zhongrong can begin its reincarna - c e :

R e the city of Hangzhou. for Hainan island and Dalian. tion of the Victorian landmark on u t e r s His big break came in 1999 when Ni is involved in more than just schedule in late 2015. n 11 Week in China Cross Strait 18 October 2013

Strait talking President Xi says he’s willing to engage more with Taipei

hen President Obama no- Wshowed at the APEC meeting earlier this month (see Talking Point), he left much of the spot - light at the gathering of Asian lead - ers to Chinese president Xi Jinping. And with Taiwan’s major backer ab - sent, Xi took the opportunity to talk about cross-straits issues on the summit sidelines. Xi said Beijing was willing to have “equal consultations” with Tai - wan on cross-straits issues, but he En route to Taipei: the Haixia departs from Pingtan Island in Fujian insisted he wanted to see more progress in resolving them. has been making regular crossings wan Strait (1,400 at the last count). “The political divide that exists be - between Fujian and Taichung, a city With the rapid modernisation of tween the two sides must reach a fi - in western Taiwan, carrying more China’s naval and armed forces, the nal resolution step-by-step and can - than 90,000 people in the first People’s Liberation Army will pos - not be passed on from generation to seven months of last year, accord - sess the “comprehensive military generation,” he told Taiwanese rep - ing to statistics from the Fujian capability to successfully deter any resentatives at the summit. transportation bureau. But last foreign aid that comes to Taiwan’s The remark triggered another week’s arrival – after a 92-nautical defence by 2020,” the report’s au - round of diplomatic activity. Last Fri - mile journey from Pingtan – was the thors warned. day representatives from both sides first passenger ship from mainland Political analysts say that the Tai - met in Shanghai to seek consensus China to travel direct to Taipei since wanese purposely released the find - on the possibility of future dialogue. the island’s ruling party, the KMT ings to pressure the Americans to At the first Cross-Strait Peace Forum, decamped there in 1949. lend more support (the United some 120 experts discussed political Despite the steady growth in States is Taiwan’s leading provider relations, external affairs and secu - transport links, both sides remain of military hardware), according to rity, as well as developing a new wary of the other’s intentions. A the Shenzhen Satellite Station, a ca - framework for peace, reports the case in point: ahead of the Peace Fo - ble TV network. South China Morning Post. rum held in Shanghai this month, In 2011, the Obama administra - The meeting came at a time when Taiwan’s defence ministry released a tion agreed to upgrade the island’s connections between China and Tai - report suggesting that China will existing fleet of F-16 jets rather wan are growing. Indeed, there was soon have the military capability to than sell new fighters to Taipei. another milestone last week when fend off foreign efforts that might This still prompted strong protests the high-speed passenger ship stop it from invading the island. from Beijing. Haixia made its first voyage be - The report says that China is con - “Taiwan has hyped up China’s P h o t o tween Pingtan Island in Fujian tinuing to enhance its strike capabil - military threat in what is clearly an

S o u r c province (the closest point on the ity against the Taiwanese, which in - effort to seek external support,” Lai e :

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a Chinese mainland to Taiwan) and cludes beefing up its potential for an Yueqian, an outspoken commenta - g i n e

C Taiwan’s capital Taipei, says CCTV. amphibious landing, as well as de - tor on cross-straits relations, told h i n a For nearly three years the Haixia ploying more missiles across the Tai - Phoenix TV. n 12 Week in China China Consumer 18 October 2013

Mutton and manicures The hot pot chain that’s hugely popular in China, but struggles in the US

Dipping in: customers at a Hai Di Lao hotpot restaurant in China

hen Hai Di Lao gets a men - company, which has 75 outlets flavours for hot pot broth, like sour Wtion, fans of the restaurant around the country and one in Sin - vegetable fish soup, would have to chain tend to highlight its much- gapore, made Rmb3.1 billion ($510 go. The pre-dinner manicure serv - loved hot pot (Hai Di Lao essentially million) in revenue in 2012, up 54% ice also got dropped over fears that means “fishing at the bottom of the from a year earlier. But Hai Di Lao it might attract the interest of food- sea” in Chinese) . But they talk too has loftier goals: it wants to intro - safety inspectors. about the chain’s nigh-fanatical duce the concept of hot pot – cus - Still, Zhang was optimistic. “One focus on service too. While patrons tomers cooking vegetables or meat great thing about Americans is that wait for tables during peak hours, in a boiling broth at their tables – to they are a very curious group of peo - Hai Di Lao offers free entertain - Western consumers. That means ple,” he said. Industry commenta - ment via internet terminals, board taking it further afield and in March tors thought Hai Di Lao had a games and kids’ toys. Patrons can the company announced that it was chance in the US market too. Shaun nibble on complimentary snacks in opening its first branch in Arcadia, a Rein, managing director of Shang - advance of their main meal. And if city near Los Angeles. hai-based China Market Research the wait is a particularly long one, At the time, Hai Di Lao owner Group, went so far as to say that Hai how about a free shoeshine or a Zhang Yong told the Wall Street Jour - Di Lao has the potential to do for P h o t o manicure to kill time? nal that he would be making a few Chinese cuisine what Benihana – hi -

S o u r c This commitment to unusual lev - changes to the existing business in bachi-style restaurants in which e :

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a els of service has set Hai Di Lao apart order to appeal to American diners. chefs prepare food in front of their g i n e

C in China’s burgeoning yet highly For instance, Zhang reckoned that guests – did to boost Japanese food h i n a

fragmented restaurant industry. The some of the more distinctly Chinese in the US in the 1980s. 13 Week in China China Consumer 18 October 2013

But six months on, Hai Di Lao’s quite the same way. early inroads into the American Of course, Little Sheep got some market look limited. The hotpot help from its owner Yum Brands, chain picked Arcadia for its debut the US fast food giant, when it outlet because half of the city’s res - made the transition to the US mar - idents are Asian yet the response so ket, says the Chengdu-based Tianfu far has been muted. The company Morning News. seems to be struggling to generate “Why is Hai Di Lao experiencing the customer buzz that it develops problems in the US? The company at home. On Yelp, a popular web [was successful in China] because it service that allows users to rate local was constantly surprising diners businesses, Hai Di Lao only receives with warm service. But does the hot - 2.5 stars out of 5. In comparison, on pot chain understand foreign con - Dianping, China’s top review site, The other major hot pot chain sumers? Do they know what diners the chain is consistently awarded 4.5 like to do before and during meals?” stars out of 5. English and Chinese, appealing to a Zhao Jingqiao, deputy director of the What has happened? Sina Fi - wider demographic. Chinese Academy of Social Sciences nance says one of the biggest com - Some of Hai Di Lao’s quirkier Institute, asked the same newspaper. plaints from American diners is add-ons don’t seem to resonate as “Until the company fully under - that the restaurant isn’t offering well with an American audience ei - stands its customers, will it be able to English menus or a telephone ther. Customers are turning down provide them with the service that booking service in English. That hair bands (to prevent hair from American diners need?” sounds like a fairly fundamental er - falling in food) and don’t sound too Nor is it yet clear that Westerners ror if Zhang’s campaign is to bring keen on the slippers offered upon will eat hot pot as regularly as hot pot to a wider audience. Little arrival, Sina says. Nor has noodle Asians. As Bill Murray’s character Sheep, Hai Di Lao’s main rival in dancing, an enthusiastic dance style memorably said of it in Lost in Trans - China, has 12 stores in the United proferred by servers at its outlets, lation : “What kind of place makes States that all offer menus in both caught on with American crowds in you cook your own food?” n

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14 Week in China Environment 18 October 2013

Forest flaw Sandstorm threat with green wall on the wane

he National Holidays that take roads. Hence the new focus on re - Tplace in the first week of Oc - ducing by a quarter the levels of PM tober are normally accompanied 2.5 in Beijing’s air by 2017 (this is by glorious autumnal weather in particulate matter measuring less Beijing. than 2.5 micrometres – the smallest This is partly because of the time and most harmful to humans). of year and partly because, if rain That plan will be backed up with Not breathing easily threatens, the government will seed Rmb5 billion ($819.8 million) in cash rain clouds elsewhere to prevent bad rewards for Beijing, Tianjin and four region – where 945 square kilome - weather reaching the capital. surrounding provinces if they make tres of land was planted with But this year the week marking progress towards slashing emis - poplars – is that over a third of the the founding of modern China was sions, the finance ministry an - trees are on the verge of death. marred by lung-choking pollution. nounced this week. “If the forest in Zhangbei is not Tourists visiting the capital com - The city’s environment bureau properly preserved, Beijing will plained that they couldn’t make out estimates that a quarter of Beijing’s again be put under the direct im - the sights they had come to see. On pollution originates in its neigh - pact of sandstorms from dune ar - October 6 – with the holiday coming bouring provinces. eas like Otindag of Inner Mongolia,” to an end – the smog was so thick “If they take care of their prob - the Global Times quoted Hu Jun, a that flights were delayed and high - lems, Beijing will be fine with the research fellow at Beijing Munici - ways were closed. 2017 target,” a spokesperson told pal Bureau of Landscape and For Beijingers it was an ominous Xinhua earlier this month. Forestry, as saying. sign. “The air is meant to be the best But PM 2.5 matter is not Beijing’s “The sandstorms will make pol - in the autumn,” wrote a local resi - only problem. Every spring the city lution control [in Beijing] more dif - dent on the popular microblogging is also lashed by sandstorms sweep - ficult, as the density of PM 10 [larger site Sina Weibo. “We don’t expect it ing in from Inner Mongolia. For dust particles] will be increased,” Hu to get this bad until they turn on three decades, some of the impact of added. As result a replanting the heating next month.” these storms has been mitigated by scheme is underway to help rejuve - Others suggested that it could the so-called Great Green Wall – a nate the shelterbelt. But even this is mean that the air this winter will be thick strip of specially-planted trees proving controversial. The Beijing worse than last, when the city and that runs though part of Hebei, the Youth Daily says that scientists much of the surrounding area was province that sits between Beijing question its effectiveness because blanketed in smog. It got so bad that and Inner Mongolia. But according the non-native poplar trees are January was dubbed ‘air-mageddon’ to CCTV, the forest is dying. It visited thought to be damaging local ecol - and some foreigners made the deci - Zhangbei county where there is a ogy, making it more fragile. sion to relocate elsewhere for the concentration of the special forestry Another expert told the newspa - sake of their families. and was told by a ranger that 20% of per that – given much of the area in Chinese leaders are aware of the the poplars were dying each year. question receives less than 300mm severity of the problem. But sadly The reason, CCTV reports, stems of rainfall annually – it is not even for residents, air pollution is not as from another serious environmen - suitable for large-scale afforestation. easy to deal with as seeding rain tal problem: a lack of water. Accord - Thanks to the paucity of water, P h o t

o from clouds. Instead Beijing needs ing to the broadcaster, groundwater these scientists conclude that the

S o u r to wean itself off coal – long the levels in the forestry zone have been Great Green Wall is not a sustain - c e :

R e source of the city’s power supply – declining by almost 3 metres a year. able solution to Beijing’s sandstorm u t e r s and cap the number of cars on its The estimate for the entire Bashang woes. n 15 Week in China Society and Culture 18 October 2013

Beautiful television Thanks to nation’s buying power, demand for Chinese models is surging

ver the last 10 years millions of Oviewers have tuned in to watch ex-model Tyra Banks mentor aspir - ing contestants on America’s Next Top Model . Now in its 20th season, the franchise has launched interna - tional spin-offs around the world, with local versions in Asia that in - clude South Korea, Thailand, the Philippines and Vietnam. And China, too. The format is not wholly new to the Chinese – it started out quietly on Sichuan Satel - lite TV – but its third season got a boost when The Travel Channel, a new lifestyle station based in Hainan, picked it up. Last Saturday the series made its debut. Banks, the head judge and executive producer of the US version, made an honorary appearance by taping a clip (in Eng - lish) in support of the show. Banks will not be fronting the se - ries in China, with the producers opting for rather a controversial host instead. Shang Wenjie, some - times known as China’s Lady Gaga, gets the role, along with judges in - cluding leading Chinese model Qi Qi and fashion icon Han Huohuo. It has been rumoured that actress Gong Li – a spokesperson for Aimer, the lead sponsor of China’s Next Top Model – will make an appearance as New show is looking to discover the next Liu Wen a guest judge later in the series, says Sina Entertainment. the Travel Channel itself. the Chinese show is hoping to ‘dis - The Chinese franchise is very So far, the response to the show cover’. And please, get rid of the similar to the US format. Each week has been lukewarm. “After watching show host Shang Wenjie,” one neti - an aspiring model is eliminated un - the first episode of China’s Next Top zen wrote on Sina Weibo. til only one is left. Up for grabs? The Model , I think it feels very staged. A common complaint is that P h o t

o winning girl will grace the cover of All the contestants are professional Shang lacks Banks’ on-screen pres -

S o u r the Chinese version of Grazia mag - models while the contestants on ence, while others have sniped that c e :

R e azine, get a contract with a model - America’s Next Top Model are ama - she looks too “gothic” in her ap - u t e r s ling agency and become a host on teurs. So I’m not sure what talent pearance. Perhaps that’s why Banks 16 Week in China Society and Culture 18 October 2013

seems to keep cropping up on the fessional conduct” and an “unac - ing to his earlier-then-expected re - Chinese series. She gets plenty of ceptable work ethic”, the Daily Mail tirement in 2011 aged 31. (By com - mentions throughout and induces reported (Campbell denied she had parison, Hakeem Olajuwon, another weekly squeals of delight from the anything to do with the decision). legendary Houston Rockets centre, contestants by sending them “Tyra Nevertheless, expect to see more retired at 39.) mails” (cryptic messages about the Chinese models on the fashion So Yao is trying out a second ca - challenges that determine who stays runways, if only because China is reer as an investor. China Money, a and who goes home). going to be the biggest growth magazine, already puts his net China’s Next Top Model coin - market for luxury products for the worth at Rmb3 billion ($490 million) cides with a period when more Chi - foreseeable future. thanks to lucrative NBA contracts nese models are featuring in the “It’s the major driver for the and endorsement income. Yao’s professional fashion world. Ac - change in catwalk and advertising fame also makes him a preferred cording to models.com, five stars casting. In an effort to reach the partner for many commercial en - from China now rank in the world’s Asian audience, the industry is em - terprises looking for instant public - modelling top 50. Liu Wen, whom ploying girls who the customer can ity – for instance, this week the NBA WiC profiled as far back as issue 44, identify with,” Rosie Bendandi, joined with him to open a basket - is ranked third behind Puerto Ri - Elle’s booking editor, told the UK’s ball training school. can Joan Smalls and Saskia de Telegraph. Then again, unlike the act of put - Brauw, from Holland (Liu is also ting a ball through a hoop, Yao is one of six Estee Lauder global finding life as an investor more of a brand ambassadors alongside challenge. Some of his investment Smalls). Sun Feifei and He Sui also returns prove so disappointing that came in 12th and 13th respectively, Money ball Yao became the butt of netizen jibes with Sun the first Asian model to Yao learns investment lessons about his financial prowess, with feature on the cover of Italian many playing on his name sound - Vogue. hen Yao Ming joined the NBA ing like a homonym for “kill” or “be “I think there’s been a steadily in - Win 2002, the 7-foot-6-inch deadly” in Chinese. creasing demand for Asian models giant was hyped as a “mobile Great One example of a failed invest - in general. The increased demand is Wall” that towered as a centre but ment is music website Top100.cn, due in most part to the strength of also had touch sweet enough to play launched in 2006 as a joint venture the economies in Asia as well as the shooting guard. between Yao and Google, providing significant growth luxury brands But you can’t have it all in life. copyrighted music to download. The are seeing in those markets,” an - Yao’s nine-year NBA career was National Business Daily said Yao in - other Chinese model called Jing plagued with injury, eventually lead - vested nearly $7 million in the start- Wang told Jing Daily. Another modelling wannabe to make a splash in the US is Luo Zilin, a former Miss Universe China, al - though she did so less for her cat - walk strut than for her tabloid no - toriety. Luo had her own moment of fame after appearing on another modelling reality show called The Face . On the programme she was mentored by supermodel Naomi Campbell, ending the competition as runner-up. However, her hopes of stardom came to a screeching halt after she was discovered to be P h o t

o dating Campbell’s former lover,

S o u r Russian billionaire Vladimir c e :

R e Doronin. Soon afterwards, Luo’s u t e r s agency MIX fired her for “unpro - Mulling over investment opportunities: Yao Ming 17 Week in China Society and Culture 18 October 2013

up but the venture suffered after Google pulled most of its business operations out of China three years ago. Top100.cn has been shut since April his year. How about basketball, which must be more familiar ground than music for the former player? Sur - prisingly, the sport could prove the biggest black hole yet in Yao’s port - folio. That’s because he bought the Shanghai Sharks, his former club, in 2009 for about Rmb20 million ($3.28 million). Most of China’s pro - fessional sport clubs are loss-makers that get financed by commercial firms (typically real estate develop - ers) for marketing purposes. Ac - cording to Tencent Sports, the Sharks franchise has been costing Li Na: now China’s highest paid sportsperson Yao a further Rmb20 million every year since 2009. manager at D&F Capital, told China enough, given the role that the state Speaking at the Boao Forum last Money that the new fund has been has played in supporting sports - year, Yao confessed that many of his seeking out quality pre-IPO projects people from their childhood. But as personal investments had flopped. in areas like sports media. The mar - we pointed out in WiC14, not all the He says he continues to receive nu - ket for sports properties has vast players are happy with the terms. merous investment proposals but potential, Lu reckons, but reform is One of the most high-profile stars to now picks only those that fall within required in many parts of the in - break away was Li Na, winner of the his “personal interests”. dustry. For example, many sports French Open in 2011. In 2008 the The NBA star’s portfolio spans resources are state-controlled. tennis star negotiated a deal to man - restaurants, fitness clubs, technol - Opaque rules governing the eco - age her own career. In return she ogy, red wine, hotels and real estate. nomic rights to stars’ incomes pays a lower share of her winnings (his property punts are the most makes it hard for sports marketing to the state, although there has been successful if the mainland media is agencies to flourish. griping from the sporting authori - to be believed). Elsewhere, success Most Chinese athletes are trained ties that Li hasn’t been paying up. has been limited. by the state from youth and con - Li’s decision to strike out on her “Yao’s investments have been too sidered as “state-owned assets”. own looks like a smart financial diversified and most of them are in Even when some are good enough choice. According to Forbes China, fields he isn’t familiar with,” the to compete professionally overseas, she was the sixth biggest earner overseas edition of the People’s part of their incomes go to the state among Chinese celebrities last year. Daily scoffed. “It isn’t a feasible com - organisations that helped groom With an annual income of Rmb93 mercial strategy.” them. million, she has also overtaken the Since 2011, Yao has tried to The cut varies from sport to likes of Yao Ming, as well as gold sharpen his approach, founding sport. Take tennis, where players medal hurdler Liu Xiang, as the ad - D&F Capital and staffing it with pro - who opt out of the state system to vertisers’ favourite. Tencent Sports fessional managers. The firm has fo - turn professional still have to give a reports that Li is sponsored by at cused on investing in the sports in - percentage of their prize money to least 13 renowned consumer brands dustry and later took over another the Tennis Sport Management Cen - and can expect to earn more in en - P h o t o private equity outfit. The 21CN Busi - tre under the General Administra - dorsement fees over the remainder

S o u r c ness Herald estimates that the two tion of Sport (8% is the most widely- of her career. e :

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a funds now have a combined capital quoted figure, although the When she finally retires, perhaps g i n e

C of Rmb6.6 billion. arrangements are said to vary). Li should call Yao for a few words of h i n a

Lu Hao, Yao’s agent and a senior Some might argue that this is fair advice on what to do next... n 18 Week in China Society and Culture 18 October 2013

Wish you were here? When an entire country goes on holiday, you can be sure tourist million people take to the road, reports CNN, a 13% increase on the spots are going to get a little crowded. However, Golden Week earlier same period in 2012. Among other eye-popping stats: Beijing’s this month – which gave workers eight days off to celebrate the Forbidden City saw its highest ever daily attendance (182,000 founding of the People’s Republic in 1949 – broke all records as visitors, photo above), while Sun Yat-sen’s memorial in Nanjing was visitors to China’s 119 scenic areas reached 34 million, up 20% on visited by 215,000 people, ten times as many as a normal day. last year. The chaos of these Golden Week crowds has again roused That led to some serious overcrowding on the Great Wall (see debate between those who favour the concentrated holiday period photo) not to mention at Hangzhou’s West Lake, which pulled in a (one argument is that it’s good for the economy, since it boosts million tourists on October 2 alone. As you might imagine, the traffic consumer spending in a coordinated way) and those who believe was awful too, especially once the government declared all toll that the national holidays should be broken up, giving workers time roads would be free during the holiday week. That prompted 86 off that’s spread out throughout the year instead. P h o t o

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19 Week in China And Finally 18 October 2013

On a roll Truancy app grows quickly, as students skive

n the 1980s movie Ferris Bueller’s would not be penalised for truancy. IDay Off , the eponymous hero A typical example on a message takes skipping school to extraordi - board of internet giant Tencent went: nary levels. Played by Matthew “I want to go home before National Broderick, the young student fakes Day but for fear of missing the roll an illness to have fun in Chicago, call I’m looking for someone to help. Present, but not correct taking in a baseball game, eating Tell me your price. My requirements with friends at a fancy French are girls who can attend classes for for a couple of months – “In two restaurant and driving around in a me on the 29th and 30th.” days I can make a month’s worth of 1961 Ferrari 250 California GT Spy - Beijing Youth Daily says that par - pocket money,” she said. der. Bueller then caps his awayday ticular student was able to find sub - The creator of the app is Pu Bing, by singing the Beatles classic Twist stitutes for all 16 of her classes in a sports major at a university in and Shout at the city’s annual Von less than a day. The going rate per Sichuan province. He says hundreds Steuben Day Parade. class was between Rmb20 ($3.28) of people arrange to skip classes us - Now, 27 years later, Chinese stu - and Rmb30. ing his software every day. But Pu dents are seeking to follow in The newspaper even discovered also argues that he didn’t intend to Bueller’s footsteps by cutting classes. there’s a mobile phone app that can encourage truancy, but rather to But in this case they’re not high be used to arrange substitutes. help students ditch more boring school seniors but university stu - Named the Super-Skipping Assis - courses (clearly not Mao Zedong dents. And in typical Chinese fash - tant, the service covers almost all Thought, of course) in favour of ion, skivving off has been turned into universities in China, with students classes they prefer. He launched the a moneymaking exercise. clicking on the courses they’d prefer app in August, thinking it would be The Beijing Youth Daily said the not to attend. used by a few of his classmates. “I trend came to light ahead of the re - A reporter tried it out and soon did not expect it would become so cent ‘Golden Week’, the holiday pe - found a substitute willing to go to a hot,” Pu admits. riod following China’s National Day class named ‘Introduction to Mao Currently available only on An - celebration on October 1. The inter - Zedong Thought and Theories of the droid, Pu is planning to release an net was flooded by requests from System of Socialism with Chinese iPhone-compatible version soon. students offering to pay others to Characteristics’. The Beijing woman Presumably he is using his own attend class for them – answering who offered her services told the product to buy time to get the new their name at the roll call so they journalist that she’s been doing it version onto the market… n

Car talk

“The one that’s probably to watch is Great Wall” P h o t o * Ford’s Asia boss David Schoch told Bloomberg that the Chinese carmaker could emerge

S o u

r as a top global player. Schoch said Great Wall looked like China’s best domestic auto firm, c e :

S adding “They seem to be coming up with good designs and quality and they’ve started to h u t t e export.” For more on Great Wall, see WiC187. r s t o c k

20 Week in China The Back Page 18 October 2013

Photo of the Week In Numbers $3.66 trillion China’s foreign exchange reserves at the end of September – which are now greater than the combined reserves of Japan, the Eurozone, Saudi Arabia and Switzerland. Reserves saw an increase of $163 billion in the last quarter, the biggest rise since the second quarter 2011 when GDP was still humming along at 9.5% annual growth.

P 202.8 million h o t o

China’s expected rice crop in metric tonnes S o u r

c this year. That’s a small drop of 0.7% e :

R

e according to the China National Grain and u t e r s Oils Information Centre. It’s the first time

since 2003 that the harvest will be less Having a laugh: Premier Li Keqiang with Thailand's Prime Minister than the year before. Yingluck Shinawatra 5.9 inches The screen size of the new HTC One Max smartphone. It launches in Beijing on Where is it? Tuesday, three days ahead of the US. This Some of the places referred to in this issue is the first time that HTC has begun selling a phone in China first, indicating its changing priorities. Inner Mongolia Beijing Tianjin Shandong 25 The number of underperforming stores Wal- China Mart is planning to close in China. Despite Shanghai this, based on current expansion plans, the Hangzhou world’s largest retailer will add more stores than it shuts in the country. Wal-Mart is set Fujian to open about 30 stores this year as part of a three-year, 100-outlet expansion effort, Hong Kong which will continue to 2015.

Hainan

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