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Books I Read These Days Thomas Friedman is the fad of the day. His record in the Middle East is terrible but his sound bite is good and therefore he sells books. A few Chinese saw through what Friedman really is - a glib promoter rather than a writer with substance. See http://www.zonaeuropa.com/20061125_2.htm |
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Qingdao (Tsingtao) Pictures Great photos. What's the weather like in Tsingtao? Is it cooler or hotter than Shanghai? |
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Too Many Entries in a Blog I think it's unrealistic to expect anyone to read all or most of the archived entries on any blog. What the past entries do is it gives readers an idea of what your web site is about. If they like your contents and your style, they will become regular readers via RSS feed or e-mail subscriptions. Once they become regular readers, they will read all your posts one entry at a time (I do anyway). And past posts should not be deleted because it serves a useful purposes for people searching a particular topic via search engines such as Google. It helps build more information on the net. |
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One Child Policy - Part II Macroeconomic trends are hard to forecast. Investing based on trying to forecast macro trends is a difficult game. Warren Buffett invests based on the business itself and ignores macro trends. Japan is a rapidly aging society with very poor demographics. Yet there are still opportunities to make money in business there. In my humble opinion, it's better to focus on the potential of the business itself rather than worry about macro trends. |
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Keep Doing, and Its Meaning Thanks for a great post. I mentioned you in my blog at http://investorsdiary.blogs.com/my_weblog/2006/05/keep_doing_its_.html |
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What to Write Today? How about "Is air pollution improving in Shanghai?" Hong Kong's air pollution is getting worse every year. I now think it's actually worse than Shanghai's. So I am just wondering how you find the air quality in Shanghai, getting better or worse? |
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Xiangyang Marketing will be Shutdown? Yogo, have some manners and show some respect when you visit a community like this. The blogger (Jiang Shuo) has put in a lot of effort and passion to write his blog. I went to your Seven Castles blog and you know what is the biggest problem with it? It has absolutely no frigging personality and is dry and read like a brochure. The blogger didn't even have the guts to put something on the profile page. You are the one who should be "shameful" for your rudeness |
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Wangjianshuo's Blog is Experiencing Difficulties Jian Shuo, really sorry to hear about your problem. Hope you will fix everything soon. In the mean time, wishing you and your family a Merry Christmas and Healthy & Prosperous New Year. |
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Cold Winter Comes I love Shanghai except for its Winter. The type of "damp wet" cold really gets into your bones and makes it very uncomfortable. Jian Shuo, how about doing a post on the present status of the Shanghai real estate market? |
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Happy Birthday To Me Happy Birthday Jian Shuo. God you are only 28? I thought you are in your 30s. Wishing you best of success and happiness. |
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We Filled Our Lives But Lost Our Souls The author wrote: "But how can you not go with the flow? If the entire society is crazed about making money and buying houses, how do you dare to be different? What about parental expectations? They've had a hard life raising us. What about our children? We can't have them lose out from the start. Life is a race and you simply cannot afford to stop." Sorry but this is exactly the type of attitude that leads to unethical and immoral business behavious in China. For example, having fake milk powder that leads to permanent damages to infants, having cancerous malachrite green in fish farms, using previous years' rotten moon cake leftovers to make new mooncakes, using "hair" (yes human hairs) to make soya sauce.............. etc. etc. |
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I Watched Super Girl, Finally Thanks nn. Interesting as I heard Shanghai TV station is now producing a Chinese version of The Apprentice. Vincent Lo, Chairman of Shui On Group (Xintiandi developer) will be the equivalent of Donald Trump. What's more interesting is Donald Trump is now suing Vincent Lo and his partners regarding a dispute in a real estate partnership they have in New York. So looks like everyone needs to pull their version of "The Art of the Deal". :-) |
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Ability to Make Impact is the Cause of Pressue Jian Shuo, Thanks for continuing to post in what must be a very hectic business and personal schedule. You have already shown great persistence by keeping your blog going in the past few years. |
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Taxi Driver's Life Tougher - Part II Retail gasoline prices in China are under tight control by the state owned oil companies. So far the state owned oil companies have been "subsidising" retail gasoline prices by keeping it artificially lower. With crude oil prices having increased from US$30/barrel to over US$60/barrel in the past 2 years, the refinery profits of the state owned oil companies have been severely squeezed, i.e. you have input costs doubled from US$30 to US$60 while they have not passed on the cost increases to consumers by raising retail prices proportionately. So the recent gasoline price increase is much over due and despite the increase still does not reflect true market realities (retail gasoline prices are much higher in Hong Kong). I believe the government understands that keeping retail gasoline prices low is one of the critical elements to help preserve social stability. After all, the 1998 riots and anarchy in Indonesia was sparked by the Suharto government raising gasoline prices. However, the negative of keeping gasoline prices artificially low is it encourages consumption and discourage energy savings and efficiency. I read somewhere that China's energy usage on a per unit of GDP basis is several times higher than Japan, meaning there is a lot of wastage and inefficiency. I think the government recognizes this and is now trying to put together an energy conservation program while at the same time they look to secure important strategic energy assets, e.g. CNOOC's bid for UNOCAL. |
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RMB Finally Goes Strong Yuan can only be truly free floating when the RMB is fully convertible into other currencies. This move to 8.11 to the USD is more political to economical - to avoid head on confrontation with the US. JS, interesting story about what Amazon did to Joyo after their acquisition. I have the same experience years ago when I sold my company. The acquirer brought in a very arrogant US educated MBA hot shot as the Managing Director. This hot shot eventually pushed out most of the senior staff that has been with the company for over 20 years and replaced them with younger recruits. In the process service quality deterioated. To cut a long story short, the hot shot managed to turn a solidly profitable business into a loser. |
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When the House Prices Goes Down This (real estate) slow down is only the start. I know most people in Shanghail still think this is only a temporary correction and property prices will head back up after this "healthy" correction. On the contrary I think things will get even worse in 2006 when the Chinese economy really starts to slow. Behind the robust trade surplus figures of China, you see the reported losses of Chinese companies shooting up dramatically this year. This tells you excess capacity and eroding profit margins are starting to take its toll. So in order to survive, the Chinese companies push for the export markets to get cash flow thus leading to strong export figures. But look at how imports from China have slowed substantially, signaling a slowing economy. When the economy finally rolls over in 2006, China's overall trade surplus will shrink dramatically and may even turn into a deficit. And all those property owners/speculators who have bought at the top with leverage and are still holding on now will be forced to sell. |
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Pudong Starbucks is Nice Starbucks is a novelty in China at present and that's why people like to be seen there. It's way overpriced, in my opinion, for what they are offering. I prefer the traditional tea houses - more character and a sense of zen and quietness. |
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Celebrating 1000 Days of Blogging Thanks for your hard work. |
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I Love Shanghai! Shanghai is a city with incredible energy. |
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996 Day of Blogging Thanks for your posts. They help me keep in touch with Shanghai which I miss a lot. Keep up the great work. |
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Language Exchange Partners Wanted Jian Shuo, I have a lot of respect for your desire to help Chinese students advance in English by providing classified services through your blog. Keep up the great work. |
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Black Day for Shanghai Stock Market I don't think now it's a good time to invest in China as it is near a "cyclical" peak. However, if you put a gun to my head and force me to choose whether to invest in Shanghai properties or the Shanghai stock market, I will choose the Shanghai stock market. Sentiment on the Shanghai stock market is dark and very pessimistic. A lot of bad news have already been discounted. People have "given up" on the stock market and daily trading volume is very low. These are the conditions required for a bottom. On the other hand, everyone and his dog expect properties will keep going up for years after the current "brief" correction. There is still optimism over properties. This is the opposite of the stock market. According to Warren Buffett, the secret to investment success is "To be greedy when others are fearful and to be fearful when others are greedy". Right now, there is a lot greed in China real estate and a lot of fear and pessimism in stocks. Again I don't think this is the right time to invest but I will pick Shanghai stocks as the "lesser" of the two evil. |
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T.I.C Moments When I was admiring a very attractive young woman at a traffic light, who proceeded to spit and then squat onto the ground. |
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T.I.C Moments When I was admiring a very attractive young woman at a traffic light, who proceeded to spat and then squat onto the ground. |
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T.I.C Moments When a waitress in a restaurant stood next to my table and started clipping her nails, finger by finger. |
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Is 10,000RMB/Month a Ridiculous Offer? I think the distinction between "expat" and "local" staff will become inceasingly obsolete in the years to come. Salaries and pay are slowly converging in a lot of fields, whether you like it or not. The pay of Asian countries' workers will rise whereas those of the west will decline. See http://www.nytimes.com/2005/04/03/magazine/03DOMINANCE.html?pagewanted=print&position= |
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Is 10,000RMB/Month a Ridiculous Offer? There is a global labor arbitrage going on between developed and devloping countries. I am not only talking about call centers being outsourced by western firms to places like India and back office operations to China. Increasingly "skilled" labor such as R&D and health care, e.g. Indian radiologists are now reading the films of Americans being sent to them electronically, are being outsourced to developing countries at a much cheaper costs. Do you realized that McDonalds has now found that it's cheaper to have a call center in India or the Bahamas (or anywhere for that matter) take the orders from McDonalds' drive through lanes at their restaurants in the USA -- then zap the food orders back to that same restaurant onto a computer screen for the cooks to fill. The fact of the matter is as people in places like China gets more experienced and skilled, their salary is going to go up whereas salaries in the west are going to come down. Witness the weak growth in US employment and real wage growth in the past 2 years. So 10,000RMB per month may seem ridiculously low to someone in the west, but in the future it may not be an unreasonable salary on an international scale (unless you have highly specialized skills). You can look at it both ways - people in developing countries are underpaid while those in developed countries are overpaid. They are now starting to converge - the rubber meets the road. This may be hard to swallowed for a lot of people, especially those in the west. |
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Luoyang Telephone Number Upgraded I agree as nothing is certain in the volatile world of politics and economics. Competition is good as it leads to improvements. It also creates checks and balances in power. |
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Luoyang Telephone Number Upgraded Countries' dominance go in cycles. At one stage, the British Empire had the strongest military in the world, cutting edge technologies, and strong companies. Some may forget that Britain was once described as The Sun Never Sets On The British Empire". Then during the 1920s Britain over extended itself militarily and in order to pay for its imperial conquests resorted to debasing its currency and running continuous trade and budet deficits. In other words, Britain was a savings short, net "debtor" nation, and the rest of the world was financing her (sounds familiar?). Meanwhile America was running trade surpluses and was a net "creditor" nation during the 1920s. The US has had deficits before but "never" closed to 6% of GDP which is where it is now. By the way the US is now a net "debtor" nation just like Britain was in the 1920s. The same process happened hundreds of years ago before Britain involving the great Roman Empire, the Greek empire. Nothing is permanent. I agree that China is governed by a totalitarian government and lack certain freedoms. That's why I think the change and transition of China will not be a smooth one and there may be both economical and political booms and busts. From an investing point of view, when things become the glommiest in China, when it is no longer touted as a "growth miracle", and when foreign investors have abandoned China, thats the time to invest. The secular ascendency of China is firmly in place. The US went through the 1920s depression but they emerged as the undisputed world superpower afterwards. A smiliar process may happen to China. |
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Luoyang Telephone Number Upgraded I just want to add to the above. Having said the above, I firmly believe the future belongs to China. China will be the next great superpower. The US with its massive deficit and debts are in a slow decline, just like the UK in the turn of the century. However, it won't be a smooth ride for China as all emerging markets are subject to drastic booms and busts. China will be no exception. |
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Luoyang Telephone Number Upgraded Legendary investor Warren Buffett once said, "Where you are headed is more important than how fast you are going." Speed is definitely important but sound logical analysis and planning are just as important. I have invested in both American and Chinese companies. A lot of the Chinese companies, especially the family controlled ones, are utterly un professional in their approach and management of businesses. Most of them eventually revealed fraud (not that US companies are immuned, e.g. Enron and Worldcom). And in their "speed" to expand, a lot of the expansion plans and acquistions of Chinese companies are ill thought out and totally wasteful. See Chinese Multinational Companies at http://investorsdiary.blogs.com/my_weblog/2005/03/chinese_multina.html |
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Old Houses in Shanghai - Part III suggest you remove last two fraudelent and deceitful e-mails in this post |
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Beijing is Cultural Center Thanks BingFeng for your objective comments. I have lived in Shanghai for over a year. I like living in Shanghai very much, so much that I have considered making it my home base. However, I have also heard similar comments about Beijing - that it is much more cultural than Shanghai. I am interested in moving to Beijing to live for a while to explore the city and see which one I like better. I think I will give Beijing a try after reading your comments. Thanks again. |
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Beijing is Cultural Center I am curious as to what readers think which is a better city to live - Beijing or Shanghai? |
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Suggestion to Friends' Shanghai Trip Jian Shuo, Is the Garden Hotel any good? Thanks |
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What does Happiness Depend on Surprisingly money does not increase happiness after you have enough to cover the basic necessities in life. "One" of the sources of happiness is finding a meaningful purpose in work - in other words having passion in what you do. One derives more satisfaction and happiness from a sense of passion than just money. For example, I am sure Jian Shuo gets a sense of satisfaction from the sucess of his blog more than money can buy. That's because it's a labor of love. Some of the most successful people I know don't view their work as "work". They will gladly do it for free because of passion. Ironically that passion translates into success and money. |
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Helping by Hiring Check out this charitable organization. It has helped many communities across the world by teaching them farming skills and also providing them with the seed money to start them off. It helps the poor by giving them their dignity and a much needed skill. Stephen I do agree with your post that you can get on in life without domestic help and it's not the end of the world. However, once you have been exposed to such perks in life, it's hard to go back. In any case, we can help a lot by treating the Ah Yis and other workers with respect when they work for us. See http://www.heiferhk.org/ |
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Life in a Low Cost Labor World One of the things I miss most from living in Shanghai is my Ah Yi. I had a great Ah Yi. She is Shanghainese, very honest, has a good work ethic, and a great cook. She always think of ways for me to save me money. She became a friend rather than just an Ah Yi. I never call her Ah Yi because locals think it's derogatory. I don't order her around and instead politely ask her to do things for me. I always tell her I respect what she does and everyone makes a living their own way and that she is filling a much needed service in the city. Because I treated her with respect she went out of her way to do good work for me. By comparison, the domestic help in Hong Kong sucks! Expensive, spoilt, and dishonest a lot of the times. The Hong Kong government should allow much more workers from China to work in Hong Kong, especially in the area of doemstic helpers. This will definitely help alleviate the unemployment problem in the rural areas. Currently the minimum pay for domestic helpers in HK is about HK$3,270/month versus HK$800/month that I paid my helper in Shanghai. This will also help China as the money earned will be sent back to China to help families live a better life. |
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Nice Afternoon Tea at Ambrosia Dear Jian Shuo, If it is not too much to ask for, it will be great if you can also post photos of these tea houses and places for afternoon tea. Some of these tea places in Shanghai are very quaint and retro. I remember the place at XuJiaHui park where you can have afternoon tea and drinks. They have a great lounge for drinks at night too. Sorry I can't remember the name. Regards |
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Do Chinese Move to Small Cities Dear Jian Shuo, Thanks for your very informative post which reminded me that it's not that easy to move within China. I recall when I was living in Shanghai last year, a friend had so much trouble trying to get a Hukou in Shanghai. Admittedly China and US are at very different stages of development. The former is a developing country where people are just trying to get ahead by going to the big cities with more opportunities whereas the latter is a fully developed country where people are looking for better quality of life in smaller cities and want to escape the rat race. In the longer term when China becomes richer, the preference for surburbs or smaller city living should increase. Also thanks to everyone else for their very insightful comments. |
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Keep Doing, and Doing, and Doing Dear Jian Shuo, Thanks for a very inspirational post. Persistence - keep doing and keep going especially when the going gets though - is the key ingredient for success. Thanks for a very timely reminder. Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education alone will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. Quote by Ray Kroc, founder of McDonalds |
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Got Cold Again The thing that really worries me about living in China and Asia in general is the population density. It's very easy for flu virus to spread and infect more and more people. The Center of Disease Control and Prevention in the US has already said that the probability of a killer flu pandemic spreading is "100%". It's only a matter of time. The prime candidate is the Avian bird flu virus. It's only a matter of time before the virus mutates to being able to spread from humans to humans (it is unable to do that now). This thought of a flu pandemic hitting sends shivers to my spine, especially in densely populated China with poor medical infrastructure. For more on the topic, please see below: http://www.forbes.com/global/2005/0207/016_print.html The Next Big Killer Robert Langreth Tomas Kellner, 02.07.05 Forbes Magazine When a giant wave kills 200,000, the world is stunned and wonders what could have been done. But it is less galvanized to deal with a global catastrophe that could be much worse. It is likely to kill many millions of people, sicken a quarter of the world's population and send the global economy into a tailspin. There is little we can do to stop this disaster from happening, and it could already be imminent. The threat, obscured by the all-too-with-us aftermath of the Indian Ocean tsunami, is a global influenza pandemic, the rapid spread of a deadly new strain of the influenza virus to which no one in the world is immune. Such a virulent strain unpredictably leaps from farm animals to humans every few decades, with devastating consequences. The Spanish flu pandemic of 1918, the worst on record, felled 50 million people; it was particularly effective at targeting adults in the prime of life. Milder pandemics occurred in 1957 and 1968. Thanks to modern jet travel and densely packed Asian countries where millions live in close proximity to farm animals, the threat of a new pandemic is greater than ever. "The influenza tsunami is coming. It is hard to say that the probability of its occurring is anything other than 100%," says Martin Meltzer, health economist at the U.S. Centers for Disease Control & Prevention. The only real questions, he says, are how soon and how bad. A potential pandemic may already be brewing. The so-called bird flu, identified by virologists as H5N1 (a reference to the viral surface proteins hemagglutinin and neuraminidase; there are 15 types of ‘H' and 9 subtypes of ‘N' proteins), first emerged in Hong Kong in 1997 and has spread among poultry populations in Vietnam, Thailand and elsewhere in Asia. So far it has infected 47 people who had come in contact with sick animals, and killed 34 of them--a chilling 72% mortality rate. (By comparison, the SARS virus killed 10% of the 8,000 people it hit.) Unlike ordinary flu strains, which mostly vanquish elderly or other vulnerable populations through secondary bacterial infections or by exacerbating preexisting conditions, the bird flu appears to have a more direct killing effect on cells in the lungs and other organs; many of the fatalities were among previously healthy young people. It may just be a matter of time before a new strain combines the high lethality of avian flu with garden-variety influenza's ability to spread through coughing and sneezing. (Recently a strain in Holland infected a thousand people, killing one.) Meltzer says it is virtually certain there will eventually be another lethal pandemic. What is the probability that H5N1 is going to be it? That's hard to judge. Still, says University of Minnesota infectious-disease epidemiologist Michael Osterholm, "this looks like the first chapter in the new flu pandemic. Even with moderate transmission and fatality rates, this could do in less than a year what HIV took 30 years to do." Since no one would be immune, all 6.4 billion people on the planet would need a shot. But only 300 million flu shot doses are produced each year, a capacity that could stretch to 500 million or so doses in the case of a single-strain pandemic. In any case the shots may come too late: A special vaccine would have to be made, a months-long process that involves incubating influenza virus in millions of chicken eggs. "It will go around the globe, and nothing will stop it," says Klaus Stöhr, head of the World Health Organization's Global Influenza Program. "At best we can slow down the spread to give us a little more time to produce more vaccines." The U.S. vaccine supply is particularly vulnerable, now down to a single main flu shot manufacturer, Sanofi-Aventis, after factory snafus this fall contaminated the entire supply at Chiron Corp., the other big producer. After giving lip service to the influenza threat for years, the U.S. government is finally getting serious. Federal spending on flu research, surveillance and vaccine procurement zoomed to $283 million this year from $39 million in 2001. But 20 state health departments still don't have pandemic response plans, and half don't have an online reporting system compatible with theCDC's national database, says Trust for America's Health, an advocacy group. Assuming that a pandemic hits once every 30 years, economist Meltzer calculates that $700 million to $2 billion in annual spending for vaccine development and response is justified. The U.S. government has contracted with both Sanofi-Aventis and Chiron to produce a prototype avian-flu vaccine for large-scale trials that are expected to get under way very soon with healthy adults. It is not known how much protection the vaccine might provide. The government also plans to award contracts this yearto accelerate the development of a new cell-culture technique that would allow vaccine to be grown in vats instead of in chicken eggs; such methods are now used for polio and other viruses and might more easily be scaled up in an emergency. It may take years before vaccine production is sufficiently primed. Meanwhile, in Asia, the flu virus continues to mutate. Says epidemiologist Osterholm: "We have yawned at influenza year after year. We are going to have a rude awakening." |
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Chengdu Impression Dear Jian Shuo, Thanks for a great post on Chengdu. My parents and friends went to Jiuzaigou and they all said it was very pretty and scenic. The air is fresh and crisp. I will definitely some day. In fact reading your posts makes me realized that I actually miss living in China. I just love the thriving energy of Shanghai and the rough and tumble "anything can happen" type of feel to it. It's very exciting. I will be back. |
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BlueZone's Xinjiang Impression Thanks for the great photos. I really enjoyed them. |
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Chun Lian Started to Appear Jian Shuo, Can you tell us more about Cheng Du. I've always wanted to visit Cheng Du when I was living in Shanghai but pity I never had the chance. |
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On Ethic When I was living in Shanghai, I had an Ah Yi to help with domestic chores. I chatted with her frequenty. My Ah Yi has a 12 year old son. One day I asked what she wanted her son to be when he grew up. She said she wanted him to be a government official as people with power makes all the money while the majority of the common people suffer injustice. This basically sums up the current ethical standard in China. After being shut off from the outside world for decades and deprived of many liberties and wealth, the economic opening up of China has led to a gold rush mentality and a corrupt system based on guanxi. Ethics is not highly rated in China where the money stands for success and power. However, this is normal for any developing country and it will take at least 1-2 generations to change this. Witness the US in the early 1900s with their robber barons and corrupt Hong Kong in the 1960s. It will be a long time before China develops an ethical way of life. PC |
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Spring Festival in 2005 Dear Jian Shuo, Kung Hei Fat Choy to you! May you have good health and prosperity in the year of the Rooster. Keep up the great work with your blog. I know this is a labor of love rather than commerically motivated. |
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Is the Real Estate Cooling Down? - Part III The one statement that has cost investors untold sums throughout history was "This time is different!" Go back to history and in all bubble and manias, this phrase is most often used an excuses always thought of as to why the mania would continue. Having said that, long term I am a bull on China but I think China is now at its cyclical peak. All emerging markets are characterized by sharp boom bust cycles and China is no different. To think the government can actually control this (even in a closed planned economy) is way too optimistic. |
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Is the Real Estate Cooling Down? - Part III PROPERTY REPORT DOW JONES REPRINTS This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, use the Order Reprints tool at the bottom of any article or visit: www.djreprints.com. • See a sample reprint in PDF format. • Order a reprint of this article now. Foreign Investors Flock To China Real-Estate Sector By LAURA SANTINI Staff Reporter of THE WALL STREET JOURNAL January 19, 2005; Page B6 Foreign real-estate investors are ramping up their activities in China's biggest cities, even though prices have risen and there are signs of a coming downturn. The thinking is that Shanghai will beat out Hong Kong to become China's financial and commercial center and emerge as one of the world's great cities, on a par with New York and London. Investors in Beijing's hot market believe it will benefit from a pre-2008 Olympic boom. IN THE MARKET [Asia's Financial Markets]1 See more coverage2 of Asia's financial sector, from IPOs to banking to bond offerings. And most recently, currency speculators have helped boost prices, snapping up real estate as they anticipate that China will ease its currency's peg to the dollar. That would drive the Chinese currency higher and raise the value of the investors' real-estate holdings. It's a risky game. Skeptics argue that property values are rising too fast, outpacing personal-income growth among China's burgeoning middle class. Since 2000, residential prices in Shanghai are up an average of 85%. At the same time, rents have started to slide. Such an imbalance can't last, says Peter Churchouse, a Hong Kong-based hedge-fund manager specializing in real estate. The upshot is that property developers accustomed to reaping 6% rental yields in Shanghai now are finding it difficult to eke out 3% to 4% gross, close to what real-estate investors expect in less risky markets, such as New York and London. Rents are unlikely to go up, Mr. Churchouse explains, as properties built to entice middle-class buyers increasingly become unaffordable. Michael Hart, head of Shanghai research at Jones Lang LaSalle, says he has seen rents fall in apartments ranging between $1,500 and $5,000 per month. In one complex outside Shanghai, rents have dropped around 10% in three months, said David Zhang, an analyst at hedge fund Dynasty Asset Management. Yet foreign investors are clamoring to expand in China. Although there is no exact calculation of foreign inflows into property, Mr. Hart says the available data indicate overseas investment is growing. In 1995, China real-estate investment totaled $38 billion, with a minuscule portion of that coming from foreigners, Mr. Hart says. By contrast, in 2003, $122 billion flowed into China's property sector, and a 2003 survey by the Shanghai government revealed that 5%, or about $6 billion, came from investors in Europe and the U.S., as well as in Hong Kong and Taiwan. Shu Yin Lee, who manages a $25 million real-estate portfolio for Grand River Investments, says he isn't worried about having to pay two or three times what he paid in the past to acquire new properties in Shanghai. In his view, higher prices are justified because Shanghai's long-term prospects for becoming a world-class metropolis remain appealing. "In a way, we've taken the 'Real Estate for Dummies' approach," Mr. Lee says. Many observers expect developers to manage risk by diversifying to other Chinese cities. "One of the reasons people are looking at other places is that the market in Shanghai is too crowded," says Mr. Hart. As for that city, he says, some developers who chose wisely will do well, while those who bought land and developed projects indiscriminately may struggle to see a profit. |
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Is the Real Estate Cooling Down? - Part III As I have said, we shall see! |
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Is the Real Estate Cooling Down? - Part II Dear Jian Shuo, First I would like to commend you for doing a first class job with your blog. I enjoy reading it daily. Now onto the property market in Shanghai. You can always come up with reasons for irrational exuberance. I have seen this so many times at the tail end of the boom. Remember the goldilocks economy of the US in the late 1990s? It's pointless to put forward counter arguments here as this will just go on and on. Time is the best judge. Let's re-visit the subject one year from now and see how everything goes. |
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MagLev May Extend to Hangzhou Zhang, It's not that the British government doesn't have the same amount of cash. They do as Britain, on a per capita basis, is a far richer country than China. Britain is a democracy and their government officials are accountable to the people. If they "waste" tax payer money building these white elephant projects, they will lose their job eventually. The same thing does not happen in China, which is a centrally planned economy. Therefore there is a lot of wastage in capital allocation by corrupted government officials. And by the way, the cash that the Shanghai government is using to subsidize that loss making Maglev belongs to YOU, the tax paying people of China. |
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MagLev May Extend to Hangzhou Magnetic levitation is probably the most expensive way of transporting the least amount of load." -- and as such, unlikely to catch on anywhere in the world except perhaps for certain "prestigious" projects - quote from Hazra Mohammed Fazle Awal, C.Eng, MIEE (UK). It's obvious that in their race to make Shanghai a "showcase" to foreigners, the local government is not taking economic costs into consideration when building the Maglev. When I was living in Shanghai last year, I never went to Pudong airport via the Maglev. It's inconvenient and expensive. If I spend that kind of money, I might as well take a taxi. It's obvious that Maglev is bleeding money. These "white elephant" projects always look good and impressive and can be used to show off to foreigners as a sign of "progress" of the city. However, in reality, these are artificial progress. Just think what all these wasted money can do to help the poor in rural areas, for education, for water which China is grossly lacking, for electricity etc. instead of making officials look good. A few years ago, Nobel laurate Milton Freeman toured Shanghai. Freeman was very impressive with the progress of China in an earlier visit. He thought China was on the right track by de-regulating the agricultural sector and freeing price controls etc. The officials thought they would impress Freeman with the Pudong financial district development. When Freeman saw what the government did in Pudong, he told them they were doing what the Russians used to do, i.e. buidling "empty" show case village to impress the Shah and foreigners when they visited. He told them this did not create REAL economic wealth. |
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Life in New York is Tough for Me Shanghai is far far cheaper to live than New York or Hong Kong (having lived in both cities for a while). In fact I find the quality of living and lifestyle to be quite high. Of course there are certain frustrations and drawbacks you have to accept with China being a developing country. But once you have the right mind set, Shanghai can be a very livable place. |
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Is the Real Estate Cooling Down? To use people shopping everywhere and getting cash from ATMs to justify property prices in Shanghai that are totally out of proportion with people's income is short sighted. Things always look the best at the peak of a cycle. In 1997 at the peak of the HK property cycle, there was prosperity everywhere. At that time people used to say "they use shark fin soup to rinse their mouth every morning" to show off their spending power. And then the bottom fell off. |
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Is the Real Estate Cooling Down? I was living in Shanghai until end of November 2004. The apartment complex in XuJiaHui in Shanghai I rent at that time is fully sold but at night I counted only about 1/3 of the units are actually occupied (with lights on). The rest of the units lay empty with their owners waiting to flip them to other greater fools. Good luck to them. |
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Is the Real Estate Cooling Down? I read an article on the 11/6/04 South China Morning Post titled "Families in Shanghai, Beijing lead debt stakes". To my surprise, according to a study by the Chinese Academy of Social Sciences, it was revealed that the soaring cost of housing has pushed the average family in Shanghai and Beijing deeper in debt that their counterparts in New York and Washington. Defining family debt ratio as debt as a proportion of disposable income, researcher Liu Jianchang found that the average family in Shanghai had a debt ratio of 155 percent and in Beijing 122 percent. By comparison, family debt averaged 115 per cent at the end of last year in the US, the western country with the highest personal debt. At the same time officials in Shanghai and Beijing "boast" to foreigners that property prices in their cities cannot come down before the World Expo of 2010 and the Olympics in 2008, a belief widely shared by the public and a media that fuels the real estate frenzy. Liu said that personal debt levels in China and other developing countries should be lower than in rich countries, which provided free education, healthcare and pensions, services which most Chinese have to pay for themselves. The SCMP article ended with a quote from an official saying that, "Property prices in Shanghai can only go up!" The two phrases that you hear most often at the end of any investment cycle are: 1. This time is different! 2. Prices can only go up! I have seen this movie before and the ending wasn't happy. Booms are born in depression, come of age in skepticism, mature in confidence, and die in euphoria. |
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Jinqiao Biyun International District Wow..such high price for flats? If I get an offer from company to work there, how much should I demand minumium for an apartment. I am not GM of GE; and my job would demand about 40-45k US$ per year. Would you say 800-1000 US$ would me minumium?? |
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SARS Outbreak - How Bad Is It? i am from india.my sis is going to usa by singapore airlines . there is a 3 hours break in singapore . i am very scared that she might get infected in that 3 hour break or in the airplane. do i really need to fear? |