The prediction of China's export is going to crash will fall short again, and again ...What lies behind China's huge trade surplus
THOSE who believe China effortlessly manipulates its statistics for political ends will be surprised by the country's new trade figures. They show that the country's controversial trade surplus jumped to $11.4 billion in April just as Chinese policymakers arrived in Washington, DC, for their annual "Strategic and Economic Dialogue" with America. The surplus was so large mainly because imports were surprisingly weak. Purchases from Japan in particular slowed sharply, points out Tao Wang of UBS, thanks to the disruptions in that country's supply chain. China's exports, on the other hand, continued to grow strongly. Although the yuan has strengthened against the dollar, other currencies have appreciated faster. As a result, China's trade-weighted exchange rate was about 4% lower in March than it was nine months before, according to the Bank for International Settlements.
PRC Economy and Industry: News and Discussions
Re: PRC Economy and Industry: News and Discussions
Yuan large step
Re: PRC Economy and Industry: News and Discussions
ashi:
The show will go an as long as it can then it will end. That is how all bubbles end.
I hope you realize that the current system is reaching the end of its life as various Western institutions go bankrupt because of too much debt. The question now is what comes next, and how will different countries deal with it. When the Texas Governner and President candidate Perry called Bernanke a traitor, you have to pay attention. It might take a lot of time to turn the ship but the rudders have started turning.
China is reaching the limit of its older export based model. Wage inflation has reached a point where it is no longer a no-brainer to operate in China. Companies like Foxconn are now exploring factories in Latin America.
I hope the average Chinese worker has toiled hard on low wages does not get screwed out of their savings. I do not care too much about the neo-millionaires.
The show will go an as long as it can then it will end. That is how all bubbles end.
I hope you realize that the current system is reaching the end of its life as various Western institutions go bankrupt because of too much debt. The question now is what comes next, and how will different countries deal with it. When the Texas Governner and President candidate Perry called Bernanke a traitor, you have to pay attention. It might take a lot of time to turn the ship but the rudders have started turning.
China is reaching the limit of its older export based model. Wage inflation has reached a point where it is no longer a no-brainer to operate in China. Companies like Foxconn are now exploring factories in Latin America.
I hope the average Chinese worker has toiled hard on low wages does not get screwed out of their savings. I do not care too much about the neo-millionaires.
Re: PRC Economy and Industry: News and Discussions
That is what everyone thought about USSR and see what happened? Then again how about the USA and its AAA rating? If they can fall so can China and that is nature, my man and no amount of Marxism Leninism can change it.ashi wrote:Yuan large step
The prediction of China's export is going to crash will fall short again, and again ...What lies behind China's huge trade surplus
THOSE who believe China effortlessly manipulates its statistics for political ends will be surprised by the country's new trade figures. They show that the country's controversial trade surplus jumped to $11.4 billion in April just as Chinese policymakers arrived in Washington, DC, for their annual "Strategic and Economic Dialogue" with America. The surplus was so large mainly because imports were surprisingly weak. Purchases from Japan in particular slowed sharply, points out Tao Wang of UBS, thanks to the disruptions in that country's supply chain. China's exports, on the other hand, continued to grow strongly. Although the yuan has strengthened against the dollar, other currencies have appreciated faster. As a result, China's trade-weighted exchange rate was about 4% lower in March than it was nine months before, according to the Bank for International Settlements.
Re: PRC Economy and Industry: News and Discussions
You can bet that is not going to happen in the next ten or twenty years.VikramS wrote:
China is reaching the limit of its older export based model. Wage inflation has reached a point where it is no longer a no-brainer to operate in China. Companies like Foxconn are now exploring factories in Latin America.
The end of cheap goods?
For the next 30 years manufacturers in China helped to keep global inflation in check. But that era is now over, says Mr Rockowitz. Chinese wages are rising fast. A wave of new demand, especially from China itself, is feeding a surge in commodity prices. Manufacturers can find some relief by moving production to new areas, such as western China, Vietnam, Bangladesh, Malaysia, India and Indonesia. But none of these new places will curb inflation the way southern China once did, he predicts. All rely on the same increasingly expensive pool of commodities. Many have rising wages or poor logistics. None can provide the scale and efficiency that was created when manufacturers converged on southern China.
Nothing can replace the Chinese miracle. “There is no next,” says Mr Rockowitz.
VikramS wrote: I hope the average Chinese worker has toiled hard on low wages does not get screwed out of their savings. I do not care too much about the neo-millionaires.
China To Become World’s Second Largest Consumer Market
The sale of cars and luxury goods recorded strong growth in the Chinese market in 2010. China’s luxury consumption hit $6.5 billion in 2010, second only to Japan, and is growing at the fastest pace in the world for the third consecutive year. Goldman Sachs predicted that China could become the largest market for luxury goods in the world within two to three years.
China’s domestic consumption and capital formation are increasing at a pace well beyond that of any other major economy and will continue to drive the world’s growth in the coming years.
Re: PRC Economy and Industry: News and Discussions
You can put this into any argument. So what is the point? Everything that has a beginning, has an end.saip wrote: That is what everyone thought about USSR and see what happened? Then again how about the USA and its AAA rating? If they can fall so can China and that is nature, my man and no amount of Marxism Leninism can change it.
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Re: PRC Economy and Industry: News and Discussions
The so called Chinese miracle, which was predated on keeping workers wages low and not exporting inflation, is now coming to an end. This is the point. Since exports play such a significant part in the whole of chinese economy, when the music stops we are looking at a possibility of say 20 million plus unemployed workers. The transition from an export led growth to a domestic focused economy will take time. And this will happen at a time, which China/PRC will face competition from other countries in manufacturing. Time is one thing which China does not have.ashi wrote:You can put this into any argument. So what is the point? Everything that has a beginning, has an end.saip wrote: That is what everyone thought about USSR and see what happened? Then again how about the USA and its AAA rating? If they can fall so can China and that is nature, my man and no amount of Marxism Leninism can change it.
Some of us are starting to believe that the worst of our nightmares might come true. A large scale social upheveal in PRC. Like Soviet Union before it, China does not have the luxury of a inclusive representative system. And like Soviet Union, which in spite of having significant ethnic-Russians in the so called Former-Soviet Republics, China as an entity might shrink.
China is at a cross roads. Its current political dispensation will have to change. Mind you political and not ruling. There is thin line which separates them. Also its economic model has to change. All the best reforming both of these.
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Re: PRC Economy and Industry: News and Discussions
Before the 1997 asian financial flu hit, one of the biggest market of luxury goods manufacturer like Mercedes was South-East-Asia. Some people have claimed that it was bigger than middle-east. There were people taking out cheap loans and driving away with mercedes and BMW cars. Guess where we are currently w.r.t luxury goods in south-east-asia.ashi wrote:You can bet that is not going to happen in the next ten or twenty years.VikramS wrote:
China is reaching the limit of its older export based model. Wage inflation has reached a point where it is no longer a no-brainer to operate in China. Companies like Foxconn are now exploring factories in Latin America.
....
....
China To Become World’s Second Largest Consumer Market
The sale of cars and luxury goods recorded strong growth in the Chinese market in 2010. China’s luxury consumption hit $6.5 billion in 2010, second only to Japan, and is growing at the fastest pace in the world for the third consecutive year. Goldman Sachs predicted that China could become the largest market for luxury goods in the world within two to three years.
China’s domestic consumption and capital formation are increasing at a pace well beyond that of any other major economy and will continue to drive the world’s growth in the coming years.
Now about the Chinese export-led growth. Where will you find consumers for goods if Europe stumbles badly or if there is a double dip recession? Is there a market or a FATA which can replace Europe and/or US? There is a term, "Demand Destruction." You will hear about it more often in the future. And how it impacts, Supply.

Re: PRC Economy and Industry: News and Discussions
Oh, this is nothing new. Many didn't believe China would survive the aftermath of 1989 political mess and the break up of Soviet Union. Now Chinese is in far better shape and position than then. So I would not hold my breath for that.Christopher Sidor wrote:
Some of us are starting to believe that the worst of our nightmares might come true. A large scale social upheveal in PRC. Like Soviet Union before it, China does not have the luxury of a inclusive representative system. And like Soviet Union, which in spite of having significant ethnic-Russians in the so called Former-Soviet Republics, China as an entity might shrink.
China is at a cross roads. Its current political dispensation will have to change. Mind you political and not ruling. There is thin line which separates them. Also its economic model has to change. All the best reforming both of these.
Re: PRC Economy and Industry: News and Discussions
First of all, is China really export led growth is very much under debate. Secondly, lower end products are less impact by economy downturn. Thirdly, China is moving towards a consumer centric economy. It may take some time, but then anything loss in export, is not going to happen overnight either.Christopher Sidor wrote: Now about the Chinese export-led growth. Where will you find consumers for goods if Europe stumbles badly or if there is a double dip recession? Is there a market or a FATA which can replace Europe and/or US? There is a term, "Demand Destruction." You will hear about it more often in the future. And how it impacts, Supply.
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Re: PRC Economy and Industry: News and Discussions
Can you please substantiate the statement "Chinese is in far better shape and position than then."ashi wrote:Oh, this is nothing new. Many didn't believe China would survive the aftermath of 1989 political mess and the break up of Soviet Union. Now Chinese is in far better shape and position than then. So I would not hold my breath for that.Christopher Sidor wrote:
Some of us are starting to believe that the worst of our nightmares might come true. A large scale social upheveal in PRC. Like Soviet Union before it, China does not have the luxury of a inclusive representative system. And like Soviet Union, which in spite of having significant ethnic-Russians in the so called Former-Soviet Republics, China as an entity might shrink.
China is at a cross roads. Its current political dispensation will have to change. Mind you political and not ruling. There is thin line which separates them. Also its economic model has to change. All the best reforming both of these.
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Re: PRC Economy and Industry: News and Discussions
I think a lot of talk about the “impending collapse” of China or the “imminent social upheaval” in China is misplaced.
The singularity of the Chinese identity and the hyper han nationalism is glue enough to ensure the survival of the Chinese state (despite exterior changes). The Confucian ethic of harmony between relations, which also encompasses the state and the subjects’ relations, also provides a persuasive argument for a continued mandate of heaven for the Mao dynasty. These two elements are strong enough to override any discontent that the masses may have for the CPC kleptocrats.
The biggest threat to Chinese state actually may be from the PLA. China has seen an recurrent theme of imperial boom, Bonapartism and warlordism. The interaction between CPC & PLA is a determinant factor that will decide the future course.
The singularity of the Chinese identity and the hyper han nationalism is glue enough to ensure the survival of the Chinese state (despite exterior changes). The Confucian ethic of harmony between relations, which also encompasses the state and the subjects’ relations, also provides a persuasive argument for a continued mandate of heaven for the Mao dynasty. These two elements are strong enough to override any discontent that the masses may have for the CPC kleptocrats.
The biggest threat to Chinese state actually may be from the PLA. China has seen an recurrent theme of imperial boom, Bonapartism and warlordism. The interaction between CPC & PLA is a determinant factor that will decide the future course.
Re: PRC Economy and Industry: News and Discussions
So 1989 was just a political mess. Gov't slaughtering 400 odd kids is labelled as genocide in some places. Maybe the for the Chinese its just a political mess. You are proud , aren't you ?Oh, this is nothing new. Many didn't believe China would survive the aftermath of 1989 political mess
Your tallel/deepel/dirtier fliends chant allaaaah hu akbar after killing of people ? What do PLA troops chant?
Re: PRC Economy and Industry: News and Discussions
ashi:
Perhaps the CCP filters did not allow you to read this article about Foxconn's move to Brazil, so I will post an excerpt.
http://appadvice.com/appnn/2011/05/sout ... eet-middle
Inder Sharma: I agree with your observations But what has worked in the past may no longer work in the future. The flow of information and the ability to organize is vastly superior to what it has been. Further a vast group of Chinese have now gone beyond the subsistence stage. Once you have enough to eat, a house to live and a car to drive, your mind starts thinking about "higher needs". That is when trouble starts.
That there is going to be some trouble and fall-out is a given. How the CCP-PLA will react to it is the question mark. Unfortunately in a system without significant checks and balances the impact can be drastic.
Perhaps the CCP filters did not allow you to read this article about Foxconn's move to Brazil, so I will post an excerpt.
While that invitation remains in limbo, another, bigger, deal has recently come to light, this time between Foxconn and the Brazilian government itself. The offer includes a reported $12 billion investment from the Taiwan-based company to build and maintain its own facilities in Brazil (dedicating them to, among other things, iPad and iPhone manufacturing).
http://appadvice.com/appnn/2011/05/sout ... eet-middle
If you can access the article, note that motivation for that is the high import markups which makes the products expensive for Brazilians. Do not be surprised to see similar "import" markups to start becoming a lot more common as the rest of the world decides that they have sent enough jobs to China.And, since Brazilian citizens pay huge markups on imported Apple goods, the entire populace can enjoy vastly cheaper taxes on products made in-country.
I hope that happens because the export led growth model is now reaching the end of its shelf-life. I am worried if that adjustment does not happen since Mao's typical response to the issue of underemployed population was to find a way to get rid of them. The slowdown in export was met with the construction boom. Now when that comes to end, then what?ashi wrote: China To Become World’s Second Largest Consumer Market
Inder Sharma: I agree with your observations But what has worked in the past may no longer work in the future. The flow of information and the ability to organize is vastly superior to what it has been. Further a vast group of Chinese have now gone beyond the subsistence stage. Once you have enough to eat, a house to live and a car to drive, your mind starts thinking about "higher needs". That is when trouble starts.
That there is going to be some trouble and fall-out is a given. How the CCP-PLA will react to it is the question mark. Unfortunately in a system without significant checks and balances the impact can be drastic.
Re: PRC Economy and Industry: News and Discussions
There are a few things that always bothers me about Indian thinking when it comes to China. We assign a kind of mythical quality to their supposed skills.ashashi wrote:
By dumping the products worldwide in massive quantities, China is accumulating the wealth. Sure, profit margins are very low, but still it is accumulating the wealth. Another effect of the dumping strategy is, it is killing the industry worldwide, there by increasing the demand for chinese products.
No, you cannot have any margin if you are dumping. Dumping means you are selling below cost to steal market share. If there is any margin at all, even the slimmest one, then you are not dumping.
If a nation simply dumps for three decades it will go bankrupt. The mythical Dragon cannot do things that no other nation can do. China doesn't dump per se (at least not after the initial phase when they have already cornered the market) but it does squeeze its population in a way that is akin to slave labor.
As someone said about the Industrial Revolution being slave labor in a modern city is still better than being on the farm.
Re: PRC Economy and Industry: News and Discussions
Christopher Sidor wrote:
Before the 1997 asian financial flu hit, one of the biggest market of luxury goods manufacturer like Mercedes was South-East-Asia. Some people have claimed that it was bigger than middle-east. There were people taking out cheap loans and driving away with mercedes and BMW cars. Guess where we are currently w.r.t luxury goods in south-east-asia.
The scale of the market in China is totally different than that of SE Asia. I work in the field of analyzing markets. If we (India and NRIs) do not recognize this then we'll always be on the back foot regarding trade and business.
The sales of BMW, Mercedes and Audi is as big or bigger than those in Germany itself. On top of which the chinis also have a very under developed consumer credit market. This means that most cars are paid for in cash. As is for everything else there.
They are the largest market for cars, homes, flat screens, you name it. Every MNC is gearing up for this market. Their middle class is real unlike the one in India. Apple sells more in China than the rest of Asia combined and it has only been in Pandaland since 2007.
The goras, the Taiwanese, the Koreans and the Japs are making a killing from this. Most of the exports in China come from foreign firms using cheap Chinese labor. Their profit goes back into investing on the mainland to gain market share. This is why most of the top brands in China are actually western or East Asian. GM and VW dominate cars. Nokia and Apple, their cell phones. Even their food is dominated by KFC. The top movie in the chini box office is always a Hollywood flick.
India Inc. can and should make money off of this. But our understanding is sadly lacking. Westerners, the Japanese and Koreans have thousands of experts and media people on the ground while we depend on jingos and wishful thinking.
This will be the largest consumer market in the world. And it hasn't even started to use credit cards widely yet.
It had stumbled in 2008 and survived intact. I doubt that it can get worse even with the double dip. The fact is most of the profits in the chini export machine goes to Westerners, Taiwanese and Koreans. A double dip might send millions of chinese laborers into the streets without jobs like last time. But doubt it matters much in a oppressive regime that was built on repressing the general population. And it can always spend money on infrastructure to keep people employed.Now about the Chinese export-led growth. Where will you find consumers for goods if Europe stumbles badly or if there is a double dip recession? Is there a market or a FATA which can replace Europe and/or US? There is a term, "Demand Destruction." You will hear about it more often in the future. And how it impacts, Supply.
Eventually this kind of inefficiency will bring down the system. But I do hope it continues for a few more decades. The last thing I want is for a Taiwanese or Hong Kong style government in China.
In the meantime, there is money to be made.
Re: PRC Economy and Industry: News and Discussions
^^^ Wise words... Could you tell me about the scope for pharmaceutical market in China?
Just need elaboration on 1 point....
[quote]
Their middle class is real unlike the one in India.
[\quote]
You mean that Indian middle class is averse to spending? Audi sales in China have been clase to 300K last year. Is it because of tax incentives?
Just need elaboration on 1 point....
[quote]
Their middle class is real unlike the one in India.
[\quote]
You mean that Indian middle class is averse to spending? Audi sales in China have been clase to 300K last year. Is it because of tax incentives?
Re: PRC Economy and Industry: News and Discussions
Chola,
What is your take on the enormous increase in Chinese money supply. IIRC there are more Yuan value wise in the system than US$ in the world.
Also the Chinese people are enormously productive, far more than Indians yet their wages are kept artificially depressed by the Panda Overlords to ensure competitiveness. Is this reducing or increasing. Panda system is incredibly opaque and simple questions sometimes are impossible to answer.
What is your take on the enormous increase in Chinese money supply. IIRC there are more Yuan value wise in the system than US$ in the world.
Also the Chinese people are enormously productive, far more than Indians yet their wages are kept artificially depressed by the Panda Overlords to ensure competitiveness. Is this reducing or increasing. Panda system is incredibly opaque and simple questions sometimes are impossible to answer.
Re: PRC Economy and Industry: News and Discussions
http://www.nytimes.com/2011/08/25/world ... china.html
But there are obstacles that limit the ability of leaders to shift direction. For one thing, China continues to empower its large state-owned enterprises at the expense of private entrepreneurs, which results in market inefficiencies on where and how capital should be allocated, analysts say. Those large enterprises have enormous influence on policy makers. State banks also tend to favor government-backed projects, which are often capital-intensive endeavors like infrastructure building.
At the provincial and lower levels, one reason officials support capital-intensive projects arises from the way such officials are measured by the central government in annual reports. The rate of local G.D.P. growth is a top criterion by which the officials are judged. Their careers depend on it, and capital-intensive projects give short-term lifts to growth numbers. Another reason officials promote such projects is corruption: it is relatively easy to take bribes or skim money from large state investment projects.
To cope with the global downturn in 2008, the central government pumped $586 billion of stimulus money into the economy and loosened lending by state banks. Companies set up by local governments borrowed heavily. Victor Shih, a Northwestern University professor, said that based on official figures released this summer, total local government debt across China is $2.4 trillion to $3.1 trillion. The upper estimate is equal to half of China’s G.D.P. in 2010. Interest payments on the debt amount to more than $150 billion per year.
Re: PRC Economy and Industry: News and Discussions
From the viewpoint of where I stand, MNCs (mainly American since those are the main clients of my employer) the Indian middle class spend incredibly little.gakakkad wrote:^^^ Wise words... Could you tell me about the scope for pharmaceutical market in China?
You mean that Indian middle class is averse to spending? Audi sales in China have been clase to 300K last year. Is it because of tax incentives?
For example, Apple's Chinese sales of the second quarter of 2011 is $3.8 billion US. It has become the key driver of the company's future planning. India's sales are so small, in the millions, that it is not even listed in the company's forward prospectus.
If you look at General Motors, they sold 2.35 million vehicles in China to 110,000 in India.
These numbers are more or less the same for companies in industry after industry. These are sales figures from MNCs, outside of Chinese official stats which everyone takes with a massive grain of salt.
When numbers like those are disseminated across the corporate landscape, they have real impact on future investment and planning. They will affect FDI. They will also affect political decisions when Western corporations or corporations in Japan, Korea and ASEAN go to bat for China in order to protect access to what is often times their largest market.
Both middle classes China and India has been hyped over the past decade. But the numbers are so incredibly one-sided -- the Chinese market usually many, many folds larger than the Indian one for almost every item except for gold -- that for many MNCs the only real middle class in the Chinese one.
But the silver lining is because China is communist, its private companies are practically non-existent as a force world wide or even in its own market. SOEs are good at economy of scale contracting for outside firms but they are atrocious at developing their own brand.
That is why the Chinese market place is dominated by foreign brand, including fast food in a country famous for food -- which is amazing to me how stunted private Chinese enterprises are.
The Americans, Germans, Japanese and Koreans see this and they have control of massive chunks of the Chinese consumer market. The Europeans have the high end luxury market. India Inc. needs to take advantage of this.
Re: PRC Economy and Industry: News and Discussions
The M2 money supply in China had expanded greater than the US since the recession. Basically, it was the commies way of spending itself out of recession. This is what state-run economies do. On top of that, US quantitative easings meant that Chinese needed to print more money to keep up with the US peg. Every $trillion US expanded by the US Fed means that China needed to print 6.5 trillion Yuan to keep the peg stable.Theo_Fidel wrote:Chola,
What is your take on the enormous increase in Chinese money supply. IIRC there are more Yuan value wise in the system than US$ in the world.
Also the Chinese people are enormously productive, far more than Indians yet their wages are kept artificially depressed by the Panda Overlords to ensure competitiveness. Is this reducing or increasing. Panda system is incredibly opaque and simple questions sometimes are impossible to answer.
My take is that it the US Fed controls the Chinese money supply rather than China. This has created inflation. The US is a superpower for a reason. Eventually, this situation is untenable.
The Chinese people are productive provided that they work for MNCs from the West, Japan, Taiwan and the rest of SE Asia (mostly Overseas Chinese.) Productivity will increase as wages goes higher and firms are forced to automate. Right now, Chinese firms depend on cheap labor.
That said, their infrastructure contributes mightily to their productivity. They are not bled dry by rolling power outages, delays in delivery because of washed out road, spotty freight service, etc.
But if the MNCs leaves, China will not be so productive. Communist states are never productive compared to free ones.
Re: PRC Economy and Industry: News and Discussions
This is a very good point... Indians can be too jingoistic at times .. What Indians must understand that size of the chinese market does not indicate the superior health of its economy...But it indicates a money making opportunity while it lasts... Why should we care if the market was generated by keynesian policies at a gigantic scale.. we should seize the opportunity and make profit.
But the silver lining is because China is communist, its private companies are practically non-existent as a force world wide or even in its own market. SOEs are good at economy of scale contracting for outside firms but they are atrocious at developing their own brand.
That is why the Chinese market place is dominated by foreign brand, including fast food in a country famous for food -- which is amazing to me how stunted private Chinese enterprises are.
The Americans, Germans, Japanese and Koreans see this and they have control of massive chunks of the Chinese consumer market. The Europeans have the high end luxury market. India Inc. needs to take advantage of this.
From the viewpoint of where I stand, MNCs (mainly American since those are the main clients of my employer) the Indian middle class spend incredibly little.
For example, Apple's Chinese sales of the second quarter of 2011 is $3.8 billion US. It has become the key driver of the company's future planning. India's sales are so small, in the millions, that it is not even listed in the company's forward prospectus.
If you look at General Motors, they sold 2.35 million vehicles in China to 110,000 in India.
India is a difficult market... Indians are tough customers... Many American companies fail to understand the fact...The companies that understand the fact do real good business..
As far as car market is concerned , the Indian market is dominated by Tata , Hyundai and maruti suzuki...
GM has a particularly infamous reputation... Chevy's are believed to break down easily... Lots of problems in service... frequent service centre related problems..
Toyota does badly in India too... Thats because they remove too many features from their cars... service is a problem.
While hyundai , tata etc offer a great value for money and good service...
As far as apple is concerned , it does not have a good future in India and is wise to not consider India an important market. ..
Most Indian customers who can afford an Apple are smart enough to NOT buy one..

As far as desktop computers are concerned , assembled units dominate the market space. Indian brands like HCL and zenith do well (as they are cheaper). Dell too does well.
Laptop is dominated by dell and Indian manufacturers..
People look at tech config while buying.. Apple sold some truly ludicrous products... Expensive macbooks that lacked optical drives ,others had just a single USB port etc.... And it tried market that optical drives/USB are obsolete so they omitted them , and that you pay more for apple because apple offers "enhanced" experience is a marketing gimmick which most Indians simply wont digest ... Neither would gimmicks like retina display... And they wont reduce their prices telling people that high prices define the company and it would lose its identity if prices are lowered... Such a company does not have a bright future in India . Not now . Not in 2030 when India will be 10 times richer..
IMHO as far as FDI's are concerned , the trouble lies with restrictions and problematic infrastructure rather than size of the consumer market. This can be surmised from the fact that states like Gujarat receive lot more investment than many other states.. Land acquisition is a big problem... In many states like UP electricity supply too is a problem.. Labour laws are idiotic... If these things are rectified than growth will be unprecedented...
However the good thing is that Indian private brands are doing well..
Re: PRC Economy and Industry: News and Discussions
Most Indian customers who can afford an Apple are smart enough to NOT buy one.. The top end Indian customers are very tech savvy.. They clearly understand the technical specifications pretty well.. While apples products are exorbitantly expensive for their features. Why buy an iphone when samsung galaxy s is cheaper and has a much faster processor , more ram , more apps etc
gakakkad Mian thanks for very informative post.Please do post from time to time about pros and cons about latest products............unwashed Abduls like me can update. Your post is goldmine for marketing managers who want to understand Indian customer through yoga and meditation

Re: PRC Economy and Industry: News and Discussions
rsingh wrote:Most Indian customers who can afford an Apple are smart enough to NOT buy one.. The top end Indian customers are very tech savvy.. They clearly understand the technical specifications pretty well.. While apples products are exorbitantly expensive for their features. Why buy an iphone when samsung galaxy s is cheaper and has a much faster processor , more ram , more apps etc
gakakkad Mian thanks for very informative post.Please do post from time to time about pros and cons about latest products............unwashed Abduls like me can update. Your post is goldmine for marketing managers who want to understand Indian customer through yoga and meditation



Re: PRC Economy and Industry: News and Discussions
Lets not get too personal.. The chinese drones would misinterpret this as a civil war...
unwashed Abduls like me can update. Your post is goldmine for marketing managers who want to understand Indian customer through yoga and meditation
Re: PRC Economy and Industry: News and Discussions
India is not just a difficult market, it is more of a potential market than an actual market. Hyundai might be doing comparatively better in India than GM but GM sells 25 times more cars in China than Hyundai does in India. Hyundai itself sells more cars in China.gakakkad wrote:
India is a difficult market... Indians are tough customers... Many American companies fail to understand the fact...The companies that understand the fact do real good business..
Let's look at luxury items -- Gucci handbags, BMWs, Audis, Apple Iphones and other trappings of the comfortable class.
Luxury items are a huge indicator of overall spending power. The super rich, billionaires, do not have the critical mass to create volume buying -- there are only so many Gucci handbags that a multi-millionaire or billionaire can buy. The vast majority of luxury items -- bar the ultra-exclusive things like Lamborghinis -- are bought by the upper end of the middle class.
Also, because the middle class around the world are enticed by the same brands -- a BMW or Audi is aspired to by the upper middle class everywhere regardless of race or creed -- it serves as a barometer for firms attempting to gauge a population's spending power.
The culture of wealth is global because media and education (look at how many desis and chinis as well as the well-off of Africa and Latin America are in US and UK schools) push this class towards universal norms.
Multinationals make full use of this phenomenon. When China's middle class buy 2 lakhs Audis to a mere 3000 by Indians then companies must take this into planning. The fact is all of the companies in the first world have seen this and are in China massively. They are also crushing Chinese competition (not much to begin with) to dust in the Chinese market.
If Bharat's champions are to compete with the likes of those from Japan, Germany and the US, they must be present in one of the two largest consumer markets in the world.
Jingoism among Indians including our captains of industry -- China is a potempkin village and fake -- means that India Inc. is being left behind in a huge but unsophisticated market where Asian companies have a far better chance of winning than in mature Western economies.
Some might say that India Inc. can do well enough with India's market alone. But when luxury items in China are bought at $17 billion US while India's middle class spend barely $800 million then the Indian firm bound to the Indian market only will always be at a major disadvantage to rivals in the Chinese marketplace.
At some point, India Inc. must be able to compete with the Japanese, Koreans and even the Thais in the Asian market place if we are ever to take our place as a top level economic power. The Japanese, Koreans and Thais are all in China and gaining share. Indians must do so while the PRC is still communist and its private firms weak and their branding non-existent.
A refusal to understand or believe in the size of the chini economy is a bane not a boon.
Japan, Korea and Taiwan have even more hostility politically towards the lizard than even we and yet they are smart enough to take full advantage of the Chinese market. The surplus of South Korea and Taiwan with China are $33bn and $43bn respectively. Again, those are figures for their surpluses only!
Re: PRC Economy and Industry: News and Discussions
Great point..rob china while we can..
Some might say that India Inc. can do well enough with India's market alone. But when luxury items in China are bought at $17 billion US while India's middle class spend barely $800 million then the Indian firm bound to the Indian market only will always be at a major disadvantage to rivals in the Chinese marketplace.
At some point, India Inc. must be able to compete with the Japanese, Koreans and even the Thais in the Asian market place if we are ever to take our place as a top level economic power. The Japanese, Koreans and Thais are all in China and gaining share. Indians must do so while the PRC is still communist and its private firms weak and their branding non-existent.
A refusal to understand or believe in the size of the chini economy is a bane not a boon.
Japan, Korea and Taiwan have even more hostility politically towards the lizard than even we and yet they are smart enough to take full advantage of the Chinese market. The surplus of South Korea and Taiwan with China are $33bn and $43bn respectively. Again, those are figures for their surpluses only!
Re: PRC Economy and Industry: News and Discussions
BYD, a Chinese brand used to be the best car sellers in China. It is not doing too well in the last two years, but still is one of the top three. China has a huge market, it certainly can accommodate many different business and brands for good competition. But saying it's own private firms are not selling and is weak, is mistaken. It is kinda like saying Chinese people are working for slavery salary, are dumping products below cost, products are garbage etc. Interesting, if any of this is true, so how are people getting richer by the days?chola wrote: The Japanese, Koreans and Thais are all in China and gaining share. Indians must do so while the PRC is still communist and its private firms weak and their branding non-existent.
The trade deficit to Taiwan is mainly due to political reason. China wants to draw Taiwan under her orbit, plus as a gesture of sending good wills to the people in Taiwan. So China made special policy and special purchases from Taiwan. .chola wrote: Japan, Korea and Taiwan have even more hostility politically towards the lizard than even we and yet they are smart enough to take full advantage of the Chinese market. The surplus of South Korea and Taiwan with China are $33bn and $43bn respectively. Again, those are figures for their surpluses only!
As for Korea, China is both the top exporter and importer.
Re: PRC Economy and Industry: News and Discussions
I ll not be surprised if the BMW's are bought by CCP party workers and their relatives... In india if you import a car you have to pay 150% import duty...while in China it is tax free...
It is kinda like saying Chinese people are working for slavery salary, are dumping products below cost, products are garbage etc. Interesting, if any of this is true, so how are people getting richer by the days?
http://www.chinacartimes.com/2007/09/03 ... -worth-it/
A Chinese website wrote:
if you have a foreign experts certificate to say you are a foreign expert from the PRC government then you can import a car into China tax free for as long as you stay in China. Foreign expert cards are not exactly hard to come by
So at 0% import duty no wonder 240k audi's are sold...
Last edited by gakakkad on 27 Aug 2011 19:44, edited 1 time in total.
Re: PRC Economy and Industry: News and Discussions
India runs a 14B trade deficit with China in the first seven month of this year, and is expecting a 20B trade deficit.gakakkad wrote:
Great point..rob china while we can..
Re: PRC Economy and Industry: News and Discussions
That is exactly the point Chola is trying to raise....Our planners are not taking adequate advantage of China...ashi wrote:India runs a 14B trade deficit with China in the first seven month of this year, and is expecting a 20B trade deficit.gakakkad wrote:
Great point..rob china while we can..
Re: PRC Economy and Industry: News and Discussions
Buying an import car is far more expensive in China than buying an import car in U.S.gakakkad wrote:I ll not be surprised if the BMW's are bought by CCP party workers and their relatives... In india if you import a car you have to pay 150% import duty...while in China it is tax free...
It is kinda like saying Chinese people are working for slavery salary, are dumping products below cost, products are garbage etc. Interesting, if any of this is true, so how are people getting richer by the days?
http://www.chinacartimes.com/2007/09/03 ... -worth-it/
A Chinese website wrote:
if you have a foreign experts certificate to say you are a foreign expert from the PRC government then you can import a car into China tax free for as long as you stay in China. Foreign expert cards are not exactly hard to come by
So at 0% import duty no wonder 240k audi's are sold...
Re: PRC Economy and Industry: News and Discussions
^^^ how so... the site says that you can import a car with 0 % duty if you have some card ,That card can be easily obtained... US does not have 0 % import duty on cars... I agree that US has made policy blunders w.r.t foreign trade...
Re: PRC Economy and Industry: News and Discussions
The card only awards to highly selective people. Most people paying large sum of money for the import tax. The tax is still a good source of income for the government.gakakkad wrote:^^^ how so... the site says that you can import a car with 0 % duty if you have some card ,That card can be easily obtained... US does not have 0 % import duty on cars... I agree that US has made policy blunders w.r.t foreign trade...
There are so many lies and myths around. People used to say China import so many cars and park them in a large garage, as they ddidn't believe Chinese are rich enough of buying them.
Re: PRC Economy and Industry: News and Discussions
Tell that to the US government and the rest of the world. It is not what you plan. It is what you are capable of and what your economy model is.gakakkad wrote:That is exactly the point Chola is trying to raise....Our planners are not taking adequate advantage of China...ashi wrote:
India runs a 14B trade deficit with China in the first seven month of this year, and is expecting a 20B trade deficit.
Re: PRC Economy and Industry: News and Discussions
The source says that it is not hard to get one.
The card only awards to highly selective people. Most people paying large sum of money for the import tax. The tax is still a good source of income for the government.
There are so many lies and myths around. People used to say China import so many cars and park them in a large garage, as they ddidn't believe Chinese are rich enough of buying them.
besides
In India even if they set shops they have to pay import duty of 150-200%... So Indian sales of imported vehicles are in spite of huge duty... As per the latest regulations in India ...even a complete knocked down unit assembled in India is considered a completely imported vehicle...The only reason why China is ahead presently is because your reforms started in 1978 while ours in 1991...
. Foreign companies setting up shop in China can import their own company vehicles tax free into China.
Re: PRC Economy and Industry: News and Discussions
So the import tax is 25% and comprehensive tax is 50% for passenger cars in China.
http://english.peopledaily.com.cn/20060 ... 73293.html
My cousin in China is paying around 150% of what I pay in US for the same car.
http://english.peopledaily.com.cn/20060 ... 73293.html
My cousin in China is paying around 150% of what I pay in US for the same car.
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Re: PRC Economy and Industry: News and Discussions
My cousin in PAF has flown both F16s and the spanking new JF17-Vanar, he is very impressed with the build quality and performance indicators of the JF-17 and it is 150% cheaper than the F-16. This surely is a sign that Chinese manufacturing of high end items has come of age.
Re: PRC Economy and Industry: News and Discussions
So much misinformation here. Chinese government tax revenues the first 6 months of this year are near parity with the US federal govt. People paying 3 times US prices for imported cars is one reason.
From Bloomberg:
Porsche Only in China Has $220,000 Entry-Level Club Model: Cars
By Bloomberg News - Jun 8, 2011 10:33 AM ET
At the Beijing Sports Car Club, a $220,000 Porsche SE 911 counts as an entry-level model. Members are competing with counterparts who race $3.9 million Tramontanas and $4.3 million Bugatti Veyron 16.4s.
The number of millionaires in China jumped 31 percent last year to more than 1.1 million, and with an average age of 39, they are 15 years younger than their U.S. and European peers. Car clubs, nonexistent in the country two years ago, provide enthusiasts with a venue to demonstrate their vehicles and carmakers an opportunity to win more converts.
http://www.bloomberg.com/news/2011-06-0 ... -cars.html
From Bloomberg:
Porsche Only in China Has $220,000 Entry-Level Club Model: Cars
By Bloomberg News - Jun 8, 2011 10:33 AM ET
At the Beijing Sports Car Club, a $220,000 Porsche SE 911 counts as an entry-level model. Members are competing with counterparts who race $3.9 million Tramontanas and $4.3 million Bugatti Veyron 16.4s.
The number of millionaires in China jumped 31 percent last year to more than 1.1 million, and with an average age of 39, they are 15 years younger than their U.S. and European peers. Car clubs, nonexistent in the country two years ago, provide enthusiasts with a venue to demonstrate their vehicles and carmakers an opportunity to win more converts.
http://www.bloomberg.com/news/2011-06-0 ... -cars.html
Re: PRC Economy and Industry: News and Discussions
ashi wrote:So the import tax is 25% and comprehensive tax is 50% for passenger cars in China.
http://english.peopledaily.com.cn/20060 ... 73293.html
My cousin in China is paying around 150% of what I pay in US for the same car.
Because you are buying "Made In China" cheap maal............your cousin is buying "Made in USA" imported maal

Re: PRC Economy and Industry: News and Discussions
chola:
Each culture has its own nuances. Let us take the case of an engineer Desi couple bringing in 200-300K/year in the US. How many of them actually go out and buy Pradas and Gucci or any other high end designer brands? Very few.
The same couple may be driving a Merc/BMW. Why will they not splurge $1000 on a Prada but be happy with a $250 Coach when they will splurge $50K on a Bimmer instead of $25K Camcord?
Part of is utility, part of is value for money. A Bimmer is a lot more fun to drive, something you can experience; it is also considered one of the safest cars both from the point of view of avoiding an accident or surviving one if you get into on.
All Prada says is "look I can afford Prada".
I took up the example of the Desi couple in the US because they represent Indian values without being constrained financially, and it removes the constraints imposed by India in their value judgement.
As gakkad wrote in his Apple posts. Most Indians are discriminating customers who are a lot less driven by brand image. They will pay up a bit for a brand but not a lot; assuming the quality of the product also justifies the cost. If they want to splurge they will spend on Jewelry or other assets which have a lasting value than a $1000 purse.
That does not make for a very good pitch for an MNC. However discounting the Indian middle class because it is unwilling to suck up to Western labels is also a bit short-sighted.
The lack of success of foreign brands versus Indian brands is perhaps an illustration of the strength of the Indian companies, their understanding of the market, and their ability to compete. It is not a sign that the Indian middle class does not spend.
It is just a sign that the Indian today is a lot less enamored of the West compared to other Asians, or even Indians a generation ago. They do mind adopting an Asian brand like Hyundai because it offers value and have no problem in not chasing after the forme greats Honda/Toyota/GM/Ford etc.
This is orthogonal, but perhaps an illustration. I see very few Asian men married to White women; I see a LOT of Asian women married to white men. Within Indians, there is no obvious bias.
Each culture has its own nuances. Let us take the case of an engineer Desi couple bringing in 200-300K/year in the US. How many of them actually go out and buy Pradas and Gucci or any other high end designer brands? Very few.
The same couple may be driving a Merc/BMW. Why will they not splurge $1000 on a Prada but be happy with a $250 Coach when they will splurge $50K on a Bimmer instead of $25K Camcord?
Part of is utility, part of is value for money. A Bimmer is a lot more fun to drive, something you can experience; it is also considered one of the safest cars both from the point of view of avoiding an accident or surviving one if you get into on.
All Prada says is "look I can afford Prada".
I took up the example of the Desi couple in the US because they represent Indian values without being constrained financially, and it removes the constraints imposed by India in their value judgement.
As gakkad wrote in his Apple posts. Most Indians are discriminating customers who are a lot less driven by brand image. They will pay up a bit for a brand but not a lot; assuming the quality of the product also justifies the cost. If they want to splurge they will spend on Jewelry or other assets which have a lasting value than a $1000 purse.
That does not make for a very good pitch for an MNC. However discounting the Indian middle class because it is unwilling to suck up to Western labels is also a bit short-sighted.
The lack of success of foreign brands versus Indian brands is perhaps an illustration of the strength of the Indian companies, their understanding of the market, and their ability to compete. It is not a sign that the Indian middle class does not spend.
It is just a sign that the Indian today is a lot less enamored of the West compared to other Asians, or even Indians a generation ago. They do mind adopting an Asian brand like Hyundai because it offers value and have no problem in not chasing after the forme greats Honda/Toyota/GM/Ford etc.
This is orthogonal, but perhaps an illustration. I see very few Asian men married to White women; I see a LOT of Asian women married to white men. Within Indians, there is no obvious bias.