PRC Economy - New Reflections : Dec 15 2011

[gakakkad]

well , well , people here are jumping to conclusions like grapes being sour and all that ,when Panda has to give subsidies and cash rebates for car sales.

One must remember the fact that the Indian auto mobile industry has grown a 20%/annum for the last decade or so. The growth is in spite of the govt and not because of the gov't . Indian car industry is one of the most taxed in the world. diesel subsidies make petrol more expensive . And add labour problems to all that. In spite of all that the Indian auto industry grows at 20 % per annum . By the end of the decade India will probably sell 10 million cars per annum .

Large cars (SUVs) is a predominantly American obsession. In oirope , we don't get to see as many suvs as in the US. Inner city commuters usually need small cars. Small cars are the way to the future .

there is a rand study on comparative effects of Indian and Chinese demographics, gakakkad-ji, which bears out some of what you say
I guess, in the interim, we must learn what policy lessons we can from China's experience. The biggest one is female participation in the labor force, IMO. Thats one area China has really scored over India - do note that its happened inspite of similar gender ratios as India today and starting with similar social attitudes

Thanks for this . I was looking for the this study . It does put a fairly optimistic picture for India , (which will become even more optimistic if school/college enrolment data from 2010 are used instead of 2002 ) . But it also give a very clear warning in no uncertain terms . Wish we have a gov't that takes this into account .

[Theo_Fidel]

Am I the only one who finds it odd that Panda would pick Gucci and Prada as economic winners in the new system.

[VikramS]

Theo sir, there are very very few people who can afford Gucci and Prada when calculated on a percentage of population basis. But in absolute number, especially growth the Gucci/Prada will salivate on the Chinese luxury market.

The major Western Luxury brands are the ultimate aspirational brands. What better for a neo-rich to show their new found wealth than sport that $1000 purse? "Face" is so important and the Wild West type capitalism that exists in China, bling is perhaps the first step towards having a good Face.

From the CPC point of view, Gucci/Prada provide the visibility and the bling.

Consultants like chola can point to those big names and say see how big China is and how it can not be ignored.

They also generate great press in the West and also improve the image of the Chinese people as those who control the future of luxury brands (nee global wealth).

And finally the West needs to be given some carrots also; what better than high cost items which do not affect the employment situation in China but generate substantial revenue per item to offset the trade-imbalance?

Regardless of the criticism CPC gets here, you have to recognize one core aspect: They are utterly and completely focused on providing gainful employment to as many Chinese as possible. Gucci and Prada fit the puzzle pieces very well.

Wish the leaders in India learn from the CPC on how to alleviate the lifestyle of such a large population in such a short time.

[RamaT]

http://www.worldpoliticsreview.com/arti ... ts-decline

But what of China’s legendary capacity for long-range thinking that overcomes all such dynamics? Here, Collins and Erickson correctly capture the reality of rapidly urbanizing and industrializing China when they argue that not only is the country’s economic development far more locally directed than is commonly realized, but local officials exhibit a get-rich-quick mindset completely at odds with Beijing’s desire to keep everything on a reasonably even keel, lest the country tear itself apart over skyrocketing income inequality. As they note, “A local official attempting to get promoted to the next level . . . is judged on short-term growth, just as an American corporation is preoccupied with quarterly profits, often at the expense of long-term strategy.”

The crisis for China won’t come in 2030-2035 when its demographic profile begins to seriously hinder its economic dynamism; the crisis will come when the trend of the past 30 years -- accelerating relative growth -- inverts . . . [A]s China decelerates, it will continue to grow in absolute terms and . . . at a rate that exceeds that of many other powers. The trend of deceleration, however, will create a sense of being hemmed-in. . . . This could create a feeling of insecurity and anger as the exuberant expectations created by the 30 years of accelerating growth collide with the reality of deceleration.

[Prem]

http://www.bloomberg.com/news/2012-01-0 ... -says.html
China’s Home Prices Slide Amid Speculation of Reserve Ratio Cut: Economy

home prices fell for a fourth month in December after the government reiterated plans to maintain property curbs, according to SouFun Holdings Ltd. (SFUN) Residential prices dropped 0.25 percent last month from November, said SouFun, the nation’s biggest real estate website owner. Prices slid in 60 out of 100 cities tracked by the company, including all of the country’s 10 biggest cities such as Shanghai and Beijing, it said in an e-mailed statement today. The government said last month at an annual economic planning meeting that it won’t back away from real-estate industry curbs this year that are damping home sales and pulling down prices. The nation’s financial center of Shanghai and some other Chinese cities have also said they will continue to impose the home purchase restrictions this year. “Home prices extended the downward falling tendency, but didn’t fall aggressively, because many developers have already achieved sales targets,” said Peter Bai Hongwei, a Beijing- based property analyst at China International Capital Corp., the country’s biggest investment bank. “Property is likely to be the last sector that the government will relax policies this year.” Average home values nationwide climbed 2.9 percent in December from the same month in 2010 to 8,809 yuan a square meter (10.76 square feet), the slowest year-on-year growth since August, SouFun said.

[/quote]

[gakakkad]

Regardless of the criticism CPC gets here, you have to recognize one core aspect: They are utterly and completely focused on providing gainful employment to as many Chinese as possible. Gucci and Prada fit the puzzle pieces very well.

Wish the leaders in India learn from the CPC on how to alleviate the lifestyle of such a large population in such a short time.

Here I would like to point out something , that China is as big a market for conspicuous consumptions as the US is . Now what does that mean ? In US 95% of conspicuous consumption is done by top 5% people . The upper middle class + rich . ie income range of 150k or above . That forms about 10-15 million people. Cholas data indicate that China has 10-15 million upper middle class + rich people. (the same size of the US )But that forms less than 1% of the Chinese population. 99% of the Chinese population is extremely poor. Even poorer than their Indian counterparts. They are merely being utilized as robots for the enjoyment of the top 1 % . The 99% can't even travel freely within their own country .

Now we should make money out of the top 1% Chinese population. But we should not copy what the Chinese did . Except for in the areas of inviting foreign investment ,infrastructure and having a larger industrial base. One must remember that GDP wise we are only 5-6 years behind China . Even though they introduced reforms 15 years earlier to us .our GDP has doubled in the last 5 years it self. And the next 5 years are likely to be faster if anything else . December numbers have started to come. Industrial prodn is at 5 months high .So is service. All that doomsday talk about India slowing down is proving to be a hogwash .

[VikramS]

gakakkad:
I agree with you that the income disparities in China are at the same level or even worse in China. Clearly chola's numbers suggest that there is an uber-rich class.

However I am not sure the poor in China are that much bad off. Even if a factory job requires slave hours and pays a pittance it is still a lot more than what those folks were making before. And they have been able to generate these jobs in orders of tens,if not hundreds, of millions.

India has not generated the jobs at the same scale, however the growth is a lot more balanced and not skewed by massive state driven infrastructure projects.

OTOH, most people in India who have reasonable jobs are probably better off. Work hours are less stringent, political awareness is high, and as some articles have indicated the productivity expectations of the employers are not as extreme. But in terms of absolute numbers, the Chinese manufacturing machine has made a measurable difference in the material life of people.

Whether people are happy with the changes is altogether a different issue. The ability to vent their frustrations is important but the CPC seems reluctant to let go of its leash. Recent articles suggest a greater crackdown on reporting of the seamier sides; even the HSR crash reporting was censored and the open information generated frowned down upon.

[pankajs]

China's Property Malaise Ripples Wider

The property slump has triggered a slowdown in sales growth of goods ranging from furniture to refrigerators. Investment in residential real estate accounts for about 12% of China's economy, but as much as 25% is tied up in a broader category that also includes industries such as construction materials and appliances, according to economists.

The government had hoped that its efforts to rein in soaring real-estate prices would mean more Chinese would be able to buy homes, which in turn would keep demand for home furnishings humming. But the uncertainty around housing prices has scared away many new home buyers, making for a deeper-than-expected impact on the housing market and beyond. That could complicate China's efforts to manage a slowdown in its economy, which is increasingly geared toward domestic consumption at a time of declining demand from Europe and the U.S.

Consumer spending tied to the housing sector appears to be slipping too. Growth in sales of home appliances in the first 11 months of last year slid to 15% from 24% in the 2010 period, according to National Bureau of Statistics data that have been adjusted to account for inflation. Growth in furniture sales in the period slowed to 26% from 34% in 2010. The growth-rate declines were also felt in the overall retail sector.

Investors have already pulled back from the home-appliance sector, as government subsidies that allowed consumers to trade in their old appliances for new ones at a discount ended at the beginning of 2012, Mr. Chan said.

[pankajs]

China Telecom Enters U.K.

LONDON—China Telecom Corp. plans to launch mobile services in the U.K. in the first quarter after securing a network deal with British mobile operator Everything Everywhere Ltd., as the Chinese company seeks to drive growth in its mobile business and tap overseas markets.

The move follows a number of recent overseas deals by Chinese state-controlled companies that have highlighted their growing global clout and ambitions.

[pankajs]

Worries grow as China land sales slump

Land sales slowed sharply in China last year, according to a series of industry reports that highlight the deepening woes of debt-laden local governments that depend on land auctions as a crucial revenue source.

While the falling sales are still far from reaching crisis point, analysts say, authorities are increasingly under pressure to choose between costly help for the worst-hit cities and an unpalatable relaxation of its policies aimed at preventing a dangerous property bubble.

[pankajs]

Chinese provincial debt reaching crisis point

Stimulus money has also made it easy for provinces to get involved in massive infrastructure projects, such as high-speed railways, remote airports and even port projects that remain largely unused, analysts say.

Larry Lang, professor of finance at the Chinese University of Hong Kong, was reported by The Epoch Times as saying that China’s economy is on the “brink of bankruptcy” and that “every province is a Greece.”

The remarks were made in a lecture by Lang in Shenyang City in northern China’s Liaoning Province and reported after they were posted on YouTube.

In a controversial series of claims, Lang said that overall debt in China was as much as 36 trillion yuan (US$5.68 trillion), official inflation figures of 6.2% were as high as 16%, domestic consumption represented only 30% of economic activity and that there was “serious excess capacity.” He added that despite government headline figures of 9% growth in GDP, production had actually shrunk in China.

He also said China had one of the highest overall tax rates in the world and that Chinese businesses were paying as much 70% of their earnings in direct and indirect taxes.

“Once the economic tsunami starts, the regime will lose credibility, and China will become the poorest country in the world,” Lang concluded in the lecture.

[pankajs]

Singapore Loses Nokia to China

Notch one more victory for China in the battle to lure investment from the Western world.

Finland’s Nokia Corp., the world’s largest mobile phone maker by volume, said it is moving its Asia-Pacific headquarters to Beijing from Singapore as part of plans to raise business efficiencies and meet savings targets.

[pankajs]

Another China maritime firm delays pay to shipowner

SINGAPORE Jan 5 (Reuters) - China's Shagang Shipping has failed to pay millions of dollars in vessel rental fees to Diana Shipping, said a source close to the Greece-based firm, as Chinese maritime companies struggle through a downturn in the dry bulk freight market.

Shagang Shipping is the latest in a growing list of Chinese maritime firms that have unilaterally delayed payments to foreign shipowners in the past year, actions that have soiled China's reputation with the international maritime community.

[pankajs]

Yuan Completes Weekly Decline on Signs China Is Limiting Gains

Jan. 6 (Bloomberg) -- The yuan fell for a third day, completing its first weekly drop in almost a month on signs policy makers are limiting gains in the currency to protect exports as Europe’s debt crisis deepens.

“They are buying time to slow yuan appreciation but not to engineer yuan depreciation,” said Nizam Idris, a currency strategist at Macquarie Group Ltd. in Singapore. “We could see a slower pace of yuan appreciation in the months ahead until a soft landing in the Chinese economy is achieved.”

“If China forces the yuan to depreciate in the face of weaker growth, it will trigger massive capital outflows, which will destabilize the economy further,” Idris said. He predicts the currency will advance to 6 per dollar by year-end.

[pankajs]

Learning from experience

China's economy is entering a period of slower growth and the government should heed the lessons of other countries

China's economy has enjoyed an annual growth of 10 percent over the past 30 years, but how long can such high-speed growth last?

According to studies by the Development Research Center of the State Council, China's growth pattern is similar to that of Germany, which experienced a slowdown in the late 1960s, Japan, which experienced a slowdown in the early 1970s: and South Korea, which experienced a slowdown in the late 1990s. There are already signs emerging that China's growth rate will slow in the next few years.

First, infrastructure investment, the most important engine of growth, is declining as a proportion of total investment. In 2006, it was more than 30 percent, while it dropped to around 22 percent in 2011. As China's high growth rate is mainly driven by its huge investment in infrastructure, if infrastructure investment drops, growth rate will slow.

Second, in the last three years, the growth rate of the provinces and municipalities with good economic performance along the southeast coast, whose total GDP accounts for more than half of the national GDP, has lagged behind other regions.

Third, people are worried about potential risks in local governments' financing platforms and in the real estate market. To be more specific, people are concerned whether their investments in these areas will pay off. According to our research, the potential gains in these areas are not particularly great.

Taking all these signs into consideration, it seems the transition from high-speed growth to intermediate-speed growth may have already begun.

Although some may have a pessimistic view of this slowdown, it is actually a normal pattern of economic growth.

However, some officials, especially those from local governments, believe the slowing down is a result of government policies, and that if we need to, we can introduce stimulus policies to speed up the growth rate. But this belief is incorrect. As the growth rate is already slowing, if we apply administrative means to speed up the growth rate, it may work for a short period but it will not last for long, and may even have severe unwanted consequences. For example, the government in Japan tried to stimulate its economy in the 1980s, but this led to asset bubbles and long-term economic recession. It is a lesson we should heed.

Our estimate for China's economic growth in the intermediate-speed period is around 6 to 7 percent, which the country has the potential to maintain for 10, 15 or even 20 years. During the transition period over the next two to three years we hope to see a stable annual growth rate of 8 to 9 percent.

How can China improve its industrial competitiveness during this transition period? Several issues should be highlighted. Compared to anytime in the past 30 years, there are more uncertainties now and therefore a greater likelihood that the government or corporations will make wrong decisions.

China's infrastructure construction and many important industries, such as cement and other building materials, are entering their historical peaks of demand and capacity. If we over-invest, it may cause problems. Meanwhile, some small- and medium-sized enterprises in East China have experienced financing difficulties and great pressure from shrinking orders and a rapid rise in the costs of production, reflecting the decline in market space available when the growth rate slows.

We should prepare for this, as on entering a period of slower growth there will be a new industry pattern featuring a few large enterprises with substantial advantages in economies of scale, together with a horde of small- and medium-sized enterprises with specialized advantages. The government should introduce policies during the process of adjustment that are in accord with market rules rather than arbitrarily arranging the enterprises.

The most important lesson that we have learned from the international financial crisis is the development of the virtual economy and the real economy may not be mutually beneficial.

The main reason why Western countries have not emerged from the crisis is that the real economy, including manufacturing, has no new growth point. China should learn from this lesson since manufacturing will still be the country's most competitive advantage in the global industrial system in future.

Although there is a great deal of emphasis on the service industry, we should also note that the segment of the service industry with the greatest potential is the producer service industry, such as research and development, logistics, finance, and information services. They are all aimed at improving the efficiency of manufacturers. Therefore, whether the producer service industry can develop well or not, will to a large degree depend on whether they can contribute to the development of manufacturing.

The article is based on a speech by the vice-president of the Development Research Center of the State Council at the recent Third China Economic Prospects Forum.

[chola]

Am I the only one who finds it odd that Panda would pick Gucci and Prada as economic winners in the new system.

Gucci and Prada were not picked. They were winners because they attacked the Chinese market.

You still lack understanding of the system and market. China picks and chooses industries and home grown champions. These are companies like China Mobile, the Big Four Banks and solar panel industry as a whole.

There is no homegrown chini companies for quality and luxury like Gucci and Prada. Gucci and Prada in Pandaland correspond closely to their success in Hong Kong, Japan and Taiwan. It is part and parcel of the East Asian (and European) consuming class.

And even in industry picked by the chini government such as autos, foreign companies that attack the market can dominate, i.e. GM, VW and Daimler Benz.

[g.sarkar]

http://www.latimes.com/business/money/l ... 8185.story
Indians' ordeal rattles New Delhi-Beijing ties
Two traders were allegedly beaten and detained for two weeks by Chinese businessmen demanding payment. The episode complicates the nations' already wary relationship.
By David Pierson Los Angeles Times
January 6, 2012, 1:28 a.m.
"In a case that highlights the perils that await foreigners doing business in China, two Indian traders who were allegedly beaten and detained for two weeks by Chinese businessmen are set to stand trial accused of owing $1.58 million in debts after their Yemeni boss fled, according to news reports.
Deepak Raheja and Shyamsunder Agarwal were reportedly seized Dec. 14 in the eastern Chinese city of Yiwu, a massive trading center, and held captive in a hotel by local businessmen demanding to be paid back.
It wasn’t until Indian officials arrived that the two were released. The pair were taken to a Shanghai hospital, where they were reportedly found to have internal injuries.
In a peculiar twist before their arrival in Shanghai, an Indian diplomat was caught trying to sneak Raheja and Agarwal out of a Yiwu court hearing under the pretense of going to the toilet, the Chinese state-owned Global Times reported Thursday.
The diplomat, S. Balachandran, reportedly fainted and alleged he was harassed and denied food and water.
Hong Lei, China’s Ministry of Foreign Affairs spokesman, disputed the allegations in a news conference Wednesday, saying, “The reports did not tally with the facts.”
Lei added: “China protects the rights and interests of foreigners doing legitimate business.”
The Indian embassy has told its citizens to refrain from doing business in Yiwu, a city with 130,000 foreign business people, the Global Times said......"
Gautam

[chola]

From the CPC point of view, Gucci/Prada provide the visibility and the bling.

Consultants like chola can point to those big names and say see how big China is and how it can not be ignored.

You and Theoji pointed out Gucci and Prada not I. I mentioned Yum!, GM, VW, Mercedes, BMW and Apple as examples. Gucci and Prada are cute and quaint names in the chini landscape. The real powers in the China trade are the world's behemoths -- GE, Caterpillar, Mitsubishi, etc.

Regardless of the criticism CPC gets here, you have to recognize one core aspect: They are utterly and completely focused on providing gainful employment to as many Chinese as possible. Gucci and Prada fit the puzzle pieces very well.

Gucci and Prada provides very little employment to the swarming chini masses. Those companies are successful because they studied and attacked the chini market.

What provides gainful employment are the manufacturing and infrastructure sectors. Because those sectors create jobs, the Guccis and Pradas of the world are able to sell their brands.

Wish the leaders in India learn from the CPC on how to alleviate the lifestyle of such a large population in such a short time.

I have listed them earlier in this thread.

1. FDI
2. Exchange rate control
3. Emphasis on manufacturing and other goods production over services

FDI is the seed money for a poor nation. If you cannot understand why then think of it this way: Anyone can print paper and say it is worth something. But if you are poor, then what you print remains paper until you build the infrastructure that can back up that paper with real goods. FDI allows you to build that infrastructure. FDI also provides the hard currency needed to back your own currency when you are growing. If you do not need FDI then you are not poor.

Exchange rate control allows you to stabilize your currency while you are growing. And, in China's case, it allows you to cheat when you are strong.

But most third world nations including India attempt to raise or keep their currency above market value because it helps with imports and to keep confidence in it up. The Russian and Asian financial crisis in 1997-98 shows you how quickly confidence can be lost in even seemingly strong currencies like South Korea. We are seeing the same dangerous trend in the rupee today which is why currency swaps like ones with Japan is important.

The nations involved in the Asian financial crisis really had one choice afterwards, it was to build up their FX reserves. China is one of the few third world nations that dampens and undervalues its currency instead of supporting it. It is only possible because of the monstrous FX reserves.

Manufacturing over services. It could be agriculture or resource extraction (though this is not sustainable.) But any industry that produces hard tangible goods will provide the underpinning for your local currency and provide jobs. Services can exist only if there is a surplus of core goods. It is far easier for Ghana to accept the Yuan and know they can exchange it for a something from Chinese factory than it is for Ghana to accept the rupee for exchange of services from Wipro.

These things are not Chinese communist party ideas. They are part of a well worn formula employed by Japan, Thailand, Taiwan and South Korea. In fact, the chicoms are the very least successful practitioners of the formula judging by per capita income levels. India should have learned this a long time ago. If the Nehru clan had any foresight and watched what was happening at the time in Japan, Singapore, Hong Kong and Taiwan, India would be at three times the GDP of China instead of the other way around.

[gakakkad]

>>hese things are not Chinese communist party ideas. They are part of a well worn formula employed by Japan, Thailand, Taiwan and South Korea. In fact, the chicoms are the very least successful practitioners of the formula judging by per capita income levels. India should have learned this a long time ago. If the Nehru clan had any foresight and watched what was happening at the time in Japan, Singapore, Hong Kong and Taiwan, India would be at three times the GDP of China instead of the other way around.


One of the many reasons why I accuse the Nehru clan of nothing less than crime against humanity . I put JL nehru in the same league as the slain Romanian dictator Nicolae ceausceau or Mao himself . Too this date his descendants are attempting to hinder India. The rapid growth in last 5 years is in spite of them and not because of them .

[pankajs]

Credit crunch

Manufacturing center faces shutdowns as private moneylenders demand loans be repaid before Chinese New Year

Small businesses in China could be facing their bleakest Chinese New Year in more than 30 years - up to 20,000 businesses in the city of Wenzhou, one of the country's main entrepreneurial centers on the east coast, could suspend operations or close down altogether over the next month, according to a leading local business organization.

The small business sector in China, which makes many products which find their way to Europe and the United States, has had to rely on private moneylenders, some charging exorbitant interest rates, for a number of months.

Now many of the moneylenders - often consortia of other small businesses - want their money back.

It is traditional in China to settle all debts before the beginning of the Chinese New Year, which falls on Jan 23 this year.

Zhou Dewen, head of the Wenzhou Small and Medium-sized Business Development and Promotion Association, believes one in 20 of Wenzhou's small businesses could face closure.

"I believe it will be the worst Spring Festival since reform and opening-up more than 30 years ago because small business entrepreneurs are facing greater pressure than ever to pay back their loans and the profits from the manufacturing industry have been much reduced," he says.

The city, which has a population of 9.1 million and is famous for producing spectacles, cigarette lighters and shoe wear among dozens of other such products, is seen as a bellwether of the Chinese economy as a whole.

Many businesses have been hit hard by the economic crisis which has affected exports and up to 100 business owners are believed to have fled the country as a result of not being able to repay loans to moneylenders.

One of the most high profile of these was Hu Fulin, president of Center Group, one of China's largest spectacle makers, who absconded to the US in September. There have also been a number of suicides.

Until recently Wenzhou, a former treaty port and a city largely unknown outside of China, basked in its reputation of having more millionaires per capita than any other Chinese city and some of the country's most expensive real estate.

It was one of the first cities to develop a private economy in the wake of reform and opening-up led by Deng Xiaoping in 1978.

One of the big questions is how far the problems experienced in Wenzhou are indicative of a generalized funding crisis in China as a result of the government's credit-tightening policies.

Certainly, there are reports of problems in other entrepreneurial centers such as in Ordos in the Inner Mongolia autonomous region and Xiamen in Fujian province.

Over tea in the lobby of the Olympic Hotel in Minhang Road, Hu Zhenhua, professor of economics at Wenzhou University, paints a picture of the precariousness of this informal loans system.

"The whole system is based on A lending to B and B lending to C lending to D etc," he says.

"If D, however, flees the country, you get this domino effect where the whole system collapses. It is a crisis and it is probably getting worse."

[pankajs]

Time to plug the funding holes

Better private financing channels vital to avoid Wenzhou situations

Though the government has been trying hard to help small- and medium-sized enterprises (SME)in Wenzhou, East China's Zhejiang province, the number of units that are being shut down and the factory owners who are fleeing is steadily increasing.

With a huge chunk of the private loans still unpaid, and more funds required for cash payments like salaries and year-end bonuses, there seems to be no immediate respite for the financial muddle in Wenzhou.

There is very little that the government can do to ease the financial problems in Wenzhou and pave the way for easier SME financing.

Although the government expects commercial lenders to disburse more loans to troubled enterprises by lowering the loan requirements, banks are reluctant to and cannot play an important role in such a situation, because of their risk-control requirements and loan budgets.

Though there has been opinion in some quarters that the government should bail out the failed enterprises, there are also others who argue against such a move.

Critics of the move feel that government should not use taxpayer's money to bail out troubled SMEs, as most of the factory owners have fled not because of adverse market or manufacturing conditions but rather due to rampant speculation.

While there is little that the government can do directly, it can certainly help maintain normal financial order and punish the criminals.

Since of the "vanished factory owners" or "failed enterprises" can cause disruptions in payment chains, the government can help by bringing back the vanished factory owners and by liquidating and restructuring failed enterprises, and providing tax breaks and guarantees on short-term loans.

Though these measures may be useful in the short term, non-bank lending will continue to be the main driver in the long run.

Wenzhou can once again be the forerunner of SMEs in China if it is able to develop a successful pilot zone for private financing.

Of the over 450,000 private enterprises in Wenzhou, many are struggling or surviving with wafer-thin annual gross profit margins of less than 5 percent. It is difficult to fathom how these enterprises can borrow money with annual interest rates of over 48 percent.

There is a saying that those who use usury for speculation must eat their own bitter fruit. Considering that the government has been taking prompt steps to prevent the issue from snowballing, it can be safely assumed that the usury troubles in Wenzhou will soon be a thing of the past.

But what the government should do in the long term is to provide a fair and competitive environment for private enterprises.

SMEs not only play an irreplaceable role in job creation, technical innovation and social stability, but also are China's hope for the future.

The difficulties of private enterprises in Wenzhou show that this hope is now under serious threat. At the same time the problems in Wenzhou are akin to the problems faced by several other cities in China.

Institutional factors such as high taxes, government rent-seeking behavior, monopolies by State-owned enterprises, financial repression and weak protection of property rights affect small and medium enterprises.

Macroeconomic factors like dwindling overseas demand, weak domestic demand, appreciation of renminbi and increasing production costs, such as capital, labor, land and raw materials also affect SMEs.

As both institutional and macroeconomic factors will have long-term effects, there are hardly any short-term solutions for private enterprises.

It is not surprising that some factory owners were finding it hard to make money from manufacturing and hence turned to speculation years ago. Property, mineral resources, and some commodities are the most preferred candidates.

Property speculation has been prevalent for several years, but started running into rough weather after the government decided to clamp down on the sector. Speculation on mineral resources and commodities became popular in recent years but was quickly suppressed by the government.

With most doors for speculative gains closed, factory owners have virtually no option but to do a disappearing act rather than face their creditors.

In the short term, the government should reduce taxes and provide more funds to support SMEs while private enterprises must help each other. In the long run, the government must create an institutional environment in which private enterprises can not only fight for survival, but are also able to foster core competitiveness.

China must create private economic giants if it wants to realize its ambition of being a global economic giant. The ideal candidate for this is Wenzhou, the cradle of private enterprise.

The author is a lecturer at the Management School of Shanghai University and a research fellow at the China Europe International Business School Lujiazui International Finance Research Center.

[Singha]

sounds like the small SMEs not under party protection will get badly affected...

the big guys are safe as they can arrange new funding terms from state controlled banks via party connections.

[pankajs]

Right. Also the financial accounting and control at these firms are weak making it difficult to evaluate the health of the firm with any degree of confidence. In such cases the banks are reluctant to lend. So back to the moneylender.

[Purush]

PankajS mian, thanks for regularly posting interesting articles on this thread in an easy to read format.
Very much appreciated.
------------------------
An interesting case study...

Slightly old news from May 2011; is this mall still a ghost town?

http://www.internationalappraiser.com/2 ... rgest.html
NEW SOUTH CHINA MALL: WORLD’S LARGEST FAILED MALL

Having been an appraiser of distressed malls since 1984, I considered New South China Mall to be the Mount Everest of distressed malls. I finally got to "climb" this mall on May 11, 2011.

Completed in 2005, it is the world’s largest mall with leasable area of 7.1 million square feet, gross building area of 9.6 million square feet, space for 2350 stores, and a 99.5% vacancy rate.

What makes New South China Mall unique is that it has been mostly vacant in its 6 years since completion, and an inspection of the premises indicates that most of the few tenants this mall started with are now out of business. Press releases from the mall indicated that the mall had pre-leasing commitments from 1016 stores and opened with 386 stores.

New South China Mall was developed by an instant noodle billionaire, Hu Guirong, and financed with a billion-yuan loan ($154 million) from the Agricultural Bank of China, which was previously one of the Chinese government's "policy banks", banks that previously made loans based on government policy rather than on economic soundness. This was Mr. Hu's first retail development project.

The mall's feasibility was supported by a study from the SMR Group in Guangzhou, which forecast 203,973 customer visits per day. While I'm not sure if Chinese market research firms have the requisite skills to perform such a study, most feasibility studies, whether in China or the U.S., are typically ordered by developers to justify an over-reaching project and are thus not designed to be objective, any way. (Most lenders are too cheap to order feasibility studies and assume, to their detriment, that the appraiser they hire will automatically determine feasibility for them.)

Here are some of the factors that have led to the mall's failure:

Demographics
Dongguan is a sprawling industrial city of 7 million residents and about 900 square miles of incorporated area, more than twice that of Los Angeles. Dongguan does not match the affluence of the cities of Shenzhen and Guangzhou, though. If Shenzhen and Guangzhou were New York and Philadelphia, for example, Dongguan would be Newark, comparing cities based on personal wealth. Annual GDP per capita is $13,750 in Guangzhou, $14,245 in Shenzhen, but only $8187 for Dongguan. Similar to Newark, too, is its reputation for a high crime rate compared to its neighbors.

Of Dongguan’s 7 million residents, 5.2 million are classified by the Government as “permanent migrants”, most of who are young women who have come from rural areas to work in factories – not the sort to hop into a BMW to search for a Louis Vuitton purse at the mall. Most do not have cars. It is estimated that 75% of these migrant workers earns less than $200 per month, and some of that is sent home to even poorer relatives.

Furthermore, the mall is located in the less affluent Wanjiang district of the city, where the factories seem to be low-tech, manufacturing things like cabinets and display shelves and using mostly unskilled labor. (This area was described as farmland at the beginning of the mall's construction in 2002 but is now a fully urbanized area.) Unlike typical U.S. urban form with dying central cities and middle class flight to the suburbs, China's urban central business districts are thriving centers of commerce, and suburbs are for factories and low income housing.

Also complicating mall feasibility is the generally low level of household income in China, estimated to range from one-tenth to one-sixth of U.S. household income, and the Chinese are known as being savers, too. Too much attention has been spent on the relatively small class of nouveau riche known for its conspicuous consumption. (See my blog on Macau.) Western-style malls are a recent arrival in China, and seem to work better in the wealthiest cities, such as Shanghai, than second-tier cities like Dongguan.

Accessibility
n the other hand, the highways leading to the New South China mall are tollways owned by Dongguan Development Company Ltd (not the government), with tolls ranging from 17 to 25 yuan (about $2.60 to $3.85 -- customary tolls for New York City drivers, but not for underpaid Chinese workers).

There seems to be a lack of convenient public transportation to the mall, too, considering that the mall is not in a central location and Dongguan itself is a sprawling city that has grown without the benefit of rational urban planning. With an area of 2500 square kilometers, most Dongguan residents would need to take multiple bus rides to get to the mall. Dongguan has grown without urban planning from 28 factory towns that ultimately grew into each other.

There is also an inter-city bus station with an entrance approximately 1000 yards or one km west of the mall's entrance, but no easy pedestrian access to the mall. Even then, inter-city bus fares are typically more than $15, once again too expensive for the average area resident.

To get to the mall, I took a train from Shenzhen to central Dongguan and then took a 55-km cab ride the rest of the way, having to also pay for the cab driver's 98 yuan in tolls (about $15) for the 110 km round trip. The drivers at the taxi stand all knew about the mall, yet my driver could not find the mall when on the same street and had to call the mall several times before the phone was answered. When a local taxi driver cannot find a mall that has been the world’s largest for the last 6 years, that mall is indeed in trouble.

No anchor tenants
There is no department store currently anchoring this mall, but the official mall web site states that the mall was originally supposed to be anchored by 1) a Causeway Bay department store of more than 400,000 square feet and 2) a KFC (?!). Other intended anchor tenants were OMOMO out of Hong Kong, OBI out of Germany, and Sundan Electronics. I do not know if these other stores opened or not.

In keeping with the mega-mall concepts of the Mall of America and the West Edmonton Mall, New South China Mall is situated around a miniature amusement park with children’s rides and canals with gondolas, like the Venetian in Las Vegas. At the time of my visit at 1 pm on a Wednesday afternoon, there were no shoppers, but several dozen school children in the amusement park. Out of about a dozen tenants, the three tenants doing business at that time were McDonald's, KFC, and Kungfu (a Chinese fast food restaurant with Bruce Lee as its emblem), all visible from the street and patronized by amusement park patrons.

The theme park concept was said to be inspired by the success of the Window of the World theme park in Shenzhen, but Window of the World is almost 20 years old and was the original theme park in Guangdong province, which now has 40 theme parks, 12 of which were bankrupt as of 2007.

Having previously lived in America’s most Chinese city for several years (Monterey Park, California – 56% Chinese) and traveled to many Chinese destinations, I have never known a Chinese community to be under-retailed (having a lack of stores); theirs is an entrepreneurial culture. The SMR Group's feasibility study assumed the trade area to be the entire Pearl River Delta (including the larger and wealthier cities of Guangzhou, Shenzhen and Hong Kong), assuming that building the world's largest mall would effective draw away customers from the 15 other super-regional malls (more than 1 million square feet) that were built in Guangzhou and Shenzhen between 2001 and 2003, most of which also suffer from high vacancies. Could New South China Mall be way more retail space than Dongguan needs?

The failure of New South China Mall is also symbolic of a fundamental disconnect between mall development and actual income levels throughout China as empty luxury shopping malls start cluttering the nation. Household incomes are still well below those of more developed Asian states such as Singapore, Hong Kong, Taiwan, Japan and South Korea. The recent decade of mega-mall development in China reflects a naive hubris that presumes that the biggest mall will therefore attract the most shoppers.

More in the link, incl photos.

Also
Official propagandu site
http://www.southchinamall.com.cn/english/index1.jsp#

[g.sarkar]

http://www.spiegel.de/international/bus ... 82,00.html
01/06/2012
Policy Change
China Puts the Brakes on Foreign Automakers
By Wieland Wagner in Beijing
"For years, foreign automobile companies have reaped most of the profits to be had in the enormous Chinese market. But in a largely unnoticed change, Beijing is now ending their preferential treatment of carmakers from abroad to focus more on developing domestic technology and brands.
Info
The sea change is coming slowly, as if to protect those affected from being startled out of their festive mood. At the end of last year, the Chinese government's National Development and Reform Commission (NDRC) approved a new industrial plan that could have a devastating effect on German car manufacturers like Volkswagen, BMW and Mercedes once it takes effect in late January.
These companies have worked to make China one of their most important and successful foreign markets, while Beijing industrial planning officials looked on in frustration. In the first 11 months of last year, VW alone sold more than 2 million vehicles in there -- up more than 15 percent from 2010.
But this kind of growth could now be over. To protect the "healthy development" of their domestic auto industry, the NDRC said it would remove car manufacturing from the list of industries where it encourages foreign investment. The goal of the change is clear: Beijing wants to help its own carmakers break into the market.
Domestic Manufacturers Suffering
When compared to foreign manufacturers, domestic Chinese carmakers such as BYD ("Build Your Dreams") are suffering from the current slow-down in the market there. After Beijing cut state benefits for car purchases, the entire Chinese auto market grew by only about 3 percent in 2011 -- compared to 30 percent the previous year......"
Gautam

[chola]

>>hese things are not Chinese communist party ideas. They are part of a well worn formula employed by Japan, Thailand, Taiwan and South Korea. In fact, the chicoms are the very least successful practitioners of the formula judging by per capita income levels. India should have learned this a long time ago. If the Nehru clan had any foresight and watched what was happening at the time in Japan, Singapore, Hong Kong and Taiwan, India would be at three times the GDP of China instead of the other way around.


One of the many reasons why I accuse the Nehru clan of nothing less than crime against humanity . I put JL nehru in the same league as the slain Romanian dictator Nicolae ceausceau or Mao himself . Too this date his descendants are attempting to hinder India. The rapid growth in last 5 years is in spite of them and not because of them .

It was there for the taking but Nehru, Indira and Rajiv and their cohorts in Congress sat on this opportunity for three decades. What could have been. For me it is too painful to even contemplate sometimes.

We could have gone the way of Japan, Taiwan and South Korea but on an immensely greater scale.

A manufacturing/exporting India would have been greater than what the chinis had so far created because the system would have worked even better with private enterprises and SMEs which India could have supplied in abundance. The PRC used a stunted version because communism destroys the dynamism needed and that is reflected by the pathetic per capita income levels of the chicommies versus those in Japan, Taiwan and Korea.

A lost opportunity that we cannot retrieve unless the PRC stays communist and collapse under its contradictions without the US coming in and saving it. The Nehrus had put us in a hole that we've been trying to climb ever since.

[chola]

sounds like the small SMEs not under party protection will get badly affected...

the big guys are safe as they can arrange new funding terms from state controlled banks via party connections.

This is the same for all communist states. Private enterprises will always be starved under the system. If they were not then the political system is no longer communist.

There cannot be innovation and dynamism in communism. They are doomed to collapse. My hope for China is that it does not collapse overly quickly. Several more decades of plodding communism should stunt them nicely while we pass them. Too quick a collapse and the US and the West will rush in to help budding "democracy" and then we get a giant size Japan or Taiwan which we will never overtake.

To be sure, the race between Bharati and chini civilizations comes down to whether we can leave behind the ravages of Nehru and Congress faster than they can abandon communism and adopt the freedoms of their East Asian cohorts.

East Asian democracy is not the same as Western democracy as I explained earlier. It is closer to German national socialism that supports private and free enterprise with an elected but still intensely authoritarian government. It is a brutally mercantile system that is ruthless and efficient to the extreme. It creates wealth massively and quickly for its own people while stripping it from others. Anyone who worked with Japanese and South Koreans would understand what I say. If you look at how the Japanese and Koreans protected their own car markets while dismantling the American one (their ally and protector) then you will understand.

[rohitvats]

PankajS mian, thanks for regularly posting interesting articles on this thread in an easy to read format.
Very much appreciated.
------------------------
An interesting case study...

Slightly old news from May 2011; is this mall still a ghost town?

http://www.internationalappraiser.com/2 ... rgest.html
NEW SOUTH CHINA MALL: WORLD’S LARGEST FAILED MALL

Having been an appraiser of distressed malls since 1984, I considered New South China Mall to be the Mount Everest of distressed malls. I finally got to "climb" this mall on May 11, 2011.

Completed in 2005, it is the world’s largest mall with leasable area of 7.1 million square feet, gross building area of 9.6 million square feet, space for 2350 stores, and a 99.5% vacancy rate.

<SNIP>

Looks exactly like the feasibility/valuation/appraisal reports we make
Let us see another interesting data point - as a rule of thumb, a mall owner can expect 10%-15% of the gross revenue generated by all retailers in the mall as mall rental and in India a large size mall is expected to earn INR 50-70/sft/month, a mall with ~7mn sq.ft of leaseable area will generate 7mn sq.ft x INR 40/sft/month - 28Cr per month or 336Cr per annum or ~USD 75million per annum!!!

[Theo_Fidel]

To be sure, the race between Bharati and chini civilizations comes down to whether we can leave behind the ravages of Nehru and Congress faster than they can abandon communism and adopt the freedoms of their East Asian cohorts

I don't think it is that straight forward. Both have long 2000 year identities.

China has mostly been an authoritarian unitary state. They would have to go against their entire civilization history.

India has an anarchic fragmented non-monetary economy. We too have to go against our civilization history.
------------------------------------------------------------

IMO the greatest advantage we have is a internationally competitive private sector that is able to function anywhere in the world. They are smooth, ruthless, willing to get dirty and love a tough job. They are completely consumer driven.

The real competition is between our private entrepreneurs vs the SOE's of Panda. SOE's are investor driven.

It is our private entrepreneurs who have given Panda the middle finger and refused to be sucked in by the tales of immense wealth. I would tend to trust they know what they are doing.

[chola]

To be sure, the race between Bharati and chini civilizations comes down to whether we can leave behind the ravages of Nehru and Congress faster than they can abandon communism and adopt the freedoms of their East Asian cohorts

I don't think it is that straight forward. Both have long 2000 year identities.

It is very straight forward. If the chinis leave communism behind and adopt the system they have on Taiwan, South Korea or Japan then they become nearly impossible to catch up with.

The real competition is between our private entrepreneurs vs the SOE's of Panda. SOE's are investor driven.

If it were Indian private entrepreneurs versus the chini SOEs then we would win hands down. Look at Indian global enterprises (Tata, Wipro, Bharti) versus Chinese ones (nearly none.) State owned enterprises can never complete globally.

SOEs are state driven, not investors driven. Investors drive innovation. State ownership retards innovation.

It is our private entrepreneurs who have given Panda the middle finger and refused to be sucked in by the tales of immense wealth. I would tend to trust they know what they are doing.

The private entrepreneurs of Taiwan, South Korea and Germany have all piled into the chini market while the going is good. I trust the Indian entrepreneur but his opportunities are hampered by lack of access and information. You cannot win globally while you are shut out one of the world's top two markets.

[pankajs]

Shrinking China Trade Surplus May Buttress Wen Rebuff on Yuan

Jan. 9 (Bloomberg) -- China’s trade surplus may narrow to an eight-year low in 2012 as slowing external demand undermines exports, a shift that may help the nation rebuff overseas criticism for maintaining an undervalued exchange rate.

[JwalaMukhi]

If it were Indian private entrepreneurs versus the chini SOEs then we would win hands down. Look at Indian global enterprises (Tata, Wipro, Bharti) versus Chinese ones (nearly none.) State owned enterprises can never complete globally.

SOEs are state driven, not investors driven. Investors drive innovation. State ownership retards innovation.

Chola ji, absolutely. Well said.
Apart from that:
True competition that fosters innovation will depend not on manipulation of the governance. The reason why the behemoths such as Tatas and legacy owned firms do not rank high up in the innovation is because they aren't used to fair competitive field. They have had deep connections within the government and can manipulate them to their advantage and that might have worked in the past. Going further to really fuel innovation it has to be open competition that is primarily driven by private enterprises. The crony captialism and manipulation of the governance by the old private enterprise players has become norm for local and global space. What India needs is a system that truly fosters innovation.

The State ownership is recipe for disaster. A prime example is the me-too device from kapil sibal, who is imagining that he is going head to head against private machineries which have honed in competition and can ruthlessly innovate especially in consumer sector. State ownership advocacy is principally geared towards dividing up the pie and control of the pie and not in growth of the pie.

If India were to just be a poor imitation of its pre 1800's India it would have more than 10% of world output, and that definitely is not against what the historical identity was for India. India does not have to go against its civilization, if anything if it could be even a poor imitation of its civilization it would have re-arrived.

[Theo_Fidel]

Chola,

No one said it should be a fair fight. SOE's have 0% interest loans and massive state funding, Indian private sector must deal with 9% interest rates for every little investment it makes. This is the reason Indian corporates are so cautious about China market.

It is easy to say we missed a golden opportunity, but we don't have access to even the 3% interest loans VW gets. Our entrepreneurs are tougher for this and our banks profitable and solvent. Our savings class gets 7%-8% interest on bank deposits and our land is owned by the people who get to become crore-pati's due to land value escalation with all the problems that come with that.

We don't invest in Panda wonderland because of the nature of our society not because we 'dislike' the Chinese, which we don't. Yes some myopia is involved but that is just what we are.

Our problems are with the Panda overlords. The sooner they are overthrown the better. A China organized or wealthy like Japan does not scare me, Nuclear proliferating Panda nutcase does.

[gakakkad]

theo the panda overlords are easily bribed . I am dead sure that which brand succeeds and which fails is decided by who pays more bribe . Of course there are peculiar customs associated with bribing a panda official. For instance if you need to bribe a lower level panda official , you don't offer cash right away. You give the cash in a box of sweets ,and tell them that its a scholarship for the son to attend university . Of course all this is at the cost of raping local resources. But who cares. We are evil humans. We GUBO the hell out of natural resources of wherever we stay. When we are done with earth , there will of course be other planets.

[chola]

Chola,

No one said it should be a fair fight. SOE's have 0% interest loans and massive state funding, Indian private sector must deal with 9% interest rates for every little investment it makes. This is the reason Indian corporates are so cautious about China market.

It is not about a fair fight. The chinis do not fight fair. Neither do the Koreans, Taiwanese nor the Japanese. It is about the ability to compete.

If the reason is the 9% interest rates then it is the correct decision if one cannot pay the interest. But if the reason is lack of information or refusal to study and attack a market because of jingoism then it is the incorrect decision and will forever keep us behind entrepreneurs from places such as South Korea and Taiwan never mind the US and Germany.

We don't invest in Panda wonderland because of the nature of our society not because we 'dislike' the Chinese, which we don't. Yes some myopia is involved but that is just what we are.

It not a matter of like or dislike, the Japanese, Taiwanese and Koreans dislike the chinis far more than we do and yet they make money hand over fist from the chini market. In fact, to them it is far better to make money from your enemy. Both the Taiwanese and South Koreans have massive surpluses with the PRC. The Taiwanese surplus alone is bigger than our entire export to pandaland.

Our problems are with the Panda overlords. The sooner they are overthrown the better. A China organized or wealthy like Japan does not scare me, Nuclear proliferating Panda nutcase does.

No our problem in the long haul is competition with their civilization over the finite resources of our world. Unless we are happy in Mahatma's world of a pacifist India that accepts its place as long as the rest of the world is happy. That stupidity didn't do the Dalai Lama any good. Nor will it us.

A China organized and wealthy like Japan would be out of our ability to overtake. It doesn't scare me but I don't see it in the interest of Bharat as a nation and a civilization. It is strictly a logical decision as I look at the future. The longer that China remains under the communists the better.

As far as proliferation is concerned, the Pakis already have the bomb. I could care less now who else got it. The cat's already out of the bag. If the commies were overthrown before the Pukes had acquired the bomb then I would totally agreed with you.

Now I want the chicoms to stay in power so they can destroy as much of China's private entrepreneurs and SMEs for as long as possible. The chicoms do far more damage internally than externally. Say what you will, their pathetic arm forces has no power projection and had not had experience in doing anything since the 1970s when they had their asses handed to them by Vietnam. There is not a single chini base anywhere because no one trusts them.

The moment they become a democracy then all that will change. China would become acceptable. The US and the West will drop opposition. The other East Asians might combine with them in a front. India will be left out.

[VikramS]

Regardless of the criticism CPC gets here, you have to recognize one core aspect: They are utterly and completely focused on providing gainful employment to as many Chinese as possible. Gucci and Prada fit the puzzle pieces very well.

Gucci and Prada provides very little employment to the swarming chini masses. Those companies are successful because they studied and attacked the chini market.

What provides gainful employment are the manufacturing and infrastructure sectors. Because those sectors create jobs, the Guccis and Pradas of the world are able to sell their brands.

Sirji, that was my point. A Chinese Gucci/Prada will not provide employment to the Chinese. OTOH these big ticket items can contribute a wee bit in denting the trade imbalance and generate the right headlines about the might and right of the Chinese super-economy. Luxury spending has a psychological impact; they are a silent display of power.

[Theo_Fidel]

Chola,

It is not in the nature of our society to sacrifice so our corporates can have 0% loans. That is what we are. We are not going to change. Without this change Pandaland is quite forbidding.

Japanese, SK, Germany, USA, etc can all go on and invest in Pandaland. When the chips are down one the few bargain shoppers around holding cash are Indian corporates. They have proven again and again that they can bottom feed. Remember Flag Telecom, or Tetley Tea (Twice rebuffed) or Jaguar (3 times rebuffed) or Arcelor (drama drama) or Corus (mega drama drama). One can go on.....

If a Indian company is non-profitable it will be taken apart in short order, no sugar daddies showing up. I fail to see how a company surviving on 0% loans is being or becoming competitive. I would put it to you that it is not.

As far as competing for resources our economy is used to a starvation level diet for ages. We are not going to become rich on a liberal supply of resources. We are a 1.2 Billion population people living on 2% of the earths land and water. We will always remain starved for resources. Never going to change. We are finding a way to become rich within our circumstances or we do not. This business of competing for global resources is all fine and dandy as long as massa supplies the danda to keep everyone well behaved. When resource starvation begins no one is getting in massalands way.

WRT democracy, a word. Panda is insecure, arming insane states and trying to bribe its way to bases precisely because it is not a Democracy. Not the other way around. Panda always feels the democracies will gang up on it someday and it is right, they will, at a moment and time of their choosing. If Panda turned into a Democracy this need for crazy military bases and even the domestic ability to risk such things would be severely curtailed. Democracies by nature are timid during peace time. That is what we need. Also democracies play hard ball with each other all ready. Take a look at how the NSG is being manipulated to deny India all sorts of things. Or how Japan gets crucified for it Whaling.

[Singha]

I think vs the developed markets, most of the publicly listed indian cos (barring tata) have a relatively much higher % of stake held by the promoters. while this raises issues of 'corporate governance' (not that being widely held helped the western cos from being raped by the fat kats - execs and the kangaroo boards!), it also means the indian fat kats do have 'skin in the game' - any goof ups and their own networth take a big hit.

to some extent the banks here who invested into the ventures do save them (too big to fail) but looking at the troubles of kingfisher and others, the banks do extract a few pounds of flesh for the lifelines and certainly not 0% loans or indefinite waivers.

the onlee ones who operate in blissful govt backed mode while racking up huge losses like clockwork are folks like air india

[Vasu]

ha ha ha ha.

Chinese authors sue Apple for copyright infringement

[ramana]

TOI says:

Made in India, Faked in China

Dabur and Indian Tobacco Company (ITC) products being counterfeited in China.