President Xi: China needs courage for reforms, like “gnawing on a hard bone”; Xi stressed again the importance of innovation and technology in breaking through the bottleneck restriction for development and solve deeply rooted problems.

China needs courage for reforms, like “gnawing on a hard bone”: Xi

  • Xinhua 

2013-03-06

Communist Party of China general-secretary Xi Jinping on Tuesday called for courage like “wading through a dangerous shoal” to help deepen reforms in the country’s development.

While joining national legislators from China’s economic hub of Shanghai to deliberate the government work report, Xi compared the difficulty facing the country’s deepened reform and opening up to that in “storming a fortification.”

The report was delivered Tuesday morning by premier Wen Jiabao at the parliament’s annual session.

“We must have courage like gnawing on a hard bone and wading through a dangerous shoal,” said Xi, who is general secretary of the CPC Central Committee.

The government should give more respect to the law of the market and play a better role in advancing reform and opening up, Xi said.

While deliberating the government work report, Xi stressed again the importance of innovation and technology in breaking through the bottleneck restriction for development and solve deeply rooted problems.

Government and society should facilitate innovation with a global vision to come up with core technologies to drive industrial development, he added.

Shanghai saw a rush of people seeking a divorce over the past two days as couples worked out a way to escape the looming 20 percent tax on the profit from house sales.

Couples in rush to divorce as house sales tax looms

Created: 2013-3-6 1:46:08, Updated: 2013-3-6 1:54:53

Author:Hu Min

Shanghai saw a rush of people seeking a divorce over the past two days as couples worked out a way to escape the looming 20 percent tax on the profit from house sales.

Marriage registrars confirmed that the dramatic surge was triggered by the central government’s property curbs announcement last week, with many couples seeking a quick divorce but a remarriage shortly after.

Houses bought more than five years ago as a seller’s only residence are exempt from tax when resold. But families who own two houses and want to sell one of them are now targets in the government’s bid to curb speculation in the property market. If the couples divorce, each spouse will then own a property and one of them can sell the apartment that is tax exempt. After the transaction is complete, the couples get married again.  Read more of this post

Buffett Says Gloat Like Rockefeller When Watching Trains

Buffett Says Gloat Like Rockefeller When Watching Trains

Billionaire Warren Buffett said his Berkshire Hathaway Inc. (BRK/A) will benefit from rising U.S. oil production as the company’s trains and tank cars move fuel around the country.

Buffett, 82, highlighted demand for rolling stock made by Berkshire’s Union Tank Car in his annual letter to shareholders March 1. His company acquired the manufacturer, which traces its roots to John D. Rockefeller’s Standard Oil Trust, as part of the 2008 purchase of Marmon Holdings Inc. Buffett told investors to watch for the UTLX logo.

“As a Berkshire shareholder, you own the cars with that insignia,” he wrote to investors in his Omaha, Nebraska-based company. “When you spot a UTLX car, puff out your chest a bit and enjoy the same satisfaction that John D. Rockefeller undoubtedly experienced as he viewed his fleet a century ago.”

U.S. oil output had a record surge last year as new technology made drilling faster, cheaper and better at unleashing crude from rock formations. That’s reducing reliance on imported oil and benefiting railroads and tank car companies.

Berkshire’s railroad, Burlington Northern Santa Fe, is now carrying about 500,000 barrels of oil a day, or roughly 10 percent of what’s produced in the U.S. excluding Alaska and offshore, Buffett said. That’s helped keep volume growing at BNSF as coal shipments decline.

“Fortunately, they discovered oil where our railroad was,” Buffett, Berkshire’s chairman and chief executive officer, said in an interview yesterday on CNBC.

Car leases are generating $1,500 per month for 10-year deals, and more than double that for shorter terms, said Justin Long, an analyst with Stephens Inc. based in Little Rock, Arkansas. Before the recent boom, the cars leased for about $650 per month, Toby Kolstad, president of Rail Theory Forecasts LLC, said in December. Read more of this post

Less Than 14% of Chinese App Developers Make a Profit, Says China Mobile Executive

Less Than 14% of Chinese App Developers Make a Profit, Says China Mobile Executive

Mar 6, 2013 at 10:00 AM by C. Custer, in BusinessMobileStartups

Many of China’s tech luminaries are gathered in Beijing for the Two Meetings, and that means they’re all talking to the press. Xu Long, a National People’s Congress rep and the CEO ofChina Mobile’s Guangzhou subsidiary, took to the airwaves himself yesterday and made a grim pronouncement for China’s mobile market: only 13.7 percent of Chinese mobile app developers are actually making a profit.

It’s not entirely clear where that number comes from, but Xu says the source is “an investigation” of the country’s million-plus mobile app developers. Xu says the low number of profitable developers is evidence that China needs to continue exploring healthy and sustainable models for developing the mobile market. Read more of this post

Traders Flee Asia Hedge Funds as Haven Becomes Dead End

Traders Flee Asia Hedge Funds as Haven Becomes Dead End

Paul Smith moved from London to Hong Kong to work in Asia’s hedge-fund industry almost 17 years ago, and he rode the boom to its peak. Last year, like other industry veterans, he quit.

“I decided not to wait the cycle out but to do something more productive with my time,” said Smith, 53, who remains in the city heading the Asia-Pacific office of the nonprofit CFA Institute, the global association of chartered financial analysts. “The hedge-fund industry in Asia will continue to struggle to raise funds for the next few years as banks continue to have liquidity issues.”

Hedge-fund managers, traders and analysts in Asia are quitting as assets have failed to recover after the 2008 global financial crisis, and trading losses have left a majority of funds unable to collect performance fees. They’re moving to mutual funds, endowments, consulting firms and companies outside of the money-management business, often at a cut in pay.

Asian hedge-fund assets are 28 percent below their 2007 peak, according to data provider Eurekahedge Pte. Globally, money overseen by the funds increased 21 percent since 2007 to a new high of $2.3 trillion as of December, data from Chicago- based Hedge Fund Research Inc. show.

A total of 296 Asian hedge funds liquidated in the two years to December, 33 more than the number that started. On a global basis, 1,839 new funds outnumber those that shut by 371, according to Eurekahedge. Read more of this post

Indeed Is Becoming The Google Of Job Search

Indeed Is Becoming The Google Of Job Search

Vickie ElmerQuartz | Mar. 5, 2013, 9:13 AM | 3,991 | 1

Indeed is turning into the Google of job search.

The web site announced today that it has reached 100 million unique visitors worldwide in January, a 20% gain since late September. By some measures, the company is now bigger than Monster.

In a blog post and media announcement, Indeed said it accounts for more than half of online job searches in the United States and placed more people in jobs last year than CareerBuilderLinkedIn and Monster combined.  Its fastest growth occurred in Russia, India, South Africa, Australia and Japan.

Launched in 2004, Indeed operates as an aggregator of job listings, pulling them in from across the internet. ”We provide the best experience possible for job seekers. We do that by having the most jobs,” says Chris Hyams, a vice president of Indeed. The company has a team of people “dedicated to finding jobs online where we haven’t found them before.”

It also has focused on international growth, adding offices in Dublin, London, Toronto and Tokyo, among others, in the last two years. Read more of this post

Asian market indices do not provide an efficient risk/reward trade-off; the standard Asian indices are heavily concentrated in a few large-cap stocks. Most indices allocate as much as 60% of the index weight to only one-fifth of the stocks in the universe

Asian market indices do not provide an efficient risk/reward trade-off

Author: Wing-Gar Cheng

6 March 2013

Asian stock market indices have displayed a pronounced inability to provide an efficient risk-reward trade-off, according to researchers at EDHEC-Risk Institute.

The study of 10 major Asian stock market indices over the past decade –  “Assessing the Quality of Asian Stock Market Indices” – shows the standard Asian indices are heavily concentrated in a few large-cap stocks. Most indices allocate as much as 60% of the index weight to only one-fifth of the stocks in the universe.

Investors keen to hold well-diversified equity portfolios are advised to be aware of these inefficiencies. “Investors who want to capture the Asian market premium will do so in a better way if they use indices designed with an efficient weighting scheme.”

Asian equity indices also show severe fluctuations in style and sector exposures. Market indices in more developed countries (Hong Kong, Japan, Singapore, South Korea and Taiwan) demonstrate relatively more stability, whereas market indices in less developed countries (China and India) display higher variability over time in terms of sector allocation, the study found. “Investors clearly need to consider the weighting scheme that will allow them to extract the equity risk premium for a given geography in the best possible way.”

Total worldwide assets under internal indexed management rose to $5.994trn as of 30 June, 2011, a 25% increase over $4.781trn a year ago, the study said. In Asia, total ETF assets increased by 20-30% annually post-2008 and the number of products has risen by more than 200%. Currently, the total ETF assets in the Asia-Pacific are estimated at $81bn, it added. Read more of this post

Audis Trump China Patriotism as Local Brands Falter

Audis Trump China Patriotism as Local Brands Falter

By Bloomberg News  Mar 5, 2013

China is pressuring bureaucrats to buy locally branded cars to help domestic automakers and cut lavish spending of taxpayers’ money. That’s unless you are a high-level government official with an Audi A6L.

At Beijing’s Great Hall of the People yesterday, where Chinese Premier Wen Jiabao was addressing a crowd of almost 3,000 delegates, only those senior enough could park in the nearby north gate and southern courtyard. The scene: dozens of gleaming black Audi sedans waiting for their VIP occupants to emerge from the National People’s Congress.

“We should try to use Chinese cars when possible and actively advocate our officials to use them,” Guo Gengmao, governor of central Henan province, said yesterday when asked whether he will swap his Audi for a local brand. “But we should do so in a practical way and switch cars when we need to replace the old ones. Otherwise, it’s a big waste to replace cars when they’re still good to use.” Read more of this post

More Trouble for the Big Four in China: Pushing Prudent Analysis or Propaganda?

More Trouble for the Big Four in China: Pushing Prudent Analysis or Propaganda?

Peter Fuhrman is Chairman, Founder & CEO at China First Capital, (中国首创)a leading China-focused specialist international investment bank and advisory firm for private capital markets and M&A transactions.

March 6th, 2013

This is not a good time for the Big Four accounting firms in China. The SEC has charged themwith breaking securities law, while one of the group, Deloitte, is now in serious hot water in the US, facing a shareholder class action in Delaware for aiding a US-listed Chinese company in defrauding US investors. If Deloitte loses, or opts to settle, it could uncork a tidal wave of copycat claims that would do serious, perhaps irreparable damage to the China business of Deloitte, and then also possibly to Ernst & Yong, Price WaterhouseCoopers and KPMG.

The charges against the Big Four all boil down to allegations they were either negligent in fulfilling their statutory duties, or in cahoots with bad guys scheming to defraud US investors. The implication is that their willy-nilly pursuit of fees led the Big Four to cut corners, surrender objectivity, and allow their judgment to become corrupted.

Similar doubts can be raised about the quality, credibility and soundness of the judgments the accountants provide in assessing China’s private equity industry. Even as the PE market began to slide into serious trouble last year, the accountants kept talking up the industry. In particular, it’s worth reading the two big and well-publicized reports on China private equity produced by Ernst & Young  and PWC. Both can be downloaded by clicking here. E&Y Report.PWC Report. Read more of this post

Chinese companies have RMB 20 Trillion of receivables

全国企业应收账款规模达20万亿 商务部预警风险

商务部称将适时扩大商业保理试点范围

2013-03-06   作者:记者 孙韶华 实习生 周文其/北京报道  来源:经济参考报

5日,由中国服务贸易协会和商务部研究院合办的“首届中国商业保理行业峰会”发布了一份名为《中国商业保理行业研究报告2012》的报告。报告指出,应收账款规模持续上升风险加大,据估计全国企业应收账款规模在20万亿元以上。此外,商务部研究院对非金融类上市公司的财务状况监测结果表明,2012年我国上市公司财务风险已经为近十年来最大。
上述报告称,2012年受世界经济复苏明显放缓和国内经济下行压力加大的影响,国际国内市场需求总体不足,我国各行业产能过剩问题较为突出,在此背景下,企业应收账款规模持续上升,回收周期不断延长,应收账款拖欠和坏账风险明显加大,企业周转资金紧张状况进一步加剧。据业内人士估计,全国企业的应收账款规模在20万亿以上。
以国内工业企业为例,国家统计局数据显示,截至2012年12月,全国规模以上(主营业务收入2000万元及以上)工业企业应收账款总额82189.9亿元,较去年同期增长了17.63%,比流动资产总额增速快了5.6个百分点。应收账款总额占全国规模以上工业流动资产总额的比重为22.68%,较去年同期增加了1.08%。全国规模以上工业企业应收账款周转率12.05次,比去年同期降低0.02次。
“应收账款规模正呈现出规模大、风险高的特点。另据我们对上市公司财务状况的监测,去年上市公司财务安全状况是近十年来最大的。”商务部研究院信用部主任韩家平在论坛上表示,据统计,截至2012年10月31日,2471家上市公司应收账款达到2.22万亿元,同比上升近18%。如剔除金融类上市公司及中石化、中石油的数据,其他上市公司2012年前三季度的应收账款同比上升超过23%。其中,与宏观经济休戚相关的基建制造、煤炭钢铁、化工有色等大行业的应收账款同比增长数据均高于平均水平,达到30%—40%,整体表现为外部欠款严重;煤炭开采业更甚,2012年前三季度煤炭开采业公司的应收账款同比增长达到79.65%;此外,服装家纺类上市公司的应收账款同比增长接近40%。
据《经济参考报》记者了解,去年,我国企业应收账款规模持续上升、“三角债”抬头风险加大的问题已经引起政府高层重视,工信部、银监会、商务部等多个部委曾展开一轮调研摸底。
当前,应收账款规模依然居高不下,业内人士分析,一方面与国内外宏观经济形势和行业发展情况相关,企业资金周转出现困难。另一方面,我国信用体系建设缺失也推高了坏账率进而加剧了风险。据商务部的统计,我国企业每年因信用缺失导致的直接和间接经济损失高达6000亿元。
业内分析认为,信用服务业尤其是保理业的发展可以成为国内信用服务体系建设的一个突破口。据了解,商务部已经于2012年6月下发通知,同意在天津滨海新区、上海浦东新区开展商业保理试点,探索商业保理发展途径。截至2013年1月底,我国已注册的保理公司达到85家,其中内资64家,外资21家。
商务部市场秩序司巡视员温再兴说,当前市场信用环境不好,应收账款拖欠和三角债的问题是普遍的。商业保理业的发展对于解决我国三角债问题、中小企业融资难问题会有很大帮助。
温再兴透露,下一步商务部将稳步推进商业保理试点工作,“拟成立的公司要按照标准和条件严格把关,内外资标准是统一的。对于已经成立的公司要重新登记。对于想要参加试点的城市在严格条件的基础上,适当扩大试点的范围。”“同时商务部正在开发商务保理直报统计系统,商务保理企业都要纳入其中,我们要求所有的企业都不能游离于我们的监管之外。”

How a Request from SASAC Fell on the Deaf Ears of Property Developers; Beijing asked central government-controlled businesses to exit the real estate industry, but its notice has been largely ignored

03.05.2013 18:55

How a Request from SASAC Fell on the Deaf Ears of Property Developers

Beijing asked central government-controlled businesses to exit the real estate industry, but its notice has been largely ignored

By staff reporter Zhu Yishi

(Beijing) – In early 2010 the central government enacted policies to cool the real estate market. While the curbs have, to some extent, had their intended effect, government-controlled companies that should be busy with other business have prospered in property.

In January, eight commercial plots were sold in Beijing, and the buyers were either central government-controlled companies or state-owned enterprises (SOEs), data from Yahao Real Estate Selling & Consulting Solution Agency shows. Last year 37 residential plots were sold in the capital, and central government-controlled firms and SOEs bought 24.

These central government-controlled companies are holding their own in their adopted field. Last year, residential property giant China Vanke Co. Ltd., which is not this type of firm, had sales of more than 100 billion yuan.

In comparison, state-controlled China State Construction Engineering Corp. (CSCEC) had a similar sales figure, and China Railway Group Ltd. and China Railway Construction Corp. Ltd (CRCC) both had sales of 20 billion yuan last year. The latter two only entered the real estate industry in 2010.

This is evidence that Beijing’s request for central government-controlled companies whose main business was not real estate to exit the industry is being ignored.

The reason is two-fold. Zhou Fangsheng, former deputy director of the State-owned Assets Supervision and Administration Commission’s (SASAC) enterprise reform bureau, says for starters the property sector is very profitable. Also, the companies are assessed on their profitability, and these assessments are linked to executives’ pay.

The companies’ path to success in the real estate industry is aided by two factors. First, because the companies are controlled by the state, it is easy for them to get bank loans needed to finance projects. Also, local governments offer them preferential prices on land. Read more of this post

Lessons from past Dow milestones; As the Dow pierces an all-time high, a look at previous breakthroughs

March 5, 2013, 4:42 p.m. EST

Lessons from past Dow milestones

As the Dow pierces an all-time high, a look at previous breakthroughs

By Jonnelle Marte

The Dow Jones Industrial Average closed at its highest level ever Tuesday — ending with a new high of 14,253.77, more than 100 points above the 14,164.52 record last hit in October 2007. 

While that new all-time high may just be a number — the market didn’t undergo a magical transformation upon hitting pre-crisis levels — experts say such milestones can have a psychological impact on investors. As the Dow reclaims lost ground, some investors are reflecting on how far they’ve come since the financial crisis. Some are still trying to bounce back, but many have recovered what they lost in the crash of 2008. The average participant in a 401(k) plan broke even between 2007 and 2010, and many savers are now better off than they were in 2007, according to Vanguard. The average account balance was $86,000 at the end of 2012, 10% more than the average balance at the end of 2007. (Of course, those higher balances include investor contributions, not just market gains.) See: What’s the big deal about the 2007 highs?

But for all the investor excitement around market milestones, investing pros say these thresholds don’t really move markets too much up or down. While investors often get swept away when the market is near key thresholds — causing them to ignore important factors like stock valuations — analysts say monetary policy and economic growth drive markets. Indeed, some investing pros are skeptical about how long the run will last. See: Druckenmiller says ‘it’s going to end very badly.’

Here’s a look back at some of the Dow’s biggest milestones, what happened next — and what lessons were learned. Read more of this post

Copper Market Prepares for a Flood; Price of the Industrial Metal Has Plunged Amid Forecasts of the Biggest Increase in Output in 13 Years

Updated March 5, 2013, 8:06 p.m. ET

Copper Market Prepares for a Flood

Price of the Industrial Metal Has Plunged Amid Forecasts of the Biggest Increase in Output in 13 Years

By TATYANA SHUMSKY

The copper market is bracing for a wave of new mine openings this year. Copper prices recently fell to three-month lows as investors and traders anticipate an onslaught of supplies, estimated to be the biggest increase in global copper mine output in 13 years. At the same time, the outlook for growth in copper demand remains dim: The No. 2 and No. 3 users of the industrial metal, Europe and the U.S., continue to face economic headwinds. Copper demand is highly correlated with manufacturing activity because it is used in many goods, from electronics to automobiles to home appliances.

MI-BU509_MKTLED_G_20130305182411

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Better, smarter support needed for Australian innovation; Departing Google Australia managing director Nick Leeder thinks the reason founders are leaving Australia has more to do with the lack of a critical mass in the Australian ecosystem than a lack of initial funding

Better, smarter support needed for Australian innovation

March 6, 2013 – 9:50AM

Jana Matthews

The PM’s $1b jobs plan doesn’t feel like a boost, says leading entrepreneur and mentor Jana Matthews.

“If we want Australian companies to go global, we need to teach and prepare them…”, says Jana Matthews, program director for ANZ Innovyz START.Photo: Michele Mossop

At first, the Prime Minister’s proposed $1 billion investment to boost jobs by supporting start-ups sounds good. But is it enough and is it focused on the right kinds of programs to accelerate the growth of more companies? Read more of this post

Learning From the Octopus: How Secrets from Nature Can Help Us Fight Terrorist Attacks, Natural Disasters, and Disease

Learning From the Octopus: How Secrets from Nature Can Help Us Fight Terrorist Attacks, Natural Disasters, and Disease

Rafe Sagarin (Author)

Book Description

Publication Date: March 27, 2012 | ISBN-10: 0465021832

Despite the billions of dollars we’ve poured into foreign wars, homeland security, and disaster response, we are fundamentally no better prepared for the next terrorist attack or unprecedented flood than we were in 2001. Our response to catastrophe remains unchanged: add another step to airport security, another meter to the levee wall. This approach has proved totally ineffective: reacting to past threats and trying to predict future risks will only waste resources in our increasingly unpredictable world.

In Learning from the Octopus, ecologist and security expert Rafe Sagarin rethinks the seemingly intractable problem of security by drawing inspiration from a surprising source: nature. Biological organisms have been living—and thriving—on a risk-filled planet for billions of years. Remarkably, they have done it without planning, predicting, or trying to perfect their responses to complex threats. Rather, they simply adapt to solve the challenges they continually face.

Military leaders, public health officials, and business professionals would all like to be more adaptable, but few have figured out how. Sagarinargues that we can learn from observing how nature is organized, how organisms learn, how they create partnerships, and how life continually diversifies on this unpredictable planet.

As soon as we dip our toes into a cold Pacific tidepool and watch what we thought was a rock turn into an octopus, jetting away in a cloud of ink, we can begin to see the how human adaptability can mimic natural adaptation. The same mechanisms that enabled the octopus’s escape also allow our immune system to ward off new infectious diseases, helped soldiers in Iraq to recognize the threat of IEDs, and aided Google in developing faster ways to detect flu outbreaks.

While we will never be able to predict the next earthquake, terrorist attack, or market fluctuation, nature can guide us in developing security systems that are not purely reactive but proactive, holistic, and adaptable. From the tidepools of Monterey to the mountains of Kazakhstan, Sagarin takes us on an eye-opening tour of the security challenges we face, and shows us how we might learn to respond more effectively to the unknown threats lurking in our future. Read more of this post

To Become More Adaptable, Take a Lesson from Biology. Decentralization. The most successful biological organisms are structured or organized in such a way as to eschew centralized control in favor of allowing multiple agents to independently sense and quickly respond to change

To Become More Adaptable, Take a Lesson from Biology

by Rafe Sagarin  |  12:30 PM March 5, 2013

Remember when Apple’s stock traded at $7 a share? I do, because that’s when I sold my shares. Tech experts’ sage predictions had convinced me that the Mac would never make a dent in the PC market. As it turned out, the Mac didn’t need to make a dent, because Apple mutated its cute computer DNA into cute music players and phones that fit massive unfilled niches. Yet even the genius architect of this turnaround made faulty predictions sometimes. Remember the invention Steve Jobs said was going to be “bigger than the PC”? You may have seen a mall cop riding onerecently.

Even the best of us are horrible at predicting the future. That’s too bad, because our world is full of risk that we’d love to avoid and opportunity that we’d love to seize.

Fortunately, there’s a rich source of lessons on how to thrive in an unpredictable world, and it has been cranking out success stories for 3.5 billion years. It’s called biology.

All of Earth’s successful organisms have thrived without analyzing past crises or trying to predict the next one. They haven’t held “planning exercises” or created “predictive frameworks.” Instead, they’ve adapted. Adaptability is the power to detect and respond to change in the world, no matter how surprising or inconvenient it may be.

While there’s much chatter in the management world about the need to be adaptable, only a few creative companies and innovative managers have probed the natural world for its adaptability secrets. But when they have, they’ve been remarkably successful. A study of nature offers straightforward guidance through four key practices of adaptable systems.

Decentralization. The most successful biological organisms are structured or organized in such a way as to eschew centralized control in favor of allowing multiple agents to independently sense and quickly respond to change. An octopus, despite its surprisingly intelligent brain, doesn’t order each arm to change a certain color when it needs to hide quickly. Rather, individual skin cells across its body sense and respond to change and give the octopus a collective camouflage. Read more of this post

A Revolution in China’s Search Market? Sogou Integrates Search into its Input Method

A Revolution in China’s Search Market? Sogou Integrates Search into its Input Method

Mar 6, 2013 at 08:00 AM by C. Custer, in BusinessMobileWeb

China’s Sogou has been a player in the search market here since the early days. At present, it commands around 8 percent of the search market share, which makes it one of China’s top three search engines but still puts it way, waybehind the dominant Baidu (which has more than 70 percent of the market). But Sogou does dominate the Chinese input method market, with reportedly more than 100 million usersacross its mobile and PC input methods.

Yesterday, Sogou announced an update to the “smart” version of its PC input method softwarethat seems to signal the company is placing increased importance on search. Users of the latest version of the smart input method (which you can get here) will find that when they type certain terms, relevant search results pop up directly below the character selection bar. Sogou says this will save users massive amounts of time, as where previously they needed to open a browser and search for certain kinds of content, now they can get direct links from anywhere on their computer by simply by typing their search terms. Here’s how it works:

sogou-search-input-method2

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“The Big Mac Mirage”: America is actually terrible at globalization; U.S. companies derived less than 10% of their overall revenues from emerging markets

“The Big Mac Mirage”: America is actually terrible at globalization

By Tim Fernholz — 6 hours ago

Coke is so prevalent around the world that non-profits look to its supply chain for help on distributing aid. McDonalds, in 122 different countries, is so widespread that there’s a foreign relations theory that no two countries hosting the burger franchise will go to war, although the strong version of that theory is well dead. And Wal-Mart is the world’s third largest global employer, after the American and Chinese militaries, respectively.

The US must be great at globalization, right?

Unfortunately, no, according to Bhaskar Chakravorti, the director of Tufts’ University’s Institute for Business in the Global Context. He says all these examples represent “the myth of American global market power”—they are outliers that disguise the real failing of American multinationals to succeed around the world, and especially in fast-growing emerging markets. Despite what you might hear, he says “we are extremely under globalized.” Here’s an excerpt from a forthcoming paper he’s written with fellow economist Gita Rao (emphasis mine):

In 2010, emerging markets represented 36% of global GDP; these markets already account for the majority of the world’s oil and steel consumption, 46% of world retail sales, 52% of all purchases of motor vehicles and 82% of mobile phone subscriptions. With two-thirds of global growth coming from these markets, in a decade they will account for the majority of the world’s economic value. Yet U.S. companies derived less than 10% of their overall revenues from emerging markets: about as little as 7%, according to HSBC estimates for 2010. The 100 largest companies from the developed world overall made 17% of their revenues from emerging markets, according to a McKinsey report; in other words, the U.S. lags not only emerging market firms in capturing share in emerging markets, but it lags the developed world overall. By considering the difference between the “absolute potential” represented by the 36% number or, to take a much more conservative benchmark, the global peer average of 17% and the U.S. share of 7%, we derive two measures of the gap – and the degree to which U.S. industry has not participated in global growth. Read more of this post

China is spending more on policing its own people (RMB 769bn) than on its defense budget (RMB 720bn)

China is spending more on policing its own people than on its defense budget

By Lily Kuo — 6 hours ago

Red alert! China plans to spend 720 billion yuan ($114 billion) on its military this year, according to a budget released at the National People’s Congress this morning. With the world’s second-largest military in terms of spending, the Chinese government has increased its defense budget by double-digit percentages annually since 2000. This year’s increase will be 10.7%, similar to last year’s and faster than the target GDP growth of 7.5%.

But perhaps this is the headline the Chinese government would rather the media focus on. Buried in the budget numbers is another figure: 769 billion yuan, to be spent on what is officially termed “public security.” That means money for China’s vast network of official and unofficial police, armed militia, jails and overall state security, i.e. keeping the country’s 1.3 billion people in check as discontent mounts over pollution (paywall), government corruption, and inequality. Chinese officials have countered that this is a misrepresentation, saying that some of the funds also go to things like improving public transportation or food safety. Read more of this post

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