China’s Cadres Balk at Showing the Money; For All the Corruption-Campaign Fanfare, Efforts to Get More Insight Into Officials’ Assets Appear to Suffer a Backlash

July 31, 2013, 7:41 p.m. ET

China’s Cadres Balk at Showing the Money

For All the Corruption-Campaign Fanfare, Efforts to Get More Insight Into Officials’ Assets Appear to Suffer a Backlash

JAMES T. AREDDY

SHANGHAI—Chinese President Xi Jinping stripped away some traditional privileges of government service when he took office. But even as his administration frowns on banqueting and fancy cars, it is defending a fundamental entitlement of Chinese public service: concealed wealth. Almost no Chinese official tallies his investments and net worth in ways that make the information accessible to the public. Now, there are indications that Mr. Xi’s government is stepping up efforts to keep it that way. In addition to the apparent resealing of once-available data, Chinese authorities also appear to be cracking down on transparency advocates as political dissidents. Read more of this post

Bond Slump Saddles Big Banks; Large Banks Can’t Avoid Trouble When Interest Rates Rise

July 31, 2013, 3:22 p.m. ET

Bond Slump Saddles Big Banks

Large Banks Can’t Avoid Trouble When Interest Rates Rise

DAN FITZPATRICK and SHAYNDI RAICE

The recent market turmoil exposed a new weakness in the balance sheets of large banks: they hold so many bonds that they can’t avoid trouble when interest rates rise. When long-term rates jumped by a full percentage point in May and June amid worries the Federal Reserve would taper its bond-buying stimulus program, bank investments in mortgage-backed securities and Treasuries got slammed. J.P. Morgan ChaseJPM +0.72% & Co., Bank of America Corp., BAC +0.55% Citigroup Inc. C +0.70%and Wells Fargo WFC +0.55% & Co. saw a measure of the paper value of these holdings fall by more than $13 billion during the second quarter. Read more of this post

Angry and powerless in China

Angry and powerless in China

Thursday, August 1, 2013 – 10:21

New Straits Times

According to the Chinese Constitution, “the People’s Republic of China is a socialist state … led by the working class and based on the alliance of workers and peasants”. Taken literally, that should mean that people such as farmers and migrant workers are the masters of the country. But, as events show, such is not the case; in fact, quite the contrary.

On July 20, Ji Zhongxing, originally a farmer from Shandong province but now paralysed from the waist down and unemployable, detonated a home-made bomb at the Capital International Airport in Beijing, losing his left hand in the process. However, after six frustrating years, he has finally succeeded in getting the attention of officialdom. Read more of this post

US failures could teach China’s automakers how to succeed

US failures could teach China’s automakers how to succeed

Wednesday, July 31, 2013

In early 20^th-century China, personal transportation didn’t get much better than a rickshaw. On the other side of the world, automakers like Winton Motor Carriage Company in Cleveland, Ohio were bringing automobiles to the masses. By 1924, however, Winton was out of business. An inability to produce enough cars to meet national demand helped bankrupt the company as the major US automakers grew stronger. Nearly 100 years later, as China’s car market experiences an auto boom similar to that of the US, small mainland automakers may find themselves in a similar position as they struggle to serve the growing needs and requirements of today’s Chinese car buyers. China now has more than 170 automakers. That’s roughly comparable to the more than 250 car manufacturers in the US just after the turn of the century. Like Winton, many of the Chinese firms are small, local ventures with production capacities that pale in comparison to the major automakers. Read more of this post

Alarm bells for crowdfunding as bubble pops for soap start-up

July 31, 2013 6:16 pm

Alarm bells for crowdfunding as bubble pops for soap start-up

By Lucy Warwick-Ching, Tanya Powley and Elaine Moore

One of the first companies to raise money via crowdfunding in the UK has ceased trading, sounding alarm bells for investors in what has become one of the fastest growing investment areas in the country. Bubble & Balm, a fair trade soap manufacturer, was the first start-up to raise money via equity crowdfunding platform Crowdcube, in 2011. It raised £75,000 in return for 15 per cent of the company’s equity from 82 investors, who contributed between £10 and £7,500 each. As part of the deal investors were also in line to receive free soap and discounted products. Read more of this post

Korean accounting firms poised for seismic changes next year

Accounting firms poised for seismic changes next year

By Park Seung-cheol/ Lee Ga-yoon

2013.07.31

South Korea’s accounting industry is fussing over the largest-ever seismic changes slated for next year. Critical changes will all come next year: international audit standards will become effective; the period for audit firm rotation will approach on the annulment of the rule, under which businesses must replace an audit firm with another in six years; and an independent auditing committee will be given rights to pick audit firms.  Large accounting firms including Samil PwC, Deloitte Anjin, Samjong KPMG Advisory and Ernst & Young Korea are already in the cutthroat competition, believing the next year’s accounting firm selection will be the event that will reshape the market landscape. An official at Ernst & Young Korea noted, “accounting firms had enjoyed extra demand for consulting services with the introduction of the international financial reporting standards, but now failed to seek new breakthroughs to be in the doldrums over the last few years,” adding “the next year will be the cornerstone for accounting firms to get out of the hardships.”  The international audit standards call for a parent company’s auditor to hold responsibility for the audit results of its consolidated subsidiaries. Accounting firms project that the introduction of international audit standards will eventually make parent company and its subsidiaries have the same audit firm. In addition, it has been three years since Korea scrapped the rule, by which businesses are obliged to rotate their auditors every six years, in 2009. This is acting as another catalyst for fueling competition among accounting firms.

The benefits and perils of riding China’s coat-tails; Many Latin American nations have bet the mine on an economy that is now slowing

July 31, 2013 4:18 pm

The benefits and perils of riding China’s coat-tails

By David Pilling

Many Latin American nations have bet the mine on an economy that is now slowing

Few parts of the world have benefited as much from China’s rise as Latin America. In 1990, China was a lowly 17th on the list of destinations for Latin American exports. By 2011, it had become the number one export market for Brazil, Chile and Peru and number two for Argentina, Cuba, Uruguay, Colombia and Venezuela. Over that time, annual trade rose from an unremarkable $8bn to an irreplaceable $230bn. Chinese leaders predict it will reach $400bn by 2017. Read more of this post

Ex-courier lifts lid on theft and fraud in China’s logistics industry

Ex-courier lifts lid on theft and fraud in China’s logistics industry

Staff Reporter

2013-08-01

A retired courier said that it has become the norm for employees in China’s delivery services industry to steal or tamper with items trusted to them to sort and deliver, while couriers work with contacts to scam the recipients out of money, reports the Guangzhou Daily. The former courier, who recently retired from his position at the Guangzhou branch of Shanghai YTO Express (Logistics) — a leading player in the delivery services industry — said that many couriers steal parts of a parcel if its packaging is broken. He added that many would open and steal from parcels if they knew that the contents were items such as moon cakes, teas or fruit. He said that many in the industry would also take high-end electronic products such as iPhones if they had the chance, which they then would replace with a counterfeit item, repackaging the parcel before delivering it to the recipient. Read more of this post

Money Merry-Go-Round in North Korea

Money Merry-Go-Round in North Korea

Good luck finding a North Korean won in Pyongyang

By Giles Hewitt on 1:10 pm July 31, 2013.
Pyongyang. Chinese yuan, US dollars, euros and tea bags. Money can come in many forms in North Korea, but as a foreign visitor you’ll probably never even see a local banknote, let alone use one. Pretty much any hard currency is welcome in a country with anemic foreign reserves. Tourists, although few in number, represent a valuable cash source. For those who do choose to visit, every transaction — no matter how small — must be made in foreign exchange, further narrowing options in what is already among the most restrictive countries in the world. There are not many places to spend money in the capital Pyongyang. As a foreigner, the choice is reduced further by the need to find somewhere that takes foreign currency and — importantly — is capable of giving change. Read more of this post

China Owes Hollywood Millions After Halting Payment for Films; lack of profit has not deterred US studios from sending their films to China,

China Owes Hollywood Millions After Halting Payment for Films

By Agence France-Presse on 1:48 pm July 31, 2013.
Los Angeles. China has stopped paying Hollywood studios for its films in a dispute over a Chinese tax on movie profits, Hollywood trade papers reported Tuesday. Tens of millions of dollars in box office revenues are owed in arrears to the likes of Disney, Warner, Universal, Paramount, Fox and Sony, according to The Hollywood Reporter. The magazine said China’s state-owned movie distributor, China Film Group, owes more than $31 million to Warner for “Man of Steel,” $23 million to Sony for “Skyfall” and $23 million to Fox for “Life of Pi.” China stopped payment at the beginning of the year, when American studios took issue with a two percent value-added tax that the world’s most populous nation was levying on US films. Chinese authorities want the studios to pax them the tax, but the studios argue it violates a World Trade Organization agreement governing the film trade between the two countries. In the accord last year, heralded as historic by the United States, the two countries agreed that China could import 34 US blockbusters a year (up from 20) and studios’ revenue share from China was fixed at 25 percent (up from 13 to 17 percent). The Motion Picture Association of America (MPAA), which acts on behalf of studios’ interests, is negotiating with Chinese authorities, to resolve the tax dispute. In the meantime, lack of profit has not deterred US studios from sending their films to China, which currently has the world’s most dynamic movie market, in the aim of cementing a long-term foothold.

Overcapacity sends China’s steel sector into loss

Overcapacity sends China’s steel sector into loss

English.news.cn   2013-07-31

BEIJING, July 31 (Xinhua) — China’s iron and steel industry reported a loss of 699 million yuan (about 113 million U.S. dollars) in June, the first monthly deficit that the overcapacity-troubled industry has seen this year. For the first half, the profits of members of the China Iron and Steel Association (CISA) hit 2.27 billion yuan, with an average profit margin of 0.13 percent, the lowest among all industries, said the CISA on Wednesday. Steel prices have been dropping since February. At the end of June, the price of steel products fell 6.45 percent compared with the beginning of this year, and down 14.7 percent year on year, according to the CISA. Read more of this post

Chinese Venture Fundraising Hurt by Fears Over Economy

July 31, 2013, 5:42 a.m. ET

Chinese Venture Fundraising Hurt by Fears Over Economy

Economic Concerns Outweigh Renewed IPO Activity

SONJA CHEUNG

Venture capital fundraising in China slumped to a two-year low in the second quarter as concerns about the country’s slowing economy outweighed renewed activity in initial public offerings, according to data from Dow Jones VentureSource. IPOs of Beijing-based e-commerce company LightInTheBoxHolding Co. in the U.S., and of car dealership China Harmony AutoHolding Ltd. in Hong Kong in early June, failed to reignite interest in those investing in mainland VC funds, despite proof that fund managers are finding it slightly easier to off-load investments. Read more of this post