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Ruchir Sharma: China’s Illusory Growth Numbers; Huge new flows of credit and public investment are delaying needed reforms and inflating a real estate bubble

Ruchir Sharma: China’s Illusory Growth Numbers

Huge new flows of credit and public investment are delaying needed reforms and inflating a real estate bubble.

RUCHIR SHARMA

Oct. 30, 2013 7:09 p.m. ET

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Beijing appears to be on track, yet again, to hit its official growth target. According to China’s National Bureau of Statistics, gross domestic product rose 7.8% in the third quarter of 2013, well on its way toward hitting the official target of 7.5% GDP growth for the year. But can these numbers be trusted? Beijing has a long tradition of setting and then claiming to exceed high growth targets, which makes growth appear both rapid and stable. For years, China reported much less volatile economic growth than other developing nations, but lately volatility has all but disappeared. Since the start of 2012, China has reported a GDP growth rate within a few decimal points of the official target—every quarter. Read more of this post

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Top Chinese Banks Post Biggest Bad-Loan Surge Since 2010

Top Chinese Banks Post Biggest Bad-Loan Surge Since 2010

China’s top four banks posted their biggest increase in soured loans since at least 2010 as a five-year credit spree left companies with excess manufacturing capacity and slower profit growth amid an economic slowdown. Nonperforming loans at Industrial & Commercial Bank of China Ltd. (601398), China Construction Bank Corp. (939), Agricultural Bank (1288) of China Ltd. and Bank of China Ltd. (3988) rose 3.5 percent in the three months to Sept. 30 from June to a combined 329.4 billion yuan ($54 billion), according to data compiled by Bloomberg News based on third-quarter results. Profit rose to 209 billion yuan. Read more of this post

‘The Human Brand’: Our Relationships with Companies

‘The Human Brand’: Our Relationships with Companies

Oct 24, 2013 Books North America

Customers describe how they feel about companies and brands in profoundly personal ways. We hate our banks; we love our yoga pants. We can’t stand the cable company, but we consider our smartphone one of our very best friends. How are we making these judgments? According to a new book titled, The Human Brand: How We Relate to People, Products, and Companies, by Chris Malone, an expert in customer loyalty, and Susan T. Fiske, a professor of psychology at Princeton University, our perceptions are the result of spontaneous judgments on warmth and competence – precisely the same elements that drive our impressions of other people. As a result, customers evaluate, judge and form relationships with companies in ways that are remarkably similar to how they evaluate and behave toward people. Malone recently talked to Knowledge@Wharton about his book. To achieve success in the future, companies must build more genuine relationships with customers that display warmth, competence and worthy intentions, says Malone, who got his MBA at Wharton and has held senior marketing positions at companies such as Coca-Cola, ARAMARK and Choice Hotels. An edited transcript of the conversation follows.

Knowledge@Wharton: Your book’s hypothesis is that we relate with companies in much the same way that we do with people. Explain.

Chris Malone: In their struggle for survival, primitive humans were forced to develop a genius for making two specific kinds of judgments quickly and accurately. One: What are the intentions of other people toward me? And two: How capable are they of carrying out those intentions? In the academic world, these dimensions of perception are called warmth and competence. Warmth involves whether we view others to be honest, trustworthy, kind or friendly, while competence relates to whether they seem capable, intelligent or skilled. These spontaneous perceptions drive most of our emotions and behavior toward other people. Read more of this post

It’s Time for Chinese Firms to Play Offense Against the Shorts; Boosting transparency from the start can keep investors from questioning the books

It’s Time for Chinese Firms to Play Offense Against the Shorts

Boosting transparency from the start can keep investors from questioning the books.

MATT FORNEY AND PAUL GILLISMatt Forney

Oct. 30, 2013 12:55 p.m. ET

Once again, China has New York on edge. Despite renewed faith in China’s economy, a sudden shock among investors has reversed a steady climb in the share prices Chinese companies listed in the U.S., and rising fears of Chinese firms may even imperil the pending initial public offerings of four Chinese firms that have filed with the Securities and Exchange Commission. The sudden volatility of Chinese stocks comes from one source: short-side attacks. The most prominent shorter, U.S.-based Muddy Waters, struck again last week with its 81-page skewering of NQ MobileNQ +11.26% a Chinese maker of mobile-phone security software. The report says the company’s cash balances are misstated, revenues are inflated and customers are non-existent. NQ Mobile denies the allegations and has released information on its bank accounts and taken the extraordinary step of transferring some of its cash to another bank. Read more of this post

A World Without Maps

A World Without Maps

MELIK KAYLAN

Oct. 29, 2013 4:42 p.m. ET

Measuring and Mapping Space: Geographic Knowledge in Greco-Roman Antiquity

Institute for the Study Of the Ancient World

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Ptolemy’s Earth, from a Florentine manuscript (c. 1460). New York Public Library

The contradiction may seem insuperable—that the main point of an exhibition about ancient maps is that there weren’t any, or any that have survived. But don’t let that put you off. The show at the Institute for the Study of the Ancient World (ISAW) is titled “Measuring and Mapping Space: Geographic Knowledge in Greco-Roman Antiquity.” Its explanatory circular tells of focusing on “ancient cartography and the ways in which Greek and Roman societies perceived and represented both the known and unknown worlds.” All of which certainly suggests that you will see maps. And you will, but not what you expect. Read more of this post

‘Mission in a Bottle’: Making Honest Tea

‘Mission in a Bottle’: Making Honest Tea

Oct 28, 2013 Books Podcasts North America

When Seth Goldman and Barry Nalebuff, co-founders of Honest Tea, set out to make a tea that they would want to drink, they knew they wanted to create a product that wasn’t too sweet and build a brand that was socially responsible and environmentally friendly. But they had no idea what it would take to get the tea to market. Their new book, Mission in a Bottle: The Honest Guide to Doing Business Differently and Succeeding, tells the story of their start-up in a graphic novel format. Nalebuff is a professor at the Yale School of Management; Goldman, a graduate of the school, is one of his former students. Recently, Knowledge@Wharton had an opportunity to talk with Goldman and Nalebuff about how they created a financially sustainable company that serves a mission, how they navigated the beverage distribution challenges, why they decided to sell the company to Coca-Cola — and how they did it on their own terms. An edited transcript of that conversation follows.

Knowledge@Wharton: The simple answer to why you started Honest Tea — and it’s on all of the bottles — is that you were thirsty. You talk in the book about how you wanted to create a beverage for people like you, who thought most of what was already on the market was too sweet. But what was it about tea that really captured your imaginations, that told you this was the venture you wanted to pursue as entrepreneurs? Read more of this post

China’s talk of reform leaves investors cool toward state giants

China’s talk of reform leaves investors cool toward state giants

5:02pm EDT

By Umesh Desai and Vikram Subhedar

HONG KONG (Reuters) – For all the grand talk of far-reaching reforms when China’s leadership meets early next month, foreign investors have refused to become carried away, with most choosing to shun the country’s mammoth state-owned enterprises (SOEs). The new leadership has been in place for a year, and investors are keen to see its strategy to keep the world’s second largest economy growing, as it enters a more mature phase of slower expansion. Read more of this post

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