26 | January | 2014 | Bamboo Innovator

China loses its allure: Life is getting tougher for foreign companies. Those that want to stay will have to adjust

January 26, 2014 Leave a comment

China loses its allure: Life is getting tougher for foreign companies. Those that want to stay will have to adjust

Jan 25th 2014 | From the print edition

ACCORDING to the late Roberto Goizueta, a former boss of The Coca-Cola Company, April 15th 1981 was “one of the most important days…in the history of the world.” That date marked the opening of the first Coke bottling plant to be built in China since the Communist revolution.

The claim was over the top, but not absurd. Mao Zedong’s disastrous policies had left the economy in tatters. The height of popular aspiration was the “four things that go round”: bicycles, sewing machines, fans and watches. The welcome that Deng Xiaoping, China’s then leader, gave to foreign firms was part of a series of changes that turned China into one of the biggest and fastest-growing markets in the world.

For the past three decades, multinationals have poured in. After the financial crisis, many companies looked to China for salvation. Now it looks as though the gold rush may be over.

More pain, less gain

In some ways, China’s market is still the world’s most enticing. Although it accounts for only around 8% of private consumption in the world, it contributed more than any other country to the growth of consumption in 2011-13. Firms like GM and Apple have made fat profits there.

But for many foreign companies, things are getting harder. That is partly because growth is flagging (seearticle), while costs are rising. Talented young workers are getting harder to find, and pay is soaring.

China’s government has always made life difficult for firms in some sectors—it has restricted market access for foreign banks and brokerage houses and blocked internet firms, including Facebook and Twitter—but the tough treatment seems to be spreading. Hardware firms such as Cisco, IBM and Qualcomm are facing a post-Snowden backlash; GlaxoSmithKline, a drugmaker, is ensnared in a corruption probe; Apple was forced into a humiliating apology last year for offering inadequate warranties; and Starbucks has been accused by state media of price-gouging. A sweeping consumer-protection law will come into force in March, possibly providing a fresh line of attack on multinationals. And the government’s crackdown on extravagant spending by officials is hitting the foreign firms that peddle luxuries (seearticle).

Competition is heating up. China was already the world’s fiercest battleground for global brands but local firms, long laggards in quality, are joining the fray. Many now have overseas experience, and some are developing inventive products. Xiaomi and Huawei have come up with world-class smartphones, and Sany’s excellent diggers are taking on costlier ones made by Hitachi and Caterpillar. Consumers will no longer pay a hefty premium just because a brand is foreign. Their internet savvy and lack of brand loyalty makes them the world’s most demanding customers (see article).

Some companies are leaving. Revlon said in December that it was pulling out altogether. L’Oréal, the world’s largest cosmetics firm, said soon afterwards that it would stop selling one of its main brands, Garnier. Best Buy, an American electronics retailer, and Media Markt, a German rival, have already left, as has Yahoo, an internet giant. Tesco, a British food retailer, last year gave up trying to go it alone, and entered a joint venture with a state-owned firm.

Some of those who are staying are struggling. IBM this week said that revenues in China fell by 23% during the last quarter of 2013. Rémy Cointreau, a French drinks group, reported that sales of its Rémy Martin cognac fell by more than 30% during the first three quarters of last year because of a plunge in China. Yum Brands, an American fast-food firm, said in September last year that same-store sales in China had fallen by 16% in the year to date. Its problems were partly the result of a government investigation into alleged illegal antibiotic use by its chicken suppliers.

Investors no longer celebrate firms with big investments in China. Our Sinodependency Index weights American multinationals by their China revenues. Sino-dependent firms used to outperform their peers, but in the past two years their share prices have done worse than others’.

As Jeffrey Immelt, the boss of GE, puts it, “China is big, but it is hard…[other] places are equally big, but they are not quite as hard.” Companies that want to stay in China will have to put in even more effort. Many will have to change strategy.

One China is over

First, rising costs mean that bosses must shift from going for growth to enhancing productivity. This sounds obvious, but in China the mentality has long been “just throw more men at the problem”. One way to get a grip on costs is to invest in labour-substituting technology, not only in manufacturing but also in services. Also, multinationals are falling behind local firms like Alibaba and Tencent in exploiting a surge of big data coming from e-commerce and smartphones.

Second, tighter control is another must. GSK’s bosses in London admitted that its problems in China were partly the result of executives acting “outside of our processes and control”. Managers in headquarters must ensure that executives’ behaviour and safety standards are as high as anywhere else in the world. Chinese consumers are even more active on social media than those in the West, so any scandal is instantly broadcast nationally.

Our interactive Sinodependency index gauges China’s influence on the fortunes of American multinationals

Lastly, a One China policy no longer makes sense. Most firms set up their local offices when China’s economy was smaller than $2 trillion. Although it will soon be five times that size, many still try to run their operations from Shanghai. That makes little sense when tastes in food, fashion and much else vary between provinces and mega-cities that have populations as big as European countries. Some 400m Chinese do not speak Mandarin. So even as CEOs need to keep a closer eye on standards and behaviour, they should localise marketing and perhaps product development.

China is still a rich prize. Firms that can boost productivity, improve governance and respond to local tastes can still prosper. But the golden years are over.

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A tippler’s guide: What SABMiller’s lager sales say about the state of African economies

January 26, 2014 Leave a comment

A tippler’s guide: What SABMiller’s lager sales say about the state of African economies

Jan 25th 2014 | JOHANNESBURG | From the print edition

FOR most people the letters BBC denote the British Broadcasting Corporation. For fans of Real Madrid, the world’s richest football club, they stand for Bale, Benzema and Cristiano (Ronaldo), the team’s goal-guzzling forward line. For investors in Africa’s stockmarkets, BBC means banks, breweries and cement. The biggest companies listed on African exchanges are typically BBC firms. And in places where official statistics are scarce or unreliable, their trading figures are often a good guide to how much lending, spending and building is taking place in African economies.

SABMiller is a BBC behemoth. It is one of the world’s leading brewers, with chunky operations in 15 African countries and a presence in a further 20 markets on the continent through its alliance with Castel, a French company. Africa is now SAB’s fastest-growing market. Lager sales by volume rose by 6% in the year to the fourth quarter of 2013 compared with growth of just 1% in its operations worldwide. So its latest trading statement of January 21st is a useful barometer to the state of Africa’s economies.

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Can he manipulate the West?

A tippler’s guide

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La Salada: Inside South America’s largest informal market

January 26, 2014 Leave a comment

La Salada: Inside South America’s largest informal market

Jan 25th 2014 | Buenos Aires | From the print edition

IT IS five o’clock in the morning, but shoppers in La Salada market in Buenos Aires are already going home. They drag rubbish sacks full of T-shirts, trainers and pirated DVDs across the car park to board waiting coaches. Some have come to stock their shops, others to fill their wardrobes. They started shopping when the market opened at 3am, and have travelled from as far as Neuquén, a Patagonian city 15 hours away.

La Salada is thought to be South America’s largest informal market. Around 30,000 wire-mesh stalls spill out of three warehouses in an unsavoury neighbourhood on the outskirts of the capital. Its administrators reckon that on Tuesdays, Thursdays and Sundays, when the market is open, more than 250,000 shoppers browse its stalls. Tens of thousands of people help keep La Salada running—selling, protecting, cleaning and supplying the market. At the Punta Mogote warehouse, where most stalls are underground, so many people faint that an ambulance is kept on site.

Hard numbers are impossible to come by but administrators estimate that vendors sell 150m-300m pesos ($22m-$44m) of goods every day La Salada is open. According to Jorge Castillo, who manages Punta Mogote, vendors pay up to $100,000 in cash for a stall measuring four square metres—more than they would for space in a former Hermès store on Avenida Alvear, the main shopping street in Buenos Aires.

La Salada has its murky side. In one bizarre case a man who bought a poodle puppy at La Salada claimed he was duped into bringing home a fluffy angora ferret on steroids. Nacho Girón, a journalist who has written a book on the market, insists that this story is itself one of La Salada’s fakes. Piracy is undeniably rife. Stalls in Punta Mogote sell copies of Tommy Hilfiger shirts for 110 pesos. At street level, vendors hawk Nike knock-offs and flimsy “Ray-Ban” sunglasses.

Mr Castillo is engagingly open about the dubious merchandise sold by some of his vendors. La Salada’s merchants, he acknowledges, may not follow the rules when it comes to intellectual property “but this is Argentina. Nothing is ever just black or white.”

Taxes are certainly a grey area. All shopping is done in cash, leaving ample room for fudging the accounts. Tax officials have trouble enforcing their writ: in one 2009 tax raid vendors from Punta Mogote lobbed thousands of eggs at agents until they fled. The police are reckoned to be more complicit, demanding bribes in exchange for ignoring contraband goods.

Given La Salada’s popularity among Argentina’s poor, the government has long understood that attacking it would be politically risky. According to Mr Girón’s book, Néstor Kirchner, a former president, privately described the market as “a social phenomenon of Argentina in crisis”. “Shoppers love us because we allow them to buy what they need and also have a little left over to treat themselves,” says Mr Castillo. “Vendors love us because we don’t take their hard-earned cash.”

That ethos stretches back to the market’s foundation in 1991 by a bunch of struggling Bolivian clothing producers. Sick of being exploited by factory bosses who paid them poorly and late, the manufacturers gathered enough money to buy the site of abandoned thermal baths. The market was an immediate hit. Mr Castillo, who had been a women’s shoemaker, began buying stands in La Salada’s second warehouse in 1994, before leading the way in opening Punta Mogote in 1999.

Ferreting out the bargains

Competition is at the heart of La Salada’s model. When the market was founded the Argentine peso had just been pegged to the dollar, making imported textiles far cheaper than Argentine-made fabrics. To succeed, vendors had to cut prices right back. Competing with imports is no longer a problem, thanks to currency controls and heavy taxes: the government’s latest wheeze is to require shoppers to pick up goods bought from foreign websites at customs offices so taxes can be collected. But with so many stalls next door to one another, competition at the market remains cut-throat. “The good and the bad of Argentina are embodied by La Salada,” Mr Girón reflects. “It is at once a display of Argentine creativity, intelligence, resilience and grit, and an exhibit of Argentine cunning and corruption.”

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Political crisis in Thailand: You go your way, I’ll go mine; Thailand’s very unity is now under threat

January 26, 2014 Leave a comment

Political crisis in Thailand: You go your way, I’ll go mine; Thailand’s very unity is now under threat

Jan 25th 2014 | CHIANG MAI | From the print edition

STOUT and loquacious, Khamsi Audomsi runs a roasted-banana stall in the covered market of San Kamphaeng, a small town just outside Chiang Mai, the main city of northern Thailand. In front of where she fries up, a greasy wall is festooned with posters and calendars devoted solely to the Shinawatra clan: Thaksin Shinawatra, the former prime minister deposed in a coup in 2006 and now in self-imposed exile, and Yingluck Shinawatra, the current prime minister, who takes orders from her older brother in Dubai.

Thanks to Mr Thaksin’s policies, Ms Khamsi says, her family’s prospects were transformed. A student-loan scheme allowed both her son and daughter to go to university, a family first. Now their relatively well-paid jobs help to pay for her health care. And for this, Ms Khamsi repays Mr Thaksin and his sister with her undying loyalty. She was a founder of the “red shirts”, Mr Thaksin’s grassroots political movement.

It is the sort of story you hear time and again in northern and north-eastern Thailand: how Mr Thaksin’s social policies, dismissed as mere populism by his opponents, helped people to escape poverty. Chiang Mai and the 16 provinces around it are almost solid red-shirt territory; the 20 provinces of Thailand’s poor north-east, a region known as Isan, are even redder (see map). The flames of devotion burn brightest in San Kamphaeng, for this is where the Shinawatras come from and where they return to be buried.

Ms Khamsi and her fellow red shirts are looking forward to the general election on February 2nd. (Ms Yingluck called it in an attempt to break the political deadlock that has gripped the capital, Bangkok, since November.) They can renew their vows and demonstrate once again the strength of the red shirts and the supporters of the ruling Pheu Thai party. Parties run by Mr Thaksin have won every election since 2001, precisely by dominating the rural north and north-east.

For that very reason the anti-Thaksin forces are boycotting the election altogether. Led by a former MP, Suthep Thaugsuban, they have staged mass protests in Bangkok in hopes of ousting Ms Yingluck. Mr Suthep and the Democrat Party, the main opposition, argue that Mr Thaksin’s money has poisoned the electoral process and say they will only participate after the system has been cleaned up. Their disruptive tactics may yet cause the election to be postponed or even cancelled.

Mr Suthep launched his crusade three months ago, at the time of the government’s cack-handed attempt to force through a bill granting Mr Thaksin amnesty for convictions for corruption and abuse of power. In reality, Mr Suthep’s protests are just the latest round in an increasingly bitter struggle for the political soul of the country, between the northern red shirts and an ultraroyalist establishment that controls much of the capital and the southern provinces. The struggle is turning ugly again, and risks splitting the country in two. At least nine have died as men of violence creep on to the stage with sniper rifles and bombs. Each side blames the other for these shadowy provocateurs. On January 21st Ms Yingluck declared a state of emergency in Bangkok and its surrounding districts.

Although the red shirts will dutifully vote on February 2nd, they are mostly focused on how they might protect their government, and Ms Yingluck, from the coup that they are all expecting. A coup might be a military one, under the pretext of stopping violence escalating in Bangkok. Or it might be a judicial one, with the courts barring Pheu Thai politicians from taking office because of alleged offences against the constitution. Both have happened before, and the red shirts see both the army and the courts as tools of the Bangkok political establishment.

If Ms Yingluck, who was elected in a landslide in 2011, is forced out of Bangkok, she will be welcomed in Chiang Mai, where she will be encouraged to keep on governing as the legitimate rival to whoever takes over in the capital. That might trigger the split between north and south.

Indeed, many red shirts say Bangkok is already lost. Mr Suthep has nearly free rein there, closing down most government offices. The police have charged him with insurrection and seizing state property, but no attempt has been made to arrest him. The imposition of a state of emergency for 60 days may not make much difference.

Thus most red shirts in the north and north-east now contemplate—indeed they seem to be preparing for—a political separation from Bangkok and the south. Some can barely wait. In Chiang Mai a former classmate of Mr Thaksin’s says that in the event of a coup “the prime minister can come here and we will look after her. If…we have to fight, we will. We want our separate state and the majority of red shirts would welcome the division.” Be afraid for Thailand as the political system breaks down.

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Why I Read: The Serious Pleasure of Books

January 26, 2014 Leave a comment

The joy of reading

Literary voyeurism

An American critic dissects a lifelong satisfaction

Jan 18th 2014 | From the print edition

Why I Read: The Serious Pleasure of Books. By Wendy Lesser. Farrar, Straus and Giroux; 240 pages; $25 and £17.99. Buy from Amazon.com, Amazon.co.uk

JAMES WOOD, a British critic, fell in love with Gustave Flaubert’s Emma Bovary when he imagined her fondling the satin slippers she wore at a great ball, “the soles of which were yellowed with wax from the dance floor”. Henry Miller, though born to Lutheran parents in New York, had a liking for Plutarch, Petronius, Marcel Proust and that dotty Russian theosophist, Madame Blavatsky, the original New Ager. How do people know this? Because both authors came clean about their literary passions.

Writers are made by their reading, which is why it is such fun to peer at their bookshelves and inspect the dog-eared pages, the turned-down corners. More than 50 years after Miller published “The Books in My Life”, Wendy Lesser has brought out an equally personal reading memoir. Founder and editor of the Threepenny Review, an American literary magazine, Ms Lesser is known for her non-fiction writing: her examination of Shostakovich’s quartets and a study of the subterranean in literature entitled “The Life Below the Ground”.

Her new book, “Why I Read”, is a model for the modern age, with a list of 100 books to read for pleasure and a notice at the back advertising an online guide for reading groups. But her instincts are those of her literary forebears. She recommends Henry James and Patricia Highsmith for plot, Charles Dickens for character and Javier Marías, a Spanish writer, for being so good at mining the “uncertain borderline between the dead and the living”. For novelty she prescribes Geoffrey Chaucer, Jonathan Swift and Miguel de Cervantes, and in modern times, David Foster Wallace. To Russia, for love, would be Ms Lesser’s advice. Only Fyodor Dostoyevsky can offer a double lesson on the love of God and the love of a good woman.

“Reading literature”, she says, “is a way of reaching back to something bigger and older and different.” How very consoling.

Why I Read: The Serious Pleasure of Books Hardcover

by Wendy Lesser (Author)

“Wendy Lesser’s extraordinary alertness, intelligence, and curiosity have made her one of America’s most significant cultural critics,” writes Stephen Greenblatt. In Why I Read, Lesser draws on a lifetime of pleasure reading and decades of editing one of the most distinguished literary magazines in the country, The Threepenny Review, to describe her love of literature. As Lesser writes in her prologue, “Reading can result in boredom or transcendence, rage or enthusiasm, depression or hilarity, empathy or contempt, depending on who you are and what the book is and how your life is shaping up at the moment you encounter it.”

Here the reader will discover a definition of literature that is as broad as it is broad-minded. In addition to novels and stories, Lesser explores plays, poems, and essays along with mysteries, science fiction, and memoirs. As she examines these works from such perspectives as “Character and Plot,” “Novelty,” “Grandeur and Intimacy,” and “Authority,” Why I Read sparks an overwhelming desire to put aside quotidian tasks in favor of reading. Lesser’s passion for this pursuit resonates on every page, whether she is discussing the book as a physical object or a particular work’s influence. “Reading literature is a way of reaching back to something bigger and older and different,” she writes. “It can give you the feeling that you belong to the past as well as the present, and it can help you realize that your present will someday be someone else’s past. This may be disheartening, but it can also be strangely consoling at times.”

A book in the spirit of E. M. Forster’s Aspects of the Novel and Elizabeth Hardwick’s A View of My Own, Why I Read is iconoclastic, conversational, and full of insight. It will delight those who are already avid readers as well as neophytes in search of sheer literary fun.

Editorial Reviews

From Bookforum

Lesser’s taste is eclectic, her range large. She offers insights into George Orwell and Henning Mankell, Emily Dickinson and Roberto Bolaño, J.R. Ackerley and Shakespeare, Henry James and Isaac Asimov—to name but a few. There is no claim to a comprehensive approach, nor even a sense that what is discussed is of greater importance that what is not. […] The effect is rather as if Lesser were writing to a friend about the most fabolous literary party of all time, where she’d been in conversation not with authors but with their works. […] Her book is […] thoughtful and intelligent, conversational without being “improving,” and it ultimately encourages us to formulate our own responses, to continue and enlarge the literary conversation. —Claire Messud

Review

“The rare and marvelous pleasure of meeting a fellow reader, the sort of person who, in childhood, automatically turned the cereal box so her eyes could rest on words at all times, is here given new form. Wendy Lesser is candid, democratic, brisk, passionate, stubborn, fiercely exact; as in all memorable conversations, I found myself sometimes wishing to debate, and often bursting into private festivals of concurrence. This is a book of rich provocations and rich delights. More than most contemporary critics, Lesser trusts her instinct: what a joy it is to listen, through these pages, to her bold assessments and charismatic opinions.” —Louise Glück, author of Poems 1962–2012

“Reading Why I Read delivers all the pleasure of discussing one’s favorite books with a marvelously articulate, intelligent, opinionated friend. It’s like joining the book club of your dreams, one in which you don’t have to do any of the work or think up intelligent things to say, but can simply enjoy reading about books you’ve read or want to read.” —Francine Prose, author of Reading Like a Writer

“Wendy Lesser has read just about everything, and proves a wonderfully companionable guide to books high and low. Rather than attempting anything ponderously encyclopedic, she follows her hunches, asking good, probing questions, voicing cultivated, intelligent opinions and surprising judgments, and doing it all with humor, dash, and skeptical humility. The result is a treat for all who love reading.” —Phillip Lopate, author of To Show and to Tell: The Craft of Literary Nonfiction

“Wendy Lesser’s extraordinary alertness, intelligence, and curiosity have made her one of America’s most significant cultural critics.” —Stephen Greenblatt

“An intellectual of unflinching dignity and gravitas, founder of The Threepenny Review and author of nine previous books—including literary memoir, cultural criticism, and an incandescent study of Shostakovich—Lesser talks within books as few now are able to do . . . We turn to a book like Lesser’s not only to help us unravel the DNA of literature (what Hazlitt named the gusto in the soul of literature) but to commune with a mind abler than our own, to augment our own appreciation and understanding. Everywhere in Why I Read lie ribbons of literary wisdom . . . Lesser’s voice is so congenial, measured, authoritative and sane, it seems downright impervious to quarrel. From Hopkins to Cervantes to Dickinson, from Herzen to Klemperer to Louise Gluck, she is equally discerning and deft . . . In Why I Read she has written a necessary addition to the canonical titles of appreciation. Wendy Lesser is a serious reader—a quality reader—and this book is a serious pleasure.” —William Giraldi, The New York Times Book Review

“Exuberantly digressive . . . The effect is rather as if Lesser were writing to a friend about the most fabulous literary party of all time, where she’d been in conversation not with authors but with their works . . . [Why I Read] is thoughtful and intelligent, conversational without being ‘improving,’ and it ultimately encourages us to formulate our own responses, to continue and enlarge the literary conversation.” —Claire Messud, Bookforum

“More than 50 years after [Henry] Miller published The Books in My Life, Wendy Lesser has brought out an equally personal reading memoir . . . Why I Read is a model for the modern age, with a list of 100 books to read for pleasure and a notice at the back advertising an online guide for reading groups. But her instincts are those of her literary forebears.” —The Economist

“I began Wendy Lesser’s Why I Read: The Serious Pleasure of Books with my usual yellow highlighter in hand, notepaper and pen at the ready, opening the reviewer’s copy as I would for any normal assignment. By the time I’d finished, the notepaper was still mostly blank, but the thing in my hand resembled a brightly painted fan—every page saturated in color, with so many corners folded down the book had trouble staying closed . . . Lesser, a longtime Berkeley resident, founded and edits the elegant literary journal the Threepenny Review. Author of nine prior books and contributor to various prominent literary venues, hers has been a no-holds-barred, art-loving life, and her dedication to that quest irradiates Why I Read.” —The San Francisco Chronicle

“Reading Wendy Lesser is like attending a book club where the leader is an Olympic champion reader. Think the Dana Torres of page-turning . . . [In] Why I Read: The Serious Pleasure of Books, Lesser tackles a deceptively simple question: Why does one read? The question might be impossible to answer, but it’s a pleasure to explore . . . Just like your favorite book club, the discussion is brainy, it’s personal, and it’s occasionally off topic.” —Christian Science Monitor

“A witty, wise, and buoyant book full of the sense of adventure and the capacity for surprise that Lesser values in literature itself . . . We finish reading Lesser enlarged by the delights and rewards of her prose, enriched by her insights, and with an expansive sense of possibility.” —The Boston Globe

“Plenty of surprises . . . wonderfully unpretentious.” —Columbus Dispatch

“In this elegantly meandering narrative, critic and editor Lesser (Music for Silenced Voices: Shostakovich and His Fifteen String Quartets), founder of the Threepenny Review, takes us through her expansive reading life. This is not so much a memoir of reading as it is about the craft of literature—the merits of both grandeur and intimacy, the double-edged sword of novelty, the ways character and plot are inextricably linked . . . Lesser’s idiosyncratic reading list and her wealth of insights will speak to booklovers of all types.” —Publishers Weekly (starred review)

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Mapping China: A cartographer’s dream; Two books tell the fascinating tale of a rediscovered map of China

January 26, 2014 Leave a comment

Mapping China: A cartographer’s dream; Two books tell the fascinating tale of a rediscovered map of China

Jan 18th 2014 | From the print edition

Mr Selden’s Map of China: Decoding the Secrets of a Vanished Cartographer. By Timothy Brook.Bloomsbury USA; 240 pages; $25. Profile Books; £18.99. Buy from Amazon.com,Amazon.co.uk

London: The Selden Map and the Making of a Global City, 1549-1689. By Robert Batchelor. University of Chicago Press; 344 pages; $45. Buy fromAmazon.com

MAPS can be tools for trade, but they can also be weapons of war; for centuries cartographers have embraced both aims. Nowhere has captivated the minds of Western mapmakers as much as fabled Cathay. Finding a sea route to China inspired many of the great explorers. European maps of the past 400 years tell the story of empire and the efforts to prise China open for trade. In the 19th century the navigators finally succeeded.

Chinese leaders are now flexing their own cartographic muscles. In November last year they issued a map showing a new Chinese “air defence identification zone” that includes the airspace around some disputed islands, owned by Japan which calls them the Senkakus and claimed by China which named them the Diaoyus.

The map of the Chinese defence zone may have raised some wry smiles in Oxford University’s Bodleian Library. For the Bodleian houses a special map of China, bequeathed in 1654 by an English lawyer, John Selden (pictured). The map was probably drawn by a Chinese cartographer in Java around 1610, when China was still the world’s biggest economy and Europeans longed to trade there. It came into Selden’s possession through an English sea captain. During the first half of the 17th century, it was the most accurate chart of Asia in the world; clearly marked upon it are some of the disputed islands.

Selden’s map is a work of art. It is also different from any that had come out of China before. Unlike imperial maps before it, and after, China itself is not in the middle. The map views Asia from the sea and not from the land, so the South China Sea is at the centre. It is a traders’ map and the merchant routes through Asia are marked with lines criss-crossing the seas. The disputed islands were not so much objects of desire as of danger. They were surrounded by reefs that could take any ship to the bottom and were to be avoided.

The map presents a different story from the one that is frequently told of 17th-century China—of a culture in isolation, cut off from the rest of the world. Even more surprising, then, that the map could have been put in a drawer in the Bodleian more than a century ago and not seen again until an American academic, Robert Batchelor, discovered it in 2008. One of those who saw it next was another historian, Timothy Brook. Now both men have written books about it.

Mr Brook is best known for his tale of early globalisation, “Vermeer’s Hat”. He calls the Selden map “the most important Chinese map of the last seven centuries”. His book, though, as he admits, is not really about the map itself, but about “the people whose stories intersected with it”. King James II is there, witnessing a food fight at the Bodleian in 1687. Ben Jonson appears. So, too, does Shen Fuzong, a Catholic convert and the first Chinese man to visit Oxford. The story is full of Chinese pirates and English adventurers.

Most fascinating of all, though, is Selden himself. The son of a Sussex farmer, he rose to become London’s foremost lawyer and his legal contributions still resonate. In 1619 he wrote a treatise called Mare Clausum (“The Closed Sea”), in which he argued that countries had jurisdiction over the sea close to their shore. The work was in response to a similar treatise, Mare Liberum (“The Open Sea”), written in 1609 by a Dutchman called Huig de Groot, which had argued the opposite, that the seas were open to anyone. The international law of the sea used today, including the concept of 12 miles of territorial waters (an extension of Selden’s original three miles) is based on the two men’s works.

Nowhere does the Selden map state that the disputed islands belong to China or Japan, and Mr Brook, wisely, does not try to use the map to solve the question of sovereignty. Instead, he weaves a wonderful tale of the interaction of peoples of a different age in lands where sovereignty was barely a concept. From Quanzhou and Java and Nagasaki back to Oxford and London, he describes people trying to understand each other before they had the intellectual and linguistic tools to do so.

Mr Batchelor’s book is more academic in research and in tone, but no less fascinating. In it he shows how the skein of shipping routes on the Selden map were connected with the rise of London as a global city. If there were a northern European city that might have aspired to be global in the 1540s, it would more probably have been Antwerp. And yet the hub of the English wool and cloth trade on the edge of Europe would, by the 1700s, become the centre of the world. Mr Batchelor argues that, even more than the much-documented Atlantic trade, it was interaction with Asia along the lines traced upon the Selden map that brought London into modernity. Now, after centuries of European dominance, the map has emerged from its hibernation into a world whose order is being reversed once again.

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Learn ‘n’ go: How quickly can people learn new skills? The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies

January 26, 2014 Leave a comment

Learn ‘n’ go: How quickly can people learn new skills?

Jan 25th 2014 | From the print edition

The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. By Erik Brynjolfsson and Andrew McAfee. W.W. Norton; 320 pages; $26.95. Buy fromAmazon.com

IN 2012 Erik Brynjolfsson and Andrew McAfee took a ride in one of Google’s driverless cars. The car’s performance, they report, was flawless, boring and, above all, “weird”. Only a few years earlier, “We were sure that computers would not be able to drive cars.” Only humans, they thought, could make sense of the countless, shifting patterns of driving a car—with oncoming traffic, changing lights and wayward jaywalkers.

Machines have mastered driving. And not just driving. In ways that are only now becoming apparent, the authors argue, machines can forecast home prices, design beer bottles, teach at universities, grade exams and do countless other things better and more cheaply than humans.

Mr Brynjolfsson and Mr McAfee, an economist and scientist respectively at the Massachusetts Institute of Technology’s Centre for Digital Business, first described this in 2011 in their self-published e-book “Race Against the Machine”. “The Second Machine Age”, which grew out of that earlier work, is an ambitious, engaging and at times terrifying vision of where modern technology is taking the human race.

Innovation has always driven advances in mankind’s standard of living, from agriculture to electricity. Information technology, the authors argue, is quantitatively and qualitatively different. It is, thanks to Moore’s law, exponential: its effects, barely perceptible for the first few decades, are turning explosive. It is also digital. Formerly complex tasks can be mastered then reproduced and distributed at almost no cost. Finally, it is recombinant, merging separate, existing innovations and innovators through networks and crowdsourcing.

This will have one principal good consequence, and one bad. The good is bounty. Households will spend less on groceries, utilities and clothing; the deaf will be able to hear, the blind to see. The bad is spread. The gap is growing between the lucky few whose abilities and skills are enhanced by technology, and the far more numerous middle-skilled people competing for the remaining jobs that machines cannot do, such as folding towels and waiting at tables.

Economists believe innovation is always good for society because workers displaced in one industry will find jobs supplying new goods and services. The authors acknowledge this but ask, “What if this process takes a decade? What if, by then, the technology has changed again?” Some people, they gloomily predict, will have nothing that employers will want even at a salary of a few dollars per hour, citing the example of horses, put forward by Wassily Leontief, an economist; they were never able “to adjust to the invention of the tractor.”

This has a familiar ring. A few years ago there were credible estimates that a quarter of American jobs could be sent offshore. Those apocalyptic totals seem unlikely ever to be reached. Mr Brynjolfsson and Mr McAfee may be similarly right about the potential for machines to displace middle-class workers, but wrong about the magnitude.

In case they turn out to be right, they offer prescriptions. People should develop skills that complement, rather than compete with computers, such as idea generation and complex communication. Policymakers should improve basic education, pour money into infrastructure and basic research, admit more skilled immigrants, and shift the burden of taxes from wages to consumption. This is sensible, but unsatisfying: it may expand the circle of winners and reshuffle its membership, though it seems unlikely that it will fundamentally alter the growing gap between them and the losers. The authors may not have the solution to growing inequality, but their book marks one of the most effective explanations yet for the origins of the gap.

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An uncomfortable account of how Hispanic immigrants shaped America

January 26, 2014 Leave a comment

An uncomfortable account of how Hispanic immigrants shaped America

Jan 25th 2014 | From the print edition

Our America: A Hispanic History of the United States. By Felipe Fernández-Armesto. W.W. Norton; 416 pages; $27.95. Buy from Amazon.com

THERE was something a bit grudging about America’s conquest of Puerto Rico in 1898, after a short war with Spain. The “so-called white” inhabitants, the first American military governor sniffed, looked as if they had “Indian blood”. A commander of the defeated Spanish forces was just as contemptuous. Locals went from being “fervently Spanish” to “enthusiastically American” in 24 hours.

Both sides missed the import of the moment, argues a new Hispanic history of the United States, the very title of which, “Our America”, sounds like a challenge to a fight. The rising superpower had just seized a colony far older than any English settlement on the North American mainland. The island of Puerto Rico became Spanish in 1508, almost a century before English buccaneer-adventurers splashed ashore at Jamestown in Virginia. Not only that, but settlements like Jamestown—a fortified trading-post, built explicitly for profit—had been founded in conscious imitation of Spanish colonial practices in the Americas, says the author, Felipe Fernández-Armesto, a British academic based at Notre Dame University in Indiana.

The book takes aim at the founding myths of America that run exclusively from east to west. Those myths begin with ocean-crossings by pious, liberty-loving Englishmen. They dwell on the miracle of the Revolutionary War, in which bewigged patriots defeated vastly larger British forces. The myths end with wagon-trains rumbling across the Prairies and railways cutting through the Rockies, opening a continent to such Anglo-American virtues as rugged individualism and the plain- spoken certainties of the common law.

The book sets out to show how such tales ignore a parallel history of America that runs from south to north, embraces different values and has—for unbroken centuries—spoken Spanish. With startling facts and jaw-dropping tales of courage and depravity, the author triumphantly rescues Hispanic America from obscurity.

Spanish conquistadors brought horses to the Great Plains as early as 1540, showing native Americans in present-day Kansas how horsemen with spears could kill 500 buffalo in a fortnight. By 1630 a Franciscan mission in New Mexico claimed to have baptised 86,000 Indians in one summer. To repel French, British and Russian rivals, Spain built forts from Florida to the north-western coasts of what is today British Columbia. Catholic missions ran vast cattle ranches and planted California’s first citrus groves and vines. It was not just the French who helped George Washington’s armies defeat the British crown. Spanish forces harried the redcoats from Florida to Michigan, the book records, while Spanish gold bankrolled the siege at Yorktown (the newly founded town of Los Angeles, a continent away, sent $15 for the war effort).

Spanish rule was often pretty sketchy. One 18th-century frontier governor was a friendly Apache chief, while Spain’s agent in the Upper Missouri was a mystic from Wales, hunting for the Welsh-speaking descendants of a prince who, myth had it, crossed the Atlantic to escape the English 600 years earlier. Colonial bosses, soldiers and missionaries were not kindly men: Indians, in particular, died in large numbers from disease, exploitation and armed conflict. But the book makes a case that a rough-hewn paternalist pragmatism mostly prevailed in Hispanic America. Slavery was shunned (and in 1821 outlawed by newly-independent Mexico). Spanish officials treated slavery as a crime, and worse as a mistake: far easier to buy off natives with axes, copper kettles, food and dependence-inducing rum.

The author paints a harsher picture of English-speaking America, from the first moments after the revolution. A sort of madness for land and expansion gripped the Yankees and English-speakers of the South, buttressed by “scientific” race theories that placed white Anglo-Americans over supposedly brutish Indians, Spaniards and those of mixed race. American settlers flooded California and Texas, grabbing land with the help of corrupt lawyers, broken treaty-promises, “popular tribunals” that were little more than judicial lynch-mobs, and, when all else failed, force. The war of Texan independence involved much daring, but was also explicitly motivated by the desire to escape Mexico’s laws against slavery: Anglo settlers were anxious to import black slaves to pick cotton. The spectacle appalled such observers as John Quincy Adams, with the former president sorrowing that Texas joined the union tainted by two crimes, slavery and “robbery of Mexico”.

More than a century of unblushing, institutionalised racism followed, involving everything from segregated schools to guestworker schemes that left Mexicans at the mercy of exploitative bosses. Hard economic times triggered race riots and mass deportations.

Still Hispanics kept coming, most recently breaking out of urban and suburban strongholds to establish communities in small towns and rural counties in almost every state. A quarter of all American children are now from Spanish-speaking backgrounds. That prompts the book to two conclusions. The first—that a “second Hispanic colonisation” is under way—is essentially a bit of wordplay. The second—that “the United States is and has to be a Latin American country”—leads the author into a muddle. He offers a digression about the Protestant work ethic, and why that is a fiction behind which lurks anti-Catholic prejudice. He asks why, if the government in Washington is supposedly more democratic than the military dictatorships that blighted South America for so long, American troops have at times been used to break strikes or escort black children into Arkansas schools.

These final digressions are a shame: a quest for equivalence that is really an attempt to refute anti-Hispanic condescension. But the effort is not needed. The history of Hispanic North America is already fascinating, as the book shows. Yet—to be clear—it was also a story of the peripheries, not least for the Spanish empire itself. America is a country founded on a unique set of ideas, and most of them do not come from imperial Spain.

Hispanics will play an ever-larger role in shaping America. Centuries of proximity and shared history are bound to strengthen this. But modern America does not belong to any one race or culture: that is its genius.

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Spam in the fridge: When the internet of things misbehaves

January 26, 2014 Leave a comment

Spam in the fridge: When the internet of things misbehaves

Jan 25th 2014 | From the print edition

“THE internet of things” is one of the buzziest bits of jargon around in consumer electronics. The idea is to put computers in all kinds of products—televisions, washing machines, thermostats, refrigerators—that have not, traditionally, been computerised, and then connect those products to the internet.

If you are in marketing, this is a great idea. Being able to browse the internet from your television, switch on your washing machine from the office or have your fridge e-mail you to say that you are running out of orange juice is a good way to sell more televisions, washing machines and fridges. If you are a computer-security researcher, though, it is a little worrying. For, as owners of desktop computers are all too aware, the internet is a two-way street. Once a device is online, people other than its owners may be able to connect to it and persuade it to do their bidding.

On January 16th a computer-security company called Proofpoint said it had seen exactly that happening. It reported the existence of a group of compromised computers which was at least partly comprised of smart devices, including home routers, burglar alarms, webcams and a refrigerator. The devices were being used to send spam and “phishing” e-mails, which contain malware that tries to steal useful information such as passwords.

The network is not particularly big, as these things go. It contains around 100,000 devices and has sent about 750,000 e-mails. But it is a proof of concept, and may be a harbinger of worse to come—for the computers in smart devices make tempting targets for writers of malware. Security is often lax, or non-existent. Many of the computers identified by Proofpoint seem to have been hacked by trying the factory-set usernames and passwords that buyers are supposed to change. (Most never bother.) The computers in smart devices are based on a small selection of cheap off-the-shelf hardware and usually run standard software. This means that compromising one is likely to compromise many others at the same time. And smart devices lack many of the protections available to desktop computers, which can run antivirus programs and which receive regular security updates from software-makers.

Ross Anderson, a computer-security researcher at Cambridge University, has been worrying about the risks of smart devices for years. Spam e-mails are bad enough, but worse is possible. Smart devices are full-fledged computers. That means there is no reason why they could not do everything a compromised desktop can be persuaded to do—host child pornography, say, or hold websites hostage by flooding them with useless data. And it is possible to dream up even more serious security threats. “What happens if someone writes some malware that takes over air conditioners, and then turns them on and off remotely?” says Dr Anderson. “You could bring down a power grid if you wanted to.”

That may sound paranoid, but in computer security today’s paranoia is often tomorrow’s reality. For now, says Dr Anderson, the economics of the smart-device business mean that few sellers are taking security seriously. Proper security costs money, after all, and makes it harder to get products promptly to market. He would like legislation compelling sellers to ensure that any device which can be connected to the internet is secure. That would place liability for hacks squarely on the sellers’ shoulders. For now, he has had no luck. But Proofpoint’s discovery seems unlikely to be a one-off.

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Acacia, ants and antibiotics: Protect and survive; Another twist in one of nature’s best-known partnerships

January 26, 2014 Leave a comment

Acacia, ants and antibiotics: Protect and survive; Another twist in one of nature’s best-known partnerships

Jan 25th 2014 | From the print edition

THE symbiosis between bullhorn acacias and Pseudomyrmex ferruginea, the bullhorn acacia ant, is the stuff of biological legend. The acacias provide the ants with food, in the form of protein, fat and sugar secreted for their delectation by special organs called Beltian bodies, and also with homes, in the hollow thorns which give the plant its name. The ants reciprocate by stinging anything—from other insects to cattle—that dares try to eat the acacia’s leaves. The latest research, though, suggests that the ants do more than just drive away herbivores. They also act as a sort of immune system which protects acacias from infection.

This discovery, reported in New Phytologist by Marcia Gonzalez-Teuber of La Serena University, in Chile, dates back to an observation made a decade ago that macaranga trees, which have similar symbiotic relations with ants, seem immune to a particular fungus when ants are present, but not when they aren’t. Dr Gonzalez-Teuber wondered if something like this was true of acacias—and if it was, why.

To try to find out she chose ten wild acacia plants in the state of Oaxaca, in Mexico, and evicted the ants from one branch of each by plucking them off, removing the thorns, and stopping them returning by coating the base of the branch with a sticky substance that traps insects. As a control she sliced the thorns off a second branch, but left the ants free to roam over it.

After six weeks, she found that 45% of the leaves on the experimental branches showed signs of infection, compared with 14% of those (including the thornless controls) over which ants could roam freely. And when she tried culturing micro-organisms from leaves taken from the various branches she showed that those from branches without ants were more heavily infected with known plant pathogens.

The reason, she discovered, was on the ants’ legs. When she and her colleagues amputated some of these, washed them in methanol to see what they could extract, and applied the result to colonies of micro-organisms cultured from acacia leaves, they found that the extract eradicated many of those colonies. When they analysed the extract they discovered it contained several types of bacteria known to synthesise antibiotics. The ants, then, by acting as hosts to these bacteria, are protecting their own hosts from the attentions of other micro-organisms—and making the legend of their mutual relationship with acacias grow yet further in the telling.

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An uncomfortable account of how Hispanic immigrants shaped America

January 26, 2014 Leave a comment

An uncomfortable account of how Hispanic immigrants shaped America

Jan 25th 2014 | From the print edition

Our America: A Hispanic History of the United States. By Felipe Fernández-Armesto. W.W. Norton; 416 pages; $27.95. Buy from Amazon.com

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Malaria eradication: Cure all? A novel approach, using drugs instead of insecticides, may make it easier to eliminate malaria. But it is not without controversy

January 26, 2014 Leave a comment

Malaria eradication: Cure all? A novel approach, using drugs instead of insecticides, may make it easier to eliminate malaria. But it is not without controversy

Jan 25th 2014 | Grande Comore | From the print edition

WHAT if it were possible to get rid of malaria? Not just bring it under control, but wipe it from the face of the Earth, saving 660,000 lives a year, stopping hitherto endless suffering, and abolishing a barrier to economic development reckoned by the World Bank to cost Africa $12 billion a year in lost production and opportunity? It is an alluring prize, and one that Li Guoqiao, of Guangzhou University of Chinese Medicine, thinks within reach.

Dr Li is one of the researchers who turned a Chinese herbal treatment for the disease into artemisinin, one of the most effective antimalarial drugs yet invented. Now he is supervising experiments in the Comoros, using a combination drug therapy based on artemisinin, to see if malaria can be eradicated from that island country. If it works, he hopes to move on to somewhere on the African mainland, and attempt to repeat the process there.

The current approach to dealing with malaria is to control the mosquitoes (one of which is pictured above) that spread it—either by killing them with chemical insecticides or by draining the bodies of stagnant water that their larvae live in. That has worked in many places. In Europe, for example, malaria once existed as far north as Murmansk, in Russia. Now it is rare-to-non-existent. But it was never the plague in Europe that it is in Africa, and on that continent mosquito-control programmes may need a helping hand.

Dr Li’s approach is to attack not the mosquito, but the disease-causing parasite itself. This parasite’s life cycle alternates between its insect host (the mosquito) and its vertebrate one (human beings). Crucially, as far as is known, humans are its only vertebrate host. Deny it them and it will, perforce, wither away—an approach that worked for the smallpox virus, which had a similarly picky appetite. In the case of smallpox, a vaccine was used to make humans hostile territory for the pathogen. Since there is no vaccine against malaria, Dr Li is instead using drugs.

A combined assault

The drugs in question are artemisinin and a second antimalarial called piperaquine—a combination made and sold under the brand name “Artequick” by Artepharm, a firm based in Guangdong which Dr Li helped found. Adding piperaquine to the mix reduces the risk of a strain of parasite resistant to artemisinin evolving, because the chance that an individual parasite will be immune to both forms of attack is negligible. (A similar approach is employed in the combination therapies used to treat HIV infection.)

To deny the parasites their human hosts long enough to exterminate them in a given area, the researchers administer three doses of Artequick, spaced a month apart. To add extra power, the first dose is accompanied by a third drug, primaquine. Dr Li and his colleagues call this approach Fast Elimination of Malaria through Source Eradication, or FEMSE.

And it works—almost. The Comoros has three islands: Moheli, Anjouan and Grande Comore. Before the experiment started, more than 90% of the inhabitants of some villages on these islands had malaria. Song Jianping, Dr Li’s lieutenant in the Comoros, blitzed Moheli with Artequick in 2007. The number of cases there fell by 95%, though reinfection from other islands caused a small subsequent rebound. In 2012 he did the same thing on Anjouan. There, the number of cases fell by 97%. In October 2013 the campaign moved to Grande Comore, the most populous island. When the process is complete there, nearly all of the 700,000 Comorans will have taken part in FEMSE.

Ninety-five percent, or even 97%, is not eradication. But it is an enormous improvement and creates a position from which eradication can be contemplated. To do that, though, means keeping an effective surveillance programme permanently in being so that those who become infected can be treated quickly, to stop them spreading the parasite.

That is especially important, in the view of Yao Kassankogno, the World Health Organisation’s representative in the Comoros, because eradicating malaria will stop people building up immunity to the disease as children. Almost everyone in a place like the Comoros gets infected as a child, and the immune systems of those who survive thus learn to combat the disease, meaning that for many people subsequent bouts are not much worse than catching a cold. If malaria did return after a longish period of absence, Dr Kassankogno fears it could wreak havoc.

Whether FEMSE, or something similar, could be made to work on the African mainland—or anywhere else that is not an isolated island—will also depend on this sort of long-term monitoring, for in that case leakage from the outside would mean even 100% local eradication would not be enough to eliminate the parasites. In the case of the Comoros, not everyone is convinced sufficient surveillance is happening. Dr Kassankogno says the government’s current surveillance for the disease is weak. Dr Song, however, says that his team has trained more than 200 Comorans to monitor rates of malaria, with a view to detecting and preventing its return.

Safe and sound?

A more immediate concern is the safety of the drugs. Artemisinin and piperaquine are pretty safe, but primaquine ruptures red blood cells in people with a deficiency of an enzyme called G6PD. That can kill. And a lot of Africans—in particular, 15% of Comorans—are G6PD-deficient.

Andrea Bosman, the head of the diagnosis, treatment and vaccines unit of the global malaria programme at the World Health Organisation, is critical of the experiment’s approach to looking for side-effects. He says neither the scientists running it nor the Comoran government have been monitoring side-effects from the drugs in a systematic way. That, in Dr Bosman’s view, not only risks harming participating Comorans, it is also a missed opportunity to learn lessons from the project that would be of help to other countries in the fight against malaria.

Dr Song does not, however, believe side-effects will be a problem, because the dose he uses is so low. He also says he has seen no evidence of side-effects, though one hospital in Grande Comore said that the number of patients it treated doubled in the week after the drug-administration programme began, with people reporting nausea, fever, stomach and back pain, headaches and chills. These are symptoms of red-blood-cell rupture, but some are also common side-effects of artemisinin, so would be expected anyway.

Four deaths that occurred shortly after people took the drugs have been reported. There is no evidence that these were any more than coincidence, but family members seem reluctant to talk about them with journalists. Fouad Mhadji, the country’s health minister, shows no similar reluctance. He says the four in question died of natural causes: “One of them had the problem of cancer. One had the problem of hepatitis B. The flu was not only in the Comoros. It was also in the region of the Indian Ocean.”

There is also the question of informed consent to the drugs. Smallpox vaccination permanently protected the person being vaccinated. There was thus an individual as well as a collective benefit to offset any possible side-effects. Prophylactic drug treatment protects only for as long as the drugs stay in the body—which is a few weeks (and explains the need for three rounds of treatment). Dr Song’s results suggest the benefit is real. But it is a collective benefit. That changes the moral calculus. On the one hand, there is the risk of healthy people being harmed by side-effects. On the other, there is the risk of their free-riding, by taking the collective benefits while not taking the drugs themselves.

To avoid such free-riding, a lot of official encouragement to participate has happened—encouragement some people regard as tipping over into pressure and propaganda. In a public meeting in Niumadzaha, a village in the south of Grande Comore, for example, the chief doctor of the local health centre shouted through a megaphone: “This drug is safe and effective. You are not being used as guinea pigs. The WHO would not allow this administration to happen if you were being used as guinea pigs.”

Certainly, there is a lot riding on the project. Dr Mhadji says FEMSE will save the Comoros $11m a year in direct and indirect costs (for comparison, its annual health-care budget is $7.6m), as well as preserving many lives that would otherwise have been lost and saving survivors from the brain damage malaria can cause. The eradication of malaria will also, he hopes, make the Comoros more attractive as a destination for tourists.

Others hope to profit, too. Artepharm has high expectations of Artequick and is using the drug’s success in the Comoros in its marketing campaigns in South America, South-East Asia and Africa. Moreover, the arm of the Chinese government that administers that country’s foreign aid, and is thus helping pay for the project, is the Ministry of Commerce—for Chinese largesse is more explicitly tied to the promotion of the country’s business than is aid from most Western countries.

Not that the West is a disinterested party, for Western firms, too, manufacture artemisinin-based malaria therapies. On that point Dr Mhadji has strong views. He dismisses criticism of the experiment as fuelled by competition between Western and Chinese pharmaceutical companies.

As Nick White, a malaria researcher at Oxford University’s School of Tropical Medicine who has been working for years on eradicating malaria, says, “This research is radical. It is controversial. It is led by a very famous Chinese physician and investigator. There are lots of very serious questions here and a lot of unknowns.” Or, as Oscar Wilde more succinctly put it, “The truth is rarely pure and never simple.”

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Failure Modes; Every creative field – music, movies, books, art – follows a power law, and startups are no exception

January 26, 2014 Leave a comment

Failure Modes

Posted 2 hours ago by Jon Evans, Columnist

This was a rich month for the deadpool.Prim shut down. So did CarWoo. And much-hyped Outbox. And even moot’sCanvas/DrawQuest, which had 1.4 million app downloads and 400,000 monthly users. All part of the game, right? The circle of startup life, or something.

It’s a truism that most startups fail. But in fact most startups don’t even get to fail, in the way the word is most commonly used in Silicon Valley. The “failures” listed above were, by any reasonable standard, astonishing successes; like athletes who almost-but-not-quite qualified for the Olympics. Most startups never get anywhere near as far as that. Most startups disappear without a trace.

I saw Inside Llewyn Davis last week, and it has haunted me since, mostly, I think, because it’s a brilliantly told tale of abject, anonymous failure, and you don’t encounter that much nowadays, especially in the Valley. Not that we ignore failure. No, the relationship is much more awkward than that. Instead we make a point of celebrating it…as long as it’s part of narrative of struggle which ultimately ends in success.

But the cold hard truth is that most people who fail don’t succeed in the end.

Every creative field — music, movies, books, art — follows a power law, and startups are no exception. (Of course startups are a creative field. They bring into the world richly valued things which did not exist before. That’s why they’ve become so culturally compelling; they’re perceived as combining the coolness of the arts with the filthy lucre of business.) And like every creative field, the startup ecosystem is hit-driven; a few massive successes balance out the vast teeming majority that nobody but a handful of people, or maybe, a few thousand, ever heard of.

For almost every artist/entrepreneur who succeeds — within or beyond their wildest dreams — there are 10 more who were just as smart and talented and worked just as hard but who got hit by bad luck, or were the victims of bad timing, or simply dug where there was no gold. What’s more, the super successes almost invariably got very lucky several times over. (Page and Brin would have sold Google for $750,000 back in the day. Drew Houston had higher ambitions; he would have taken $1 million after tax for Dropbox. They were lucky nobody took them up on that.)

The Valley says, “It’s OK to fail, you learn from it.” But what they really mean is, “it’s OK to fail once or twice, maybe thrice, after you’ve had your big break. But don’t push your luck much further than that.” (There are exceptions, of course, but by definition, they’re exceptional.) Again, just like any other hit-driven industry. Your big break is your first movie, your first book deal, your notice that you’ve been accepted to Y Combinator. After that you’re an insider, you’re part of the industry, looking out from within the walled garden, and you’re afforded two or three more kicks at the can before people start forgetting to return your emails.

The thing is, this is all totally fair.

Because the walled garden is too small for everyone; and if you fail repeatedly, while you learn from those failures, others are learning from their success. How to handle growth, how to cut deals, how to use media attention, how to hire good employees, how to acquire and be acquired, how to ride the fabled hockey stick, how to use each success as a springboard for the next. All lessons that you are not learning while doing your best to overcome the collapse of your latest dream.

Failure teaches you a whole lot of important stuff once, yes — never trust someone who’s never failed at anything, you don’t know if they’ll collapse or explode — but the second time? The third? You just keep falling further behind, while those who were lucky enough (and smart enough, and dogged enough) to succeed are avidly learning how to run faster.

Personally, I’ve always been horribly fascinated by failure; at the same time, I’ve had a weird knack of avoiding it. In the midst of the dot-com boom I quit a software consultancy heading for an IPO to go write novels, and it was universally understood that I was choosing failure over success — until that consultancy went from 110 employees on three continents to four evicted co-founders in the space of eight months, while I sold the book I wrote and spent six years as a full-time novelist. Now I write software for another (far more secure) development shop, effectively selling picks and shovels to would-be miners of this new gold rush.

Some of them have been quite successful. Some have not. Sometimes our clients drive me crazy, but I understand why. I always wanted to be a writer, to the extent that it used to be almost physically painful to walk into a bookstore. In the same way, today’s founders hunger for success. They’re starving for it. And they’re terrified of the prospect of failure.

But just like all other creative fields, most of the hungry hangers-on on the fringes of the tech-entrepreneur industry will never, ever have a real hit. The difference is that this industry is so big, so lucrative, and so fast-growing that they can stay semi-gainfully employed in it indefinitely. Is it better to always be hungry, and always be frustrated, or accept that failure was your lot, and move on? I’d say the former, but then I would, wouldn’t I?

I do believe, though, that those who have tried and failed to build their own dream make for the finest startup employees, the best sergeants and lieutenants, as long as you can make them feel that the enterprise they are joining can in some small way become their own. I would always choose someone who has failed repeatedly over someone who has never really tried to achieve anything. If nothing else, failing again and again teaches you how to keep fighting; and while helping to build someone else’s dream isn’t anywhere near as rewarding as bringing life to your own, it’s miles better than not dreaming at all.

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The Taiwan Stock Exchange (TWSE) said that its TWSE RA Taiwan Employment Creation 99 Index beat the weighted index on the main board in terms of total investment returns

January 26, 2014 Leave a comment

TWSE’s employment index beats main board in returns

CNA
January 24, 2014, 12:06 am TWN

TAIPEI — The Taiwan Stock Exchange (TWSE) said Thursday that its TWSE RA Taiwan Employment Creation 99 Index beat the weighted index on the main board in terms of total investment returns last year.

The TWSE said the employment index garnered 22.3 percent in total returns in 2013, compared with 15.1 percent in returns generated by the Taiwan Stock Exchange Capitalization Weighted Stock Index.

According to the TWSE, the employment index in returns closed at 5,670.82 points at the end of 2013, up from 4,637.07 at the end of the previous year.

The exchange said the employment index also beat 11.9 percent in returns posted by the FTSE TWSE Taiwan 50 Index, which is comprised of the top 50 stocks in Taiwan in terms of market capitalization.

The employment index, which was co-compiled by the TWSE and U.S.-based investment management firm Research Affiliates, was launched in December 2010 and includes the top 99 employers in Taiwan as its constituents.

The employment index covers companies in the high-tech sector, the old economy sector and the financial sector. It uses Research Affiliates methodology that determines the constituents and their weightings based on the number of employees, to show how corporations are fulfilling their social responsibilities.

The employment index is also able to reflect how local enterprises are pursuing long term development through their efforts to cultivate talent for future growth, the exchange said.

The TWSE said the Research Affiliate’s innovative methodology is highly regarded in the major equity markets around the world as it can generate satisfactory returns in line with the fundamentals of its constituents.

The exchange said other corporate responsibility-related stock indexes largely focus on issues such as social justice, corporate earnings and environmental protection efforts, which can take too much time to evaluate.

As the assessment process for these indexes can also be expensive, the exchange said, it is not easy for these corporate responsibility-related indexes to generate stable investment returns.

Filed under Macro Trends

Taiwan’s first budget airline named ‘V air’

January 26, 2014 Leave a comment

Taiwan’s first budget airline named ‘V air’

AFP
January 24, 2014, 12:06 am TWN

TAIPEI–Taiwan’s TransAsia Airways said Thursday a low-cost carrier it aims to launch later this year will be called “V air” as it seeks to tap the growing budget travel market.

TransAsia said it picked “V air” out of nearly 8,000 entries in a public naming contest while the new carrier’s Chinese name will be “Wei Hang,” which means “mighty airline” in English.

“V can stand for voyage, vision, vivid, or victory which symbolizes the positive energy a new company requires and can help boost the public’s preference and acceptance of the new company,” it said in a statement.

Two winners of the naming contest are entitled to unlimited free flights on the budget airline for 10 years, it said.

The company, Taiwan’s first private airline, said in November last year it would spend around NT$3 billion (US$100 million) to launch Taiwan’s first low-cost airline catering to the needs of Taiwanese travelers.

TransAsia plans initially to lease two to three brand-new Airbus A320/A321 planes and hopes to start flying by year’s end.

TransAsia — which flies to Japan, Singapore, South Korea and Vietnam — has been expanding as it benefits from increased revenues from new China routes that have opened up in recent years as relations between Beijing and Taipei have improved.

Demand for discount flights has been rising in Asia. Twelve foreign budget airlines, including Malaysia-based AirAsia and Japan’s Peach Aviation, offer services to and from Taiwan.

Taiwan’s leading carrier China Airlines announced in December that it would set up a new no-frills airline in a joint venture with Singapore’s budget carrier Tigerair, expected to become operational in 2014 with three A-320s.

Filed under Macro Trends

“Thou shall have balls & not business ideas”; And 9 more commandments for startups from Indian entrepreneur, angel investor Vishal Gondal that will lead the “path to the promised land”

January 26, 2014 Leave a comment

“Thou shall have balls & not business ideas”

By e27 Editorial Staff

And 9 more commandments for startups from Indian entrepreneur, angel investor Vishal Gondal that will lead the “path to the promised land”

Called ‘India’s King of Gaming’, Vishal Gondal is the Founder and CEO of India Games. He is considered among the among the top 25 powerful people in the Indian digital business. Erstwhile, he was the Managing Director of DisneyUTV Digital.

He has received no formal education in computers and is a commerce dropout.

Gondal shared his 10 commandments for startups as part of an initiative byNASSCOM’s 10000 Startups, an effort to support technology entrepreneurship in India. The programme aims at creating 10000 tech startups in India in the next 10 years. Gondal announced his commandments at Unpluggd – a flagship event ofNextBigwhat – a startup blog from India.

We present to you his commandments…

Thou shall have balls & not business plans
Ideas are dime a dozen. To be an entrepreneur you don’t need business plans but the courage and conviction to break through the initial challenges and bring your ideas to life.

Thou shall develop relationships & not transactions
Entrepreneurs should go out, meet people and invest in building long-term relationships. Those who can’t help you today may prove to be valuable tomorrow. Don’t be transactional about it; make lifelong friends!

Thou shall focus on real pain-points
India is the land of opportunity because it has tonnes of problems for entrepreneurs to solve. Instead of aping solutions from the West, we should look at solving local problems – something not many entrepreneurs are doing today.

Thou shall be among the top 2
It’s imperative that you be No. 1 or No. 2 nationally or internationally in your defined sector to ensure you create a larger market for yourself. There is no point in becoming the nth player in an already competitive marketplace which has established leaders.

Thou shall focus on 20 per cent
As an entrepreneur, you must focus on the 20% that gives you 80% impact. Entrepreneurs tend to waste their time and effort in a number of non-productive activities just to be everywhere. This should be avoided at all costs.

Thou shall avoid MBAs & spreadsheet makers
The education system is designed to train students to fill up competencies required to work in large organisations. Startups are meant to disrupt and are run by talking to people and constantly taking feedback from the ground. The mindset required to excel at a startup is very different from one that is required in a large company where there is time to invest in building year by year projections.

Thou shall celebrate failures & enjoy your journey
As an entrepreneur, you will have many moments of failure. Organisations where failing is not okay tend to become bureaucratic. As a startup, you should build a culture which celebrates failure and people have the independence to experiment and execute new ideas without worrying too much about failure.

Thou shall not want to sell
Don’t build your company with the intention to sell. You can’t build a great startup by dreaming about selling it someday. As an entrepreneur, your startup becomes the core of your life and you have to nurture it like your own baby.

Thou shall be fit
As an entrepreneur, one tends to put their health on the backseat but there is no point in building a billion-dollar company and having boiled vegetables with a IV attached to you. If you aren’t fit both, in mind and body, you cannot operate a company.

Thou shall win with… Passion
As a startup you will have a small set of people who won’t always have the best skills or resources at their disposal. In this case, the only thing you can motivate them with, is PASSION. As an entrepreneur you need to make your team believe that this is their chance to do something remarkable with their career!

Filed under Life

Nanoparticles cause cancer cells to die and stop spreading

January 26, 2014 Leave a comment

Nanoparticles cause cancer cells to die and stop spreading

BY AKSHAT RATHI
ON JANUARY 23, 2014

More than nine in ten cancer-related deaths occur because of metastasis, the spread of cancer cells from a primary tumour to other parts of the body. While primary tumours can often be treated with radiation or surgery, the spread of cancer throughout the body limits treatment options. This, however, can change if work done by Michael King and his colleagues at Cornell University, delivers on its promises, because he has developed a way of hunting and killing metastatic cancer cells.

When diagnosed with cancer, the best news can be that the tumour is small and restricted to one area. Many treatments, including non-selective ones such as radiation therapy, can be used to get rid of such tumours. But if a tumour remains untreated for too long, it starts to spread. It may do so by invading nearby, healthy tissue or by entering the bloodstream. At that point, a doctor’s job becomes much more difficult.

Cancer is the unrestricted growth of normal cells, which occurs because mutations in normal cell cause it to bypass a key mechanism called apoptosis (or programmed cell death) that the body uses to clear old cells. However, since the 1990s, researchers have been studying a protein called TRAIL, which on binding to the cell can reactivate apoptosis. But so far, using TRAIL as a treatment of metastatic cancer hasn’t worked, because cancer cells suppress TRAIL receptors.

When attempting to develop a treatment for metastases, King faced two problems: targeting moving cancer cells and ensuring cell death could be activated once they were located. To handle both issues, he built fat-based nanoparticles that were one thousand times smaller than a human hair and attached two proteins to them. One is E-selectin, which selectively binds to white blood cells, and the other is TRAIL.

He chose to stick the nanoparticles to white blood cells because it would keep the body from excreting them easily. This means the nanoparticles, made from fat molecules, remain in the blood longer, and thus have a greater chance of bumping into freely moving cancer cells.

There is an added advantage. Red blood cells tend to travel in the centre of a blood vessel and white blood cells stick to the edges. This is because red blood cells are lower density and can be easily deformed to slide around obstacles. Cancer cells Have a similar density to white blood cells and remain close to the walls, too. As a result, these nanoparticles are more likely to bump into cancer cells and bind their TRAIL receptors.

Leukocytes are WBCs and liposomes are nanoparticles. King/PNAS

King, with help from Chris Schaffer, also at Cornell University, tested these nanoparticles in mice. They first injected healthy mice with cancer cells, and then after a 30-minute delay injected the nanoparticles. These treated mice developed far fewer cancers, compared to a control group that did not receive the nanoparticles.

“Previous attempts have not succeeded, probably because they couldn’t get the response that was needed to reactivate apoptosis. With multiple TRAIL molecules attached on the nanoparticle, we are able to achieve this,” Schaffer said. The work has been published in the Proceedings of the National Academy of Sciences.

While these are exciting results, the research is at an early stage. Schaffer said that the next step would be to test mice that already have a primary tumour.

“While this is an exciting and novel strategy,” according to Sue Eccles, professor of experimental cancer therapeutics at London’s Institute of Cancer Research, “it would be important to show that cancer cells already resident in distant organs (the usual clinical reality) could be accessed and destroyed by this approach. Preventing cancer cells from getting out of the blood in the first place may only have limited clinical utility.”

But there is hope for cancers that spend a lot of time in blood circulation, such as blood, bone marrow and lymph nodes cancers. As Schaffer said, any attempt to control spreading of cancer is bound to help. It remains one of the most exciting areas of research and future cancer treatment.

Filed under Health

[TechNode 2013 Year in Review]: A Year Not So Good, Not So Bad

January 26, 2014 Leave a comment

[TechNode 2013 Year in Review]: A Year Not So Good, Not So Bad

By Ben Jiang on January 24, 2014

After a year that saw the burgeoning entrepreneurship cutting across China in 2011 and a following year that tasted the backlash in 2012 — painfully leads to the termination of venture capital spree in addition to the shutdown of innumerable failures, we are now at the end of 2013 and looking back at a year which is neither so good nor so bad for Chinese TMT industry.

IPO Window Reopens

I’ll start with the not so bad part. Just so you know, 2012 was a dud for both the startup and venture capital world with only two startups made it to the public market — YY(NASDAQ:YY) and VIPShop(NYSE:VIPS). The gloomy picture was mostly painted by the sustained worldwide economic downturn and worries over accounting fraud that dogged and derailed several China concept stocks over the past two years. Now in 2013 that picture – which apparently was put upside down — turned around and turned out to be a masterpiece. We have six companies, including 58(NYSE:WUBA), 500Wan（NYSE:WBAI）, AutoHome(NYSE:ATHM), Lightinthebox(NYSE:LITB), SUNGYMobile(NASDAQ:GOMO) and Qunar(NASDAQ:QUNR), successfully pulled off long-awaited IPO.

Breakthroughs that set for changes

As IPO is just one of the many facets of a vivid and persuasive evidence to testify that 2013 isn’t a bad year, We also outlined below some breakthroughs that someday in the near future would have more material influence on Chinese economy with the power of Internet, new technology as well as political reform.

I think there is little argument that the groundbreaking set-up of China (Shanghai) Free Trade Zone topped the first place of the breakthrough candidates. Despite the fact that some optimists pointed out a parallel between this and the reform and open-up policy that leads China to what it’s achieved today, we are neither too optimistic nor will we play down its significance. While the trade zone indeed was created by aggressive (sort-of) reformers to spur changes in China, how’d it pan out remain to be seen. And, economic and political significance aside, at least hard-core Chinese gamers will applaud for the FTZ as the decade long ban on the sales of game consoles are lifted within this zone. High five? Ok never mind.

3G never really took off in China. In an effort to balance the inequities among Chinese carriers, MIIT did a little gimmick to issue WCDMA – advance technology, widely adopted by manufacturers, carriers worldwide – license to China Unicom the weakest one of the Chinese carrier trilogy while China Mobile the world’s largest carrier were obligated to build up the home-grown TD-SCDMA technology.The result is palpable, a small chunk of China Mobile users fled to either China Unicom or China Telecom (operates CDMA2000) for faster mobile Internet access, while the others stick around. Out of China’s 1.1 billion or so subscribers, 3G subscribers stand at a mere 234 million.

To solve the dilemma, MIIT finally granted 4G licenses to the carriers after a whole year of speculation and wait, hoping that the new standard could get people out of the 2G camp, while all the carriers are supposed to use the Beijing-backed TD-LTE technology, China Unicom and China Telecom were also seeking to apply for FDD-LTE license “as soon as practicable”.

China Mobile, which was muted by poorly-received TD-SCDMA, has already launched commercial 4G services with enthusiasm and wall-to-wall campaign in many cities with wider and more aggressive rollout in the coming years. Personally, some of my friends who sticked around already flipped the LTE switch on by getting an iPhone 5s. Speed? Bloody fast. Disadvantage? Poor coverage.

But it’s only getting better.

Interestingly, MIIT the bureaucratic slow mover and telecoms regulator of China caught everyone off guard by announcing a flurry of announcements in the final weeks of 2013. Well, good news always comes when least expected. MIIT also issued the highly speculated virtual network operator licenses to 11 Chinese companies (including Alibaba and JingDong) on December 26. Currently Chinese telecom market is dominated by the big three carriers, the introduction of virtual network operator is expected to bring some competition and efficiency to the market.

Our readers would certainly be sure that mobile internet is now a mega trend in China: entrepreneurs are doing it, investors are checking on it, journalists are bragging about it. And a faster and more ubiquitous 4G services is expected to boost it to the next level and change Chinese people’s daily life in many ways.

Speaking of changing daily life, I guess the vigorous ecommerce empire pumped up by Alibaba deserves a vote. The company recored north of RMB 35 billion yuan (USD 5.7bln) in this year’s Double 11 shopping spree, breaking its own recored from last year. In comparison, America’s CyberMonday hit 2.29bln. Jack Ma, the legendary founder and chairman of the group later on divulged that the transaction volume was just a no-brainer, the company could easily crank it up to 100bln in the years to follow. Ambitious!

Numbers aside, we Chinese people who live here did felt the gradual and accelerated replacement of brick-and-mortar stores by virtual storefronts. What people used to say of anyone of Chna’s small commodity markets, where you could get almost anything, now they say of Taobao. The Chinese e-tailing platform provides everything ranging from clothing, food, electronics, cars, home decors to even improper items such as aircraft/island/human body parts, you name it, you find it.

2013 goes down as the most active for Internet M&A

As aforementioned are the breakthroughs emerged in the past year that’d be shaping up China towards a better direction, we also noted a maybe less profound but more practical change on the market that overrides the stereotype of Chinese Internet conglomerates. They DO know what M&A is.

Baidu grabbed 91 Wireless the largest Chinese app distribution platform from NetDragon, the whopping 1.9bln dowry made the deal the largest acquisition in Chinese Internet industry. It also gave Baidu access to a fast-growing and lucrative mobile Internet market. 91 Wireless manages 91 Assistant and HiMarket, tow of the leading app distribution service in China through which over 10 billion apps have been downloaded.

As Baidu is catching up on mobile front, Tencent and Sogou are coveting Baidu’s search business when they forged an alliance that saw Tencent bought 36.5% of Sogou with US& 448mln and packed Soso into Sogou.The new company would operate under the Sogou brand. Actually, from appearance nothing seems to have changed after the merger, Baidu 360 and Sogou ranked top 3 in terms of market share. Same old same old. But please be sure that the new Sogou is determined to take down 360 to become the second largest player.

And right after the merger, Sogou CEO Wang Xiaochuan said that some users of its Sogou Internet Browser running 360 Safe Guard complained about having the browser removed without their consent. The finger-pointing suggested that Qihoo was compromising Sogou on purpose, which came as no surprise given the company’s failed attempt in bidding for Sogou and its past repeated involvements in this kind of practice to rival against competitors.

A new acronym BAT was coined this year to represent Baidu/Alibaba and Tencent, three of the largest Chinese Internet companies with across-the-board services, as Baidu and Tencent both made fruitful deals in many areas this year, the one who is at a genuine spree should be Alibaba.

The ecommerce giant treated itself with a little bit of something in almost every sectors: from Xiami (online music), Zhong An (internet finance), Weibo (social media), AutoNavi (mobile map), Meituan (O2O, daily deal)UMeng (data analysis), Kanbox (cloud storage), LBE (mobile security), DDMap (O2O, e-coupon), Kuaidi (O2O, taxi hail app), Quiexy (overseas investment, app search service), ShopRunner (ditto, ecommerce) and Fanatics (ditto, sports retailer). Looks like Alibaba was trying to dip its toes into everywhere.

To wrap up, 2013 is a year that destined to go down as the most active for Internet M&A wave with Baidu, Alibaba and Tencent as the major drivers.

Xiaomi becomes a cult

Now let’s move on to the company of the Year. I personally haven’t tried anyone of those sensational popular Xiaomi phones, but my stubborn and ignorance did nothing to diminish Xiaomi’s status as a new cult here. According to Lei Jun, founder and CEO of the Chinese handset manufacturer founded three years ago, the company sold 18.7mln Xiaomi phones in 2013, up 160% from last year, while its revenue reached US$ 5.22 billion. The company was valued at over US$ 10bln in its latest round of financing compared to Nokia’s US$ 7.17bln sale to Microsoft. Besides, Xiaomi managed to nab Hugo Barra, a highly regarded Android team exec from Google, right in the middle of last year to steer its global expansion effort.

Good sales, wide prevalence, upbeat valuation and international effort all propelled the up-and-coming mobile vendor into our Company of the Year category.

Lei Jun, starts a business at 40

Since Xiaomi made it to the Company of the Year, the man behind it naturally emerged on top of our choices for People of the Year, and we thought Lei Jun, the founder and CEO of Xiaomi, well deserves it for a threefold reason:firstly, he made Xiaomi a huge success; secondly, he made Xiaomi a huge success; thirdly, he made Xiaomi a huge success.

In his late 30s, Mr. Lei already made his name for being a successful Jack of all trades and quite a figure in China Internet industry: as a professional manager, at him helm Kingsoft the Chinese software slash online game developer launched initial public offering; as an angel investor, his portfolios scattered around everywhere with YY landed an IPO last year; as a tech billionaire and happily married father of two, he basically had way more than what the world would expect from a middle-aged man.

Yet he didn’t feel completely fulfilled. He yearned to create a world-class company, a dream planted deeply in his heart in his early years.

The day he turned 40, he invited some friends over to a teahouse, and blew their mind by telling them he’d start a new business to make smartphone, he believed there was huge untapped potential in this area. Regardless of concerns over funding difficulty, failure among other things, he got started anyway. Now three years after, Mr. Lei’s Xiaomi not only took firm grip on its home turf, but also would expand its geographic footprints to overseas market such as Singapore soon.

Given Mr. Lei’s diligence, audaciousness and vision, we tapped him as this year’s People of the Year.

Now after all the sweet talks, it’s time to shed light on some tough realities. Just like the two sides of a coin, the past year wasn’t so bad, nor was it that good.

2013 is a lost year in terms of creativity and innovation. While people are applauding that BATs didn’t follow through on their copy-and-kill startups practice this year and generously offer them with big check instead, the unspoken fact is that M&A has replaced innovations. Now the big names couldn’t care less about curating mind-blowing new ideas that being challenged by big chances of failure despite a slight hope of becoming successful and transforming people’s life in some ways. They just went out with _strategic_ shopping and then arranged the acquiree like they’re the pieces in a chess match. All that matters is to gain the upper hand of your rivals and for that matter some pieces are doomed to be given up, the ultimate goal is to deliver checkmate.

While we couldn’t bank on the top-down innovation initiative, the bottom-up one also failed to work. The more popular Xiaomi became, the more sales-sensitive the company was. Xiaomi shipped its latest update to its handset with the launch of Xiaomi 3 and received mixed comments. Albeit a larger screen, battery that last longer, faster CPU and better camera,there’s no significant raise in price. This is one of the characteristics that made it successful – to offer high performance smartphone at relatively low price. However, some did find the iteration cycle of stacking up hardwares become more dull and less fun.

In all fairness, Xiaomi certainly isn’t the epitome of lack for creativity, the big guys are doing much much worse. Take Baidu the Chinese counterpart of Google for instance, at the company’s annual conference, it unveiled a new solution dubbed Light App to tap into mobile area. Since Light app basically is the rebranding of the web app solution once highly promoted by the search giant, what are we expecting for next year? Lighter App or Super Light App? Its pricey but worthwhile acquisition of 91 would do better to give it a quicker and easier access to mobile world.

Some might argue mentioning the smartwatch or smart router wave, aren’t those innovative enough? Listen, let’s don’t jump to conclusion so fast before you lay your hands on a smart watch, as for router, you mean a router with built-in features to block the pre-roll from online video sites? Not so much. There might be something coming out from them in the years to come, but not interesting enough for the time being.

For better or worse, 2013 is now a bygone and just like what Alfred Tennyson said, it’s not wiser to weep a lost, we might as well “trim our sails and let old bygones be” and to create a brave new tech world in 2014.

Filed under Macro Trends, TMT Trends

HK property agents were warned they face stiff punishment if they use their own money to pay developers in the hope of being allotted a chance to buy homes at popular projects

January 26, 2014 Leave a comment

Agents warned on paying for shot at homes
Friday, January 24, 2014
Property agents were warned yesterday they face stiff punishment if they use their own money to pay developers in the hope of being allotted a chance to buy homes at popular projects.

Fines of up to HK$300,000 and licenses suspended or revoked were cited by Vivien Chan, chairwoman of the watchdog Estate Agents Authority.

“The authority is highly concerned about agents offering financing for homebuyers,” she said, noting there are clear guidelines that ban such action.

Agents are said to be drawn into such dealings when developers announce oversubscription figures at projects, hoping to boost sales.

Potential buyers have to register and provide cashiers’ cheques to a developer, which is how developers can gauge responses to a project.

Chan said the worry about this becoming a problem means more undercover checkers are being sent to watch agents, though only three violations of the money rule are suspected at this time.

The warnings on payments came as the authority revealed it had received a total of 494 complaints last year, with 44 of them from the primary market.

But that compared with 547 received in 2012.

It is also a fact that the number of agent licenses has been falling – it lately stood at 35,900 – since April last year.

The trend has reflected a lackluster market for homes, indicated clearly yesterday when a 1,600-square-foot unit at Harbourfront Landmark in Hung Hom sold for HK$32 million after the asking price had been reduced by HK$3 million.

And a survey by online property platform GoHome, which had 2,575 respondents, showed around one-third of local people interested in buying a home in the first half this year are being tempted by developers’ discounts and rebates.

Still, 86 percent of respondents also said that homes were still too expensive, while 38 percent believed prices will fall.

It was also noted that more than half of the respondents claimed they would consider buying property in Singapore, Malaysia or Thailand.

Filed under Macro Trends

HK hospitals suffering from bad debts, with more than half the culprits being non-residents

January 26, 2014 Leave a comment

Hospitals suffering from bad debts
Hilary Wong
Friday, January 24, 2014
The Hospital Authority says it has incurred bad debts totaling HK$49 million, with more than half the culprits being non-residents.

It said in its annual report that absconding pregnant woman from the mainland alone were responsible for HK$10 million of this amount.

Secretary for Health Ko Wing-man said he is greatly concerned as the number of bad debts has increased sharply from the previous year.

“We took stringent measures to prevent bad debts, including deposits by non-local patients,” he said.

Ko admitted it will be hard to recover the money if the patients had left Hong Kong as this will require additional resources.

“The deposit system is used when patients are referred to a hospital,” he said.

“But if a pregnant women arrives at the accident and emergency ward we have to provide medical services on humanitarian grounds and charge the patient later.”

He said the government and the authority will work together on prevention measures and he asked the public to understand the difficulties encountered on this issue.

Meanwhile, Ko said there are two peak periods of seasonal influenza, at the end of a calendar year and again in spring.

He said the Centre for Health Protection has been monitoring the incidence rate of influenza by examining samples from clinics or hospitals and collecting information about the patients who had upper respiratory infection symptoms similar to influenza.

Ko said the number of influenza cases this year is higher than the previous two years. He said since the outbreak of H1N1 in 2009, it had became one of the main viruses found in seasonal flu, accounting for 40 percent of all tested samples.

“With the flu season peaking in March and April we need to prepare to face any pressure to the medical system.”

Ko said despite the low death rate, flu can cause complications. “We still need to carefully monitor the situation so no conclusion can be made now.”

Filed under Macro Trends

Charles Lee Yeh-kwong, the first chairman of Hong Kong Exchanges and Clearing (0388) became the chairman the Academy of Chinese Studies after stepping down from the top of the financial pyramid

January 26, 2014 Leave a comment

Pivotal pioneer
Ling Wang
Monday, January 20, 2014

Charles Lee Yeh-kwong, the first chairman of Hong Kong Exchanges and Clearing (0388) became the chairman the Academy of Chinese Studies after stepping down from the top of the financial pyramid.

Lee now endeavors to promote Chinese culture.

Last year marked the 20th anniversary of the first mainland enterprise listing in Hong Kong, and indeed, it was Lee, 77, who had pioneered the watershed event.

Mainland firms now account for more than half of Hong Kong’s total HK$24 trillion market capitalization.

In addition to bringing H shares to Hong Kong, Lee has been credited with being a prime mover in pushing through the merger of the city’s stock and futures exchange.

He also encouraged many of the territory’s biggest companies, including major developers to go public, as chairman of the Mandatory Provident Fund Schemes Authority.

Born in Shanghai in 1936 during the Sino-Japanese war, Lee moved to Hong Kong with his family in 1949, attended Wah Yan College, then studied accounting before going Britain to qualify as a lawyer.

Returning from London, he took various roles, including politician, solicitor, administrator, reformer, academic and charity worker. Now, he prefers people to call him a “messenger of culture”.

Mr Lee told Sing Tao Daily, The Standard’s sister paper, he likes the saying from The Analects of Confucius: “While wealth is covetable for a gentleman as well, he takes it in its natural course.”

Recalling the global financial crisis in 2008, He added: “So long as it comes to humans, things are not easy to control because humans are greedy by nature.” Therefore, edification brought by culture education was important.he lays blame on greed of Wall Street elites. “That was a grave lesson. But with days gone, people seem to forget the pain as Wall Street’s greed comes back again,” Lee said. “Governments want to correct the situation, but how?”

He paraphrased a story circulated in Pingyao, Shanxi Province, from where he has just returned.

The city was the financial center during the Ming and Qing dynasties. In the transition period between dynasties, the currency of the former dynasty depreciated sharply.

An owner of a private bank took pity on civilians who lost almost half of their life savings through currency depreciation, and deciding to exchange their currency with real gold prices.

“He suffered a great loss, of course, but it is a good example of doing business with morality,” Lee said.

He believes such good Chinese history is a treasure that deserves deeper exploration. The Academy of Chinese Studies is a non-profit organization established by renowned scholars in 1998. Lee is dedicated to promoting the website “Splendid Chinese civilization” (http://hk.chiculture.net).

The website has been running for more than 15 years, but has never had a high profile.

However, it has attracted a lot of overseas visitors, and the academy is translating the content into English. “You will be completely wrong if you think it’s an easy job,” Lee said.

“An article tens of thousand of words long needs more than one translator, but too many hands might spoil the coherence.” Despite the challenges, he would never give up. He believes that people should persist with meaningful things.

“It is a pity when you are capable, yet do nothing. When you are capable, then turn impossible into possible.”

In the past three decades, he has had numerous public roles. He feels sorry for the younger generation who show little enthusiasm for public service.

“The older generation felt they wanted to give something back to society when they tasted success. But the younger generation seems to think in a different way. They lack enthusiasm.”

There were lots of reasons for this, and politics was only one of them .

Asked if he would go back into public service, Lee said: “Opportunities should be left to the younger generation.”

But his public gowns have not disappeared for good.

He now heads the Hong Kong- Taiwan Economic and Cultural Cooperation and Promotion Council, and has been appointed as pro-chancellor. He has also been busy fund-raising for the Journalism Education Foundation to help it build a museum in Central.

As it gets harder for the government to find talent, Lee quoted a metaphor as food for thought.

“Man always complains it is hard to look for a girlfriend. For sure, it will be difficult when you require both beauty and brains. Sometimes you should lower the standards.”

He disagrees with those who criticize the young, saying: “Years ago, only one percent of people were admitted to university. Now over 60 percent attend colleges and universities, and one percent are as excellent as their predecessors.”

Although he was born in Shanghai and raised in Hong Kong, Lee’s family originated from Chiu Chow. He and another Chiu Chow tycoon, chairman of Cheung Kong (Holdings) Li Ka-shing have a close friendship.

He helped Cheung Kong to list in 1972 and held a role of director in all Cheung Kong-related companies. Last year, he became independent non- executive director of Cheung Kong and Hutchison Whampoa on a promise made 16 years ago.

“I joined the Executive Council in 1997, so I had to quit all the positions in listed companies. He [Li Ka-shing] said it was good to serve society, but when you finish the job in Exco, please come back to help me,” he said.

Li Ka-shing commented on current affairs and business issues in an interview conducted by mainland media last November. Asked how he sees his old friend’s remarks, Lee laughed and said, “Of course I cannot tell you.”

At 77, Lee still has lots of energy. He walks quickly, and still visits the office of Woo Kwan Lee & Lo law firm, which he co-founded in 1973. He is also a regular at a coffee shop in The Landmark..

Asked his opinion on Occupy Central, he said: “It’s OK to express ideas, but you have to adhere to the law.”

He likes scuba diving. His endurance of staying under the water would put many young divers to shame.

“People say diving is dangerous, but actually its the safest to stay under water. If I am under water when a tsunami hits, I would not feel it.”

Filed under Macro Trends

Company chiefs in Hong Kong are earning as much as HK$31 million a year – but the city’s top and senior executives are still getting far less than their counterparts in Singapore and Japan

January 26, 2014 Leave a comment

HK, Singapore CEOs tell a tale of two salary scales
Eddie Luk
Friday, January 24, 2014
Company chiefs in Hong Kong are earning as much as HK$31 million a year – but the city’s top and senior executives are still getting far less than their counterparts in Singapore and Japan.

The Hay Group found that salaries and year-end bonuses of CEOs in large listed companies in Hong Kong ranged from HK$13.63 million to HK$31.3 million a year.

But this is 34 percent less than that pulled in by top executives in Singapore.

And another survey showed that even senior executives in Hong Kong get 14 percent less than their counterparts in Singapore.

That’s according to Towers Watson, a professional services firm, which compared the salaries of senior executives in business corporations in Asian economies that also included Vietnam, Indonesia and others.

Based on the Hay Group survey, CEOs in banking, finance, telecoms and “consumer discretionary” industries are generally highly paid, taking home as much as HK$31.3 million a year.

Those in the financial/ banking and communication/ telecom sectors are paid HK$28.03 million and HK$20.68 million, respectively.

CEOs in the industrial sector are paid around HK$13.63 million a year.

On average, the salary of CEOs in the top 25 percent was HK$22.17 million a year.

The middle 50 percent took home HK$10.62 million and the bottom 25 percent got HK$4.82 million. Hay Group Hong Kong general manager Thomas Higgins said: “Changes in total CEO remuneration value is not always obviously linked to performance.”

Chinese University economics professor Terence Chong Tai-leung said: “As the retail industry is booming, particularly for firms selling watches, handbags and cosmetic products, they are willing to pay high salaries for the best CEOs.”

“In Singapore, firms are willing to offer extremely high salaries to lure talented people.”

Centaline Human Resources Consultants managing director Alexa Chow Yee-Ping agreed with Chong, saying that in recent years Singapore’s economic development has been stronger than Hong Kong’s.

Filed under Macro Trends

India’s Decade of Decay; Manmohan Singh’s decade of disastrous leadership has been characterized by weakness and decay. India will suffer the consequences for years to come

January 26, 2014 Leave a comment

India’s Decade of Decay

01-24 18:01 Caijing

Manmohan Singh’s decade of disastrous leadership has been characterized by weakness and decay. India will suffer the consequences for years to come.

By Jaswant Singh

NEW DELHI – Indian Prime Minister Manmohan Singh, who has been in office since 2004, recently held what was only the second press conference of his current five-year term, which is rapidly approaching an inglorious end. Betraying his yearning for approval, Singh told the assembled journalists that he hoped that history would judge his tenure more kindly than his political adversaries do.

That outcome seems unlikely, at best. On the contrary, Singh’s once-great Congress party is now at a political impasse, from which it can escape only if it frees itself from its destructive dynastic leadership. After more than a half-century in government – much of India’s modern life as an independent country – the era of Congress dominance appears to be over.

Perhaps the clearest indication of the party’s decline occurred in December, when it suffered crushing defeats in four key state-assembly elections. In Rajasthan, Congress won only 21 seats, while India’s second-largest political force, the Bharatiya Janata Party (BJP), won 162. This represents a massive shift from the 2008 election, when Congress gained 96 seats, compared to the BJP’s 78.

Likewise, in Delhi, Congress was reduced to just eight of 70 seats after 15 years in power, with even Sheila Dikshit, Delhi’s longest-serving Chief Minister, losing her seat to a political newcomer. Only in the small northeastern state of Mizoram did Congress retain its majority.

This was an unprecedented rout – and does not bode well for Congress in the upcoming national elections. To see why – and to determine whether the party can stem its own decay – requires understanding what has happened since Congress regained national leadership from the BJP-led National Democratic Alliance in 2004.

As the largest party, Congress became the hub of the newly established United Progressive Alliance (UPA). But, in a surprise move, the party’s leader, Sonia Gandhi, declined to become Prime Minister, naming Singh – an academic and civil servant, with no electoral experience – as the UPA’s choice. After nearly 40 days of melodrama, Singh was finally sworn in, though he had not won voter support directly in any constituency.

This unnatural arrangement instantly earned acid comments. As one observer astutely remarked, “Where there is authority, there is no ability; but where there is some ability, there is no authority.” Despite Singh’s academic abilities, his potential as India’s top politician was severely limited. Over time, it became apparent that Singh’s government was worse than ineffective; it was doomed to fail, because Singh’s strengths lie in serving as an obedient and capable subordinate, not as an agenda-setting leader who acts decisively.

Consider his role in managing India’s economic transformation when he was the country’s finance minister in the early 1990’s – an effort that his supporters have often cited as an example of his vision and ability. Last year, former External Affairs Minister Natwar Singh disclosed that it was actually then-Prime Minister Narasimha Rao, a shrewd and experienced Congress veteran, who pushed India’s economic reform and restructuring. Singh, reluctant to do what was needed, would have achieved very little had Rao not provided a platform – and the needed political support – to pursue the government’s agenda. Early on, there were intimations that Singh should neither be underestimated as a political manipulator, nor overestimated as an effective economic manager.

But Singh’s ineptitude as a leader was already apparent before the revelation of Rao’s role. Not only has economic reform come to a virtual standstill since he took office, but he has also acquiesced to all of Gandhi’s demands, legitimate or otherwise.

As a result, governance, and thus the economy, has been deteriorating. India has been taken hostage by an extra-constitutional body composed of NGOs, brought together under the National Advisory Council, which is chaired by Gandhi. With the cabinet having become superfluous, the NAC’s decrees – including half-baked ideas inspired by the European welfare state – became policy.

As a result, Singh has presided over a sharp economic slowdown and soaring prices, especially for food. Meanwhile, political scandals, financial scams, and other criminal activities have proliferated under Congress rule since 2004. The UPA regime has effectively looted the country, and rampant corruption and a lack of accountability have decimated its leading party’s credibility.

Through all of this, the supposedly economically literate Singh was little more than a silent spectator, offering only denials of responsibility or trite remarks from the perspective of a political outsider. And, while the damage that he has caused to Congress is for the party to solve, the damage that his aloofness has caused to the institution of Prime Minister is a problem for all Indians.

Manmohan Singh’s decade of disastrous leadership has been characterized by weakness and decay. India will suffer the consequences for years to come. Far from vindicating him, historians will know exactly whom to blame.

Jaswant Singh, a former Indian finance minister, foreign minister, and defense minister, is the author of Jinnah: India – Partition – Independence and India at Risk: Mistakes, Misconceptions and Misadventures of Security Policy.

Filed under Macro Trends

Tesla makes electric debut in China market despite hurdles

January 26, 2014 Leave a comment

Tesla makes electric debut in China market despite hurdles

Xinhua

2014-01-25

US electric vehicle maker Tesla made its debut in China this week amid applause over its lower-than-expected price tag, but consumers are still concerned about issues such as battery charging.

The company plans to have showrooms and maintenance centers open in more major cities in east China this year as part of its outreach to consumers in the world’s largest auto market, Veronica Wu, Tesla’s vice president, told Xinhua on Friday.

She also said CEO Elon Musk wants to double Tesla’s auto production this year and sees China as a key driver of its global auto sales growth.

Despite these ambitions, its efforts to build a strong presence in China face many hurdles.

Wu said pre-orders of its Model S in China have been dynamic in the past few months, but prospective car buyers in China are still resistant to the idea of driving a purely electric vehicle, mostly out of concern that it is hard to find places to recharge the car.

At Tesla’s Beijing showroom — the first and so far only one in mainland China — Xinhua reporters found customers gathering around the company’s popular Model S, with some venturing inside to try driving an electric vehicle.

A sales representative at the showroom said people who check out the Model S come with a broad range of questions, but the most frequently asked is where to charge the car, especially when running long-distance trips.

Tesla has said it will build free-to-use charging stations along expressways linking Beijing and Shanghai. The Model S can run up to 500 km after an hour of charging at one of these stations.

The insufficient infrastructure will likely hold back Tesla’s sales and expansion in China. But Wu expressed confidence in the Chinese government’s commitment to advancing its green initiatives. “Based on our contacts with officials in central and local governments, we find that authorities are very open to discussions about sustainable solutions to problems posed by growing automobile ownership,” she said.

Wu labels Tesla’s commitment to the Chinese market “unprecedented” compared with many multinational firms such as Apple and Motorola that she has previously worked for.

Tesla marked its entry to the highly competitive Chinese auto market with an online announcement on Thursday that the price of its Model S constitutes only its original price in the United States and unavoidable taxes and shipping costs.

Yet competitive pricing alone does not promise strong sales in China. A host of big Chinese cities have moved to cap the growth of automobile ownership to alleviate traffic congestion and air pollution.

Authorities have been encouraging purchases of hybrid and electric cars by granting more quotas and subsidies for buyers, but Tesla has yet to make the official list of cars eligible for such preferential policies.

Wu said Tesla is in talks with relevant government departments over this issue, recognizing that Tesla’s inclusion on the list would make its cars much more attractive to Chinese consumers.

She said the company has grand vision for its China business, even though its current China-based team of less than 30 people is building from scratch.

Wu also said she felt encouragement from the fact that China has seen “leapfrog development across many industries in the past” as an unsatisfactory status quo in many sectors has led to faster adoption of the latest technologies.

Kingston Chang, Tesla’s general manager in China, also added, “Though we sell cars, we are more of a tech company and we are in a business consistent with China’s goal of developing more sustainably. This means huge opportunities for us going forward.”

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Taiwan topped the global rankings in patent activity and was ranked as the 10th most innovative nation in the world and the fourth most innovative in Asia

January 26, 2014 Leave a comment

Taiwan tops global patent rankings

CNA

2014-01-25

Taiwan topped the global rankings in patent activity and was ranked as the 10th most innovative nation in the world and the fourth most innovative in Asia, according to the Global Innovation Rankings released by Bloomberg on Thursday.

According to Bloomberg, the patent activity category looked at resident patent filings per million residents and per US$1 million of research and development spent, as well as patents granted as a share of the world’s total.

In addition to patent activity, Taiwan finished second in high-tech density and tertiary efficiency in the Bloomberg innovation rankings.

The high-tech density category calculated the number of hi-tech publicly listed companies as a percentage of all listed companies. The United States came in first.

The tertiary efficiency category, measuring the number of secondary graduates enrolled in post-secondary institutions and the percentage of the labor force with tertiary degrees, in which Canada was ranked first, also looked at the annual number of science and engineering graduates as a share of the labor force and as a percentage of all tertiary graduates.

In addition to the three categories, the Bloomberg global innovation rankings weighed four other factors: R&D density, productivity, researcher concentration, and manufacturing capability.

The rankings evaluated more than 200 countries and regions based on the seven factors.

South Korea came in first in the overall innovation rankings but did not lead in any of the seven categories, according to Bloomberg.

Sweden was ranked the second most innovative nation in the world ahead of the United States, Japan, Germany, Denmark, Singapore, Switzerland, Finland and Taiwan.

China finished 25th in the overall innovation ranking but placed first in manufacturing capability, which measured manufacturing value as a percentage of a country’s gross domestic product and as a share of the world’s total value-added manufacturing.

South Korea came in second in the manufacturing capability category, according to the rankings.

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Pharmas face closure if they fail to meet Beijing’s new regulations; Most drug makers who passed the new regulation are now facing idle capacity because their capacity had been enhanced to meet standards

January 26, 2014 Leave a comment

Pharmas face closure if they fail to meet Beijing’s new regulations

Staff Reporter

2014-01-23

Drug manufacturers in China that have not passed new regulations under the Good Manufacturing Practice for Pharmaceutical Products (GMP) will face closure until they pass the verification process devised by the new GMP regulations, according to the China Food and Drug Administration.

Chinese pharmaceuticals can be divided into two categories — sterile medical products and non-sterile medical products.

The administration stated that all the sterile drugs manufactured by existing drug manufacturers had to meet the requirements of the new version of GMP before the end of 2013.

As of Dec. 31, 2013, the number of sterile drug producers was pegged at 1,319, with 796 passing the new GMP regulation and 523 trying to meet the new requirements or waiting to be merged with other companies.

The administration stated that those who have not met the requirements of the new GMP regulation could continue operating after they pass, but those who fail to pass the exam would be closed or merged, according to the Shanghai-based Economic Observer.

Most drug makers who passed the new regulation are now facing idle capacity because their capacity had been enhanced to meet standards, said a worker at China Shineway Pharmaceutical Group.

For drug producers, trying to meet the new GMP regulation is exerting mounting pressure as a result of idle capacity, bank loans, development for new drugs and capital flow.

Non-sterile medical products, on the other hand, have to meet the requirements of the new GMP by the end of 2015, said the report.

As of Oct. 2013, only 778 out of the total 3,839 non-sterile drug manufacturers passed the verification process.

An official at the China Association of Pharmaceutical Commerce said that at least 1,000 non-sterile medical producers have to be shut down or merged with other firms after the deadline passes in 2015.

Market observers are of the view that China’s pharmaceutical industry should be controlled by large pharmaceutical firms, which could help enhance quality, improve competitiveness and internationalization.

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266 SMEs debut on China’s New Third Board

January 26, 2014 Leave a comment

266 SMEs debut on China’s New Third Board

Xinhua

2014-01-25

A total of 266 small and medium enterprises (SMEs) started to be traded on the New Third Board on Friday, marking a considerable expansion for China’s over-the-counter (OTC) market after the board was officially established one year ago.

The move, bringing the number of companies listed on the New Third Board to 621, represents China’s efforts to encourage the development of SMEs against the current economic downward pressure.

The New Third Board, or National Equities Exchange and Quotation (NEEQ) system, serves as a national share transfer system for SMEs to transfer shares and raise funds.

Of all the debuting companies, which come from 28 provinces across the country, over 75% are engaged in innovative hi-tech sectors, covering high-end manufacturing, information transmission, software, research and development, technological solutions and cultural services.

23% of the companies have capital stock between 5 million yuan and 10 million yuan (US$820,000-$1.65 million), while enterprises with 10 million to 20 million yuan (US$1.65 million-$3.3 million) take up 24%.

Companies with capital stock of 20 million yuan to 50 million yuan (US$3.3 million-$8.26 million) and of above 50 million yuan account for 34% and 19%, respectively, of the total.

Half of the enterprises posted revenue of over 50 million yuan (US$8.26 million) in 2013 and a quarter reported 100-million-yuan (US$16.5 million) revenue with net profits surpassing 10 million yuan (US$1.65 million).

Confronted with a potential slowdown in economic growth, widespread industrial overcapacity and weakening investment increases, China’s economy is increasingly reliant on SMEs to generate growth.

Currently, such enterprises contribute 50% of national tax revenue, 60% of GDP, 80% of employment and 74% of technological innovation, the China Securities Journal reported on Friday.

However, SMEs in China still struggle with financing, regardless of whether they are trying direct or indirect ways of raising money, and are encumbered by intrinsic factors such as high risks for start-ups, lack of information and an opaque financial condition.

Prompted by the situation, the New Third Board was initiated in 2006 as an experimental platform to facilitate financing for China’s non-listed small and promising high-tech enterprises in Beijing’s Zhongguancun Science Park. Companies nationwide are now allowed to file applications.

The present system was officially established on Jan. 16, 2013 after years of trials in cities including Shanghai, Wuhan and Tianjin.

It complements the existing main board, the SME board and the ChiNext board, being seen as an easier financing channel with low costs, simple listing procedures and a short application period for start-up firms unqualified to be listed on major exchanges.

The State Council, China’s Cabinet, released policy measures in June 2013 to support adjustment and upgrading of the country’s economic structure, putting great emphasis on the OTC market in a bid to set up a multi-layered capital market.

Data from Straight Flush, a securities information service provider, showed that 355 enterprises listed on the New Third Board completed 60 issuance projects in 2013, raising over 1 billion yuan (US$165 million) and with aggregate market value surging 64.55% year on year.

Xie Geng, general manager of the NEEQ, revealed that the new transaction platform for the board is scheduled to begin operating in May while a system for market makers could also be expected in August.

Yang Xiaojia, chairman of the board of the NEEQ, promised to expand cooperation with commercial banks and other financial institutes and build a connecting mechanism for the Third Board and other exchanges markets as well as regional markets.

A guideline for supervision over mergers and acquisitions of non-listed companies is being drafted and will be released as soon as perfected, said the China Securities Regulatory Commission on Thursday via its account with Sina Weibo, the Twitter-like microblogging service.

Filed under Macro Trends

China overtakes Japan for highest rate of death from overwork

January 26, 2014 Leave a comment

China overtakes Japan for highest rate of death from overwork

Liang Shih-huang and Staff Reporter

2014-01-25

China has surpassed Japan to become the country that posts the highest rate of deaths caused by excessive work, with one Chinese website noting that the problem is acutest in the manufacturing sector.

According to some media reports, around 600,000 people or over 1,600 persons a day die as a result of overwork in China every year.

The manufacturing sector has seen the highest number of such deaths, reported iheima, a website offering consulting services to entrepreneurs, followed by PR, media, e-commerce, start-ups, finance, communication, internet, gaming and courier services.

“The invincible Chinese workers produce cheap, quality goods for the world, but pay the high price of health and lives,” iheima said, citing the example of Taiwan-based contract manufacturer Foxconn Group, which produces consumer electronics at its plants in China.

The website also cited the example of a 24-year-old employee at advertising agency Ogilvy & Mather’s Beijing office, who died suddenly in May last year after working overtime for a month.

However, such sudden deaths are excluded from accident insurance policies in China and have resulted in several disputes, the Chinese-language Beijing Business Today reported.

As a result, CIGNA and CMC Life Insurance Co recently launched the country’s first insurance policy that covers sudden death, although industry insiders pointed out certain existing life insurance policies also covered such deaths.

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35% of top brands’ toxic childrenswear made in China

January 26, 2014 Leave a comment

35% of top brands’ toxic childrenswear made in China

Staff Reporter

2014-01-25

A report released recently by Greenpeace claiming that the childrenswear lines of renowned international brands contain toxic chemical residues has caused a stir among Chinese consumers.

The clothes of twelve brands, including Burberry, Adidas, Nike, H&M, Primark, Puma, Li Ning, Disney, American Apparel, C&A, GAP, and Uniqlo, were found to have contained toxic ingredients, such as nonylphenol ethoxylates (NPEs) and phthalates, according to the report. The finding is based on samples of 82 items of childrens’ clothing purchased by the organization in 25 countries and areas during May-June of 2013, with production sites including China, Bangladesh, India, Indonesia, Italy, Mexico, the Philippines, Thailand, Tunisia, Turkey, Vietnam, and the US. “The problem may lie in the lining and the dyeing process,” remarked Xiao Danlai, vice secretary general of the Hubei Textile Industry Association.

Twenty nine, 35%, of the toxic samples came from China, which is the world’s largest textile producer, consuming 42% of textile chemicals worldwide.

The report points out that 50 of the 82 samples contain NPE ranging from 1.1-17,000 micrograms per 1.000 grams, higher than the allowed maximum of 1 microgram per 1,000 grams. Three samples had NPE residues exceeding 1,000 micrograms per 1,000 grams, including a Disney skirt, with 3,900 micrograms per 1,000 grams, C&A footwear, with 2,000 micrograms per 1,000 grams, and an American Apparel babywear garment, with 2,000 micrograms per 1,000 grams. A Burberry T shirt also contains 780 micrograms per 1,000 grams.

NPE is a chemical widely used in the textile production. When NPE is discharged into the environment, it can turn into nonylphenol (NP), an even more toxic environmental pollutant, which can disrupt the endocrine system of animals.

The report urges governments and enterprises to manage chemical ingredients throughout their life cycle, starting from the sources, by formulating complete policies and regulations.

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Investors Offer Hospitals a Market Injection; Public hospitals in China’s cities are attracting investors willing to confront ‘Himalayan’ challenges

January 26, 2014 Leave a comment

01.23.2014 17:24

Investors Offer Hospitals a Market Injection

Public hospitals in China’s cities are attracting investors willing to confront ‘Himalayan’ challenges

By staff reporters Yu Ning, He Chunmei, Li Xuena, Zhou Qun, Li Yan, Luo Jieqi and Ren Bo

(Beijing) — Sick patients waiting in long lines at China’s public hospitals have at least one advantage over the local government officials who run these overcrowded facilities.

Seeing a doctor, eventually, is pretty much assured for patients with patience. But for all their hard work a public hospital’s government managers may never see a profit: Simply breaking even after paying the bills is usually as good as it gets.

Which is one reason why local governments and the nation’s health care industry players have been carefully reviewing guidelines issued in October by the State Council, China’s cabinet, designed to encourage fresh investment in the nation’s more than 10,000 public hospitals.

The guidelines complement previous policy directives introduced by Beijing in recent years that encouraged a more market-oriented approach to managing the big, mainly urban hospital networks at the heart of the nation’s health care system.

“This policy is very attractive,” said Wei Xin, CEO of Sinocapistar Investment Holding Group Co. Ltd., a privately owned investment firm. “Private investors will soon carve up the public hospitals pie that’s being offered.”

Indeed, Wei said his firm is launching a special fund for investors interested in putting money into public hospital takeover projects. Others potential hospital investors include pharmaceutical companies, venture capital firms and even foreign investors.

The central government’s initiative has already spurred success stories as well as failures. Both outcomes have been experienced by the state-owned drug company China Resources Pharmaceutical Group Ltd. (CRP), for example, which first set its investment sights on hospitals in Yunnan, a province in the southwest, and Guangdong, in the south, in 2010. CRP is a subsidiary of the state conglomerate China Resources Group.

In the Yunnan capital of Kunming, CRP paid the city government 700 million yuan for a 66 percent stake in Kunming Children’s Hospital, the city’s main pediatrics facility and one of eight public hospitals in town.

On the failure side, the company in 2013 was forced to abandon a year-long effort to buy Gaozhou City Hospital, a public facility in the Guangdong city of the same name. The deal fell through because of what officials called resistance from special interests at the hospital.

A subtext to CRP’s tale of two city hospitals is that local governments, the traditional owner-operators of these bustling health centers, have the power to make or break an investor’s plan. Indeed, some say local governments stand as the biggest barriers to the kind of public hospital reform advocated by the central government.

Powerful city governments are particularly formidable. For that reason, the health sector does not expect outside investors to try vying for big public hospitals in big cities, such as Beijing and Shanghai, anytime soon.

However, smaller cities and communities with hospitals that are struggling financially are expected to welcome new investors. Some already have: In addition to Kunming Children’s, hospitals have gotten new owners in the cities of Wuhan, in the central province of Hubei, and Xuzhou, in coastal Jiangsu.

Willing investors can be found because buying a major or a controlling stake in a public hospital, which can include valuable medical staffers and urban real estate, is seen as a cost-effective way to break into the business. Public hospitals, although rarely profitable, are usually well-equipped and staffed by skilled doctors. Thus, buying a hospital is considered more investment-effective than trying to build a new hospital from scratch.

Himalayan Challenge

How did CRP successfully scale the local government barrier in Kunming? By winning support from the highest echelons, said company CEO Zhang Haipeng.

“It was only possible because the mayor led and the (Communist) Party secretary advocated the project,” Zhang said. “Investing in public hospitals is like climbing the Himalayas.”

CRP, whose parent started out as a trade mediator between Hong Kong and the mainland, has close ties with government agencies nationwide. This political network gave it a head start in its bid for the Kunming hospital.

In the course of negotiations with CRP, Zhang explained, Kunming’s then- arty secretary, Qiu He, agreed to let outside investors buy shares in up to three public hospitals, including Kunming Children’s.

For a local government official, Zhang said, Qiu’s outlook was especially progressive because he was willing to let CRP, as a new investor, acquire a majority stake and manage the hospital.

A CRP investment team had been looking for exactly that kind of opportunity. But while researching potential investment targets across the country, Zhang said, the team generally found government officials reluctant to allow private management of a local hospital.

Filed under Health, Macro Trends

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