Pronouncements that the Belt and Road Initiative is failing are premature, argues Tom Miller, author of China’s Asian Dream and Senior Asia Analyst at Gavekal Research. He is well-versed in the problems facing the Belt and Road Initiative (BRI) and predicted many of them. In his 2017 book China’s Asian Dream, he warned that China’s preference for cultivating close relationships with individual leaders could be a long-term risk for BRI. Eighteen months on, this looks prescient. New governments have won power in Malaysia, Pakistan and the Maldives, and renegotiating deals signed by their predecessors are high on the agendas.
What a difference a year makes. Last summer, there was a sense of unstoppable momentum behind the Belt and Road Initiative (BRI), China’s trillion-dollar plan to build a network of infrastructure connecting Africa, Asia and Europe. When China hosted its 2017 Belt and Road Forum, 29 heads of state and delegations from another 100 countries traveled to Beijing, hoping to cash in on what President Xi Jinping described as the “project of the century.” This year the landscape, at least from the media’s perspective, looks dramatically different as even China’s closest partners make more cautious noises about the BRI.
Compared to other sectors, Chinese e-commerce firms are among the first batches of firms to embrace automation. China accounts for nearly half of global demand for AGVs, enabling one warehouse to process up to 100,000 orders a day with a staff of 20 human workers, work that previously would have required 300-600 people, according to Beijing-based startup Geek+, a leading domestic robot maker in logistics industry. Other tech giants, like Alibaba and JD.com, have also announced plans to invest billions of dollars to roll out next-generation technologies including totally unmanned warehouses and last-mile delivery robots and drones.
Online data theft is rife in China, affecting more than 80% of Internet users, and tech companies often display a cavalier attitude to using people’s personal information. But things may change. In May, the government implemented new data protection rules called the Personal Information Security Specification, which was hailed by some analysts as a watershed for data privacy, with a few even comparing it to the European Union’s game-changing General Data Protection Regulation law. While there are important differences between the two, Beijing’s new rules appear to reflect a wider shift in the way the Chinese government, companies and consumers perceive online privacy.
Learning how to please Chinese audiences without alienating moviegoers in the US is becoming crucial for Hollywood as box office receipts stagnate in home market but explode in China. Quarterly ticket revenues in China surpassed those in North America for the first time ever in the first three months of 2018, with Chinese cinemas netting $3.15 billion compared to $2.85 billion in Canada and the US. Those figures were boosted by massive takings during the Lunar New Year holiday, always a peak time for Chinese cinemas, but China could become the world’s largest film market in whole-year terms in 2019.
Will two executive-level people doing the same job with the same education background and experience be paid differently? The answer is yes. And unsurprisingly, one of the two is female. How big is the gender pay gap at the executive level? Professor Huang Rong at the Cheung Kong Graduate School of Business, who studied a sample of over 34,000 executives from US publicly traded firms using data spanning an 18-year period, found women executives are paid 31% less than male executives. Although it can partly be explained by objective considerations such as title, experience, company size and performance, a 19% gap still exists.
Economic changes taking place in China are rippling across the world, causing rapid upheaval in global supply chains. Manufacturers are moving to lower-wage economies, the Belt and Road Initiative (BRI) is creating a new web of trade flows and the rise of cross-border e-commerce is accelerating demand for goods from across the world. And then, of course, there is a possible global trade war to factor into the equation. Dealing with all this uncertainty requires ice-cool pragmatism, as FedEx’s China head, Eddy Chan, has learned.
The moment finally came just after Lunar New Year, 2016. That morning, residents in Lintao, a city of 200,000 in the remote northwest, turned on the taps, but no water flowed. The groundwater that provided the town’s supply had simply run out. A year later, Si County, a cluster of settlements 2,000 kilometers to the southeast, also ran dry. After municipal wells began to empty, local schools and hospitals resorted to drilling their own. In the north, which contains nearly half of the population but only 20% of the water resources, there is not enough to meet demand. Groundwater storage on the North China Plain fell at a rate of more than 6 trillion liters a year between 2002 and 2014.
Few thinkers can speak about global governance with as much authority as Kishore Mahbubani. A former President of the United Nations Security Council, Permanent Secretary of Singapore’s Foreign Ministry and Dean of the renowned Lee Kuan Yew School of Public Policy at the National University of Singapore, he has been named “the muse of the Asian century”. In his latest book, due next year, Mahbubani plans to tackle the rising tensions between the US and China. As he explains, the US should embrace a more minimalist and strategic approach to foreign policy to maximize its interests in an era of Asian dominance.
To many people in its home market China, Transsion Holdings is a company name they’ve never heard of. But this smartphone maker, based in Shenzhen, taking over 38% market share, is rising to dominate the smartphone market by with its Tecno Mobile, Itel and Infinix. Its success shows what differences can a small company make by truly catering to consumers’ long ignored needs, as said by local tech expert, “Transsion has succeeded because they addressed the problems of the market directly. They make phones with features that are attractive to Africans.”
You are invited to download the Fall 2018 issue of CKGSB Magazine. “The old world is dying; the new world struggles to be born,” Antonio Gramsci wrote. The Italian philosopher was discussing Europe during the early 20th century, but the phrase appears just as apt when considering East Asia nearly a hundred years later. This […]
For China’s technology sector, the decision of the United States to hit Shenzhen-based telecommunications giant ZTE with a trade ban in April was an abrupt and painful wake-up call. Until then, many in China had grown accustomed to thinking of their country as a global leader in technology. After all, China’s smartphones, high-speed railways and e-commerce platforms were the envy of the world. But in the days following the ban, designed to punish ZTE for violating US sanctions on Iran and North Korea, it became clear that one of China’s most successful companies was totally dependent on American suppliers.
China’s huge current account surplus was once the symbol of its status as the “factory of the world.” But in recent years, that surplus has been shrinking. Last year, it sank to 1.3% of GDP. The half-year deficit announced in August was the first in more than 20 years. Some economists predict China could soon be running a current account deficit. If that happens, it will be a watershed moment with implications for all manner of issues, from the policies Beijing is able to pursue to the status of the RMB as a global currency and maybe even the way the US finances its debt.
The negative effects that industrial revolutions unleash on human society always stem from an overestimation and abuse of the power of new technologies. It has never been more important to heed this point than today. Big data and artificial intelligence (AI) are bringing forth a new industrial revolution, and the blind worship of these innovations is already on full display in some quarters.
In October, the CKGSB Business Conditions Index (BCI) dropped slightly from the worst reading to date in September, from 41.9 to 41.4. Although not quite as dramatic a decline as the previous month, the deterioration of conditions for doing business in China should not be underestimated. It shows that the majority of sampled companies, some of the most competitive private businesses in China, are pessimistic about their prospects for the next six months.
Sometimes, a major innovation starts at the top of a market and works down—think of Tesla’s electric sports car. Other times, as innovation theorist Clayton Christensen noted in The Innovator’s Dilemma, innovations bubble up from the bottom, beginning with a product that has limited functionality and seems at first like little more than a toy. That second uphill path has been the trajectory of the electric bicycle, which over the past 20 years has become an important mode of personal transportation in China and is now beginning to make inroads in the rest of the world.
What is the most important thing for a startup? Growing your business by focusing on the value to the customer is the answer given by Sean Ellis, founder and CEO of GrowthHackers, a service that helps 200,000 members with their growth strategy. According to Ellis, “growth hacking” is more than a buzzword in Silicon Valley—it’s a marketing strategy with actionable methods that prioritize business growth.
For nearly 50 years, most of the world’s oil has been bought and sold with US dollars. But that may be changing, as the energy exchange center in Shanghai has begun trading a yuan-denominated oil futures contract. Six months after the contract, more 10% of the world’s oil is now traded in yuan. Why are the Shanghai contracts so popular? Will the world enter a petrol-yuan era from petrol-dollar era? How will the situation evolve against the background of trade war between the two largest economies?
Cleaning up China’s poisoned air, water and soil and transforming its industry-dependent economy is a vast task, one that may need an investment of up to 620 billion per year—and government can only directly fund 10-15%. To achieve its ambitions, the government needs to attract investment from the financial sector, private companies, households and international investors. Green finance offers the opportunity and China has rapidly established itself as one of the biggest players in the global green finance movement. But how green are China’s green bonds? Many analysts argue that if you scratch under the Chinese system’s green veneer, it reveals a different color entirely.
Chinese millennials promise to reshape the global tourism industry. Unlike their parents’ generation, who preferred to travel abroad on Chinese-organized tour groups, today’s young Chinese are independent, individualistic and willing to try more adventurous vacations. This shift is opening up huge new opportunities for travel and tourism operators worldwide. They can now advertise directly to China’s 400 million children of the 1980s and 1990s, who often book their next trip online and on impulse. For operators able to target this group, the rewards can be spectacular. Chinese millennials already make more overseas trips than all American tourists combined.