Eating in China

Below is a January 20, 2016 editorial from The Standard, sent to me by Todd DeMatteo, a close friend and uber investment banker. Todd and I have traveled in China, conducting business and sampling various regional cuisines. When in season, our hosts almost always invite us to feast on hairy crabs, as they’re considered a delicacy. However, from the article below, you’ll see that these crustaceans are often found to contain dioxin, a known carcinogen. As scary as this sounds, it didn’t overly surprise either Todd or I, as Chinese farmers often irrigate their land with the same contaminated river water where the crabs are found. Therefore, I’m sure during the nearly 14 years I’ve traveled throughout China that I’ve ingested a long checklist of substances that have been banned by the EPA. Fortunately, I’m in good health, so the McDonald’s, KFC, Burger King, and other health food supplements I‘ve taken in between these meals seem to have protected me. I should also mention that vodka is similarly considered a health restorative.

The irony is, contaminated or not, the food is generally tasty throughout the country. Therefore, there’s not a hint that what you’re eating contains anything harmful. Fortunately, the levels of pollutants in food seem to be minute enough that people are not dropping like flies after they eat. Therefore, if you go to China stay away from hairy crabs. It also might be a good idea to not eat from locally caught seafood, as most rivers in China are heavily polluted. As for me, I live in denial and am polite to my hosts, eating what’s in front of me. So far that’s worked. However, if my posts suddenly cease, it might be because I stopped eating or drinking the nutritional supplements mentioned above, and living in denial finally caught up with me.

No muddy waters in crab row, please!

The hairy crab feasting season may be over for the year, but the controversy over the finding of carcinogenic chemicals in some of the crustaceans from Lake Tai in Jiangsu is far from over

Yesterday, pro-establishment “matriarch” lawmaker Ann Chiang Lai- wan took a cue from her rivals – challenging food-safety officials to have a lavish feed of the hairy crabs to prove they’re safe to eat.

Chiang’s move wasn’t entirely innovative.

Remember that at the height of the tainted water scare last year, the Democratic Party’s Helena Wong Pik-wan dared water-supply officials to drink water they insisted was safe to consume?

Then Chief Secretary Carrie Lam Cheng

Yuet-ngor told the public servants not to bow to Wong’s challenge to drink the water.

A year later, will Lam similarly order food-safety controller Gloria Tam Lai-fan and her colleagues to ignore Chiang?

Lam should – regardless of any designs she may have on running for chief executive.

She should agree that when the food-safety technocrats banned some of the hairy crabs found to have “excessive” amounts of dioxin, they must have public health in mind, and were acting in good faith.

That said, some questions voiced by the distributors – including a few challenging the ban in the court – appear to be legitimate, and it would be in the public interest for the food-safety authority to clarify the picture.

First, it’s about the dioxin test. In a Legislative Council meeting, it was confirmed the government had tested for dioxin in hairy crabs for years, with satisfactory results in the past two years. But it was no longer as safe this year, after dioxin was found to be excessive in some samples.

Common sense would expect a dioxin safety standard to exist somewhere in the regulations. But then officials went on to say dioxin isn’t included in the food-safety regulations in the mainland or SAR. That’s totally bizarre, making the statements before and after contradict each other.

As confusing as it seems, how can the authority expect the trade to comply with a standard that isn’t specific for compliance?

Then, it’s also tempting to ask how the food-safety center can decide if a test result complies with or violates the safety boundary – if there’s no official yardstick to refer to? Please don’t tell us there’s a set of such standards, but for their eyes only.

This is a fundamental point the food- safety center should clarify.

The distributors also claimed the center hadn’t applied for a proper safety order in accordance with the Food Safety Ordinance.

Was that true? It would be worrisome if it was the case, as the authority should be expected to act lawfully too.

While the questions will hopefully be answered in the near future, it’s necessary to clarify any ambiguity, so that it’ll be easy for everyone to follow while Hong Kong gets ready for the next hairy crab feasting season.

 

The Archivist

China’s highest military officer, General Lin Bogang, has his eye on forcing the government into naming him the country’s new leader. And there’s a strong likelihood he might succeed, thanks to a museum worker’s discovery of never before seen documents written by Mao Zedong. Lost for nearly half a century, the revelations contained within hold a secret that the founder of modern-day China took to his grave. But there’s one major problem – the General only has a copy of the documents, and everyone knows copies can be forged. Without the originals, no one will believe him. But before that could be done the worker who took them from the museum, and the only person who knew their whereabouts, was brutally killed. Complicating matters even more for the General, the Chinese and United States governments have also learned of what he’s after, and they want it! Soon there’s a discovery that an alcoholic ex-Army Ranger named Matt Moretti, a U.S. government archivist, may hold the key to the location of the missing documents. Not long after that the Archivist is running for his life as he tries to stay alive while, at the same time, putting together the clues he knows will eventually lead him to Mao’s secret.

Above is a description of my first fiction book, The Archivist, soon to be published by iUniverse, a division of Penguin Random House.

Alan Refkin

Marketing in China Requires a Unique Approach, Part II

Increasingly, foreign companies are realizing that their future is in China. Even though Chinese brands generally enjoy a 90+ percent awareness, the average Chinese citizen has a greater degree of trust in a foreign brand. Take automobiles, for example. All premium and exotic car manufacturers expect China to be their largest market. Many forecast the Chinese super-car market to grow by 20 to 30 percent per year for the next five to ten years. Rolls Royce estimates that it will sell eight hundred cars in China in 2013, surpassing the United States and making China its largest market. Audi sales in China have surpassed Germany’s, to become its largest market. Audi expects to sell more than one million cars in China in the next three years, surpassing both BMW and Mercedes-Benz in China. Mercedes-Benz sales in China have increased by nearly 50 percent, and Porsche is on track to have China pass the United States as its largest market.
Chinese consumers have also shown an affinity for foreign retailers. UK-based Tesco, the world’s number three retailer, believes that its current expansion program will quadruple its existing annual revenue in China to $7 billion over the next five years. Japan’s Familymart plans to increase its current one thousand stores in China to forty-five hundred by 2015, and to eight thousand outlets by 2020. In apparel, Ralph Lauren plans to open sixty stores in China in the next three years, and Michael Kors plans to open fifteen stores in China the first year and one hundred stores in the next three to five years. Hugo Boss plans to add fifty stores to its existing eighty-six, and Prada plans to open 160 stores in China by 2016, given that 40 percent of its growth and 72 percent of its increase in profits comes from China. Sweden’s H&M chain recently opened its one hundredth store in Nanning, and European fashion company C&A plans to expand from eleven stores to 150 stores throughout China by 2015. The list of companies expanding in China continues to grow as companies want to take advantage of China’s love affair with foreign goods and products.

Logistical Challenges
Among the challenges foreign companies face are the logistical challenges inherent with conducting business in China. Supply chain effectiveness is a challenge for foreign companies, especially where customers may be a distance from China’s ports and major air hubs. As a result, logistical costs can be up to three times higher than those of the United States, the United Kingdom, or Japan. Part of the reason is that there’s more demand for rail, ports, air, and river services than current capacity permits. In addition, the Chinese rail system, although its undergoing improvement, is primarily geared to move bulk commodities, such as coal, over long distances. It doesn’t have the same efficiency in moving containers from ports to inland cities. Moreover, roads in some regions of China are not well-maintained and prove to be a challenge for the overland transport of goods. The government knows about these bottlenecks and is increasing infrastructure investments in an effort to try and address these issues.

E-Commerce
According to The Economist, China’s e-commerce sales will soon surpass those of the United States. E-commerce in China is dominated by Alibaba, a family of Chinese Internet-based businesses; two of Alibaba’s portals in 2012 handled $170 billion in sales, more than eBay and Amazon combined. Alibaba also accounts for more than 60 percent of all parcels delivered in China. The Boston Consulting Group indicates that apparel is the most popular e-commerce buying category, comprising 50 percent of all online sales in China, compared to 20 percent in the United States. Digital content makes up one-third of all online sales. By 2020, China’s e-commerce market is expected to be larger than the combined e-commerce markets of the United States, Great Britain, Japan, Germany, and France.
China currently has an estimated 193 million online shoppers, more than any other country. The Boston Consulting Group predicts that e-commerce could account for more than 8 percent of all retail sales in China by 2015. The primary reason for online shopping’s popularity, according to the Acquity Group, a digital marketing and global branding e-commerce company, is that it’s convenient. In addition, consumers find that online shopping gives them greater product selection and provides the ability to compare prices across various vendors.
Lauren Indvik, of Mashable, indicates that there are a number of factors driving China’s e-commerce growth:

· government-subsidized Internet
· low shipping costs
· growing middle class

The spread of government-subsidized high-speed Internet access and Internet-connected cell phones provides e-commerce companies with a potential shoppers’ pool of 513 million, or 40 percent of China’s current population. Broadband Internet access in China is relatively inexpensive, around $10 per month, compared with $30 per month in India and $27 per month in Brazil.
Another factor driving China’s e-commerce growth, according to the Boston Consulting Group, is that shipping costs for Chinese companies are about one-sixth those of their American counterparts. This makes ordering goods online relatively inexpensive for the average consumer and gives Chinese e-commerce companies an advantage not enjoyed by those in many other countries.
A third factor driving e-commerce growth, according to the Acquity Group, is that China’s middle class is rapidly expanding and is expected to grow from 200 million to 800 million in the next twenty years. Middle-class shoppers have shown the highest affinity for e-commerce transactions.
Combined, all these factors allow those willing to become involved in China’s growing economy the opportunity to participate and prosper in what will become the principal global economy for at least the next two decades.

References for the data and information contained within the above material can be found in Conducting Business in the Land of the Dragon by Alan Refkin and Scott Cray

Marketing in China Requires a Unique Approach, Part I

Many companies believe that their sales and marketing models, business management techniques, and organizational structure, which have proved successful outside of China, will also work in China with little or no modification. As a result, many companies enter the Chinese marketplace unfamiliar with local competitors, distribution systems, the culture, geographic preferences, individual mannerisms, and local marketing techniques that are necessary for them to successfully sell their products. This is an all too familiar theme for those who decide to just go for it and enter the Chinese market quickly and with little preparation. “Just get us into China, and our products will sell themselves,” companies often tell us.

Companies know that China, with its over one billion consumers, is likely the holy grail of consumer markets. Some companies take the time to comprehend the country’s culture, geography, mannerisms, and other unique factors. They want to know how they can understand the Chinese consumer’s uniqueness and adapt their product lines accordingly. These companies almost invariably succeed. Other companies believe their dominance in the United States and in other global markets guarantees them success in China. All they need, they tell us, is the right connection in China, and their products will fly off the shelves. These companies almost invariably fail.
It’s like building an outdoor ice-skating rink in Florida. Great product; wrong environment. Companies that succeed know the environment before they begin construction and therefore enclose the ice-skating rink in an air-conditioned enclosure.
Some companies also believe that Chinese consumers are largely unsophisticated. They argue that, outside of a small percentage of the country who are part of the middle class, affluent, or superrich, Chinese consumers are all the same. Their view is that a majority of the Chinese people aren’t familiar with most consumer products unless they’re exposed to them through marketing campaigns or by word of mouth. Consequently, they’re the same as every other global consumer, who only requires awareness and a value proposition in order to purchase a product. As a result, these companies believe that one size fits all and that shoppers on the streets of Beijing and Shanghai are similar to cosmopolitan shoppers in Chicago or Berlin. “Consumers need to be told which products to buy,” they tell us. “With substantive and repetitive marketing, consumers will purchase the products that are presented to them.”
Our experience has shown that these assumptions don’t apply in China. The assumption that the buying habits of the Chinese consumer are on par with those of consumers in other nations can quickly turn into a costly mistake when companies find their goods failing to capture market share in the world’s most dynamic economy. In an illustration provided by Accenture, a multinational management consulting company, a major US appliance manufacturer thought it had China figured out. It was one of the best-selling consumer products companies in the United States, had strong brand recognition, and had a reputation for excellence. But after three years in China, its sales remained minuscule. The problem, as it turned out, was that it had an American mind-set, instituted American business practices, and hired American managers in a market that was not monolithic. It wasn’t America. Instead, the environment was uniquely Chinese. Accenture went on to note that China is composed of a matrix of marketing microsegments. These microsegments are further broken down according to differences in consumer tastes that vary by geography, product category, and buyer segment. One size doesn’t fit all in China. What works in Europe or the United States may not work in China. Moreover, what works in Beijing may be completely ineffective in Shenzhen.
The MZ-HCI Group, the world’s largest independent investor relations firm, notes that the average consumer no longer exists and that customers increasingly see themselves as unique individuals. Marketing to these individuals often involves a knowledge of unspoken cultural and social patterns. This is particularly true in China. Foreign companies that have been successful in China have accurately gauged the needs of Chinese buyers and have culturally and geographically customized their goods to the country’s various microsegments. They’ve understood how to adapt their products to satisfy individual needs.

 

Attracting the Consumer
Price point is not the motivating factor in a Chinese consumer’s purchase of a product. Accenture’s research showed that a brand’s perceived contribution to the community, such as the creation of local jobs or support of important local issues, as well as perceived harmony with the buyer’s personal values, can be more influential than pricing. A brand’s national origin is also influential with Chinese consumers. German and French brands, for example, may have low consumer awareness, but the country of origin gives the goods a high level of consideration with consumers because the country of origin has a reputation for engineering precision and luxury goods, respectively. Japanese brands, on the other hand, have a high level of awareness, but are sometimes low on consumer preferences because of China’s historical conflicts with Japan and its current dispute over the Diaoyu/Senkaku islands in the East China Sea.
Methods for attracting the Chinese consumer differ from those in other countries. For example, word of mouth carries exceptional weight with Chinese consumers, more so than in most countries. Many companies institute brand loyalty clubs to help perpetuate word-of-mouth promotion of their products. Product reviews, particularly when coupled with endorsements, are unusually powerful in attracting consumers and promoting brand recognition.
Direct mail and cold-calling may work well in some countries, but they don’t work well in China. They are viewed as intrusive. However, multimedia kiosks and video boards, which may be viewed as intrusive in the United States and Europe, have a significant impact on the Chinese consumer.
Most companies expect China’s current love affair and demand for foreign products to continue through at least 2020. Chinese consumers, with an affinity for foreign goods, both in luxury brands and inexpensive products, have made China the biggest market for many foreign companies. This demand is increasingly driven by foreign manufacturers adapting their products to Chinese tastes in the various microsegments that comprise the Chinese marketplace.

In my newsletter I’ll explain logistical challenges, e-commerce, and more for those who want to sell their goods to the Chinese consumer. References for the data and information contained within the above material can be found in Conducting Business in the Land of the Dragon by Alan Refkin and Scott Cray.

Author Speaks at Costa Rican Conference

On February 29, 2016, I spoke at an invitation-only conference hosted by my good friends at Creación De Capitales in San Jose, Costa Rica. My speech was titled The Chinese Economy and its Impact on Global Business, and was well attended. That night I discussed some of the business concepts contained in my last book, Doing Business in the Land of the Dragon. Many of those in attendance were concerned about the direction of the Chinese economy. Some believed that it was imploding and that, if it did, it would take many other economies with it. This was a legitimate concern because, if the Chinese economy collapses, so do a great many others around the globe. My feeling is that this isn’t going to happen, and I provided many facts which supported that comment. I’ll try and outline those in a subsequent blog. But, for now, most economists believe that in the next decade or so China will become the dominant world economy. Below are compiled statistics from Britain’s Centre for Economics and Business Research, which indicate the projected state of world economies in 2028.

Rank          Country                                    GDP

1                  China                                     33, 513

2                  United States                       32, 241

3                  India                                        6,560

4                  Japan                                      6,415

5                  Brazil                                       5,143

6                  Germany                                4,398

7                  United Kingdom                   4,305

8                  Russia                                     4,125

9                  Mexico                                    3,697

10               Canada                                     3,677

Takes into account slowing down of China’s economy

As you can see, China’s economy is expected to continue to grow and overtake that of the United States in a little over a decade. For those companies who intend to expand their business outside their borders, China is an opportunity that rarely comes along. With projected economic growth that places it as the world’s number one economy by 2028, even with its growth leveling at around 5%, the Middle Kingdom is where you want to be. Feeding this growth is a consumer-led economy where the middle class is on the rise and wages and household income have been increasing, at least for the moment, at 13% and 7% respectively.

My thanks to Carlos Chotocruz and Carlos Gonzalez of Creación De Capitales for their hospitality in having me speak at their conference.

Driving in China

I’ve traveled quite extensively in my life and I’ve driven in many countries throughout the world, including Asia, Korea to be exact, courtesy of an all-expense paid one year trip given to me by the Air Force. I can honestly say that driving in these locations had their local challenges, but probably wasn’t any more difficult than driving in Los Angeles, Chicago, or New York. China, however, is different. I unequivocally feel that any foreigner who wants to get behind the wheel in China should first get a psychiatric evaluation prior to going to the Hertz counter.

In the over ten years I and my partner Dave Dodge have worked with China Companies, I’ve seen cars drive on a pedestrian sidewalk, forcing pedestrians to the side, because the road was too congested and the sidewalk was clear. I observed this feat performed by a company’s driver whose Chinese name was Wang Wei (pronounced Wong Way), and who we referred to as Wrong Way. I’ve also been in the car when the driver decided to drive the wrong way on a one-way street, because it was shorter than going the correct way and having to travel around a large city block, as well as weave through traffic with a speed and agility that would make Lindsey Vonn proud.

Military and government vehicles, as well as police and fire departments, are allowed to run red lights, go the wrong way on one-way streets, and weave through traffic. In other words, pretty much drive the same as every other driver in China.

According to MSN Money, Part of the reason for this type of driving behavior is that driving private vehicles in China is relatively new. In fact, the Chinese government didn’t encourage the ownership of private cars until 1994. Once they did, private ownership increased quickly. By 2009 China became the world’s largest new-car market and, by 2040, the International Bodyshop Industry Symposium (IBIS) forecasts that there will be 450 million vehicles in China. With so many new vehicles, IBIS members are excited. New drivers generally mean more accidents. However, in China, that presumption may be inaccurate as, according to a 2011 report issued by IBIS, between 60% and 90% of Chinese vehicles are involved in a collision each year. Liability insurance is mandatory in China and there’s intensive competition for car owners with insurance companies allowed to offer steep discounts in order to try and entice drivers to switch insurance companies.

Even though private ownership of cars was allowed in 1994, they were still too expensive for most people. In addition, according to the publication, Seeing Red in China, driving a car as recently as 2000 made one appear to be one of the elite. This privileged image had remained in the Chinese psyche and owning a car is considered a status symbol. In fact, car ownership is almost obligatory for anyone who considers themselves affluent and part of the middle class. The desire to increase one’s stature and image has led to a surge in new car sales. It’s estimated, for example, that 10% of Beijing’s drivers are new drivers.

Driving in China is dangerous. One of the contributing factors to this is China’s infrastructure. Its roads were not constructed or designed to handle the current volume of traffic. In many places in Beijing, for example, cars will take an off ramp from a major highway while another car is merging onto the same highway. Both cars slow to a crawl to make this happen, resulting in congestion. Along with inadequately designed roads and less experienced drivers, another factor contributing to China’s dangerous driving conditions is that driving laws are simply not enforced. Even though I regularly read in the paper that China is starting to crack down on bad drivers and has stepped up enforcement, don’t believe it. If it happens at all it’s probably temporary. Bad drivers are simply not high on their priority list.

In the West we follow driving laws because we can get a ticket if we don’t. There’s nothing altruistic in our behavior. We don’t want to go through the hassle of pulling over, paying the fine, and getting the points. The Chinese don’t have to pay much attention in these areas. Because traffic laws are primarily enforced through the use of traffic cameras, they seem to follow the traffic rules only within range of the cameras. They know where the cameras are and are very good at obeying traffic laws within their view. Outside of the camera’s view, I’ve been in cars that have passed and cut in front of police cars, and committed other traffic violations that would get you or I a free ride to the police station in most states. In China, however, they seem to rely on camera systems to enforce the law over conventional police enforcement.

According to the Irish Times, 70,000 people die, on average, per year in China from traffic accidents, 800 of those from drivers running red lights, with 300,000 more injured in road collisions and incidents. Many believe that the number reported is substantially below the actual numbers.

China does not recognize an International Driver’s Permit (IDP) in mainland China as China is not a part of the convention that created IDPs. In order to drive in China you need a Chinese license to drive. Even a Hong Kong, Macau, or Taiwan license will not suffice. However, you can get a provisional driver’s license without taking any tests. You can obtain these licenses in major cities like Beijing by going to counters at the Beijing Capital Airport or similar rental locations.

An electric scooter in China is treated the same as a bicycle and no driver’s license is required to ride it. However, some cities ban the use of electric bicycles and restrict where you can ride them, such as not on main traffic lanes.

Alan Refkin

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Quality Fade in China

Quality fade is the behavior of progressively degrading the quality of products to earn more money. In doing this some Chinese manufacturers, over time, will gradually decrease the quality of the goods they manufacture by using cheaper materials, thereby increasing their profit margins.

I’ve toured quite a few manufacturing plants while I’ve been in China. Many of these plants are honestly run, and provide high quality goods to the buyer. However, there are also many manufacturing plants that don’t adhere to these high standards and resort to quality fade.

The mindset of the manager or owner of a Chinese factory involved in quality fade is in stark contrast to the owners and managers of a Western factory. In the West, factory owners and managers continually try to improve their efficiency so as to increase their profitability. The more efficient they become, the more money they make. In addition, the cheaper the labor, overhead, and cost of materials, the greater their profitability. In this cost cutting and improvement the quality of the materials used in the manufacture of goods, as well as the goods themselves, is constant.

In contrast, in China, quality fade factory owners take their efforts to increase profitability one step further. Once their product meets the buyer’s specifications they tend to focus on cutting costs by using lower quality, and therefore cheaper materials that may have an adverse effect on the quality of the end product. For instance, cheaper chemicals may be utilized in the manufacturing process and formulas may be altered by substituting cheaper substances for more expensive chemicals. These, and other short cuts, can materially impact the quality of the product produced. Moreover, quality fade doesn’t occur immediately, but is gradually implemented over a period of time so that the decrease in quality from order to order is almost imperceptible. The way most buyers find out about quality fade is when they’ve received their merchandise and discover the flaws.

One of the primary reasons that quality fade exists is that Chinese factories are typically paid before their goods are shipped. Therefore, cutting a few corners makes them even more money. In addition, they know it’s not easy for a foreigner to take a Chinese company into a Chinese court and prevail. It can be expensive and, even with a perfect Chinese contract in place, the foreigner will still have to obtain a verdict and, if they win, get that verdict enforced to get their money back. Depending on the company’s local influence, such as employing a great number of locals, enforcement of a verdict can be very difficult, if not impossible. Chinese companies know this and they also know that the government is unlikely to take action against them. The only time the government is likely to become involved is when the problem of quality fade affects domestic tranquility, such as the story you’ve probably read about where babies were sickened, and some died, by melamine tainted milk. When the news of what happened was exposed, domestically and internationally, the government was quick to act.

In addition, don’t look to the US government for help. The Chinese Embassy doesn’t get involved in civil disputes. They’ll tell you to get a lawyer and wish you good luck.

Chinese companies, for their part, know they’re the global low cost manufacturer and have an infrastructure that most other countries can’t duplicate. As a result, they have no issue with quality fade, especially with companies which have short-term or limited production contracts. If a Chinese manufacturer knows that this is the only order you’re probably going to place with them, then quality fade is likely to be far more prevalent. However, if they know that you’re a longer term buyer, and that you’ll require contract manufacturing on a continual basis, then quality fade is far less likely to occur.

There are a number of ways companies have used to limit or prevent quality fade. To start, a company should specify in their contract the quality of the substances, materials, and other components that are to be used in the manufacturing process. This should be as technical and as specific as possible in order to avoid any ambiguity. Once that’s in place, the company should have their own quality control staff do a raw material and outsourced parts inspection. In the event the company doesn’t have the resources or requisite quality control staff, professional third party companies can utilized for these tasks. In addition, buyers can conduct factory audits, pre-production monitoring, production monitoring, and pre-shipment inspection to ensure the quality of their product.

I should also mention that some Chinese manufacturers have been using a novel approach to create greater profits, irrespective of the size of the company placing the order. In this approach some factories give favorable pricing, in an effort to attract foreign companies whose products have intellectual property protection. However, some Chinese manufacturers will then take this same product off their manufacturing line, irrespective of the intellectual property protection, and sell knock-offs of these products in countries which have weak intellectual property enforcement. In many instances, even if the company discovers their manufacturer is the source of these knock-offs and terminates the manufacturing contract, the Chinese company will continue to sell and even export the knock-offs, as China is one of the countries which has weak intellectual property protection.

Alan Refkin

If you are currently not receiving my newsletters or blogs and would like to, please sign up at http://thornhillcapital.info, or visit my corporate web site at www.thornhillcapital.net, which will also give you access to past editions of my blog’s and newsletters. I would also be pleased to answer any questions you may have by contacting me at info@thornhillcapital.net

The Various Poses of Buddha

One of the things that surprised me in my travels throughout China was that there were quite a number of images for Buddha, many of which didn’t fit the stereotypical image of Buddha that most Westerners are familiar with. In Beijing, for instance, I saw statues of Buddha that were thin and unsmiling, alongside those that were jovial and weight-challenged. All in all I probably saw more than 100 different poses of Buddha in the museum that day, with each Buddha correspondingly having a different meaning.

Buddha is actually not the name of a person, although today we associate the name Buddha with a specific person, Siddhartha Gautama. Instead, Buddha is a title which means enlightened or awakened one. The historical Buddha (Siddhartha Gautama) was born in northern India, which is now in Nepal, around 500 B.C. He was born into wealth and was a prince. Concerned about the suffering of his fellow man and for the human condition, he walked away from his status and wealth. He traveled extensively and studied under a number of teachers. After nearly starving to death, he was said to become enlightened while sitting under a Bodhi tree. He subsequently assumed the title of Buddha.

There are predominately two styles of Buddhism. The first is Mahayana Buddhism, which is prevalent in China, Japan, Korea, Tibet, and Mongolia. This style of Buddhism teaches that anyone can achieve enlightenment. This is why we see so many different statues of Buddha, from those of the jovial weight-challenged Buddha, to that of the heavily armed warrior clad figure.

The other style of Buddhism, Theravada Buddhism, is primarily practiced in Southeast Asia. It emphasizes insight gained through critical analysis and personal experience rather than blind faith. This style of Buddhism always displays Buddha as being thin.

The Laughing Buddha that we frequently see is thought to be modeled after an overweight Chinese Zen monk who wondered the countryside around 950 A.D.

In Asia, the belly is considered a source of power. Therefore, rubbing Buddha’s belly is thought to bring one good luck. But don’t try rubbing his head, that’s a no-no in Asian cultures. A person’s feet is also a no-no area. The feet are considered an impure region of the body and it’s a sign of disrespect to show the bottom of your feet to an image of Buddha.

In addition, Buddhist monks are often seen with shaved heads. The reason for this is that shaving one’s head separates a person from vanity, which is a distraction on the road to enlightenment.

One of the questions most commonly asked is why are there so many different poses for Buddha? Why is that important? The answer quite simply is that the various poses have distinct meanings. For instance, hand gestures, or mudras, in and of themselves, convey different meanings to a Buddhist. For example:

Buddha has his right hand raised and his palm facing out, with his left hand down near his hips, but also facing out. This symbolizes peaceful intentions and peacemaking.

Buddha has all five fingers of his right hand reaching to touch the ground. This symbolizes enlightenment.

Buddha with one or both hands on his lap. This symbolizes wisdom, emotional balance, and clarity. This pose is most often associated with meditation.

Buddha with the thumb and index finger of both hands touching at their tips to form a circle. This symbolizes the Wheel of Darma, or the Wheel of Life. In other words, fate.

Buddha with both hands at waist level, with the palms outward and the left hand pointing down and the right hand pointing up. This symbolizes balance.

In addition, various poses of Buddha may have descriptive names associated with them. For example:

A Protection Buddha will be seated in a single or double lotus position, with a mudra of his right hand raised, facing outward, and his left hand resting in his lap. This is meant to signify courage and offer protection from fear, delusion, and anger.

A Teaching Buddha will be seated in a double lotus position, with a mudra of both hands at chest level, with thumb and index finger forming a circle, and his right palm in and left palm out. This is meant to signify wisdom, understanding, and fulfilling destiny.

A Medicine Buddha will be seated in a double lotus and have his right hand facing downward with fingers extended towards the ground, palm facing outward, and a bowl of herbs resting in his left hand which is upon his lap. This is meant to signify healing.

A Walking Buddha will be standing with his right foot forward and have his right hand raised, facing outward, and his left hand along the left side of his body. This is meant to signify grace and internal beauty.

In Thailand, each day of the week is associated with a different Buddha pose. In the Thai zodiac, what day of the week you’re born on is more important than the month.

There are actually 8 Buddha poses in Thailand, as Wednesday is broken up into two poses. One pose if you’re born prior to noon, and another for those born after noon. Here are the various poses for a Thai Buddha:

Sunday: A standing Buddha with his arms crossed over his stomach, right hand over left, and the back of his hands facing outward. His eyes are also open. This pose signifies mental insight.

Monday: The right hand is raised as a symbol of preventing calamities or preventing relatives from fighting.

Tuesday: A reclining Buddha lies on his right side with his right hand tucked under his head, and his left hand along the side of his body.

Wednesday before noon: Buddha is collecting alms where both hands carry an alms bowl in front of his chest.

Wednesday after noon: Buddha is sitting with an elephant or monkey giving him offerings.

Thursday: Buddha is in meditation and sits in a lotus position with his hands resting on his lap and both palms facing upward.

Friday: Buddha is in contemplation with both hands crossing his chest, his right hand over his left, and the backs of his hand facing outward.

Saturday: Buddha is seated under a Naga (a seven headed serpent) and is in meditation. In this pose Buddha is being protected while he’s meditating under the spread out hood of the Naga.

After I received these insights, I never thought of Buddha as a single person again. Instead, I think of the image of Buddha, portrayed by various poses, as symbology meant to represent specific attributes attained by someone who has reached enlightenment. A Buddhist will tell you that this leads to salvation, liberation, satisfaction, and happiness.

Alan Refkin

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Smoking in China

If you’ve ever been to China one of the first things you’re likely to notice is that a great many people smoke. China is the largest tobacco-producing and consuming country in the world with 300 million smokers, or one quarter of the world’s total. In addition, there are reportedly 740 million Chinese exposed to second-hand smoke. In my book The Wild Wild East I touch on this, but let me now go into more detail.

A typical Chinese smoker lights up an average of 15.8 cigarettes a day which, for a national total, works out to be about 2 trillion cigarettes a year. Smoking and the resulting second-hand smoke has caused severe health problems with approximately 1 million Chinese dying from tobacco-related illnesses annually. Although the country has instituted anti-smoking laws and campaigns in an effort to combat the effects of secondary smoke, those efforts have largely failed. In fact, China enacted an indoor smoking ban in public places in May, 2011 but no one is paying attention. According to China Daily, 89% of restaurants, 58 percent of office buildings, and 35 percent of schools, hospitals, and public transportation still have smoking on the premises and therefore also have a secondary smoke hazard. China’s Ministry of Health acknowledges the problem of smokers lighting up in public places, in disregard of the indoor smoking ban, but blames this on enforcement of the law. One reason for this, as explained to me by an attorney in China, is that there’s only vague enforcement procedures and penalties in place for violators. People light up because there’s basically no reprisals.

Fifty percent of the men in China smoke versus about 5 percent of the women. As strange as it may sound today, those statistics also applied to the United States in the 1950s, and they currently apply to other Asian countries such as Japan. Why is that? There are thought to be two primary reasons why men account for ten times the number of women smokers. The first is that men try to act cool in their teens and get hooked on cigarettes early. Second, America’s 1950s business culture, and China’s current business environment, is one in which men drink and smoke, especially when they’re in meetings. In addition, China’s role models, Mao Zedong and Deng Xiaoping, for instance, were heavy smokers and were frequently photographed smoking. It normally takes decades to transcend through stereotypes, a business culture, and to educate people on the health associated problems of smoking. The United States has done that in the past half century. China is currently in the process of change, but change never occurs quickly with the Chinese people.

The government, for its part, doesn’t seem to be in a hurry to strictly enforce the law with only 6.1 percent of Chinese businesses having required designated smoking areas and only 1.4 percent having anti-smoking warning signs. One reason for this could be that tobacco accounts for more than 7.5 percent of China’s total central government revenue. The government, therefore, appears to be in no hurry to change the smoking habits of its people overnight.

When I’ve attended banquets and government functions in China, it’s not unusual to find a pack of cigarettes on the banquet table next to my place setting. If you don’t smoke you almost feel that you should, as most of those around you will be smoking and the air you’re breathing will probably make you an instant two pack a day person. I don’t smoke, so I usually give the pack of cigarettes in front of me to someone else who does smoke. But government officials, in particular, don’t buy off on this. They want you to participate in the carcinogenic haze. They’ll hand you a cigarette and then flick their Bic in an effort to get you to smoke. If you’re Chinese you almost always have to accept this offer from a government official. If you’re American, well, you’re American and culturally the Chinese don’t expect much from us. Americans can usually get away with not accepting the government official’s offer to smoke by claiming some malady. This will give the government official and you both an out and let the official save face. When this happens it would be good form for you to toast him. This will usually put both of you back on an even keel again. I’ve done this a number of times and it’s always worked.

I believe the Chinese will decrease their smoking habit, but it will be a slow process as smoking is much more ingrained in their culture than in Westernized societies. Until then, the only truly non-smoking area you’re likely to find is your hotel room hoping, of course, that your housekeeper doesn’t smoke.

Alan Refkin

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Cosmetic Surgery in China

Last week my wife and I were having dinner with two good friends of ours, Dr. Charles Pappas and his lovely wife Aprille. Charlie is a retired surgeon extraordinaire who was one of the best on the planet for cosmetic surgery. During dinner I started talking, as I often do, about China. At this point I usually find that people want to either hear about China or they don’t. If they don’t, my beautiful wife Kerry will usually give me a gentle nudge in the ribs – nothing broken. Charlie, however, can’t seem to get enough information on China. Therefore, with my ribs intact, we started talking about cosmetic surgery in the most populous country in the world.

China first threw open its doors, and started trading with the outside world, in 1978. Prior to that time cosmetic surgery was considered bourgeois, and was only allowed to correct physical deformities. However, in the mid-1980s elective cosmetic surgery emerged in China and its popularity accelerated with China’s growing economy and affluence. The earliest procedures were usually focused, according to Rachael Wolff of The World of Chinese, on removal of moles, freckles, smoothing of the skin and skin whitening. Since that time cosmetic surgical procedures in China have grown and are now generally comparable with the types of procedures offered in the West.

Cosmetic surgery in China is a $4.8 billion industry, with over 3.4 million cosmetic surgery procedures performed yearly, and growing at 20% per year according to China’s official Xinhua News Agency. Moreover, there are an estimated 34,000 cosmetic surgery institutions in China, ranging from hospitals and clinics, to beauty salons that offer various types of cosmetic surgery. In fact cosmetic surgery in China is becoming so popular that China currently ranks third, behind the United States and Brazil, in the number of plastic surgeries performed annually.

Chinese women want to look beautiful and they also want to look more westernized. They like the way Western women look. It’s distinctive and individualistic. They especially like a Westerner’s nose, eyes, and jaw. Not surprisingly, these are the three of the most popular cosmetic surgeries in China. Asian blepharoplasty takes the Asian “mono-lid” and makes it the “double-lid” look of most foreigners. Making one’s eyes look bigger and rounder, as one Chinese women puts it, is more attractive as bigger eyes make you look more awake, more beautiful. Cosmetic nose surgery is the second most popular cosmetic surgery and will take the flat Asian nose and make it pointier and more three-dimensional. Jawline surgery is the third most popular cosmetic procedure and will provide for a narrower and more angled jaw.

White skin has always been a big deal in Asia. In the West, we feel someone looks good when they have a tan. They look healthy and, many times, younger. In China, however, the opposite is true. White skin is a sign of beauty. That’s why you frequently see Chinese women holding umbrellas, or wearing hats or scarfs on a sunny day. They don’t want to tan. Look at any Chinese model in print, on billboards, or in a movie. They appear pale by Western standards. Therefore, many women will try to whiten their skin by either using cosmetics or chemical substances to lighten their skin tone. Li Yanbing, vice-secretary general of the Chamber of Beauty Culture and Cosmetics of the All-China Federation of Industry and Commerce reflects that skin whitening has a long history in Asia, stemming back to ancient China and the saying that one white covers up one hundred ugliness. This obsession has not faded over time.

Today you can, according to Jeffrey Hays of Facts and Details, go to the No. 9 People’s Hospital in Shanghai and get a breast implant for $2,500 or a double fold operation for $360. Other procedures such as liposuction and facelifts are also performed.

 Most of those who elect to have cosmetic surgery are women in their 20s, and a third are between 30 and 40. The most common reasons given for plastic surgery are:  job, boyfriend, and self-image. Cosmetic surgery is also considered a status symbol among Chinese women as it demonstrates one’s wealth by showing that that they have the money to pay for such a procedure. About 90% of those who seek plastic surgery are women.

Although men only make up 10% of the cosmetic surgery market, the number of men electing cosmetic surgery in the last five years has doubled. Most are middle-aged men who are job-seekers and who want to appear younger and in better physical condition. Many elect to have breast implants to make them look more muscular, although physical exercise will accomplish the same thing. The implants are differently shaped and harder than a women’s, but otherwise the procedure is similar to a female breast implant and costs approximately $1,200.

As China’s enthusiasm for cosmetic surgery grows, it also attracts unqualified entrants. In July 2006 the Chinese government banned television and radio advertising for cosmetic procedures because of the exaggerated results that many promised. As Keith B. Richburg from the Washington Post reports, with this growing obsession for plastic surgery there have been more and more unlicensed, unskilled, and unscrupulous practitioners entering what’s largely an unregulated industry. Government-run hospitals provide the highest level of care with an experienced medical staff. At the other end of the spectrum there are black hospitals, as the Chinese term them, and unregulated private facilities that perform cosmetic surgery out of the public eye. In addition, not all hospitals and clinics meet government standards. According to the New York Times, out of 11 clinics and hospitals inspected offering cosmetic or plastic surgery, less than half met national standards.

One of these private facilities may be a beauty salon. It’s not uncommon for a beauty parlor to offer cheap cosmetic procedures, performed by doctors who they summon on short notice, known asfiremen. The firemen perform quite a number of cosmetic procedures including Botox injections and eye surgery. Not only is the beauty parlor a cheap alternative to hospitals and clinics, but it also offers almost instant gratification as doctors can be summoned on a moment’s notice to perform procedures. The beauty parlor will normally get the doctor on the phone and have him rush over to perform the procedure thereby giving them the moniker of firemen. In a survey of 24 beauty salons performed by the New York Times, 15 indicated they do either double-eyelid surgery or Botox injections or both, along with manicures, pedicures, and facials.

Cosmetic surgery has also resulted in a $120,000 settlement that a husband received from his wife in a divorce proceeding. In this case the wife had cosmetic surgery to alter her appearance prior to marrying. When the couple had a baby, the baby, according to the husband, was “amazingly ugly”. The man received the settlement for “lost opportunities” in the divorce proceedings.

Cosmetic procedures on Chinese are not only performed in China, but are frequently performed in neighboring Korea where an estimated 30% of cosmetic surgery patients in Seoul is made up of Chinese who seek Korea’s higher medical standards and more experienced staff.

Alan Refkin

If you are currently not receiving our newsletters or blogs and would like to, please sign up atinfo@thornhillcapital.info, which will also give you access to past editions of our blog’s. We would also be pleased to answer any questions you may have by contacting us at info@thornhillcapital.net