Dan Harris

New Labor Laws in China Could Hinder Investors' Profit Potential

This article is about six months late and a dollar short. It's like a blast from the past, so much has changed of late.

Yes, some companies left China due to increased labor rates, but almost all of those companies were manufacturers of very low quality items like socks, and rubber duckies. Most of these companies were Chinese, HK or Taiwan owned. Very very few Western companies left for lower wages elsewhere. This article is also late because wages in China are now on a downslide and the government has been spreading the word that enforcement of its new labor laws will be less than rigorous, so long as companies retain their employees.

Luxury Products in China

What you are ignoring here though is that to be a super luxury, it almost has to not be available in China. I lived in Turkey for a year and some of the super-rich Turks would brag to me about how they would go to Paris to purchase their American toothpaste. They would do this even though the very same toothpaste was available in Turkey, but also made there. They would do this because it was the going to Paris that made the toothpaste so elite, not the toothpaste itself. The ultra-ultra rich American yacht buyer would not be caught dead buying anything in the US for the same reason -- Italy is the place.

I suspect that is the role HK plays for the ultra-rich Chinese today.

To badly paraphrase Groucho Marx, the risk luxury goods makers face by going into China is that the ultra-rich Chinese would not want to buy from any such producer that would have China as a member.

Chinese Consumers Cite Pricing as Concern for Apple's iPhone

What has surprised me about the people I deal with in China (mostly Chinese lawyers, mostly very wealthy) is how few of them care at all about getting email on their phones. Their feeling is that they have no need for emails outside of office hours and if there is some emergency email, their young associates can handle it. In other words, none of these people (all driving 50,000+ cars) really gave two hoots about my new Blackberry. Is this view of portable email prevalant outside the legal profession in China?

China: Money Keeps Pouring In

I can vouch for this from an extreme micro level: my law firm has seen no slowdown (if anything, we have seen an increase) in US companies wanting to set up operations in China. The strangest thing is that not a one of them has even mentioned the political climate there as in any way inhibiting them. It is a complete non-issue.

The Key to Successful Branding in China

Shaun,

Great post. Always difficult to recover from a loss of trust.

The Bubble Theorists Have Shanghai Wrong

I think it's a bubble just because "everyone" is on board. But your excellent analysis certainly gives me serious pause.

Implications of Yum and McDonald's Foreign Labor Policy

Am I missing something here? I read the WSJ article to which this post links and I did not see any mention of a survey, much less the numbers listed here. Would you please direct me to the correct link for this survey.

Chinese Discontent Only Minor Setback in Starbucks Growth Potential

I completely agree. Starbucks is dead serious about China and it is doing nearly everything right there. I dropped three cups in one in Shanghai and they were immediately replaced. Hell, I could have been at my regular store in Seattle (the U Village one that is always neck and neck with one in Tokyo for highest sales), it was handled so smoothly. Starbucks in China will do just fine.


chinalawblog.com

Beijing Targets Slower Growth in '07, Boosts Education and Health Spending

Won't this increased government spending on social services itself serve to increase growth? Is this not a way to prime the pump?

Tortilla Plants in Shanghai? Warming Trade Relations Between Mexico and China

I am also aware of a couple of Latin American fast food restaurants that have gone into China. In many ways, this makes sense because these companies are used to operating at a lower cost structure than American companies. The WSJ just did an article the other day on how so many South African companies are doing so well in China for the same sorts of reasons.

chinalawblog.com

Making Sense of Chinese Markets

Nice post. Very helpful. Thanks.

Exciting Opportunities for Biomedical Companies in China

This is way too rah-rah. I wish it were as easy as this makes it out to be, but it simply is not. Because of this, I am very skeptical about the 80% cost saving figure. Our clients consider themselves lucky to get anything even approaching 50%. China is good for medical R&D and I have done a number of posts on this on my blog, but it is not nirvana.

chinalawblog.com

China's Banking Sector Looks Better with New Corporate Bankruptcy Law

I do see the new bankruptcy laws (when they come into force in June, 2007) greatly helping the creditor banks, but I still do not see China's bank collection rates hitting those of the rest of the world, at least not in the short term. Collecting on judgments is still too difficult for that to be the case yet.

chinalawblog.com

UBS Takes a Step Into China (UBS)

How long until they start making money in China?

No Impact From China's Monetary Tightening So Far

Private companies in China (which seem to be growing faster than the state owned entities) generally cannot get loans from Chinese banks in any event. The relationship between the state owned banks and the state owned companies has always been murky. This all makes me think the raising of interest rates in China is likely to have less impact than raising rates would have in other countries.