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All Roads
18 Comments
China's Snowstorms Expose Infrastructure Shortcomings
While many have focused on China's push to purchase resources from around the world, where we are seeing the biggest hurdles is in the fact that China's domestic production and economy is far outstripping its local resources and logistics capabilities.
To learn more, I invite readers to view my post China’s Power Crisis. What is Happening. What the Impact Is/ Could be. And What You Should Do to learn more.
This is a problem that China has been fighting for 3 years, and unless heavy rains produce a glut of hydro capacity this spring, China will continue to experience power shortages through the summer.
China's Dependence on Exports: An Old Chinese Myth?
With that said, a lot of the wealth in China is linked to trade and will continue to be so. Therefore if trade takes a big hit, there will be ripple effects.
Will it spell disaster for China? I think the answers is no. that perhaps 10 years ago China was much more sensitive, but that in the past 10 years China has built in some economic stability and dependence from trade that would allow it to weather the storm much better.
R
allroadsleadtochina.co...
Slamming the Brakes on China
R
allroadsleadtochina.co...
Guangshen Railway Company: Profit From China’s Railroad Expansion
great piece. as someone focusing on transportation in China, I would not suggest anyone use the rail to move their freight around simply because it is running full and you never know how long it will take for your goods to move.
Logistics in China is going to be a good play all around for the next few years as China develops, Rail, road, and river will all make huge jumps in capacity and infrastructure... and that is good for Volvo, real estate investors, logistics companies and those looking to invest in the second tier markets.
China Tip: Early Warning on the Property Sector
Non-performing properties are nothing new to many cities, however before believing the tail of the dragon is hollow consider that Chengdu and Kunming are both expected to roughly double in size by 2010, and that many of the properties being built now are in anticipation of this.
This point was driven home during a trip I made to Chengdu 3 years ago and I toured a town that was about south of the city center, had about 15 - 20 high rise properties , and it was empty... completely empty.
But, today the occupancy rates are 70-80 % according to a local friend, and retail podiums are full.
The second tier cities are the future, and for those outside of China it will always be difficult to see the dream. The dream will fulfill after the Olympics as (1) the Olympics passes by; (2) manufacturers begin moving inland; and (3) the distribution infrastructure - Rail, road, and river- fill in.
Vincent Lo is a man who has done an excellent job at spotting opportunities in China, and as he said in a recent interview with CNN, you have to be in China to identify, cultivate, and execute on those opportunities.
No doubt, property will be a hot topic up until the Olympics, but do not expect the bottom to drop out of the boat. Expect there to be limited opportunities that developers like Vincent Lo take up, but also expect that a lot of the empty space will be taken up as regional economies develop in Chengdu, Chongqing, and other cities; as manufacturers open up 2nd and 3rd facilities inland; as migrant workers from the countryside chose to move to regional cities rather than the coast; and as wealth is accumulated in the regional cities rather than on the coast.
Danone Gives Wahaha A Hard Trademark Lesson
Well written piece.
I myself am very surprised that Wahaha would have signed away their rights on the naming/ branding issue. It is something that I would have thought would have been a very hot issue when the contract was being negotiated. Did he really miss that?
This surely could become a lesson in reading the fine print, however I suspect that Danone is in a lose-lose position either way as Wahaha has already massed the employees against Danone and Danone would have a rough time managing that
Anyone remember the Red Star story in Mr. China?
Implications of Yum and McDonald's Foreign Labor Policy
All fair points, and well laid out.
Both Yum and McDonald's have been "cleared", and it only makes the point all the more clear. It is a matter of public perception, and in the case of McDonald's this recent controversy resulted in union talks being moved up.
As you state, both governments are playing a role in this and it is unfortunate. Recently, the U.S. side has been on the offensive and the Chinese side has taken a few reactionary jabs. I think the ball is in the court of the U.S., and it is time that the U.S. begins addressing the issues before them (internally and externally)..
With regard to the role that Corporate America has, I think that there are a number of things they can do to reduce the tensions, but few will do so. Few will give up cost savings, few will open their books, and few will go public and criticize poor policies.
I wouldn't expect that any more than I would expect a politician to stand up and say that it would be more effective to lean on big box retail than on the RMB in trimming the trade gap.
Rich
allroadsleadtochina.co...
Implications of Yum and McDonald's Foreign Labor Policy
I am not following the 1/3 of U.S. wages angle on this as Guangzhou is clear about their level of minimum wage for part time and for college students. It is not based on a monthly wage, but an hourly, and the reports are that all three chains were below the minimum hourly wage.
With that being said, I have read that the law had just been passed the day before this story broke, and so IF that is the case, then someone was just gunning to get the chains unionized.
Either way, my point is more related to the perception of whether or not they broke the laws and what the potentials were following that. (Crossprofit - the poll was a sina.com based poll asking Chinese readers (1) if they thought these chains were wrong in paying so little.. and (2) if the chains should be published.
Again, in my eyes it is NOT a matter of whether or not they were paying more, less, or at the minimum level. It is about the fact that of 52k people who took the time to vote, it was very clear that the brands were not being favored.
This time nothing happened, and there doesn't appear to be any backlash, however at some point it will be happen and it is time for foreign companies to get right.
Implications of Yum and McDonald's Foreign Labor Policy
In response you your comment, we found not only a Chinese version of the original article, we also found the original source <strong>Sina Poll here</strong>.
I have also update my original posting on <strong>All Roads</strong>.
Implications of Yum and McDonald's Foreign Labor Policy
What I think we are going to find (and the final word is not in yet), is that MCD and YUM violated the laws of China. However, for the context of this discussion, put all that aside and focus on the fact that 94% of 46,739 people believe that they were wrong.
For me, it is not about whether or not they were wrong, and more over whether or not MCD student employees live in the best dormitories in town. The important issue is the effect a student led China-wide boycott could have on a company's stock price, be it MCD, YUM, or any one of the reported 90,000 firms in China.
there have been a number of cases recently that have sparked controversy, and in the case of P&G their Shanghai office was ransacked; in the case of Dell, a single student created such on online uproar that the computer company had to publicly acknowledge their error and replace not a single laptop but hundreds; and at some point, these forces could come together against a firm who is seen to exploit one group or another.
Again, paying your student employees in China a third of the minimum wage may not be illegal in the U.S. , but at some point it will become an issue for U.S. investors.
Implications of Yum and McDonald's Foreign Labor Policy
If you google 47,839 respondents you will find that there are two hits for WSJ, and both of them link to the article you are currently seeing.
So, until tomorrow.
China Passes Law Bolstering Private Property Rights
the "Nailhouse" story has really gained some steam in Blogosphere as the gov't has ended coverage on what will be a landmark decision (i.e. either they uphold the law or the law becomes worthless in a week).
For background, visit www.globalvoicesonline.../
Chinese Discontent Only Minor Setback in Starbucks Growth Potential
As someone who frequents Starbucks on a daily basis in Shanghai, I would say that the trend has not changed. there are now 6 Starbucks on Nanjing Road, and business is very good right now.. and primarily rooted in local Chinese consumers (I would wonder what number are returning vs. first and only timers).
one thing I would point out with regard to the Forbidden City is that they have enjoyed 7 years business in that store, and that in and of itself proves that the decision to move in there was the right one. Sure, there have been some flare-ups, and it may be time to go now, however 7 years in a single location is very respectable in the retail world... and even more so when you have hundreds of thousands of people walking by on a daily basis.
No doubt, the Asia market as a whole is one that Starbucks views at strategically very important, and I will be interested to see how the recent flare-up plays out. It may fizzle, it may lead to the shop being closed, but I do not think that it will have a long term impact unless something drastic happens.
Wal-Mart Goes For the Gold In China
There does seem to be some confusion on the numbers, and I think the reported numbers/ figures are a mix of original report in November stating a billion (percentages were not mentioned then) and then this recent report.
When I mentioned that WMT does not need a partner, I was speaking from the legal side, not the strategy side. Carrefour, B&Q, and others are all running wholly owned operations, and are doing so successfully.
With regards to importance of China & India, there is no doubt that will be the major push for a lot of industries. Fortunately for WMT it has deep pockets and can make big moves if they see an opportunity.
There are a number of firms who are not so fortunate.
The Inevitable Collapse of China's Banks