China Word of the Day: “Restructuring”

March 10, 2013

I’m feeling like a big cliche at the moment, sitting here at a Starbucks in scenic Exton, Pennsylvania and trying to get a little blogging in between other commitments. Blogging at a Starbucks, surrounded by suburban Americans with their bizarre custom coffee orders — it’s like the first half hour of a Rom Com.

Anyway, everyone (not here, but everyone back in China) has been waiting for the policy shoe to drop from the new government for quite a few weeks now. Just what is the new government going to do in response to the significant challenges in the Middle Kingdom? There have been a couple of speeches but no real action thus far.

And now for something completely different: Beijing is messing with the government’s Org Chart.

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The Ralls Wind Farm Case: Not Quite Dead Yet

March 2, 2013

I’ve successfully made it through the first work week at my new in-house job, so I’ll reward myself with some blogging.

You may recall the Ralls case, where some Chinese investors (backed by SOE Sany) purchased a U.S. firm that owned several wind farms. However, the siting of one of these was problematic (too close to a military installation) and, long story short, the Committee on Foreign Investment in the US (CFIUS) decided that the deal should be unwound. The case then went up to President Obama, something that usually doesn’t happen with CFIUS matters, and he went along with the decision.

Then Ralls sued, challenging Obama’s decision on several grounds. The last time I wrote about this, I essentially called this whole thing a loser, since the underlying statute that deals with CFIUS says that such a presidential order is not reviewable by the courts. In other words, the law specifically says that the court should throw out the challenge.

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Some Good News, Some Bad News, and Some China Hearsay Housekeeping

February 24, 2013

You may have noticed a severe drop-off in posting in recent weeks. Quite a few reasons for this, significant among them being my transitioning out of the private law firm/outside counsel business to my new position (as of last week) as Asia Regional Counsel for an American software company. I’ll probably throw some details on that up on LinkedIn at some point, if anyone is interested.

For the moment, I’ll be devoting quite a lot of my time to the new job, including a three-week stint at HQ in the U.S. beginning tomorrow. The “bad” news is that this will have a negative impact on the blog, although I hope not quite as bad as things have gotten in the past couple weeks. I’m thinking a few posts a week, something like that, at least in the short term.

Anyway, China Hearsay isn’t going anywhere, and I’ll be back here in Beijing in a few weeks. In the meantime, I’ll be enjoying a VPN-less existence, which will make the news-gathering part of the whole blogging experience that much easier. So I’ve got that going for me, which is nice.

That’s about it. Stay tuned, folks.

China Gets Serious About Diagnosing Online Game Addiction. I Am Not Making This Up.

February 19, 2013

Okay, so I’ve done my part over the years making fun of anyone who thinks Internet/online game addiction is a real disease that deserves diagnostic criteria, special facilities, trained health care professionals, etc. Regardless, there is a constituency here in China who takes this very seriously, probably the same folks who think that if a child sees naked breasts online, he will end up with permanent brain damage and sexual dysfunction. Heaven forfend that anyone in China will be exposed to sexuality before the age of 25!

Anyway, I kind of thought that after the online game industry came into its own a few years ago, parents and government officials would learn to deal with it, let the kiddies play games, and live with the consequences.

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China Piracy and the “Like It? Buy It!” Model

February 16, 2013

One of the many IP topics we’ve discussed on this blog concerns the varying strategies employed by owners to combat piracy by changing the behavior of consumers. Many years ago, if you recall, everyone was talking about Microsoft’s China pricing strategy and whether its sky-high retail price for Windows was driving Chinese users into the arms of the copyright scofflaws.

There are many different subsets of this area. In addition to pricing, or perhaps the extreme pricing option, there is the idea that if a content owner gives away a certain amount of product for free, this will “hook” the consumer, who will be willing to pay for future works ’cause, you know, they can’t go without.

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Wakey Wakey, Year of the Snakey

February 15, 2013

Yes, I managed to snooze all the way through the Spring Festival holiday, although, to be fair to myself, it was mostly an involuntary situation brought about by ~~controlled substances~~ influenza and air pollution. A decidedly nasty business, I can assure you.

While I was “away,” what happened in Beijing? Very little, as is usually the case at holiday time. This is why I usually try to schedule my near-death experiences to coincide with long holidays. Not only do I hang on to my vacation days, but the blogging doesn’t suffer all that much. I hope you appreciate this level of dedication.

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Note to Self

February 7, 2013

If I had a blackboard, I would write the following one hundred times as penance:

I will not tempt fate by making fun of Beijing’s air pollution and anyone suffering from a related upper-respiratory condition.

I somehow angered the Gods of Irony last weekend. I wrote about Beijing’s “Airpocalypse” several times, then thought it would be a good idea to exercise on a day when the air resembled pea soup. By that night, I was experiencing a mild itching in the back of my throat, followed shortly thereafter by various and sundry other symptoms over the ensuing seven days.

This week has not been fun at all. I think I’ve learned a valuable lesson.

A Few Suggestions For CFIUS Reform

February 2, 2013

Here’s a weekend recommendation for those of you interested in China outbound investment to the United States. As you know, the national security gatekeeper in the U.S. is a body called the Committee on Foreign Investment in the U.S., or CFIUS.

CFIUS has made many prominent appearances on this blog, including in several posts in 2012 concerning the Ralls wind farm purchase by a group associated with Sany, a deal that ultimately had to be unwound. There are many critics of CFIUS, including quite a few in China, and no shortage of opinions on how the body should be reformed.

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InBev-AB Acquisition of Jiangxi Brewery. Any AML Implications?

February 1, 2013

You might not have caught the news from early in the week about a possible acquisition of a Chinese brewery by beer colossus InBev-AB. I didn’t see much coverage of the deal, and to be honest, it is a fairly run-of-the-mill M&A transaction that probably means little to folks outside of the beer/beverage market. Moreover, the story seems to be in the rumor stage at the moment.

However, I did get a tiny itch deep in my brain when I read about this that led me back to China’s 2008 review of the InBev-Anheuser Busch merger. Remember that? It was just after the Anti-monopoly Law came into effect, and the decision was overshadowed not long thereafter by the Coca-Cola-Huiyuan rejection.

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Promoting China Law to Foreigners. Wait, What?

February 1, 2013

See if you can figure out what all this means:

Local television should broadcast an English-language legal program to make foreign residents more aware of Chinese law, a partner from a local law firm proposed Tuesday at the annual meeting of the Shanghai People’s Congress.

“If Shanghai wants to become an international finance and shipping center, it is indispensable to establish the authority of law as the number of legal disputes involving foreign parties is expected to increase,” said Wu Jian, a partner at the Duan & Duan Law Firm. (Global Times)

What’s going on here? I have a few thoughts.

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Clearing the China Air: Technology and Protectionism

January 29, 2013

My posts have been few and far between these days for a variety of reasons (other commitments, paucity of real news, smog-induced crushing depression), but today’s weather requires some words in response, and thinking about smog has led me back to familiar themes about technology transfer, local protection and industrial policy.

If you’re picking up my RSS directly or reading this at the China Hearsay home page, you’ll see the pic I included, which is the view from my living room window.

The air quality this month has lurched past “Blade Runner” and gone straight to . . . well, I don’t even have a good popular culture allusion to what we’re experiencing now. Historically, I wonder if we’re getting on towards a London Great Smog situation, which happened back in ’52.

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China’s Dollar Assets and the Persistent Myth

January 24, 2013

I note that Ken Rapoza at Forbes has written yet another good post on the issue of China’s holding of U.S. debt. The occasion is a report issued by the US-China Business Council, which says “Nothing to worry about. Go about your business.” Yes, they are a pro-China lobbying group, but as Ken says, in this instance they are right.

The need for such reports, and Ken’s article, however, makes me sad.

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Bloomberg Terminal Design Case Ends With Settlement

January 24, 2013

You might remember the post I wrote on this infringement case back in July. Check that one out for photos of the products in question. If you’ve ever seen or worked with a Bloomberg data terminal, that’s what was at issue in this case, with Bloomberg claiming that the Shanghai company, Da Zhi Hui (aka “Great Wisdom”), was guilty of a trade dress infringement.

Well, this case settled, and Bloomberg withdrew the complaint from the Shanghai First Intermediate Court. I’d really like to know why, but somehow I doubt that anyone from Bloomberg is going to tell me what happened.

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Trying to Understand Today’s Huawei News Conference

January 21, 2013

On Monday, Huawei CFO Cathy Meng talked to the press about various and sundry Huawei issues, including recent performance as well as some of the long-term global political issues that have made overseas markets challenging for the Chinese IT giant. For the record, I wasn’t present and did not read a transcript or anything, so I can’t comment on the specifics.

However, I did read what journalists present at the news conference have said, and as a media management exercise, I think it’s fair to take a look at the results. On the whole, I was slightly confused on the messaging.

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Nostalgic for Chinese High Culture

January 21, 2013

We’re sliding into the Spring Festival holiday here, the year’s high point, one could say, of Chinese culture around the world. In addition to all the usual holiday celebrations, it also affords us the opportunity to navel gaze about cultural traditions or, depending on who you are, bitch and moan about the sorry state of affairs here in China.

You’re probably familiar with this sort of grousing, since it seems to be a common human past time. For some reason, we like to fix our attention in the past, imagining that most aspects of life, including cultural traditions, were somehow of better or purer quality. In the U.S., which has practically no history at all when compared to many other nations such as China or India that have been around for thousands of years, there is a significant faction that looks back at the 1950s as a golden age. Yes, it’s nonsense, but people are funny like that.

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Californians Hacking Up Lungs Due to China Pollution

January 18, 2013

No, I’m not talking about myself, although I am a Californian and I am suffering through the Biblically nasty Beijing Airpocalypse. Rather, I’m talking about actual residents of the U.S. West Coast, which is apparently enjoying all kinds of icky goop that floats across the Pacific Ocean from the PRC and into U.S. airspace. They might not be barfing up bodily organs yet, but who knows what the future will bring?

Typical westerly wind flows across the mid-latitudes of the Northern Hemisphere mean air pollution from China is often carried over the Pacific Ocean. If the weather conditions are right, contaminants including mercury, ozone, sulphur and nitrogen oxides, black carbon and desert dust, can reach the west coast of the US within days. (China Dialogue)

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In Defense of China’s Golden Week

January 17, 2013

There is a lot to dislike about China’s ginormous week-long holidays, one of which, Spring Festival/New Year, is coming up in a few weeks. The crowds are larger than you can imagine, requiring some sort of logarithmic scale of imagination to comprehend, the weird system of moving around weekend days is bizarre and uncomfortable, and the run-up to the holiday itself (i.e., all the pre-holiday shopping) is already making a trip to the supermarket something to be avoided. If that wasn’t enough, the entire country slowly winds down to a halt in the days before the holiday, making news hard to come by and blogging practically impossible!

And yet I find myself disagreeing with a call by McKinsey China to do away with Golden Week entirely. Call me crazy, but I firmly believe that workers are most productive, healthy and happy when they have sufficient time off.

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Airpocalypse Now: I Love the Smell of Emphysema in the Morning

January 14, 2013

So yeah, we’ve been having a bit of bother here in Beijing with our air. Not exactly a new development, although this particular episode is rather alarming when you look at the numbers. If you’ve seen the press coverage, you’re probably aware that the tracking system the municipal government here uses to measure air quality is based on an old story about Da Yu, China’s most famous and beloved flood engineer.

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Grauman’s Chinese Theater Finally in Chinese Hands

January 14, 2013

After 85 years, the world’s most famous movie theater will finally be living up to its name. Chinese TV maker TCL has paid more than $5 million for the naming rights to the venerable Grauman’s Chinese Theatre opened in 1927 by showman Sid Grauman. (LA Times)

If you’re a native Angeleno like myself, the thought of the venerable landmark going by the name “TCL Chinese Theater” probably elicits a sad sigh. Despite its fame, LA hasn’t been around that many years and needs to hold on to as much local history and tradition as possible. We already lost Pup N Taco back in the 80s — what’s next, the Carpeteria Genie?

On the other hand, the idea of a Chinese company buying the naming rights to the iconic “Chinese Theater” is at least a source of amusement. Sure, some folks might see parallels here with the Japanese purchase of Rockefeller Center back in the 90s, but I say there is nothing to worry about.

It’s the Chinese theater, after all. It’s almost like Hong Kong and Macau going back to the PRC in the 90s, and although there was never an unequal treaty that snatched the theater from the Qing Dynasty, I’m going to consider this purchase by TCL a reversion back to the rightful owners. Heaven knows that California still owes the Chinese people for a lot of past wrongdoings.

The term “Red Carpet” will never be the same again.