In China, there’s no shortage of brand-name hotels with high quality standards, many of them from other parts of the world. But in India, most of the hotels are distinctly Indian — there’s Taj, Oberoi, Trident, Leela and Leela — and far fewer of the Hyatt, Marriott, Hilton regulars you see around the world. In contrast, all the big multinational brands are in China, and expanding rapidly into second and third tier cities now that Beijing and Shanghai are covered.

Whether India will increasingly open up to foreign investment remains to be seen — there are rare signs of its on the retail front. But in China, there seems to be no turning back as not only top-tier hotel names like the Waldorf, Fairmont and Peninsula but also Starbucks, McDonalds and a host of other westernized brands become part of the ‘city-scape.’

Also curious to realize that while Huawei, Lenovo, Haier, Tencent, and Alibaba expand their reach outward and build business outside their home country, the same cannot be said of the India corporates, except of course for the outsourcing superpowers such as Infosys and Wipro. Tata and Mahindra haven’t become household names globally although they certainly reign in India in all kinds of industry sectors.

It's amazing to see the great strides China has made with its hybrid capitalistic system with infrastructure and advances in innovation in such a short period of time while India, the world’s largest democracy, moves at the pace of a tortoise, struggling to make the upgrades. Still, it’s refreshing to spot signs of progress: the newly completed modern airport in Delhi and the metro now open for four kilometers in Bangalore while several lines are running in Delhi.

While Chinese cities take on more and more of the character of the West, in India you can still definitely feel that you are somewhere different, and the spritual undercurrents and philosphical approach are never far away. Brands reflect a country’s culture, and it will be interesting to watch how they unfold in these two distinct emerging powers. Rebecca Fannin FORBES.

-Inexpensive products imported into the US from China have kept inflation low, saving the average American household $1,000 each year according to and Oxford Economic study.

-China's investment of its surpluses into US Treasury bonds has also lowered American interest rates

-The decline of America's manufacturing industry took place long before China's economic rise, and there are dozens of developing countries ready to replace China in manufacturing these goods. This is globalization at work.

-US Exports to China have risen at an astonishing pace, growing at a compound annual rate of 35%, a trend that is set to continue.

-The US Export-Import Bank estimates that for every $1 billion in exports to China from the US 8,000 new jobs are created

-Brand name companies such as Wal-Mart, UPS, KFC, McDonalds, and many others operate freely in China and have won substantial market share while becoming household names

-The continued growth of the Chinese  middle class, and the government's focus on domestic consumption will present new opportunities for US companies

-The US government has announced plans to attract more Chinese tourists. A record number of Chinese tourists from Mainland China visited the US in the first 10 months of 2011, and in 2010 those tourists spent $5billion in the US

-For every 1 million additional Chinese tourists, at least 100,000 new US jobs are created

The US and China share a symbiotic, mutually benefitial and inextricably linked economic relationship that both countries benefit from greatly. This relationship is not a zero-sum game and a vigorous America is good for China, and a successful China is good for America.

(With acknowledgment to an article by Tung Chee Hwa founding chairman of the China-United States Exchange Foundation)

Also when you go into a bar, often they give you a higher price when you order drink or in a shop, a higher price for the merchandise. When people grab you on the street to try to sell you stuff, they also are likely to tell you a price that is much higher than what they charge local Chinese.

So you will ask, why does this happen?

As a laowai, do I look like an ‘easy mark’?  Are the Chinese trying to take advantage of me? You’ll be surprised to know that the Chinese believe that laowei is more generous than Chinese, and this is actually is a way that Chinese will show their appreciation.

Nowadays, many international companies are doing business in China, arranging hotels, flights, business meals, presents, etc. all on the company’s expense. If your company spends more than a few thousand USD per month, and you could be guaranteed savings from 30-40%, would you hire a company and spend 5% to achieve this goal?

Tell me what you think?

By Jeffrey Holtmeier (Jeff@cu-bd.com) & Junying Sun  (jun@cu-bd.com)

On July 1, the Beijing to Shanghai route will begin service shuttling passengers at speeds of 300kmh (210mph) along the 1,100 km (650 mile) route for a cost of $86. This is about half of the cost of air travel between these cities, and about half the time factoring in airport and air time. 

By reducing cost and travel time in between Chinese cities, this will continue to spur trade, and ease the flow of people from east to west, and west to east. As China continues to develop in to a consumer society, and expand growth from the eastern shores to the middle and west, additional opportunities for China business development will follow. 

China plans to urbanize another 400 million people in the next 10-15 years and many will likely move into second and third tier cities like Zhengzhou, Chengdu and Hangzhou. US companies who recognize the opportunities created by China's massive infrastructure investments and urban migration can create opportunities to be successful first movers in their market segments in China. While most Americans have heard of Shanghai and Beijing, between these two cities there are less than 40million of the 1.37 billion people, and the China land mass is equal to USA.

While the percentages look dramatic, it's important to cite the relative nature of these cost increases to similar factory jobs in the US and EU. Example: Honda's Ohio factory has an average hourly wage (including benefits) of $50, and Hundai's Alabama factory is $27.

Here are several major Chinese cities monthly  'Minimum Wages' as of March 2011 in Yuan after increases ranging from 14-28%:

Jiangsu   1,140 

Shanghai 1,280

Chongqing 870

Zhejiang    1,310

Guangdong 1,300

While the increases are significant, note the range based on current exchange is $133 to $200 USD per month.  Chinese labor laws are strict and from this figure there are worker contributions to social security, housing fund and requisite tax deductions, thus on a gross basis this maintains an hourly rate from $0.83 to $1.25 per hour.

Going forward, companies may seek  lower cost labor for certain low skilled manufacturing in countries like Viet Nam and India which pleases the Central Chinese government as China continues to move up the value chain and lead the world in higher skilled production including electronics manufacturing. These relative increases may impact end user pricing albeit marginally, but likely won't deter China from their continued dominance in high quality/low cost producers to the world, unless of course US Labor Unions can compete with a loaded hourly wage of $1.25.

Remember, this is the same country that produces many high quality goods from famous world wide clothing vendors, and China is the manufacturing home of Apple, Dell, HP and many other high quality products, so this proves that China has the ability to manufacture 'quality' products if directed properly.

Many times, US companies will outsource production of products on their own to a China vendor, expecting similar quality to what would be manufactured in the US. Often, these US companies will be disappointed in the quality of their products that are made in China because the expectation was not clearly defined in the contract or in the specification, and there is a lack of understanding of the Chinese cultural mindset.

This is a simple example of the significant cultural differences between China and USA that need to be considered before doing business in China. It is best that when a US Company decides to outsource to China that these companies will find a reputable company with Chinese staff on the ground in China to provide that bridge between the deep cultural divide that exists.

This offshore structure provides flexibility for exit strategies whether an IPO or acquisition, reducing US Corporate taxes and reducing the impact of China's currency exchange restrictions.

The 2010 data show China holding its place as the top source of imports into the US after having jumped ahead of Canada, Japan in Mexico in the past decade. China also rose to become the number 3 market for exports in 2010, up from number 18 in 1090 and number 13 in 2000.

Like many countries, China once relied on the US for computers, but now looks to America for semiconductors, civilian aircraft and parts, and complex industrial machinery as well as medical technologies and materials such as copper and chemicals that serve as inputs for other goods.

Many US companies who once saw China as a threat now see it as an opportunity. Many Chinese companies are looking for US quality which is still superior to Chinese goods and services. Many small companies in the US are experiencing faster growth in sales to China than sales domestically, a pattern begun by large companies such as Caterpillar who for the first time in their long history, reported that 2010 revenue in Asia exceeded that in Europe, Africa and the Middle East combined.

Chinese consumers embrace US 'brands' and appreciate the high quality, and as they move to a consumer based economy, there is significant opportunity for many US products and services.  

With the financial condition of states and municipalities, they're all hard pressed to offer incentives, particularly in the form of tax concessions.Read Evergreen Solar's CEO Michael El-Hillow on why he closed his US plant, fired 800 workers and is moving his company to China.

As told to Diane Brady:

"We make silicon wafers that go into solar panels. In 2008 we decided to build a plant in Massachusetts to be near our research and development facility. There was a groundswell of optimism that the U.S. was going to take the lead in the drive for alternative energy.

There were challenges from the start. Lehman Brothers was our banker and had almost a third of our outstanding shares as part of a financing transaction. That disappeared in Lehman's bankruptcy and cost us about $300 million. Then we went to the federal government to get help from the TARP funds, but they said no because we weren't a financial institution.

In December 2008 we were approached by a Chinese company, Jiawei, which was impressed with our wafer technology. The Chinese government agreed to support a loan that would cover two-thirds of our expansion in China. The subsidies we received from the government here covered less than 5 percent of the cost of our U.S. plant. We received $20 million and some future tax credits, but you can't pay taxes if you don't make money.

One mistake was making the U.S. facility too large. We should have made it a quarter the size. I wrote to the governor of Massachusetts, and we went to everyone we could think of—Congress, our banks. Nobody could help us. Then, late last year, prices went down 10 percent in one month for the modules we sell—on top of steadily falling prices for the last three years. That left us no choice but to stop making panels in the U.S. and shift our focus to making wafers in China. The access to capital for startups there is staggering.

About 800 people in our U.S. factory will lose their jobs, but the company wouldn't have survived if we didn't make this choice. Now we'll focus on what we do best. If we had stayed here, we would have been insolvent by September. We needed to do this to survive, although my hope is that some day more jobs will come back here."

Link to story:http://www.businessweek.com/magazine/content/11_06/b4214080431984.htm?chan=magazine+channel_etc.

At the current size and rate of growth in China (10.2% in 2010) the economy in China will add about $1 trillion in GDP in 2011. What that means in simple terms that is almost like creating half of the United Kingdom… in 1 year. Over the last 10 years, China’s economy has created 3 United Kingdom’s, practically from a stand still.

According to Jim O’Neill, the chairman of Goldman Sachs Asset Management group (and the man who coined the acronym BRIC for Brazil, Russia, India and China) the behemoth in the group, China, has had a transformation so thorough that most people (companies, investors) don’t realize the sheer dimension of its rapidly growing importance in the world economy.

With China’s incredible momentum, and their plans to urbanize another 400 million people over the next 12-15 years, I would not want to be short China.

How does your company’s strategic plan include China? China’s market opportunity is so significant and their labor force so vast that it creates a wide array of opportunities. There are many potential opportunities for technology companies, health-services providers, insurers, and pharmaceutical companies in China’s fledging healthcare industry, just to name a few.

Spend a little time doing China market research and regulatory reviews to see how your company can take advantage of this once in a lifetime growth opportunity. Whether it is China outsourcing or distribution in China, don’t look past this giant of the middle kingdom.  

The USA (3,794,083 square miles) and China (3,696,100 square miles) are nearly identical in size, so imagine this:

Take the population of the United States then add Mexico, Canada and Brazil, throw in the rest of the Western Hemisphere, than add Japan and Nigeria and put all of these people in the USA and you now 1.3 billion people. 

Should America just adopt Chimerica as our 51st state rather than start a trade war? While the US and China have a symbiotic relationship, certainly, this won't happen. If not the new state of Chimerica, why don't we step back and realize that the world has changed and China is an economic force to be reckoned. At the same time, we have deeply important economic ties that create Chimerica. That said, lest we forget that the USA has significant human and economic resource advantages over this 'developing country' therefore we should focus our energy on how to adapt to the new world order of Chimerica. 

We should be realistic and just concede some facts, including China has more people (4-1) more engineers (10-1), more University graduates (6 million to 1.5 million in 2009), and a significantly higher savings rate. I also wish that our treasury secretary would acknowledge that the Yuan has risen almost 25% in value to the US dollar in the last 5 years, and in this period, their exports continue to rise and GDP is double digits while keeping inflation relative. 

In an earlier CUBD blog  'Is it REALLY made in China' I note that the parts value of an iPhone in the US-China trade imbalance registers as $178 and the actual 'value' added by China is just $6.50. In the January 11, 2011 edition of the Wall Street Journal, editors also confirmed these figures and asked why would we start a trade war over $6.50? Likely the answer is because this week Chinese President Hu Jintao will visit with President Obama and with our inimitable Mr.Geithner trumpeting his currency manipulation mantra again, so it seems there is some chest thumping rhetoric in advance of these important meetings.

I'm still intrigued by these seemingly obvious facts: If we use the ubiquitous iPhone as an example let's really look at the impact of China's contribution to this economic equation and how we SHOULD deal with it:

Presuming the iPhone retailing at $299, the retailer/distributor margins (earned mostly by US companies) are $75 and Apple's margin is about $80.Therefore, about half of this retail price goes to US companies, their employees, and shareholders in some form. (Good for US economy)

Let's consider the derivative products and services of the iPhone in the market. Telecom companies like AT&T and now Verizon have profited by selling data services for iPhone, programmers are developing applications, musicians and artists receive royalties and companies are making and selling accessories. (Good for US economy)

Is it not obvious that the $6.50 in value delivered by China (assembly work that USA cannot do at this cost) actually benefits USA many times over? By studying other industries, you'll see that this iPhone example is not unique to the economic conundrum that the USA faces with China.

For now, Chimerica IS the new world order, and if we all stopped listening to politically motivated agendas or blaming someone else for our problems, I believe that Americans are smart enough to figure out more practical ways to reduce unemployment quickly by adapting to this new world order which will in turn spur new areas of economic growth.

I've been doing business in China since 2003, and I can state unequivocally that US businesses are more innovative, creative, more efficient, display better management skills and posses many other strengths that Chinese currently lack. It is time that we concede some parts of the economic food chain, and offer our value added services where they are sorely needed to create a win-win relationship with Chimerica and the new world order. This is a simple solution that truly benefits the USA for the foreseeable future.

Whether it is software development, design architecture, product design, management skill-set, medical technology of any innovative product or service that Americans bring as a unique talent, the USA has a yin-yang opportunity with China.

Regardless of your industry or company size, you should rethink your strategy to include Chimerica. Whether you take your company's ingenuity and combine it with China's labor arbitrage in sourcing, or reach their vast and ever growing consumer marketplace, consider integrating your plan to create your own Chimerica as it is here to stay.

Jeff Holtmeier

China US Business Development

(From Wikipedia: Chimerica was first coined by historian Niall Ferguson and economist Moritz Schularick in late 2006. They argue that saving by the Chinese and overspending by Americans led to an incredible period of wealth creation that contributed to the global financial crisis of 2008–2009. For years, China accumulated large currency reserves and channeled them into U.S. government securities, which kept nominal and real long-term interest rates artificially low in the United States. Ferguson describes Chimerica as one economy which "accounts for around 13 percent of the world’s land surface, a quarter of its population, about a third of its gross domestic product, and somewhere over half of the global economic growth of the past six years.”)

China has launched trading in its currency in the U.S. for the first time, an explicit endorsement by Beijing of the fast-growing market in the yuan and a significant step in the country's plan to foster global trading in its currency.

The state-controlled Bank of China Ltd. is allowing customers to trade the yuan, also known as the renminbi, in the U.S., expanding the nascent offshore market for the currency which began last year in Hong Kong.

The decision is the latest move by China to allow the yuan, whose value is still tightly controlled by the government, to become an international currency that can be used for trade and investment.

"We're preparing for the day when renminbi becomes fully convertible," Li Xiaojing, general manager of Bank of China's New York branch, told The Wall Street Journal. He said the bank's goal is to become "the renminbi clearing center in America."

Until the middle of last year, the buying and selling of yuan had largely been confined to mainland China by the country's strict capital controls. But in July, it opened the currency to trading in Hong Kong. Daily trading has since ballooned from zero to $400 million.

Bank of China limits the amount of yuan that can be converted by a U.S.-based individual customer to up to $4,000 a day. The restriction is designed to fend off speculation in the currency, bank officials say. But there is no limit, at least for now, on the amount that can be converted by businesses, so long as they are engaged in international trading. The bank has no restrictions on the ability by U.S.-based customers to convert the yuan back into dollars.

The loosening of restrictions on trading yuan started in Hong Kong, a former British colony under Chinese sovereignty but with its own legal and financial systems. Anyone with a Hong Kong yuan account is now able to trade the currency. Bank of China's move could further open up the currency to trading and attract Chinese companies with offices in the U.S.

Reference: WSJ

AS a national strategy, China is trying to build an economy that relies on innovation rather than imitation. Clearly, its leaders recognize that being the world’s low-cost workshop for assembling the breakthrough products designed elsewhere — think iPads and a host of other high-tech goods — has its limits.

So can China become a prodigious inventor? The answer, in truth, will play out over decades — and go a long way toward determining not only China’s future, but also the shape of the global economy.

Clues to the Chinese approach emerge from a recent government document containing goals for drastically increasing the nation’s production of patents. It offers a telling glimpse of how China intends to engineer a more innovative society.

The document, published in November by the State Intellectual Property Office of China, is called the “National Patent Development Strategy (2011-2020).” It discusses broad economic objectives as well as specific targets to be attained by 2015.

In a recent interview, David J. Kappos, director of the United States Patent and Trademark Office, pointed to the Chinese targets for 2015 and called them “mind-blowing numbers.”

According to a translation of the document provided by the patent office, China’s goal for annual patent filings by 2015 is two million. That number includes “utility-model patents,” which typically cover items like engineering features in a product and are less ambitious than “invention patents.” In the American system, there are no utility patents.

In 2009, about 300,000 applications for utility patents were filed in China, roughly equal to its total of invention patents, which have been growing slightly faster than utility filings in recent years. But even if just half of China’s total filings in 2015 are for invention patents, the national plan calls for a huge leap, to one million, by 2015. By contrast, patent filings in the United States totaled slightly more than 480,000 in the 12 months ended in September, according to the patent office.

China’s patent surge has been evident for years. In October, Thomson Reuters issued a research report, forecasting that China would surpass the United States in patent filings in 2011. “It’s happening even faster than we expected,” said Bob Stembridge, an intellectual-property analyst at Thomson Reuters.

Yet if the trend is not surprising, the ambition of the Chinese plan is striking. The document indicates, for example, that China intends to roughly double its number of patent examiners, to 9,000, by 2015. (The United States has 6,300 examiners.)

 “The leadership in China knows that innovation is its future, the key to higher living standards and long-term growth,” Mr. Kappos says. “They are doing everything they can to drive innovation, and China’s patent strategy is part of that broader plan.”

China’s strategy is guided and sponsored by the state. Should that be a source of concern for the United States, and perhaps a trade issue? Or is the plan likely to resemble past efforts by other governments to give their companies an edge in global competition?

In the 1980s, the Japanese government was widely viewed as the master practitioner of industrial policy, and Japan Inc. seemed poised to overrun one American industry after another, including computers.

As we know, it didn’t turn out that way, partly because of steps taken by the American government and industry. A semiconductor trade agreement was intended to pry open the Japanese market, and I.B.M. invested in a crucial but then-struggling supplier, Intel.

More important, however, Japan never became a force in a particularly unruly, imaginative side of computing: writing software. Generalizations are risky, but it seems that Japan, as a society, has not produced enough of that kind of innovative skill, despite being a formidable patent generator. (In that area, Japan is still slightly ahead of the United States by some measures, though Japan’s patent filing pace is slowing.)

To call Japan’s industrial policy an outright failure would be simplistic. In some industries — autos, machine tools and consumer electronics, for example — it has done quite well.

The Chinese patent strategy document is filled with metrics, right down to goals for patents owned per million people. It speaks of an innovation-by-the-numbers mentality, much like a student who equates knowledge with scores on standardized tests.

“It is a brute-force approach at this stage, emphasizing the quantity of innovation assets more than the quality,” said John Kao, an innovation consultant to governments and corporations.

But it would be a mistake, Mr. Kao said, to assume that China will necessarily follow a path similar to Japan’s. China, he says, is not only much bigger than Japan, but it also has a more individualistic entrepreneurial society, despite its Communist government. Someday, he predicts, China will have its entrepreneurial equivalents of Steve Jobs and Mark Zuckerberg.

DESPITE China’s inevitable rise, Mr. Kao said, the United States has a comparative advantage because it is the country most open to innovation. “American culture, more than any other, forgives failure, tolerates risk and embraces uncertainty,” Mr. Kao says.

Many innovative products and technologies, he says, will be made elsewhere. “But America’s future lies in being the orchestrator — the systems integrator — of the innovation process,” Mr. Kao said. “Look at Silicon Valley. It is a place where smart people from all nations, all languages and all ethnic groups come together. It’s the capital of innovation assembly.”

 NYT January 2011

BEIJING—China eased capital controls on exporters' foreign-currency earnings this weekend—a move that over time could damp inflationary pressures and slow growth in the massive foreign-exchange reserves that have made Beijing a heavyweight global investor.

The move, an expansion of a program that allows exporters to keep their foreign-currency earnings overseas instead of changing them into yuan, was announced Friday and took affect on Saturday.

Chinese exporters get almost all their revenue in dollars and other foreign currencies. In the past, they could use some of that money to cover foreign-currency costs such as imported materials for their factories, but they could use some of that money to cover foreign currency costs such as imported materials for their factories, but they were required to bring the remainder back to China and exchange it with the Central Bank for Yuan.

The system, which hails from a time when China was more worried about preventing capital outflows, has long vexed the country’s monetary authorities. While the influx has given China’s government huge global clout as an investor, it has also added to the slosh of money in the domestic economy at a time when China is trying to fight rising consumer price inflation.

WSJ January 2011

Visiting China was considered an indulgence for most financial executives just a few years ago.

But when Berkshire Hathaway Inc.'s Warren Buffett, J.P. Morgan Chase & Co.'s James Dimon, Kohlberg Kravis Roberts & Co.'s Henry Kravis and Carlyle Group's David Rubenstein all visited China in recent months, the trips were seen as something else entirely: crucial steps to keep their respective companies growing.

China has been important to global economic growth for years, of course. The country likely emerged as the world's second-largest economy in 2010. It is expected to show close to 10% growth in both 2010 and 2011.

Until recently, however, China was something of a sideshow for many financial professionals. Global growth was key to China's health, and the country had an impact on many economies. But China didn't seem to matter much to most deal makers and wealth creators.

That's all changing. China is opening its markets, slightly loosening the reins on its currency, and is emerging as a key to the future of almost every Wall Street firm. It's also a linchpin of the investment strategies of a growing number of hedge- and private-equity funds.

Consider that global initial public offerings of Chinese companies amounted to $104 billion in 2010, according to data-tracker Dealogic, up from $54 billion in 2009. Last year's tally amounts to $126 billion if Hong Kong companies are included, though it includes domestic markets not fully accessible to foreigners.

By comparison, less than $34 billion of U.S. IPOs took place in 2010, the second consecutive year that Chinese companies topped U.S. companies in IPO issuance. Bankers that didn't participate in Chinese IPOs risked seeing smaller bonuses. No Chinese investment bank has emerged as a global power, reducing alibis for not establishing a presence in deals available to foreigners.

Meanwhile, mergers-and-acquisitions specialists are racing to China to work with companies like China National Offshore Oil Corp., known as Cnooc, and China Petroleum & Chemical Corp., or Sinopec, among the biggest deal makers in 2010. Chinese companies completed 3,235 acquisitions valued at nearly $190 billion, or 9% of all global deals in 2010. That was more than any other nation except the U.S. and more than the $162 billion of deals by U.K.-based companies. China also was the second-most frequent target of purchases by foreign companies in 2010, after the U.S.

The Chinese economy is expanding so quickly it's helping to offset stagnant growth elsewhere in the world for a growing number of companies. Meanwhile, many private-equity firms are racing to cut deals in China, to tap into the nation's growth—and to demonstrate to clients that they're capable of finding opportunities in China.

Mr. Kravis's KKR is putting the finishing touches on a $1 billion fund to invest in fast-growing companies in China, its first China-focused fund after several years of investing in China through broader funds. Rivals like TPG and Carlyle, which have long has been active in China, are stepping up activity. TPG recently announced plans to raise two Chinese currency-denominated funds, each sized at more than $700 million.

To be sure, a number of private-equity and hedge-fund chiefs privately share frustrations about China, even as they search for local opportunities. The rule of law is weak, some say, making it harder to resolve disputes. Others question the reliability of data published by private and public bodies, or aren't sure who controls Chinese companies, which usually are influenced by government officials.

Still other private-equity executives worry that assets in the eastern part of the country are so picked-over that they're heading to central and western hinterlands to find opportunities.

"The western region's growth is accelerating, thanks to rising demand for and rapid development of resources and related industries," Nomura says.

The question for 2011 and beyond is whether Chinese authorities can keep the country growing apace, even as they press the brakes on inflation, which is growing at a clip of more than 5%. Strong future growth may come only if Chinese leaders can transform the nation into a consumer-focused economy.

"The transition to a consumer society in China represents the single biggest challenge for the global economy," says Perella Weinberg's Mr. Arbess,  "and the biggest opportunity for markets."

 WSJ January 2011

Recently, two academic researchers estimated that one such product, the Apple iPhone added $1,9 BILLION to the US trade deficit with China. This figure is based on traditional ways of measuring global trade but fail to reflect the complexities of global commerce where the design, manufacturing, part procurement and assembly of the products involve several countries.

Therefore, the entire $178.96 estimated wholesale cost of the shipped phone is credited to China, even though the value of the work performed by the Chinese workers at Foxconn accounts for just 3.6% ($6.,50) of the total, the researchers calculated in a report this month,

This is not specific to hi-tech products, but to how imports and exports are measured, which in turn can have real world consequences, evidence by the recent trade war spat between China and US.

Recently, Chinese Premier Wen Jianbao cited that trade tensions are overblown,,,,

With all of the economists at our disposal, how about a little due diligence???

Some content derived from WSJ.com

Source:China Daily

Dec. 7 – China recently released a circular allowing foreign capital involvement in China’s medical institutions sector for the first time. Specialists believe the new policy will have a significant impact on the country’s ongoing reform of the medical industry.

The Chinese State Council forwarded the “Circular on Further Encouraging and Guiding Social Capital to Investing in the Foundation of Medical Organizations” on November 26, and gave permits to foreign enterprises to establish both profitable and non-profit medical institutions in China. The circular clarifies that China will offer favorable policies to Hong Kong, Macau and Taiwan investors who are interested in founding medical institutions and also encourages all kinds of foreign investment in medical organizations across China’s middle and western regions.

The circular says China will gradually relax restrictions on foreign share proportions in jointly invested medical institutions, and will finally open up the market to wholly foreign-owned medical organizations after first opening up several trial locations.

The government will simultaneously simplify the licensing procedures for foreign investors interested in establishing medical organizations. According to the circular, jointly-invested medical institutions need to get approval from provincial authorities, while wholly foreign invested medical organizations need to apply for a license from China’s Ministry of Health and Ministry of Commerce.

China’s medical sector is a field which foreign investors have been interested in for a long time. According to a 2009 report on CBN, a Chinese financial newspaper, China started to see foreign investment into special clinics and medical facilities in the early 1990s. However, foreign investors slowed down in 2005 when China’s public hospital-focused medical reform was widely criticized as “a failure” – leading to a surge in the price of medicine and other social problems. It was not until 2009 that China published the new plan of reform encouraging the entrance of “diverse investors” into the public health sector while ensuring fundamental medical services from public hospitals to the people.

In addition to foreign capital, the circular also welcomes private and social capital entrance into China’s medical institutions sector.

Analysts believe the new policy will improve service and management across the sector by introducing more competition to the market. Wang Jishan, vice president of the People’s Hospital of Peking University says the new policy will bring more opportunities for both hospitals and doctors.

“Doctor mobility will grow and doctor salary will see an increase too,” he added.

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