Observations on China

I recently read that David Sedaris moved to Paris and started writing on France only to be sorry a few months later he had so quickly written about Paris and ended up sounding like the typical American in Paris. Nevertheless because I belong to a more rare group, that of an Argentine in China I will dare to make a series of comments on China with the caveat that I am no China expert and have only been four times to China since 1988. My last visit ended yesterday.

On China and Cars:

China invested a lot in car plants. Chinese have bought cars like crazy during the last 5 years. In 1988 it was all bikes. Now it´s all cars. Madrid has one avenue, Castellana which is extremely wide and cuts the city in two. In Beijing a Castellana is a normal avenue. Most avenues have 6 to 8 lanes. This policy is not sustainable because China does not have the resources that it takes to make and use cars, namely iron, oil, oxygen... It is also dangerous. Since so many people in China just got a car for the first time it is probably the nation with most drivers in the world but also with the least experienced drivers. Moreover the conversion of bicycle nation to car nation seems to be the opposite of what the world needs. In Europe bicycle riding is on the rise, in China cyclists are a dying breed….literally.

On China and Pollution:

Mostly as a result of oversupply of cars and taxis and lack of a subway system, Beijing has an incredible level of pollution. Horrible. The worst I have ever experienced. Indeed when I was there last week even the Chinese newspaper in English that is put out by the government was saying that Beijing was experiencing the worst pollution crisis ever. The paradox of China is that government seems to intervene heavily in controlling unnecessary things, such as what people Google, and not in controlling necessary things, such as what people drive. Government intervenes in environmental policy much more in Europe than in China even though government in China is supposed to be more interventionist. I think that China has an amazing opportunity to lead the world in hybrid cars for example. In the perennial traffic jams of Beijing hybrid cars would do wonders for the environment. Why doesn´t the government act?

On Health Care:

China seems to have a very unusual Communist health care system in which all health services are provided by the government (very Communist) but they cost a fortune to the average Chinese (very capitalist) and the average Chinese lives in fear of getting sick (very American).

On Monopolies:

How come the most populous nation on earth remains the most competitive nation on earth without government intervention in the form of anti trust? As we saw in the West capitalism tends to lead to quasi monopolies or oligopolies as the best companies simply win over everyone else (Microsoft and Google are examples) and sooner or later they end up being regulated as they accumulate enormous market share. But in China this does not seem to happen. Without government intervention capitalism so far seems to work. Indeed where capitalism does not work in China is in the businesses in which government gave itself the monopoly (the election outcome business for example). Other than that there are no killer category businesses in China. America is the country of the killer category retailers, Walmart, Starbucks, Mc Donalds, u name it. But in China fragmentation rules. Even in the computer sector tons of brands compete selling their products through extremely competitive TINY outlets. I could not find one big computer shop in China. China´s brand of capitalism actually works very well.

On Soy Sauce:

Where´s the soy sauce? Isn´t Chinese food suppose to come with soy sauce? On all my meals there soy sauce was never part of the equation. Is soy sauce like the spoon for Italian pasta that nobody uses in Italy but outside Italy everyone thinks it´s very Italian to eat pasta with a spoon?

On Piracy:

I went to a fake market. These are the prices. Adidas Shoes: $6. DVDs: $1 to $2, Games: $2, Hermes wallets: $10, Bulgari, Cartier, Rolex, Watches, $7. Diesel Jeans: $8. Guess T Shirts, $6. In short things at the fake market cost around 90% less than the real stuff. Now as I was in the fake market I wondered about what is fake and what is real. Most of the goods we buy in Europe and USA are made in China and seeing how much it really cost to make them in China and realizing that European companies say Adidas are paying $5 for shoes they sell us for $80 you wonder who´s really faking what here. Is intellectual property worth 90% of the value of things?

On Spitting:

When I was at the Avellaneda High School in Buenos Aires, my class mates an I used to have spitting contests. Distance spitting, precision spitting were some of the common competitions. While most of my class mates and I have given up on the sport, spitting is alive and kicking all over Beijing. Olympic sport? Not sure. Yet, spitting in public is as common in Beijing as say, coughing in public in Europe. Other than the fact that to most foreigners spitting is disgusting I think that the moment the avian flu is transmitted from human to human, the Chinese practice of spitting will become akin of that of having unprotected sex. Simply deadly. Now again, can´t the Communist Party do something about spitting? As I said before there are instances in which strong government helps. If the NYC government, another quasi Communist institution (the tax burden of well off people in NYC is higher than that of well off people in China), was able to fine pet owners $200 for not cleaning after their dogs, what about huge fines in China for…spitting!!

On China Taiwan and Democracy:

Every large democracy has two main parties, the progressives and the conservatives. China also has two main parties the Communist party and the KMT. The only problem is that the Chinese opposition party is in…Taiwan. Now as the entrepreneur that I am I see a great opportunity here to kill two birds with one stone namely unite China and become a democracy. How? By allowing KMT to be the first legal opposition party not only in Taiwan but in China as a whole. In this way China would be united with Taiwan and become a democracy without firing a shot. How about that?

Movie Piracy is bad for Hollywood but Great for America´s image

Whatever Hollywood may say about movie piracy it is thanks to piracy that the Chinese are so exposed to American culture which otherwise they could not afford. The result is a very pro American culture view prevalent in China. Considering the disastrous foreign policy of George W Bush I would argue that if it wasn´t for piracy the average Chinese would have a much worse image of the United States.

On the Yuan:

The largest bill available in China is equivalent to a 10 euro bill. The largest bill available in Europe is a 500 euro bill. Moreover in China credit cards are not widely accepted. Most Chinese don´t have them. Personally I don´t understand this policy as it encourages Chinese with money to save in dollars or euros. Again a missed opportunity for the Chinese government, in my view if they printed at least 1000 Yuan bills they could release considerably more currency in the marketplace without causing inflation. You can´t have a serious currency whose largest bill is worth 10 euros.

On the Chinese and the Indians:

When I am in India people speak perfect English and yet I have a hard time understanding them. When I am in China people speak poor English yet I understand them very well. What I like about Chinese people in business is that they are straightforward. They are single minded about being successful and it is easy to understand what they want. You may say yes or no but you won´t leave the meeting wondering about what their objectives are.

On Mao:

Why do the Chinese continue printing bills showing Mao Zedong a man responsible for the death of an estimated 38 million people during the cultural revolution? Why isn´t Mao for the Chinese more like Franco for the Spaniards or like Stalin for the Russians? I don´t get it.

On Economic Growth and Freedom of the Press:

Economic growth in China is amazing. Since my first visit in 1988 China has been completely transformed. While China is not a democracy it is certainly much, much freer than it was in the 70s, 80s, the trend is in the right direction and in any case for a country in which people until not so long ago starved economic success is more important than democracy. Yet one of the most important elements of true democracy is transparency and I wonder if the Chinese won´t adopt more of the elements we associate with democracy not so much for a love for democracy itself but simply to be able to sustain their economic growth. The Wall Street Journal for example while being extremely conservative in politics it´s very fair in business reporting. As such The Wall Street Journal is a tool for investors. A fair an open press is necessary for investors to make choices. Will this be a loophole towards freedom of the press?