China to blow up this year...

[pennyk]

Just arrived in Shanghai this afternoon.... Didn't get much more info on Beijing than what I found out of the first day.

Driving from the airport, its clear that Shanghai has a very different "feel" to Beijing. Its much newer and cleaner, less traffic, almost no historical sites/ temples. There is a very "optimistic" feel to the city
There is lots of building work going on..... it has the feel of Beijing 3 years ago or so.
It seems much more international..... there are alot of Japanese supermarket chains and American fast food joints, which you don't see so much in Beijing.
There is more space, both open space and space btw buildings.
I haven't got any planned meetings with locals, so won't get as much information here....... but am off to World Expo tomorrow, which should be fun! Hopefully some rain will keep some people away, so the crowds aren't too bad.

cheers
Pen

 

[pennyk]

Well, I learned 3 very important things today.
Firstly, there are a hellavu lot of people in China... and they had all travelled to World Expo today!!
secondly, that a slight phobia of crowds and tight spaces, and World Expo in China are not a good combination!!
and thirdly that Chinese people are extremely patient and long suffering. The queue to get inside the Aussie pavilions and many others was 3-4 hours long!!!!!!!

The crowds were unbelievable. Think showground pavilion at Easter Show and multiply it by 10 or more. I was very fortunate to have VIP passes to the Aussie and German pavilions, and a couple of the Chinese pavilions, and so got to see inside these ones. The only other pavilion I saw was the Africa pavilion, which had "open entry".. no queueing up, and around 20 countries exhibiting inside. But everything else, I just saw from the outside.

There were very few westerners there, but they did treat us well. I got sent through an entrance gate which was opened just for me, while they directed all the Chinese through the main, crowded gates... and this happened several times.

So, a good day but exhausting, and I'm glad to be back in my solitary hotel room!

Pen

 

[andrew_de_a]

What exactly is the world expo?

 

[mrsdawnrazor]

Its like Expo 88 in Brisbane where all different countries showcase themselves in pavilions. Mainly for the Chinese domestic market as they don't get to travel/cant afford to travel much.

I have just done a 3 day whistle stop tour to Guangzhou. When I was up there a year ago the impacts of the GFC where obvious, mainly because the pollution had dropped and for the first time in 6 years I could see blue sky. Went back this time, and it is just as polluted as ever. The factories are back churning out at full capacity and the only hold back is the labour shortage issues. A lot of workers did not come back after Chinese new year as the Government is paying them to stay on their land as there is a big fear of too much migration to the cities.
In addition the Government has imposed a 20% increase to the minimum wage 3 times over the last 12 months and there is one more to go. One of the factories I work with now imports labour from the Philippines as it is cheaper than employing local labour.
There is a HUGE amount of building going on in the Pearl River Delta. In the 3 months since I last visited I could not believe the amount of new shops and apartments that have been built. The is still an amazing amount of domestic demand that is untapped and the wage rises are increasing the amount of disposable income available to the most basic worker.
In Guangzhou, due to its proximity to the key ports, the government want to turn it into a tech zone and are actively truing to move all manufacturing industry West. This is being resisted as there are few skilled workers and it has the potential to put manufacturing back 20 years as a completely new set of workers will need training. What I am seeing is these factories and companies making plans to relocate out of China and either to the Philippines or even to Eastern Europe.
In summary I don't think China will explode as there is so much latent internal demand, but I think it is starting to lose its position as the cheap manufacturing centre for the developed world.

 

[oracle]

China's Billionaire Builder

Read an interesting artile on Bloomberg's today.. Full article here

Zhang Xin is betting hundreds of millions of dollars that the warnings of a housing crash are wrong. The former sweatshop worker has a track record of being right.

.....

“I don’t see any bubbles,” says Zhang, dressed in a white V-neck zippered top, black slacks and red heels. “The next few months will be a fantastic time to buy.”

Bit about the Zhang Xin from Wikipedia

Zhang Xin (simplified Chinese: 张欣; traditional Chinese: 張欣; pinyin: Zhāng Xīn, born 1965) is a wealthy businesswoman from Mainland China. Presently, she is the CEO of SOHO China, the largest real estate developer in Beijing.

.....

In 2007, she was selected as one of the “Ten Women to Watch in Asia” by the Wall Street Journal. In 2008, she was listed among Forbes magazine's "World's Most Powerful Women". In 2009, Zhang Xin was included among Forbes’ "Top Ten Billionaire Women We Admire" and Financial Times’ "Top 50 Women in World Business". In March 2010 she was named among “China Top 10 Career Women Role Models in 2009” by the All-China Women’s Federation, China Sun Media Group, Sina.com and Hunan TV.

Cheers,
Oracle.

 

[Intrinsic_Value]

and now i am ment to take my cues from a property developer.
No thanks i will pass

 

[WinstonWolfe]

If she had any brains she would have diversified heavily out of property.

If she has, then she isn't betting hundreds of millions on property not tanking. Thought it was an opm public company anyway.....

 

[oracle]

and now i am ment to take my cues from a property developer.
No thanks i will pass

If she had any brains she would have diversified heavily out of property.

If she has, then she isn't betting hundreds of millions on property not tanking. Thought it was an opm public company anyway.....

She is a very very successful property developer (think billions). Anyone who has amassed this much wealth from virtually nothing knows something about making money that ordinary Joe doesn't know.

Secondly, she has been right several times in the past about her predictions and puts her money where her month is.

WW, I don't know much about her but her stake in the company is $2.2 billion.

I am not trying to defend her, but I like to look at all self made successful people from asset classes I have particular interest in and don't just make arrogant comments like I am not going to take cues just coz they are a property developer

Cheers,
Oracle.

 

[oracle]

If she had any brains she would have diversified heavily out of property.

Neither has Warren Buffet or Donald Trump. Even Bill Gates has majority of his wealth tied to only one company Microsoft. I don't see any of them regretting after decades of investing in only one asset class / company.

You don't need to diversify to be successful if you know what you are doing.

Cheers,
Oracle.

 

[WinstonWolfe]

I am glad I didn't take SOHO's initial share offer.

 

[oracle]

I am glad I didn't take SOHO's initial share offer.

What is your point? Why are you trying to change the topic of discussion? When were we ever discussing investing in her company? How do I know if the initial offer was not overpriced in the first place? Lots of companies have done that in the past. I can also argue had you invested in her company stock in Dec 09 you would have tripled your money today. But there is absolutely no merit having such discussion.

All I did was post her views on China's property market. Which was what this thread was about. And I tried to give a brief introduction to why I thought her views hold some merit because of how successful she is and her past record of her predictions. Unlike, some of the other economists making extreme predictions without any runs on the scoreboard

Cheers,
Oracle.

 

[WinstonWolfe]

Look Oracle, if you want to believe the CEO of a public property developer who says she sees no bubbles without explaining what criteria she uses to look for or define a bubble, then invest in SOHO.

 

[oracle]

Look Oracle, if you want to believe the CEO of a public property developer who says she sees no bubbles without explaining what criteria she uses to look for or define a bubble, then invest in SOHO.

I do not invest in overseas market. Just like to know what's going on there that might have impact here.. that's all.

And Yes, I do see the conflict of interest you are referring to...but that still doesn't change my opinion on listening and learning from the successful.

Cheers,
Oracle.

 

[Intrinsic_Value]

...but that still doesn't change my opinion on listening and learning from the successful.

Cheers,
Oracle.

I agree with this part in so far as developing future strategies for myself.
Look at how other successful people have done things and then try to replicate the procedure at the right point in time.

But that doesnt mean i will automatically follow that persons current commentary, especially in something that they have a vested interest in.

One involves the analysis of their structural investment journey (good), the other listening to their offhanded commentary (potentially a yawn).

I'm not very good at explaining this stuff.

 

[Aaron Sice]

WW - we're not talking about investing in SOHO, we're taling about a China property collapse.

 

[WinstonWolfe]

WW - we're not talking about investing in SOHO, we're taling about a China property collapse.

Oracle, listen and learn from all of the successful, not just widget makers who want to sell widgets.

Aaron, before you jump in your V8 and head down to Subway for a 12" meatball sub and litre of coke, say something about whether Chinese property will collapse.

 

[oracle]

Oracle, listen and learn from all of the successful, not just widget makers who want to sell widgets.

WW, I agree with what you are saying. I have no interests in her company or her companies developments.

What interested me is how she become a billionaire from virtually nothing. Why is she pouring millions and millions into China's property market inspite of all the bear predictions. Surely, she can't be crazy to be investing all this money if the situation was so bad and unsustainable.

Who knows if she is going to be right this time around like she has been in the past. I guess only time will tell.

Secondly, in my personal opinion it is extremely paramount to have a close eye on China's economy for anyone who heavily invests in Australian companies and property. If China sneezes Australia will definitely catch a cold, IMHO!

Cheers,
Oracle.

 

[Deltaberry]

China property might collapse. China, however, won't collapse. But if it slows down, we will. Simple. Looking forward to my 2-month trip to a few Chinese cities in November. Might check out the real estate market while I'm over there.

 

[Deltaberry]

Its like Expo 88 in Brisbane where all different countries showcase themselves in pavilions. Mainly for the Chinese domestic market as they don't get to travel/cant afford to travel much.

I have just done a 3 day whistle stop tour to Guangzhou. When I was up there a year ago the impacts of the GFC where obvious, mainly because the pollution had dropped and for the first time in 6 years I could see blue sky. Went back this time, and it is just as polluted as ever. The factories are back churning out at full capacity and the only hold back is the labour shortage issues. A lot of workers did not come back after Chinese new year as the Government is paying them to stay on their land as there is a big fear of too much migration to the cities.
In addition the Government has imposed a 20% increase to the minimum wage 3 times over the last 12 months and there is one more to go. One of the factories I work with now imports labour from the Philippines as it is cheaper than employing local labour.
There is a HUGE amount of building going on in the Pearl River Delta. In the 3 months since I last visited I could not believe the amount of new shops and apartments that have been built. The is still an amazing amount of domestic demand that is untapped and the wage rises are increasing the amount of disposable income available to the most basic worker.
In Guangzhou, due to its proximity to the key ports, the government want to turn it into a tech zone and are actively truing to move all manufacturing industry West. This is being resisted as there are few skilled workers and it has the potential to put manufacturing back 20 years as a completely new set of workers will need training. What I am seeing is these factories and companies making plans to relocate out of China and either to the Philippines or even to Eastern Europe.
In summary I don't think China will explode as there is so much latent internal demand, but I think it is starting to lose its position as the cheap manufacturing centre for the developed world.

Pearl Delta was hit last year as a lot of manufacturers had over-extended themselves and the sudden slow-down in exports smashed them. A few manufacturer friends were telling me this time last year how some owners in their village (which of course is bigger and more populated than Adelaide) just closed down overnight and disappear.

 

[Sunfish]

China still has a big ace up it's sleeve and The Party has good reason to play it, and it ISN"T to look after The West, it will be to keep the masses under control. That is the one big thing which keeps policy makers' mind on their job. They don't want to defend against the type of chaos which brought them to power because they know it would be unstoppable.

They can let their renminb revalue V their trading partners, thus allowing cheaper imports and then follow the example post-war America where they tooled up to sell into the domestic economy. They allow wages to climb so that the newly cashed up (and HAPPY) workers can start consuming some of the stuff they make. They will still export of course. 10% dearer chinese goods isn't going to open the door for Australian manufacturers. LOL

China can really only have major problems if they have civil unrest and (to me) the solution to that is simple: Domestic consumption. It worked for the Yanks.