1talking point week in china

1 Talking Point5 The Week in 60 Seconds7 Internet and Tech9 Aviation10 Property11 Energy and Resources12 Economy13 Agriculture14 Society and Culture17 And Finally18 The Back Page

25 February 2011Issue 96www.weekinchina.com

Week in China

Uncle Sam snubs Chinese firm

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Telecoms equipment maker Huawei is stymied in US acquisition attempt

Back in September 2007 Israeliaircraft flew undetected into

Syrian airspace to bomb an allegednuclear facility being built by theNorth Koreans. Unsurprisingly, the Israelis

haven’t explained how they man-aged it. But the speculation is thatSyrian radar might have been dis-abled through a hidden backdoor inone of its microprocessor chips, inwhich a preprogrammed codeblocked equipment from workingproperly. A flick of the “kill switch”,as it is called by the technologygeeks, and Syria’s defensive shieldturned off for the night.How might the failings of Syr-

A connection problem

ian radar systems be relevant toChinese companies? Becausesome American congressmen fearthat Chinese vendors might betempted to wire kill switches intothe US telecommunications sec-tor. And that is giving firms likeHuawei, China’s leading telecomequipment maker, plenty of com-mercial headaches. Huawei claims its products are

now deployed in over 100 countries,helping to connect a third of theworld’s population via telephony.But this week it was forced to relin-quish patents that it had purchasedfrom a Californian technology start-up, adding to another problem: its

sales efforts in the US have had farfrom a smooth ride…

There has been disappointment inits American M&A before?Yes, Huawei was blocked from ac-quiring 3Com in 2008, when a jointbid with Bain Capital was scup-pered by government concerns thatrouters, switches and network cardsmade by 3Com and used by US mil-itary could be at risk of sabotageand snooping.Huawei is also said to have failed

in bids last year to acquire the wire-less network division of Motorolaas well as 2Wire, an Americanmaker of broadband internet soft-

Huawei faces another setback in the US where it’s viewed as a security risk

1

For Huawei the ‘American dream’ is proving more of a nightmare...Photo Source: Reuters

Talking PointWeek in China

25 February 2011

won deals to supply telecom com-panies like Cox Communications,bigger contracts have tended to bemuch more elusive.Last October five US senators

wrote to the Chairman of the Fed-eral Communications Commissionarguing against the sale of Chineseequipment to US telecoms firms.Previously, agencies like the Penta-gon had expressed concern thatmany of its defence contractors re-lied on commercial suppliers forchips, many of which are now fabri-cated overseas. But the letter fromsenators widened the scope again:

“When telecommunications carri-ers purchase equipment fromHuawei, the result is that US com-munications will travel overswitches, routers and other equip-ment that was manufactured anddesigned in China and may be re-motely accessed and programmedfrom that country, and the CFIUSprocess cannot protect against it.”

What about the Chinese reactionto that 3Leaf ruling?“Of course, we all know that Huaweiis a genuine private enterprise,” Xi-ang Songzuo, Deputy Director of the

Talking PointWeek in China

25 February 2011

2

ware. Analysts say that Motorolaand 2Wire were told that Washing-ton was likely to block any deals.Also last year, Huawei ran into sus-tained opposition to its efforts tosupply Sprint Nextel with net-working equipment. And now therefusal by CFIUS (the Committeeon Foreign Investment in the US) toallow it to keep patents it had pur-chased from 3Leaf – these involvedtechnology that binds operatingsystems together. It was all too much for the Global

Times, which rolled out a fiery edi-torial ridiculing the case. This wasanother attempt to stymie Huawei’sgrowth in the US, the newspapersaid. “It seems that the only trans-actions the US is not concernedabout are China’s purchases of USbonds,” it concluded.

What concerns the Americansmost? The most common complaint is thatHuawei is associated with the Peo-ple’s Liberation Army (its founder,Ren Zhengfei, was formerly directorof a PLA research institute). Huawei refutes such claims, in-

sisting it is 100% employee-owned.Indeed on the FAQ section of itswebsite it even states “the Chinesegovernment and the PLA do nothold shares in Huawei, nor do theycontrol the company in any form.”But that doesn’t seem to have

prevented ongoing speculation onits ownership structure, or its rela-tionship with the military. Indeed,in a letter last year to US CommerceSecretary Gary Locke, a group of USlawmakers went further still, accus-ing Huawei of having ties with theTaliban, and the Iranian Revolution-ary Guard too. “Unfounded innuendo” was the

Huawei response.But it’s not just the company’s

acquisition agenda in the US that isbeing curtailed – sales contracts arebeing hit too. Although Huawei has

Talking Point

Institute of International Currencyat Renmin University, told CCTV, go-ing on to describe the speculationon Huawei’s military links as“trumped up”. Nor did Xiang see much room for

maneouvre ahead. “The UnitedStates is now very clear. If your in-dustry is associated with militarytechnology, and if your business isa state-owned enterprise, then theacquisition is basically rejected ongrounds of national security.”Ye Hailin, another CCTV com-

mentator, agreed. “Where once theUS was a beacon of an open econ-omy, now it has become ‘a shiningcity upon a hill’ of protectionism,”he lamented.Weibo comments – the Chinese

Twitter-equivalent (see WiC95) –tend to have been more scathingstill, often accusing the US telecomequipment makers of runningscared of Huawei. “The IT industryis the only industry US companiesstill dominate, so it has to protectit,” trumpeted one irate contributor.“China’s low-cost strategy with itsall-devouring and all-destroyingmomentum makes Europeans andAmericans fearful.”

But hadn’t Huawei been on acharm offensive in the US?Last autumn it teamed up withAmerilink Telecom Corp for a jointbid to serve as an equipment

Week in China25 February 2011

provider to Sprint Nextel, the UScarrier. Under the proposed dealAmerilink would have purchasedequipment directly from Huaweithat it would then have integratedinto Sprint’s network. Amerilink may have also pro-

vided some heavy-duty assistancein the Washington corridors ofpower. It was founded by WilliamOwens, vice chairman of the JointChiefs of Staff under PresidentClinton and a former CEO of NortelNetworks Corp, and also welcomedformer Democrat congressionalleader Dick Gephardt and formerWorld Bank governor JamesWolfensohn as directors. But these efforts don’t look like

they have paid off. On the SprintNextel supplier deal, both Huaweiand its Chinese rival ZTE weredropped from competition with Al-catel-Lucent, Ericsson and Samsung,even though they are said to havesubmitted lower bids. And nowHuawei is being forced to divest the3Leaf patents purchased last year.In fact, regulators seem to have

been caught unawares on the 3Leaftransaction. Huawei actually ac-quired patents from 3Leaf last May,but the deal only came to lightwhen CFIUS officials read about it

via information provided by one of3Leaf’s founders on LinkedIn, a so-cial networking site. That then led to some fairly tense

exchanges, with Huawei saying itdid not think it needed to file for areview in the first place as it was notbuying the company outright, justa few of its patents, and taking onsome of its staff. The deal was asmall one at $2 million.Once the review process began,

the Huawei executives then pushedfor it to go all the way up to the USpresident’s desk. This is unusual.Standard practice is for companiesto withdraw applications if they getan indication that the committeewill not recommend a deal.Huawei refused, adding to the

rancour surrounding the case. Onlyat the last minute did it back down.“This was a difficult decision, how-ever we have decided to accept therecommendation of CFIUS to with-draw our application to acquire spe-cific assets of 3Leaf,” the companysaid. “The significant impact and at-tention that this transaction hascaused were not what we intended.”

The Europeans have some con-cerns too?It’s not just in the US that Huawei

3

GATED COMMUNITY. The Great Wall is one of China’s best-known

landmarks. And for the villagers of Aodi in Zhejiang province, the structure

has also proved an inspiration. A relatively affluent community of 70

households, Aodi became concerned by a rise in burglaries, reports the

Guangzhou Daily. So the villagers decided to build their own wall –

modelled on the Emperor Qin Shi Huangdi’s ancient structure. More than

500 metres long, it uses 70,000 green adobe bricks, similar to those in its

more famed peer at about 70cm thick. Entry to the village is now through a

7 metre high gate, which closes at 10pm; after that, villagers can only enter

with a swipe card. Since the perimeter wall’s completion a month ago there

have been no thefts, says village head Ruan Guolin. The wall cost

Rmb500,000 to construct, with residents contributing 70% of the funds and

the local government the remainder.

Planet ChinaStrange but true stories from the new China

China Business News has

reported that Carrefour may shut

stores in Changchun and

Shaoxing. The French chain has

already closed supermarkets in

Xi’an, Dalian, Henan and Foshan,

states the paper. This follows a

wave of bad publicity for the

retailer, including a government

fine for overcharging customers,

as reported in WiC94.

Keeping track

Talking Point

has run into regulatory concerns. TheEuropean Union has also been inves-tigating the company (and ZTE too),although the substance of the com-plaint was shaped more in terms ofcompetition rules than fears abouttelecommunication security.

Option, a Belgian manufacturerof wireless network cards (whichconnect computers to Internet net-works) has seen most of its shareof the EU data card market disap-pear in the last four years. Itblamed unfair competition, citinginformation including a Huaweiagreement with China Develop-ment Bank in 2009 in which it wasgiven access to a $30 billion creditline (Huawei revenues that yearwere $22 billion).

"Such fund-raising cannot beachieved on the open market," thesubmission stipulated, with the im-plication that the financial re-sources are being used to supportcut-price tendering. Huawei and ZTEnow control 90% of EU wirelesscard sales, according to reports. In fact, Option has now dropped

its case in exchange for a Huaweiagreement to license its own soft-


ware. Now the EU Commission isdropping its investigation too, butnot before some of its preliminaryfindings outlining the “massive”credit lines available to the Chinesetelecom firms were leaked.

Potential for tit-for-tat ahead? China’s Ministry of Commerce wasrestrained in expressing its own dis-appointment on the 3Leaf case, say-ing that it regarded Huawei’s pro-posals to have been a “normalcommercial move based on its owndevelopment needs and marketeconomy rules”.But the timing of the spat is still

awkward, as the Chinese have justannounced the creation of a secu-rity review panel of their own, com-prised of officials from the NDRCand the Ministry of Commerce. Policymakers say the new body is

similar in set up to CFIUS or the For-eign Investment Review Board inAustralia. “China is following inter-national practice. Many nationshave already adopted such an ap-proval process. It will help China tofurther open up and improve policytransparency,” a Ministry of Com-

merce spokesman told the People’sDaily. Some analysts have expressedconcern at the breadth of the newpanel’s terms of reference: nationalsecurity is being defined not just formatters of defence but also in agri-culture, energy, transport and tech-nology too. As for Huawei, it hasn’t given up

on its US prospects. It posted a2,000 word open letter on its web-site this morning in which deputychairman Ken Hu writes that anyclaims that Huawei has ties to themilitary or receives financial sup-port from the Chinese governmentare “falsehoods”, but also that they“have had a significant and negativeimpact on business activity”. In an unexpected move he asked

the US government to investigateHuawei to end “unsubstantiatedsuspicions” it posed a threat to na-tional security, promising that itwould “cooperate transparently”with all government agencies in aUS investigation. Hu even quotesAbraham Lincoln: “Character is likea tree and reputation like itsshadow.” Rumours have been the“shadow of Huawei”, he claims. n

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Illustration: ww

w.benitaepstein.com

Buying Bordeaux, literally

There was an air of inevitability to it; but last week it

finally happened. Oenophile bible The Wine Spectator

has reported that a Bordeaux chateau was purchased

by a Chinese firm.

The 49 acre Chateau de Viaud was bought by

Chinese food giant COFCO for an undisclosed sum.

The magazine says that the deal is significant

because it “integrates COFCO into the Bordeaux wine

trade”. COFCO’s plans include exporting the entire

production directly to its own distribution network in

China. Perhaps surprisingly, locals seem positive

about the deal. “We have a tradition of welcoming

foreigners to develop the market when they have a

passion for our wine,” said Georges Haushalter, a

négociant and president of the Bordeaux wine

councils. “The English, Dutch, Irish … The Japanese

came 20 years ago. It’s logical that the Chinese arrive

“Welcome to my chateau...”

today. It’s a good thing that people like that invest in

Bordeaux.” According to UbiFrance, half of the wine

the Chinese buy is French. But growth potential is

huge, as grape wines make up just 3% of Chinese

alcohol consumption.

The Week in 60 Seconds

1China’s largest social networking website,Renren.com, may finally be going ahead with its US

IPO, according to the Financial Times. The company issaid to be aiming to raise $500 million in an offeringthat could take place as early as June, tapping into in-vestor demand for Chinese tech stocks. Renren wasfounded in 2005 and currently has around 160 millionusers, versus 600 million for privately held industryleader Facebook.

2Turning conventional thinking on its head, a majorUS-based company could soon IPO on a Chinese

bourse. FinanceAsia this week said that Denver-basedluggage maker Samsonite is planning to list on theHong Kong Stock Exchange later this year. The cen-tury-old company was bought in 2007 by CVC CapitalPartners for $1.7 billion, and plans to raise $1 billionfrom the share sale.

3China’s banking regulator has reportedly orderedbanks to recompute their capital adequacy ratios by

the end of next month, attaching new risk weightingsas high as 300% for some loans made to local govern-ments. The move could put pressure on capital adeqacyratios, and comes just days after reserve requirementswere increased to a record 19.5% in a bid to lower infla-tion. Those measures may have been a factor in ChinaEverbright Bank’s announcement this week that itplans to raise as much as $7.6 billion in a Hong KongIPO (the bank first listed in Shanghai last year).


Alibaba and the 2,300 thieves

4Volvo’s next auto plant is to be built in the south-western Chinese city of Chengdu, according to gov-

ernment officials. Plans to build a manufacturing basein the country had been expected since Geely bought theSwedish carmaker last year. The Associated Press reportsit will make about 125,000 cars.

5The 121 state owned enterprises under Sasac will beforced to raise their payouts to the central govern-

ment, according to a senior official with the State-ownedAssets Supervision and Administration Commission(Sasac). China Daily says 15% of profits will be paid toSasac up from the 10% paid in the previous years. Thenewspaper says the reason is “to share the benefits pro-vided by the rapid growth of the SOEs with the public”.

6China signed several billion dollars worth of dealsthis week during a state-visit from the president of

resource-rich neighbour Kazakhstan. The agreementscovered a high-speed rail line, uranium supplies and anew oil refinery. China’s rising influence in the countrywill be watched closely by Russia – the two are neck andneck in terms of bilateral trade with Kazakhstan.

7Problems at Chinese internet heavyweight Alibabacost the jobs of CEO David Wei and COO Elvis Lee.

Both resigned after an investigation found that com-pany employees had enabled customers to be defraudedby 2,300 bogus sellers. Alibaba’s business model is basedon trust, making the scandal dangerous for the firm. n

The major news items from China this week were...

5

Soon to be built in Chengdu

Kazakhstan’s ties with China got a boost this week

Photo Source: Reuters

China Consumer

When asked why Best Buy wasentering China in 2007, Bob

Willett, then chief executive of BestBuy International (he’s since re-tired) replied: “China’s going to bethe biggest economy, or second, andit would be just unbelievable ifwe’re not there.”Well, it’s time to suspend belief.

Four years later the world’s largestelectronics retailer by sales is clos-ing all of its branded stores inChina. And at a time in which salesin the mainland electronics mar-ket have been growing at an annualrate of 8%. Industry observers ex-pect the revenues to reach $203 bil-lion in 2013. So what went wrong? For a start,

Best Buy entered the China marketquite late in the day and nevercaught up with rivals like GOME andSuning, which each have more than1,000 branded stores around thecountry (Best Buy only had nine).Moreover, Best Buy tried to com-

pete on the basis of its businessmodel in the US, where it marketsitself as providing a better servicethan its competitors. That seemsto have failed to strike a chord inChina. “Best Buy believed it couldgrab market share by offeringhigh-quality service and a goodshopping experience,” TorstenStocker, retail analyst at MonitorGroup told the Financial Times.“But what determines Chinese con-sumers’ purchasing decisions isprice, not service.”To be fair, mainland shoppers did

take advantage of Best Buy’s supe-rior service. According to blog


Born in the USA

Shanghai Scrap, Chinese shopperswould go to Best Buy to try out dif-ferent products – and thenpromptly march across the street toone of the Chinese retailers and buythem for less. Nevertheless, Best Buy hasn’t

completely given up on China. Thecompany now says it is committedto expanding Five Star, a local elec-tronics retailer it took over in 2006.Five Star has about 170 stores, ac-cording to its website, and Best Buysaid it planned to open 40 to 50more in the next two years. And as it turns out, Best Buy is

not the only US retailer to an-nounce a retreat from the Chinesemarket. A month ago, Home Depot,the largest US home improvementretailer by sales closed its last storein the country too.On the face of it Home Depot’s

chances looked good, with risingrates of home ownership lookinglike a promising indicator for in-creased demand for the company’sdo-it-yourself product range. But again, there were problems

in translating a US-based businessmodel into the Chinese context. Theproblem Home Depot faced is thatChinese property owners haven’ttaken to the do-it-yourself ethoswith much gusto. It’s usually moreconvenient to pay others to do thework. “In China, even the moreprice-sensitive people hire labour-ers,” James Roy of China Market Re-search in Shanghai, told the FT. Foreign companies need to im-

merse themselves in changes takingplace in Chinese lifestyles, and for-

get just about everything they havelearned in other countries, saysMike Bastin, a visiting professor ofbrand management at China Agri-culture University.Dunkin Donuts, another US

chain, also learned the hard way.The company left China back in2000, saying at the time that thelocals simply didn’t like doughnuts.But competitors like Mister Donut,owned by Japan-based Duskin, havemanaged to build popular brandsby doing things like reducing thesugar in their pastries to adapt tolocal tastes. Dunkin Donuts even-tually returned to China in 2008,providing more localised offeringsalongside its traditional menu. Thatmeans it is “much better preparedcoming to the market” second timearound, believes Anthony Pavese,the company’s chief operating of-ficer for international operations.“We’ve learned to adapt to con-sumers, to listen to them and seewhat makes them tick.”Looking for a role model? Per-

haps try Coke. According to Reutersit engineered its Minute MaidPulpy drink purely for the Chinamarket. Since the juice’s creationin 2005, it’s been a huge hit. Somuch so, that Pulpy has becomethe company’s first “billion-dollarbrand” to be designed outside theUS. It joins a line-up of 13 otherbrands that have achieved sales ofat least $1 billion for Coke. n

Why some American firms fail in China

6


Didn’t prove the best after all

Internet and Tech

If I lose mine honour, I lose my-self.” So goes a line from Shake-

speare’s Antony and Cleopatra inwhich the Roman protagonist mustbe making one of literature’s earli-est recorded comments on the pre-cariousness of brand value.

It’s a sentiment that’s not lost onJack Ma. The Chinese tycoon hasbeen in Roman mood this week, withat least two of his top executivesmetaphorically ‘falling on theirswords’ following a managementoversight that’s threatened the hard-earned reputation of the Alibababrand. On Monday evening it was an-nounced that company CEO DavidWei and chief operating officer ElvisLee had both resigned. They did so,pointed out the Wall Street Journal,after an internal investigation foundthat staff had allowed 2,300 sellerson the e-commerce site to commitfraud. Neither executive was foundguilty of any wrongdoing himself,but both acknowledged that the buckstopped with them for a “systemicbreak-down” that risked a loss of cus-tomer trust in Alibaba’s services.

Regular readers of WiC will knowthat Alibaba Group operates threemain businesses. Taobao is a hugeChinese shopping site (see WiC94)and Alipay is a dominant player inonline payments (see WiC66). ButAlibaba.com is the group’s flagshipbusiness (see WiC27). Established in1999, it offers business-to-businessservices that help overseas buyerssource Chinese-made goods. It doesso by connecting over 108,000China suppliers with the likes ofWalMart and Procter & Gamble, saysBloomberg.


Fall guys

So what went wrong? Around 100of Alibaba.com’s salesforce (out of atotal of 5,000) were discovered tohave been helping frausters evadethe firm’s authentication process.That meant that Alibaba’s ‘gold sup-plier credentials’ were given toaround 2,300 scamsters – who tookcustomer money with no intentionof sending them the products thatthey had ordered.

This obviously goes to the heartof Alibaba’s business model. Mahad little choice but to take action.In an open letter to staff, the en-trepreneur wrote that Alibaba pre-ferred “no growth to harming theinterests of customers.” He added:“If we do not have the courage toface the truth...the mission anddream we have adhered to for 12years will become a joke and emptytalk,” Ma continued. “Any toleranceof behaviour in breach of the prin-ciples of business integrity is crim-inal to more honest clients andmore honest Alibaba people. Wemust take measures to defend thevalues of Alibaba!”

When news broke of Wei andLee’s departure on Monday night,there was an immediate response.Fellow tycoon Shi Yuzhu (see WiC21)commented on his weibo that hisonline gaming firm Giant had themotto ‘dare to take personal re-sponsibility’ as part of its corporateculture. But he also added (ratherhonestly) that in practice the com-mitment had often beena “mere formality”. He was there-fore impressed to see the resigna-tions at Alibaba. “If I were in JackMa’s position I might have bro-

Welcome lessons from Alibaba’s fraud debacle

7

Responsible chap: David Wei

Photo Source: Imagine China

“

ken the company motto due to lackof courage,” Shi admitted, i.e. hemightn’t have asked the CEO to go.

Ma has always been a bit differentfrom his fellow entrepreneurs. Aformer English teacher and lecturerat Hangzhou Dianzi University, hegot the idea for the Alibaba websitein the mid-nineties, says the Econo-mist magazine, when he typed ‘Chi-nese beer’ into Yahoo and got no re-sults. He has since become one ofthe nation’s leading business icons –so much so that when Chinese stateTV produced an equivalent of TheApprentice (called Win in China), Mawas selected to be the first judge (seeWiC44). If anything, his reputationamong Chinese has risen this week.

iPad killer?ViewPad 7 launches in China

Is it a threat to the iPad? That’s thequestion being asked by the Chi-

nese media after the much-toutedrelease of the ViewPad 7 by anAmerican firm called Viewsonic.

The Shanghai Daily says the newproduct enjoys some big advantagesover Apple’s more well known prod-uct. The 7-inch tablet computer al-lows users to make phone calls – un-

Internet and TechWeek in China

25 February 2011

8


Who’s Hu: Zhang ChuanweiProfiles of China’s business leaders

Blown UpA native of Gushi in Henan Province, Zhang Chuanwei served inthe army for 10 years before going into business. In 1993, he setup Zhongshan Ming Yang Electric, a company focusing on thedevelopment and production of powertransmission and distribution equipment.

Changing courseZhang’s move into the wind power sectorstarted in 2005, when he was invited to visit alarge wind turbine manufacturer in Xinjiang. Hediscovered that his host, as was the norm inChina, was using foreign designs to create itsturbines. With his experience in electricalcontrol systems, Zhang was confident that hecould do better.

His colleagues at Ming Yang Electric weresomewhat sceptical. The company, they said,was too small to start manufacturing windturbines in volume. But Zhang was not to be putoff and the following year he establishedGuangdong Ming Yang Wind Power Technology.

Grand designsZhang’s first task was to acquire thetechnology for his turbine business. He endedup making a deal with Aerodyn, a German company. Zhangsuggested that they jointly undertake new design projects: theGerman company would conduct the research and development,while Ming Yang would create the prototype and test it in China.

Although Aerodyn was reluctant at first, Zhang won them over byexplaining that Ming Yang’s on-the-ground involvement wouldprovide a platform to showcase their technical skills in China.

Offshore, but on targetIn August 2007, Ming Yang produced China’sfirst anti-typhoon 1.5MW wind-turbine, whichsoon proved its worth by withstanding two Force10 typhoons during its trial operation.

Later that year, the company signed acontract to supply 72 wind turbines to UScustomers for Rmb720 million ($109 million).

Zhang also pioneered a turbine leasingbusiness with Chinese bank ICBC, where thebank buys turbines from Ming Yang and in turnleases them to end users. In 2009, lease ordersaccounted for 30% of the annual total.

Ming Yang’s immediate strategy is to focuson offshore turbines, with a long-term goal ofcreating a more integrated offshore product thatbrings together turbines, energy storage andgrid technologies.

Zhang’s ultimate goal is for Ming Yang tobecome the world leader in offshore windpower. And with the proceeds of a $350 millionlisting completed in the US last October, he has

raised some of the financial resources that he will need toachieve it. According to the South China Morning Post, his mainthreat may be from firms in the UK, where offshore windtechnology is being developed in the gusty North Sea.

“My thanks to the Academy”

It’s a phone too...

like the iPad – over China Mobile’sGSM network, as well as via ChinaUnicom’s WCDMA standard. It alsofeatures Google’s GPS and two cam-eras that allow for video calls.

In terms of price, it stacks up welltoo. Sina.com, an online news portal,says the only competing tablet cur-rently capable of being used as avideo phone is Samsung’s Galaxy –and the ViewPad costs Rmb1,000less. “That gives it a desirable ad-vantage in the domestic market,”Sina thinks.

Viewsonic was founded in 1987by James Chu, an American-bornChinese entrepreneur. Its core busi-ness has always been screens but theadvent of the tablet has reshapedthe growth outlook for Chu’s firm.

“The key point is no longer PCsbut screens. Pads have replaced lap-tops, especially notebooks,” Chusays. He is forecasting sales of600,000 of his tablets in China thisyear and reckons the product willsoon account for a third of View-sonic’s total sales. The companytried to list in 2008, but pulled thedeal due to market conditions. Thatmay end up being no bad thing: if itgets its strategy right in China’stablet market, it could look again atan IPO. Viewsonic has some way togo before it can claim to be a gen-uine challenger to Apple, which sold7.33 million iPads in its most recentfiscal quarter, and (it’s speculated)will unveil the iPad2 next week. Willit make calls too? n

Aviation

Most WiC readers probablyhave a complaint or two of

their own about their experiencesof antiquated airport infrastruc-ture, especially those travelling reg-ulary in Europe and the US. But fewof us want to see a brand new air-port built next door to our house.Just look at the series of rows pro-voked by the various proposals tobuild a third runway at London’sHeathrow airport, none of whichhave made it to construction phase. Airport construction in China

rarely meets with the same level ofopprobrium as that experienced byHeathrow’s prospective architects,with officials usually able to greenlight projects without undergoinganywhere near the same level ofpublic scrutiny. Take, for example, the recent find-

ing by government auditors that air-port construction over the past fewyears has been rife with backhanders(at least Rmb159 million in bribespaid for contracts and almost Rmb2billion of contracts not open to pub-lic bidding). The news came just daysafter the downfall of former railwayminister Liu Zhijun on similarcharges (see WiC95). But it still hasn’tstopped the talk of expansion.The latest blueprint is for another

international airport for Beijing. Sur-prised? Didn’t they just build a thirdrunway and gigantic Norman Foster-designed terminal at Beijing CapitalInternational airport shortly beforethe 2008 Olympics?Yes, they did. But record passen-

ger numbers mean that additionalcapacity now seems to be required –and there isn’t enough space to ex-


Why one’s just not enough

pand further. It will cost an esti-mated $15 billion, and initially servean additional 40 million passengers.Beijing’s officials had actually

started planning for a second inter-national airport back in 2003 but itwasn’t supposed to be needed until2015. That’s when the existing hubwas due to reach its maximum ca-pacity of 76 million passengers.The problem? It hit 74 million last

year, and the growth spurt is show-ing no signs of slowing. January pas-senger throughput was up 14%, atrend being mirrored at all ofChina’s major hubs. “Since early thisyear,” explains Caixin magazine,“the situation has worsened signifi-cantly as delays spread nationwide.”The current runway capacity is

close to saturation, reports the Econ-omy & Nation Weekly magazine,with a lack of airspace making de-lays worse. Less than 65% of the cap-ital’s flights were on time last year,according to the magazine.Predictably, bureaucratic mis-

steps are said to have contributedto the problem. “During the exten-

sion of Capital International Airportin 2003… two [new] runways shouldhave been constructed, bringing theairport’s total number of runwaysto four,” National Development andReform Commission researcherDong Yan told Economy & Nation.“But when the expansion projectwas formally approved, one of theplanned runways was cut off.”How big an impact did that deci-

sion have? “If four runways had beenconstructed in accordance with theplan,” claims Dong, “the airport’s an-nual passenger throughput couldhave been up to 100 million passen-gers and the approval of the secondairport construction project couldhave been postponed a few years”. That would have held off another

problem facing city officials: whereto put the new facility. The currentplan has it located in south Beijing’sDaxing district, close to Nanyuanairport, 50km away. Nanyuan ismainly used by the military but alsoprocesses about two million civilianpassengers annually. Industry insiders think that

might mean Nanyuan is relocated(not that the military is especiallyflexible on these matters, see WiC83for how its control of national air-space is a leading contributor toflight delays). Industry body IATA predicts 214

million new passengers will take toChinese skies over the next threeyears, making new airports a pri-ority. The head of China’s civil avi-ation authority yesterday said that45 new airports would be built be-fore 2015. By his own estimate, 500million Chinese will fly that year. n

Beijing searches for site to build a second airport

9

Big but congested


Property

Beijing’s migrant workers aren’tfeeling very welcome in the

city at the moment. Not only arethey denied the same rights aslocal residents (including retire-ment pension and medical care),they have also been finding ittougher recently to find accommo-dation in town. In December, city officials re-

vealed plans to close down illegalshanty dwellings, reports Caijing,and cheap basement accommoda-tion is set to be next to go. The newrules, critics say, are to block ruralmigrants from moving to thecountry’s capital, where policy-makers are concerned about howoverpopulated and congested Bei-jing has become.Indeed, even those who can afford

better living conditions are not sowelcome any more. City officials announced last

week that Beijing is also introduc-ing new restrictions to counter theproperty bubble. People with Bei-jing hukou (permanent residency)will be limited to buying two apart-ments within city limits.Others will be restricted to a single

property unless they can provide taxor social insurance certificates toprove that they have lived in Beijingfor five successive years. Those lacking supporting docu-

ments won’t be allowed to buyhomes in Beijing at all. The new ruleis effective immediately, says theShanghai Daily.That has led to accusations of

discrimination against non-Beijingresidents, and charges by bloggers


Inhospitable?

that city officials are using theproperty bubble as an excuse to getrid of outsiders.On his weibo, Shi Shusi, a com-

mentator from Caijing Magazine,lambasted Beijing for its exclu-sionary bent: “If you purely and ut-terly detest high property prices,you may savour the long-lost joy[of the measures]. But sadly, themethod used is discrimination...Among the 17 million people liv-ing in Beijing, 5 million come fromelsewhere and have no family reg-istration (in Beijing). Most of themare not speculators. Rather, theyare constructors and contributors.But do they deserve discriminationfor lack of a hukou?” Pan Shiyi, chairman of Beijing-

based property developer SOHOChina, also detected another motive.He reckons that the regulation isaimed not only at curbing homeprices, but also at alleviating short-ages of natural resources created byrapid urbanisation (the city has ahuge water deficit, for example).Beijing’s authorities are clearly

under pressure to control popula-tion growth. An investigation lastsummer found that the city popu-lation (those living in Beijing for sixmonths or longer) topped 19.7 mil-lion by the end of 2009, or two mil-lion more than official figures hadsuggested, says the Economist. In a development plan published

seven years ago, the government an-nounced that the population shouldnot top 18 million till 2020 at theearliest – meaning its target wasbreached eleven years early. Beijing

officials normally like breaking tar-gets; but not this one, apparently.Overpopulation has led to rising

complaints about the capital’s per-petual traffic congestion andcrowded public transport. In late De-cember officials introduced newmeasures to ease the traffic, by re-stricting the number of cars (seeWiC90). The new rules also ban out-of-town cars in much of the city dur-ing peak hours. Many Beijing resi-dents blame newcomers.With their hopes of owning a

home dashed by the property con-trol orders (assuming that they couldeven have afforded one in the firstplace), the non-Beijing born havebeen expressing their frustration. Feng Xiaoyuan, a Chongqing-born

animation designer who has workedin Beijing for three years, is one ofthose concerned about the newchanges. “As I plan to get marriednext year, the new regulation disap-points me,” he told the China Daily. “It means my partner and I can’t

buy our own home here. We have tolive in a rented apartment andworry about the rising rents.”Others were angrier. One wrote

online: “We are all workers and tax-payers. Outsiders have contributedno less to Beijing than locals. Thisis unfair!” n

Capital city no longer wants outsiders

10


Please go home...

Energy and Resources

In an early episode of GordonRamsay’s Kitchen Nightmares,

the irasicible Scottish chef visits theFish and Anchor in mid-Wales. Nottoo impressed with the food, he iseven less enamoured to read a re-view posted on the internet aboutthe same eatery that gushes: “I’vebeen to Gordon Ramsay’s and tofind a restaurant better than his onmy doorstep here in Wales is adream come true.”

When Ramsay confronts theFish and Anchor’s owner itemerges that Welshman hadposted the dubious reviewhimself.

Evidence, of course, that youcannot always trust what youread on the internet. And inChina doubly so, as a new scan-dal has revealed.

Last week a Shenzhen profes-sor revealed on his weibo (a Twitter-like service, see WiC95) that oil majorSinopec has been attempting to usethe internet to rally public opinionbehind an oil price hike.

Professor Sun Haifeng publisheda copy of a memo that Sinopec’smanagement had sent to its371,000 employees offering prizesto those who wrote the best blogarguing why fuel prices should rise.According to the Hong Kong Eco-nomic Journal the intention was tobolster public opinion for higherfuel prices, and even suggested offi-cial lines that the budding Sinopecbloggers were to take. These in-cluded a “gentle reminder” that abarrel of domestic fuel is now $16cheaper than an internationally-


Pump priming

priced equivalent, and that refinerswill continue to incur losses unlessthere is a timely adjustment inprices at the pump.

After the tactic was exposed, aSinopec official admitted to theSouthern Metropolis Daily that thecompany had dreamt up the con-test but argued that it was designedto improve communication withthe public.

The timing is nothing if notironic: Xinhua had only just re-ported that the government was in-tent on cracking down on similarpractices. The official news agencyhad quoted a police estimate thatover half of online comments aremade by “unscrupulous” paid par-ties. Many are made by what isknown as the ‘50 cent’ industry.These netizens are widely used byfirms seeking to generate praise fortheir own products or to badmouthrivals. The name derives from thefact they are supposed to get paid 50fen ($0.05) per posting.

But Professor Sun told theSouth China Morning Post that

Sinopec’s online strategem willprove unpopular with the public,which is increasingly wary of ma-nipulated online opinion. “The in-ternet is a public utility in thesame way as a public road. It’s notright for it (Sinopec) to do suchthings,” he said.

Why the need for the online PRefforts? The Economic Observer saysthat China’s state oil companies are

very unpopular with the public,which feels them to be too pow-erful and unaccountable. “Themasses are very unhappy withthe price increases of the state-owned monopolies that controlenergy,” it writes.

But why Sinopec’s specificneed to persuade those massesto stomach such a rise? Be-cause it is more reliant thanPetroChina and CNOOC on im-

ported oil, which makes its refin-ing operations more susceptible tolosses when oil prices rise dramat-ically (paradoxically it doesn’thave the power to set the price atpetrol stations).

Still, Sinopec got better news thisSunday when the National Develop-ment and Reform Commission didallow a refinery price hike ofRmb350 per tonne ($53.2), or 4.5%up on the previous price.

The internet campaign has notmade Sinopec any more popular,however. The increases continue tomean higher petrol prices for drivers.

China SignPost, a blog, reckonsthat the latest hike means that theChinese are now paying 30% morethan US drivers for gasoline. n

Oil major Sinopec gets into trouble on web

11

“Have you read my blog?”Photo Source: Reuters

Economy

We’ve said it before, but thereis more and more evidence:

China’s coastal factories are run-ning out of cheap workers. So manymigrant workers have left Zhejiangprovince, for instance, that somecompanies are even recruiting newstaff straight out of prison. Accord-ing to state media, firms are offer-ing to train inmates withless than two months lefton their sentences if theysign contracts to join up ontheir release.

Labour shortages hitheadlines last year but,anecdotally at least, theproblem appears to have es-calated. “Normally, workershortages appear during theSpring Festival [usuallyearly February] and last onemonth,” explains the Eco-nomic Observer, “but thisyear, they appeared fourmonths before it.”

Some of the major manufactur-ing areas have responded by givingmigrants more hukou benefits andincreasing the minimum wage.Guangzhou recently set a nationalrecord by posting a Rmb1,300($200) minimum monthly salary.“One important reason [for thetrend],” claims Xinhua, “is the seri-ous recruitment difficulties in thePearl River Delta.”

Still, Guangdong is now thoughtto be short of 2 million workers. Tounderstand why, look at Fuyang inAnhui, a poor rural area that’s longrelied on remittances sent home bymigrants. Traditionally, over a quar-ter of its 9.5 million people have


Fuyang’s fight for workers

worked elsewhere. But now local in-dustrial parks are holding job fairsand local cadres in Fuyang havebeen trying to convince potentialworkers to stay with offers of pen-sions, medical insurance and hous-ing assistance.

lt’s thought that at least 21,000migrant workers have been enticed

to stay and work in the city ratherthan travel further afield to the likesof Guangdong.

“In recent years, Fuyang’s coal,chemicals, machinery, agriculturalproducts, medicine and other indus-tries have developed rapidly,” ex-plains the 21CN Business Herald. “Theindustrial development has increasedthe demand for labour.”

The demand for workers has alsoforced wages to become more com-petitive. “Companies in the countyare all lacking labour and providemonthly income of more thanRmb1,000 [$150],” says Gong Chun-yan, Party secretary of a localcounty. Migrants will still earn

more away from home (aroundRmb1,700 according to a recent sur-vey of workers under 30). But thatmay no longer be enough to com-pensate for the higher cost of livingin the more developed coastal areas.

Staying closer to family is an-other major reason to look for workin your hometown, particularly as

migrants have to pay extrato educate their children incities that they move to insearch of work. That meansthat they often leave theiroffspring with relatives: arecent survey by the All-China Women’s Federationfound that migrant workersleft behind at least 58 mil-lion rural children.

Staying at home – if thejobs are available – lookslike a much better parentaloption. “They do not needto pay the so-called trans-fer and transient fees and

are not subject to enrollment re-strictions,” explains anotherFuyang official.

The shift might be bad news forcoastal manufacturers (various me-dia reports now suggest that wagesin Vietnam often undercut those inChina’s leading manufacturingzones). But it’s a more promisingsign for the country as a whole, es-pecially for the policy planners whowant to see economic developmentspread more evenly across the coun-try, as well as GDP growth powered alittle more by domestic consump-tion, and a less by investment andexports. Higher wages for workerslike those in Fuyang should help... n

Due to shortages, labour is even being recruited from prisons

12

Should I stay or should I go?Photo Source: Im

agine China

Agriculture

Rice cultivation led to the creat-tion of China’s first urban states

several thousand years ago – and thestaple has been entwined with thecountry’s history ever since.

So it’s with deep unease that offi-cials and ordinary citizens alike haveread reports over the past few daysthat a growing number of the coun-try’s paddy fields have been con-taminated with toxic heavy metals.

The scare adds to China’s poorreputation for food safety, alreadytarnished by the 2008 scandal overmelamine-tainted baby formula.That incident injured 300,000 ba-bies and killed at least six – causingsenior officials to promise tightersupervision.

That’s a promise that still hassome way to go before it’s fulfilled. Asmuch as a tenth of China’s 200 mil-lion tonne rice crop may be pollutedwith cadmium (an ingredient usedin rechargeable batteries), accordingto a study by academics at the Nan-jing Agricultural University. The au-thors surveyed food markets in sixsouthern provinces between 2007and 2008 – and found that in themarkets surveyed more than 10% ofthe rice sampled was contaminated,sometimes by over five times thecountry’s legal limit (for cadmium).

The report received plenty ofmedia attention, after it was firstdiscussed in Caixin magazine lastweek. “Cadmium, arsenic andother heavy metals are dischargedwith sewage by mining operationsand make their way into rice pad-dies, especially in southern China,”the magazine concluded. “Theproblem is decades-old, and rice


Paddy problem

contamination continues today.”State-owned magazine China Eco-

nomic Weekly then estimated thisweek that as much as 12 milliontonnes of grain may be contami-nated. It warned that mining sludgehad created “cancer villages”, andpointed to government figures put-ting the potential economic cost ofthe tainted rice at $3 billion annu-ally. “These harmful heavy metalshave spread through the air and wa-ter, polluting a rather large area ofChina’s land,” claims the report.That was also the conclusion of a2002 Ministry of Agriculture study,which found that 28.4% of the sur-veyed rice was contaminated withlead and 10.3% with cadmium, saysthe Global Times.

Nearly two thirds of China’s pop-ulation are regular rice eaters. Cad-mium’s harmful effects include softand brittle bones, irreversible kid-ney damage and arthritis. TheCaixin investigation included dis-cussion of one Guangxi village

downstream from a zinc mine, inwhich “several dozen farmers…have been troubled by a strangeweakness of the legs for decades.”

The Global Times says that laxoversight is once again to blame forthe problem. “Most of the time [of-ficialdom] blocks information onpollution, leaving farmers unawareof the contamination of their land,”explains the newspaper, “[and] thelack of supervision… leaves the con-taminated rice freely in the market.”

The Ministry for EnvironmentalProtection has responded by push-ing provincial governments tocrack down on offenders. Plans callfor heavy metal pollution to be cut15% from 2007 levels over the nextfive years.

Government leaders are increas-ingly concerned about the potentialfor a public backlash – especially asfood prices continue to rise and thewinter wheat crop is threatened bydrought. “More than 30 majorheavy-metal poisoning incidentshave occurred since 2009,” ZhouShengxian, minister for environ-mental protection, told local media,“posing a grave threat to publichealth, especially to children.”

Dramatic food-related scandalsonly add to public fears. This week,for example, 136 kindergarten stu-dents were hospitalised with nitritepoisoning in Xi’an. The toddlers fellill after eating a noodle lunch at theschool canteen. Nitrite looks andtastes like salt, but will cause severeheadaches and vomiting. ShanghaiDaily says police are investigatinglocal salt sellers in the city to findthe source of the poison. n

Chinese used to speak of iron rice bowls – now it’s cadmium rice bowls...

13


How much cadmium’s in it?

Society and Culture

For most Chinese, mentions ofpolo are more likely to bring to

mind Ralph Lauren’s ubiquitousshirts rather than the equestrianpastime.

But for China’s new rich, polo as asport has become distinctly fash-ionable. No surprise then that thecountry’s newest and largest poloclub hosted China’s first interna-tional polo tournament last week.

The Goldin Metropolitan PoloClub in Tianjin lured six of theworld’s top teams from England, Ar-gentina, France, Australia, NewZealand and Hong Kong. “We haveso many international players fromall over the world coming togetherin this area,” a 23 year-old player onthe Hong Kong team told the Shang-hai Daily. “I think that it’s a goodway to promote polo in China.”

Polo is not new to China, ofcourse. While the game’s origins arereckoned to be in Persia, a variant


Chinese chukkas

became popular during the TangDynasty (618 to 907AD), as indicatedby paintings of the time showingmen on horseback hitting balls.However, the game faded during theQing Dynasty when restrictionswere placed on playing it.

The polo being played today islargely the brainchild of CaptainRobert Stewart and Major GeneralJoe Shearer, two British soldiers whofounded the Calcutta Polo Club in1862. They formalised the rules.Thanks to its popularity with the of-ficer class, the game found its wayback to England to be taken up byBritish aristocrats, as the epitomeof class and cachet.

It is a similar association with no-bility that first aroused the interestof China’s new rich. City Express re-ports that the first polo club to openwas in Hangzhou in 2007. The NineDragons Hill Polo Club memberswere successful entrepreneurs from

around Zhejiang province. To joincost Rmb500,000 ($76,000); but asthe newspaper comments, mem-bers then needed a polo pony (a fur-ther Rmb300,000) and as much asRmb1 million a year in running coststo be able to compete in the topcompetitions.

By definition, you had to be prettyrich to play. And for those playingthat was part of the attraction. Themessage was clear: yes, you had to bewell-off to play golf, but you had tobe super-rich to be a polo enthusiast.

The club began to hold annualevents, such as the Royal SalutePolo Gold Cup. In attendance: 35 ofthe richest billionaires as ranked bythe Hurun List. As Nine DragonsHills manager told City Express“polo is becoming the latest way toshow success”.

That mentality was in evidenceagain at Tianjin’s Goldin Metropoli-tan Club last week, where snow ma-

Why an international polo tournament got hosted in Tianjin

14

Hurlingham with smog: players compete at the new Tianjin Goldin Metropolitan Polo Club


Society and Culture

chines were brought in to give theevent an Alpine feel. The six-daytournament attracted 2,000 specta-tors, with the winning team given atrophy made by Asprey, the jew-ellers to the British royal family.

“Our main objective is to excitethe public in terms of the game ofpolo,” said Rowland Wong, presidentof the Tianjin Goldin MetropolitanPolo Club. According to the WallStreet Journal more than 1,300ponies were imported into Chinalast year versus 300 five years ago –a measure of the growth of interestin equestrian sports such as polo.

How about the Chinese nationalteam? The Worker’s Daily – which asyou might imagine is no great fan ofsuch elitist pastimes – quotes amember of China’s Equestrian As-sociation as saying there are onlythree clubs in the country with reg-ular polo fields, and China didn’tcompete for the Goldin Cup, relyinginstead on Hong Kong for represen-tation. In spite of the recent hoopla,the Worker’s Daily doubts Chineseplayers will have a serious impacton the polo world anytime soon.

In fact, many in the local mediasay polo is being promoted less as asport than as a way to sell real estate.Nine Dragons Hill is part of a prop-erty play and its manager is candidenough on his intentions: “We setup the polo club, in addition to ourlove of polo, to enhance the value ofhousing projects around it.”

Goldin – a Hong Kong-listed prop-erty developer – is equally transpar-ent about its motives. Its polo club –which houses 150 stables – is sur-rounded by as yet unfinished high-rise apartments and villas. The club’sboss told the Shanghai Daily he was“happy for the club to add value tothe real estate that looms over it.”

Guangzhou Daily points out thatthose who join the polo club enter aworld of privilege that extends wellbeyond Tianjin. “The club will in-vite members to hunting expedi-


tions in Scotland, access to frontrow seats for Milan Fashion Weekand arrange private jets and yachtsaround the world.”

A club official summed it up:“Polo is a kind of aristocratic life ex-perience; and our members will en-joy the royal family life.”

EncouragingcheatingNew website for Chinese whowant to have a love affair

Life is short. Have an affair.”That’s the catchy slogan used by

AshleyMadison.com, an onlinematchmaking site. But unlike popu-lar dating sites like Match.com, Ash-leyMadison is designed for peoplewho are already married (or in a re-lationship). In other words, it hooksup cheaters with other cheaters.

The Toronto-based site claimsthat it’s “safe” for cheaters becauseeveryone going on the site knowswhat they are getting into, says NewYork Daily. And the formula seemsto be working. AshleyMadison nowclaims a whopping 7.8 million mem-bers since it was launched in 2008.

So perhaps it shouldn’t come as asurprise that China now has its ownonline dating site for cheaters too.Kuanhou.com, like AshleyMadison,facilitates extramarital affairs, andthe site claims to have been attract-ing a lot of neglected husbands andwives, says Beijing Youth Daily.

To meet fellow philanderers,Kuanhou requires that its membersfill out a basic questionnaire, eventhough most members seem to be alittle bashful in outlining their mo-tives for joining the website. In herself-description, RuoShui, 32, de-clares that she is interested in “find-ing a friend to talk to”. Similarly, 27year-old Hawthorn Tree says she islooking for “a sensitive man” to en-rich her life. More promisingly, An-gle, 37, thinks that “when you lookback in life, it doesn’t matterwhether it is right or wrong”.

Female users can use the site forfree. But men have to pay Rmb50 toregister and initiate contact. Thosewho want to access other members’profiles and receive messages frominterested parties must payRmb200 a year to become what thesite calls a “VIP member”.

One user by the name of Wangstarted using the site when his rela-tionship with his wife of two yearsbegan to drift. He reveals that she

15

Photo Source: Imagine China Famous adultress: the wife of the last emperor (played by Joan Chen)

“

In last week’s issue we looked at China’s attempts to gain the upper hand in negotiations with theworld’s big three miners (BHP Billiton, Rio Tinto and Vale) over the price of iron ore. As detailed inthe article, it has pretty much been a losing battle for the China Iron and Steel Association (CISA).So a different tack: China Daily quotes the organisation’s former vice-chairman as saying thenew goal is to buy mines overseas. Last year only 15% of ore imports came from mines owned(or part-owned) by Chinese steelmakers. CISA says the target is to up this to 40% by 2015. Healso suggests China uses it forex reserves to buy and store ore. “Like oil reserves, China shouldalso have iron ore reserves,” says Luo Bingsheng.

Keeping track

Society and Culture

spends all his salary shopping onthe internet, does no housework andis useless in the kitchen.

“I loved my wife,” he says. “Butit’s not all about love. Love is diffi-cult to maintain.”

Infidelity is increasingly wide-spread, growing in tandem withChina’s economic and social oppor-tunities. This has helped drive upthe country’s divorce rate. Today,one in five Chinese marriages endsin divorce (by comparison, maritalbreak-ups were practically unheardof during the Maoist era).

Xu Anqi, a researcher with Shang-hai Academy of Social Sciences, toldMirror Evening News that the majorcause of the rise in divorce is socialmobility, which has weakened thecohesiveness of family ties.

But then philandering has beencommonplace in China for cen-turies. Few statistics exist on the fre-quency of extra-marital affairs, butanecdotal evidence abounds – forexample, the country’s former rail-ways boss, who was charged withcorruption last week, supposedlyhad 18 mistresses (see WiC95).

Indeed, the mistress culture isprevalent enough that mistressesaround the country are planning anannual festival of their own onMarch 3. Why that date? The num-ber “3” indicates their position asthe third person in the relationshipand March is also the third month.

The Shanghai Daily reported thisweek that “China’s Association forMistresses” has also established anonline forum, xiexie.com, for allthose who claim to be mistresses ofmarried men. Members publish ar-ticles on the site, describing theirrelationships with wealthy men andcelebrating the lavish gifts that theyhave received. Mistresses are goodfor business: a report in 2008 esti-mated that ‘the other woman’ ac-counted for one third of China’sconsumption of luxury products.

A wide range of online discussion


covers the crucial topics (shoppingand breast enhancement are highon the list, naturally). Likewise howto be a perfect lover comes in for re-view – “totally different from aman’s ordinary wife” – seems to be akey theme.

Not to be outdone, angry wivesare fighting back. Outraged spouseshave got together online to launchtheir own weibo, the Chinese equiv-alent of Twitter, on Sina. They, too,are planning their own festival, onMarch 8, International Women’sDay. Presumably rather differenttopics will come up for discussion.Cheating husbands, beware...

Will the ‘redroyals’ say I do?Heated debate online about aprinceling wedding

For many it’s a Long March to theIvy League; but for few is that

more true (figuratively) than for BoGuagua and Chen Xiaodan. The twoChinese students are both pursuingpost-grad studies at Harvard, andboth are the grandchildren of menwho accompanied Mao on his epicescape from Nationalist forcesthrough western China.

As offspring of the Party elitethey’re known as ‘princelings’ (formore on this topic see WiC35). Andit’s the photo (posted online) at thetop of this page that’s got them in

the news. Speculation has beenmounting that the two may marry.

Britain’s Daily Telegraph reckonsthat, should they do so, it will be theequivalent of the upcoming UKroyal wedding between PrinceWilliam and Kate Middleton. Theyare indeed ‘red royalty’. Both grand-parents (Bo Yibo and Chen Yun)were such senior Communists thatthey rank among the ‘eight immor-tals’ of the Party. Their fathers arepretty important too. Bo Xilai is cur-rently running the fast-growing mu-nicipality of Chongqing and istipped for a Politburo place nextyear. Chen Yuan runs the powerfulChina Development Bank.

The Telegraph says the photos“appear to be genuine”. If the mar-riage rumour is too, it could create apolitical dynasty in China to rival theKennedys, Bushes and Clintons. n

16

Bo and Chen: Will they wed?


And Finally

The highlight of this year’s CCTVSpring Festival Gala wasn’t the

crooning of the country’s biggestpop stars or the comedy skit fromnational funny man Zhao Benshan(see WiC6). No, it was the obedientperformance of six goldfish. At thecommand of magician Fu Yandong,the goldfish swam from left to rightin two straight lines, in military-likeformation.

The goldfish illusion proved amassive hit with hundreds of mil-lions of viewers who tuned into theshow early this month.

Animal rights activists were lessamazed. That’s because after theshow, many tried to replicate thetrick at home by buying goldfishand feeding them metal pellets(they assumed the magician was us-ing magnetism to direct them). In-evitably, the fish died.

A coalition of 53 groups then senta letter to CCTV demanding that FuYandong be prevented from per-forming the trick again. Fu, however,insists the fish are not in danger. Onhis weibo, he said they were “livinghappily” and that, if he really usedmagnets, they would “stick to-


Gala performance

gether.” Then again, he’s (unsur-prisingly) not very forthcomingabout how exactly his goldfishmind-control technique reallyworked. But you sense Fu’s beentaken aback by the outcry. China’sanimal protection legislation is lim-ited, after all. But there are signs ofmore concern about animal welfareand CCTV, caving in to public pres-sure, cancelled Fu’s scheduled ap-pearance on the broadcaster’sLantern Festival show last Thursday.

For the Spring Festival Gala, it wasnot only goldfish magic tricks re-ceiving criticism. Negative com-ments for the CCTV production con-tinued to pour in two weeks afterthe show was first aired.

The gala is still the most highlywatched show in China, reportedlydrawing 700 million viewers eachyear (the Super Bowl in the US drawsabout 100 million viewers), and hasbeen something of an annual ritualfor millions of Chinese since it wasfirst broadcast in the 1980s.

But this year there were signs thatviewers are starting to turn off.Many have complained that theshow was “flat and dull,” and at best

“a nostalgia trip,” reported theGlobal Times. An online survey con-ducted by Sina also found that morethan 70% of 10,000 respondentswere not satisfied with this year’sshow, says the Beijing News.

Perhaps recognising a trend, sev-eral provincial cable stations evendeclined to broadcast the show thisyear. Instead, they launched theirown variety performances to com-pete with CCTV’s for audience shareand advertiser money.

Maybe they’re right to make themove. When a show’s most note-worthy performers turn out to bea troupe of obedient goldfish, itmight be a message that it’spassed its prime. n

Is world’s most watched TV show losing viewers?

17

Some proletarian entertainment

“I would want to be able to sit down with the Americans and look at my watch and say: ‘Gosh, I’m a bitbusy right now. I’ve got some customers in China that I’d like to talk to. Can we do this another time?’ ”

* British Columbia’s forestry minister tells the Financial Times that sales of timber to China havesurged to 2.5 billion board feet, equivalent to 20% of the province’s output. Pat Bell added that risingChinese demand will give Canada negotiating leverage with Washington when the current US-Canadasoftwood lumber agreement comes up for renewal in 2013. Pat Bell

Lumberjacks love China

ChinaZhejiang

Xi’an

Tianjin

Shanghai

Hong Kong

Henan

Guangdong

Chongqing

Beijing

The Back PageWeek in China

25 February 2011

18


Photo of the Week

Some of the places referred to in this issue

Workers at Wolong Nature Reserve dress as pandas to move cub

7.13 millionThe number of passengers on Chinesetrains last Saturday, setting a new record.Many were returning home as the SpringFestival holiday came to an end. Theaverage number of daily train passengersfor the rest of the year is expected to be4.5 million.

19%The percentage price cut BYD is making forits G3 car. The move is motivated by a dropin sales and a need to shift inventory atdealerships.

$6,782The current price of a Shanghai licenseplate, up nearly $900 from last month,according to the Shanghai Daily. In a bid toease congestion the city government hasbanned out-of-town cars from usingexpressways during rush hour.

Rmb63 billionThe amount planned for investment inmaintaining small reservoirs across thecountry. The aim is to improve flood controland water conservation by repairing all ofChina’s 40,000 reservoirs by 2015.

$152,000The price of a bottle of vintage Moutai at aShanghai auction last week. The grainliquor is being pitched as an alternativeinvestment for wealthy Chinese.

In Numbers

Where is it?

@2011 Week in China is published weekly by ChinTell Limited, a company based in Hong Kong. All rights reserved. To contact us email: [email protected]

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