China Watch Blog

China Watch Blog has learnt that French logistics student Pauline Bourderiou is about to sit her final examinations, helped on her way by a four-month internship at Impatex Freight Software, the UK’s leading freight and Customs software supplier.

During her stay with Impatex, Pauline has worked behind the scenes on the company’s 24/7 Help Desk to learn about the company’s software and the UK Customs system. She also translated Impatex’s Integrated Customs for Europe (ICE) and NetFreight software screens into French. In her final two months, she assisted in finding a French distributor for NetFreight, and also represented the company on its stand at a trade exhibition.

Pauline’s placement was arranged by Wiltshire College, where she has been studying in the UK; they publicised the availability of French interns through BIFA’s member newsletter. Wiltshire College operates an exchange scheme with IUT Laval, Pauline’s local business college close to her home near Le Mans, France.

In June, Pauline will sit her examinations for the “Licence Gestionnaire Import-Export” – equivalent to a bachelor’s degree in Import and Export; she will also receive an HNC in Business. In April, she sat and passed the Cambridge University Certificate in Business English.

To date, Pauline has spent two years studying international trade, with work placements in Spain and France that involved translation, organising and attending overseas exhibitions, identifying potential international distributors, supply chain analysis and accounting.

Says Pauline: “My last work placement in a logistics department in France, gave me the desire to follow my study in Import-export. For me, logistics is a really interesting sector because the aim is to coordinate all activities in the areas of procurement, production, handling, packaging, packing, storage, distribution and delivery.

“I was really pleased to do my work placement at Impatex; there is a really good atmosphere at work and everybody has been very welcoming when I arrived. This work placement gave me more knowledge about export and import documents, and how the UK trades with other countries using its software to prepare and manage their exports and imports. I learned how Customs works in England; it is quite unique, and different than French Customs.”

Pauline has her sights set firmly on a career in logistics; and although she favours a French company in the wine or foods sector, she is not against working in other countries or businesses: “I love travelling : it is the reason why I chose to study International trade. I would like to work as an export sales manager, because I really enjoy the contact with customers and it is a really important place within the logistics process.”

Adds Impatex MD Peter Day: “It has been a real pleasure helping Pauline with her studies, and she has also been a tremendous assistance to our business. We wish her very well for the future: she will be a real credit to whoever is lucky enough to employ her.”

China Watch Blog reports that China’s e-commerce economy will grow nearly six times by 2020 as more retailers and vendors tap online shopping to lure consumers.

The e-commerce economy – including online transactions and the e-commerce related service industry and information technology infrastructure – will reach 43.8 trillion yuan (US$7.1 trillion), with the majority made up of enterprise transactions of 33 trillion yuan, according to a Shanghai Daily report.

The value of online retail sales, from individual and enterprise sellers, may reach a combined 10 trillion yuan by 2020, Alibaba Group Research Center said in a report yesterday.

Though e-commerce retail only accounted for 6 percent of China’s overall economy in 2012, the figure is seen to reach 16 percent by 2020 due to its huge growth potential as vendors move to the virtual world to lure shoppers, the report said.

Last year, Alibaba Group’s retail arm Taobao and Tmall recorded more than 1 trillion yuan of sales, 10 times their transaction size in 2008.

China is set to become the world’s largest online market whose size may exceed US$420 billion and rise to US$650 billion annually by 2020, McKinsey&Co said in a report in March this year.

China is home to the world’s largest Internet user base of over 560 million and a younger generation of consumers who shop by clicking their mouse.

China Watch Blog has learnt that a disturbing new type of telecom blackmail has appeared in Shanghai, one that seems to operate through enforcement loopholes of telephone companies and police.

Criminals are using telephone software to make very frequent phone calls to a victim’s cellphone, and threatening to keep it up until they are paid off, the Shanghai Daily reported.

In a recent case, a salesman surnamed Zhang said he received more than 2,000 calls, with a call every one to two minutes over two days, and as soon as he picked up, the call ended, the Shanghai Morning Post reported.

According to a message sent to Zhang, the harassment would stop only if he transferred 500 yuan to a designated bank account.

Zhang called police, but was told the amount of money was too small to file the case, and it is hard to collect evidence as the suspects usually use software and a server outside the city or country to make the calls.

Zhang’s phone service said it could act against only those calling or sending messages using their service.

The harassment started on Friday last week when a call that appeared as “private number” showed up on Zhang’s phone.

“I tried to call back, but the other side hung up right after the call was put through,” Zhang said.

In just 10 minutes, Zhang got 16 such calls. Zhang did not pay the 500 yuan and he received more than 2,000 calls that weekend.

Zhang dared not turn off his phone for fear of missing important calls.

“I think they found my number on the Internet,” Zhang said. “I’m so frustrated. I don’t want to change my number and I’m afraid they are just going to ask for more if I pay.”

“The suspects are very crafty as they asked for only a couple of hundred yuan just to avoid criminal charges,” a police officer said.

The phone company suggested Zhang set up his phone to allow only calls from contacts in his phone, which Zhang said wasn’t a good answer, either.

During the May Day holiday, Zhang turned off his phone and received no more of the calls when he turned it on again. He’s hoping they don’t come back.

China Watch Blog has learnt that Zhejiang authorities found many shark fins sold in the market are artificial products with some containing excessive levels of cadmium, which is a toxic metal.

The industry and commerce department in Zhejiang province conducting a check of shark fin soup, a popular dish often served at luxurious banquets.

It found many restaurants serving artificial shark fins made of edible gelatin and seaweed gum.

Restaurants purchase the “shark fins” at a low price, but they are sold for up to 1-thousand yuan a bowl in restaurants and hotels.

Similar results were found in another investigation by the province’s consumer rights protection agency as no shark was found in any of the soups.

The consumer rights protection agency also found that about one-third of dried shark fin in the province’s markets contained excessive cadmium and methyl mercury.

Experts say excessive ingestion of mercury can harm pregnant woman and the development of the fetal brain and nervous system.

China Watch Blog picked up this interesting article from Star Online quoting an international financial expert, Satyajit Das, who contends that the debt- fueled boom and “botox economics” of the past have come to a halt to make way for what will be, at least until global debt levels come down, a bleak future.

Gold, not a solution during difficult economic times

“The most difficult period will be the time it takes to wipe out the debt,” he said last week at a talk organised by the Malaysian Investment Banking Association. Das has over 30 years experience in capital markets and risk management and is now a consultant to banks, corporations and regulators.

In a sobering assessment of the health of the world economy, he likened the various pump-priming actions by governments and central banks to driving with the handbrake on.

From the current malaise, he sees three possible outcomes: a 75% chance of stagnation, 20% of a collapse, and 5% of belle epoque.

For the man on the street, he has this advice: “First I would pray. People asked me what I would buy in 2008. I said foodstuff, energy, and a gun to protect you. The world is going to look a very ugly place.”

Das, a former banker who published a book in 2006 anticipating the credit crash, thinks that in the future the top 10% of the population will rule the world and hire 20%, leaving 70% with nothing.

“You already see this with security and gated communities becoming more prevalent. I’ll be dead, thank god,” he laughed.

On what the ordinary person should do to protect his wealth, he said: “You need a trading mentality and to look very carefully at what other people are doing.

“My investment strategy now is very simply summed up. I don’t bother asking questions about fundamentals. What are other people thinking and doing?”

Das also dismissed the long-held notion that gold was a refuge in times of trouble.

“I don’t understand gold, it is an irrational asset. My mother, who is Indian, would buy gold whether it is valued at US$20, US$200 or US$2,000. It doesn’t make any difference to her because people have an innate desire to own gold.

“In my mind there is no difference between gold and paper currency. You still rely on someone to give you something in return it is a different act of faith. Gold is not a good investment after adjusting for inflation, but it can be a short-term tactical asset.”

Asked about Malaysia, Das said that as the global economy waned, the question was not whether the country would be affected but rather to what degree.

“Malaysia has natural resources. You have things people need, at least in the near term.

“But a lot of the growth is dependent on government spending. There is a need to get away from investment-driven growth.”

On Asean, he remarked that the 10-nation region was to an extent “trapped in the China story” as its suppliers and exporters, especially in the case of Singapore and Hong Kong which are trade-dependent economies.

However, Das pointed out that the world was not at the end of growth per se, just the end of “financially-engineered” growth.

“Real growth stems from a few things: population growth, productivity and innovation, and new markets.

“But they are limited. Besides North Korea, I can’t see any other country that has not been integrated into the global economy, unless the Martians start to trade with us,” he joked.

“The point is all those things will not bring us back to the growth of the past. We are in for a very long period of adjustment. To some extent we are going backwards.

“We are going to see not a great deal of forward progress, but a return to a more sustainable economy. That will be a long process.”

China Watch Blog has learnt that a superstorm threatening 60 million people in the most heavily populated corridor in the USA gained strength on Monday, packing winds of 90 mph and picking up considerable speed just hours before it is expected to make landfall, forecasters said.

The National Hurricane Center said on Monday morning that the Category 1 hurricane is moving northwest at 28 mph – up from 18 mph a few hours earlier. At 2:00 p.m. ET the storm was centered about 175 miles south-southeast of New York City, or about 110 miles southeast of Atlantic City, N.J. Hurricane-force winds extend up to 175 miles from the storm’s center, with tropical storm-force winds extended outward up to 485 miles.

Maximum sustained winds of 90 mph, with higher gusts, were measured.

As it slams into the Unites States’ eastern seaboard, Hurricane Sandy has grounded thousands of flights, shut down rail services and harbours and closed the New York Stock Exchange for the first time since 1985. Trade has come to a standstill.

Passengers are stranded from Hong Kong to Europe. Air travel will be shut down for at least two days in a key region of the US for both domestic and international flights. Around 7,500 flights had been canceled so far for Sunday and Monday.

Sandy is a Category 1 hurricane with sustained winds 120 kph. It has already been blamed for 65 deaths in the Caribbean. Forecasters say the hurricane could become the “perfect storm” as it collides with a winter storm front descending from Canada and cold air pushing down from Greenland.

What meteorologists are describing as the biggest storm ever to hit the United States is also affecting travel worldwide. In Hong Kong, for example, business travellers are learning that they could be stuck there for nearly a week before seats on flights to the US become available.

Cathay, Korean Air, Asiana Airlines and Air India, among other international carriers, have also axed US flights.

China Watch Blog received this release from AccuWeather.com which reports that an extremely rare and dangerous storm will turn in from the Atlantic, putting 60 million people in its path and could lead to billions of dollars in damage.

The worst of the storm will be Monday through Tuesday, but the storm’s aftermath may linger days later. Conditions will deteriorate from the mid-Atlantic to southern New England Sunday and Sunday night.

Ripple-effect flight delays and cancellations are possible over a large part of the nation, as the storm will target major airports from Boston to Washington, D.C., with New York and Philadelphia in the middle. Many aircraft originate from or travel to these hubs on a daily basis.

Trade, transport, travel will all be impacted by the storm, which is going to make people homeless, and there will be loss of lives as well. We pray all the people in the path of the storm will take all the necessary precautions.

China Watch Blog has learnt that due diligence of Mergers & Acquisitions (M&As) do not focus enough on post deal integration to be able to fully tap full potential of such deals, according to a new worldwide study by global law firm Eversheds, whose deals are more than 75% involving cross border.

Little or no focus beyond the deal transaction to post-integration is compromising the benefits and value of cross-border M&A, and internal processes are as much to blame as external factors, the report says.

Global businesses are not realising the full potential of cross-border mergers and acquisitions (M&A) as a means of driving growth due to weaknesses in the deal process, the new global study, The M&A Blueprint: Inception to Integration , published by Eversheds, shows that deal teams need a more holistic approach and stronger connections between the planning, completion and post-deal integration phases.

The study involved more than 400 multi-national businesses who have worked on cross-border M&A deals in the past three years. It shows that nearly half (43%) of businesses believe that the most common cause for deals not successfully achieving their goals is due to a failure to address post deal integration from the early stages of deal due diligence.

The report also shows that legal risk is an increasingly important consideration in the assessment of potential deals. General Counsel provide essential input at this stage and more than half (59%) of all respondents said they had spotted potentially damaging issues early enough to caution management about proceeding with the deal.

The research highlights that less experienced buyers are finding the process challenging but even those with a wealth of knowledge believe that there are improvements to be made.

Robin Johnson , M&A partner at Eversheds , said: “The current economic climate has made the business of doing deals much tougher, with the research highlighting an acute awareness of risk in the process. However, company boards are under pressure to secure growth and M&A is an essential business tool for achieving this, in particular for organisations thinking about tapping into or increasing their penetration in new international markets.
“Our research shows that the overriding factor contributing to the success of a cross-border deal , is the presence of a core team providing the ‘connective tissue’ to link all the phases together , taking the deal from the inception stage through to post-completion integration. Businesses need to start joining the dots between the different stages of the deal cycle to move the focus from just simply ‘doing the deal’ to thinking about life for the business beyond the deal.

China Watch Blog has learnt that the International Monetary Fund has cut its global growth forecast and warned that the world economy could become much worse if the euro zone crisis is not quelled and Washington fails to reverse the looming “fiscal cliff” austerity plan.

Hong Kong port

Unrelenting market turbulence and budget-cutting in developed countries has led to worries about risks across the globe, slowing trade and investment, the IMF said in a report released in Tokyo.

The Fund cut its growth forecast for this year to 3.3 percent, from its estimate in July of 3.5 percent, with Asia still leading the pack of expanding regions with Europe expected to contract 0.4 percent this year.

Growth will reach only 3.6 percent next year – lower than the 3.9 percent predicted in July – as even powerful emerging economies such as China, India and Brazil hit the brakes, the Fund said.

China’s economy was expected to grow 7.8 percent in 2012 and 8.2 percent in 2013.

Both figures are below the Fund’s most recent estimates in July of 8.0 percent growth for 2012 and 8.5 percent for 2013.

China’s gross domestic product expanded 7.6 percent in the second quarter of this year, its worst performance in three years, and disappointing data since then has led to fears that third-quarter growth may have weakened further.

The IMF warned US leaders that hitting the looming “fiscal cliff” would not only crush the American economy but spin havoc through the rest of the world.

The US needs to shrink its huge fiscal deficit over the medium term but steep spending cuts and tax hikes scheduled for January are too extreme, and are already sending worries across the globe and hitting growth, the IMF said.

China Watch Blog has learnt that beginning on August 30, Guangdong government has launched a 4-month on-line sales campaign to promote made-in-Guangdong products.

The government, for the promotion, has opened an official website www.ghwsx.gov.cn, wishing to push forward e-commerce.

Hundreds of companies will take part in this campaign, mainly providing high-tech electronics, smart home appliances and brands with a long-standing history, said Vice director of Guangdong’s Economic and Information Commission Qi Zhenli.