Understanding China, One Blog at a Time

An American in China

Archive for March 18th, 2011

Anarchy in the UK-China Now Torpedoing Actuarial Science

Posted by w_thames_the_d on March 18, 2011

In the excerpt below, China’s actuarial tests will be recognized by England.What the hell ar ethey thinking? In a country where the profs actually pass out test answers to the students (as one did to the class of yours truly), why woudl anyone trust an exam taken in the land of smog and disenchantment?

” Exam results of the China Association of Actuaries (CAA) will be recognized by the UK’s Institute and Faculty of Actuaries, said a memorandum of understanding (MOU) signed by both parties in Beijing on Thursday .

Those who have acquired a CAA associate actuary certificate will be recognized as having taken basic skill tests from CT1 to CT8 required by the UK’s institute, according to the MOU.”

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Not Reporting from China- The Press Harrassed in China

Posted by w_thames_the_d on March 18, 2011

From here:

BEIJING — Western journalists have lately been tolerated in China, if grudgingly, but the spread of revolution in the Middle East has prompted the authorities here to adopt a more familiar tack: suddenly, foreign reporters are being tracked and detained in the same manner — though hardly as roughly — as political dissidents.
On Sunday, about a dozen European and Japanese journalists in Shanghai were herded into an underground bunkerlike room and kept for two hours after they sought to monitor the response to calls on an anonymous Internet site for Chinese citizens to conduct a “strolling” protest against the government outside the Peace Cinema, near People’s Square in Shanghai.

In Beijing, several plainclothes officers planted themselves on Saturday night outside the home of an American correspondent who was severely beaten by security officers the previous week as he sought to cover a similar Internet-inspired protest there. Seven officers in two separate cars then trailed the reporter to a basketball game on Sunday, recording his trip on video the entire time, correspondents said.

At least a dozen other journalists and photographers were visited in their homes over the weekend and repeatedly warned not to cause trouble — or, as one officer put it, try to “topple the party.”

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China’s Scary Quality Problems

Posted by w_thames_the_d on March 18, 2011

Here is an excerpt from Paul Midler, author of Poorly Made in China. the book is great, I just can’t seem to find the one I’ve purchased…

Excerpt from this site:
The Case Of The Missing AluminumSome quality issues are not all that serious, but others are downright frightening. One of the most disturbing examples I have encountered while working in China involved the manufacture and importation of aluminum systems used to construct high-rise commercial buildings. These are the systems that support tons of concrete as it is being poured, and their general stability is critical.

The American company that designed and patented the system engineered all key components. It knew exactly how much each part was supposed to weigh, and yet the level of engineering sophistication did not stop the supplier from making a unilateral decision to reduce the specifications. When the “production error” was caught, one aluminum part was found to be weighing less than 90% of its intended weight.

Where did the missing aluminum go? Into the factory owner’s pocket as a cost saving. The only thing passed on to the customer was an increase in product risk. Quality fade is like the straw that broke the camel’s back–only in reverse. Suppliers push the limit by taking more and more out of the equation until they are caught, or until disaster strikes.

Even when importers catch suppliers in a quality fade, they frequently don’t do much about it. Many quality problems are seen as too minor relative to the difficulties involved in rectifying them. Customers may not notice a product flaw, but they most certainly notice when a product is not delivered on time. The chance of a product failure is usually remote, but the penalty for late delivery is an almost certain loss of business.

Some importers bravely attempt to fight back against quality fade by insisting a supplier replace substandard goods at the factory’s expense. A savvy supplier–and most are extremely savvy–can respond to such demands by threatening to terminate the supplier relationship. Or the supplier can respond by raising prices. Importers might then say they will switch suppliers, but the factory owner knows this is an empty threat as finding and cultivating a new supplier can take a long time. And anyway, there is no guarantee that the next supplier won’t engage in the same willful behavior as the first.

The factory owner who practices quality fade knows exactly where he stands with his customer in these cat-and-mouse games. He has virtually nothing to lose and only margin to gain–and, having gotten away with it once, no one should be surprised when he goes for it again. When the factory owner offers his most sincere apologies and promises that it won’t happen a second time, importers simply close their eyes and hope for the best.

If Adam Smith were around today, he would have had to write a separate chapter on global outsourcing. Because it takes importers a long time to find suppliers and to get them up to speed, importers keep their suppliers a secret. The last thing that an importer wants to do is let his competitors know the source of any supply chain advantage he may have. Even when it is in their collective interest to share information, importers keep to themselves.

As a result, factories pay little, if any, reputational cost for production shenanigans. The invisible hand doesn’t work well when the manufacturers themselves are unseen.

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China’s Scary Bad Pollution

Posted by w_thames_the_d on March 18, 2011

This information is dated, it’s from 1995 and look how bad china was back then. Can you imagine how bad it is today??

Ambient concentrations of air pollutants, 1995
Source: The World Bank, Clear Water, Blue Skies: China’s Environment in the New Century (The World Bank, Washington, D.C., 1997), Figure 1.1, p. 6.

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China’s Economic Miracle Explained in Layman’s Terms

Posted by w_thames_the_d on March 18, 2011

We hear a lot about China’s economic miracle and I’d like to take a few moments to reflect upon that term ‘economic miracle’ and how it pertains to China. Although some of you may not be as well versed in all things economic like your humble author and servant, I will try to give you a quick lesson in economics and a little history.

Back in ’76 each Chinaman earned about $176 per year and lived in what could best be described in a cross between a Bedouin and caveman. They toiled away for state owned enterprises and their remuneration was nothing more than little coupons with which they could buy their allotted rice and a few times per year an egg. As a country they were dirt poor and of the two nickles that they had to rub together, one was usually fake.

That was then. Flash forward to today where 80% of all China’s billionaires are members of the communist party or their kids and the typical Chinaman no longer has to queue for his twice yearly ration of eggs. The skyline is littered with skyscrapers and pollution fills the air, a testament to her growth.

The scene I described is oft called ‘the economic miracle of china’. This country of
1, 340,000,000 souls who not thirty years ago lived like ravenous barbarians, now enjoy a lifestyle quite similar to our El Salvadorian neighbors (per GDP).

Now let me explain to you the economics of her transformation, no on second thought let me tell you a story. In Vietnam there was a guy named Nguyen Van Het, shown below.


Nguyen Van Het and his wife in their charity house built by local authorities in Ho Chi Minh City’s District 11. After winning more than US$400,000 in a local lottery earlier this month, their home has been flooded by droves of people claiming to be long-lost relatives and demanding a piece of the windfall.

Here is a guy who was lucky to have a dime in his pockets on a good day and basically lived like the Chinese did back in the 60’s. He was 97 and had no savings so on a good day he’d feed himself with rice purloined from the local country side, also much like the Chinese of the late ’50s.

Then luck turned for this spritely old man as all of the sudden he found the winning ticket to the Vietnamese lottery in his hands. After cashing his U$400,000 check, he was no longer shackled to the countryside ditches. In a country where the average per capita income hovers around U$1000 per year (much like China’s of old), this guy now possesses the wealth of a king.

Do you get my drift… are you feeling me on this one? If not then let me be blunt.

The ‘Chinese Miracle’ is nothing less than the ‘Economic Miracle’ visited upon Mr. Nguyen. If we are to tout the astute powers of uncle chicom then too we should tout this man’s intelligence in purchasing a ticket which has lead to his newfound wealth, for the rise of China is nothing more than what this man has experienced.

If you consider this to be nothing more than capitalist propaganda meted out by a cynical American, and maybe it is, at least let me explain why I am making this statement.

Just like Mr. Nguyen, the China of 30 years ago had nothing. The miracle that has played out in China is nothing less than the effect of the massive infusion of international capital and technology to a dirt poor country whose government has played no other roll than siphoning off its hong baos (bribes) and impeding progress along the way. In other words, the economic miracle is nothing more than the consequence of allowing foreign capital to bring a country of poor into the 20th century.

How does a country go from living like the Flintstones to El Salvadorians in a matter of three decades? It’s easy. Look what foreigners have brought to the country. The Germans have provided the blueprint for their high speed trains, the world has written their constitution for them, the international community has provided motorcycles and cars for them to reverse engineer and copy, Cisco has given the blue prints for their networking devices, foreign profs have taught them a classroom is actually a place for discussion not torture and ‘self punishment’ sessions, foreign architects have designed their buildings for them. The truly remarkable thing is that a country of 1.3 billion waited so long to join the rest of the world in all things modern.

I guess the way I see it is that the ‘economic miracle’ visited upon China is nothing more than the ‘economic miracle’ that will happen in N. Korea and Cuba when they too are open to the west and the US (as in the case of Cuba).

Oh yeah, the little Vietnamese guy gave away a ton of the cash he won, so he definitely is not like the majority of the people here….

his story is here http://www.thanhniennews.com/2010/Pages/2010227113832055315.aspx

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China Unveils New Three Year Plan of Innovation, Ball Point Pens? WTF?

Posted by w_thames_the_d on March 18, 2011

Uncle chicom is rushing headlong into one of the most important yet underdeveloped product markets. Fresh off the communist ‘contact high’ from the recent meetings here in the land of pollution and glum, the Chinese are pulling out all the stops.
They, in order to overcome the image of their backwards production measures and shitty quality are now entering into the …..
Ball point pens? Check the article below, it made the front page of the chinadaily today. Uncle chicom says he is no longer going to be beholden to foreign devils and their sub par pens and as such is setting off to rid themselves of their dependency on companies such as Bic and Mount Blanc.
Is it just me or are they pretty bizarre? Or is it another case of Chinese arrogance, such as they exhibited thousands of years ago, where they assume that they can do it better than the filthy foreigners?

” BEIJING – Since there’s little chance of making a better mousetrap, the government of China is putting its research dollars into improving another invention: the ballpoint pen.
China is set to launch a three-year project to develop its own technologies for making ballpoint pens, the Ministry of Science and Technology said. The country’s manufacturers currently rely heavily on foreign technology for their production. With a fund of 60 million yuan ($9.1 million), the project will run from June 2011 to June 2014, a statement from the ministry said.

The project to make ballpoint pens a home-grown product will mostly focus on developing core production techniques, including producing inks, pen points and mechanisms to combine the two.”Using advanced technologies to renovate and upgrade traditional industries is an important part of China building an innovative country,” said Minister of Science and Technology Wan Gang.”

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Cous Cous in China

Posted by w_thames_the_d on March 18, 2011

I just went to this little Russian place that has delicious chicken and soup. Today I got wild and ordered the cous cous soup…wtf is that stuff? To me it had all the charm of a Mexican michilada- a nasty brew of beer and tobasco sauce, that the Mexicans love. The soup was yellow and tangy and tasted like your mouth after a night of dry heaving. Was it just a bad batch, or is that what the stuff tastes like?

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