Briefly…Top Ten Tweets (From Slowing Growth, Fishy Stats & Industry Clusters, To M&A, Alignment & Secret Risks)

Related entries: Business Issues, Corporate News, Economy, General, Investment

China’s growth seems set to continue its managed slow-down – and a recent estimate from the State Information Centre, reported in China Economic Review, puts the Q3 GDP figure at 9.3% year-on-year (compared to 10.3% in Q2 and 11.9% in Q1. However, for all the estimates and statistics, an open mind is still required. As Global Times reported “Something is fishy in the provinces” – where GDP rates run ahead of the national figure.

All that growth has been fuel for China bears fearing a bubble. So it was interesting to see Standard Chartered’s research in the Wall Street Journal’s blog, suggesting that the real estate developers in tier 2 and 3 cities remain relatively bullish, despite Beijing’s cooling measures and, “if sales and construction activity holds up in most Tier 2 and Tier 3 cities, then the economy will not tank”. As usual, you have to get into the detail, and not make too many assumptions, based on too few data points in too few cities (and with too much reliance on back-office figures, and too little input from front-line people).

Those tier 2 and 3 cities have had a lot of press over the past few years (and, more recently, city clusters), but industry clusters are also well established, and it was good to find the Wall Street Journal mapping some of them out – from children’s clothing in Zhili and lighters in Wenzhou, to socks and ties in Shaoxing. However, rising costs (which we have been following in recent updates) are challenging the status quo, and accelerating investment in automation.

Not all the economic action has been at home. China’s overseas direct investment has seen a success in the completion of Geely’s purchase of Volvo. The Local reported that “Geely…has said it will spend $2.7 billion on the deal — the original price tag of $1.8 billion, plus $900 million in working capital to improve the brand.” And like other international auto brands, Volvo could do well in China, with the right positioning, while China gets and technology, design and international network.

For those with an interest in M&A, the action goes in to, as well as out of, China. WilmerHale reminds us that: “Proposed mergers and acquisitions in China need to be structured carefully to take into account government policy priorities. Lack of alignment of deals with government policies can often lead to deals being rejected or subject to onerous conditions under regulations governing mergers and acquisitions and other regulations”. Too right.

That alignment is important not just for M&A, but for business generally. Siemens clearly knows this, as a recent piece in China Daily shows: Their China head, Cheng Mei-Wei, was reported as saying that “companies should work to “adapt themselves to the rapid changing market…Cheng said he is “optimistic about Siemens’ future in the Chinese market” as the company’s portfolio fits well with the country’s needs in areas including urbanization, demographic change and environmental protection.”. Buzz words such as “localization” and “R&D” were also thrown in for good measure, befome coming to a strong close: “We are a multinational company, but we are also a Chinese company”. Siemens will not be without difficult issues, but a little friendly alignment can be a good long-term policy.

Perhaps Siemens had advance sight of the latest employment survey from – which was strangely anti-MNC (not all are convinced – but it is interesting to consider the implications). That other official organ, the People’s Daily tells us: “The number of foreign companies on the list of the top 50 preferred employers voted by Chinese college students has plunged to four from last year’s 21”. This may reflect increased wages, or more perceived stability (or accessibility), in local firms. MNCs may not be out of the picture, but for some it will prompt some proactive positioning. Perhaps, like Siemens, they will remember to repeat “we are also a Chinese company”…

Just as students want access to increasingly rare jobs, China wants access to some rare raw materials. Yes, rare earths are back in the news, along with Chinalco. People’s Daily reported that the company: “is eyeing rare earth mines in Guangxi Zhuang autonomous region to bolster reserves”, and that “The government has indicated that it wants big companies to spearhead the consolidation of the nation’s rare earth sector”. This is a worrying policy for international firms that rely on these materials for high-tech production as “China supplies more than 95 percent of the global output of rare earth oxides and sits on half of the reserves in the world”. This is a policy – and a risk issue – to watch.

…But it is not the only risk. And others are less rare, such as bribery and state secrets. On one hand the fall out from the Rio case has continued – with the sentencing of some of the Chinese-side players (on trade secret issues).

On the other hand are the “state secrets”, which are (thanks to Baker & McKenzie) well worth reading up on before the State Secrets Law knocks on the door on 1st October.

See the related tweets, and links below.

For more real-time news and views, see our ChinaBlogTweets Twitter stream, or subscribe to the rss feed.

1. RT @chinaeconreview: SIC: China’s Q3 economic growth to slow to 9.2% (see also: RT @markmackinnon: ” – GDP growth in China’s provinces…outpaces national…

2. RT @ChinaRealTime: StanChart finds reassuring results in poll of tier 2 and tier 3 city property developers.

3. RT @MalcolmMoore: RT @kinablog: RT @ChinaAtoZ: …cool map on WSJ showing where industries have clustered in China.

4. ODI RT @BullishChina: China’s Geely completes Volvo purchase – Local (See also: A safe premium… RT @billrusso: Russo Says Geely Ownership Will Benefit Volvo in China

5. RT @chinahearsay: WilmerHale: Spotlight: M&A Trends In China

6. Aligned strategy (& better PR than GE) RT @ChinaDailyUSA: Siemens CEO touts long-term China strategy

7. RT @NiuB: Foreign companies out of favor on China’s preferred employers list:

8. Guanxi in Guangxi? RT @ellachou RT @kinablog: Chinalco, China’s largest aluminum producer, steps up drive for rare earths

9. Trade secrets RT @eobserver: …fall out from Rio Tinto case [Caixin / Reuters] …sentencing of Tan Yixin & Wang Hongjiu

10. RT @chinahearsay: Baker & McKenzie: Latest Developments on China’s State Secrets and Trade Secrets Regime

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2 Responses to “Briefly…Top Ten Tweets (From Slowing Growth, Fishy Stats & Industry Clusters, To M&A, Alignment & Secret Risks)”

  1. Tweets that mention Archive » Briefly…Top Ten Tweets (From Slowing Growth, Fishy Stats & Industry Clusters, To M&A, Alignment & Secret Risks)| China Business Blog -- Says:

    […] This post was mentioned on Twitter by China Business Blog, William N.. William N. said: Briefly…Top Ten Tweets (From Slowing Growth, Fishy Stats & Industry Clusters, To M&A, Alignment & Secret Risks): C… […]

  2. Archive » Tracking: Rare Earth, Trade & Tensions | China Business Blog Says:

    […] August, in another update, we went on to note that: “China wants access to some rare raw materials. Yes, rare earths […]

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