Last year Andrew Hupert from Diligence China was kind enough to invite me over to the Itv-Asia office and pepper me with questions about china’s 2nd tier. For a number of reasons, I have just now figured out how to embed (i.e. shamelessly promote) this video.

A few things have changed factually since the video, but I still believe in the fundamental issues that I run through, highlight, and stutter over.

If you have trouble viewing through this post, click over to ITV’s site, but for those in China I should just warn you ahead of time that it is slow no matter how you cut it.

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With so much going on in China, and only a limited amount of bandwidth, I have created this weekly post to highlight articles that I feel are (1) important, (2) relevant, and (3) interesting.

This week there are 3 articles that I have chosen to highlight as each are quite interesting, they are all relevant, and there are issues within each that I think you the reader should be aware of.

If you have an article that you feel needs to be mentioned, please do so in the comments section. We all have different areas of interest and bandwidth, so I hope you will take some time and post those articles!
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I am generally of the opinion that if you are writing a blog focused on business, you should follow the cardinal laws of topics to avoid at networking events: politics and religion. In china, I would also add culture.

However, I recognize the fact that the line between business and politics is a fine one, and that come this November the line that the Bush Administration has drawn in the sand will be moved by one of the candidates…. and more than ever, I think we need to understand clearly the knowledge, understanding, experience, and potential impact of the candidates as it relates to globalization.. and of course China.

and, as luck would have it, Youtube has provided such an opportunity through a 9 minute clip of Hillary Clinton being interview on the George Stephanopoulos show:

 The highlights of the clip are:

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One of the things I love about China, is that “China experts” can have worked in the same city, assisted largely the same firms, be roughly of the same intelligence.. and yet disagree on things that one would think were fundamental.

The first time I witnessed this in China (keep in mind I used to watch a lot of CNBC), was at an AMCHAM where you had three economists debate what was going to happen with the RMB.. and just how undervalued it was.

The next experience I had was when I moderated a panel on real estate in Shanghai (a pretty well discussed topic you would think), and the differences between investors, economists, and agent expectations was fascinating.

more recently though, it has been over the topic of China’s market size, and more specifically the size of China’s middle class. Type it into google, and you get a pretty decent range of opinions… 57 million … 10o million… 200 million.. and so on.

One of the most vocal critics of the big 200 and above numbers is the well known Paul French, and it is he who for a while stood out from the crowd and said that China’s middle class is not as large as others would say.. and it is definitely not in the 200 million range

And when I saw the recent Youtube (h/t Danwei)of Paul French taking shots at JWT’s Tom Doctroff - also considered to be very well versed in China, I realized that the fight was spilling out into the street… one Old China hand against another!

Like Thomas Crampton, I too would like to hear Tom’s reply to this. for me, I know each equally well, which is to say that I have seen both of them present and heard good things about both. My view on the middle class is that (1) you cannot trust any statistic (2) you cannot base your numbers on luxury sales and (3) it is surely more fragile than anyone would like to admit.

UPDATE - Doctoroff Responds to French

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In yet another chapter of the visa saga, it appears that we are now seeing where immigration officers at the border are turning multiple entry visas.

According to the email I received:

But yesterday and today it seems that when they arrived into the Guangzhou station from the HK Train, they were told that their visa would have to be canceled and they would be on their last 30 day stay and they would have to go back home to get an extension or a new visa!!

He said that at least 1 case was someone he personally knew but other 3 were friends of his friends…

Now, this is third hand reporting, so do not take this as fact. Like before, there has yet to be an official document published and the websites I normally check for this make no mention of this.

However, if you are on a multi-entry tourist or F visa, I would say that you can no longer take your visa for granted.

It is clear that the visa policies and immigration procedures have changed/ tightened up, and my suggestion is to keep alert. If you are leaving country, then maybe give a call to your embassy to see if anyone else has recently had problems.

Immigration officers have the right to do what they feel is best, and that includes canceling your visa. So, do your best to be nice and have a fresh shave when going through the border. Yelling at the guy behind the glass and generally throwing a temper tantrum is not going to get you anywhere, but perhaps showing a bit of understanding and courtesy will.

Also, for those who are in country already who are trying to get those invitation letters, here is a report:

Since I am in *&^zhou I went to the local govt. offices here to find out how I could get one for my client in India, and this is a genuine client who wanted to come to place orders last week, and I also had all the legal documents and my Chinese business partner with me with all company license etc…

The only reply I got from them was ‘Sorry, we are not allowed to give visa notification letters to Indian passport holders’ and they wouldn’t reveal which other countries they weren’t allowed to give the letters to. Its really starting to affect the businesses here man, you can actually see the 4/5 star hotels running dry here with no ‘laowai’s’ in sight.

As always, please send me your updates (good and bad). I will continue to follow the situation as best I can.

It may seem like a no brainer in answering this question, but last week I was fed a question by a good friend who had been hearing that his friends were having trouble getting his employees from an F to a Z.

In his email to me, he wrote:

that the registered capital requirement for an entity (foreign or domestic) to apply for a first time Z visa for a foreigner had been raised from RMB1m to RMB10m. Clearly this restricts even further where folk can get Zs from…

Immediately, I emailed some friends whose job it is to advocate and assist foreign firms in China at some of the highest levels in China…. After all, this could become a huge human relations headache for some….

Today I got my first response:

Here’s the rules to my understanding:

For WFOEs with less than USD 3 million in registered capital, only the GM/CEO (top guy) can have a Z visa (residence permit). Other foreigners can have F visas but not Z visas.

For WFOEs above the USD 3 million line, all foreign employees can have Z visas (residence permits).

Now, under the old system I have never heard of anyone having issues… but under these time of strict enforcement it could prevent some smaller WFOEs (and perhaps some larger WFOE in the services industry) from registering their employees on a Z visa.

Anyone with any experience on this, or with a story, please share.

While living in the United States, I must admit that I knew little about city planning.. and I really didn’t care. I enjoyed driving, and my morning/ evening commute was always an adventure.. .and more than my morning commute, I loved getting out on the open road for a cross country trip.

But that was when I had the time, and gas was only .98USD/ gallon.

However, with 6+ years in China (the last 5 in Shanghai), all I can say is that China for me is a model of what transportation networks in cities - and between cities - should be for the future… and what makes me appreciate Shanghai more and more, is reading article/ posts like the one Jim Kunstler just wrote called Blind Spot on his blog Clusterfuck Nation:

I got a little guided tour of Minneapolis from the author-shlepping service that my publisher engaged. We rode past the old Minneapolis central train station. He said no trains stop there anymore

In other words, this region of the country has next-to-zero railroad service. Can we pause a moment here to ask: exactly how far does America have its head up its ass? Do you get the picture? Can you connect the dots? The airline industry is dying and absolutely no thought is being given to how people will get around this big country — except to make the stupid assumption that we can just drive our cars instead. Even during the several days I was around Minneapolis, no news media or politician raised the subject of reviving passenger railroad service.

In point of fact, these are exactly the kind of trips that would be better served by rail, anyway — the towns that are less than five hundred miles apart. The travel time between trains and planes would be comparable, considering the two hours or so that you have to add to every airplane trip because of all the security crap, not to mention the delays. As a matter of fact, USA today ran a front page story two days after the Delta / Northwest announcement saying “Air Trips Slowest [now than] in Past 20 Years.” Subhead: “Trend likely to persist as congestion worsens.”

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