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Does Microsoft Need China?
angkor writes "Does Microsoft Need China? Interesting article from CFO.com's perspective on MS pricing strategies in the developing world: 'Put another way, Microsoft is relying on current pricing and a goodly portion of the world's tech growth to sustain its 31 percent net profit margins. But an increasing portion of global tech growth will come from Asia's burgeoning economies. And it's precisely in Asia--with China in the lead--that pressure to alter the uniform pricing structure for its software is the strongest in the world...'"
I think Microsoft has some of the right ideas, trying to develop an infrastructure which has a need for their products, but they'll need businesses to buy into it more than government.
And at that point the conference center's FUD alarm went off and people fled into the streets.A feeling of having made the same mistake before: Deja Foobar
The low price growth in China is finally starting to slow, but profit margins are continuing to rise. Companies like SINA Corp have profit increases of nearly 350% for this year alone. China is an inevitable sector of growth in the world economy, which may change a lot of global commerce in the coming years. However, those who have got in early have benefitted greatly. Recent stock analysis on companies like SINA are still looking to much brighter futures, which can only increase profit for Microsoft.
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artlu.net
In Communist China, Microsoft needs YOU.
I predict that in 20 years, a Chinese OS is dominating market share in eastern countries. There's no way that a workforce of that size, with increasing technological skill, won't be able to compete with a floundering US economy. China is not about to bind itself to a major western corporation, at least not in a way that involves shipping product IN to the country, rather than the traditional OUT.
But I'm only a history major...
Does China need Microsoft?
not so much...
"The object of war is not to die for your country, but to make the other bastard die for his." - Patton
A better question would be: "Does China need Microsoft?" No, I dont think so.
with the government pushing for Linux, how much impact will Microsoft really have on the Chinese market? That's a more relevant question.
Many of todays manufacturing jobs are moving to China. Labor is cheaper and many of the raw materials are from China in the first place, so it only makes sense (at least from a financial point of view) to move some of the manufacturing over to China.
I used to work in the conveyor belting business and every belting company in town wanted to get into china to cut costs.
If China becomes a huge source for outsourcing manufacturing then of course the question is who will supply the technology to do it?
On the other hand, if Linux is allowed to compete in a free market both here and in China, Microsoft will need to find a new strateghy anyway.
Perhaps they'll have to start innovating instead of charging large amounts for commodity components like filesystems and operating systems.
In a word: no.
What they need is to rethink their current strategy and figure out how to make it more efficient in their current market.
If they rely on a new populous for their future plans...well, I hate to be the bringer of bad news, but eventually they're going to run out of new blood...unless ET visits us, but, I doubt a lifeform capable of extra-solar travel is going to be interested in licesensing MS software.
I don't know that Micrsoft necessarily needs China buying their product, but if MS can't sell their products in China there eventually will be some stiff competition coming from the big country.
No sig for you. YOU GET NO SIG!
I think MicroSoft's efforts at a tiered pricing scheme are doomed. The "Broken-Windows" effort (only 3 apps can run at a time, only low resolutions, etc.) will do little to nothing to curb piracy, no matter how cheaply it is available. On the other hand, if the full version is released at a greatly reduced price, then why would anyone pay the the higher one? It's only a matter of time before people realize that spending $400 for their OS is a ripoff, and M$ is forced to lower prices in China, the U.S., and everywhere else to maintain its market share.
What would M$ do without China to produce all of the CDs on which windows is distributed.
That article you linked to is a load of shit. The author obviously put a lot of work into it, but in the end his ideas get pretty messy if you think about the implications. I mean, (from the conclusion) "a fundamental shift away from the Western supply-and-demand paradigm?" Come on, what a load of crap!
Because like everyone knows, Open Source = Communism :-)
I hear there's rumors on the Slashdots
here
I would avoid China, and instead give Microsoft paper plates and a sippy cup.
of Microsoft's products in China and other Asian countries is well above the rest of the world. This isn't totally bad for Microsoft however. If people, as they have in the US, become reliant on Windows/Office, the future can only be good for Microsoft. Better copy protection, registration, web applications, etc. could force users to purchase upgrades. If I were Microsoft I would be giving my product away to these industrial developing nations.
Probably not the first question I'd ask, probably more like, what the hell am I going to buy today?
The question is not if MS *needs* PRC, but how does it get the maximum amount of money of it.
Because of the piracy and other situation, the optimum pricing strategy in China might well be different from of other countries.
Of course they need China. Remember that Windows is about perpetuating marketshare. Without marketshare (and narrowminded IT people), Windows can't compete well. China has a huge market potential. Suppose they standardize on linux, then every company wishing to deal with the government must support linux too. At some point, economic decision such as it's cheaper to support only linux (exactly the same argument companies use to rid of Macs) will be easier to make. And this time, the TCO study actually support the argument, unlike Windows vs Mac TCO argument.
From then on, companies will see and have to open their mind that companies can survive without Microsoft (or as least as possible). It's something that scares Redmond.
The only way that Microsoft can successfully market their Windows OS in China is to stop piracy first. The only way to stop piracy is to strategically align themselves with the government of China.
Microsoft can't defeat the 90% piracy by themselves, that's insane. They have to encourage (or entice) government enforcement if they want to successful transform a nation that only knows theft into a nation that is a legal consumer.
A restrictive operating system is a pitiful attempt at making in-roads into China. Microsoft's approach is completely misguided.
That is the real question here. Long live Linux!
Meh.
China needs a goodly protion of its bestest software. Its the goodest!
Yah!
China is a bigly country too!
Comment removed based on user account deletion
Microsoft knows that the market in the developing countries in Asia is not in the home segment but in the corporate and government segment.
The home segment will continue to pirate software as there is little enforcement of law, if they exist, and primarily because it is so much cheaper to buy pirated copies.
For example here in India the cost of a pirated copy of windows is 1/10th of the cost of a legit copy. Nobody cares about support anyways.
The government offices are the next target. In Asia and specially in countries like communist China the biggest employer is the government. So you can easily guess that more people=more desktops=more sales. But Microsoft is frustrated that it cannot use it's traditional tactics of getting people to resist change by not switching from windows as in most cases people are starting out from scratch and if they latch on to Linux as a desktop OS they will resist changing from that as that is what they have been used to. An example is how the Chinese goverment is developing it's own version of Linux to counter dependence on Microsoft.
It will turn out to be an interesting fight.
China is too large a market to leave to 'alternative' operating systems.
1) Most other multi-national corporations need the emerging market of China in order to keep their growing revenue.
2) Microsoft needs the business of those multi-mational corporations in order to keep their marketshare and revenue.
3) Those multi-national corporations are opening offices and hiring employees in China.
If Microsoft doesn't have China as a market, then these new offices and new employees will be able to introduce 'alternative' operating systems within the corporate infrastructure.
This will probably be happening anyway - but Microsoft can't afford to let it happen without a fight. In fact, it is arguable that piracy in China is actually in Microsoft's best interest at this point.
a better one is "does money need yet more money?"
Does China need Microsoft?
"Does China need Linux?"
Yes, as an educational tool on operating systems. They can learn a great deal about both embedded OS's and Enterprise-class OS's by working with Linux that they can't learn if they use a commercial closed source product.
"Does Linux need China?"
Not really, considering it survived well as a hobby -- but with the backing of China, it will advance at an even faster pace than it ever has.
It's just a shame it's a little too predictable, buddy, especially since both comments are AC. For instance, I never click AC links without thinking first. Hard.
Assume for a moment that China *doesn't* need Microsoft, and that Red Flag Linux takes off.
Will China respect the GPL?
The living have better things to do than to continue hating the dead.
..is an eco-system, we must be living on Io.
Oh wait.. he said the support that "evolves around" Windows.
This true.. there's a ton of websites out there telling you how to do stuff that Microsoft made unintuitive. Personally, I hate those sites. If they all died, so would a lot of Microsoft's users.
That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze
And they know it.
Im actually kind of suprised they bother.
I read somewhere that the guy they have running the entire IT show in china is some fairly young computer geek that hates windows/MS and loves linux/open source.
wish I could remember where I saw that.
Who knows, Windows may well develop to the point where it is again the superior operating system. And if Office (which is MS's realy money-maker) were to support Linux and supported open file formats, I would most likely be willing to purchase it even while using Linux.
Mathematics is made of 50 percent formulas, 50 percent proofs, and 50 percent imagination.
Thinking of M$ as "an admired giant seeking to find a footing in the developing world" is specious.
M$ is reviled here, that's for shure. And its insistence on adherence on illegal marketing practices, and f*ck the anti-trust, is the main cause, followed closely by its buggy, security flawed software is the reasin why.
Furthermore the thought that the computing market is anywhere near a "mature market" is just plain wrong.
We haven't begun to see the innovations in UI and processing capacity that will suggest themselves when our machines are no longer deaf, dumb and blind.
This was a "rah-rah" article, but it was very short sighted.
MSBPodcast.com The opinions expressed here are my own. If you don't like 'em... Think up your own stuff.
Shows what you know! I just saw the parent sitting there and thought I'd jump on, crack a couple doodie jokes. It is funny, though, how scientists spend so much time working on a new technology such as Coral, and it's immediately put to use as a redirector.
Microsoft has plenty of money, it's not going to run out any time soon.
The real issue is what China will do instead of using Microsoft software. They have to use something. That's an incredible amount of resources the Chinese government and businesses have that will go to Microsoft's competitors.
When the German government decided to shift its employees to Linux, they provided resources that greatly improved the KDE groupware infrastructure. Imagine what the whole of China could give us. Now see why it's important for Microsoft to dominate the Chinese market?
I overheard a "sales person" at Besy Buy a few days ago. He was pitching a PC to some 20-ish student who also wanted office applications for school. The Best Buy guy said he should buy Works (or something like it) and said it has Powerpoint, Word, Excel, all that stuff for $150. I was just going to walk over and suggest he download OpenOffice.org for Free when the Best Buy guy said - "and if you have a couple buddies to split it, it's only $50". So I guess this BB guy promotes piracy of MS products :-) Or perhaps he meant they could share the computer...
Not really, considering it survived well as a hobby -- but with the backing of China, it will advance at an even faster pace than it ever has.
Assuming, of course, that China actually backs Linux and doesn't fork it off and do their own distro with their own who-knows-what in it. Maybe they'll eventually be big enough to attempt to force code bases to put in China Government "stuff" into their sources in order to be "accepted" into the Eastern economy?
I doubt whether the reporter understands the state of technology today. Statements like,
Future electronics products shipped from China--such as mobile phones and DVD players--could be developed free from dependence on the Windows operating system.
make me think that he does not.
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Why would China need Microsoft in the first place?
Microsoft produces nothing that has any advantage outside the typical American top-heavy company that is full of office drones and PHBs, and has all actual work being done somewhere else (say, in China). Lack of this kind of organization is one of the reasons why China's economy can sustain its growth.
Piracy provides enough Microsoft products in China for home users and companies where they are not important for the job being done (therefore those users aren't going to buy them at full price anyway), and the economy as a whole would be better off with Microsoft not playing any active role in it, so why bother?
Contrary to the popular belief, there indeed is no God.
Does MS need China? Does MS need money? Sure, it's not about the survival of MS (at this moment) but for any company more income is better.
CONCLUSION: YES, STUPID!
I love watching the Microsoft vs Linux battle in China unfold. The PRC government is the heavily centralized power in China. It is totalitarian and oppressive even though it doles out autonomy on a limited basis.
It is ironic that China is turning to Linux as an alternative to MS. Linux's genesis is based on a very decentralized western style meritocracy. Only the freedoms of liberal democracies could produce something like Linux.
What difference does it make if Microsoft make money in China or not? Its about market share. Ask Coke in South Africa where they went in early before Pepsi and spent a fortune in embedding itself in the market. Pepsi started in the late 90's in South Africa and promptly closed its doors about 2 years later. Coke is now the dominant beverage in the country because of the outlay that they did earlier. Almost a legal monopoly :P (sound familiar :) )
Does anyone know if that is true? That most users are now asking for Windows? And if so, why? I cannot imagine why, but if they are, there must be a reason. The only one I can come up with is that they believe that it is better because it used to cost 10 times as much. I would like to know!
Just like teenage sex, everyone is sure that computers will be better (and probably safer) "next time".
The Chinese are not anywhere near as locked into MS as the western world. For them, this IS "next time". They can learn from our mistakes. If we had it to do all over again, there are many things we would build differently -- the streets of Boston, for example.
The whole concept of large-scale open source development is very much in line with Asian concept of group participation. Of course, there is also the tendency to emulate all things American, but the urge to do this will subside as the Chinese realize that Americans are not all that thrilled with Microsoft products -- we merely tolerate them as the cost of doing business. In China, MS has no such lock-in and they are unlikely to achieve it.
Besides, the Chinese are unlikely to continue as the low-cost producers of anything if they throw money away on poor software, especially when there are cheaper and better substitutes available. If nothing else does it first, spyware and viruses will kill MS in China.
I've heard on NPR radio that even if Chinese economy sustains the current growth rate for the next 50 years, and Japanese economy gets 0% net growth, the Chinese economy will still be 1/2 of the size of Japanese economy. So while China has extremely large population, the rapid growth of its economy is often overestimated. It's easy to grow from zero if you measure growth in percents of GDP. As soon as they get to better levels economy-wise, it will be more and more difficult for them to grow.
If an alternative OS takes root in Asia, it could very easily become the defacto standard for business and commerce. This would hurt the US economy even more.
Because we're going to be sitting around pointing fingers at each other, bitchin' about IP's,while people in Asia are just using there frickin computers to get shit done.
Hey, whatever we can do to keep the lawyers off unemployment.
I'm glad I had poor schooling, if I had a proper education, this would drive me insane.
Microsoft's fundamental power comes from monopoly influence. One of the basic things that monopolies _have_ to do to maximize revenue is to differentiate pricing for various market niches-that is simply Econ 101.
Does Microsoft need China? Not in the short term. Can Microsoft retain its present position if China goes the Open Source route? I doubt very much it can--once the Chinese and the Open Source community are attack Microsoft from different directions, Microsoft will be toast.
M$ knows that outsourcing of IT projects will not go away. As such, getting into china ahead of Open-Source offerings will help to strengthen their hold in the higher level IT market.
This strategy has worked with India as they pump out so much M$ crap that it scares me.
Your sig indicates that you feel metamodding should increase your chances of
getting mod points. Is this true? I almost never metamod and yet seem to get
mod points 2 or 3 times a week. What sorts of things detemine who gets mod
points and how often?
*sigh* back to work...
For Microsoft in China. It's in China (I'm talking about 1.2 billion people here) best interest to string Microsoft along, for as long as possible. Give them just enough hope to keep coming to the negotiating table.
Kind of the same way North Korea and Iran does, but this one uses operating systems instead of nukes.
MS needs to get their product integrated into China's schools. It's like heroin or McDonald's. If you get them early enough, they're hooked, and they'll never learn anything else. They'll struggle with viruses, backdoor trojans, and everything else, just like the rest of us.
Oh yeah, once they're hooked... and completely under MS's will, start jacking the price around... every year, change the licensing scheme to get every last yen? What's the currency in China? Certainly not the dollar or the euro. Silk?? Whatever it is... MS will do their best to eek out every last shilling from the Chinese.
-- No sig for you!
Becoming dependent up MS is like being addicted to cigarettes - you don't notice it happening, it's a wrench to quit, and we try to discourage those that haven't started.
It'll be interesting to see how MS goes about trying to get China hooked.
"Go on, the first shipments are free, and all the cool countries are using it"
:wq
They have the biggest market by far; and going on the tenets of Capitalism, as espoused by George Bush AND John Kerry, means that WE will have to adapt to THEM, not the other way around.
Unfortunately M$ has already screwed itself into increasing marginalization by its rapacious business practices. They are f*cked.
There's no way that China's business and end-user communities are going to shell out the kinds of money for Windows when Linux is free and government supported.
In the end, Linux will be damn near free and multi-lingual, and Chinese will be a major deal, or it too will go the way of CPM.
I've always considered M$ to be an abberration. As we expand globally, despite the pains it is causing us, here at the top, M$ will dissapear because the rest of the world CAN'T AFFORD IT.
M$ rode in on "Nobody ever got fired for buying IBM", back when IBM was selling to the extremely wealthy, and grew to their present status, legally and otherwise, when that changed to "Nobody ever got fired for saving the company's paper budget." (PCs were originally bought from companies' paper budgets!)
Mow they have to face the fact that they are victims of the very technological changes they wrought.
MSBPodcast.com The opinions expressed here are my own. If you don't like 'em... Think up your own stuff.
You have to look at it in perspective of Economics and market share.
If China at some point becomes a wide open (technically speaking) market with the ability for people buy anything they want and use any software, then yes MS needs China. If China remains pretty closed, then they are closed to other software as well. MS doesn't need China.
The question boils down to profits and market share. American shareholders like it when a company proves it can grow it's profits and at least maintain or increase it's market share. This translates to greater dividends from stocks and greater stock value as more people buy it for dividends.
To grow, you need to sell more of what you have, and you have to expand into existing markets. If the China market opens up, then MS better try to get into it, or their market share, globally, will grow slowly (or not grow at all) compared to other offerings. Those other offerings will become more attractive then and MS stock will be sold.
If china remains closed, then there's nothing to gobble up, then MS can safely ignore it because everyone else has no choice but to ignore it.
This is Wall Street 101 and the article is stupid. In fact I think its trying to subtly imply that MS needs to, themselves, actively negotiate with China to get into that market and not just wait. I doubt China will bite on anything MS will offer.
"All great wisdom is contained in .signature files"
Does Anybody Need Microsoft?
small paste from the URL:
SUN AND THE CHINA STANDARD SOFTWARE COMPANY PARTNER TO ESTABLISH THE JAVA DESKTOP SYSTEM AS THE FOUNDATION FOR CHINA'S FAST GROWING IT INDUSTRY
Multi-Year Deal Kicks Off Global Campaign To Bridge the "Digital Divide"
SANTA CLARA, Calif. - November 17, 2003 - Sun Microsystems, Inc. today announced a far reaching agreement with the China Standard Software Co., Ltd. (CSSC) to establish Sun's Java Desktop System as the foundation for standard desktop development and deployment in the People's Republic of China (PRC). The CSSC is a consortium of Chinese technology companies supported by the Chinese government to produce a nationwide standard desktop software system to help bridge the digital divide among the nation's 1.3 billion citizens. The CSSC has selected Sun as its preferred technology partner to help reach this goal.
This collaboration is the first step in Sun's global campaign to partner with every nation and to help bring an open, affordable and secure desktop to users worldwide. Countries such as China, South Korea, Japan, Vietnam, Israel and India are driving programs and incentives to improve their IT infrastructures and incorporate technology into government agencies, educational systems and to domestic regions where economic barriers have limited technological growth. In an effort to accelerate these initiatives and quickly bridge this "digital divide," Sun is embarking on a program to partner with these nations through the Java Desktop System.
In other words, nearly 100% of of the Microsoft applications running in China is stolen. So, of course, Microsoft and other software companies have severe trouble in using the Chinese market to grow their revenue and profits.
The problem is none a governmental problem. The problem is Chinese culture.
Microsoft definitely needs china. In fact it should include some in every Windows package so you have something to drink your tea from while you are waiting for the bloody thing to install!
One of the natural powers which accrue to a monopoly is the power to price discriminate. That is to say they charge each person in each the country the maximum that they are willing/able to pay. The same holds true, although to a somewhat lesser degree, in an oligopoly where a few firms have control of the entire market. The same type of pricing structure occurs with airlines and drug companies. They only charge the guy in Africa $2 for his AIDS medication because that is that entire he can afford to pay and dead people do not generate profits. In the airline industry they nail you for last minute arrangements, i.e. business travelers, because they know that you will pay big-time to get to that important convention or meeting and that there is nobody else for you to turn to, the other airlines all do the same thing. The point is that Microsoft, if it truly has monopoly power, will price discriminate, i.e. charge less in China, because they want to maximize their profits, not enforce uniform pricing in the name of fairness. They know that if the price is too high and there are not perfect substitutes people will either steal the software or do without, which is exactly what is happening in China (mostly stealing ;D).
...actually know anything about the economics of China currently? For example that VW has ~80% of its revenue stream in China. Or that China is really only Communist in name -- there are party internal sub-parties that participate in internal elections. Admittedly not entirely free, and still a little totalitarian, but nothing worse than 20's Europe. As far as one comment on GDP growth goes, just remember that the current dollar-yuan conversion rate is set delibrately low by the Chinese government to encourage foreign investments; the US would like is to be around 4 or 5 yuan per dollar (currently at about 9), which is still higher than what it would stablise on a floating market. China's actually GDP is about 4 times higher than it's current value in dollars. As far as Windows in China goes, I don't know of any business that actually uses anything but Windows. And legitimately. Homes use it too, perhaps not too legitimately. Servers are obviously not. The next person who posts on this topic with nothing but rumours and data that is more than 18 months out should just be modded to hell and back.
Microsoft needs Steve Balmer and Bill Gates to bend over and take it up the ass- just so they know what it feels like. Seriously, Microsoft management being knocked down a pegged could help from losing an accurate vision of the future. But again, who wants a gentler and kinder Microsoft?
"Once all the labour is concentrated in China, they can stop and start the world as they please."
The awakening of Comintern!
Online backup with Mozy, sounds like Ozzie, but more!
I thought that china was going to create a flavor of linux and realy develop for it. i would think that that would be the smartest way to go. i didnt RTFA, but i was hoping to hear or see a red flag linux project anounced sooner or later. china is just staring to regain its identity. and show independance from western domination. It would be a travesty for china to accept the ass raping that the west has jellied up for.
IMAGIN A LINUX FLAVOR WITH 1.2 BILION USER BASE.
You sure have a point there, but it does not work this way.
You make it sound like a conspiracy of sorts.
Once China is dependant on revenue from outside for its (toys/software programming/you name it), then it is difficult to act erratically, and deprive itself of the revenue.
See, capital is very selfish and wary. Once it sees instability, it runs away to safer havens.
Look at the USofA's relationship with Pakistan and India for example, when it comes to invading Afghanistan, a dictator like Prevez Musharraf is ideal, because he can allow troops, ...etc. without asking a parliament. When it comes to outsourcing, it is India that gets the money, because it is a democracy with stability.
Think about it a bit ...
2bits.com, Inc: Drupal, WordPress, and LAMP performance tuning.
Microsoft needs China to stop creating worms and viruses that attack it's precious product!
I have very joke for you?
Comment removed based on user account deletion
The people of Hong Kong seem to feel that the Chinese government lied to them about autonomy (e.g. here, here, here, here) as the following quote (from 2003) indicates:
"The present governing crisis in the Hong Kong "Special Administrative Region" (SAR) of China came to a head on July 1 when over a half-million of the SAR's 6 million citizens marched in protest against strict new anti-sedition laws, the "Article 23" legislation. The magnitude of the public outcry was a shock to Beijing, which has not experienced such a grassroots rebellion since China's budding democracy movement was brutally suppressed in Tiananmen Square in June 1989 by Chinese People's Liberation Army."
Why should the people of Taiwan trust any promise of the Beijing government? Considering the large amount of money being invested in the mainland by Taiwan, one should assume that the Chinese on Taiwan would welcome joining the mainlane once a reformed and freely elected government is in place in Beijing; however the native people of Taiwan who are not of Chinese heritage may never welcome a union of Taiwan with China.
"especially considering there are no such things as credit cards, personal loans (in the US sense), and various other things people here take for granted"
c ip ation.html
& q= wsj+china+bad+automobile+loans+down+payments&btnG= Search
What? Chinese on Mainland China are getting into "Love American Style, singing in the Red, White, and Blue" with serious credit debt and all the other vagaries of having credit cards when borrowing heavily and paying back on low income.
WADR (with all due respect), evangellydonut, please... see:
"USCBC: US China banking Council: Foreign Participation in China's Financial Sector"
http://www.uschina.org/statistics/foreign_parti
And, China is "awash" in credit cards.... See:
http://userwww.sfsu.edu/~glee/Fall 3.htm
"Surge in Lending
In China Stokes
Economic Worries
Spending, Investment Sprees Point
To Overheating; Bad Debts Rise"
The intro paragraph reads:
"SHANGHAI -- Liu Yijun is 27 years old and works as a real-estate agent. He and his wife, a supermarket purchasing agent, together make about $8,000 a year. On that modest income, this year they've bought a new Mazda for more than $19,000 and a new apartment priced at almost $91,000.
How did they do it? "Bank loans changed our life," Mr. Liu says.
China is awash in easy credit these days, spurring a national spending and investment spree in everything from residential property to wine, cars, steel and shopping malls. Banks' liberal lending policies -- Mr. Liu and his wife, for instance, financed at rates between 5% and 6% -- have boosted lifestyles and helped fuel China's white-hot economic growth. Gross domestic product hit $1.236 trillion last year, up 50% from 1996, according to the International Monetary Fund. The average annual growth rate during that period was nearly 7%."
From WSJ, Oct 2003
=========
For more details on other links, google this:
wsj china credit cards automobile loans
Or, just use the google URL/cache link:
http://www.google.com/search?hl=en&lr=&ie=UTF-8
David Syes
Previously: "Linux... Toward the Sunrise..." Now: "Linux... Toward the-- No, now, part of Every Sunrise"
BTW, I also read an August 2004 copy of WSJ, and this year, China is considering forcing automobile buyers to pay down at least 20% on a vehicle.
Why? Well, too many borrowers get a vehicle financed and when they lose their job or drown in debt, they just either abandon the car -- and the debt-- or worse, they keep the car and abandon the creditor. The serious part of that problem is when the debtor KEEPS the car without paying it off, and they relocate, it is hard for the title holder of the car to repossess it.
Maybe China is going to have to have a Yakuza-like repossession agency -- if they don't already have one. But, forcing the purchaser to pay 20% down might be better, since more money down theoretically will make the borrower more committed to just paying it off.
Local layoffs or economic malaise or disasters, though, can still undermine that plan.
David Syes
Previously: "Linux... Toward the Sunrise..." Now: "Linux... Toward the-- No, now, part of Every Sunrise"
Reading things on paper from a foreign perspective is very different than living in the environment and knowing all the details of it all.
CCs don't exist, only debit cards.
Personal loans are not something a Joe Shmoe can walk into the bank and get.
China is pushing for lending because its trying to artificially create economic expansion, but at the same time, the parent banks that own the tiger banks that provides these loans are already leveraged to a ridiciulous amount (85% ~= 566 in terms of leveraging...back in 1997, Korea's Samsung was at 473 in leveraging and it was bad enough to cause a huge crash). How did they manage to avoid crashing into oblivion? multiple-hundread-billion dollars of injection from the government. This in turn put the government in more debt, and there'll be a lot of other follow up problems in the long term.
I recommend you talk to some young FOBs (fresh off the boat) from preferably Shanghai, and you'll realize how much of the Chinese economy is a bubble waiting to burst, and why so many companies stayed on the sidelines after millions of dollars of initial investment in the 90s. (and why so many lost all their apples on the Chinese market)
Say, THANKS!,
This is really interesting stuff.
I don't think WSJ portrayed the CC as what you say, debit cards. I guess that's an unfortunate side of rushed "journalism", and the lack of paper space to put the read "right there", on the ground.
I really do need to subscribe or log in to some of the indigenous papers to be more balanced. I do have friends from places around the world, but unfortunately, sometimes people don't like talking much about some of these things.
I end up combing Barnes & Noble books for recent, lived-there (purportedly, or by references cited) people. Right now I'm studying about Japan. I have some books on China, and I sometimes go to SINA and other sites, but I haven't been to SINA for maybe a year. Inevitably, something always comes along and competes for time...
Best Regards,
David Syes
Previously: "Linux... Toward the Sunrise..." Now: "Linux... Toward the-- No, now, part of Every Sunrise"
Thinking about this new trend a bit, it brings an interesting point...
Much of the loans and most of the bad loans (rest of the bad loans are probably due to corruption) are tied up in real-estate over-investment back in the 90s. So, with a crazy-lending policy, people can finally afford the over-developed houses, which in turn allow the bank's bad-debt to be paid back, and will be able to collect from "everyone else who received the loan" over the next couple of decades... I guess that's a good effort by the government, but considering the first set of bankruptcy laws were instated in China this year, it'll be a while before the system is fully mature. The other interesting thing to keep in mind is that that court system is totally different than here...I haven't really done my research on it, but most often, I see a tribunal, and its a tool of the government rather than a balance of power. So more reasons to wait and see...
Does any one of you live in China? Have you ever been China recently for even a short period of time? How can you put forward any conculsion on this issue if you even do not have the professional knowledge or personal experience about the object you're talking about? All you know about China are no more than the propaganda from the biased fareast history textbook or newspaper controlled by your naturally biased westerners' mass media which will undoubtedly pander your taste but not reflect the truth!! Please shut up until you get the certification to spell and write sufficient Chinese characters!!!! --From your sincerely Chinese friends