November 11 (11/11) is not that significant in the rest of the world, but in China it is an online retailer's best dream come true. Singles Day, so named because the date is made up of four "1"s, broke world records for online retail this year. Dubbed as the anti-Valentine's Day, on November 11, Chinese consumers generated $3 Billion of revenue at eCommerce websites like Tmall and Taobao. This number may not be significant, until you compare it to the previous record held by last year's Cyber Monday, which generated $1.25 Billion in revenues. Singles Day more than doubled that number.
Ok, so why do we care? This is a trend that shows the changing mentality of the Chinese consumer. In the past, Chinese people were a nation of savers. They only spend when necessary and focused their efforts in saving their earnings. Trends show a change from a savings driven culture to a consumption driven one. With 1.3 billion consumers, China will soon catch up to the U.S. on consumption and U.S. companies should take note of this giant opportunity.
Tuesday, November 13, 2012
Monday, October 15, 2012
Huawei and ZTE...a Threat to the U.S.?
Last week, in a draft report, the Intelligence Committee of the House of Representatives urged American companies to avoid doing business with Huawei and ZTE, two of China's largest telecommunications companies. Huawei, the world's second largest telecom company after Ericsson, and ZTE, its smaller rival in China, were found to be national security threats. The report goes on to urge U.S. regulators to block all mergers and acquisitions by the two companies in the U.S. For the reason stated for these actions was that the 2 companies could not proof that they were not influenced by the Chinese Communist Party. However, being the largest telecom companies in China, Huawei and ZTE would not be able to be completely free from Chinese government influence...that is just how business in China operates. If U.S. regulators truly blocked all Huawei and ZTE investments into the U.S., it would be losing out on a lot of job creating foreign investments (Huawei is investing $2 Billion into the UK). Many people believe that this action was just another political positioning before the November elections, but, no matter what the reason, it definitely sends a bad message to the Chinese investors.
Saturday, August 11, 2012
BMD New Office in China
I am happy to announce that my law firm has taken another major step in assisting businesses in their transactions between the U.S. and China (inbound and outbound). With our offices in Ohio, Florida and China, and affiliate offices in the Midwest, Alabama, Washington D.C., and Singapore, we help connect businesses in cities like Akron, Beijing, Cleveland, Columbus, Detroit, Jacksonville, Shanghai and Toledo. We can now provide our clients and partners on-the-ground support in all their business ventures (whether its Cleveland, Detroit, Jacksonville or Shanghai). Like any business, having people in China, provides us with local support, 24-hour service, immediate access to changes in the business climate and government regulations, and face-to-face interactions with our clients and partners. We have worked hard to get to this step and look forward to the future. I just wanted to thank everyone for their support.
It's All About Technology
As the representative for our new office in China, I have move back to Shanghai. In my daily interactions with Chinese businesses and public, one thing is extremely clear to me: It is all about new technology. China is no longer solely dependent on cheap labor for growth. The people here understands that in order to maintain its status as a global economic power, China needs to be more technically advanced. Most my conversations with potential partners and clients always touch upon importing foreign technology into China. Chinese businesses are eager to have newest technology to gain a competitive advantage in the market and are willing to pay for it. Also, their knowledge of the unique needs of the Chinese market helps adapt foreign technology to be better suited for China. What is even better is that the government is in full supports these efforts.
We see these developments especially in the healthcare/pharmaceutical and entertainment industries. Shanghai has become a prime location for R&D centers, taking advantage of favorable government policies, relatively low cost engineers and scientists, and access to the world's largest market, many foreign businesses are focused on developing new technology in China. Most recently, DreamWorks announced that they will work with their Chinese partners to jointly produce the next "Kung Fu Panda" movie and develop an entertainment district in Shanghai. For DreamWorks, it will gain access to China's creative talents and large market. For the Chinese, DreamWorks will provide much needed advances in animation technology. This is a win-win for both sides.
We see these developments especially in the healthcare/pharmaceutical and entertainment industries. Shanghai has become a prime location for R&D centers, taking advantage of favorable government policies, relatively low cost engineers and scientists, and access to the world's largest market, many foreign businesses are focused on developing new technology in China. Most recently, DreamWorks announced that they will work with their Chinese partners to jointly produce the next "Kung Fu Panda" movie and develop an entertainment district in Shanghai. For DreamWorks, it will gain access to China's creative talents and large market. For the Chinese, DreamWorks will provide much needed advances in animation technology. This is a win-win for both sides.
Monday, January 9, 2012
New Year
Happy New Year everyone. As we move to set our goals for the new year, the following is a couple of goals the Chinese has for their economy in 2012:
1. Increase domestic consumption - With the debt crisis in Europe and the U.S. economy in a slow recovery and the rise in value of the Chinese currency, Chinese exports have been significantly affected. Exports grew by only 13.8% in November, year-on-year, down from the 15.9% growth in October. 2012 is likely to see further decline. Therefore, the government is focused on growing its domestic market, so there is less reliance on exports. Look for growth to the GDP to be at around 8.8% in 2012 with inflation hovering around 3%-4%.
2. Increased foreign acquisitions - Chinese government is actively encouraging its companies to expand overseas. With a huge amount of foreign reserves, Chinese government is looking for ways to buy up assets to lower the holdings. Also, with the global economic downturn, Chinese companies are finding great deals on assets overseas. This "go out" plan also conforms well into Chinese government's plans to shift away from an export focused economy. Recent overseas moves by Chinese state-owned companies include: (a) $2.5 billion deal between China Petrochemical Corp. and Devon Energy Corp. to help develop U.S. shale oil and natural-gas fields; (b) China Telecom's recent move into the U.K. mobile industry; and (c) China Three Gorges Corp. buying 21% in EDP-Energias de Portugal SA for $3.51 billion.
3. Focus on environment - pollution is a huge problem in China. Therefore, the government is taking many measures (from encouraging development of electric vehicles, to the promotion of alternative energy industry, to providing subsidies for the purchase of more energy efficient home appliances). In 2012, you can see more programs aimed at controlling pollution and encouraging environmentally friendly innovations. This is especially apparent in recent Ministry of Commerce guidelines that encourage more foreign investment into energy-saving and environmentally-friendly technologies, new-generation information technology, biotech, high-end equipment manufacturing, alternative energy, advanced materials and alternative fuel cars.
1. Increase domestic consumption - With the debt crisis in Europe and the U.S. economy in a slow recovery and the rise in value of the Chinese currency, Chinese exports have been significantly affected. Exports grew by only 13.8% in November, year-on-year, down from the 15.9% growth in October. 2012 is likely to see further decline. Therefore, the government is focused on growing its domestic market, so there is less reliance on exports. Look for growth to the GDP to be at around 8.8% in 2012 with inflation hovering around 3%-4%.
2. Increased foreign acquisitions - Chinese government is actively encouraging its companies to expand overseas. With a huge amount of foreign reserves, Chinese government is looking for ways to buy up assets to lower the holdings. Also, with the global economic downturn, Chinese companies are finding great deals on assets overseas. This "go out" plan also conforms well into Chinese government's plans to shift away from an export focused economy. Recent overseas moves by Chinese state-owned companies include: (a) $2.5 billion deal between China Petrochemical Corp. and Devon Energy Corp. to help develop U.S. shale oil and natural-gas fields; (b) China Telecom's recent move into the U.K. mobile industry; and (c) China Three Gorges Corp. buying 21% in EDP-Energias de Portugal SA for $3.51 billion.
3. Focus on environment - pollution is a huge problem in China. Therefore, the government is taking many measures (from encouraging development of electric vehicles, to the promotion of alternative energy industry, to providing subsidies for the purchase of more energy efficient home appliances). In 2012, you can see more programs aimed at controlling pollution and encouraging environmentally friendly innovations. This is especially apparent in recent Ministry of Commerce guidelines that encourage more foreign investment into energy-saving and environmentally-friendly technologies, new-generation information technology, biotech, high-end equipment manufacturing, alternative energy, advanced materials and alternative fuel cars.
Tuesday, October 11, 2011
Google in Trouble Again
Google is running into further problems in China. The search engine’s online marketplace for Android Apps. Has been block by China. Access to the online marketplace for Google’s mobile operating platform will be a huge setback for Google in China. Both political and economic reasons could be behind this censorship. Some speculate that the Chinese government is trying to protect Baidu, which is developing a new mobile operating system known as Qiushi to compete with Android.
Wednesday, June 15, 2011
Lost in Translation?
When doing business in Asia, often your partner/employee/agent does not speak English as a first language (if at all). Most of the time you will need to communicate through a translator. For day-to-day communications a loose translation of your message is sufficient. However, when it comes to entering into contracts, you have to ensure that not only the translation is correct, but it is legally sound.
English has been the dominant language for doing international business for so long that we tend to insist that a contract be in English and the other side adjust to our needs. As the global economy changes, this can be very bad practice for several reasons: (1) you are alienating a large segment of the market and losing out on potential business; (2) you are relying on the other side’s English abilities to be able to communicate effectively; and (3) under certain circumstances, it is just not legally allowed. Given the above, it is always a good idea to have your contracts translated into the native language, but be aware…
One of the most important things you can do as a businessman in Asia, is to find a capable, knowledgeable and trust worth translator. As I mentioned before, there are two important aspects to translating a document: (1) ensure the idea is translated accurately; and (2) make sure it is still legally enforceable after being translated.
Many translators can translate a document with great technical skills, but they do not grasp the underlying essence of the communication. You want to find a translator that will be able to take the idea in English and accurately recapture it in Chinese. The exact order and wording is not as important as the communication.
Lastly, you want to ensure that everything that is translated is still legally enforceable. Take for example a non-competition provision that lasts for 5 years with a liquidated damage provision. A translator can easily translate that into the native language, but only someone with legal knowledge can tell you that it would not be enforceable in China. Also, certain wording has very special meanings that may not translate directly. For example, the word “shall” states a requirement for one party to do something, verses the word “may”, which suggests some discretion. It would be imperative for your translator to make the distinction and capture it in the translated document.
So remember…get things translated and ensure it is translated well, then you won’t ever hear the phrase “lost in translation” again.
English has been the dominant language for doing international business for so long that we tend to insist that a contract be in English and the other side adjust to our needs. As the global economy changes, this can be very bad practice for several reasons: (1) you are alienating a large segment of the market and losing out on potential business; (2) you are relying on the other side’s English abilities to be able to communicate effectively; and (3) under certain circumstances, it is just not legally allowed. Given the above, it is always a good idea to have your contracts translated into the native language, but be aware…
One of the most important things you can do as a businessman in Asia, is to find a capable, knowledgeable and trust worth translator. As I mentioned before, there are two important aspects to translating a document: (1) ensure the idea is translated accurately; and (2) make sure it is still legally enforceable after being translated.
Many translators can translate a document with great technical skills, but they do not grasp the underlying essence of the communication. You want to find a translator that will be able to take the idea in English and accurately recapture it in Chinese. The exact order and wording is not as important as the communication.
Lastly, you want to ensure that everything that is translated is still legally enforceable. Take for example a non-competition provision that lasts for 5 years with a liquidated damage provision. A translator can easily translate that into the native language, but only someone with legal knowledge can tell you that it would not be enforceable in China. Also, certain wording has very special meanings that may not translate directly. For example, the word “shall” states a requirement for one party to do something, verses the word “may”, which suggests some discretion. It would be imperative for your translator to make the distinction and capture it in the translated document.
So remember…get things translated and ensure it is translated well, then you won’t ever hear the phrase “lost in translation” again.
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