Clever Terry Gou

Clever Terry Gou really knows how to play both sides of the Taiwan Strait.  He can wring concessions out of Taiwan's government for his industrial park in Tucheng with one hand and with the other scratch the back of the PRC.  How else can one explain the recent announcement (link) that Foxconn will invest 12 billion US in Brazil just as Brazilian president, Dilma Rousseff, is visiting China?  Somebody had to help the PRC out by providing a little hard cash to go along with all the empty rhetoric about the many common interests of BRICs.  Like many investment announcements, this one is inflated and much more inflated than most.  Invest in Brazil, yes.  Invest in Brazil several multiples of what Foxconn's total declared investment in China, no way

Rare Earth Elements: Another Environmental Fiasco in China's Green Industries

This article from SCMP (link here) documents the horrendous environmental and health effects of China's rare earth elements industry.  The irony of course is that rare earth elements are a critical component in many "green" technologies.  And yet, these very un-green externalities are common across China's green industries.  See for example the heavy energy consumption of solar panel production in China.

Hong Kong in the Five-Year Plan

Hong Kong has finally gotten some significant space in the new 5YP document (see today's SCMP here).  However, calling for Hong Kong to be the "dragon head" of Pearl River Delta financial system does not really offer much reassurance that the long term goal is not to have Shanghai replace Hong Kong as China's main financial center.  Indeed, two years ago the State Council named 2020 as the year Shanghai will be a global financial center and the new 5YP acknowledges Shanghai as the hub for RMB financial services with Hong Kong given the smaller role of hub for international RMB services.  Siu-Kai Lau of the Central Policy Unit has trumpeted Hong Kong's 5YP-designated role as showing up Guangzhou's bid to become the financial hub of the Pearl River Delta.  True as this may be, Hong Kong should not really be competing with Guangzhou in the first place.  Oh well, at least Hong Kong can comfort itself with the fact that the snail's pace of liberalization towards the capital account openness that Shanghai will require to become a global financial center means that Hong Kong will remain the financial window on the world for China beyond the 2020 deadline.

Asustek and Tsinghua Tongfang Tie-up?

Taiwan's China Times has reported rumors (article here) that Asustek and Tsinghua Tongfang may merge in a bid to replicate the success of Acer's alliance with Founder.  If such a merger occurred, the Chinese marketplace that Lenovo relies on would probably become not quite so hospitable.  One more reason to think Lenovo will continue its decline and no longer rank among the major global PC vendors (if measured in something more sensible than just unit sales in China).

Google's Trouble Started at the Top

According to the Guardian's review of Wikileaks' release of US diplomatic cables (link here), a member of the Chinese Politburo ordered hacker attacks on Google after searching his own name on the international version of the search engine and finding articles critical of himself.

Hua Hong over Grace

The always pending but never completed merger of Grace and Hua Hong is a step closer to being realized now that Ulrich Schumacher has stepped down as CEO and President of Grace and Gacre VP and former Hua Hong executive, William Yu Wang, has taken over as President.  It sounds if Schumacher went down fighting as he tried to become CEO of the Grace-Hua Hong JV fab, Huali, before resigning as CEO and President of Grace (link here).  Could the fact that the CEO position is still vacant mean Grace anticipates a full merger with Hua Hong sooner rather than later?

Nonsense Number One

China is now being heralded as the world leader in patent filings (link here), but this world number one reveals very little about China's innovation prowess or lack thereof.  First of all, counting filings (applications) rather than approved patents is rather silly.  Anyone can apply to Harvard Law School.  What is impressive is getting into Harvard Law School.  Second, China is busy filing lots of patents in China where the process of approving patents is lax at best.  If (when?) China overtakes Germany or Japan in patents received from the USPTO or some other respectable patenting office, then and only then should we sit up and take notice.  Third, there are different types of patents representing different levels of innovation.  For example, in the USPTO system, the inherent innovation behind utility patents is all else being equal much higher than that for design patents.