Coming Soon to Prime Video: The China Hustle

[JamieDimonsBalls]

Made by the same guys that directed Enron: Smartest Guys in the Room documentary



Your thoughts @Noodle , @toastedbread @sglowrider given your international experiences? We had a thread a few months back about how the Ghost City epidemic is supposedly gone.

 

[toastedbread]

Made by the same guys that directed Enron: Smartest Guys in the Room documentary

View embedded media

Your thoughts @Noodle , @toastedbread @sglowrider given your international experiences? We had a thread a few months back about how the Ghost City epidemic is supposedly gone.

hmm wouldn't surprise me. This kind of thing is typical in places with endemic corruption.

 

[sglowrider]

Ok...apologies as this is a long ass read and for the grammar as its off the top of my head.

I have been going in and out of China since 92 for various industries/technologies -- when they were biking in the snow during the winters, a bit like me in Bloomington winters. Must be a Chinese thing. And now bumper to bumper traffic jams in the mega cities. And over the years I have been to the Eastern seaboard at the Tier 1 cities to a few Tier3/4 cities by the Russian borders. Basically, I have seen quite a bit of change in China.

There are several fear factors/opportunity from my perspective:

1) The banking system is fakked. It reminds me of the old Japanese banking days in the 80s where they would have overpaid/valued assets from buildings to artworks booked into their balance sheets.
2) Investing in China reminds me of what my cousin (who headed the Biz Dev team for an aerospace company) once told me many years ago: Its like mining .... you keep digging. How deep and which direction you need to dig, you aren't sure. But you have to keep digging.
3) There are 2 books for investors in China. One for the foreign investors and another that are the real books.This is well known.
4) The government in the case of a crisis doesn't do half measures ie. fantastic example was during the past currency crisis. Whilst the US government was faffing around and politicking, China went in in a big way and there was never in doubt it was going to get fixed. This will give us confidence in case the next global clusterfeck happens which it will.

Points #2,3 and 4 are both problems and opportunities.

A quick anecdote: I was asked to do a due diligence on a potential IPTV deal in China for a client like 6-7 years ago. Went to some tiny city there by the Russian border -- I was worried it was a scam and I would be kidnapped and sold as an sex slave to an Oligarch's bored wife over in the Russian border.
As I did a review of the infrastructure architecture, I realised that they had fibre to the home. Living in Singapore I was only scheduled to get my fibre the following year!!
The problem/opportunity here -- the only thing stream through this fibre network was the Police's raw (uncompressed feed) of all the traffic running around the city.

Chinese value discipline is driven by the Confucius ethos. This is great for military and factories. However, it sucks for the more creative work like art, software design etc. (India is the other way around. Sicks at discipline but pretty creative.)

So in this case of a fibre network, there was nothing to pump into the network. No to poor content.
Americans/Europeans can offer a lot but on the content /software /creative / marketing side of things.

You need to keep digging; which direction and how deep, I cant tell you but eventually it will be worth it ie deep pockets. There is a cashé with all things western for now especially when they are now undergoing massive economic restructuring similar to the US..

 

[twenty02]

Ok...apologies as this is a long ass read and for the grammar as its off the top of my head.

I have been going in and out of China since 92 for various industries/technologies -- when they were biking in the snow during the winters, a bit like me in Bloomington winters. Must be a Chinese thing. And now bumper to bumper traffic jams in the mega cities. And over the years I have been to the Eastern seaboard at the Tier 1 cities to a few Tier3/4 cities by the Russian borders. Basically, I have seen quite a bit of change in China.

There are several fear factors/opportunity from my perspective:

1) The banking system is fakked. It reminds me of the old Japanese banking days in the 80s where they would have overpaid/valued assets from buildings to artworks booked into their balance sheets.
2) Investing in China reminds me of what my cousin (who headed the Biz Dev team for an aerospace company) once told me many years ago: Its like mining .... you keep digging. How deep and which direction you need to dig, you aren't sure. But you have to keep digging.
3) There are 2 books for investors in China. One for the foreign investors and another that are the real books.This is well known.
4) The government in the case of a crisis doesn't do half measures ie. fantastic example was during the past currency crisis. Whilst the US government was faffing around and politicking, China went in in a big way and there was never in doubt it was going to get fixed. This will give us confidence in case the next global clusterfeck happens which it will.

Points #2,3 and 4 are both problems and opportunities.

A quick anecdote: I was asked to do a due diligence on a potential IPTV deal in China for a client like 6-7 years ago. Went to some tiny city there by the Russian border -- I was worried it was a scam and I would be kidnapped and sold as an sex slave to an Oligarch's bored wife over in the Russian border.
As I did a review of the infrastructure architecture, I realised that they had fibre to the home. Living in Singapore I was only scheduled to get my fibre the following year!!
The problem/opportunity here -- the only thing stream through this fibre network was the Police's raw (uncompressed feed) of all the traffic running around the city.

Chinese value discipline is driven by the Confucius ethos. This is great for military and factories. However, it sucks for the more creative work like art, software design etc. (India is the other way around. Sicks at discipline but pretty creative.)

So in this case of a fibre network, there was nothing to pump into the network. No to poor content.
Americans/Europeans can offer a lot but on the content /software /creative / marketing side of things.

You need to keep digging; which direction and how deep, I cant tell you but eventually it will be worth it ie deep pockets. There is a cashé with all things western for now especially when they are now undergoing massive economic restructuring similar to the US..

1) I bought one Chinese stock ever...China Agritech. It had a great story....how their fertilizers were going to transform agriculture in China....and that they were growing at a rapid rate. The company was incorporated in the US, and was listed on the NASDAQ. I held it for maybe a year...it went up like 3-4x what I paid for it, and I sold it. It continued to sky rocket for another year or so. Then an investor actually took a trip to China.....and found out it was a total scam. The company didn't really exist.

Scams like this are common with pink sheet/OTC type stocks...but to see a NASDAQ listed company be a total sham was a wake-up call, to how ridiculously corrupt China is. You can read about this stock with a quick search, there is obviously big class action suits going on.

2) Your point about their culture and ethos is actually something I recall debating and even writing a small paper about during my MBA work. I always believed that China's Achilles would be their culture, which does not promote individualism whatsoever. Organic creativity and entrepreneurship is significantly absent from life, for the most part, IMO.

You clearly have exponentially more insight than me...but what you wrote resonated with my feelings.

 

[sglowrider]

1) I bought one Chinese stock ever...China Agritech. It had a great story....how their fertilizers were going to transform agriculture in China....and that they were growing at a rapid rate. The company was incorporated in the US, and was listed on the NASDAQ. I held it for maybe a year...it went up like 3-4x what I paid for it, and I sold it. It continued to sky rocket for another year or so. Then an investor actually took a trip to China.....and found out it was a total scam. The company didn't really exist.

Scams like this are common with pink sheet/OTC type stocks...but to see a NASDAQ listed company be a total sham was a wake-up call, to how ridiculously corrupt China is. You can read about this stock with a quick search, there is obviously big class action suits going on.

2) Your point about their culture and ethos is actually something I recall debating and even writing a small paper about during my MBA work. I always believed that China's Achilles would be their culture, which does not promote individualism whatsoever. Organic creativity and entrepreneurship is significantly absent from life, for the most part, IMO.

You clearly have exponentially more insight than me...but what you wrote resonated with my feelings.

There was a 'scam' I was involved with when my old company, a global MNC was partnering an Asian start-up that eventually listed on the American stock exchange. They did a reverse takeover of some shell-ish company there and marketed the hell out of it later back in Asia. A lot of the activities were actually on the back of my budgets esp the marketing activities across A-P ie piggyback. Sucked enough suckers.
I consulted for a Bombay-listed trading company for an IPTV media deal -- when from 20 rupees to 270 rupees within that year. Some Middle East company took over the Bombay listed company. The IPTV company never took off.
Point is, if you only work in the States and then coming over to the rest of the world, you will have felt like I did -- a straight pole in a room with 'snakes' slithering around you. But hey... decades later, you are less naive and know the ways of the world more.
Plus you are rich for it as the stories I have to tell in my travels.... a story for every wheel of fortune spin.

Back to the original topic: I do disagree with the idea of the lack of entrepreneurs in China to a degree.
There are zillions of startups there but as you mention, its the culture that holds it back. The risk adverseness of the Asian culture that will always allow western startups the leg up. Consequently, they will tend to do copycat innovations or more transactional.
I have started some globally disruptive technologies only to be rejected here because they think partly because of its push against the grain or convention. And some of these failures are held against me going forward.
Not so in the States.

 

[Noodle]

I have experience dealing with the hustle/fraud side of things but also the regular business side of things as well. In the latter, I also have seen shortcomings with respect to creativity. But that is starting to change. One measure of that change is the extraordinary amount of patent filings not only within China (well in excess of 3 million in 2017), but also by Chinese companies filing outside of China. From my own personal experience, my clients are now more likely to file in China than anywhere else in Asia. These aren't perfect measures of the status of things, but they are clearly indicators.

But the rampant fraud is also scary.