Yi Gang, the newly appointed head of China's central bank is a believer in the market. However, he takes a more balanced approach. He knows that things do not happen overnight, especially in China, given its size, complexity diversity, where there is a real risk of serious trouble if prudence and proper caution aren't embraced. Continue reading

Taking both governments’ practices into consideration, in 2018, we may see smaller size transactions and hopefully more sophisticated, strategic buyers and investors from China. As I previously mentioned, I am bullish about biotech and healthcare sectors. Continue reading

2016 Rio Olympics is going to end tonight. China is trailing the U.S. in the number of total medals while ranking the third in gold medals. This year's Olympics is different in a couple of ways for Chinese. Gold Medal Fixation, No More? China is getting fewer gold medals this time. In 2008 Beijing Olympics, China won 51. However, this time, they are going home with only 26 of them. Does it matter? Used to. But not as much. China started to fix its "gold medal obsession" since early 2015, when the central government announced that it would stop rewarding local governments based on the number of gold medals the athletes from each province win from international competition. Under the incentive system, Chinese athletes are under tremendous pressure to win only gold, dismissing silver and bronze. The shift of the policy, hopefully, may encourage more young people to participate in the sports, first and foremost, to enjoy. The interview of the 20-year-old Fu Yuanhui, who won 100m backstroke bronze medal, went viral in China. When she found out that she got a bronze medal she was thrilled and said, " I used my primordial force to win it. I am... Continue reading

四月，正如生命勃发的大自然，创业创新与资本市场也异常活跃。新资金注入, 股权换手，难免有创业公司夭折，真是几家欢喜几家愁。让我们聚焦中国企业在海外的活动，以及一些值得我们关注的海外企业的近况。 阿里巴... Continue reading

Tweet Google’s search engine is great. Everybody loves it. Google Translation is a different story. From time to time, I have to convince my clients not to use Google Translation to generate Chinese f... Continue reading

Tweet Not until recently, China has been a land where money seems to grow on trees. A couple of years ago, a U.S. fund went to China to raise money from Chinese investors. After the presentation, someone from the audience raised his hand. He asked the presenter to clarify whether the expected investment return of 10% meant monthly or annual. The presenter jokingly responded, "if you know of an opportunity that guarantees 10% monthly, please tell me. I want to invest my money." The person said, " Sir, few people in China will invest for a return of 10% a year." Long silence from the presenter. The audience was not joking. Chinese investors have been lending to some privately owned businesses at absurd high rates, sometimes as high as 48%/year or higher. In theory, the money serves as bridge loans for a couple of months, but at times borrowers keep it longer. Privately owned businesses are poorly served by banks. Working for big and fat State-Owned Enterprises often means less leg work, less risk and much bigger transaction in dollar amount. In need of capital for operations and expansion private companies often turn to private lenders, a reliable funding source.... Continue reading

Photo credit: University of Kent Today, one of my friends visited me, sharing his recent projects related to China. One of them is helping a Chinese technology company scout Italian design schools. This company is reinventing itself through acquisition and operation of vocational training schools, first in China and overseas the next stage. This has become a trend in China these days. I often receive inquires from different Chinese companies. They have a "shopping list" of targets that they believe will help generate revenues or profits, not necessary to be in the areas of their expertise. I categorize them into two groups of needs: 1) Proven technologies that Chinese companies can take over and plug into China market. They told me, "we do not have time to do R&D. If the technology works in the U.S., we may be able to make it work in China too. " 2) Companies with profits. Publicly listed Chinese companies are under mounting pressure to boost bottom line. Traditional industries such as manufacturing are facing most challenges of over capacity and price erosion. Restructuring is under way, a long and painful process. One of the measures is to acquire a profitable company. In the... Continue reading

Tweet Inspired by Fred Wilson, who uses its AVC Blog as a diary, sand box, and therapy, I am going to keep this blog exclusive to myself and try to write as long as I can. Doing business with China and Chinese since 1991, I do not lack stories and anecdotes to share. I hope it will become a cleansing and therapy process for myself, while being helpful to those who are intrigued by this gigantic country and its people. If you want to ask me what the biggest challenges are when it comes to working with Chinese. Lack of transparency is on top of my list. It is hard to see things through, from the government to small businesses. We all remember that, late 2015, China was plunged into a chaotic situation. RMB's value was dropping like a rock vs. US dollar. Investors, both domestic and foreign, were panicking. Local Chinese rushed to banks trying to exchange all their savings into U.S. dollar. , so did some institutions, out of the fear that RMB would crash and Chinese economy would crash. Nobody from the government stood up to communicate with its people and the rest of the world. Instead,... Continue reading

Tweet "China’s Economic Growth the Slowest in Decades", Wall Street Journal; “You don't need Soros to tell you that China is the big short", MarketWatch; “You should fear a China hard landing”, CNBC T... Continue reading

The recent volatility in China's stock market is more of a manifestation of the jittery and nervous sentiment of investors, both retail and institutional, as well as the inexperience of China's SEC. Continue reading

Tweet People have been searching for the next big platform, is it VR, or google glasses, or cars? No, definitely not. It is messaging platform. Few people bet it right except genius Mark Zukkerberg. The two platforms he owns, Facebook Messenger and Whatsapp have active users of 1.6 billion combined per month. The top 4 messaging platforms have more than 3 billion users. Data source: Business Insider Wall Street Journal points out that Messaging platform is more than facilitating texting. They move beyond social media functions to become an important tool for on-line payment, shopping and other services. Wechat under Chinese Internet giant Tencent has taken it to a new level. http://www.wsj.com/articles/the-future-of-texting-e-commerce-1451951064 Yes, Wechat has become the center of Chinese people's daily life. Any business targeting China or its consumers will be doomed for disappointment if without taking it into consideration and integrating into its business plan. Continue reading

to end RMB's long-term tie with dollar will not be an easy journey. China will have to address the exodus of capital out of the country due to investors' expectation of RMB's further depreciation. The instability of its currency may also affect the currencies of some developing countries which are China's major trade partners, ultimately hurting their economies. In the end, the rest of the world may all feel the pain. Continue reading

美国人和中国企业打交道，有几个最叫他们头疼的事，一是没完没了的宴席，再就是没法做计划，老总们总是说，见面再聊。在他们眼里，中国企业缺乏管理，只会吃喝搞关系，只顾眼前不看长远。然而哈佛商业评论却推出一个新概念“中国式的管理”，认为新一代的中国企业家正在形成自己的风格 － 随机应变，高速灵活。 Continue reading

加入货币俱乐部主要是一种象征意义：IMF官方认可人民币为一种储备货币，一种安全、具有流动性的资产，各国政府可以用人民币持有它们的财富。实际上 IMF的决定远远未能助推对人民币需求的大幅上扬，却有可能为人民币贬值做了铺垫。中国的央行正面临日益加大的压力 － 按照发达国家央行的做法让市场决定人民币价格。 Continue reading

China's baby food market has grown into one with $19 billion by sales in 2014, compared to $9 billion in 2009. Despite the fast growth this industry is still in its infancy. Baby formula milk accounts for more than 70% of the total annual sales in China, the rest 20% + goes to cereal. Solid foods are still in its early stage, when young parents are learning the importance of giving their babies a balanced diet. Multinationals dominate the baby food market in China. In 2013 16.4 babies were born in China vs. 3.9 million in the U.S. China may expect to welcome at least 1 million more babies each year since 2015. Chinese government has been relaxing the Only Child Policy by allowing couples of both the only child to have a second child in the urban area. About 1.5 million couples have submitted application to have a second child since the new policy was announced and practiced in selected regions in China November 2013. Please click to download the latest presentation of China's Baby Food Market by Kee Global Advisors (KGA). Continue reading

In June 2014, I wrote an article about Alibaba's launch of 11 Main in the U.S. Please click here to read the article. Only a year later, Alibaba sold 11 Main to OpenSky. As Alibaba's Executive Vice Chairman Joseph Tsai said in an interview, "the key issue is whether we are going to have something in the U.S. market that will really target U.S. consumers. We think in the long run that's is an interesting market to us. But today, our focus is very much on cross-border activities" that connect U.S. sellers with Chinese consumers." Wasn't 11 Main designed to serve this purpose or has Alibaba failed to convince enough U.S. sellers to list on 11 Main? Alibaba Stumbles in U.S. Online Market - WSJ (June 24, 2015) Continue reading

In late April, I attended a forum “China-U.S. Business Forum: Finance and Innovation” hosted by Guanghua School of Management of Peking University, my alma mater, at the New York Public Library. The speakers included Jack Rosen, CEO of Rosen Partners; Steven Barnett, Division Chief (China Division, Asia Pacific Department), International Monetary Fund (IMF); Gary Rieschel, Founding Managing Partner, Qiming Venture Partner; Hongbin Cai, Dean of Guanghua School of Management; and other China veterans. The speakers, both Chinese and American, have been doing business with China or in China for an extensive period of time. For example, Gary Rieschel has moved his family to Shanghai from the U.S. to manage his VC fund Qinming Venture Partner. The speakers were divided on the prospects for China’s economy and markets. Some of them painted a much more bullish picture than others. Differences of opinion, needless to say, are typical when a bunch of economists, business people and lawyers sit down to discuss China. Each party may have dramatically different opinions from each other. The reason is that China’s economy or market is not homogeneous, but diversified and full of self-sustained pockets that posses their own ecosystems. Broad-brush conclusions about China often sound ill-informed... Continue reading

孤身隐士久居林中，一天仙女从天而降以身相 许，隐士的生活从此不再孤独，世界鲜花盛开。甜蜜恋人携手发展副业，收入不断增加，日子一天比一天好。仙女不知用什么迷魂术把两人共同拥有的公司中隐士的 股份全部转移... Continue reading

These days, the questions my clients ask me most often are how bad is the corruption in China and to what degree will Xi continue to fight it. Before I answer these questions I tell them stories from my personal experience. I want to share one story here from one of my typical trips to China a couple of years ago. My client was a private owner of a business that manufactures surveillance products. His top customers are government institutions in China. My team and I were chauffeured to a restaurant’s private room for dinner at the end of the day. At the table, we drank, ate and chatted. As dinner continued, my client started to open up and to carry out conversations with more substance, partly because of all the wine he had consumed. When we asked about how he successfully acquired government institutions as his clients, he winked his eyes and mimicked a gesture of counting dollar bills with his fingertips. Seeing that we didn’t fully understand, he gave us a long lecture. A private business owner, he had little to leverage when starting out to build his small empire. In comparison with mammoth State-Owned-Enterprises (SOEs) his company... Continue reading

No market than China sees American Internet companies fail so terribly. Google was kicked out of China, part of it because it offended the Chinese government, part of it because it lost to its local competitor Baidu. eBay pulled out of the market voluntarily after realizing it was losing ground to Alibaba's Taobao. Yahoo!'s business barely took off in China after years of struggling and trying in China. Facebook or Twitter, even worse, never got a chance to try the market out. What's more, their domains are blocked in China. Yahoo! struck a deal with Alibaba in 2005 to form a joint venture, in which Yahoo! invested $1 billion cash and Yahoo! China assets, which was valued $700 million, for a 40% stake. The whole joint venture deal was valued at $4 billion. At Alibaba's coming IPO, analysts estimate it may be valuaed around $200 billion. Even though Yahoo! was forced to reduce its share at Alibaba to 23% in 2012, Yahoo! is still going to do extremely well. Sue Decker, former Yahoo! president, looked back at what Yahoo! had done right and wrong in China in her" An Insider's Account of the Yahoo-Alibaba Deal" in Harvard Business Review Blog... Continue reading

Tompkins International has put together a comprehensive presentation about Alibaba. It is a must read or listen material before Alibaba's August IPO at New York Stock Exchange. This 50-minute video presentation covers five topics: 1) Alibaba, what is the big deal 2) What does Alibaba do 3) Who is Jack Ma, the founder 4) Where is Alibaba headed 5) What action to take based on this Alibaba presentation One of KGA's blogs "Should Amazon or eBay be concerned about Alibaba Entering US ecommerce Market" looks at Alibaba from a different perspective. Continue reading

Alibaba recently unveiled its new venture in the U.S. 11main.com, an eCommerce business offering similar services to Amazon and eBay, a market place for smaller vendors. The site is not available yet. Here is a peek of the home page of 11 Main. Should Amazon or eBay be concerned about Alibaba's move? In the short-term, they should not. It took a long time for Amazon and eBay to build their empires in the U.S. Even with Alibaba's deep pocket behind it, 11 Main is still a new entrant to this market, a lot of things to learn and catch up. Additionally, consumers' demographics in the States is significantly different. As a new player in the U.S., 11 Main needs some time to collect and build data to understand U.S. consumers. Moreover, U.S. eCommerce market is much different from that of China. For example, the eCommerce market is more developed in the U.S. China's online retail penetration of Internet users was 42.9% in 2012, compared to 71.6% in the United States. iResearch expects that China's online retail penetration may increase to 53.7% by 2016. Please refer to Chinese Consumers Moving On-line. The competition in eCommerce space in the U.S. is far... Continue reading

The successful IPOs of Chinese ecommerce companies VIPSHOP (ticker VIPS), Jumei International (ticker JMEI), Jingdong (ticker JD) and the much-anticipated IPO of Alibaba in the near future, have one thing in common, ecommerce. Stock Performance of VIPS Stock Performance of JMEI Stock Performance of JD These companies have benefited from Chinese consumers’ embrace of online shopping, which has been a result of fast-growing disposable income per capita in China. Urban Household Per Capita Disposable Income Retail Sales* Internet Sales 2008 2545 1 trillion 2012 3962 1.58 trillion 213 billion 2016 2.46 trillion (E) 611 billion (E) Currency = USD * Excluding motor vehicles, fuel, and the sales of products that could be characterized primarily as the provision of a service, such as meals in restaurants. Online retail sales in the U.S. was $225.5 billion in 2012 and will grow to $384 billion, according to eMarketer. China surpassed the U.S. in the online retail sales by 2013; however, China's online retail penetration of Internet users was 42.9% in 2012, compared to 71.6% in the United States. iResearch expects that China's online retail penetration may increase to 53.7% by 2016. What do Chinese consumers like to shop online? Consumption of apparels and... Continue reading

China's central government relaxes its control over Chinese companies outbund investment in overseas asset by introducing a filing-based system vs. approval-based system. Compared with the old system, which requires approval from the National Development and Reform Commission (NDRC), the Ministry of Commerce (MOFCOM) and the State Administration of Foreign Exchange (SAFE) for any investment above $100mm, under the new policy, a Chinese company only needs to file with NDRC if the transaction is below $1 billion or NDRC's local representation if below $300mm. However, SAFE and its currency control still remains a major hurdle for outbound investment. For more detail, please visit Schulte Roth & Zabel's report on this subject. China is going to launch the Third Board in August 2014. The Third Board is similar to the bulletin board in the U.S. Unlike other main boards in China, which accept a limited number of companies each year, the Third Board will accept up to 1000 companies per year, in a hope to help more small enterprises to raise capital. However, the new board has a high bar of RMB 5 million net worth (approximately $800K) for retail investors. The board will include 100 Chinese market makers to create liquidity,... Continue reading

From time to time, owners of small and mid-sized companies in the United States have approached me with the question: "We have excellent products/services/technology, can we make some money from China with them? By the way, though we can't afford to set up a China-team to handle all the work, challenges and potential headaches, we'd still love to explore the opportunity." I get it. What they mean is, they want to collect checks while leaving the hard work and stress to someone else. I am glad that these companies' owners have this idea. Why not? First of all, I want to reiterate that it is important to make a plan for China as soon as you believe you have something unique to offer. Committing to the sale and distribution of your products in China is an excellent starting point. It may not be as hard as you think. Minimally, you can add the Chinese language to your website and support Paypal or credit card payment. Chinese are searching for things to buy all over the world. At the same time, more and more Chinese students are attending U.S. colleges and universities, estimated 250K enrolled, not to mention those Chinese who... Continue reading