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Got an email the other day on Chongqing that went as follows:
Long-time reader _________from Chongqing here. Hope all has been well with you.
First, I'm not sure how this could work into a post, or whether it is simply of interest, but there has been fascinating political and cultural developments here in Chongqing over the last year, mostly due to the entrance of new(ish) general secretary Bo Xilai. He has made headway into cleaning up the city's notorious controlling mafia (possibly an un-spoken reason MNCs had historically chosen Chengdu over Chongqing for their base in western China???), pushed to clean up mafia-related and property-related corruption within the city government (the deputy director of the city's PSB was just arrested), and has made a cultural impact through his push for "5 Chongqings" (Forested Chongqing, Healthy Chongqing, Smooth Transportation Chongqing, Safe Chongqing, and Liveable Chongqing) - an attempt at establishing an underlying philosophy for future policies and decisions, and the encouragement of sending Maoist slogan text messages and singing Communist revolutionary songs. While some have compared this last policy as a new "cultural revolution", it has seemingly been well received by the public at large. A friend summarized Bo Xilai's current M.O. as "cleaning the local government of the filth, while still trying to maintain the average people's faith in that same government".With that said, these sorts of changes should affect the business environment of Chongqing, possibly to a great degree. And what have I seen on the ground? There are more foreigners in town than before, more MNCs, more companies establishing businesses, and more entrepreneurial small-medium sized businesses getting started. Granted, most of these businesses are in established industries (mostly auto supply and manufacturing, industrial manufacturing, and logistics), but there is growth you can feel. Whether foreign companies were affected by the Chongqing mafia in the past or present is not something of which I have any knowledge. I understood the minimum capital requirements for a WFOE were recently lowered as well. Whatever the cause, it feels like there is growth here.
In hindsight, my firm has been seeing the same thing in that over the last six months or so we have definitely had a pickup in business involving Chongqing, though I have to admit we were starting at a pretty small base. Much of our work has been related to the transportation/logistics sector.
What are you seeing out there? Is Chongqing really going to be the next big thing.
UPDATE: China Translated just did a post on Chongqing, entitled, "Make No Little Plans." It is a guest post by someone named "Don Johnson." I have a China client with that name. Same person?
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I will be speaking at a Chinese drywall seminar in New Orleans next month and that means I am on an email list that I think consists of others who will also be speaking at this seminar. Seeing as how this email list consists of around 100 people, I do not believe I am violating any expectations of confidentiality by publishing what transpired on it today.
I get an email from Gary Rosen, who has a PhD in biochemistry, proclaiming the "Chinese manufacturers are NOT the ones to blame for problem drywall." According to Rosen, there is"good quality drywall manufactured in China at International Organization for Standardization (ISO) qualified factories that have US recognized quality control approvals such as UL and ASTM" and this stuff is, "by definition, NOT problematic." But China also makes drywall for local consumption that is not made at ISO qualified factories and is does not have UL and ASTM approval. According to Rosen, it was this drywall that was imported in the US and it is this drywall that is causing the problems.
Rosen goes on to lay blame right at the feet of the US companies that brought the bad drywall into the United States:
The problem is that US distributors purchased and then imported the domestic quality Chinese drywall rather than much better quality drywall made for the export market. If US distributors would have all purchased the good export stuff there would not be any problems at all.So why blame the Chinese? They certainly have the right to made lower quality less expensive product for their local consumption. Investigative reporters should be focusing on why US drywall distributors chose to purchase the lower quality Chinese domestic product rather than purchase export quality product. The answer will certainly turn out to be – they saved money by buying junk Chinese domestic board. Investigative reporters should be focusing on why builders actually used this nasty smelly stuff rather than rejecting it.
Rosen then attacks US builders' quality control systems:
What about the US builder’s quality control systems? Surely products used in the construction of homes have to be evaluated prior to use when not purchased from a well known US manufacturer and not approved/ certified by well known quality control bodies like UL, ISO, and ASTM? Again, where were our quality control systems?
Rosen was actually responding to a Miami Herald, quoting a number of US lawyers on the difficulties in suing Chinese companies for drywall problems. Seems these American lawyers are getting pretty testy.
The article talks about the 300 drywall lawsuits currently pending in New Orleans Federal Court and asks "who's going to be on the hook for any damages courts might award?" The article then outlines some of the tactics the plaintiffs' lawyers are considering for trying to collect and guess what? None make any sense.
The lawyers are "considering" suing "U.S. investment bankers who financed the Chinese companies, and seizing ships that brought the drywall to the United States." With all due respect, the odds of either of these tactics generating any cash are pretty much zero. First off, it would surprise me if any of the Chinese drywall manufacturers were financed by "US investment bankers." Does anyone disagree with me on this? Second, I also doubt very much that any US court is going to set aside 200 years of US (and a couple more hundred years of British) jurisprudence and find the investors liable. I certainly hope not as I own shares in drug and tobacco companies and by this logic, I could be held liable for injuries caused by those companies.
The arresting ships idea is probably even more ludicrous. What these lawyers are proposing is to do something that has, as far as I know, never been done anywhere in the world or at any time in the long history of shipping, and that is to find the shipper liable for having shipped a perfectly legal product. Not only has this never been done, but if it were done, it would probably destroy the shipping industry as we know it and, at minimum, raise the price of pretty much every single product worldwide. Can you even imagine a system where shipping companies are forced to guarantee the quality of every single item they ship? I can't and if any of my law firm's shipping companies get their vessels arrested over this, you can bet we will be counterclaiming for wrongful arrest.
And it is not just plaintiffs' lawyers who are getting mad. U.S. District Judge Eldon Fallon found one Chinese company, Taishan Gypsum Co., in contempt of court for ignoring the suits. And though I am on record in this post ("China Tooling/China Consulting -- I Told You So") for stressing the importance of abiding by Federal Court orders, I do not for a minute believe the Taishan Gypsum is going to care one whit about what some U.S. judge has to say. If Taishan Gypsum conducts no business in the United States or in any of the very few countries that typically enforce U.S. money judgments (I very much doubt any country enforces U.S. contempt orders) U.S. court orders almost certainly mean little to nothing to it. Most US judgments against Chinese companies have no value beyond the Chinese company owner's belief that it will preclude his/her son or daughter from attending UCLA.
The article then states how US lawyers "said Chinese companies are virtually insulated against liability in U.S. suits because suing them through international court is costly and time-consuming and civil judgments in U.S. courts are not enforced in China." I agree with the part about US court judgments not being enforced in China, but I do not know what they mean by an "international court." International courts are not going to take a drywall case so I am going to assume that Chinese courts was meant here. Again, these lawyers are wrong. Suing in Chinese courts is way cheaper and way faster than suing in US courts. The problem with suing in a Chinese court in a case like this is not the time or the cost, it is the damages. Chinese courts are incredibly stingy (by US standards) with damages for pain and suffering and lost profits. A win in a Chinese court might mean no more than a full refund for the cost of the drywall.
But at least one lawyer believes the future for plaintiffs' lawyers in these drywall cases looks bright because....well....because he really really wants it to:
Herman said plaintiffs' lawyers were up to the challenge. "I think we can bust the dam in this case," he said. "You're talking about billions of dollars" at stake, Herman said. "We're going to find some ways to make them responsive."
The next email came from Ervin Gonzalez, a plaintiff's lawyer out of Miami, who has this to say:
The Chinese are to blame because they sold defective dry wall, damaged thousands of homes, hurt consumers and caused billions of dollars in damages to be sustained by American homeowners and businesses. The Chinese Companies do business in the United States and should be responsible for the damage they have caused to American home owners and businesses. If the Chinese Companies are not willing to be accountable and responsible for their acts and omissions they should not do business in the United States. If any American Company provides a defective product, that Company would be responsible and accountable in a court of law in the United States as well as in the Country where the defective product was sold. Your comments blaming only the American companies, who certainly are legally responsible for this dry wall debacle, ignore the basic principles of justice, equity, accountability and responsibility that our civil justice system is built on. While I have enjoyed reading your scientific reports, I must say that your editorial supporting the Chinese makers of defective dry wall lacks any basis in law, equity, fairness and common sense.
I was interviewed yesterday by the Center on the Global Legal Profession and was asked what has surprised me in my practice of international law. Among my answers was how how so many American lawyers still refuse to recognize that foreign country's laws tend to be very different from ours and that U.S. law does not cover the entire world. As much as we U.S. lawyers (myself included) wish it would, it just doesn't and it never will.
So what of the Chinese drywall? Who is responsible and who should be liable and who will be found liable and who will need to pay? I have no idea who is responsible and I said that in my email to the group:
As someone who devotes the bulk of his law practice to China (representing mostly Western companies, but a few Chinese companies as well), I find this whole discussion bizarre and a little bit scary. There are good Chinese manufacturers and there are bad Chinese manufacturers. There are Chinese manufacturers that manufacture to spec and there are Chinese manufacturers that do not manufacture to spec. And there are American companies that get bad product from China because they do not know how to get good product from China or because they simply do not care whether they get good products or not. And there are American companies that get bad product from China even though they did pretty much everything one can do to prevent getting bad product.Unless one has had really close involvement with what transpired between the Western companies and the Chinese companies involved in the drywall mess, I do not see how one can confidently assess blame either way between the Chinese and the Western companies. I am not speaking to legal responsibility here, I am talking about blame. My experience in these situations is that most of the time, there is plenty of blame to go around.
Who should be liable? Whomever is responsible.
Who will be found liable in the US courts? Whomever is responsible.
Who will need to pay? See above.
For more on these issues, check out the following:
-- Who Needs International/Foreign Law? Not Us, We're Americans
-- Suing Chinese Drywall Manufacturers. Why All The Bother?
-- Will Your US Judgment Be Enforced Abroad? Not China, But Maybe.
-- Enforcing Foreign Judgments in China -- Let's Sue Twice
-- Taking Judgments To China (And Korea), Let's Not Sue Twice
-- Chinese Drywall. If You Think That Is Bad.....Just Wait
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About a month ago, in Part I of this series, I promised we would go through our blogroll and justify and expound upon each blog, five by five. This is the second in that series. As I mentioned in that last blog post, we pick our blogs based on the following slippery, vague, and subjective criteria:
Our blogroll basically consists of those blogs we like and which we think our readers will like or should be reading. We tend to like blogs that are unique in their content, well written, or consistently helpful. If we really like a blog, it makes it on no matter what. The less we like the blog, the more we have to believe it can be helpful to our readers. If a blog has not posted for a couple of months, we start seriously consider removing it from the rolls. Three months and it is usually removed. We obviously focus on China related blogs and, within that, we generally focus on those blogs related to law or business.
Here then is our second five, listed alphabetically:
Asia Health Care Blog. Alphabetically, this blog actually belonged on our first list, but since we added it since that post, I am writing on it now. I tend not to like listing industry specific blogs because.....well, they are too industry specific. There are many excellent China tech blogs and none of those are on our blogroll. But I have added this one for two reasons. One, health care impacts us all (yes, I know technology does also, but remember the subjective part mentioned above) and this blog is written with a general audience in mind. Second, the two bloggers are so damn earnest, I wanted to give them some kudos.
bezdomny ex patria. My Latin ain't so good, but I think this blog title means homeless and outside of one's native country. And at least the second part is true of the force behind this blog. It is written by a New Zealander who lives in Beijing, hence its subtitle: "ramblings of an expat Kiwi living in one small corner of Beijing." I like that it is not yet another American blog and I especially like how the guy behind it, Chris Waugh, is very smart, very independent, and not afraid to put it all out there in his posts. This is not your standard China blog and that is why you should be reading it. Waugh describes himself as follows:
My real name is Chris Waugh.... I’m from Wellington, I live in Beijing where I teach English to earn my keep and study Chinese in my spare time because…… well, why the hell not? I mean, apart from the fact I live in China and my wife is Chinese, it’s just interesting. Well, I majored in French language and literature (Otago University, finished my BA in 1998, graduated May 1999), I also studied German language and literature, Russian language and literature, German and Russian film, Russian history….. I guess you could say I’m the kind of guy who loves studying languages, literature, cultures, that kind of thing. So in that respect, living in China is great, never a dull moment, always something to keep me interested.I’m one of the least threatening people I know, and I don’t blog about the kind of stuff that would have people kicking my door in and dragging me off for reeducation. This blog is simply about what I observe and experience in my banal little life. If people find it interesting, cool, if not, there are plenty of other things you can kill your time with. What you can expect to read here is rambling about life in Beijing, my experiences trying to learn Chinese, perhaps some ranting about stuff in the news- but that’s not likely to be of a nature to invite unwelcome attention, I’m more likely to rant about shitty journalism, and just whatever occurs to me to write. Don’t come here looking for profound insights into Chinese language, culture, society, history or anything like that. Explore my blogroll, several of the blogs there are much better at that kind of thing. Basically, I just write about my view from this little corner of the world. That’s all.
Chris underrates himself. I have learned a lot from his blog and it makes me think.
Black and White Cat. Black and White Cat is a very intelligent, irreverent, thoughtful and independent blog. It typically takes a topical and interesting China news story and goes deeper. The writer is anonymous, but whomever he or she is, he or she knows China and does an excellent job tying previous news to current news. B&W Cat describes itself as follows:
Black and White Cat tends to be about China, since that is where I live; and I live here because I like it. But although most things I write or translate are about China, I do also launch off into other things. That is probably quite irritating to many people who would prefer not know what I think about other things.If you came here looking for information about cats, there isn’t any. Sorry.
I'm glad about the lack of cats.
Blogging For China. The full name of this blog is Fools Mountain: Blogging for China. And its subtitle is "A wise one knows moving mountains is beyond human power, but a fool has other thoughts…." This blog too is on our blogroll for its originality and also for its courage. Courage because this blog is not afraid to take a stand and to offend. I like that. No, actually, I love that, even though I definitely do not always agree.
Blogging for China has this to say about itself:
Fool’s Mountain (愚公移山) is a collaborative effort amongst writers focused on Chinese issues. Through our blog, we publish regular English-language articles and essays for both a Western and Chinese audience. All articles represent only the opinion of the individual writer, and may not reflect the opinions and views of other contributors. All contributors write on a voluntary basis with no compensation; those who write are driven to do so by their conscience, and nothing else.
Just by way of a good example, its most recent post is a video of a bunch of American school children chillingly reciting a piece deifying Barrack Obama. The post is entitled, "Mmm, mmm, mm … Barack Hussein Obama!" and the point of it is that maybe we Americans should look at ourselves and our willingness to ignore our own propagandizing when we so condescendingly criticize China for doing the same thing. In other words, is it propagandizing that we do not like or is it the message of the propaganda that offends us. As someone who does not believing in politicizing our schools and politically brainwashing children, I like the question posed.
Last, and maybe least, is the Cal Poly MBA Blog. Least not because of content, which has always been excellent, but because of a lack of posting regularity. It has had only two posts since June 18. But I have the following reasons for keeping it on the blogroll, at least for a while longer:
1. This blog is written by a friend of mine, Chris Carr. I have known Chris for years and I greatly like and respect him.
2. This blog is really good. Chris is a professor at the highly regarded Orfalea Business School at Cal Poly-San Luis Obispo and he brings that perspective to his posts on China. By that I mean that he views a lot of what he sees in and about China from a business prospective. More importantly, his posts are great teaching devises and great for spurring thought and conversation regarding China.
What do you think?
Read more: China Blogs: That's The way, Uh-Huh Uh-Huh, We Like It, Uh-Huh, Uh-Huh. Part II.
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FT.com has a very nicely put together, very informative timeline/article mapping out the key points in China's history. It is entitled, "People’s Republic of China at 60" and its pitch is that it allows you to "follow the key political and economic moments in the history of the People’s Republic since its founding on October 1, 1949. It does and I recommend it.
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