Is China Headed for a Meltdown (yes, another article...)

[To Kubes]

The U.S. and EU have poped. They have more than 50% of the world's output. What's new?
 
Anyway, more money will be created for poped economies? We are back to the free money era..

[gram]

To gram,
That's an interesting point you make. I agree that the Japanese certainly do appear to have a different mindset to the Chinese, including being less self-orientated and also with higher standards of tidiness. I am not sure why but it probably does flow through to the quality of products and services in the respective societies. (note the low service standards in Singapore)

[To gram]

The Japanese mindset on quality was not natural to the culture. To compete in the global market, the American statistician, Deming was active in Japan in the earlier 60's and introduced quality control concepts to Japan. The Japanese industry took the concepts to heart and practiced these concepts and then refine and evolved the methodologies to an almost religious level. Quality management is integrated to general management there so much so its hard to seperate to two.

My take is that some China companies will go this way due to global quality expectations, multinational companies operating there or just plain competition for global market share.

The chalenge for a company going in this direction in China is that it will be operating in an environment that does not have this pervasive mindset yet. So a company would hire workers from the environment and then need to "brainwash" them to work and think high quality standards concepts. A lot of commitment from top management is needed to operate with this strategy.

 
 

[To gram]

To gram,
That's an interesting point you make. I agree that the Japanese certainly do appear to have a different mindset to the Chinese, including being less self-orientated and also with higher standards of tidiness. I am not sure why but it probably does flow through to the quality of products and services in the respective societies. (note the low service standards in Singapore)

The Japanese are group orientated and fiercely compete at this level. You can call this the "group selfishness". Company A will not think twice about crushing company B..

Tidiness is one of the concept towards high quality. If you keep your work area clean and tidy, you will produce better quality products and services.

[gram]

To gram,
I'd agree with you about where China is headed and why.

I'd still lean towards the idea that the Japanese were always quite good at producing products because people who visited there before it came under any significant Western influence already noted the quality of things that were made there. I can think of samurai swords and also ancient castles in Japan. However, the modern concepts of quality management merely allowed the inherent mindset to express itself in a more methodical and formalised way, especially with its application towards mass manufacting with fewer defects. The introduction of these foreign quality concepts in a manufacturing context also can't fully explain the clean and tidy nature of Japanese society.

[To gram]

To gram,
I'd agree with you about where China is headed and why.

I'd still lean towards the idea that the Japanese were always quite good at producing products because people who visited there before it came under any significant Western influence already noted the quality of things that were made there. I can think of samurai swords and also ancient castles in Japan. However, the modern concepts of quality management merely allowed the inherent mindset to express itself in a more methodical and formalised way, especially with its application towards mass manufacting with fewer defects. The introduction of these foreign quality concepts in a manufacturing context also can't fully explain the clean and tidy nature of Japanese society.

The Chinese made intricate jade carvings that are extremely sophisticated a thousand years back. That does not make Chinese produce of maximum quality in general. The sportperson in China are as dedicated as you can get. They start a rigourous training routine at a young age and dedicate the rest of their lifes towards it, e.g. table tennis players. The Shao Lin monks are extremely discipline in their training, both physical and mental. There is no lack of examples of quality pratices from China over the ages.

Japan did export shoddy products in the fifties like cloth and automobiles. They have since improved from that time.

If you have the chance to work with Japanese companies, you will be amazed on how homogenous their thinking on quality is. 

[5 year plan]

Nope no meltdown ever came to china did it ?   No bubble burst and all in all the economy there is very very stable and still doing very well.

[To pp]

China came out of communism so no recent history there. There will be economic cycles in the capitalistic system due to the fact that the markets satisfies itself.

With intervention, the upside or downside will be tempered. The aim is for soft uptick and a soft downtick. The ideal situation is a straight upward slope. Due to market imperfections we have the up and down cycles superimposed on it over the long term.

As we can see, China is actively taming its upcycling economy and the world is watching closely.

[5 year plan]

Well lets hope they dont tame it too much.

[Vulcanl]

This is an interesting piece in that highlights a major miscalculation on the part of certain Western retailers....one would have thought they'd done their homework - a mere 2 year stint living in China would have made it obvious that this concept would not have caught on there.

If companies like this (with all of their resources) could make such a dumb mistake, I wonder just how many Western analysts, pundits, and fund managers are making similar mistakes with regard to China? 

Non-Westerners I talk to here in Singapore all say the same thing: China is the real thing. 

It may look different and not behave how we (Westerners) would expect it to, but that doesn't mean 'their' system is not effective.

Western DIY outlets retreat in China
AFP Sunday 27 March 2011, 11:57 SGT

At a near-empty B&Q home improvement outlet in Beijing, much of the foot traffic is due to the location of a public toilet next to the entrance -- not the store's patio furniture or circular saws.

It's a sign of how foreign "do-it-yourself" big-box chains have struggled to attract customers in China, where homeowners have little experience in renovating apartments and prefer to pay low-wage decorators to do it for them.

"Do-it-yourself is not popular in China," Shaun Rein, managing director of China Market Research Group, told AFP.

"The feeling in China is that if you do it yourself that means you are a peasant -- not the sturdy, manly image DIY chains have crafted in the US."

Despite China's booming property sales and a home-improvement market growing 15 percent a year and worth $100 billion in 2009, such chains have been forced to pare back operations in China -- or leave the country altogether.

UK-based B&Q, whose website describes it as "the market leader in China," entered the Chinese market in 1999, but last year abruptly closed 22 of its 63 stores.

Meanwhile US giant Home Depot, which entered China in 2006, has shuttered nearly half its outlets, leaving it with just seven.

The latest casualty of the tough Chinese home-decorating market is French construction group Saint-Gobain, which said this month it had closed all of its La Maison building material stores.

Analysts said overseas executives mistakenly assumed they could replicate the Western big-box model in China, where many people are renovating for the first time and have little experience using power tools.

"A lot of apartments in China are concrete boxes and have to be decorated from scratch -- very few homeowners know how to do that themselves," Zhou Wei, chief financial officer of advertising agency Charm Communications, told AFP.

These foreign retailers have also stocked products such as garden hoses, picnic tables and barbecues -- poor sellers in a country where people live largely in apartments with no balconies.

Rein said that on some of the few DIY items that do sell in China, both B&Q and Home Depot priced themselves out of the local market by charging much more than Chinese competitors.

In the Beijing B&Q store, bored sales assistants far outnumbered customers. An employee said this was normal for a weekday but it was busier at the weekends -- thanks to the smelly public toilet.

One of the shop's few customers, a man surnamed Ding, said he wanted to buy "important items" like pipe fittings for an apartment he was renovating, as he believed they would be better quality at a foreign outlet, albeit more expensive.

For everything else, he said he would get an interior designer to buy at Chinese stores where prices would be cheaper.

Home Depot spokesman Ron DeFeo admitted the company had made mistakes since entering the Chinese market more than four years ago and had since "learned a lot".

"Our stores were modelled after the US market and its DIY format, but China is more of a DIFM (do-it-for-me) market," DeFeo told AFP.

Another problem, according to Saint-Gobain spokesman Nicolas Nie, is that more and more homes sold in major cities such as Shanghai were already decorated, reducing the "prospect to serve individual customers".

B&Q did not respond to AFP requests for comment.

Foreign home-improvement stores are not alone in their struggle to find the right formula for consumers in the country of more than 1.3 billion people.

US toy maker Mattel this month shut the world's first and only Barbie concept store in Shanghai, while US consumer electronics giant Best Buy abruptly closed its self-branded stores last month.

Analysts said some overseas companies have been left in the dust by Chinese rivals who have opened more outlets across the country, secured better locations and enjoy stronger bargaining power with local manufacturers.

But some firms such as Swedish furniture giant Ikea appear to have found the right mix -- it plans to more than double its number of stores in China from the current eight by 2015.

Zhou said Ikea had adapted to the local market by giving novice home decorators examples in its stores of living room, bedroom and kitchen styles suited to Chinese apartments.

[$Pripps]

 

[Kubes.SG]

China is brilliant at faking reality.

Here is a eye opening short piece from the Australian SBS network:
http://www.youtube.com/watch?v=rPILhiTJv7E   The HK analyst makes the perfect soundbite that seems up the issue in China and in Singapore:  "It is not quantity of GDP, what's important is the quality of the GDP".

More from the fund manager Hugh Hundry.  He is scathibg and sarcastic:  http://www.youtube.com/watch?v=ektMQGbW3wk  

Even the Arabs are calling out the China's reality faking and GDP pumping:  http://www.youtube.com/watch?v=0h7V3Twb-Qk

64 million empty properties.

[Vulcanl]

"....what's important is the quality of the GDP..."

You keep harping on this....but I would turn this around and ask you: WHY is this so? 

So what if SG considers the value transfer of goods in its port as GDP (even though nothing has actually been created from scratch)? 

I will go along with you that most stats published by any Gov't are crap and not to be trusted.

We live in a relative World, however and clearly Asia is better off than just about any other region. 

You have been among those talking about some kind of blow-up in China since the GFC and have been wrong!

[Bigtime]

What Bubble ? It ain't  bubble no more.It is a big Balloon now and yes, it will definitely burst and God only know when it would be.

Asia had its financial crisis 15 years ago kicked in by Thailand property bubble burst  and ,yes, Singapore property price index went down 70%  within 2 years(1996-1998).

China ghost town reminds me of Thailand bubble (Overpriced  &  low unoccupied properties).The difference would be only the size of bubble.

Hang on to your cash and wait for the grand sale


 

[Tulips]

Vulcan..remember what idiots the nay sayers where about the internet bubble? or the idiots about the U.S property market? how about the morons who said Japan was an accident waiting to happen..tick tock tick tock