Chindia: Overpopulation + Drought = Looming Catastrophe

The juxtaposition of these two pictures poses a chilling predicament. What’s likely to occur when an area of the world (East Asia+India) that contains 51% of the world’s population also happens to be the most likely area other than North Africa where water shortages could become a chronic issue (second map)? Let’s hope that Asia’s leaders are feeling dryness in their throats as they consider the possibilities.

Hong Kong’s Human Sardines

Not for Claustrophobics

The picture above is a sample of a birds-eye view of a single family dwelling in famously dense and expensive Hong Kong. This particular closet-sized apartment houses a family of four, including the two kids shown. Click through to the daily mail article below for more pictures, taken by a charity called the Society for Community Organization. That hundreds of thousands of families live in such conditions in a wealthy city such as Hong Kong is a human tragedy.

 

http://www.dailymail.co.uk/news/article-2282764/Hong-Kongs-human-battery-hens-Claustrophobic-images-slum-families-squeeze-lives-tiniest-apartments.html

My Big Fat Chinese Relatives

Some family trees with particularly high canopies

This SCMP article is an interesting follow-up to the blog post from one month ago (Banking’s Blood Relationships) that JP Morgan and the other big banks are being investigated in Hong Kong for their practice of hiring “princelings” of China’s communist leadership to win lucrative deals on the Mainland. It’s a story that has drawn outrage from some quarters of the public, while drawing a clearly audible “well, duh...” from others familiar with a long-standing and widespread business practice. This article reports that “princelings” who have grown uncomfortable with having the media and regulatory spotlight shown on their family tree are increasingly giving up their prestigious positions with the global banks to mine their trade under the cover of Chinese financial institutions with branches in Hong Kong.

 

Over the years, many young and ambitious professionals around the world view their tenures at investment banks and management consulting firms as way stations to gain training, experience and branding. They then go after the really big game of working for private equity or other investment firms or taking up management positions in family-run conglomerates, most of which may be less known but are many times more lucrative. The increased presence of government hound dogs sniffing around the global banks in China may simply be accelerating this migration.

Asian Casinos: Gambling on Growth

Now chasing after children

This Economist article on Asian casinos provides an insightful update of the continuing evolution of a sector that continues to grow bigger and more broad. In short, the piece highlights two related trends – one, the chasing by neighboring countries (e.g. Singapore, Philippines, Russia, Australia, Korea) to lure the high end Chinese gambler away from Macau, and two, Macau’s reaction by broadening its appeal to the mass markets and families.  On the first point, the fact that Macau’s size has handily eclipsed Las Vegas as the largest gambling destination in the world (Forbes magazine puts Macau’s gaming revenues at six times that of Vegas) speaks volumes about the immense firepower of the high end Chinese punter. However, the Chinese government’s recent crackdown on corruption and the flaunting of wealth has made Macau a less popular destination than before. “Beijing has too many cameras watching us in Macau,” says one former patron. Other governments are therefore trying to lure these players to their shores, implicitly offering discretion as one strong enticement.

However, there’s no need to pity the poor ex-Portuguese colony of Macau. Losing some of the high-end players is a natural evolution towards a more durable and less risky business model. The Chinese high-end customer has traditionally been a lower-margin segment of the market, primarily due to the necessary subsidies and incentives (e.g. free suites and fine dining, money laundering services, “companionship”, cuts paid to the junket tour operators). So while securing these customers has been an essential part of Macau’s early success story, the future lies in luring the vast Chinese mass market – the "great unwashed”, so to speak. To ease their journey, billions of dollars are being spent on improving the road, rail and bridge links between Macau and other neighboring Chinese cities, including Zhuhai, Shenzhen and Hong Kong.  A key future draw is a nearby island, Hengqin, that is being developed with theme parks – think of it as building an Orlando next to Vegas. The model is similar to what Las Vegas itself has done over the past decade, evolving into a destination where non-gambling revenues now constitute the majority.

Early signs of the market transition for Macau have been encouraging for its license holders. Despite the government crackdown on the high end, Macau’s monthly revenue and year-to-date growth has grown by 15-20%, fueled largely by the broadening of the customer base.

So while other markets try to court away China’s kings of gambling, Macau is not likely to lose its crown any time soon. At least, don’t gamble against it.

“Go West, Young Man.” No Thanks.

The road more widely traveled

“Safe and secure” are not the adjectives that readily spring to mind when one thinks about jobs that promising young Chinese graduates might desire once they leave university and launch themselves into the country’s go-go economy. However, according to American Nobel Laureate Edmund Phelps, that’s what a disheartening number of young Chinese are looking for as they clamor in increasing numbers after government-related civil servant jobs. As reported in this SCMP article, Mr. Phelps this week lashed out at the “public servant frenzy” by fresh graduates, calling it a waste of talent. As he is quoted as saying, “we hope to see more bright young men telling their mothers, ‘Mom, I am heading west, south or north to run a company.’”

On the one hand, it is easy to be sympathetic with Mr. Phelps’ urgings. Chinese government positions are hardly known for being innovative, efficient, visionary or forward looking. They also pay like crap. So it would be great to see China’s brightest pushing themselves to innovate and energetically lead the country up to the top of the world’s economic league tables.

However, there are a number of attractions that ho-hum civil servant positions hold for new members of the work force. Firstly, the jobs do provide security, as well as decent benefits and limited responsibilities. Secondly, and more troublingly for the country, China’s private sector has been facing a growing number of challenges in the past two years, hit by a double whammy of slowing economic growth and a public state-owned-enterprise sector that stubbornly seeks to maintain its hegemony in many sectors, thereby squeezing out (and even obstructing) business opportunities for private enterprises. Thirdly, and most cynically, uncontrolled corruption up and down the ranks of the government bureaucracy still serves to fatten the pockets of many a government official. So perhaps taking a job sitting on the side of power, even if it entails little more than pushing papers around a desk, isn’t a half bad way to make some dough and avoid stress and uncertainty. As the race course of the road to riches turns increasingly into an uphill slog, history and children’s fables both have shown that “slow and steady” beats out the galloping sprinters.

Cappuccino Capitalist

Espresso with a shot of frothy bourgeois

Where in Asia is this swanky coffee bar, where an espresso costs US$4 and a shaved ice red bean concoction can set you back by US$10? It could be Beijing, Taipei or Singapore. But no. It’s Pyongyang, North Korea. Though details are scarce, it is unfathomable that such an establishment is meant to appeal to the local mass market. Rather, it is probably intended, like many other symbolic facades around the city, to show off just how modern a state North Korea is. This particular café blares out to the world that North Korea’s elite are hip with global consumerism in the 1980s. It’s just a shame that the prices are very 2013, where a drink may be equivalent to a full day’s wages for a citizen lucky enough to have a job.    

 

Article in the Shangaiist.com