Damian Holmes

Wow that’s just a few of the stories that are in the headlines today…… Biggest one first

China hits a 14-month low today (1)
All the major news sources are reporting that (see chart) which I think will send a few more jitters through the US market(that closed yesterday at a 2010 low) as it opens for the morning session. Now is this low due to local factors or is it the fact that the European market and sovereigns are scaring everyone by often keeping a bit too quiet? Or that the USA market seems to be taking longer to recover and Wall Street lost more ground yesterday?  I think it is a combination of worldwide & local factors as the construction market in China is slowing and its the time of year where China is in the middle of lull(between Valentines & Holiday Season) for exports to its major export markets  and also the pressure from the USA and others(more on that later) for China to re-evaluate the yuan(RMB) thus pushing up prices for exported goods. In other words its a lot of factors that are pushing the market lower, which is surprising for the China market as more and more people in China have surplus cash as the government mechanisms to cool the property market have well and truly taken effect.

IMF pushes for currency revaluation
The Global Times reported today about the statement the IMF made on Monday that joins the USA conga-line in pushing China to to  yuan(RMB) rise. Last week the yuan(RMB) rose over the threshold limit that the government have been maintaining. China will allow the yuan(RMB) to rise such as it allowed in 2005 however it will do it gradually and when it feels it best suits China.

Google to stop redirecting China search site to HK search site
WSJ and China.org.cn are reporting that Google will stop the redirecting of its Google.cn to its Hong Kong search website. This comes as an interesting move as it tries to renews its ICP licence in China which is set to expire today. So what does it mean? Well Google is realising that China is going to require a less heavy handed approach like storming off and taking your bat and ball and going home is not exactly the best way to do business in China. The way Google business is always an interesting watch and is never dull!

Counting the rising cost of wages (2)
Over the last couple of months there has been some issues at large and small factories  such Foxconn & Honda running into issues about pay & conditions and the companies giving employees wages rises to calm the storm. Will the companies move out of China due to the rise in costs – probably not as the market is too large and they have spent years on developing the market, setting up factories and training hundreds of thousands of workers. What will it mean it terms of costs? I don’t think you’ll see any price difference in an iPhone or Honda car anytime soon but we will see a rise in the lower end of the market as Foxconn & Honda’s suppliers pass on the costs across the board to its other customers. Overall costs will rise but so will the incomes of the employees across China which will stimulate domestic consumption which is what government and the rest of world have been waiting for – a Chinese consumer lead recovery…..

Foxconn was in the news due to the Foxconn International Holdings(HKG:2038 chart) issuing a profit warning (FT.com) and Morgan Stanley downgrading its rating. Also the company is looking at almost finalising it relocating(WSJ) its main production from Shenzhen to Langfang in Hebei province to reduce costs.

The P.R.C. Ministry of Commerce has announced that it will require any person conducting online sales to register industrial and commercial agencies to bring them under government regulation. The online market sales are estimated to be 2% of the retail market and expected to grow to 5% of retail sales by 2015.  Measures will be taken to regulate transactions of online sales to improve the market. Currently China has 100 million domestic online customers.

The coffee wars are just starting to get brewing(pun intended) as China Resources Enterprise(HKG:2091; chart)  has purchased 80% of the Hong Kong coffee chain Pacific Coffee from Chevalier Pacific(HKG 0508; chart) for HK$326.6 million. According to the CRE press release Euromonitor expect coffee consumption in China to grow by more than 35% in the next 5 years on the Mainland.  CRE will utilise their network of stores across Mainland China with Starbucks & others in their sights as CRE stated that  “Our goal is to build Pacific Coffee into the No. 1 coffeehouse brand in China”. I say let the coffee war begin and see if the HK firm can upset the Americans who have a big headstart.

The Asian Development Bank(ADB) recently put out a summary of 104-page report(link to PDF) stating that People’s Republic of China (PRC) needs 413.5 billion yuan (CNY) (or roughly $60.5 billion) in investments over the next 10 years to harness its biomass energy (wiki) potential in rural area. “Biomass energy is a sensible renewable energy option for rural areas and it can be cost-effective at community and industrial scales if governments support and effectively guide its development,” said Klaus Gerhaeusser, ADB’s Director General for East Asia Department. It also “has great potential to make a significant impact on two of the country’s most pressing development challenges: rural poverty and environmental damage.”

If you have time I would highly recommend reading the Christopher Joye article in the Business Spectator(registration required) -  China’s housing bubble myth. It is a great read for anyone who read a real analysis with number rather than shot from the hip rhetoric. Business Spectator is a great read and has free registration.

(1) Business Week – China’s Stocks Decline to 14-Month Low on Economic Outlook
China Real Time Report (WSJ) – Did a China Indicator Lead the Market Down?
Business Spectator (Subscription)  – China shares hit fresh 14-month low

(2) People’s Daily – Counting the cost of rising wages in Chinese industry
FT.com – China’s factories spread the wealth

As apart of my setting goals for 2010 I set 5 words – one of which was Simple.

Simple Ideas. Simple Concepts. Simple Processes and Simplify.

Tonight I decided to Simplify my web reading. In 2009, I read too much business news, business trends, social media trends which often was great for small talk but often lead to information overload that really in the end didn’t help move my ideas move forward. I had created too much noise. Most of what I read is via my Google Reader which I open every morning and spend about an hour scanning the information and another hour at night. I use this as a good way to research and gain ideas for my business and sites.

Over the last couple of years I have added newspapers, magazines, blogs, zines and other RSS feeds. However, I realised that I needed to simplify the amount and type of information I was reading. So, I went through each category – business, landscape, architecture, entrepreneur, news, etc and culled each to 2 to 5 sources from 10-20.

How did I do it? Well, I gauged how much I really gained from each source and how useful it was to me last year. Also if I thought that I could get the same content from another one of my sources I culled it. I also  found during 2009 that I often got duplicate information from multiple sources especially US-based newpapers on China or Asia. I also culled a lot of the USA based magazines as some of what I read was useful, but I decided I need to focus more on Asia were I am based.

To concentrate more on Asia and other topics I searched Alltop.com for RSS feeds and added 2 sources maximum to some categories.

I am also Simplifying my social media habits – less twitter/foursquare and more writing ideas down and then thinking of ways of implementing(doing) them.

I also decided recently that I needed to reduce the number of my sites from 5 to 3 and probably soon to be 2 (not including my blog!) so that I can spend more time on my design studio SUSTAIN.DS and World Landscape Architect.

I hope this gives you something to think about and what you will do in 2010. What are you doing in 2010 to simplify your life?
Leave it in the comments section or email me