Another Brick in the Wall: Link Edition II

Below are 10 business-related stories regarding China from the past 10 days.  Many thanks to Yanli and Sinocism for providing them.  Feel free to send me any you may come across as well.

Weixin has about 300 million users.  I used Fetion a few years back, it had a few of the basic functions that Weixin expanded upon.  See Chapter 12 for more about the popularity of Weixin (WeChat).

In Chapter 1, footnote 43 I mentioned that one of the issues facing policy makers is traffic congestion.  Each city handles it differently, some auctioning off license plates to residents.  The cost of license plates has increased as cities have become denser and more affluent.  In Shanghai for example, in the recent license plate auction held in January 2013, the average price for a plate was $12,000.  See Shanghai’s Newest Luxury Item: The License Plate from The Wall Street Journal and Shanghai licence plates ‘precious as gold,’ says vice mayor from South China Morning Post

In Chapter 3 I detail the milk powder scandal and the subsequent surge in milk importation that continues to take place.

In footnote 26, Chapter 14 I mention that the amount of foreigners residing illegally may actually boost the perceived laowai numbers.  That is to say, many of my Chinese friends and students are under the impression that there are more legal foreign residents than there really are.  For example, at least 20,000 Africans legally live in Guangzhou alone (up to 150,000 Africans are estimated to live there including tourists and those illegally overstayed their visa).  For comparison, between 580,000 and 820,000 Chinese migrants live in Africa.  There are tens of thousands of domestic servants (typically maids from the Philippines) under similar legal circumstances in Hong Kong as well.  See 593,832 foreigners live on Chinese mainland: census data from Xinhua, The Promised Land by Evan Osnos and China cracks down on African immigrants and traders from The Guardian and Eastern Promise in Little Africa from The Global Mail

If you have ever spent much time using search engines on the mainland it is painfully obvious that Bing (from Microsoft) is really bad in terms of producing relevant search results.  So bad that it only has .5% marketshare and it is not even blocked/impeded upon.  In contrast,, which is continually blocked/redirected/stalled, has about a 15% marketshare.  And Baidu, the homegrown champion has about 78.6%.  See Chapter 12 for more.

360Buy is briefly mentioned in Chapter 7.  It is an e-commerce portal that specializes on electronics.  It turns out that there is a bit of a scandal as employees have been caught in a scheme in which they would help boost traffic for merchants who gave them goods.  This is — so far — a smaller scandal than Alibaba witnessed a couple years ago (see this backstory).  Perhaps they can clean it up their act like Alibaba did, there is lots of current and future potential to provide that incentive.

In summation, there is a 20% capital gains tax on your second home throughout certain areas of China (both Beijing and Shanghai have passed this type of law).  Thus if you get divorced, your partner can technically sell the second property and not have to pay the hefty levy.  Many couples are actually still living together and are only divorced on paper, only going through this process to save tens of thousands of dollars.  While it is hard to say just how many divorces are because of this specific issue, in Chapter 4, footnote 40 I discuss some of the numbers regarding divorce and a few opportunities.  One area that may be relatively untapped is the divorce app market.  For example, more than 5,000 couples divorce each day in China.  Roughly 1.96 million couples got divorced in 2009; in 2011 2.9 million couples got divorced.  In fact, the divorce rate has doubled over the past decade in Beijing and Shanghai and is now nearly 40% (for comparison the national divorce rate is 2.29%).  To be even handed, some of these divorces may be related to avoiding regulations on buying 2nd or 3rd homes.  Yet just like in the West, when children are involved, the custody issues require communication between exes.  Thus online communication through apps may be a potential market.  See Ensuring a long marriage with insurance from China Daily, Joint Custody From A Distance from The New York Times, Divorce: Why the big breakup in China? from CNN, China’s Hot Real Estate Market Takes Broad Toll from NPR, China’s divorce rule dubbed ‘Law that makes men laugh and women cry’ from The Telegraph, Over 5,000 couples divorce each day in China during first quarter from People’s Daily, Divorce rate exceeds one third in Beijing and Shanghai from SINA, Shanghai has 2nd highest divorce rate in China from People’s Daily and Divorce app could help couples decide if their marriage has a future from The Guardian.

Based on current trends, by 2030 China will import 79% of its oil.  As a consequence, many policy makers are wanting to tap into fracking like the US has done, to acquire hydrocarbons and become less dependent on imports.  In Chapter 17 I mentioned that one estimate by geologists is “the nation’s recoverable reserves at about 25 trillion cubic meters, on par with the United States.” Thus both foreign and domestic firms specializing in the natural gas segment (e.g., extraction, storage, transportation) may find new revenue streams in an industry that is expected to pump “6.5 billion cubic meters of natural gas from underground shale formations by 2015.”  Yet despite the aggressive timeline for hydrocarbon extraction, another hurdle is a lack of experience.  None of the 16 firms awarded drilling rights at a recent auction has ever drilled a hole.  See China’s ragtag shale army a long way from revolution from Reuters, Environmental Frets as Frackers Move In from Caixin and China’s “Ultimate Goal Is a Huge Fracking Industry” from Mother Jones

Good short story, with anecdotes, of the real estate costs on the SAR.  Certainly one of the fewer places with more expensive cost of living than here in Shanghai or up in Beijing.

While Beijing is still the top tourist destination, with 5 million foreign visitors a year (see Chapter 4), Xi’an also is one of the biggest destinations for both mainlanders and foreigners.  According to the report:

Last year, Xi’an attracted 78.64 million domestic tourists and 1.15 million overseas tourists, 20 percent and 15 percent rises respectively on 2012, according to official figures.

“This year, we expect to see 1.3 million overseas travelers,” Dong said.

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