Santa Tsang offers hand outs to MICE industry in HK

Hong Kong's new Financial Secretary John Tsang was able to deliver a budget on Wednesday that most of his counterparts around the world could only imagine in their dreams. Highlights included:

• Salaries tax down 1% to 15% and a rebate of 75% of tax paid last year (up to a US$3,000 limit);
• Profits tax down 1% to 16.5%;
• Rebates on properties taxes;
• The complete elimination of duties on wines and beer (no coincidence that the Hong Kong Trade Development Council has just launched its first Wine Expo here).
• ...and, as the vaudeville promoters would have said, much much more!

The exhibitions and conventions business was recognised in the budget as a "pillar industry". Tsang told Hong Kong "We will step up our efforts in overseas promotion. We aim to attract more high quality convention and exhibition projects that will bring high value-added business travellers to Hong Kong. I have earmarked an additional $150 million to carry out these activities in the next five years".

The Hong Kong government has also recognised that lack of hotel rooms is an important restraint on this industry and has earmarked 10 sites for new hotel development as well as waiving the Hotel Accommodation Tax.

On YouTube

Thomas Crampton is obviously a whole lot younger and more cutting edge than I am in the blogging work he's doing. I can, though, feel slightly nearer to that edge thanks to him posting a YouTube video of the interview we did earlier this week. See it posted over on our corporate blog and here on Tom's site for his take on what we said.

Edge-ing into Hong Kong

One of the great things about blogging is that rumour mongering is not frowned upon. In fact, it's nigh on compulsory. So, I happily pass on this rumble from Thomas Crampton about Malaysia The Edge launching a business newspaper in Hong Kong.

Mind you, when you get details like "starting with a 5,000-copy print run, The Edge will be printed on high quality paper in a tabloid format", you have to assume that this rumour has slightly more substance than the average whisper around the Foreign Correspondents' Club bar.

Anhui Ho!

Hmmm...well on Monday I wrote about the focus on the west of China and yesterday asked whether companies will really moving to the infrastructure-lite world of India and Bangladesh when the rest of China beckons.

The China Law Blog has been focusing on the same topic this week and today points to a China Daily piece highlighting the attractions of Anhui. As this was where a lot of the young women working in Pearl River Delta and Greater Shanghai factories were coming from anyway, this makes a lot of sense.

For those of you who are not regular visitors, Nat Krause's picture of downtown Hefei, Anhui's capital, can get you prepared. Yep, just like every other Chinese city.

The media angle to all this is the question of who is best placed to follow the factories into Anhui, Guangxi, Hunan and Jiangxi? In the 1990s, the Taiwan-based traditional competitors of Global Sources withered away to almost nothing. Will the same thing happen now and who will suffer the most?

The taxonomy of free...cor blimey gov

Sounds very fancy doesn't it...and the Asian link is a bit of a stretch, but here goes. You're going to be seeing a lot about this.

Wired magazine's Chris Anderson codified the Amazon world of dotcom 1.0 with his concept of the long tail. Today, he uses the magazine to preview his next book, "Free" which captures pretty neatly the dotcom v1.5 (not really 2.0) world of Alibaba, Taobao (see....the Asian connection) and Google. If you're not up to reading 6,000 words, my basic take is: we'll give you something and pay for it by selling something to someone else. This is fuelled by marginal costs being at or close to zero and, thus, Yahoo!'s recent fight-back against Gmail by offering infinite storage to all users.

Other Asia links in the piece:

Forty years ago, charity was dominated by clothing drives for the poor. Now you can get a T-shirt for less than the price of a cup of coffee, thanks to China and global sourcing. So too for toys, gadgets, and commodities of every sort.

How much longer the China connection can be quoted as the key driver is increasingly open to question. This AP piece in the UK's Guardian newspaper echoes many others which are now appearing. It reports on "a new challenge for China" and suggest that "its huge economy, which has long offered some of the world's lowest manufacturing costs, is losing its claim on cheapness as factories get squeezed by rising prices for energy, materials and labor".

This isn't particularly "new" actually and I remain sceptical about the capacity of some of the mooted alternatives to take over from China very quickly. Watch for Pearl River Delta neighbours Guangxi, Hunan and Jiangxi rather than Bangladesh and India really taking over the manufacturing mantle. Indonesia and Vietnam are, though, clearly on the rise.

Go West!

We wrote back in July about my friend Sam Chambers' launch of the City Connect project which was planning to focus attention on the logistics business in China's key inland cities. The first event kicks off in Chongqing on 7th April and Sam tells me "we're into the final furlong, the local govt fully onside - and a great line up". He goes on to note "as you know one of the big themes this year and onwards in China is improving inland supply chains. Few places will be as pivotal as Chongqing in smoothing cargo flows for inland destinations".

Sam is a lot younger than me and certainly youthful enough to be fulfilling his Manifst Destiny and following John Soule's advice (via Horace Greeley) to "Go West, Young Man". Good luck.

PCCW's Netvigator deeply unreliable

An alert to readers of this blog: PCCW's Netvigator e-mail service has developed massive reliability problems in the past week. My personal account has only worked sporadically for the past 7 days and their so-called customer service is unable to respond with anything other than trying to sell me upgrades to my Broadband TV service.

I am now becoming aware that this is not limited to my account and that many other people are suffering from both the poor delivery of e-mail and even poorer technical support.

This is a company we've loved to hate for years (in its previous incarnation as Hong Kong Telecom but especially since Richard Li took it over and renamed it) but they are plumbing new depths of uselessness at the moment.

Update: their technical incompetence knows no bounds it seems. According to this BBC report, PCCW was also responsible for a worldwide blocking of YouTube over the weekend!

TTG is "on" Facebook

Our Facebook 'lab' doesn't throw up too many interesting initiatives from the region's B2B and specialist media. So, we were interested to see our friends over at TTG Asia in Singapore launching a Group for corporate travel managers. So far, it's invitation only and, as is the way with these things, that means a slow start. There are only 11 people in the group so far...not enough to generate any real activity. We'll keep an eye on it to see how it develops.

Macau update

Thanks to Eddie Choi for his generous post about the UFI Open Seminar in Asia which has seen me over in Macau this week and away from blog posting. I have to agree with his final conclusion: about what he calls "the correct recipe" for an event like this succeeding: "great people mix, very interactive, fabulous location, for a good turnout rate".

The seminar was looking at new exhibition opportunities in Asia with a variety of different formats and speakers varied from Dane Prof. Per Mollerup, the author of Wayshowing, talking about how to organise fairs and venues to help people get the most value out of them to Cybermedia's Pradeep Gupta on the latest developments in IT face-to-face events. It's not often we hear comments about pubic hair trimming in exhibition industry conferences, but Mollerup certainly woke up the audience yesterday with that reference!

Other day one speakers included Brand Events' Chris Hughes, Lee Newton of Media 10, Interads' Rajan Sharma, VNU's David Zhong and Shahin Javidi of Fiera Milano. On Day 2, we also had CMP's Michael Duck, Chen Xianjin from the Shanghai World Expo and Edward Liu of CEMS in Singapore.

Of Asia B2B blogging

A couple of quick snippets on the small world of Asia B2B blogging:

1. Trapp Lewis (we spoke of him just the other day) has launched a new blog, the Trade Media Blog. It's heavily focused on the world he knows very well of the Global Sources/Alibaba space. Recent posts, though cover the all-important quality issue and China overtaking Canada as the top supplier to the US. Trapp has kindly included us in his exclusive blog roll. Thank you!
2. Eddie Choi's Tradedot has been included in the BIGLIST SEO Blogs 'hall of fame'. Take a look at his latest post on the search terms that are driving traffic to his site. Again, the Glob-ibaba combination features large.
   

Good luck with both gentlemen. I welcome both of your contributions to intelligent debate on the business world we cover.

Meckler won't invest much

Technology media veteran Alan Meckler's blog is worth a read at least for the amusement provided by his capacity to blow his own trumpet harder than almost anybody other than Donald Trump. He's been talking for a few days about his round-the-world trip which takes in Australia, Japan and India in our part of the world. His wide-eyed surprise that his (obviously non-3G) Blackberry doesn't work in Japan is a good sign of somebody who hasn't been paying attention.

Today, he is interviewed by contentsutra.com on his plans for India. He seems to be most fired up by the fact that he's hired away arch rival Getty Image's top salesman in India to power up his Jupiter Images activity there.

On the media side, we were intrigued by a few comments (the highlights are mine):

Our media properties get a combined 1.1 million unique visitors, around 3.3 million page views from India. So we’re tying up with an ad rep firm - we have spoken to some, and will make our decision in a few weeks. We have plans for Internet.com, and if all goes well, we will launch india.internet.com by summer. The beauty of India is that we don’t need to do local language here, so we don’t need to invest much.

Most people I know who've tried to open up India that way have ended up disappointed.

On rapid expansion in Asia, he is obviously still smarting from the pain of the dotcom 1.0 crash when he says:

n 1999, I opened up offices in Beijing, Taipei, Hong Kong, Kuala Lumpur, Sydney and Japan. We also opened offices in England, Belgiun, Canada, among others, with around 3-4 people in each office. And then the bottom came off the Internet business and we had to shut down most offices. We just kept Sydney and Japan. I want to be very careful this time.

Sourcing source

For those of you who don't follow the comments on earlier posts, I'd direct you to an interesting one which has appeared over the weekend to last Wednesday's piece on LinkedIn Answers and the exchange on 'safe sourcing' in China.

The comment comes from a blog I hadn't seen before, Source Juice. The bloggers describe themselves as "guys and Gals from the US and China in the technology, manufacturing, and supply chain industries" who "believe there is a huge void of information and intelligence about China and Asia in general that needs to be filled". They go on to say that they plan to "adhere to principles of eliminating bullshit and enabling the truth to surface as well as providing as much value to our readers as possible". Worthy goals indeed. Seek truth from facts, eh!

Their comment on our post notes:

This post is important because there are so many small and medium sized enterprises (SME's) getting absolutely burned when purchasing initial orders from Chinese factories.

The reality is that China is a place where you need to work face to face and build trust with parties over time. This is why Trade Shows, as Trapp Lewis pointed out, is a great way to meet potential suppliers.

They also direct readers to their own post 7 Ways to Avoid Getting Scammed by Suppliers in China which is worth a read. Never forget point 7: "7. Use Common Sense! The old adage.. if it’s too good to be true, it probably is!". Why that seems to be forgotten in China by otherwise sensible business people is beyond me.

Shaun Rein 1, Jim Rogers 0

Shaun Rein seems to me one of the soundest writers on the PRC commercial scene. I find myself agreeing with him more often than not on the development of corporate China.

I have rarely, however, agreed with him more than I do today when I read his intelligent review of the pompous, self-important piffle masquerading as investment advice in Jim Rodgers' book A Bull in China: Investing Profitably in the World's Greatest Market. While Rein (like me) avows great optimism for China's economy and businesses, he pulls no punches when he says:

Overall, though, it does not really sound like Rogers has any idea of what he is talking about when investing in China. He seems to be talking in broad macro themes rather than on specifics of doing business in China. He sounds very much like that professor or government official or businessman who flies into China a couple times a year and lives at the Portman Ritz Carlton and then positions himself as the China expert but does not understand the realities of business here.

When I first travelled to China in 1985 I talked to a very sage American woman who had already been running a business there for several years. I was making my living as a writer then and her advice still sticks with me: "those who stay for a week write a book. If they stay for a month, they might try to write a magazine feature. If they stay for year, they're far too confused to write anything". And it is still so. She, by the way, is still running a China business, now publicly listed and very successful.

LinkedIn Answers China question

My social networking experiment continues to suggest that, while Facebook is fun and a real time sink, LinkedIn is actually the more useful for business contacts. I am noticing increasing activity on the "Answers" page where members respond to each others' questions.

One exchange has caught my eye around a question posted by Massimiliano Bevilacqua a Senior Consultant at IBM Global Business Services. He asks:

Importing goods from China ... online with Alibaba.com or similar: is it safe to import goods from China using such website for establishing contacts with suppliers? Somebody had/has experience, can give good advices/best practices? How to deal with frauds, defect products, or worse with products not shipped at all? Which risks should I consider??

There are some particularly sensible responses from the China Law Blog's Dan Harris who says:

To be safe, you should conduct your own due diligence on any supplier.

Meanwhile, my friend Trapp Lewis, formerly of both Global Sources and Alibaba.com, now running the Palmetto consultancy, has some very sound advice which is worth re-posting in full:

Sourcing websites - Don't forget that these are designed to provide marketing channels for suppliers/exporters and aggregate product/supplier content for buyers/importers online. Read the User Agreements closely as they clearly state that you are essentially using the site at your own risk so be careful!
Never rely solely on any ratings systems provided by these sites. Always conduct your own due diligence.

Trade shows - The absolute best place to meet suppliers and learn more about the industry, manufacturing process, products, export issues, etc. The exhibitors can teach you many things and are willing to do so if they believe you are a serious buyer and potential customer. Like finding the right supplier, it is not easy selecting the right trade show to attend. Do your homework, ask other importers you know which shows they attend and also look for UFI approved events (www.UFI.org).

Quality Assurance - There are companies that specialize in factory audits and product testing - use their expertise. Bureau Veritas is a good place to start.
Shipment - Selection depends on the product and quantity. If by air, then speak to FEDEX, DHL, etc. to understand not only shipping costs but also import taxes. If by sea, look for a shipping company that can also help you manage the taxes. Its also a good idea to speak to your local customs office.

Payment - Never send cash! Talk to your bank about Letters of Credit and Escrow. There are systems to protect your money so use them!

Patience - Take your time, look at alternatives and start small. If something looks too good to be true, it is.

There are many other facets to this industry but this is a good place to start

Quite right!

The action's in India

It's probably not surprising that there's been more activity in India over the past few days than in East Asia as we've all been celebrating the arrival of the rat and/or shovelling snow depending on where you live.

But there are a couple of stories I've bookmarked which catch my eye and highlight the challenges of doing business in the sub-continent:

1. Reuters and Time of India owners Bennett, Coleman & Co Ltd have ended their 3 year old JV Times Global Broadcasting, which owns and operates English news channel Times Now. Local media reports suggest that Reuters is looking for a new partner for India broadcast activities.
2. Meanwhile, Cybermedia and its controlling shareholder Pradeep Gupta are reported to have taken over Dice's stake in their online classified joint venture which will be renamed CyberMedia Careers Ltd. That was also three years old and Gupta was quoted as saying "With this change in the ownership pattern, we would like to reward our 680,000 registered job seekers / users with several innovative services". The last time we wrote about it, the venture was losing money. However, you'd have to say that, with all we read about shortage of good quality, qualified people in India, the recruitment business ought to be a good place to be.

The moral here: there are lots of great opportunities in India. They are, however, not necessarily easy to grasp and they are certainly not sitting out on a silver plate to be grabbed by every enthusiastic western CEO who has decided that the flavour of the month is India.

News update on Macau seminar

See this posting over at our BSG News blog about next week's UFI Open Seminar in Macau.

Goodbye Pig Year, hello Rat!

Well, we see off the Year of the Pig with China still stuck in a deep freeze, world stock markets wobbling and Obama, Hilary and McCain still with much to play for. The coming year of the rat (or mouse if you're feeling squeamish) looks set to be a challenging one in some ways we haven't seen for a few years: global slowdown, rising inflation in Asia and continued wrenching technological change will all make business planning a handful in the industries we cover.

Let's worry about that next week. In the meantime, eat, relax and extend new year good wishes to your families.

Gong Xi Fa Cai! Kung Hei Fat Choy.

Blogging will probably be a bit light over the next few days.

GSOL's turn for some limelight

There's still plenty of hoopla surrounding Microsoft's bid for Yahoo! and its implications for China and, in particular, Alibaba. One blogger even proposes Jack Ma for non-executive Chairman of Microsoft China.

But Global Sources is not going to let the boys from Hangzhou steal all the limelight and has made its own modest dent on the market by announcing a $50 million share buyback programme. That's about 7.5% of the company's value at yesterday's prices.

"Why not?", we say; when your share price has fallen over 3 months from $35.35 to $14.22 at yesterday's close (and it had been almost $1 lower than that). Those within presumably know it's the same company and either wasn't worth double what it is today or...and we assume this is the line they'd take....not worth half what it was three months ago.

Others agree: Seeking Alpha published yesterday a commentary from "Wall Street Mayhem" titled "Global Sources Growth Prospects are Still Strong". We think the basic argument is decent:

The core B2B business at Global Sources is still strong. Even after the recent downside revision on 2007 revenue estimates, revenue for 2007 is now expected to be $182 million compared to $156 million in 2006 and $112 million in 2005. Fourth quarter growth in on-line revenue and revenues from mainland China were up 20% and 28% respectively from the fourth quarter of 2006. The revenues for print media were lower than expected, but at Wall Street Mayhem we don’t see that as a problem going forward. Did any of the investors that were buying the stock back at $35 a share hope that print media revenues would take off? Nope, there were interested in the on-line revenue and sources fairs which are still on track.

Ali-thanks to Bill

The phones are ringing hard this morning as Alibaba.com's share price shoots up over 15% in morning trading. The market's having a better start to the week (up 3.5%) but I'm assuming we can thank Microsoft's bid for Yahoo! for this excitement.

I'm not sure I can unravel the maths and sort out in my head whether Yahoo!'s 40% stake in the parent company, Alibaba Group should make the listed Alibaba.com all that much more attractive.

Anyway, that's a nice way for Jack and the boys to see out the pig year.

Gong Xi Fa Cai and thank you uncle Bill!

Consider e-GDP before you leap in China

This is a new concept to me, but an interesting one. The Silicon Hutong blog picks up on an article by Donald DePalma, author of Business Without Borders: A Strategic Guide to Global Marketing. In this article, de Palma explores the concept of e-GDP and its implications for investing in China's Internet.

He defines e-GDP as a cross tabulation of global GDPs with Internet penetration as a proxy for internet-accessible wealth. "Guess what?", he asks, "Last year just six languages gave you 88% of the world's e-GDP. Chinese was not one of those six, but English and Japanese were. Compare: Website owners can access 13.2% of the planet's e-GDP by localizing for Japan, but only 1.1% by supporting the People's Republic of China (PRC) Simplified Chinese. What that means is China has lots of people online, but they're mostly browsers, not yet accustomed to pulling out their wallets to buy stuff online".

Details of the e-GDP formula are scanty but it certainly provides food for thought.

Gen Kanai, commenting on the Silicon Hutong posting, obviously thinks this all makes sense with the following input to the debate:

Witness the rush of Chinese internet firms opening offices outside of China and new services in non-Chinese languages. To me, that's the clearest sign that the these publicly listed Chinese businesses understand that they need growth (and profits) from outside of China in order to support their P/E ratios because the internal Chinese Internet advertising and/or ecommerce markets are not large enough at this time to support the growth the markets demand.

Update: The fact that there might be something to all this is demonstrated in a post on Hugo E. Martin's blog where he reports e-Marketer's data on B2C e-commerce in Asia. Japan leads with over half of the region's spending ($43.7 billion of $73.3 billion). Australia is 2nd ($13.6 billion), Korea 3rd ($10.9 billion) and China a pretty distant 4th ($3.8 billion). By 2011, China is expected to have overtaken Korea but still to lag far behind both Australia and Japan.

Certainly, breathless excitement over 210 million users could at best be described as a bit premature.

Forbes China on the move?

There have been rumblings around the market for several weeks now that Forbes is planning to move its China license from the Chan brothers' Morningside to IDG. Danwei publishes a detailed post on what is mooted which is exactly in line with what I had already heard.

To pour a little more fuel on the smouldering rumours, it has been suggested that IDG is eager to boost it's portfolio as several international projects previously launched with great gusto are allowed to fade quietly into Beijing's smoggy sunset.

We shall see - the Forbes license expires in June according to Danwei's Jeremy Goldkorn.

How depressing

I'm not talking about Hong Kong's unusually foul weather. I'm talking about editorial values in Asia.

I like LightHouse Independent Media's Marketing website (and associated e-newsletter) and was reading a piece about online advertising growing much faster than TV in China. I noticed a little reader poll on the right-hand side of the page and clicked through. The question: Would you be willing to pay for editorial coverage?

The screen shot here shows you the result (click on it to read clearly). How depressing! Paul Conley, sorry to spoil your day, but, if that's how the marketeers of Asia are feeling, we have a LONG way to go in this part of the world before any content, let alone B2B content, can be trusted.

Mail server troubles

BSG's mail server appears to have taken an early Chinese New Year holiday (along with the technician who runs it who is also AWOL). So, mail sent to us since Thursday evening Asia time is stuck somewhere.

In the meantime, please feel free to send me e-mail at paulw at netvigator.com or, for BSG in general, bsginfo at biznetvigator.com. We'll let you all know once we're back online...and with a new mail server service provider!!

Update: All better now! Please feel free to use our bsgasia.com e-mail addresses again. More robust systems on the way.

Ali-awards

I was aware that Alibaba was involved in the Asia Event Fortune Forum conference in Hangzhou which took place just before CEFCO. What I had missed was their sponsorship of the new "Goldfinger Awards for China Leading Industry Brands Exhibitions".

I only picked up on this through a Reed Sinopharm Exhibitions press release about three of their fairs winning the Goldfingers. According to Reed (I can't find any information on Alibaba.com itself), "The four-month selection process included a rigorous evaluation that scrutinized nearly 40 different marketplace sectors including medical, chemical, consumer goods, furniture, construction materials, and real estate among others. A professional panel comprising trade media specialists and trade exhibition experts voted and assigned points for each nominated show. In addition, industry players cast their votes online through Alibaba's online portal. Nearly 24 million buyers and sellers voted".