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Archive for May 10th, 2019

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小步快跑

Like good writing, business starts with an idea.

There’s an idea, above: A family recycling bricks (condescending Anglophiles call the act ‘scavenging’) for resale after a building was demolished in Shanghai. Few cents a piece make a hundred, hundreds make thousands and thousands make tens of thousands. One page a day makes a book 360 days later.

Persevere or go home.

https://madaboutshanghai.blogs.com/photos/uncategorized/migrant_worker_1.jpg

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Economics

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with Chinese Characteristics

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In the Song dynasty, about 1,000 years ago, China had just two cities with more than 1 million, the capital Kaifeng and Hangzhou, both still in existence. Never before was China’s dynastic urban to rural population more than 1 in 10 persons.

Even at the start of the modern era, in 1953 for example, that ratio registered 13 percent. By last year, urban population made up 60 percent of total, that is, six in ten lived in cities of more than 200,000. In absolute terms, the number is 840 million, of who some 700 million were moved in the last 40 years (1978-2018), many from some mountain farms.

This urbanization, unprecedented in the history of China (or the world), did not, fortunately and thanks to Sino culture and government organization, come with widespread Third World afflictions of urban poverty associated with slums, crime and unemployment. But there some unimaginable effects.

While the government, through its large state-owned enterprises, could take care to build networks of trains to move people, or build new schools and direct vast scale housing construction — many completed ahead of relocation — how were the people to be provisioned? Shenzhen, for example, was a village of no more than 10,000 40 years ago. By last year, its population was 12 million. How do you provision a city this size in this short a time without an existing social, economics or logistics network: food, cooking, clothing, entertainment, banking, even as banal as getting milk to kids? (And that’s just one city.) For quick solution, developers typically build and sell a hollow flat, walls unfinished, bricks still visible.

The government would lay out the plans and supplied the infrastructure, but it was individuals, businesses and community groups who had to filled in the details and complete the rest. In many types of solutions, Chinese common sense prevailed: Parents took the babies back to the village homes to be care for by the grandparents; cooks came along with factory workers; children of farmers became shopkeepers (one started a clinic and now there are eight); builders build flats without finishing and fixtures, no taps or light bulbs.

(Some years ago, two smart alecks who owned two adjoining pieces of ancestral land outside a large village suggested developing the property, starting with a 12-story apartment building. I was offered to buy ten units at a fixed price, but this was before even the draftsman had done the design. With the income, the two men had hope to pay for construction — costs is low — after which I can resell the units, at a profit naturally. We settled on an amended deal; we each take three units, the balance of costs, whatever that may be, from private, personal loans, collaterized on the land and pre-sold units. After the toing and froing, the building is finally going up. Still, overall area development is only one plan, in the mind and on A-4 paper. The units come empty, nothing, so buyers get just a walled shell. But, wish me prosperous times ahead.)

All this is to say that where the government left off, private entrepreneurship took over: taxi services, electricians, plumbers, street food, 7-Eleven lookalike, dedicated liquor and tea shops, clothing and shoe factories, hair salons, karaoke, boarding flats, home furnishing, and myriads of other activities. Out of all these grew logistics enterprises to connect distances between supply and demand, and in parallel came Ali Baba and WeChat transactions via the phone.

Outside supercities like Shanghai, there are still not enough tyre change and car repair shops, not enough pharmacies, no Panadol or Aspirin, and instant coffee can be hard to find. Malaysian Anglophiles would, but we Chinese do not, look at this minor deprivations as signs of a lowly existence; these are opportunities.

Next ten years

The transformation of China is now at the stage that is vertical as opposed to linear development the past two or three decades. Vertical means embedding deep into layers. For example, a tea shop that once sold only Oolong tea need to stock up black tea from Yunnan because most of the population come from a dozen provinces. Where a hotel used to cater to only truck drivers now combines hostel and two-star bedrooms.

China’s changes in the past had been most dramatic in hardware — buildings, trains, the like. This is seen in a handful of top tier cities often talked about, such as Shanghai or Shenzhen where quality of living equal Hong Kong or Singapore.

But the bulk of the population lives in 280 other cities with populations of 200,000 to 8 million each.

Collectively they represent China’s mid- and long term future prospects because they are cheaper to live in. Where wealth once accumulated from individual businesses or from laboring 12 hours a day in a factory for ten years, the savings have gone back to places you are least likely to hear about such as Shenyang or Shijiazhuang or Zhengzhou or Louyang or Nanning or Fuzhou. Still, any of these is two, four times bigger than KL. They also have the important advantage of being closer to people’s ancestral homes we call laojia 老家.

There is a mix of legal (property rights) and cultural reasons that people are turning back to the old country, laojia. Nobody — nobody at all — sees Dongguan as home; it’s simply a place to make money. Big cities are transient places; they are not the roots of Chinese psychology or culture.

America’s tariff imposition — and the more the better — is actually doing China a favor. By forcing Shenzhen factories and shops to slow or close down, others affected are also finding it hard to recruit workers because they see no prospects in such places. Besides (so they say), many village migrants have had it with bosses. Unlike decades ago, city migrants today can afford to pick and choose, in particular those closer to the old country so that they can consider restarting a business, buy property or find more fulfilling employment.

One man who worked three years in a Shenzhen’s IKEA store had moved back to Yunnan, his home state. Another collected his savings from selling liquor in Dongguan to return to Guizhou and opened a shop. Such examples are countless. (In this way, though, I find friends and neighbors vanishing.)

But it is in these less famous smaller cities and in the old homes where, as adjustments are taking place, opportunities have arisen: one business will trigger another and another in a cascading effect. In absolute numbers, the demographic reshuffling is amazing: that is, an aggregate of somewhere between 500 and 600 million, will be moving again. According to the Ministry of Housing and Urban Development, another 300 million will be added to such second-tier and third-tier cities in the next ten years, or 2025 latest.

Consequently, urban and rural planning has now focused on qualitative not quantitative improvements because the latter has been reached.

Below are examples of the ongoing qualitative changes. Collectively, they suggest business and individual opportunities:

  • better quality housing, furnishings, and all things associated thereof,
  • a quasi rural, horticultural economy, commercial farming for making fruit juices, for example, even wine,
  • semi-processed industrial products like fabric and timber, a door or a bed, DIY installation,
  • sale and distribution of household white consumer or electrical goods,
  • services such as in interior design and web applications, consumer stores with Chinese characteristics,
  • reconstruction and refurbishing of old village properties, house by house, village by village, including mansions, dilapidated huts and public buildings,
  • turning whole regions into new economies, supported with local industries, a village agri-produce or handicraft (and we are not talking about a Genting or Malaysian handicraft which, by China’s standards, is really shitty).

Connect a population or tourism or production or farming center, a distribution chain or storage to the Belt-Road Initiative city, the world could, hopefully, become a market place. China has land, money, people, beauty, geography, four seasons and a 5,000 year-old culture.

What it needs in the near future are ideas, and more ideas. Below are three examples of how fresh ideas have triggered real life changes.

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Example A

The Art of the Business in a Zhejiang County

Three hours south of Hangzhou, four from Suzhou, is a sprawl of 70 villages clustered under the administration of Songyang county 松阳县. The villages have names like Damushan and Pingtian. In 2015, reconstruction work began in earnest to do something about the villages, houses crumpling, fields unattended and emptied of people who had gone off to work in places such as Hangzhou and Shanghai. There has been a revival since. Below, two clips and other, related images explain why and how and, as well as the results: people coming back, lives prosper, business flourish.

https://www.researchgate.net/publication/327286618/figure/fig1/AS:681669086425088@1539533983506/Administrative-division-map-in-Zhejiang-at-county-level.png

https://www.viennawurstelstand.com/wp-content/uploads/2019/03/viennawurstelstand-events-rural-moves-the-songyang-story.jpg

Songyang county above: Its town, heart of the county, is in the background.

https://images.adsttc.com/media/images/5ad8/ceca/f197/ccd9/a300/0465/slideshow/Bamboo_Pavilion__Damishan_Area__Photo_Zhou_Ruogu_(5).jpg?1524158127

Songyang tea farm, close-up.

Can Architecture Save China’s Rural Villages? DnA’s Xu Tiantian Thinks So,Bridge at Shimen Village. Image © Wang Ziling

With minor modifications and without taking out anything, a little used Songyang bridge became a tourist attraction.

Can Architecture Save China’s Rural Villages? DnA’s Xu Tiantian Thinks So,Brown Sugar Factory. Image © Wang Ziling

Songyang sugar factory

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How Songyang did it

Art in the sugar & tofu factories

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Example B

Rebuilding Lives: Room by Room, House by House

Zhejiang, Songyang county, Pingtian village

  • Project name: (in English) Papa’s Hostel
  • Location: Pingtian Village, Sidu Township, Songyang County, Zhejiang Province, China
  • Client: Jiang Bin-Long (villager in Pingtian)
  • Architectural design team: Chen Long, Li Qiang, Chen Huang-Jie, Cheuk Chun-Yung
  • Architectural design company: He Wei Studio/3andwich Design
  • Design period: 2014-2015
  • Completion: September, 2015
  • Area: 270 square meters
  • Cost of Construction: RMB 200,000

https://news.cgtn.com/news/3d3d674d31417a4d79457a6333566d54/img/ecc6032010e241108b3658cacf6148f6/ecc6032010e241108b3658cacf6148f6.jpg

Below, another reconverted Hakka house.

https://news.cgtn.com/news/3d3d674d31417a4d79457a6333566d54/img/9574147f59764419b5f32b8c520e0289/9574147f59764419b5f32b8c520e0289.jpg

 

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Example C

Making a Deal with the River, Mountain

Fujian, Shuikou county, Shangping village

Like much of China, the Hakka village of Shangping is agricultural, populated by those surname Yang, the earliest residents of who were soldiers serving the emperors during the Han Dynasty. Two streams run around the village in Shuikou county where, because of its historical past, has inherited old buildings like the Tai Futai Mansion, Yang Ancestral Temple, Shezumiao shrine, Zhaogongmiao temple, and so on.

Then modernization came: people left, buildings crumpled, nobody around for upkeep, the local economy wound down, and so on.

Shangping became the first experimental ground for the regeneration of Shuikou, focused initially in areas around and on the Yang School and the Tai Mansion. As the reconstruction started, the guiding principle was, and still is, “fix the old to bring out the old”.

A selection process began, first to transform common-used buildings: barnyards, cowsheds, pigsties, and other enclosures. Next, when small farm industries were upgraded with modern equipment and new buildings, this was done on the basis of inserting art (contemporary design, for example) into the in-situ canvas image of rural mountains and valleys. The purpose was to bring out a picture postcard tourist feel.

Nearly all the buildings were in dilapidated conditions. But by using connective devices such as a bridge, by retrofitting a tobacco curing house, debris shed, and a gallery pavilion, blending them to the Shezumiao Shrine and Ancestral Temple (the ancestral markers of history), a unified but enlarged old landscape gradually emerged. This is as opposed to independent stand alone structures that once stood.

In this way, not only a county was reborn but a new economy arose. Below are some of the results:

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Architectural design company: He Wei Studio/3andwich Design

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Only in China, only in laojia, 2,000 years later and we’re still doing it.

CHINESE HOME INDUSTRIES

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(Below, from 李子柒)

Silk making

Fuck the Anglophile tree huggers.

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Paper

李子柒: 千年长安千年纸,原来最原始的纸张是这样造出来的

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Carpentry: Sofa

At 6:22, testing the new sofa, she realized to her horror she was still in her dirty work clothes. So she went to change.

妹妹! 好♥♥♥ 喜欢 喜欢

Carpentry: Bathroom

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Persimmons

This is every Chinese child’s favorite fruit when sweetened.

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Tofu

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Aromatic concentrates

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Cosmetics: Rouge (all natural, no oxides) for lips, eyes, cheeks

李子柒: 用鲜花给自己做了套胭脂,原来古代的胭脂眉黛膏是这样做出来的

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Picking mushrooms

The location in all the clips above, in case you are wondering, is Sichuan. These are not Hollywood stage sets. I was there: For several weeks between one late winter and beginning spring, Jian took me up the mountains, taught me to recognize herb plants, pick crops from the farm, make zongzi 粽子 and quickly produce yellowish wine from sorghum.

It isn’t just the place, though. But the the pines, fruits, the seeds, the kitchen layout, hearth, wok, bamboo baskets, flowers, mountains, farms, utensils, equipment, the methods, everything, are common place in much of China. Hence, all that you see are possible only in China because, like 李子柒, like Jian, they grew up in that environment and culture, learning these things since they were toddlers. (In contrast, in Malaysia, for example, Hannah Yeoh and Sumisha Naidu devote their lives to emulating Jane Austen, learning about the different types of Christian sins, and how to snare the fair skin son of rich ‘gentleman’ towkay. Pathetic.)

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POSTSCRIPT

Why Malaysian and Western companies fail

In the last two decades, many western companies (including General Motors, Wal-Mart and Anglophile ones) failed in China for two pieces of myths: (a) cultural and (b) ideological.

Ideological because, convincing themselves to be cleverer and flaunting their Wharton MBAs, they assume all conditions of business that permeate their liberal formulae (capital + land + labor = revenue + profit) are the same everywhere. Cultural because, it is their money, they alone should decide, and they should decide because they know best. Private equity and investment bank executives are notorious for this condescending sense of superiority that they know more than others. You read this attitude in Jho Low’s 1MDB email exchanges with Seet Li Lin and on their corporate website Jynwel. Tony Pua is another case in point. Others, Bloomberg, Reuters reporters, Goldman Sachs, Blackstone, and on and on.

This also explains why, on the flip side, the world has never heard of Huawei until a year ago when Reuters and Bloomberg purposefully feasted on its troubles America inflicted on it.

And after the MBAs failed, Anglophiles run off to American politicians and shareholders, blaming Chinese legal and other restrictions on their businesses without mentioning that Taiwanese firms (Foxconn, Formosa) enter China on the same terms but these thrive.

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