New stuff

Ai Weiwei: “Beijing is a nightmare”

Mon, 29 Aug 2011 21:54:00 +0700

We knew it would only be a matter of time, and the time has finally come for recently imprisoned, outspoken artist Ai Weiwei, who refuses to be silenced. Although on conditional release after months of confinement, under terms that he does not comment about his treatment, or the charges against him, Weiwei cannot help but speak out about the sucking of this republic.
In a scorching op-ed piece published by the Daily Beest, Weiwei delivers a blistering critique of the injustices of the Communist Part, the inequality and greed of the system, and how his home of Beijing has become a Kafka-style nightmare:

Beijing is two cities. One is of power and of money. People don’t care who their neighbors are; they don’t trust you. The other city is one of desperation. I see people on public buses, and I see their eyes, and I see they hold no hope. They can’t even imagine that they’ll be able to buy a house. They come from very poor villages where they’ve never seen electricity or toilet paper.
Every year millions come to Beijing to build its bridges, roads, and houses. Each year they build a Beijing equal to the size of the city in 1949. They are Beijing’s slaves. They squat in illegal structures, which Beijing destroys as it keeps expanding. Who owns houses? Those who belong to the government, the coal bosses, the heads of big enterprises. They come to Beijing to give gifts—and the restaurants and karaoke parlors and saunas are very rich as a result.
Beijing tells foreigners that they can understand the city, that we have the same sort of buildings: the Bird’s Nest, the CCTV tower. Officials who wear a suit and tie like you say we are the same and we can do business. But they deny us basic rights. You will see migrants’ schools closed. You will see hospitals where they give patients stitches—and when they find the patients don’t have any money, they pull the stitches out. It’s a city of violence. The worst thing about Beijing is that you can never trust the judicial system. Without trust, you cannot identify anything; it’s like a sandstorm. You don’t see yourself as part of the city—there are no places that you relate to, that you love to go. No corner, no area touched by a certain kind of light. You have no memory of any material, texture, shape. Everything is constantly changing, according to somebody else’s will, somebody else’s power.
To properly design Beijing, you’d have to let the city have space for different interests, so that people can coexist, so that there is a full body to society. A city is a place that can offer maximum freedom. Otherwise it’s incomplete.
I feel sorry to say I have no favorite place in Beijing. I have no intention of going anywhere in the city. The places are so simple. You don’t want to look at a person walking past because you know exactly what’s on his mind. No curiosity. And no one will even argue with you.
None of my art represents Beijing. The Bird’s Nest—I never think about it. After the Olympics, the common folks don’t talk about it because the Olympics did not bring joy to the people.
There are positives to Beijing. People still give birth to babies. There are a few nice parks. Last week I walked in one, and a few people came up to me and gave me a thumbs up or patted me on the shoulder. Why do they have to do that in such a secretive way? No one is willing to speak out. What are they waiting for? They always tell me, “Weiwei, leave the nation, please.” Or “Live longer and watch them die.” Either leave, or be patient and watch how they die. I really don’t know what I’m going to do.
My ordeal made me understand that on this fabric, there are many hidden spots where they put people without identity. With no name, just a number. They don’t care where you go, what crime you committed. They see you or they don’t see you, it doesn’t make the slightest difference. There are thousands of spots like that. Only your family is crying out that you’re missing. But you can’t get answers from the street communities or officials, or even at the highest levels, the court or the police or the head of the nation. My wife has been writing these kinds of petitions every day, making phone calls to the police station every day. Where is my husband? Just tell me where my husband is. There is no paper, no information.
The strongest character of those spaces is that they’re completely cut off from your memory or anything you’re familiar with. You’re in total isolation. And you don’t know how long you’re going to be there, but you truly believe they can do anything to you. There’s no way to even question it. You’re not protected by anything. Why am I here? Your mind is very uncertain of time. You become like mad. It’s very hard for anyone. Even for people who have strong beliefs.
This city is not about other people or buildings or streets but about your mental structure. If we remember what Kafka writes about his Castle, we get a sense of it. Cities really are mental conditions. Beijing is a nightmare. A constant nightmare.

Ai Weiwei in the Daily Beest

China Really Doesn’t Suck - this one time

Mon, 15 Aug 2011 14:46:58 +0700

Rightly or wrongly, this site has been regularly accused of unfairness. We won’t deny a certain bias, but that’s transparent right in the name. Yet we feel our focus defies race, nationality and overarching retorts of hegemony, whatever the heckemony that is. From the start, our mission statement has been simplicity: document how China really sucks. This was not implicitly to ridicule China, or suggest that it sucks while other nations and systems suck not. America sucks. England sucks. But other sites already had those covered.
In the end, the point was to highlight Chinese suckingness of the worst forms. Not merely for amusement, but also with the vague, perhaps ridiculously idealistic hope that as some form of civil society develops, we in China will demand better. While the talent and execution is clearly there, nobody really thinks the Chinese aspire to suck. Right?
Hence, once in a while, it’s fair to note how, given the chance to totally suck it up, China takes a different tact and doesn’t suck, or not so much. Take the recent case of the poison chemical plant in Dalian, on the Chinese eastern coast. A typhoon swept in the area last week, prompting fears that the dikes containing the toxic pools might be breached, and spew cancerous chemical into the local water system and fields.
Such fears can hardly be considered hysterical, considering how chinareallysucks. Nor can anyone chastise local residents for fretting that authorities might mislead them about the danger, or developments, since that is modus operandi in this Sucking state. So, when citizens rose up in arms, and mounted massive protests against the Fujia chemical plant (which produces the highly toxic Paraxylene), authorities didn’t send in the goons or tanks, but rather agreed to move the toxic plant away from Dalian city.
Sure, this wasn’t the immediate response. China with its usual tyrannical trigger-finger, initially censored news of the protests. And that’s still happening elsewhere: We still aren’t getting much info from Xinjiang, where a race war and reprisals seem underway by the long-marginalized Uighur-Muslim population, while Tibet is still closed to foreign (meaning non-Chinese) visitors. Just last week, Beijing cleared out Xiahe area, home to the important Tibetan monastary Labrang, so no prying eyes could witness reaction to the installation of the China-designated Panchen Panchen Lama, who is not recognized by the Dalai Lama or any true Tibetans.
Still, compare the response to protests in Dalian to the ongoing slaughter in Syria, or even criminal misinformation in post-nuclear-spill Japan. Of course, what makes this so surprising is that chinareallysucks. Still, here’s a tip of the hat to China for calling one right.

Some details (from the Xinhua state news agency, as carried by China Daily):
Thousands of people rally to call for relocation of toxic 'time bomb'
DALIAN, Liaoning - Government officials ordered a chemical plant to shut down and leave Dalian city after thousands of residents, worried about toxic leaks, took to the streets on Sunday demanding its relocation.
The largely peaceful protest was triggered by mounting safety fears at Fujia Chemical Plant.
The plant produces paraxylene (PX), a flammable, carcinogenic liquid used in polyester films and fabrics.
Residents living near the plant on Monday had to be evacuated after waves, whipped up by a tropical storm, breached sea defenses protecting the factory, sparking fears that a toxic spill could take place.
The breached defenses were repaired and no chemical leaks had been reported, but demands by members of the public to relocate the factory gathered steam. Calls for street protests circulated rapidly on the Internet before Sunday's protest.
The protest started with a small crowd sitting in front of government office buildings at about 10 am and quickly grew from there. They chanted "Fujia, get out!" and "serve the people".
They sang the national anthem and displayed banners printed with the phrases "we want to survive" and "we want a good environment".
There were reports of scuffles with police, but no injuries. At one point, protesters threw bottles of mineral water at police who tried to cordon off a section of a major road. They relented after police backed down.
Dalian's Party chief Tang Jun and Mayor Li Wancai tried to appease the crowd by promising to move the plant, but did not give a clear timetable as the protesters had demanded.
The protest resembled a similar move by residents of the southeastern city of Xiamen in Fujian province in 2007. They called for the relocation of a Taiwanese-funded PX plant, and the plant was eventually moved out of the city.
Dalian is a coastal city known for its sandy beaches and clean air. "It is a 'garden city'. The plant, located only 20 km away from the city center, is like a time bomb," said a protester, surnamed Wang, who did not want to give his full name.
"If it is not moved now, Dalian will be destroyed."
Another resident surnamed Li, again requesting that the full name not be used, blamed the local government for approving the construction of new industrial facilities without considering their potential environmental impact.
The city government held an emergency meeting on Aug 9 to discuss relocation plans. Top officials ordered a thorough assessment of the plant's safety with a report backed by "scientific and responsible" explanations. The chemical plant was approved by the National Development and Reform Commission (NDRC) in 2005. It is a joint venture between the State-owned Dalian Chemical Group and the private Fujia Group, a local real estate giant.
The plant, one of China's largest PX producers, went into operation in 2009 and is capable of producing 700,000 tons of the compound annually, according to the company website. The plant contributes 2 billion yuan ($311 million) to the local government in taxes every year.
A report from the NDRC showed that the country built six PX plants between 2006 and 2010, bringing the total number of plants to 14. The plants are located in regions across China, including Fujian, Liaoning and Henan provinces and the Xinjiang Uygur autonomous region.
Internet users in Dalian complained on micro blogs that facilities like the PX project would be best located 100 km away from any city.
"There was already controversy when the (Fujia) project was approved and started operation," an Internet user said. "But many people simply did not know such a project was being constructed in their neighborhood.
"The truth was withheld from the public. We didn't know about how toxic it could be. Now, the relocation cannot wait any more," he said.
Dalian's petrochemical industry has a far from spotless safety record.
An oil pipeline exploded near a Dalian storage port in July last year. It took firefighters 15 hours to extinguish the blaze and caused a marine oil spill that polluted 50 square km and damaged beaches.

Apple closure, but Copy Kingdom Rules

Sun, 7 Aug 2011 13:10:23 +0700

Remember how we told you about the deluge of totally fake Apple stores, copied from the Mac/Iphone product line right to the design of the staff T-shirts, in Kunming? (See http://chinareallysucks.com/Site/New_Stuff/Entries/2011/7/20_Copy_Kingdom.html)

Well, this story went viral around the world, prompting a slew of negative publicity, and an extremely unusual response from authorities in China. The suckers promptly shut down these fake Apple stores!!!
Such a rapid response on the copy shops naturally makes one think how easy it might be for the sucking republic to take sincere action on piracy. Of course, the reality is that for every high-profile fake Apple shut in the sucking motherland, another few dozen undoubtedly sprout.
We’ve been documenting the fakery since this site launched in our Copy China section (http://chinareallysucks.com/Site/Copy_China.html). But even the mainstream media is noting the widespread fakery in the People’s Republic of Copying. From the Wall Street Journal:
BEIJING—In China's "fake world," consumers can shop for furniture at an imitation IKEA store, eat a six-inch sandwich at an outlet strikingly similar to Subway, and then grab dessert at "Dairy Fairy"— where they might knock back an Oreo-flavored "Ice Storm" whose, thick, creamy texture takes unabashed inspiration from the famous Dairy Queen "Blizzard."
Suddenly, one of the most famous Apple stores in the world is one that not only isn't a real Apple Store, but apparently isn't even an authorized Apple reseller.
Welcome to the modern era of copying in China, in which sophisticated proprietors of knockoff stores and chains are targeting increasingly sophisticated Chinese consumers with store experiences and customer service extremely similar to the real thing, down to the helpful store maps, coupons, shopping bags and employee uniforms.
The imitation retailers and restaurants go beyond the simple fakes of consumer goods that have long been abundant in China. Indeed, in some cases, they aren't even selling fake goods: the phenomenon gained global attention last month when a foreign blogger in the southwestern city of Kunming posted photos of a fake Apple Store selling real iPads and iPhones in a setting remarkably similar to Apple Inc.'s trademark retail outlets, and identifying itself as an Apple Store without the U.S. company's permission.
Imitation retailers and restaurants aren't new in China, but analysts and executives say they have proliferated in recent years. The trend reflects growing awareness of the importance of things like design and customer experience among entrepreneurs in China, where people long ago perfected the art of making imitation goods but where companies have been less successful building their own consumer brands, said Wei Xiaopo, an analyst at CLSA Asia-Pacific Markets.
"Chinese companies know that service and experience have become among the most critical parts of branding for businesses that operate in China," said Mr. Wei.
While China is hardly the only country to have problems with commercial fakery, what happens here now matters enormously for multinational companies, because China is the world's most important growth market for consumer goods. Retail spending is expected to reach 27.4 trillion yuan ($4.3 trillion) by 2015, up by more than two thirds from the level last year, according to the Chinese Academy of Social Sciences, a government think tank.
China's government has acknowledged problems with piracy, and has taken measures to address it that some foreign executives and experts say are starting to make headway. After the fake Apple Store was highlighted last month, Kunming officials initiated a sweeping inspection of electronic stores in the city. It's unclear whether they have taken any action against the Apple store, whose staffers now refuse to answer queries over the phone.
The fake stores present new complications for global companies that have long struggled to protect their brands in China. Some executives say that fake stores can help build brand awareness. And in cases of unauthorized resellers like the Apple store in Kunming, the foreign company is still benefiting from sales of its own products.
Alexander Moody-Stuart, managing director at sandwich chain Subway, said the number of imitators that come to franchising fairs in China increases every year. He said there are Subway copiers that use similar logos, offer sandwiches in six-inch and 12-inch formats as Subway does (China generally uses the metric system), and even accept coupons from Subway when consumers confuse the two stores.
For Subway, which is trying to build awareness to a type of food that isn't always eaten in China, "the mimicking isn't exactly a bad thing," Mr. Moody-Stuart said.
But the imitation stores also limit the companies' ability to control the experience that consumers have with their brands. Copycat companies run the risk of tarnishing a consumer's association with an already established brand at a time when Chinese consumers are increasingly brand-conscious. Apple, for example, wasn't able to oversee the service or hire the employees at fake stores like the one in Kunming the way it does painstakingly at its own outlets. Walt Disney Co. has similar difficulties: a number of "Disney Stores" are open in China, even though the U.S. company hasn't yet launched its trademarked chain of stand-alone retail shops in the country—although it does license its products for sale in the Chinese market.
Spokeswomen for Apple and Disney in China declined to comment.
Copycat stores range from small regional operations, such as 11 Furniture, which runs two stores, to larger Dairy Fairy-type national franchises. To some degree, the copycat stores illustrate that there's demand that's not being met, because some foreign companies haven't expanded into huge swaths of China's interior, said Torsten Stocker, a Hong Kong analyst for Cambridge, Mass., consulting firm Monitor Group.
Apple, for example, has only four of its stores in China—in Beijing and Shanghai—though it licenses resellers elsewhere in the country. Swedish furniture giant IKEA Group hasn't yet expanded into China's far western cities like Kunming, where a Chinese company called 11 Furniture is mirroring IKEA's store marketing strategy—everything from its blue-and-yellow colors and in-store room displays to special golf pencils and crinkling plastic bags.

China Real Time
The Ultimate Knock-Off: A Fake Apple Store
Fake Apple Store Clerk Speaks Out
Reaction to Imitation Apple Store: 'That Is One Thorough Fake'
Just like IKEA does, 11 Furniture uses blue signs and yellow arrows on the floor to direct consumers through mock living rooms, where sofas sit opposite flat screen TVs and tables that look like they should have names like Folkvik and Liatorp (instead of Shuwei Kela Chaji).
A spokeswoman in China for IKEA, which has nine stores in China and plans to open 12 more, said of 11 Furniture that "IKEA is not aware of copyright infringement."
Not everything is knockoff in imitation outlets. At Dairy Fairy, a national franchise chain that opened in 2008, ice cream, including the Blizzard-like "Ice Storm," is served upside-down, just like at Dairy Queen, which has 360 stores in China. Cups are marked with "DF" in red and blue, resembling the colors Dairy Queen uses and its "DQ" nickname. Dairy Fairy employees are donned in blue uniforms with red aprons—nearly a mirror image of Dairy Queen employees. But at a Dairy Fairy in Beijing on Tuesday, the menu also included items that one wouldn't find at a DQ, such as spicy-pepper-flavored ice cream.
Dairy Fairy declined to comment and didn't offer details on the number of stores it operates in China. Dairy Queen vice president of international marketing Justin Holtkamp said the company isn't aware of Dairy Fairy, but that it has other imitators, who just use the company's name or call it "Dairy & Queen." Dairy Queen has shut down two stores that infringed its trademark within the last year, he said.
Some proprietors say their company's similarity to known brands is a coincidence. At Jambo Juice in Beijing, where smoothies are made on-the-spot so consumers can add so-called energy boosters and opt for antioxidants, the green signs and tropical colors are familiar to anyone who has ever patronized U.S.-based chain Jamba Juice, which doesn't have outlets in China.
But Jambo's founder, Ye Jiabin, says he got the English name from an African language (it is a greeting in Swahili), and is now considering changing the name because it is too similar to the U.S. company. "We've just always put more emphasis on the Chinese name"—which is Jiang Bao—he said.
Still, the scale of some examples is startling. In Changzhou, Jiangsu Global Digital Cultural Theme Park Co. has opened a park called Global Animation Joyland, which bloggers have called attention to because it includes a section that appears to be based on Activision Blizzard Inc.'s World of Warcraft massive multiplayer online game.
Activision Blizzard said it hasn't licensed the use of its intellectual property to Joyland or any other theme park, and is "actively looking into the situation." The Chinese version of World of Warcraft, operated through a licensing agreement by Chinese Internet company Netease.com Inc., is one of the most popular online games in China. Netease didn't respond to requests for comment.
Joyland, a park that opened with blessings from local officials, also includes licensed sections devoted to other brands including "Mo'er Manor," based on an online community for children by New York Stock Exchange-listed Taomee Holdings Ltd., and a store carrying official merchandise of Walt Disney Co.
The theme park company declined to comment.

Copy Kingdom

Wed, 20 Jul 2011 04:05:40 +0700

Every so often, even chinareallysucks.com cannot believe how China has taken sucking to new levels, almost an artform. This comes from http://birdabroad.wordpress.com/2011/07/20/are-you-listening-steve-jobs/ via reader Peter.
The Western news media is replete with pithy descriptions of the rapid changes taking place in China: China has the world’s fastest growing economy. China is undergoing remarkable and rapid change. This represents a unique moment for a society changing as quickly as China.
You probably read such things in the paper every day – but if you have never been to China, I’m not sure you know quite what this means on a mundane level. As I’ve mentioned elsewhere on this blog, in the 2+ years that RP and I have been in our apartment, much of the area around us has been torn down, rebuilt, or gutted and renovated – in some cases, several times over. I had the thought, only half-jokingly, that when we returned from a couple months abroad, we might not be able to recognize our apartment building. Or that it might not be there at all.
As it turns out, my fears were baseless – our scrappy little home remains. The neighborhood, however, has definitely kicked it up a notch or seven. Starbucks has opened not one, but THREE branches (that I encountered) within a 10 minute walk of one another. An H&M has opened across from our apartment building. These are the kinds of major Western brands that were previously only represented in Kunming by fast food chains like McDonald’s and KFC. Our neighborhood has quickly become the swanky shopping center of the city.
So when we strolled down a street a few blocks from our house a couple weeks ago, I was only sort of surprised to see this new place, one that any American of my generation can probably recognize instantaneously:

It’s an Apple store!
Or is it?

RP and I went inside and poked around. They looked like Apple products. It looked like an Apple store. It had the classic Apple store winding staircase and weird upstairs sitting area. The employees were even wearing those blue t-shirts with the chunky Apple name tags around their necks.

We proceeded to place a bet on whether or not this was a genuine Apple store or just the best ripoff we had ever seen – and to be sporting, I bet that it was real.
I know, you guys are laughing: an Apple store in Kunming? No one who doesn’t know me personally has ever heard of Kunming before. Kunming is the end of the Earth. It’s all true – but seriously, China warps your mind into believing that anything is possible, if you stay here long enough. When we went back to this store 5 days later and couldn’t find it, having overshot by two blocks, I seriously thought that it had simply been torn down and replaced with a bank in the mean time – hey, it’s China. That could happen.

You have already guessed the punchline, of course: this was a total Apple store ripoff. A beautiful ripoff – a brilliant one – the best ripoff store we had ever seen (and we see them every day). But some things were just not right: the stairs were poorly made. The walls hadn’t been painted properly.
Apple never writes “Apple Store” on it’s signs – it just puts up the glowing, iconic fruit.

The name tags around the necks of the friendly salespeople didn’t actually have names on them – just an Apple logo and the anonymous designation “Staff”. And of course, Apple’s own website will tell you that they only have a few stores in Beijing and Shanghai, opened only recently; Apple famously opens new stores painstakingly, presumably to assure impeccable standards and lots of customer demand.
Is this store a copy of one of those in Beijing? A copy of a copy in another Chinese city? A copy of a copy of a copy?! While you’re pondering that, bear in mind: this is a near-perfect ripoff of a store selling products that were almost unknown when we first came to China. My white MacBook was likely to draw only blank stares or furrowed brows as I sat gnashing my teeth trying in vain to get a piece of Chinese software to run on it.
Being the curious types that we are, we struck up some conversation with these salespeople who, hand to God, all genuinely think they work for Apple. I tried to imagine the training that they went to when they were hired, in which they were pitched some big speech about how they were working for this innovative, global company – when really they’re just filling the pockets of some shyster living in a prefab mansion outside the city by standing around a fake store disinterestedly selling what may or may not be actual Apple products that fell off the back of a truck somewhere.
Clearly, they had also been told that above all, they must protect the brand. As I took these photos I was quickly accosted by two salespeople inside, and three plain clothes security guys outside, putting their hands in my face and telling me to stop taking photographs – that it wasn’t allowed. And why wasn’t it allowed? Because their boss told them so.
I…may or may not have told them that we were two American Apple employees visiting China and checking out the local stores. Either way, they got friendlier and allowed me to snap some pictures.
And the best part? A ten minute walk around the corner revealed not one, but TWO more rip-off Apple stores.

Some store managers may have dozed off briefly during certain parts of the lecture on How to Completely Ignore Intellectual Property Rights:
Anyone from Apple want to come down to Kunming and break open a can of IPR whoop-ass?

Chinese seen as Red Menace

Tue, 19 Jul 2011 09:49:10 +0700

Many sucking readers have noticed the lack of postings for some time. The reason: we’re taking a break from China’s Sucking. Still, even from a delightful distance it’s hard to miss how much China Really Sucks. Just ask the rest of the world!
The following is from the new issue of the Economist, which gauges the growing influence of China, and reaction from various parts of the world. In China, of course, there is this loud rumbling of how the rest of the world is just wallowing in a giant vat of sour grapes. The view is that the West had its time, mucked up the planet, created slavery, colonialism and ABBA, and now it’s China’s turn.
Even chinareallysucks.com sees some relevance here, particularly with the negative reaction to Chinese investment and takeovers. What really is the difference between giant greedhead capitalistic WESTERN companies exploiting immigrant labor to churn out products in western sweatshops and factories, or farming it out (along with the pollution) to China?
But that’s beside the point and open to subsequent debate. What we find intriguing are the nuances of the Economist’s survey. For instance:
Why have negative perceptions of Chinese in Mexico exploded from under 20 percent just six years ago to more than 40 percent now? Did we miss some tortilla takeover?
Why don’t the Brits hate the Chinese as much as the rest of Europeans (about 40 percent negative, compared to more than 50 for France, Germany and Italy)? Don’t they realize the Chinese still don’t know how to queue?
How come anti-Chinese sentiment soared so much in Canada, where it now outpaces anti-Chinese sentiment in the USA? Years of soggy Hong Kong spring rolls?
Why is Japan at the bottom of the list of Chinese negativity (at 30 percent). Don’t they realize the Chinese hate them?
Why do Italians top the list? Too many similarities (loud, rude, insular noodle slurpers with blinding grand view of past glory)?

Streaks of red
Capital and companies from China are sidling into Europe
A RIDE in a London taxi from Canary Wharf, a financial district, to the Bank of England sounds like an inimitably British experience. It is also a Chinese one.
London’s black cabs are made by Manganese Bronze, which is part-owned by Geely, a Shanghai-based carmaker that also owns Volvo, a Swedish company. China Investment Corporation (CIC), a sovereign-wealth fund, has the third-largest stake in Songbird Estates, which controls Canary Wharf Group, the property firm behind the towers that dominate the city’s eastern skyline. CIC may soon become an investor in the Citigroup building, another landmark skyscraper, which is for sale.
The Bank of England is not yet Chinese-owned but it is increasingly encircled by Chinese banks, which have bought or leased about 300,000 square feet (28,000 square metres) of office space since the financial crisis. Bank of China, which has been in London since 1929, has recently moved into plush new headquarters that overlook the central bank. Down the road, in King William Street, the builders are at work inside the future home of ICBC, another state-owned giant.

Such visible signs of Chinese encroachment will feed the worries of many Europeans. A poll conducted for the BBC World Service in March found rising concern about the eastward shift in economic power: a majority of Germans, Italians and French people view China’s rise negatively (see chart 1). Americans and Canadians feel similarly. These proportions have gone up since a similar survey in 2005.

Europe’s political elites have fewer qualms. A buyers’ strike in sovereign-debt markets has left several struggling euro-zone countries wondering whether China might be the answer to their prayers. On a red-carpeted tour of European capitals this week, Wen Jiabao, China’s prime minister, said that the country would continue to purchase euro-denominated government bonds. Delegations have shuttled back and forth between Beijing and Athens, Lisbon and Madrid to pledge eternal friendship and see whether the Chinese might be tempted to put some money their way.
White knights wanted
It is not just governments that are desperate for Chinese capital. Saab, a struggling Swedish carmaker, is trying to sell stakes to two Chinese firms to secure its future. Victor Meijers, a Dutchman who is the only foreign global partner in DeHeng Law Offices, one of China’s big law firms, says that he gets several inquiries a month from struggling European firms looking for a Chinese white knight.
In truth, China is neither Europe’s saviour nor its destroyer. But Europe is likely to feel the force of China’s outward expansion earlier than America. Europe may be seen as a geopolitical irrelevance but the Chinese feel more welcome there than in America, where a Chinese oil firm was prevented from buying Unocal in 2005—an event that still colours perceptions. European firms arguably have a greater need for cash than American ones. And China’s huge holdings of Treasuries give it an incentive to diversify into other markets.
In analysing China’s economic forays into Europe, it helps to divide them into three categories (even if some of these distinctions are fuzzier in China than elsewhere). First, there are financial investments by the state, through bodies such as CIC and the State Administration of Foreign Exchange (SAFE), which looks after the country’s vast foreign reserves. Second, there is private investment by wealthy individuals and, gradually, private-equity firms. Third, there is the advance of corporate China.
Start with the official flows. The data on what China invests in are sketchy but two things at least are clear: China has a stated desire to diversify away from dollar assets and the euro zone is the natural alternative. Simon Derrick, a currency analyst at BNY Mellon, an American bank, reckons that around a quarter of China’s $3 trillion-plus of reserves are now in euro-denominated assets. Given the recent pace of accumulation—around $200 billion a quarter—that would suggest that $150 billion-200 billion of Chinese reserves have found their way to the euro zone since last summer. (Another few billion will have gone into sterling-denominated assets.)
Inflows on that scale would help to explain why the euro has continued to do better than many expected given the zone’s sovereign-debt crisis. But they may also signal weakness to come. China’s desire to slow the rate at which it builds reserves may slacken demand for euro-denominated assets. “That could mean radically different values for the euro,” says Mr Derrick.
How much official Chinese money has found its way into peripheral euro-zone countries is a matter of guesswork. Stephen Jen of SLJ Macro Partners, a hedge fund, thinks that the Chinese may have been buying as much sovereign debt from struggling states as the European Central Bank (ECB) has. Their motives may be partly political: Mr Jen tartly observes that the Europeans have had nothing to say on the value of the yuan recently. But there is commercial logic, too: Spanish bonds, say, promise a nice return if you think the debt crisis will go no further.
There is a limit to the largesse. Exuberant Spanish announcements that the Chinese were about to pump money into the country’s troubled savings banks were quickly slapped down. Hopes for a flood of Chinese capital into Greece have not yet materialised. The most prominent deal is a concession for COSCO Pacific, a state-owned shipping and ports giant, to run a terminal at the port of Piraeus and perhaps to build another. But far from being an opportunistic asset grab, it was arranged in 2007 at boom-time prices. In government-bond markets, China’s support for wobblier states may well dwindle as 2013 gets nearer: then a new euro-zone sovereign-debt fund will be able to promote the claims of European governments on some countries above those of other creditors.

Although China’s foreign-exchange reserves have largely gone into government and quasi-government debt, not all of them have. An analysis by The Economist of SAFE’s holdings of FTSE 100 companies shows that it holds stakes worth around £11.6 billion ($18.6 billion), sprinkled across two-thirds of the index. That translates to a little under 1% of the total value of the index, with energy, non-cyclical consumer stocks and basic materials to the fore (see chart 2). The Chinese are far less visible in other European markets, although they may be buying shares via third parties.
CIC transit gloria
Officials want to diversify further into real assets, including companies. CIC will reportedly be handed another $100 billion-200 billion of reserves to invest, for example, and some of that money will find its way to Europe. But the pace is likely to be measured. Investments by the state can be politically sensitive. Many of CIC’s bets are made via third-party managers. Where it does hold direct stakes, it has so far shown little inclination to interfere in the running of companies.
CIC’s approach to property investment, for instance, has been to ally itself with experienced partners, through Canary Wharf Group, on long-term projects in the continent’s most developed market. Via the group the Chinese also have an interest in an office development in London known as the Walkie-Talkie, which will not open until 2014 and will then need time to be let. Other sovereign-wealth funds might talk about a three-to-five-year play, says a property consultant, but “CIC wouldn’t tell you [their timetable] and if they did, the answer would be that they’ll hold it for ever.”
For its partners CIC’s attractions are obvious. As well as that big pot of money, it may bring in the Chinese occupiers of tomorrow. Property consultants already report rising numbers of inquiries from Chinese companies about office space. Insiders think CIC will eventually invest in accommodation for students, which may be filled by Chinese youngsters attending British universities.
If the flow of state capital to Europe is relatively advanced, the arrival of private mainland capital is a younger phenomenon. A recent survey by Bain & Company, a consultancy, and China Merchants Bank estimated that the investible wealth of Chinese individuals was 62 trillion yuan ($9.6 trillion) and that the number of people with investible assets worth more than 10m yuan would come close to 600,000 this year. They are increasingly ready to put some of their money abroad. According to Johnson Chng of Bain, rich Chinese have doubled the proportion of their portfolios invested abroad from 10% in 2009 to 20% this year.
Most of that goes to Hong Kong and Singapore, but some of it finds its way to Europe. Exchange controls exist but with so much liquidity sloshing around China at the moment, approval has become easier to get. Property, the asset of choice for Chinese investors, is again the focus and London is again the prime target in Europe, thanks to the weakness of sterling, a friendly tax regime and, often, plans to give children a British education.
The mainland Chinese are the fastest-growing group among foreign buyers of the dearest new property in central London, says James Thomas of Jones Lang LaSalle, a property consultancy. Roadshows to promote developments in London that would previously have stopped at Hong Kong and Singapore are now taking in the mainland, with Chinese banks and Western law firms joining in to offer prospective buyers tips on financing and tax.
Some are after commercial investments. Siqi Zhang, who runs the London arm of Celestial Globe, a small property consultancy aimed at mainland buyers, reports lots of interest in restaurants, hotels and bars that can throw off cash as part of an investment portfolio.
The flow of private capital is not just driven by individual wealth, however. Perhaps the most sensitive area of China’s march is in the corporate arena, as Chinese firms and their financiers look abroad.

The importance of developed Western economies in this process should not be exaggerated. China has largely concentrated to date on Asian, African and Latin American investments that secure energy supplies and natural resources. Europe is a market where Chinese goods end up, not where they are put together. That said, the biggest Chinese deal announced in Europe this year has been the $2.2 billion purchase by China National Chemical Corporation of Elkem, a Norwegian manufacturer of polysilicon, which is a key component of solar panels. And Iceland, handily close to the oil-rich Arctic, is said to be surprisingly popular with visitors from China. But the data on China’s outbound foreign direct investment show that Europe accounts for a mere 3.5% of the country’s stock of such assets (see chart 3). Single deals can still make a big difference to the numbers.
Follow the money, if you can
Then again, the data do not tell the whole story. Money from the mainland and from Hong Kong is often intermingled. It does not cost a lot to open representative offices, which can then quickly be expanded. The numbers can also hide the extent of Chinese influence. Geely owns only 20% of Manganese Bronze, but it has the larger stake in a joint venture between the two that produces the taxi for international markets, it is the British firm’s chief creditor and it is the linchpin of Manganese’s strategic plans.
Walid Sarkis of Bain Capital, a private-equity firm, says that the tilting of economic power eastward is in any case naturally turning European firms into Chinese and Asian ones. Revenues and growth increasingly depend on these parts of the world. Managers of portfolio companies are thinking about moving headquarters east and listing in places like Hong Kong. “The process of rebasing is happening really fast,” says Mr Sarkis.
The trend of growing outbound Chinese investment is unmistakable. Christian Milelli of the University of Paris West, who has helped compile a database of Chinese investment flows to Europe, says that deals have continued unabated despite the financial crisis, whereas those of Indian companies have contracted.
Behind the scenes, there is an awful lot of activity. Investment bankers routinely propose deals to Chinese firms (if only to scare other bidders into life); five years ago they would not have. “There is a huge amount of looking going on by Chinese companies,” says Simon Wilde of Macquarie Capital’s European power and utilities practice. It is not all about acquisitions: talks are apparently under way for Chinese firms to run big power and infrastructure projects in eastern Europe.
Much of this prospecting can be hard to spot since it is often conducted through individual fixers with knowledge of the West and good connections in China. Mr Wen’s visit this week was in full view of the cameras but when deals are made, there is often little fanfare. “It’s different to the Americans, where the chief executive will fly in to take a picture with the local bishop,” says an Irish executive.
Investments happen for all sorts of reasons. Chinese banks want to offer services to Chinese companies as they expand internationally, for instance, and to European firms seeking a bank to work with in China. They also have lots to learn in a place like London about foreign-exchange trading and derivatives, especially as the yuan internationalises.
Expansion is frequently driven by the needs of the highly competitive Chinese market as much as the lure of the European one. “CIC and SAFE make financial investments based on returns on capital,” says Z.Z. Qiu, who is chairman of Barclays Capital for greater China. “Corporate deals are more strategic and about synergies.”
Technology and brands are the things that can make the biggest difference back home. Take Geely’s deals in Europe. The Volvo purchase gives it a premium brand to compete with Western carmakers in China at the same time as it aims its own brands at the mass market. Its tie-up with Manganese Bronze has yielded few hard financial benefits, says John Russell, Manganese’s boss, but lots of broader advantages such as access to engineering know-how and a brand with plenty of heritage.

It is a similar story with the purchase by Zoomlion, a Chinese manufacturer of construction equipment, of CIFA, an Italian rival, in 2008. “CIFA’s core European markets dived during the recession,” says Josh Lerner of Harvard Business School, who has written a case study on the deal. But CIFA has given Zoomlion access to better manufacturing technology and a premium brand to sell in China.
Germany has become a natural hunting-ground for industrial companies looking to move up the engineering value chain. Carmaking is again a focus. So is clean tech: Goldwind, a Chinese wind-turbine manufacturer, bought a German designer called Vensys in 2008 so it could develop bigger turbines for its domestic market. Not every European firm can assume it has technological allure, however. “I couldn’t sell BT [a British telecoms firm] to China,” says James Wang, a Chinese violinist-turned-dealmaker in London whose firm, Eli Capital, guided Geely’s transactions in Europe. “It’s too old-fashioned.”
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Deals can help to open up the Chinese market. In June 2010 Fosun, a Chinese conglomerate with pretensions to become a global investment giant, bought 7.1% (later raised to 9.3%) of Club Med, a French leisure company hoping to serve Chinese holidaymakers. Club Med’s first Chinese resort followed in December. In May Fosun also bought 9.5% of Folli Follie, a Greek retailer whose brands include Links of London and which thinks the deal will accelerate its expansion in China. CIFA’s partnership with Zoomlion has given it access to the Chinese firm’s distribution networks in Africa and the Middle East.
Transactions like these are opportunities not just for the companies involved but also for private equity. Fosun is acting, in effect, as a private-equity firm, and has set up investment ventures with both Carlyle and Prudential Financial. The Zoomlion-CIFA deal was 40% financed by a consortium of funds led by Hony Capital, a Chinese firm, and including Goldman Sachs. Mr Lerner reckons that within five to ten years Chinese private-equity firms will have joined the industry’s global elite.
As well as providing financial firepower and a network for sourcing deals, private-equity firms can shroud the identity of publicity-shy investors. They are also well equipped to structure the fiddlier bits of deals and to guide the integration of partners from different cultures. Getting that sort of thing right is undoubtedly hard for Chinese firms with limited experience of international deals—witness the bafflement of one firm at foreigners’ habit of taking time off for holidays. Europeans, of course, have plenty of experience of cross-cultural deals. According to one Briton, the Chinese are no worse than the neighbours. “The French are way more difficult than the Chinese,” he says.