I love you. I buy you.

Source: www.economist.com

First things first, my apologies to those of you who were hoping to read about something other than China this week, but as it is a favourite topic of mine and last week's lead - China buys up the world - in The Economist, I really can't help myself from blogging about it. 

Source: www.eiu.com

Now, correct me if I'm wrong but isn't the common perception: China = Communism? Well, whilst in theory, the ownership of a business in a capitalist economy is irrelevant, in practice it is rather controversial. Therefore, when the #1 country that comes to mind when thinking of the word "red" or "communism", is now going on a global shopping spree, one starts to wonder. A capitalist in disguise? Hardly. A country with a big, fat trade surplus and a business-savy government? More likely. 

Source: www.economist.com

With such a high trade surplus ($27bn) and increasing pressure on the Chinese Yuan, it is no wonder that the Chinese government, often through the Sovereign Wealth Fund, as well as through the slightly more secretive SAFE (State Administration and Foreign Exchange) fund, is starting to buy up the world. I mean, why not kill two birds with one stone? Secure the wealth through M&A's of large and well-established MNE's, thus hedging against rich countries' devaluations and possible defaults, and at the same time increase their presence in the west, and acquire technology and know-how in the process. 

The Chinese can throw money at companies like no other country in current economic times. However, is overpaying a clever idea (just because you can, doesn't mean that you should)? Empirical evidence  highlights the caveats with this strategy. Let’s not forget what happened to Japan… 

Source: www.japaninc.com

Chinese firms currently own 6% of global investment in international business, a bleak comparison to the 50% that the UK held in 1914 and the US held in 1967. This further supports the argument that China will, no doubt become a superpower, but it will take a good couple of decades before it resembles a calibre as that of the US, key reasons being the culture and government structure. 

Source: www.leaderswedeserve.wordpress.com

FT's blogger Martin Wolf discusses the rise of China in one of his latest postings; Will China's rise be peaceful?. It is an interesting piece discussing how to, if at all, the west should facilitate for the rise of the east, including China. In my comment, I very much agree with Mr Wolf, that whilst western governments are solely focused on the political interests serving this acquisition spree and therefore being less welcoming, it would be foolish to write China off as a devious and naughty game player with a hidden agenda. 

Source: www.autoblog.com

As I am Swedish, I will take Volvo as an example. Forget IKEA, forget H&M, Volvo is as Swedish as it gets, at least for the Swedes themselves. I remember when I was little, my father drove a Volvo, many of my friends parents also drove Volvos'. Not only because it was Swedish, but it was considered a "proper" car and any self-respecting man drove one, at least during the 80's and 90's. That was the good days. Since Volvo Cars were acquired by Ford it has been a long way downhill. The recent takeover by the Chinese automotive holdings company; Geely, could realistically breathe some new life into this fossil of a brand. 

If you want further insight into what it is like being owned by the Chinese, another article in The Economist (same issue as the lead, which I referred to earlier), read - Being eaten by the dragon - in which anonymous CEOs of companies that have been "victims" of Chinese takeovers, give their view on what it is like to be owned by the Chinese. No names of either CEOs or companies are given. However, if you have been paying some attention to the M&A activity involving China as bidders in recent years, it isn't hard to figure out which the companies are...

Source: www.irishmoneytalk.com

What other options for investment is there? Ireland? Not really that attractive given its current "slight mishap"... (for an interesting read on this, go to Robert Peston's blog on the BBC website and read Ireland: The big uncertainties, and if you are interested in my opinion, have a look at my comment)

So, to conclude, China is no longer solely the target for western companies in terms of expansion strategy, their increasing interest in international and cross-border holdings in some of our dearest and most well-known western companies makes a strong case for the investor who believes in China as potential area for growth investments. The selection just doubled. A likely scenario is that the companies who don't choose to go to China on their own, may very well will be bought by the Chinese, who at some point in the future will move operations to the motherland, whether the company likes it or not. 

To put it in plain English; China is your Smorgasbord. 

The Great Firewall of China

Notoriously known for high Internet censorship, breaking through in China as a blogger, of any kind, is a challenge to say the least. The big boys like Facebook and Twitter have both encountered countless barriers and resistance in launching their products in the Chinese market.

Source: www.amitbhawani.com

A recent article in The Economist examines the situation further, highlighting that as it may be difficult to operate a service such as blogging, and microblogging in particular, the domestic players such are more likely to succeed than foreign. The blockage of Twitter in China encouraged homegrown version to appear on the market, even the Chinese government (including the Communist Party's own microblog The People's Daily) and former critics of microblogging have become frequent users.

Source:www.zdnet.com

However, the prime example of growth this area of communication is Weibo. A recent nationwide survey supports the popularity of Weibo, reporting that more than 45% under the age of 40 are frequent Weibo users and more than 94% said Weibo had changed their lives.

Source: www.starcomchinablog.com

With one of the world's largest population, you could easily see the appeal in this form of communication. Some people are even arguing that the Chinese are world leaders in microblogging, using it for everything possible. I personally think this is slightly optimistic. What can be argued however, is that the likes of Weibo could act as a platform for change, maybe even be a step towards "modernising" China's authoritarian regime. Though, as Internet analytics argue, if someone wanted to truly go beyond borders, microblogging wouldn't be the way as the government can track and actually shut them down whenever they want to. Now, they are simply playing ball.



Even if microblogs might not be a significant breakthrough in the history of Internet censorship, the Chinese open-minded attitude towards this form of communication, is. The relationship between the consumers and companies have significantly improved through the use of microblogs (please refer to figures above for further detail).

Is this sustainable. Maybe. If China continues to modernise itself, including opening the border to foreign goods and services in order to satisfy the demand of the Chinese consumer, then it is just a matter of time before lifestyle is another key aspect, which the Chinese wish to mirror. And that is when the real breakthrough (or breakdown even) in Internet censorship will really occur. Pessimists might think that this will take a while, however, personally I believe that at this rapid growth and development in a future superpower - this is a given, and will most definitely happen sooner rather than later.

So, in terms of an attractive investment, I don't think these specific companies (Weibo or Twitter for that matter) have enough exciting potential for a return of you investment, however, keep your eyes open because the company who is the first to innovate this further, and take it to another level, will be the golden ticket. Well, that is if you believe in the potential of the power of the Chinese consumer as much as I do.

Apple's love affair with China

Source: blog.karachicorner.com

China - the coolest kid on the block these days, especially in terms of business. 

For the last decade China has been playing the lead role in the international arena of investment, with wannabes such as India and Taiwan sneaking envious peaks at their successful neighbour. With the second-largest consumer market and highest potential, companies worldwide are fighting for a piece of the cake. The tables have turned and China is now the one calling the shots. International big players such as Porsche, Google, Louis Vuitton and Apple, are all convinced that China is the way forward. However, breaking through in China is not as easy as it might seem.  

Forbes.com highlighted the issue in the article Why The iPad May Succeed in China, Where The iPhone Failed by Shaun Rein last week. It is clear that after failing with the iPhone 4, Apple is determined to succeed with the iPad, and the Chinese consumer seem to agree. Analysts are sceptical, but I agree with Rein and think that this time, they might actually get it right. But what went wrong the first time? 

The answer can be summed up as 'lost in translation'. Mr Jobs and the Chinese consumer don't speak the same language (in more ways than the obvious one). Just because the Chinese aspire to western ideals and consumer trends, it doesn't mean their purchasing habits are the same. Further more, they are not prepared to wait two years for the product to reach their market either.

One would think that international success stories such as Google, Wal-Mart and Apple would get the not so small detail of 'getting the consumer what she wants' right. Yet surprisingly, they have all been beaten by the likes of Porsche, GM and Carrefour, all good companies but no marketing-geniuses. 

On a more positive note, the iPad seems to appeal to the Chinese consumer more than the iPhone (for many reasons, including the pay-as-you-go structure) and will thus hopefully strengthen Apple's position in China for future product launches. Who knows, maybe in 2020 it will be the Americans who will be crusading to Shanghai for the next iCard?

In a society where 'google' has become a synonym for 'search', and the letter 'i' in front of any product name suggesting "made by Apple", Apple might not be the sexiest investment on the planet, but its products certainly are. In Steve Jobs I trust and therefore recommend, despite being expensive, you to BUY AAPL.

To finish off, some entertainment for all those die-hard Apple fans... ENJOY!