Times are tough in #China, but the #economy will remain stable. The central #government will keep investing in key projects to keep people calm and the economy growing at 7%.
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Third of #ThirtySixStratagems: Kill with a borrowed knife. 借刀杀人(借刀殺人) – Jièdāoshārén.
Mini strategy series @soerenbax: The #ThirtySixStratagems, a collection of ancient Chinese military thought and experience.
Characters of the third of Thirty-Six Stratagems: 借刀杀人(借刀殺人) – Jièdāoshārén. 借, Jiè: borrow. 刀, dāo: knife. 杀, shā: kill. 人, rén: people, person.
Meaning: Kill with a borrowed knife. One man’s loss is another man’s gain.
Business example: A factory may have the problem that the only reliable supplier for certain components has rather high prices and is a very tough negotiator. It seems impossible to lower the prices through negotiation.
In that case it is wise to add suppliers that are very keen to enter a business relationship with the factory. If this smaller supplier is then kept small and hungry for more orders, then he will start to use all the tricks in the book in order to gain the upper hand over the first supplier. This urge for more orders is even increased if the factory requires the new smaller supplier to invest into special machines and tools.
During talks with the factory, he may accuse the first supplier of fraud, make below cost price offers, spy on his operations etc. – just to get more orders.
In any case, that new supplier will be a great source of information and puts the factory back into control of the negotiation.
Press Release: #IMF Managing Director #ChristineLagarde Concludes Visit to #China and Meets with Premier #LiKeqiang
Striking against both “tigers and flies”
Power, steel, cement suggest China’s economy not so buoyant
Six China shadow banks threatened with default over coal firm exposure: paper | Reuters
Does China plan to use gold to internationalize the yuan?
Back to work – Chinadaily.com.cn
Nation’s salary growth strong: Report – Business – Chinadaily.com.cn
Times of change for China
Thousands of party members were accused of corruption in 2013. President Xijinping is taking the fight against corruption seriously. The sheer volume of cases is impressive. This fight against corruption is not a very new development, but new is the fact that even the highest party functionaries are not safe anymore.
It remains unclear if Xijinping is using this fight also for his own agenda, to get rid of his political adversaries. The following years will show if Xi can be remembered for cleaning up and improving the economic environment.
Overall China is currently in a period of transition. The fight against corruption is causing a lot of commotion and wide spread reforms are being enacted. These reforms will take time, but a transition of the Chinese economy will happen.
A shift to a more consumption driven growth will be necessary. But also the environmental living conditions and the rule of law have to be improved if China hopes to attract global firms and foreign direct investments.
The basic conditions and potential for economic growth remain intact. Export driven growth currently remains sluggish. Also China remains rather insular and fails to integrate regionally and globally. Territorial disputes with most of its neighbours upset regional governments and hurt international trade. Japan is outpacing China in Asia with outbound investments, while China is busy with internal reforms, internal unrest and border disputes.
Cost are rising fast in China, labor disputes and questionable decisions of local labor authorities increase the overall cost of manufacturing. Times are tough, prices and factor cost are rising. It remains important to find new sources of income and watch the details even more. Keep an eye out for trouble spots and insist on due diligence in your China operations.