Apple CEO Tim Cook is visiting Beijing these days and meeting with Chinese officials. He even was spotted in the Apple Store in Beijing. But what my fellow netizens are curious about is how he likes our shanzhai（山寨) Phones.
Guizhou Moutai Company (贵州茅台), the producer of the most luxurious Chinese liquor Moutai Jiu (茅台酒), just bought a real estate company and annouced its plan to enter the business of real estate development. Why would it do that? Moutai Jiu has such a unique status in the history of Chinese alcohol that it seldom needs to worry about insufficient demand, but right now many real estate developers can hardly get rid of their huge stock of unsold apartments. Also Moutai Jiu’s profit margin is around 80% while that of most real estate projects is below 30%. But Moutai is a state-owned enterprises, its priority is not really profit. The local government of Guizhou Province (贵州省) wants it to lift up Guizhou’s GDP.Moutai Jiu has been an icon of Chinese alcohol since the Qing Dynasty and its unique flavor is tied to the particular water, soil, and climate of its origin–Moutai Town of Guizhou. So Moutai Jiu is perceived as scarce and precious by Chinese consumers. The value of a bottle of Moutai Jiu actually increases with the amount of time it is stored. A bottle of Moutai from 1953 was just bought at 1.5 million yuan at an auction in Jan. 2012. So Moutai Jiu is also a store of value for some people. No wonder the stock of Moutai Company is Chinese value investors’ favorite. But these value investors should worry about Moutai’s recent attempt to enter fields like real estate, where it has little experience. Continue reading
Prime Minister Wen said the targeted growth rate of China in 2012 is adjusted down to 7.5%. No surprise there. Infrastructure, real estate, government stimulus programs, export, all these things that were propelling China’s GDP have went up so much in the past several years that the only direction they can go now is downwards.
Credit Suisse’s Tao Dong said on 3/7 that in 2011 each 1% growth of China’s GDP consumed 71 million tons of steel, a number unheard of in world history and unsustainable obviously. You see how dependent China’s GDP is on construction.
Wuhan government asked the real estate company Greenland to increase the height of Greenland Center Wuhan, a skyscraper under construction, from 606 meters to over 632 meters so that it will beat the Shanghai Center in being the tallest building in China.