Decadence in the Chinese Business World

Where are these pictures from? The national palace in some European country? No, they are images of the Harbin Pharmaceuticals Group’s Sixth Pharmaceuticals Plant. Harbin is a state-owned Chinese company.

Now, some people in China are arguing that the gold-and-marble encrusted building with its expensive granite exterior is a sign of a healthy company with money to spend. On the contrary...these photos are evidence of a sick, sick economy in deep trouble. Let me break it down for you.

In China, with its one-child policy, saving for one's old age is essential. Because in the future, each child will have four grandparents to support, which means the grandparents aren't likely to get much support at all from their grandkid. And there is no real, viable pension system for most people in China. Knowing this, Chinese have become some of the world's greatest savers, mostly stashing their humble nest-eggs in banks or insurance plans, because their opportunities for investment are limited. Some put money into real estate, which has accounted for the boom of empty buildings across the country, now looking unstable. But the majority of savings go into big Chinese banks and insurance companies.

What do these banks and insurance companies do with their glut of savings? They, too, have limited investment opportunites, so large amounts of the savings flows it to state-owned enterpries -- companies like Harbin Pharmaceuticals.

Most of these state-owned enterprises are nests of corruption. What isn't skimmed off or used in bribes is often wasted in a spectacular manner. Like the photos above attest. Statistics are just made up; its impossible to know whether these companies are making any sort of profit at all, or even have an income flow. But they generally have access to money from banks. Money that non-wealthy Chinese people are counting on to be there in their old age.

Some day, probably before too much longer, this is all going to blow up in everyone's faces.

It won't be pretty. Just sayin'.

Communism works, I TELL YOU IT WORKS.

Regardless of not being able to point at a single sustainable communism, it works dammit.

If I owned a successful company because we did things well, it is not sick to do whatever I want with my money because the nations poor are not my responsibility.

Sure, we could help some, but not all.

The reason you blame the rich is because your not one of them.

reply to post by pacifier2012


Did you even read my post? This is not the result of "business being done well."

This is borrowed money. Wasted. By a STATE-OWNED (not private) company.

And nowhere in my post did I "blame the rich" either implictly or explicitly. Because this company is not rich. Its a COMMUNIST-STATE-OWNED company living on borrowed money, which it is wasting. If anything,　I'm blaming the Communist Party of China, not "the rich." But in reality I'm not "blaming" anyone...except perhaps the terminal stupidity of the broken Chinese system.

Please read and think before posting. Thank you.

It looks like the american companies have not only sent all our jobs to china but they have also sent their business ethics or should I say lack of ethics to china too. They might be communist`s but it didn`t take them very long to learn the ungodly capitalist business ethics of greed, pillaging and pilfering.

reply to post by Tardacus


They've had centuries of practice in graft and corruption...millenia, really. The current system takes the worst features of East and West and blends them in a single nasty cocktail:

One of the central players in uncovering Chinese investment fraud research is the firm Muddy Waters who recently published a white paper entitled Frauducation Part I: in this paper the author outlines how Chinese businessmen are taught and sponsored by experts, who sponsor and coach fraudsters in subjects like falsifying records, accounting, assets and the various methods needed to pull off grand frauds. When a character like John Paulson gets taken for nearly half a billion there is a lot of motivation on the criminal side to get things right

The fraud school’s assistance went well beyond providing document and accounting templates. The fraud school provided a network of “friendly” auditors that would help the companies get through the initial due diligence processes. The fraud school also helped companies game the due diligence process by providing the companies with contact information of suppliers and customers to give to potential investors. The suppliers and customers were frauds – the school hired them merely to play a role and answer questions according to the script. (Source: Muddy Waters)

Fraud is central to the Chinese system, it has emerged via virulent mutation of the ancient tribute system. In the past, these tribute systems reflected an ancient form of private regulatory order. In the past there was often a limited basis for the rule of law to govern transactions. Throughout Chinese history, trade relied on systems of tribute to ensure secure business and political outcomes.

These old systems were still essential throughout Asia up until only a few decades ago because, transacting parties could not rely on the rule of law to ensure the security of terms governing a transaction. In China this has evolved into government sponsored systemic corruption with Western motivations of greed and criminality. It infects every level of the private and public sector....

Source

reply to post by silent thunder


I wonder how many more years it will take for the average Chinese person to ask why they are not allowed to do so many simple things.



Change is coming for China and it might rip it apart at the seems. We might even see a few new countries in the future. The leadership in China will only get weaker and weaker as people wake up and the middle class grows.

Originally posted by silent thunder

Where are these pictures from? The national palace in some European country? No, they are images of the Harbin Pharmaceuticals Group’s Sixth Pharmaceuticals Plant. Harbin is a state-owned Chinese company.

Now, some people in China are arguing that the gold-and-marble encrusted building with its expensive granite exterior is a sign of a healthy company with money to spend. On the contrary...these photos are evidence of a sick, sick economy in deep trouble. Let me break it down for you.

In China, with its one-child policy, saving for one's old age is essential. Because in the future, each child will have four grandparents to support, which means the grandparents aren't likely to get much support at all from their grandkid. And there is no real, viable pension system for most people in China. Knowing this, Chinese have become some of the world's greatest savers, mostly stashing their humble nest-eggs in banks or insurance plans, because their opportunities for investment are limited. Some put money into real estate, which has accounted for the boom of empty buildings across the country, now looking unstable. But the majority of savings go into big Chinese banks and insurance companies.

What do these banks and insurance companies do with their glut of savings? They, too, have limited investment opportunites, so large amounts of the savings flows it to state-owned enterpries -- companies like Harbin Pharmaceuticals.

Most of these state-owned enterprises are nests of corruption. What isn't skimmed off or used in bribes is often wasted in a spectacular manner. Like the photos above attest. Statistics are just made up; its impossible to know whether these companies are making any sort of profit at all, or even have an income flow. But they generally have access to money from banks. Money that non-wealthy Chinese people are counting on to be there in their old age.

Some day, probably before too much longer, this is all going to blow up in everyone's faces.

It won't be pretty. Just sayin'.

edit on 12/20/2012 by silent thunder because: (no reason given)

America is not going to be pretty, just sayin.

And who do you think will control the Reserve Status then? Thats correct. China. Then they can run up a 16 trillion dollar debt no? And how does America pay the interest on that 16 trillion after it loses Reserve Status and petrodallar? It will never.

America has 16 trillion in debt. China has a trillion dollar surplus.

Sixteen trillion debt. 16 trillion.

China rules the world already.

And communists have taste. Communists have style. Look at a train station in Russia.

I enjoy your insights. I'm sure your right about the future for the Chinese. The unfortunate thing is except for the opportunities and excessive showy spending, looks like America to me. Results are remarkably similar. Some Americans are still doing okay, but there is no real security. With companies revealing that oh by the way, that pension plan you were counting on, hehe, it is gone. With government threatening Social Security.....As for Banks, well few are more than money grubbing crooks and with no interest rate, more like a safety deposit box that isn't safe.

Sorry I guess this is mostly off topic

reply to post by silent thunder


You see, this is what happens when a state--any state, mind you, as we could just as easily be speaking of the United States and certain nations of the EU--completely uncouples economic policy from the long-term demographic realities. Instead of taking the accumulated savings of the average Chinese citizen (who intelligently read the prophetic tea-leaves of their future financial situation) and properly investing these savings in future ventures that will have measurable benefit to future generations (and the retired), the Chinese officials have opted for the very worst aspects of "western"-style consumerism and out-right embezzlement. Why does there seem to be such a disconnect between proper and rational decision making on the allocation of scare resources through the "wizardy" of finance and the actual use of these funds. The only answer I have for this is the folly of human nature, not matter flag its flown under.

-Ghoster

reply to post by spangledbanner


This thread isn't about America, it's about China. Of course America has huge problems. What does that have to do with corruption in China?

It'w funny...I've got one response insinuating that because I dare to criticize this waste of borrowed money, I'm somehow anti-business. Then we have your response, insinuating that because I criticize China I'm somehow ignoring problems in the US. Both of you at wrong, both irrelevant to this thread.

All this shows me is that it is just one more domino lined up to fall in a domino line spanning the entire world from the US to the EU all the way to the far east. What keeps amazing me is how no one has kicked over the first piece yet.

Originally posted by silent thunder
reply to post by spangledbanner

 

This thread isn't about America, it's about China. Of course America has huge problems. What does that have to do with corruption in China?

It'w funny...I've got one response insinuating that because I dare to criticize this waste of borrowed money, I'm somehow anti-business. Then we have your response, insinuating that because I criticize China I'm somehow ignoring problems in the US. Both of you at wrong, both irrelevant to this thread.

Actually, I responded to your post by mistake. I wasn't referencing your reply. Apologies

-Ghoster

reply to post by Iamschist


Thanks for writing...

All countries need to think more carefully about the interaction between free markets and star programs. But it seems to me no system incentives long-term thinking like that. It's a shame if it has to come to total collapse but I fear it will eventually, for both China and the US...

reply to post by silent thunder


Sounds like criminal banksters on wall street.
Where would they be were it not for 401k' s and productivity of the American people to fleece from.

Here is a very good read on the difficulties of doing business in a corrupt and incompetent China, for those who are interested. It's an eye-opener:

www.expat-chronicles.com...

America has 16 trillion in debt. China has a trillion dollar surplus.

Sixteen trillion debt. 16 trillion.

China rules the world already.

While America has some huge problems, China is far from ruling the world.

In fact China is invested in America's debt, just like a bunch of people were invested in Bernie Madoff.

Right now, China is directly or indirectly heavily tied to the U.S. economically. It will take many decades to decouple such a relationship. The U.S. is just one of the poison pills for the Chinese economy, just as the OP's mention about Chinese elite corruption and the one child policy.

Please.The Chinese bureaucrats are as corrupt as ours are.Ours just hide it better.It sickens me these bastards have that much power to abuse.And we all know about what happens with absolute power....