According to an announcement on the website of China's Ministry of Industry and Information Technology (MIIT), 2,087 companies in 18 industries have been ordered to close outdated, heavily polluting factories by September.
While this sounds like a positive step by a government that values the environment, it also sounds like similar orders that have been given in the past -- long before it was cool to care about climate change. I hate to sound skeptical (and I would like to be wrong about this), but, frankly, I'm not buying it this time either.
The punishments suggested for companies failing to comply are restrictions on access to bank financing and new project approvals. First of all, most of the companies on MIIT's list are small or medium sized enterprises, and many of them are privately owned. These companies never had access to bank lending anyway. Furthermore, because they are so small, their approval processes -- if indeed there were any -- most likely never went further than their local governments.
In addition, local governments are still heavily incentivized on two very measurable criteria: social stability and economic growth. Closing local businesses is unlikely to help their job performance measurement under either criterion.
While local governments will, of course, have to be seen to follow central government orders, it's not hard to imagine that local authorities are already working with the owners of these businesses (which in many cases are the local governments themselves!) to find a way around Beijing's dictates.
Ultimately, Beijing sees great opportunity in the climate change movement. But contrary to outward appearances, the opportunity for China lies, not in cleaning up its environment, but in selling related technologies to foreigners.
Clean technology will be expensive, and a country facing a demographic time bomb in a decade or so cannot afford to waste a single percentage point in GDP growth to clean up its environment. China will, however, be more than happy to sell the necessary technology to those countries that are already on the bandwagon.
Monday, August 9, 2010
Thursday, July 29, 2010
More Local "New Energy" Vehicle Subsidies
In addition to the central government's subsidies for new energy vehicles in China, two more local governments have announced their own subsidy plans.
Shanghai is planning subsidies of 40,000 to 60,000 yuan for individual buyers of plug-in hybrid or electric vehicles, and the city of Changchun, along with Jilin Province, is also planning a subsidy of about 40,000 yuan.
Shanghai is the home of Shanghai Automotive which owns the MG and Roewe brands (bought from the UK) and has joint ventures with both Volkswagen and General Motors. Changchun is the home of First Auto Works, a centrally-owned company that has joint ventures with Volkswagen, Toyota and Mazda, and is producing some of its own-branded vehicles as well.
Shanghai and Changchun join Shenzhen which earlier announced it would provide new energy vehicle subsidies.
These are the subsidies available so far. ($1 = 6.8 RMB)
People buying pure electric vehicles in Shenzhen could get a subsidy of up to 120,000 RMB ($17,600). That approaches half the cost of an electric vehicle.
Now, if only they can find a place to plug it in...
Shanghai is planning subsidies of 40,000 to 60,000 yuan for individual buyers of plug-in hybrid or electric vehicles, and the city of Changchun, along with Jilin Province, is also planning a subsidy of about 40,000 yuan.
Shanghai is the home of Shanghai Automotive which owns the MG and Roewe brands (bought from the UK) and has joint ventures with both Volkswagen and General Motors. Changchun is the home of First Auto Works, a centrally-owned company that has joint ventures with Volkswagen, Toyota and Mazda, and is producing some of its own-branded vehicles as well.
Shanghai and Changchun join Shenzhen which earlier announced it would provide new energy vehicle subsidies.
These are the subsidies available so far. ($1 = 6.8 RMB)
People buying pure electric vehicles in Shenzhen could get a subsidy of up to 120,000 RMB ($17,600). That approaches half the cost of an electric vehicle.
Now, if only they can find a place to plug it in...
Saturday, July 24, 2010
US Senate happy to support Greentech - but not in an election year
It is no secret that China’s leaders are keen on making their country into a world leader in green technology. The subsidies being provided by both central and local governments for purchase of hybrid and electric vehicles and support to companies pursuing R&D in this area have been widely reported over the past year.
Now it seems the US government is beginning to wake up to the importance of this new industry and its potential to provide, not only a cleaner environment, but jobs and tax revenue in the US. This past week, a Senate committee approved a couple of bills to support greentech, bills that, if approved, would begin to devote a serious amount of government money to support of the industry.
The first devotes $3.6 billion to promotion of plug-in hybrid technology. The bill includes, among other things, $1.5 billion to go directly to plug-in research, and a $10 million prize would go to the first person or company who demonstrates improved battery technology that will carry a vehicle 500 miles without recharging. This bill enjoys bipartisan support, including an endorsement from Lisa Murkowski, a Senator from Alaska, a state that earns a large portion of its revenue from oil extraction.
Another bill would expand a $25 billion Department of Energy program that has already lent $8.6 billion to makers of battery powered cars, and also make the funds available to makers of commercial vehicles while lifting the $25 billion cap.
While some may question the wisdom of the US government’s involvement in “picking winners”, it seems that we may no longer question whether the government sees the need to help US business gain a competitive foothold in this industry against other countries (particularly China), whose governments are heavily involved.
(And, yes, the phrase “picking winners” is still deemed by many in America to be the only words necessary to put an end to all argument as to whether the state should be involved in business – despite the lack of evidence to support the assertion that “picking winners” is, in all contexts, a bad thing. I'll have to save that idea for a future post.)
But not so fast. In the same article that informs us of these bills, we also see the concerns that Senate Leader Harry Reid may not allow these bills to come to a vote in the Senate – despite their bipartisan support – because he sees energy issues as a potentially hazardous issue to touch during an election year.
Yes, once again, politics in the US stands in the way of our elected leaders doing what they believe to be in the best interest of the country. Just once, it would be refreshing to hear our leaders say, “to hell with my re-election. I just want to do what’s right for the country.”
But perhaps that’s too much to hope for. Fortunately for China, they don’t have anything like re-election to to draw energy and money away from the more pressing matters of delivering prosperity to the people.
Well, except for all those tens of thousands of people employed to police the internet. That’s a massive waste of money. But other than that…
Well, yes, there’s also that whole parallel party structure that mirrors and oversees the entire government. But really, how much can that cost?
Ok, yes, there’s also that bureaucracy that oversees all media and censors films and books. But, other than that…
Well, yes, ok, there is the People’s Armed Police and Chengguan who are employed to keep citizens in line since the Army and the regular police, and the secret police, and the plainclothes police aren’t enough to do that.
Oh yeah, there are also all those locally-hired thugs to keep petitioners from going to Beijing, and the thugs hired in Beijing to send the petitioners home.
Oh, and I almost forgot, there’s that whole bureaucracy that oversees religions (and picks their leaders for them), making sure they don’t get out of hand.
But, honestly, aside from those few things, China really has it much better than the US. They don’t have to waste all those resources on elections.
Too bad for the US.
Now it seems the US government is beginning to wake up to the importance of this new industry and its potential to provide, not only a cleaner environment, but jobs and tax revenue in the US. This past week, a Senate committee approved a couple of bills to support greentech, bills that, if approved, would begin to devote a serious amount of government money to support of the industry.
The first devotes $3.6 billion to promotion of plug-in hybrid technology. The bill includes, among other things, $1.5 billion to go directly to plug-in research, and a $10 million prize would go to the first person or company who demonstrates improved battery technology that will carry a vehicle 500 miles without recharging. This bill enjoys bipartisan support, including an endorsement from Lisa Murkowski, a Senator from Alaska, a state that earns a large portion of its revenue from oil extraction.
Another bill would expand a $25 billion Department of Energy program that has already lent $8.6 billion to makers of battery powered cars, and also make the funds available to makers of commercial vehicles while lifting the $25 billion cap.
While some may question the wisdom of the US government’s involvement in “picking winners”, it seems that we may no longer question whether the government sees the need to help US business gain a competitive foothold in this industry against other countries (particularly China), whose governments are heavily involved.
(And, yes, the phrase “picking winners” is still deemed by many in America to be the only words necessary to put an end to all argument as to whether the state should be involved in business – despite the lack of evidence to support the assertion that “picking winners” is, in all contexts, a bad thing. I'll have to save that idea for a future post.)
But not so fast. In the same article that informs us of these bills, we also see the concerns that Senate Leader Harry Reid may not allow these bills to come to a vote in the Senate – despite their bipartisan support – because he sees energy issues as a potentially hazardous issue to touch during an election year.
Yes, once again, politics in the US stands in the way of our elected leaders doing what they believe to be in the best interest of the country. Just once, it would be refreshing to hear our leaders say, “to hell with my re-election. I just want to do what’s right for the country.”
But perhaps that’s too much to hope for. Fortunately for China, they don’t have anything like re-election to to draw energy and money away from the more pressing matters of delivering prosperity to the people.
Well, except for all those tens of thousands of people employed to police the internet. That’s a massive waste of money. But other than that…
Well, yes, there’s also that whole parallel party structure that mirrors and oversees the entire government. But really, how much can that cost?
Ok, yes, there’s also that bureaucracy that oversees all media and censors films and books. But, other than that…
Well, yes, ok, there is the People’s Armed Police and Chengguan who are employed to keep citizens in line since the Army and the regular police, and the secret police, and the plainclothes police aren’t enough to do that.
Oh yeah, there are also all those locally-hired thugs to keep petitioners from going to Beijing, and the thugs hired in Beijing to send the petitioners home.
Oh, and I almost forgot, there’s that whole bureaucracy that oversees religions (and picks their leaders for them), making sure they don’t get out of hand.
But, honestly, aside from those few things, China really has it much better than the US. They don’t have to waste all those resources on elections.
Too bad for the US.
Friday, July 23, 2010
UPDATED-Still Lost in Translation: 垄断 ≠ Monopoly
UPDATE: I have added some comments from Don Clarke of China Law Prof Blog at the bottom of this article.
Preface: My Twitter acquaintances sometimes accuse me of being pedantic, an inconvenient malady to suffer when one is restricted to 140-character soundbites. While most of this article may indeed sound overly pedantic, it has a real-world application concerning the role of foreign automakers in the Chinese market. If you read to the end, I promise it will all make sense. What you see here is the scaffolding surrounding an intellectual edifice that is still under construction. If you find this sort of thing boring, you may want to skip grad school. :-)
A few months ago, I wrote a series of posts (the first of which is here) in which I attempted to get a handle on the terms guo jin min tui and guo tui min jin. Part of the upshot was that many English speakers wrongly translated the latter term as “privatization” when in fact that was not the intention of the Chinese speakers who introduced the term. Furthermore, since the former term is the exact opposite of the latter, we translated it as “nationalization”, which was also incorrect.
Whether my dissertation will ultimately provide a better understanding of business-government relations and industrial planning in China remains to be seen. But one of the unexpected by-products of research in Chinese language documents is a discovery that, in many cases, Chinese and English speakers, even when relying on dictionaries and professional interpreters, often have very different concepts in mind for what they think is a common term.
Doesn't 垄断 mean monopoly?
The latest example is 垄断 (longduan) which is always translated as “monopoly.”
Google Translate, Babelfish and my Concise English-Chinese Chinese-English Dictionary all give the English word “monopoly” as the translation of "longduan". And, with the exception of Babelfish, they give “longduan” as the Chinese translation of of the English word "monopoly". (Babelfish, gives 独占 (duzhan) as the translation of monopoly.)
The context in which this discrepancy came up was my search for documentation of how China’s government and auto industry bureaucracy views the presence of foreign automakers in China’s market.
The first comes from a collection of essays on the auto industry written by a former Policy Research Director in China’s auto industry bureaucracy, published in 2009. This particular essay, written in 1998, was regarding the role of foreign automakers in China:
But in the case of China’s auto market, there’s simply no way that any foreign company has a monopoly. First of all, the foreign automakers in China are not a unified group. There are dozens of foreign companies trying to sell cars in the China market, and competition among them is quite fierce. Second, even if the foreigners did have a unified group, foreign brands only comprised about 70 percent of passenger cars sold in 2009, down from about 80 percent in 2004.
What does it mean in Chinese?
Thinking the problem may lie, not with the word longduan, but with its translation into the word “monopoly”, I took a closer look at the Chinese word:
垄断
垄 (long) is defined as a ridge of earth dividing plots of farmland, and you can see that in the parts of the character. The top part 龙 is “dragon” and the bottom part 土 is “earth or soil”, so a 垄 is like a dragon lying in the fields dividing different plots of land. If my knowledge of Chinese history is correct, this refers to earthen walls or ridges made of stones separating one family’s plot of land from another, meaning that each family was responsible for its own plot. (In feudal China, the economic benefits derived, not to the family, of course, but to a landlord.)
断 (duan) means to break off, to sever or to judge.
Together, these two characters seem to indicate something that separates one part of something from another. What I don’t see is any meaning indicating that one party gets everything and all others get nothing. Nor do I see any indication that one party even gets most of something while others are left to share a small portion, though that could be implied -- and it might certainly describe the current situation in which foreign brands (collectively) occupy about 70 percent of China's passenger car market.
So the problem here isn’t that the Chinese don’t know what “monopoly” means; the problem is that I didn’t know what longduan means. Now that I do (and assuming my analysis isn’t way off base), I am able to read the above passages with a better understanding.
Now for the application
What these passages are lamenting is not the exclusive right to the Chinese market by a unified group of foreigners, but the fact that the foreigners have any market share at all!
The common refrain that surfaces repeatedly in official and semi-official documents is the fact that Chinese joint venture partners have learned very little from their foreign partners aside from how to assemble and sell cars. The all-important design element continues to exceed their grasp. There exists an almost palpable resentment of the fact that China has handed over market share to these foreigners without getting the technology they were expecting in return.
What’s even more amazing to me is that this complaint has been consistently aired throughout the past two-plus decades – which leads to a much more interesting question: If the lack of technology sharing has been a problem for so long, why does China continue to welcome new joint venture partners?
For the answer to that question, you’ll have to read my dissertation, but please feel free to venture a guess in the comment section below. :-)
________________________
UPDATE: I consulted with Don Clarke of the Chinese Law Prof Blog on how the term 垄断 is defined in China's anti-monopoly law.
Don says: "It is understood in Chinese legal discourse to be the Chinese equivalent of the English term "monopoly". The economic tests used in China to measure the degree of longduan in a market are similar in principle to the tests used in US antimonopoly law."
He adds further that, when we see officials using the term 垄断 as I excerpted above, they are just "misusing the Chinese word the way an American politician might misuse an American word".
In other words, don't confuse discourse for policy.
Thanks, Don, for your insight!
Preface: My Twitter acquaintances sometimes accuse me of being pedantic, an inconvenient malady to suffer when one is restricted to 140-character soundbites. While most of this article may indeed sound overly pedantic, it has a real-world application concerning the role of foreign automakers in the Chinese market. If you read to the end, I promise it will all make sense. What you see here is the scaffolding surrounding an intellectual edifice that is still under construction. If you find this sort of thing boring, you may want to skip grad school. :-)
A few months ago, I wrote a series of posts (the first of which is here) in which I attempted to get a handle on the terms guo jin min tui and guo tui min jin. Part of the upshot was that many English speakers wrongly translated the latter term as “privatization” when in fact that was not the intention of the Chinese speakers who introduced the term. Furthermore, since the former term is the exact opposite of the latter, we translated it as “nationalization”, which was also incorrect.
Whether my dissertation will ultimately provide a better understanding of business-government relations and industrial planning in China remains to be seen. But one of the unexpected by-products of research in Chinese language documents is a discovery that, in many cases, Chinese and English speakers, even when relying on dictionaries and professional interpreters, often have very different concepts in mind for what they think is a common term.
Doesn't 垄断 mean monopoly?
The latest example is 垄断 (longduan) which is always translated as “monopoly.”
Google Translate, Babelfish and my Concise English-Chinese Chinese-English Dictionary all give the English word “monopoly” as the translation of "longduan". And, with the exception of Babelfish, they give “longduan” as the Chinese translation of of the English word "monopoly". (Babelfish, gives 独占 (duzhan) as the translation of monopoly.)
The context in which this discrepancy came up was my search for documentation of how China’s government and auto industry bureaucracy views the presence of foreign automakers in China’s market.
The first comes from a collection of essays on the auto industry written by a former Policy Research Director in China’s auto industry bureaucracy, published in 2009. This particular essay, written in 1998, was regarding the role of foreign automakers in China:
My translation (again, assuming 垄断 means “monopoly”):
[跨国公司]最终是想在合资企业中取得资本、技术、产品、市场的控制权和垄断，已达到长期占据中国汽车大市场的战略目的。
The ultimate aim of the multinational corporations (MNC) is to use joint ventures to gain capital, technology, products, market control and monopoly so as to achieve the longer term strategic purpose of occupying China’s big auto market.This next one comes from a book published by the Ministry of Science and Technology intended to be used by government and auto industry officials and academics as a companion reference to the eleventh five-year plan. The series editor is one of the Vice Ministers of Science and Technology. It was written in 2009.
跨国公司的这一策略对我国经济发展的影响较之于单纯的股权控制更为隐藏、深入，严 重削弱了国有经济的主导作用和制力，增强了跨国公司在中国市场的垄断地位。My translation:
The impact of MNC strategy on China's economic development is hidden and much deeper than just equity control. It seriously undermines the state-owned economy and manufacturing power and enhances the MNCs' monopoly position in the Chinese market.My first thought was, well, they simply don’t know what a monopoly is. In English, the word “monopoly” is pretty easy to understand. It comes from the Latin monopolium, mono meaning “one” and polium meaning “to sell”. It defines a situation in which a single company controls all, or nearly all, of the market for a particular product or service. In other words, the absence of competition.
But in the case of China’s auto market, there’s simply no way that any foreign company has a monopoly. First of all, the foreign automakers in China are not a unified group. There are dozens of foreign companies trying to sell cars in the China market, and competition among them is quite fierce. Second, even if the foreigners did have a unified group, foreign brands only comprised about 70 percent of passenger cars sold in 2009, down from about 80 percent in 2004.
What does it mean in Chinese?
Thinking the problem may lie, not with the word longduan, but with its translation into the word “monopoly”, I took a closer look at the Chinese word:
垄断
垄 (long) is defined as a ridge of earth dividing plots of farmland, and you can see that in the parts of the character. The top part 龙 is “dragon” and the bottom part 土 is “earth or soil”, so a 垄 is like a dragon lying in the fields dividing different plots of land. If my knowledge of Chinese history is correct, this refers to earthen walls or ridges made of stones separating one family’s plot of land from another, meaning that each family was responsible for its own plot. (In feudal China, the economic benefits derived, not to the family, of course, but to a landlord.)
断 (duan) means to break off, to sever or to judge.
Together, these two characters seem to indicate something that separates one part of something from another. What I don’t see is any meaning indicating that one party gets everything and all others get nothing. Nor do I see any indication that one party even gets most of something while others are left to share a small portion, though that could be implied -- and it might certainly describe the current situation in which foreign brands (collectively) occupy about 70 percent of China's passenger car market.
So the problem here isn’t that the Chinese don’t know what “monopoly” means; the problem is that I didn’t know what longduan means. Now that I do (and assuming my analysis isn’t way off base), I am able to read the above passages with a better understanding.
Now for the application
What these passages are lamenting is not the exclusive right to the Chinese market by a unified group of foreigners, but the fact that the foreigners have any market share at all!
The common refrain that surfaces repeatedly in official and semi-official documents is the fact that Chinese joint venture partners have learned very little from their foreign partners aside from how to assemble and sell cars. The all-important design element continues to exceed their grasp. There exists an almost palpable resentment of the fact that China has handed over market share to these foreigners without getting the technology they were expecting in return.
What’s even more amazing to me is that this complaint has been consistently aired throughout the past two-plus decades – which leads to a much more interesting question: If the lack of technology sharing has been a problem for so long, why does China continue to welcome new joint venture partners?
For the answer to that question, you’ll have to read my dissertation, but please feel free to venture a guess in the comment section below. :-)
________________________
UPDATE: I consulted with Don Clarke of the Chinese Law Prof Blog on how the term 垄断 is defined in China's anti-monopoly law.
Don says: "It is understood in Chinese legal discourse to be the Chinese equivalent of the English term "monopoly". The economic tests used in China to measure the degree of longduan in a market are similar in principle to the tests used in US antimonopoly law."
He adds further that, when we see officials using the term 垄断 as I excerpted above, they are just "misusing the Chinese word the way an American politician might misuse an American word".
In other words, don't confuse discourse for policy.
Thanks, Don, for your insight!
Tuesday, July 20, 2010
BYD Between a Rock and a Hard Place
The multinationals think they have it hard? It seems that one of China's rising stars of the auto world, BYD, has run afoul of the authorities in Beijing.
BYD, a Hong Kong listed automaker based across the border in Shenzhen, has aims of becoming bigger than Toyota someday, but in the short term at least, they may have to scale back their expectations. At the beginning of this month BYD broke ground on its second factory in the city of Xi'an. This new 5 billion yuan factory, due to open in 2011, has a projected capacity of 400,000 cars a year.
Yesterday, BYD was ordered by the central Ministry of Land and Resources to halt construction of its new factory because of a "land use violation". The Ministry's announcement gave no further specifics as to the nature of the violation. In its defense, BYD said that it had conducted due diligence and obtained the necessary approvals from local government. So it would appear that the violation has been committed not by BYD, but by the local government.
Perhaps the violation comes as Beijing has stepped up its enforcement of land use policies. There was much talk during this year's National People's Congress of the need to prevent local governments from appropriating farmland to sell to developers, a situation that has led to much social unrest in recent years. Regardless, BYD has become yet another victim of the vagaries of doing business in China.
Until now, the conventional (yet somehow simultaneously unorthodox) wisdom has been for foreign companies to worry more about local governments when setting up their businesses in China. Just because you got approval from someone in Beijing didn't mean that all problems were solved. Local governments are the ones with the real power to make or break your business, and "as everyone in China knows" the central government devolved a lot of their powers to the local governments back in the 1980s.
So which governments should you be worried about? Perhaps the received wisdom (conventional or unorthodox, or whatever you want to call it) needs to be revisited. The real answer is, you need to worry about both.
BYD, a Hong Kong listed automaker based across the border in Shenzhen, has aims of becoming bigger than Toyota someday, but in the short term at least, they may have to scale back their expectations. At the beginning of this month BYD broke ground on its second factory in the city of Xi'an. This new 5 billion yuan factory, due to open in 2011, has a projected capacity of 400,000 cars a year.
Yesterday, BYD was ordered by the central Ministry of Land and Resources to halt construction of its new factory because of a "land use violation". The Ministry's announcement gave no further specifics as to the nature of the violation. In its defense, BYD said that it had conducted due diligence and obtained the necessary approvals from local government. So it would appear that the violation has been committed not by BYD, but by the local government.
Perhaps the violation comes as Beijing has stepped up its enforcement of land use policies. There was much talk during this year's National People's Congress of the need to prevent local governments from appropriating farmland to sell to developers, a situation that has led to much social unrest in recent years. Regardless, BYD has become yet another victim of the vagaries of doing business in China.
Until now, the conventional (yet somehow simultaneously unorthodox) wisdom has been for foreign companies to worry more about local governments when setting up their businesses in China. Just because you got approval from someone in Beijing didn't mean that all problems were solved. Local governments are the ones with the real power to make or break your business, and "as everyone in China knows" the central government devolved a lot of their powers to the local governments back in the 1980s.
So which governments should you be worried about? Perhaps the received wisdom (conventional or unorthodox, or whatever you want to call it) needs to be revisited. The real answer is, you need to worry about both.
Thursday, July 15, 2010
America is rotten; China is awesome!
Yesterday fellow Forbes ChinaTracker writer, Ray Kwong posted a summary of a shocking Computerworld article on the Forbes China Tracker site. Computerworld, a publication not exactly renowned for its expertise on China breathlessly exclaims that China is getting ready to clean America's technological clock. China's education system is producing far more engineering graduates than the US, and China's leaders are fully engaged in making China into a future technological powerhouse.
While the article was fact-based, I think its conclusions were way overdrawn.
This is very much an issue of quality vs quantity. I spent two years teaching at universities in China, and I continue to maintain close touch with the academic community there. While China is indeed turning out math and science whizzes up through high school level (the average middle schooler can plot the trajectory of a non-guided missile), nothing is being done to nurture the kind of creative and critical thinking that produces innovation.
Furthermore, among the engineers earning degrees in China, very few of them have a passion for what they are learning. It doesn't bother me that a relative handful of students in the US are choosing the sciences as long as the vast majority of these students love what they're doing and eventually find their ways to Silicon Valley, Austin, TX or other similar clusters of talent. Again, this is where the innovation comes from.
On the other hand, I think the Computerworld article may have been intended somewhat as hyperbole to shock our leaders into action, and I am pretty sure this was Ray's intention in excerpting the article. If at least one leader in Washington gets the message regarding the vital importance of education quality in the US, this can't be a bad thing, right?
_________________
UPDATE: It looks like Dan Harris, keeper of ChinaLawBlog, was also moved to comment on the Computerworld article. He makes some really good points that I hadn't considered, so take a look if this topic interests you. Also check out the vigorous discussion going on in the comment section there.
While the article was fact-based, I think its conclusions were way overdrawn.
This is very much an issue of quality vs quantity. I spent two years teaching at universities in China, and I continue to maintain close touch with the academic community there. While China is indeed turning out math and science whizzes up through high school level (the average middle schooler can plot the trajectory of a non-guided missile), nothing is being done to nurture the kind of creative and critical thinking that produces innovation.
Furthermore, among the engineers earning degrees in China, very few of them have a passion for what they are learning. It doesn't bother me that a relative handful of students in the US are choosing the sciences as long as the vast majority of these students love what they're doing and eventually find their ways to Silicon Valley, Austin, TX or other similar clusters of talent. Again, this is where the innovation comes from.
On the other hand, I think the Computerworld article may have been intended somewhat as hyperbole to shock our leaders into action, and I am pretty sure this was Ray's intention in excerpting the article. If at least one leader in Washington gets the message regarding the vital importance of education quality in the US, this can't be a bad thing, right?
_________________
UPDATE: It looks like Dan Harris, keeper of ChinaLawBlog, was also moved to comment on the Computerworld article. He makes some really good points that I hadn't considered, so take a look if this topic interests you. Also check out the vigorous discussion going on in the comment section there.
Tuesday, July 13, 2010
Shenzhen Subsidies, US-China Acquisition, EV Policy
Three important stories in the China electric vehicle world. The first one is a Local BizGov story...
Shenzhen's new EV subsidies
A little over a month ago, Beijing announced a pilot plan for new energy vehicle subsidies in five Chinese cities, one of which is Shenzhen. In short, the plan calls for subsidies of up to 50,000 yuan for plug-in hybrids and up to 60,000 yuan for pure electric vehicles.
Shenzhen, home of battery and auto manufacturer BYD, has also announced its own subsidies to be added to those from Beijing. Shenzhen will provided subsidies of up to 30,000 yuan for plug-in hybrids and up to 60,000 yuan for pure electrics.
With total subsidies of up to 80,000 yuan ($11,800) for a plug-in hybrid or 120,000 yuan ($17,700) for a pure electric vehicle, these still experimental cars are reaching a price point where early adopters in China would be willing to consider them.
And Shenzhen wins brownie points: from Beijing for supporting low- or zero-emission vehicles, and from BYD who will, it is hoped, build more cars, employ more people and pay more taxes.
If there is another city in the world where new energy vehicles are more affordable than they are in Shenzhen, I am not aware of it.
US-China Acquisition
Santa Rosa, California based ZAP Motors (a company you've probably never heard of) has just signed an agreement to acquire 51 percent of Taizhou based Zhejiang Jonway Automobile for about $28 million in cash.
Yes, you read that right. This is not a joint venture; it's an acquisition.
ZAP, which has been in operation since 1994, has, until recently made electric vehicles designed for off-road use in such places as airports, military bases, large factories, etc. It gained some recognition by showing this futuristic electric car, the Alias at Beijing's Auto Show a few months ago.
And this is no mere concept car. Apparently ZAP had already (pre-acquisition) contracted with Jonway Auto to build the Alias with current plans to introduce it in the US later in 2010.
Jonway Auto is (or will be until this acquisition takes place) owned by Jonway Group which manufactures cars and motorcycles. I am unable to determine who owns Jonway Group, but due to its location in Taizhou, I think it is a pretty good bet that the company is private. And the fact that a foreign company is about to buy a majority stake in one of its subsidiaries is also a good indication that Jonway is most likely not state-owned. (Then again, the difference between public and private is still quite blurry in China.)
Even more interesting is the fact that Jonway has been quite profitable while ZAP, which reportedly hasn't earned a profit since 2002, has only recently emerged from bankruptcy.
On second thought, I'm quite certain Jonway isn't state-owned.
China's new energy vehicle policy is on the way
And finally, Dong Yang, secretary general of the China Association of Automobile Manufacturers announced that a policy on new energy vehicles is in the works and will probably be released in September or October.
About those subsidies I mentioned above, well, China is apparently just getting started. We can expect to see a more comprehensive plan laid out this fall with details on how China intends to dominate this space -- globally. Among other things we can probably expect to see further incentives for auto companies to conduct R&D in this area and further plans for rollout of charging stations.
The lines are being drawn In the global battle to dominate alternative energy vehicle manufacturing. We could not ask for a better real-life experiment to compare the results of state-led vs market-led capitalism.
Shenzhen's new EV subsidies
A little over a month ago, Beijing announced a pilot plan for new energy vehicle subsidies in five Chinese cities, one of which is Shenzhen. In short, the plan calls for subsidies of up to 50,000 yuan for plug-in hybrids and up to 60,000 yuan for pure electric vehicles.
Shenzhen, home of battery and auto manufacturer BYD, has also announced its own subsidies to be added to those from Beijing. Shenzhen will provided subsidies of up to 30,000 yuan for plug-in hybrids and up to 60,000 yuan for pure electrics.
With total subsidies of up to 80,000 yuan ($11,800) for a plug-in hybrid or 120,000 yuan ($17,700) for a pure electric vehicle, these still experimental cars are reaching a price point where early adopters in China would be willing to consider them.
And Shenzhen wins brownie points: from Beijing for supporting low- or zero-emission vehicles, and from BYD who will, it is hoped, build more cars, employ more people and pay more taxes.
If there is another city in the world where new energy vehicles are more affordable than they are in Shenzhen, I am not aware of it.
US-China Acquisition
Santa Rosa, California based ZAP Motors (a company you've probably never heard of) has just signed an agreement to acquire 51 percent of Taizhou based Zhejiang Jonway Automobile for about $28 million in cash.
Yes, you read that right. This is not a joint venture; it's an acquisition.
ZAP, which has been in operation since 1994, has, until recently made electric vehicles designed for off-road use in such places as airports, military bases, large factories, etc. It gained some recognition by showing this futuristic electric car, the Alias at Beijing's Auto Show a few months ago.
And this is no mere concept car. Apparently ZAP had already (pre-acquisition) contracted with Jonway Auto to build the Alias with current plans to introduce it in the US later in 2010.
Jonway Auto is (or will be until this acquisition takes place) owned by Jonway Group which manufactures cars and motorcycles. I am unable to determine who owns Jonway Group, but due to its location in Taizhou, I think it is a pretty good bet that the company is private. And the fact that a foreign company is about to buy a majority stake in one of its subsidiaries is also a good indication that Jonway is most likely not state-owned. (Then again, the difference between public and private is still quite blurry in China.)
Even more interesting is the fact that Jonway has been quite profitable while ZAP, which reportedly hasn't earned a profit since 2002, has only recently emerged from bankruptcy.
On second thought, I'm quite certain Jonway isn't state-owned.
China's new energy vehicle policy is on the way
And finally, Dong Yang, secretary general of the China Association of Automobile Manufacturers announced that a policy on new energy vehicles is in the works and will probably be released in September or October.
About those subsidies I mentioned above, well, China is apparently just getting started. We can expect to see a more comprehensive plan laid out this fall with details on how China intends to dominate this space -- globally. Among other things we can probably expect to see further incentives for auto companies to conduct R&D in this area and further plans for rollout of charging stations.
The lines are being drawn In the global battle to dominate alternative energy vehicle manufacturing. We could not ask for a better real-life experiment to compare the results of state-led vs market-led capitalism.
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