A growing number of Chinese are joining tours organized especially for investors who want to take advantage of slumping U.S. real estate prices amid a financial crisis. While China’s ultra-rich have been buying property in the U.S. for years, the buying tours are new, made attractive by still-rising Chinese income levels and American real estate prices that have been falling for two and a half years.

More than 100 Chinese buyers have joined such tours since late 2008. The home-buying opportunities mirror a larger trend. Cash-rich Chinese companies are looking to buy resources made suddenly cheaper by the downturn or companies suffering under the global debt meltdown.

China had the world’s fifth-largest population of millionaires in 2008 with 391,000, up 20 percent from the previous year. Chinese buyers are looking at both commercial property and homes to rent out or use on business trips. And the U.S. has plenty of unsold homes to offer — 3.67 million as of the end of December.

The development of real estate in China has good prospects in the long run despite the sluggish demand. Amid an estimated continuous urbanization drive in China, more people may move to cities in the next decade and more, creating increasing demand for houses.

Statistics show that real estate investment accounted for nearly 20% of the total investment in fixed assets last year, driven up by about 5% as against 2000

Real estate investment increased by more than 30% between January and July this year, despite the shrinking housing demand since the second half of last year. The country’s real estate developers, which experienced huge profits in the past decade, sold out about 260 million square meters of houses in the first six months this year.

Apparently, the British are eyeing the East as well.

Will China overtake the United States as the world’s biggest economy? It almost certainly will.

China’s economy is now only a fourth the size of the $14 trillion U.S. economy, but given plausible growth rates in both countries, China’s output will exceed America’s in the 2020s, Goldman Sachs forecasts.

By itself, a richer China does not make America poorer. Indeed, because there are so many more Chinese than Americans, average Chinese living standards may lag behind ours indefinitely. By Goldman’s projections, average American incomes will still be twice Chinese incomes in 2050.

The real threat from China lies elsewhere. It is that China will destabilize the world economy. It will distort trade, foster huge financial imbalances and trigger a contentious competition for scarce raw materials. Symptoms of instability have already surfaced, and if they grow worse, everyone—including the Chinese—may suffer.

China strives to lock up supplies of essential raw materials: oil, natural gas, copper. If other countries suffer, so what? Both the United States and China are self-interested. But the United States has seen a prosperous global economy as a means to expanding its power, while China sees the global economy—guaranteed markets for its exports and raw materials—as the means to promoting domestic stability.

China’s economic nationalism may weaken the world economy—but if we retaliate by becoming more nationalistic ourselves, we may do the same. Globalization means interdependence; major nations ignore that at their peril.

China will complete the construction of its first four strategic oil reserves by the end of this year. China started to build its strategic oil reserves in 2004, in order to fend off the risk of oil shortages and reduce the impact of oil price fluctuations.

The government plans to build strategic oil reserves in three phases over 15 years, involving an estimated investment of 100 billion yuan (14.6 billion U.S. dollars).

The first four reserves, located in Dalian, Qingdao, Ningbo and Zhoushan, are expected to maintain strategic oil reserves equivalent to 30 days of imports in 2010.

China’s economy will overtake that of the United States by 2035 and be twice its size by midcentury, a study released Tuesday by a US research organization concluded. The report by economist Albert Keidel of the Carnegie Endowment for International Peace said China’s rapid growth is driven by domestic demand more than exports, and will sustain high single-digit growth rates well into the 21st century.

Under current market-based estimates, China’s gross domestic product is about three trillion dollars compared to 14 trillion for the United States. Based on a more controversial purchasing power parity (PPP) measure used by the World Bank and others to correct low labor-cost distortions, he said China’s GDP is roughly half of that of the United States.

China’s economy will overtake that of the United States by 2035 and be twice its size by midcentury, a study released Tuesday by a US research organization concluded. The report by economist Albert Keidel of the Carnegie Endowment for International Peace said China’s rapid growth is driven by domestic demand more than exports, and will sustain high single-digit growth rates well into the 21st century.

Under current market-based estimates, China’s gross domestic product is about three trillion dollars compared to 14 trillion for the United States. Based on a more controversial purchasing power parity (PPP) measure used by the World Bank and others to correct low labor-cost distortions, he said China’s GDP is roughly half of that of the United States.

As waistlines continue to expand in Japan, the country’s lawmakers are taking the unusual step of fining companies that employ overweight workers, an approach that diet experts say would likely meet with failure in the United States. Companies would be sued left and right for “discrimination.”

Weight-loss groups in Japan exercise together, singing inspirational weight-loss songs with lyrics such as “Goodbye, metabolic. Let’s get our checkups together. Go! Go! Go!” Meanwhile, posters in Japan feature rotund cartoon figures with buttons popping off their pants urging people to overcome “metabo.” The goal measurements for Japanese men’s and women’s waist circumferences are 33.5 inches and 35.4 inches, respectively — guidelines straight from the International Diabetes Federation in Belgium. People who exceed these measurements will be targeted for health education initiatives. If they fail to lose the extra inches, their employers could be fined.

As a country with more than one-third of its population classified as obese, the U.S. might benefit from a stringent program like Japan’s. According to the Centers for Disease Control and Prevention, 78 million Americans are obese.

Japan has a system of universal health coverage divided into a national system, and employees health insurance in which membership is mandatory. The question would then imply that a US system of univeral health coverage exist. Which it does not.

Add an extra zero to the ranks of the millionaires club.

The number of people around the world with at least $1 million in assets passed 10 million for the first time last year. The combined wealth of the globe’s millionaires grew to nearly $41 trillion last year, an increase of 9% from a year before.

The ranks of the wealthy are growing fastest in the developing economies of India, China and Brazil. The number of millionaires in India grew by about 23%. The United States still reigns supreme when it comes to fat wallets, though: One in every three millionaires in the world lives in America. Combined, Africa, the Middle East and Latin America account for just one in 10.

$1 million isn’t what it used to be. One million dollars in 1996, the first year the report was issued, would have been worth about $1.3 million last year. The wealth of the world’s richest is projected to reach almost $60 trillion by 2012.

When it comes to multinational manufacturing, Vietnam is fast becoming the new China.

China remains the most popular destination for foreign industrial investment in the world, attracting almost $83 billion last year. But a growing number of multinational corporations are pursuing a strategy that companies and analysts call “China plus one,” establishing or expanding Asian bases outside China, particularly in Vietnam.

A long list of concerns about China is feeding the trend: inflation, shortages of workers and energy, a strengthening currency, changing government policies, even the possibility of widespread civil unrest someday. But most important, wages in China are rising close to 25% a year in many industries, in dollar terms, and China is no longer such a bargain. Companies are using the China-plus-one strategy to mitigate the risks of overdependence on factories in one country.

In May, the thrifty Honda Civic became the best-selling vehicle in America.

The Honda Civic became the best selling vehicle in America - car or truck - and both it and the Honda Accord outsold the once-invincible Ford F-150 pickup trucks.

Among the world’s automakers, Honda has long behaved as if the world is indeed running out of all kinds of resources, including oil. Its relentless focus on thrift and conservation, which seemed like eccentricities 20 or 30 years ago, today make Honda the leader of the environmental pack.

While the Detroit Three plus Toyota were getting hammered on the showroom floor in May, with sales down anywhere from 4.3% for Toyota to 27.5% for General Motors, Honda posed a stunning 15.6% sales increase.

Rocket science this isn’t. They aren’t making any more oil so, over time, you had to figure it was going to get more expensive and more scarce. So why weren’t other manufacturers able to see the road ahead as well as Honda?

1. They got sidetracked by the easy profits available in big SUVs and pickups. During the 1990s, the last golden age of the American auto industry, the combination of cheap gas and high-profit big vehicles seduced automakers into believing the good times would never end.

2. Honda’s tightly-knit corporate culture and long time horizon made it uniquely able to wait for events to move in its direction, rather than chasing fluctuations in the marketplace.

3. The other automakers became distracted by their own corporate imperatives. Nissan compounded its problems by starting its own passenger car horsepower race. The Detroit Three, at times, seemed to get their jollies by reviving models from 40 years ago — Mustang, Challenger, Camaro — because of the short term jolt they got in the marketplace, rather than formulating any kind of long-term strategy for a resource-constrained world.

Mukesh Ambani’s $2 Billion Home

The 27 storey skyscraper being built in Mumbai by Mukesh Ambani, the richest person in India, could be the world’s largest and costliest home with a price-tag nearing two billion dollar, according to Forbes magazine.

When the Ambani residence is finished in January, completing a four-year process, it will be 550 feet high with 4,00,000 square feet of interior space. Mukesh Ambani was ranked as the fifth richest person in the world with a net worth of 43 billion dollars.  Ambani heads India’s most valuable firm Reliance Industries, an oil and petrochemicals giant.

Atop six stories of parking lots, Antilla’s living quarters begin at a lobby with nine elevators, as well as several storage rooms and lounges. Down dual stairways with silver-covered railings is a large ballroom with 80% of its ceiling covered in crystal chandeliers. The report said that Ambanis plan to use the residence occasionally for corporate entertainment also and they want its interiors to have a “distinctly Indian” look and feel. To get an idea of which floor is for what, click here.

Commercialization of Sports in China is Unavoidable 

Twenty years ago, before the rise of China’s market economy, the Chinese hockey team didn’t stand to win prize money or sponsorships. Competitions were for the glory of the country, not the kind of fame lavished on athletes in the West. Today, with the Olympic Games in Beijing less than four months away, the team is sponsored by Nike. It has an expert coach from South Korea, expensive protective equipment made by a U.S. firm and access to a professional psychologist through the state sports administration.

Attitudes about sports in China have undergone a dramatic shift from the days when the government focused on collective gain rather than individual accomplishment. Those changes have helped foster the development of a new kind of athlete, one whose sacrifices result in fame and fortune — and, if the athlete has a distinct personality, national celebrity.

The shift spans the panorama of Chinese sport. Tennis players who once barely eked out a living can now earn as much as $100,000 a year. Even the lowliest college team is part of a tiered economic system of sponsorships, incentives and bonuses. In Beijing, the University of Aeronautics and Astronautics track team is sponsored by a tire company. One distance runner said he stands to receive a bonus of more than $14,000 if he wins at the national level.

“Before, our policy killed the personalities of athletes. The government didn’t promote fame or self-interest,” said Jin Shan, director of the Sports Culture Research Center at the Beijing Academy of Social Sciences. “China was so weak in its economy and politics that sports were used to enhance the people’s confidence. Now it’s not necessary to use sports to build a strong image of China overseas. Sports will be commercialized in the future, and more stars will be generated, just like in the U.S.”

If you didn’t have ethanol, you would not have the prices we have today

The globe’s worst food crisis in a generation emerged as a blip on the big boards and computer screens of America’s great grain exchanges. As prices rise, major grain producers including Argentina and Ukraine, battling inflation caused in part by soaring oil bills, were moving to bar exports on a range of crops to control costs at home. It meant less supply on world markets even as global demand entered a fundamentally new phase.

At the same time, food was becoming the new gold. Investors fleeing Wall Street’s mortgage-related strife plowed hundreds of millions of dollars into grain futures, driving prices up even more. By Christmas, a global panic was building. With fewer places to turn, and tempted by the weaker dollar, nations staged a run on the American wheat harvest.

Foreign buyers, who typically seek to purchase one or two months’ supply of wheat at a time, suddenly began to stockpile. They put in orders on U.S. grain exchanges two to three times larger than normal as food riots began to erupt worldwide.

The food price shock now roiling world markets is destabilizing governments, igniting street riots and threatening to send a new wave of hunger rippling through the world’s poorest nations. It is outpacing even the Soviet grain emergency of 1972-75, when world food prices rose 78%. By comparison, from the beginning of 2005 to early 2008, prices leapt 80%. Much of the increase is being absorbed by middle men — distributors, processors, even governments.

At least 14 countries have been racked by food-related violence.The crisis, it fears, will plunge more than 100 million of the world’s poorest people deeper into poverty, forced to spend more and more of their income on skyrocketing food bills.

People worldwide are coping in different ways. Although China has tried to calm its people by announcing reserve grain holdings of 30 to 40% of annual production, a number that had been a state secret, anxiety is still running high. In India, the government recently scrapped all import duties on cooking oils and banned exports of non-basmati rice. Even wealthy nations are being forced to adjust to a new normal. In Japan, a country with a distinct cultural aversion to cheaper, genetically modified grains, manufacturers are risking public backlash by importing them for use in processed foods for the first time.

In the United States, experts say consumers are scaling down on quality and scaling up on quantity if it means a better unit price. In the meat aisles of major grocery stores, steaks are giving way to chopped beef and people used to buying fresh blueberries are moving to frozen. Some are even trying to grow their own vegetables.

A big reason for higher wheat prices, for instance, is the multiyear drought in Australia, something that scientists say may become persistent because of global warming. But wheat prices are also rising because U.S. farmers have been planting less of it, or moving wheat to less fertile ground. That is partly because they are planting more corn to capitalize on the biofuel frenzy. If market forces had played a larger role in food trade, some now argue, the world would have had more time to adjust to more gradually rising prices.

The high cost of doing business in India is pushing some smaller technology companies to relocate elsewhere in Asia. Soaring wages and rentals there are having a significant impact on mid-sized companies, many of which blossomed for several years amid a vast pool of well-educated workers and comparatively lower operating costs.

The $52 billion software industry — arguably India’s best known overseas — is now confronted with multiple challenges.
The economic slowdown in the U.S., the single largest market for outsourced orders, has cast a shadow over near-term business prospects.

It’s being exacerbated by local issues such as an appreciating currency, rising fixed and operating costs, a growing shortage of skilled manpower and the prospect of a sharp tax increase. Under so-called sections 10A and 10B of Indian tax laws, software companies are currently granted a tax holiday on income generated out of units at designated software-technology parks — a concession that brings down the effective tax rates to 12% to 15%, compared with the peak effective corporate tax of 33%. That benefit is due to expire in March of next year.

Larger firms will be able to expand in special economic zones spread over 30 acres or more and take advantage of similar tax holidays at those facilities. But small- and mid-sized companies, who don’t have a need for and can’t afford such large facilities, will feel the pinch immediately because of the “uneven playing field.”

On the jobs market, the supply of Indian software professionals is also growing tighter because of the rapid expansion. In the financial year ended March 2005, Indian software and business-process outsourcing companies employed fewer than 1.05 million people directly. At the end of March 2008, the number likely grew to 2 million.

With millions of graduates being churned out every year, “the size of the talent pool isn’t the issue. Our issue is that the employability of that group of people coming out of those colleges.”

Wages, meanwhile, have been shooting up at the rate of about 15% a year in tandem with the demand for experienced software developers. A study of 30 emerging countries conducted by Gartner last year, which showed India was the “most lucrative destination as far as outsourcing was concerned” on a scale of ten parameters, including labor pool, English-speaking skills, cost structure, infrastructure and government policies. However, if wages continue to rise at a rate of 15% and the rupee-dollar exchange appreciates by 5% a year for a few more years, it’ll dent India’s competitive advantage

Chinese intertwine business and personal affairs much more deeply. They do things for their partners even if they are personal affairs.

If you wander into any of China’s five floored bookstores, the first thing you notice right when you enter the store won’t be the newest hardcovered fictions. It’ll be management books written by successful American businessmen. On shelf after shelf, you could see copies of Jim Collins’s “Good to Great,” Jack Welch’s “Straight From the Gut,” Tom Peters’s “Re-Imagine!” and just about everything the late Peter Drucker ever wrote. One section you won’t find in Chinese bookstores is a section for management or human resources.

There’s a good reason for this. In the West (not to mention Japan and South Korea) management skills are a given. Graduate schools of management churn out M.B.A.’s, while instilling the basic processes and systems that virtually all multinational companies rely on. People who rise to the top of companies are the ones who have mastered the art of management. But there are also many first-rate managers who populate the middle ranks of companies. They are the lifeblood of most big companies.

That’s not the case in China. The shortage of managerial talent is huge. There just aren’t very many people here who have the range of skills you need in that position. Xiang Bing, dean of the Cheung Kong Graduate School of Business, said: “We Chinese are so willing to work hard for money. We are intelligent. We have the drive and the passion. But we put too much attention on technology and not enough on institution-building. And our soft skills are a real weakness.”

One issue with management is that most Chinese entrepreneurs hire friends and family because they don’t trust people they don’t know. And if they don’t get help fast, they are going to lose control of their rapidlygrowing businesses. Rapid growth, though, is only one of the issues these entrepreneurs are facing. Every bit as difficult are ingrained mind-sets and attitudes that can make it difficult for Chinese executives to adapt professional management techniques.

Many Chinese entrepreneurs (even those who have graduated from the executive M.B.A. program) don’t want to hire M.B.A.’s because they bridle at having to pay professional management salaries. Another problem is that many Chinese executives believe that because it is a Chinese business, professional managers won’t fit in the system.

When dealing with each other, the Chinese, quite simply, do business differently than Western companies do business. For one thing, there is a lot of petty corruption that is an ingrained part of business, especially among the state-run companies. Purchasing managers favor one vendor over another because they get a kickback. A sales rep buys customer loyalty with under-the-table payments. And so on. People also tend to put their own interests over the interests of their company — not a huge surprise, given that everyone worked for the state just a generation ago.

Finally, there is the gnarliest issue of all: the importance placed on the deep, intertwining set of relationships known as guanxi. Unlike the West, you don’t just have a business relationship in China; you have a relationship that interchangeably mixes the personal with the professional.