Buy China, I Am

Burlington Northern -- a cheap buy

2011-03-03T18:11:00.001+08:00

A report from NYTimes:

Mr. Buffett singled out Burlington Northern, for which he paid $26 billion last year for the 77.4 percent he didn’t already own, for hefty praise. Here’s how he sees the benefits of owning a majority stake in the railroad operator, which earned $3.6 billion last year, on $15.1 billion in revenue

What a cheap buy! 26/0.774/3.6=9.3, that means 10.7% profit a year...And Burlington still grows...

Why Paul Samuelson Do Not Support Leverage Investing

2010-07-07T17:32:00.003+08:00

It is quite strange that academic fellows still advocate leverage investing, even though one of the greatest economists Paul Samuelson declared against it and Warren Buffett was mentioned.

Obviously, I think professor Samuelson was right and so is Warren Buffett. This kind of stories in investment always happen. These academic fellows once again act as "falling victim to the 'law of large numbers' fallacy". They are wrong simply because they use short term debt to "invest" long term or uncertain time period realized asset. That is crazy. Quite different from buying a house with leverage, debt of stock leverage is quite uncertain and liquidation time is always short than those fellows expect. No long term financial tools are present for ordinary stock leverage.

We need to remember Mr. Buffett's advice: never leverage.

Why we all love Warren Buffett?

2009-03-12T12:29:00.006+08:00

Warren Buffett is no longer the richest man of 2009;Bill Gates, again got the No.1. It doesn't matter at all. Fortune is always not easy to valuate, or even estimate. I think none can really tell us who will be really richer, Mr. Buffett or Gates --even neither can they themselves.

As a matter of fact, Bill Gates is much younger than Warren Buffett and their fortune almost the same, therefore Bill Gates' return rate of investment should be much higher than Mr. Buffett -- remembering the power of time. But why is it Mr. Buffett that is much more noticed and loved by the people all over the world? Another fact is they are both the biggest charitarians in the world.

The personal charisma and wisdom is one of the important reason, but not all. From the view of investment, Mr. Gates' success is some kind of "venture investment", which is possible but not expected. But Mr. Buffett, we all know him as the greatest "value" investor. Absolutely, few can expect to become Buffett II, as well as Gates II, however, the "value" investment is much more definite than "venture" investment, isn't it?

Why I become to believe China will have a brilliant future

2008-07-14T12:46:00.009+08:00

I used to be pessimistic about the future of China. I thought the government was inefficient and officials were all corruptive. Since late of 2006, through information from all kind of media, Jim Rogers' books and Steven N.s. Cheung's blog, I have believed that China will have a brilliant future.

Jim Rogers travelled around the world two times, he knows the ecnomics of over 100 countries; his believing in China cannot be wrong so easily. Professor Cheung, grew up in China, studied and worked in the US for years. He is a wise and rational ecnomist; I also do not think he can mistake on such problems. As a Chinese, Professor Cheung said he can write 3 books on criticising China's dark side, however, he admitted that Beijing must have done things quite correctly, otherwise, China cannot make such a historic progress in past 30 years. Charlie Munger, Warren Buffett's partner, the vice president of Berkhire Hathaway, said to those who resist Beijing Olympic early this year :" To ask yourself, does China become better or worse in these years?"

Moreover, I find that talent and wise people become to be in the right places in this country; the Mckinsey report How corporate China is evolving display this.

So, why China should not have a brilliant future?

Business in Wuhan

2008-06-04T13:09:00.009+08:00

Are you planning to do business in Wuhan, the biggest city in centeral China? Quite smart!

The south China is losing some of its advantage in manufacture industry. The prices for houses, land and labor are rising rapidly. The local government increases the lowest salary year by year in Shenzhen, Guangzhou, Zhuhai, Dongguan etc. As profit margin has already dereased quickly, many factories are considering on removing to even poorer countries like Vitenam and Burma. Obviously, that cannot solve the problem completely. There are not so many well educated engineers and huge labor resouce in these countries; also, the public facility is not as good as that in China.

How? Move to north, move to Wuhan. Tranportation cost may increase, but cost on labor, land, rent, electricity and facility will compensate much more. Wuhan has the 3rd largest university student population, 2nd largest iron & steel production, 2nd largest auto company in the nation. The biggest hydroelectric station in the world is also nearby. The city has been called "center of China" for hundreds of years. The biggest & longest river and the most important railways and highways in the nation are all pass throuth this center city. In the early 20th centry, the city was called "Oriental Chicago" by foreign investors and adventurers. Before 1949, Shanghai and Wuhan are the topest 2 cities ahead of Beijing in China.

World famous companies have already come to Wuhan. Citroen and Foxconn both has big factories of over 100,000 workers in Wuhan. The French have put most of its investment in China to Wuhan for quite a long time.

If you are interested in Wuhan or like any discussion on this city, please contact me. I am now intesested in the fields of

1) financial service (only interested in value investment)
2) food service
3) retail
4) education
5) internet
6) microelectronics

I am glad to have your emails: ickitt(*at*)gmail.com

Is it time to invest Chinese stocks?

2008-03-06T14:40:00.012+08:00

US market has been stricken heavily by the sub prime. Even Warren Buffett, who became the richest man in the world today, admitted that US economy is being faced with fading. How about China?

Will China survive alone in this crisis? Of course US is a big and important market for Chinese manufactures and China's GDP is expected to increase only 8% this year, but that is still good enough. China itself has the greatest demand on this planet. Its people are stimulated successfully to consume much more than before. Please come to any supermarket or shopping mall in China, which is filled with customers no matter on weekend or workday national wide.

Chinese do not become rich one night; in fact, most Chinese are still much poorer than most American can imagine. However, persuaded by the central government, Chinese have decreased their saving and consumed more. You can find the novel iPhone at Chinese young men's hands, PSP played by children, and luxury auctioned on marts...

The overall PE of Chinese blue chips has kept on decreasing since last year end (now, it is only half compared to that of in mid 2007), PEG of blue chip section is less than 0.8. Jim Rogers, the legend world wide investor, has kept in collecting Chinese stocks for years. Just yesterday, Jim advocated strong buy! If you do not believe Chinese manufacturing, at least, you should never miss the retail sector.

Believe in 2008 or regret in 2009...

Gmail not accessible since Mar 1 2008

2008-03-03T10:16:00.004+08:00

Gmail has been not accessible in Chinese mainland. What is the problem? The IE status bar displays "Script Error".

GFW or anything else? I will try with firefox later...

update: on Mar 5, gmail restored. It seemed that the gmail itself got some problem this time...

Invest crazy real market in China

2007-08-27T15:04:00.001+08:00

While the US real market falling into the valley in past 15 years, Chinese real market keeps on rising. When the government declared the state would no longer provide low-rent appartment for its citizens, the real market is destined to roar for a long time; we must understand that no land in this country is privately owned by anybody.

The land namely belongs to the state; but actually to the governmental high officials. House owners have only the very limited right to live on the land, where their houses are, for no longer than 70 years. According to the law, the government can take back the land any time (even in the 70 years) . Only the government has the right to sell land to real development companies; this means the local governments and high officials have the chance to make monery for themselves with this privilege. You can image not every company has the chance to get land no matter how qualified the company is.

The real market in China is far away from the market economic. This market is monopolized by the governmental high officials and real companies with special background. Wanna be special? It is not as difficult as before, as long as you have enough money and know how to use the money to get land.

The people in Chinese cities have complained for high house price for quite a long time. Meanwhile, the centeral government has kept on issue real regulations and laws to control the crazy house price. I have been never believed in what the central government has done. The fact is the people need houses, but the government is always trying to beat the hourse providing.

Also the government tries to persuade the people to give up the idea to own a hourse or an apartment. Yongtu Long, a high central governmental official, said he had not owned a house until 58 years old; he might have forgot that before he was 58 years old, no houses or apartments sold in China.

The central government always heads for south if it plans to reach north. I firmly believe the house price will not drops unless the land private ownership is realized.

As the best and biggest real company, Vanke occupies only 1% of the whole market. So, come to China for the tempting real and make a big fortune! Do not mind the special money cost, every penny of which is absolutely worth.

Blogging is not easy

2007-08-23T15:23:00.001+08:00

Blogspot has been blocked by by Chinese gov's Great Fire Wall (GFW, compared to Great Wall, one of the 7 miracles in the world) since Aug 2007. What a miracle for Chinese bloggers and it should be the 8th miracle of 21st century for human civilization.

Anyway, I finally found the way to "walk over" the damning GFW. The Great Wall was used to fight again the Norman in ancient; however, the GFW is to block free ideas of Chinese people in 21st century. I firmly believe that to detain one's mind should be cursed much more than to one's body.

Thanks God. I can finally update this blog now.

GFW failure or temporarily accessible?

2006-12-11T17:15:00.001+08:00

Google blogger/blogspot cannot be accessed from China mainland at this time. GFW failure or temporarily accessible? I do hope the damnable GFW is OK for this time...

After I opened this blog for only 2 days, the blogspot was blocked by Chinese government...

I will keep watching for another 2 days. If it is still OK, I will update this blog soon.

Internet Business in China

2006-10-16T13:12:00.000+08:00

Doing business in China? Good idea! The largest market in the world, cheap and huge labor resource, the appreciating RMB, the kind government for foreign investors and promised high yields ... However, it does not sound as good as in internet business.

Google, the best online search engine and the best web company, acts in China not as excellent as Baidu. Yahoo defeated by SINA and SOHU sold its yahoo.com.cn to Alibaba, which is greatly threating ebay with its taobao.com without taking another Chinese C2C website dangdang.com into consideration.

What problems?The China government's rigorous internet policies upon foreign companies?Yes, but very limited. The most important factor, I think, is that Chinese have their own ways on internet surfing, quite different from that of the people in the US. In fact, the similar problems lie also in other businesses, just not so obviously.

For Google, I think it all right except for its boring Chinese name gu-ge; and it is true that, google has been greatly feazed by the GFW. Yahoo deserved its lose in China as it was not willing to study from sina.com and sohu.com. Chinese do not like to read news and stories on the web-pages from yahoo, which has a very "simple" homepage almost without scrolling the slider bar. Chinese hate to click for more than 3 times to read what they want; they dislike too much indexes and directories. They are fond of shortcuts; even these shortcut links are filled in all over the homepage. Also, ebay destined to fail when it entered China the first day. Two reasons: 1) Chinese do not believe in credit cards as this country pay more attention to reality rather than credit. 2) Chinese like bargaining when buying anything. For the first, ebay could not build up an online payment system according to Chinese customers as quickly as taobao.com. On the other hand, taobao solved the second problem completely by launching its own integrated IM software customized for online purchasing; thus the customers and the seller can enjoy the pleasure on bargaining, even more pleasant than in real market.

Now the US internet service providers might have learned a lot from their Chinese competitors. But understanding what Chinese customers want is really not so easy; you must really understand Chinese commerce under the background of Chinese culture, watch and study the customers' behavior very carefully.

In fact, the same problem lies not only in the internet business, but most of the other industries. It might just not so obviously. For example, Dell can provide much better notebooks than many Chinese manufactures, but Dell's selling acts not as well as its competitors'. Chinese people just do not like Dell's direct selling service. The problem seems to mainly lie in internet only because the internet business in fact mainly focuses on channel service.

Will Chinese Benefit from RMB Appreciation?

2006-10-14T10:28:00.001+08:00

RMB appreciation or not, this is a problem. According to natural rules in economics and the interest of the US, I agree that RMB appreciation should be necessary. The government cannot always disobey the basic rules, no matter how powerful it is. Foreign investors may be excited on talking RMB appreciation; however, for ordinary Chinese people it might not be a good news.

I do not care for the affection of RMB appreciation on Chinese export trading, instead, let us take a look at the changes in ordinary Chinese life. In Wuhan, the biggest city in central China, with the population of over 850 million, food price has increased 25% in average since this August when China government began to speed up the appreciation of RMB; the price for egg even become 2 times that of in July. However, the average income increase only 0 - 3%; more than half employee cannot get a compensation in salary as the increasing of laid-off workers. Also, the prices of electricity, water and gas keep on rising national wide including in Wuhan this year. In spite of the government regulation on real market, the average price of apartments in all Chinese cities except Shanghai continue rising up. That is the life the ordinary Chinese should be faced in front of RMB appreciation.

I still admit that RMB appreciation is correct; the problem lies in the government financial policies. RMB cannot be exchanged freely for ordinary Chinese and the government insists on GDP increasing depending on export rather than domestic consumption. Now who should take the responsibility ? Again the whole Chinese people?

China in IC Kitten's Eye -- A Window to China

2006-10-13T16:09:00.001+08:00

About this blog

China again grasps the eyes from all over the world. How the state runs; how its economy booms; how its big population inflates...let these be the specialists' problems. Here, IC Kitten just opens a window to display the ordinary Chinese daily lives and their true feelings.

About me

I am a Chinese living in Wuhan, the biggest city and the capital of Hubei province in central China with the history of more than 2000 years. I am a Wuhan native -- born here, studied here and now working here. I gave up much higher salary in south China foreign companies and full fellowship from the US universities only because I love this city.

Why blogging?

I found that people in foreign countries can understand even better than Chinese themselvs on Chinese big affairs, especially on political, financial, human right, etc. Little do they know how ordinary Chinese lives and what true Chinese feelings are in this drastically changed information age, which I think even worth being acknowledged.

I also run another blog in Chinese on financial, tech & life comment.

Thanks for your concern over China and this blog.