Made_in_Laws

Game Theory, Economics and Strategy.

2007-08-29T19:38:00.003-07:00

I am reading and searching many mathematical books, almost all are related with law, economics and game theory.

There are several books I strongly recommand.

(Clicks the picture of right-hand-side to see the details in Amazon)

1. Game Theory and Strategy (New Mathematical Library) (Paperback) by Philip
D. Straffin (Author)

This is an excellent introduction of game theory, Professor Straffin explains the game theory in English. He is not expected the reader with strong background in mathematic. Moreover, it is not only a mathematical reading in English. There are many excellent example in term of social science, economics.

2. An Introduction to Game Theory by Martin J. Osborne (Hardcover - Aug 1, 2003)

3. A Course in Game Theory by Martin J. Osborne and Ariel Rubinstein
(Paperback - Jul 12, 1994)

There are two textbook from a same author, Professor Osborne.
Professor Osborne address the game theory in different level;
graduate level and undergraduate, respectivley.

There is a Professor Osborne page-link.

http://www.economics.utoronto.ca/osborne/

2007-08-06T08:45:00.000-07:00

Over the last few months, I am going to write a paper about "Economics analysis of capital market". I found it is not a easy subject, neither how to write a academic paper in term of less mathematical, nor it is abstract. New Institutional Economics; for the people who are not familiar with this subject, please click "New Institutional Economics" to get the related externl link.

New Institutional Economics is a interesting subject, however, it is not easy to get the knowledge indepth.

Anyway, back to my paper subject, I try to treat the market as a "Organization". Trying to research the nature of the market. There is a book which is informative for me to gain the knowledges about NIE.

Institutions and Economic Theory: The Contribution of the New Institutional Economics (Economics, Cognition, and Society) (Paperback)
by Eirik G. Furubotn (Author), Rudolf Richter (Author)

There is a link from amazon

Economic Analysis of Property Law in China.

2007-05-31T22:34:00.000-07:00

Property Law was adopted by the National People's Congress in2007 and shall be going to effect on October 1, 2007.

In this paper, property law refers to a basic question? what is property right? It shall address the issue of possessory right.

Possessory right. An individual or legal person owns a property. We ordinarily mean that an individual or legal person owns an ownership of the property. Property law protects the right of an individual or legal person; to use, to assign or to dispose a thing freely and to prevent others to critize the owner. Moreover, the property law also address certain regulations to allow the first person to commit particular act and to prevent others to commit particular acts, in order to protect the first person possessory right exclusively.

However, the freedom of usage the property right that is limited, in other words, it is proportionally. There is a man who owns an ownership of the land in countryside. Generally, we can say the the man can do what he please to do on the land (farming, build a building or leave it idle).

Right to transfer.

http://zt.thebeijingnews.com/0799/2007/03-19/018@051239.htm

Law and Economics

2007-05-07T08:12:00.000-07:00

It has been a long time without update this blog, I am going to study Master of Economics in September. As you all know, I completed a LLB degree last year. Especially, I enjoy studying the combination of these two areas; law and economics.

There are two books that are highly recommended.

Game Theory and the Law
Douglas G. Baird, Robert H. Gertner and Randal C. Picker
http://picker.uchicago.edu/agtl/gtl.html

Foundations of Economic Analysis of Law
Steven Shavell
http://www.hup.harvard.edu/catalog/SHAFOU.html

Former Stanford law dean passes California bar

2006-08-06T15:48:00.000-07:00

According to The Mercury News

Associated Press

SAN FRANCISCO - Former Stanford Law School Dean Kathleen Sullivan passed the California State Bar examination on her second try - months after the state's highest court removed her from a case because she had not passed the exam.

Sullivan failed the state's three-day test to become licensed to practice law in California last year, but she passed the February test, according to results released Sunday.

A month before she retook the exam, the California Supreme Court removed her from the legal team in a $500 million licensing dispute because she had not yet passed the exam.

Sullivan, the author of a leading constitutional law textbook, is licensed to practice in New York and Massachusetts and says she has argued four cases before the U.S. Supreme Court.

"Having practiced law for nearly 25 years as a member of the New York and Massachusetts Bars, I am extremely excited about new opportunities to practice in California," Sullivan, 50, said in a statement.

Sullivan departed from the top law post at Stanford in 2004 after a five-year stint to head the appellate section of the firm Quinn Emanuel Urquhart Oliver & Hedges in Redwood City.

Bill Moyers on Faith & Reason

2006-07-12T16:24:00.000-07:00

It is a debate between faith and reason, on one end said "Only religion counts." On the other end, they said "Only reason counts". How do we keep the balance of "Faith" and "Reason" in my mind?

Bill Moyers
-- "In a world religion is poison to some and salvation to others, how do we live together?"

http://www.pbs.org/moyers/index.html

Company Law in China

2006-07-11T23:01:00.001-07:00

Prior to the 1978, there wasn't the concept of “Company”; all economic entities were belonging to the state or the country, Economic sector was managed or controlled by the government only. It was not necessary for people to form an economic entity to carry out their business because there wasn't private owned business. There were state owned enterprise and governmental entities to carried out business. The state owned enterprise did not responsible to bear the profits & losses individually. They were following administrative advices or country's strategies to operate their business.

Until 1978, as consequence of China's domestic economic reform and was opened to the outside economy, to help the country transitional period from a planned economy to the make economy smoothly. The concept of “company” was reintroduced into Chinese history. It is necessary for people to operation their business and responsible to bear the profits & losses, and dealing with other entities to ensure competitive for survival and success in the market.

There are different business entities in China, limited liability company, joint stock company limited, individual owned company, Chinese-foreign equity joint ventures, Chinese-foreign contractual joint ventures and wholly-foreign owned company.

A New Era of Company Law

On October 27, 2005, a new company law has been Enacted at the Tenth National People’s Congress of the People’s Republic of China and promulgated on the same day by the President of China and came into force as of January 1, 2006.

1. Eliminated the proportional limit for investment abroad of company asset.
(Article 15 A company may invest in other enterprises. However, unless it is otherwise provided for by any law, it shall not become a capital contributor that shall bears several and joint liabilities for the debts of the enterprises it invests in.)

2. Company investment in any other enterprise or provide guaranty for others.
(Article 16 Where a company intends to invest in any other enterprise or provide guaranty for others, it shall, under its articles of association, make a resolution through the board of directors, shareholders’ meeting or shareholders’ assembly. If the articles of association prescribe any limit on the total amount of investments or guaranties, or on the amount of a single investment or guaranty, the aforesaid total amount or amount shall not exceed the limited amount. If a company intends to provide guaranty to a shareholder or actual controller of the company, it shall make a resolution through the shareholder’s meeting or shareholders’ assembly.)

3. The minimum amount of registered capital of a limited liability company shall be RMB 30, 000 yuan, the margin shall be paid off within 2 to 5 years.
(Article 26 The registered capital of a limited liability company shall be the total amount of capital contributions subscribed to by all the shareholders registered in the company registration authority. The amount of the initial capital contributions made by all shareholders shall not be less than 20% of the registered capital, nor less than the statutory minimum amount of registered capital, the margin shall be paid off by the shareholders within 2 years from the day when the company is established; for an investment company, it may be paid off within 5 years. The minimum amount of registered capital of a limited liability company shall be RMB 30, 000 yuan. If any law or administrative regulation prescribes a relatively higher minimum amount of registered capital of a limited liability company, the provisions of that law or administrative regulation shall be followed.)

4. The amount of the capital contributions in cash paid by all the shareholders shall be no less than 30% of the registered capital of the limited liability company.
(Article 27 A shareholder may make capital contributions in cash, in kind, or intellectual property right, land use right or other non-monetary properties that may be assessed on the basis of currency and may be transferred in accordance with the law, excluding the properties that shall not be treated as capital contributions under any law or administrative regulation.

The value of the non-monetary properties as capital contributions shall be assessed and verified, which shall not be over-valued or under-valued. If any law or administrative regulations provides for the value assessment, such law or administrative regulation shall be followed.

The amount of the capital contributions in cash paid by all the shareholders shall be no less than 30% of the registered capital of the limited liability company. )shall make a resolution through the shareholder’s meeting or shareholders’ assembly.)

To be continue….

Beer Industry in People Republic of China

2006-07-07T22:47:00.000-07:00

The following article which was written by me. It is a bit outdated, I hope it is still useful for a brief introduction of beer industry in China.

Beer industry is being driven by restructuring and acquisitions of domestic breweries and foreign investors

Beginning in spring 2005, annual beer production capacity of 25,000,000 metric tons in China. Discussions on China’s breweries-mergers and acquisitions have primarily centered on two questions; whether China’s domestic breweries can expand a sharing of the industry, and whether it will be acquired by foreign investor.

In respect of whether domestic breweries have expanded rapidly, beginning in October 2001, when the CRE/SABMiller launched investment to the market by acquisition of Sischuan Blue Sword, China’s government has lifted a policy, implemented selective investment controls, and increased encouragement on domestic brewery to acquits with province brewery. These activities are still on-going that the clearest signal was the market expending by both foreign breweries and domestic breweries.

Growth in consumption of alcoholic beverage has substantially in response to these GDP measures. Consumer Price Index (“CPI”) inflection has been growing strongly; it is being driven by increases in income and urban population. It is probably this indicator more than others, which the private consumption has been growing in the past and will be continuing in the future.

According to ACNelson statistical report, 70% of alcoholic consumption in China occurs at mealtimes, indicators suggests that alcoholic beverages are identified as basic goods, the profit margin of breweries are low, because of weakness in demand and overcapacity puts pressure on price. Beer demand is growing of 6% per annual, which has benefited from China’s government low-alcohol-beer promotion and it has been the most favorite alcoholic beverage in China.

High-alcohol-content consumption continues to decline, It is being driven by the China’s government discourages the consumption of high-alcohol-beverages and encourages consumption of low-alcohol-beverages.

In the past few years, the sales volume of high-alcohol-beverages (baijiu, a inexpensive traditional rice-based alcoholic beverage) is declining by more than 10% annually. The major of such alcoholic beverage are local products. The foreign high-alcohol-beverages, such as whisky, brandy and cognac, represents only 0.1% demand of total consumption of high-alcohol-beverages market. Sales of foreign high-alcohol-beverages have declined by advertising and pricing from high quality domestic products, which dampened their popularity.

M&A Activities

The data for the transactions shown above those international breweries invested in the Chinese beer market. Although there are several international brewers that are profitable in the region, foreign brewers still sold their breweries. Foster sold two of its breweries in 1999. Carlsberg returned to the market and bought three breweries in the southwest region, but it sold its Shanghai brewery in 2001. In the past year, there has been a rising trend in the transactions value from Q2 2002 to Q3 2005.

Activities are being driven by continued restructuring and privatization from both foreign brewers and domestic brewers. China’s largest brewers continue to expand its market share. The past few years have seen new government policies to facilitate M&A by domestic brewers. The Ministry of Commerce announced in October 2004 that it had simplified approval procedures for investments by domestic brewers. The most significant acquisition recently was Beijing YingJing Brewery acquisition of a 52.3724% stake in Huangling Brewery Company. Driven by its desire to reduce production cost of its existing breweries and regional market access, Beijing YingJing become China’s first brewer to take control of southeast region.

Another emerging trend is the rapid increase in international brewer acquisitions activity in Mainland China. The first half of 2005 has seen a number of successful private equity exists, and an increase in investment activitiy. SABMiller accepts an offer of HK$5.58 that Anheuser-Busch made for shares in Harbin Brewery.

Brewing industry is beginning to experience consolidation. Particularly in those brewers deregulated where regional participation was previously to joint ventures. These brewers have experienced an on-going trend for mult-regional corporations to consolidate multiple joint ventures.

Outlook

In the medium term, it is likely that M&A activities will increase. As more and more of the economy is in industrial restructuring from the fragmented regional brewers will be consolidated. Overseas brewers M&A activity by domestic cooperation will continue to be driven by the search for resources, technology and market access.

Privatization is now bullish in China and has a rapidly growing of successful beer brewers. The growing participation of oversea brewers, the emergence of increasingly powerful and capital rich foreign corporation and domestic brewers are seeking aggressive growth targets in China suggests that it will remain a active market.

Securitization in China

2006-07-07T18:34:00.000-07:00

I am going to conduct a research in securitization, specialised in China. There are several published laws & regulations which I found that would be useful.

《中华人民共和国信托法》，2001年4月28日第九届全国人民代表大会常务委员会第二十一次会议通过。 (Trust Law of the People’s Republic of China, Adopted at the 21st Meeting of the Standing Committee of the Ninth National People's Congress on April 28, 2001)
《信贷资产证券化试点管理办法》，中国人民银行、中国银行业监督管理委员会制定，2005年4月20日公布。(Administrative Measures for the Securitization of Credit Assets, The People's Bank of China, China Banking Regulatory Commission April 20, 2005)
《信贷资产证券化试点会计处理规定》，财政部于2005年5月16日公布。(www.cadwalader.com/assets/article/010106IFLRWang.pdf )