Coming to a neighborhood near you

What do the Chinese want? This simple question has roiled global commodity and equity markets for years. The macro answer is found in places like Newcastle, Australia, where China’s appetite for coal created a port-side traffic jam. The micro answer can be found in Causeway Bay, my neighborhood and one of Hong Kong’s busiest shopping districts.

As one of the most popular spots for visitors from mainland China, hosting some 15 million tourists in 2007, Causeway Bay is a leading indicator of what Times Square in New York, Paris’s Champs Elysees or Leicester Square in London might look like in 10 years’ time.

If my neighborhood is anything to go by, mainland Chinese want luxury watches, branded cosmetics, and skin creams. Maybe a little jewelry, and of course medicine and baby milk powder. Almost every day, shops that sell anything else are being replaced by those that cater to the mainlanders. And it's not just my neighborhood: IFC, a big shopping mall in central Hong Kong connected to two office buildings filled with investment banks, is gradually converting its tenants to stores that absorb the maximum amount of mainland money. It wouldn't surprise me one bit if the reason Pret a Manger, the UK sandwich chain that filled each day with suited financial drones, closed its convenient IFC branch recently was because a jewelry store that catered to mainland visitors could pay a higher rent.

Mainland shoppers are here to stay in Hong Kong, and they are heading overseas. As increasingly wealthy Chinese tourists fan out around the world, they will have a similar impact on the shopping landscape of big cities, just as the Japanese did before them. Already, there are lines most days outside the Louis Vuitton shop in Causeway Bay. And it's a safe bet the big luxury groups all now design with Chinese shoppers in mind.

As the Chinese shoppers head your way, here are a few things I've noticed that have changed in Causeway Bay that you might observe eventually in New York or London: signs have cropped up on cosmetics saying "fixed price" (no bargaining!), stores have started to promote payment in renminbi, stores install ropes outside to give the impression of exclusivity, and of course, every possible store gets turned into a watch or cosmetics shop.

By 2020, the World Tourism Organization is predicting 100 million Chinese will travel overseas. When they come, the Chinese will leave their mark. While they may be shy about spending at home, the Chinese are shopaholics overseas, spending $6,000 per trip to the US, more than visitors from any other country.

Tell that to the economists and politicians who complain about the Chinese not spending enough. They'd just rather shop overseas.

Shell, Nestle and Motorola's dirty secret

Greenpeace has a new report out this week about big companies, including Nestle, Samsung, Motorola, Shell and Kraft Foods, that are failing to comply with China's environmental disclosure regulations. What's great about the report (called "Silent Giants") is that it only asks if companies (both foreign and Chinese) are complying with Chinese regulations - it's not demanding they adhere to a higher international standard. In particular, Greenpeace investigated companies' compliance with a 2008 regulation that said companies blacklisted by local governments in China for spewing pollutants into the environment must disclose precisely what they are spewing. What Greenpeace found was "[n]one of the 25 factories belonging to the 18 companies that were required to disclose environmental information for exceeding discharge standards disclosed information within the stipulated time limit." Interestingly, all of the eight multinationals cited in the report regularly disclose information about emissions at their plants OUTSIDE China. What do you think?

Notes from my career crypt

I'm always fascinated to hear about the short cuts people take to do their jobs better. I don't mean cutting corners on health and safety or anything pernicious - not today. I mean the ways that people do their jobs better ... like the Silicon Valley entrepreneur who said that he never helped anyone above him in the dotcom hierarchy; he always helped people junior to him. Anyway, partly because I've had to deal with a public relations executive recently (I say "had to" because I basically swore off dealing with PR after I left the FT because so many were unhelpful, poorly informed, or just liars), I have been thinking about the ways people screw up their relationships with journalists, sometimes to the detriment of their employers or clients. I've also been cleaning out my contacts file. Looking through the notes I kept, most people merited a "nice" or no note at all. But a good number got freaked out by just meeting a foreign journalist - not even doing an interview. I share some of these notes here, if not for your amusement, then for insight into how journalists (or maybe it's just I) think:

"A little scary" (human rights activist)
"Sucks. Never around. Never returns phone calls." (can't recall who this was)
"Beautiful eyelashes. Great English. Kind of cute." (senior police officer)
"Allegedly does not have an email account" (Steve Wynn, gambling mogul)
"Condescending. Ex-Goldman. Yuck." (banker)
"[Has a] pet pig." (news assistant)
"Didn't eat anything or say anything." (financial PR)
"'If it rusts, pollutes, or you can eat it, it's mine.'" (Morgan Stanley banker)
"Anal about quotes, but in a good way." (consultant)

The photo is of me in a classic pose from my days as a reporter: juggling too many notebooks and material on the street in Tokyo.

Japan vs China, take one

I've been in Shanghai and Tokyo this week giving speeches and presentations, and moving between these two cosmopolitan but very different cities has left me with plenty of food for thought. To start: while Japan has in many ways become an easier place for foreigners to navigate than it was a decade ago, it still has a long way to go. For example: unless you have a business here that can keep a mobile phone contract rolling over every month in someone else's name, you have to rent a phone on arrival at the airport. To get a local mobile number as a foreigner in Japan, you have to have a foreigner registration card. (By contrast, in China, like most of the world, you just show up, buy a local SIM card, and pop it in your phone - in China, SIM cards are sold at newspaper kiosks on street corners.) I'm going to go out on a limb on this one and blame Japanese bureaucrats for this situation. Another problem: Japanese banks, not so friendly to foreign cards. American friends visiting Tokyo this summer could not believe how difficult it was to find an ATM machine that would accept their cash cards. Because I used to live here, I know where the Citibanks are, so I don't normally spend much time thinking about this problem, but it's silly. It's much easier to find a place to withdraw money in Shanghai than Tokyo. Finally, getting paid for services rendered in Japan without a Japanese bank account is not easy. Like a street performer, I am paid in cash for my speeches and TV appearances. Wiring overseas is too complicated at Japanese banks, or so my clients tell me. Banking and telecoms, two service industries that should, in theory, be more international in the country with a longer experience with capitalism and global commerce, illustrate perfectly how Japan has been happy to keep itself at arm's length from the rest of the world. Granted, accessibility to foreigners is not a perfect index for measuring a country's prospects - but how could being more open to skilled foreigners be a bad idea for Japan?

Changing of the guard?

I met up with a friend yesterday who teaches business to graduate students here in Hong Kong. These kind of programs have grown in popularity while I've been living in Hong Kong, presumably because they are extremely profitable for the universities. They draw students from around the world - India, the US, the UK, and the mainland. Because I'll be giving a talk to a class of these students again this year, I asked the professor whether there was anything different about this class. Yes, he said. This year, the mainland students have arrived much more confident and even nationalistic. The financial crisis has emboldened them to feel that China's system is superior, and they could be very vocal in response to what you say about their country. Putting aside for the moment the question of system superiority, we all know that the environment you graduate into (whether from high school, college or grad school) affects how you see the world: graduating into Japan's big bang permanently altered the expectations of a generation of Japanese my age, for instance. And for Brits who graduated around the time my husband did, their troubles finding work dimmed their views of their country. What I hadn't considered is how the humbling of America, Inc over the past year will affect the way young Chinese see themselves - not just university students, but also middle class people like Lu Yuan, the woman in this photo. It's been a matter of hot debate among academics and business people here over the last few weeks: the shifting of the world order. While I haven't seen a definite rise in swagger among the Chinese students I know, this financial crisis has no doubt affected their views of the world and how they fit into it. I'm interested to see what, if anything, that means for China's policy and economy five, 10, 20 years down the line.

Rise of the $1 censors?

There's been a lot of talk on some China blogs lately about China's so-called public opinion crisis, where public opinion spirals out of the government's control. To Western readers, this is a natural part of civil society - people express their views openly. But not so in China, where Rebecca MacKinnon has dubbed the government's strategy to control public debate "cybertarianism". The Chinese government pays bloggers to weigh in on online debates in Chinese - these so-called "50-cent censors" advance the government's view of situations without declaring who is paying them to do so. I haven't yet heard of 50-cent censors operating in the comment sections of English-language websites, but I wonder if they already exist. I have met some incredible English speakers in my travels in rural China, people who asked me about George W. Bush's frequent use of certain words like "robust" to describe the economy because they spent so much time on Whitehouse.gov. The initial responses to the always excellent Arthur Kroeber's piece on FT.com about the Rio Tinto case made me wonder whether there weren't $1 censors (surely they get paid more for posting in English) at work. Arthur's piece actually comes out fairly positive for China, saying it's not as bad as Russia; the piece doesn't directly address the question of what crimes were at stake, as commentators immediately pointed out. I'm assuming (as perhaps Arthur does, though I haven't asked him directly) that bribery is widespread in China, among both foreigners and locals, and that the larger issue at stake is the consistent application of the rule of law. As the public debate (see Niall Ferguson's piece in Newsweek, as one example) continues to heat up about China's rise and the resulting shifts in the world order, it will be interesting to see how the online chatter develops.

The China Daily on The China Price

Much to my surprise, the China Daily has reviewed my book in a favorable light. The review, published in today's China Daily, argues that "Harney's book certainly has plenty of grim material providing grist for the China-critic mills. But Harney has too much integrity and objectivity as a reporter to altogether ignore the positive side of China's export economy." William Daniel Garst, the reviewer, liked the story of the girls of room 817 (pictured on my Twitter page) and agrees with my argument that the China price is unsustainable. He does take a more sanguine view than I do in the book, where I argue that while China is changing and worker expectations are rising, not much will change until Western consumers do. If anything, the financial crisis has deepened Western consumers' appetite for cheap goods. But recent books like Ellen Ruppel Shell's Cheap, which generated good press coverage, suggest that at least coastal American pundits are willing to discuss the question that lies at the heart of The China Price: are we really okay with prices this low, even if they mean unsafe working conditions, unsafe products and the decampment of our entire manufacturing sector to cheaper locales abroad?