Perceptric Forum

Global Connections

Chris Gilbey — Mon, 22 Sep 2008 06:10:34 +1000

The implosion of US and global financial markets over the last week has been extraordinary, but not wholly unexpected - after all there have been warnings for some time that things were coming apart.

What has been a surprise is the speed of the unraveling in the US. And it would almost certainly have been a whole lot worse if it weren't for the fact that there are some extremely smart people working in the US administration who have presumably been not just putting together the government bail outs, but also manipulating markets through the application of very large bets on market for the same companies that are being bailed out...

Next we are going to see how the tsunami affects the rest of the world as the aftershocks ripple around the planet...

And isn't it ironic that the country in which capitalism has become such a fine art is now in the process of becoming the country that is most socialized on the planet?

How is is possible that the world's largest insurance company is now owned by the US government?

The AIG mess is going to reverberate through China next, and who knows what that means. Look at this article about the connections that the company has with China.

China's imploding US ally
September 18, 2008
by Richard Komaiko and Chris Stewart

Asia Times

                The collapse of US insurance giant AIG and its US$85 billion takeover by the US government on Tuesday takes the US financial crisis right to the heart of China's development as a capitalist country.

                AIG, the world's sixth-largest company by assets and biggest insurer, according to the Forbes Global 2000 list for 2007, is one of the few US institutions to be founded in China, its roots dating from 1919 when Cornelius Vander Starr, a veteran of World War I, founded a small insurance company in Shanghai called American Asiatic Underwriters, later to become AIG.

                More famously, Starr's successor, Maurice R Greenberg, built relations with China's leadership from 1975, his first visit to the country predating by several years the revolutionary moves by Deng Xiaoping to open up China to Western influences.

                In this, Greenberg proved himself a master of developing guanxi, a term summarized as "connections" and now recognized as holding the key to successful development of business in China.

                According to Benjamin A Shobert, reviewing Robert Buderi and Gregory T Huang's book of that name, "guanxi is commonly perceived as partnering and understood to focus the attention of Westerners on the great importance that the Chinese put on relationships. To most Westerners guanxi emphasizes personal relationships in contrast to the contractual, non-relational business practices common in America.

                "While a portion of the word's meaning can simply be seen as stressing relationships, the authors emphasize that a better understanding of the word is to emphasize four things: trust, favor, dependence and adaptation - the last what the authors call 'patience and cultivation'."

                Greenberg's patience and cultivation of relations with China's leaders saw him play a key role in building links between the US and China, while his company had a front-runner's view as it and China metamorphosed into leading players in the global business world.

                Starr was the initial pathbreaker. When he set up shop in Shanghai, there were many other Westerners selling insurance in the city, then as now the country's financial hub. But these potential rivals almost exclusively concentrated their efforts on selling to other Westerners. Starr realized that the Chinese people themselves represented a vast and underserved market for insurance, with relatively low risks. This insight would enable him to become one of the wealthiest men in the world.

                Within 10 years, Starr had established offices across China, Hong Kong, the Philippines, Indochina, Jakarta and Kuala Lumpur. In 1926, he opened his first office in the United States. The growth of his company was temporarily disrupted by the Chinese civil war and the general turmoil in East Asia. In 1939, Starr moved the headquarters of his corporate empire to the Empire State - New York. From there, his company and fortune grew many fold.

                In 1962, Starr appointed Greenberg to head AIG's then failing North American operations. In a remarkable display of business prowess, Greenberg turned the unit around, a feat that encouraged Starr to name him his successor before passing away in 1968.

                Starr bequeathed all his wealth to the C V Starr Foundation, one of the largest foundations in the United States, with over $3 billion in assets. Greenberg became the chairman of this foundation while also assuming the reins at AIG. Under his leadership, the company prospered while he himself became one of the kingpins of American foreign policy.

                In 1977, he became a member of the Council of Foreign Relations, arguably America's most influential think-tank, and over the next three decades he would hold numerous leadership positions in the council, culminating in 1997 with the founding of the Greenberg Chair.

                Today, the Greenberg Chair "is the senior person directly responsible for the substantive content and management" of the think-tank. Greenberg has also been a member of the board of directors of the New York Stock Exchange; a former chairman, deputy chairman and director of the Federal Reserve Bank of New York; a member of the US-China Business Council; the chairman of the Asia Society; and a member of the Advisory Committee for Trade Policy and Negotiations to the President of the United States.

                With all of these roles, plus his control over the resources of the Starr Foundation and the American International Group, Greenberg's power to shape America's foreign policy was rivaled only by Citizen Kane.

                Greenberg's foreign policy views were heavily influenced by two factors. One was his experience in World War II of the liberation of the Nazi concentration camp at Dachau. The other was the legacy of Starr's love for China. This latter factor would ultimately play an enormous role in shaping America's policy toward China for more than a quarter of a century.

                In all of his actions and with all of his influence, Greenberg exercised a sanguine desire to foster reconciliation and cooperation between the United States and the People's Republic of China. The impact of this desire can be seen in the fingerprint that Greenberg has left on academic and policy institutions around the United States.

                At his discretion, the Starr Foundation has funded numerous fellowships with the Asian Cultural Council, donated $300,000 to Columbia University's East Asian Library and considerably more to Berkeley's C V Starr East Asian Library. Most recently, Greenberg and the Starr Foundation each donated $25 million to Yale University to create the Maurice R Greenberg Yale-China Initiative.

                Greenberg's lobbying efforts were a driving factor behind America's decision to support China's admission to the World Trade Organization, which it officially joined in November 2001. Undoubtedly, a fair amount of the credit for the creation of an American policy environment that is favorable to China is due to Greenberg and the resources that were generated by AIG.

                AIG's own development in China took various, often ground-breaking, forms. China America Insurance Company was formed in 1980 as a 50-50 joint venture between AIG companies and the People's Insurance Company of China (PICC), the first joint venture between a foreign insurance organization and PICC. Personal ties with future leaders were also forged. In 1990, AIG financed and chaired a financial services conference in Shanghai to assist then city mayor and later country premier Zhu Rongji in introducing the international financial community to investment opportunities in Shanghai.

                Two years later, AIG unit American International Insurance (AIA) established a branch office in Shanghai, to become the first foreign-owned life and non-life insurance business to receive a license from the People's Bank of China. In 1995, AIG companies won licenses to extend operations to Guangzhou, the key city in the country's efforts to open up to the outside world of commerce, and a year later it secured a lease allowing it to return in 1998 to the Shanghai Bund, home of C V Starr's original Shanghai insurance companies.

                In 2003, by which time AIG's presence in the country extended to several provinces, the insurer acquired a 9.9% stake in PICC Property and Casualty (PICC P&C) when the Chinese company listed in Hong Kong. In 2005, as the Chinese government continued to ease its grip on the financial sector, AIG Private Bank became the first foreign private bank to receive approval to open a representative office in Shanghai.

                One immediate effect of AIG's collapse could be on PICC P&C's stock price, which would be at risk if AIG liquidated its stake, Citigroup analyst Bob Leung said in a research note on Tuesday.

                Chinese insurers also face a greater counter-party risk from the collapse of AIG than from Lehman Brothers, the other US financial giant that crumpled in the past few days. Lehman, which has filed for bankruptcy has significant exposure in Asia. "Given the very low life insurance accession rate in Asia, "if AIG loses its A- rating or its situation worsens significantly, we expect the financial impact to affect mainly P&C insurers," Leung wrote.

                S&P lowered AIG's long-term counterparty rating to 'A-' on Monday.

                China's insurance regulator declared that AIG businesses in the country were sound, echoing statements from the rest of the region. This is however a big concern going forward, given the large market share that AIG commands in many Asian markets, and the sheer volume of domestic securities that it holds across the region.

                Other insurers in China meanwhile may gain from AIG's loss. "China Life, with a strong balance sheet and limited non-yuan asset exposure (less than US$3 billion and mainly in H-stock Hong Kong listed shares and cash) has the strongest balance sheet of all regional insurers and is likely to benefit from a 'flight to quality' perspective," Leung wrote.

                The sudden decline of AIG may lead to a reduced influence of the company in international affairs, and a cut in the amount of resources that are lavished on America's foreign policy establishment for the purpose of encouraging China-friendly policy.

                As it is, Greenberg's pathfinding and influential role in China has already been superceded to a large extent by the huge influx of other Western business leaders, notable among them Henry Paulson, who as chairman and chief executive of Goldman Sachs spent much time and and effort building his own relations with the present Chinese leadership.

                Paulson's appointment as US Treasury Secretary in 2006 came at a time of simmering tensions between Washington and Beijing over China's reluctance to strengthen its currency and rein in the growing trade surplus it enjoyed with the US. Demands for faster appreciation of the yen continue, but their tenor has become less strident since Paulson took up his government post, with the focus on relations changing through the Strategic Economic Dialogue to broader long-term bilateral economic interests.

                Ironically, while the US Federal Reserve played the dominant role in bailing out AIG this week, it was Paulson holding key strings of power in Washington while Maurice Greenberg sat on the sidelines.

                In 2005, Greenberg was accused of financial malfeasance. In the ensuing scandal, he was ousted from his leadership role at AIG. Nonetheless, he retained direct ownership of 39 million shares of AIG stock, and an additional 243 million shares through the investment company that he still controls, C V Starr and Co. At the beginning of this year, his shares were worth $15.8 billion. By the close of the market on Tuesday afternoon, they were worth a little more than $1 billion.

                The links that Greenberg had cultivated over the decades with the Chinese community certainly are also looking frayed when it comes to trust in AIG products in the wake of this week's collapse.

                As Chan Akya reports in Asia Times Online on Wednesday panic-stricken policyholders lined up all day on Wednesday in Singapore to surrender their policies to secure redemption value.

                In Hong Kong, where AIA is the largest life insurer with more than 26% of the market and more than 1.9 million policies sold, more than 1,700 people canceled their insurance policies with AIA on Tuesday. On Wednesday, some 170 policy holders rushed to AIA headquarters to cut their insurance or investments. The Hong Kong government has demanded AIA seek approval before it removes any asset out of the territory.

                One 50-year-old woman at the hectic commercial and retailing center of Causeway Bay said she decided to surrender her insurance policy today as she was worried AIA's business might be affected.

                "I was supposed to pay premiums this month but I don't want to take any risk now. I am so afraid that I will lose all my money here. To keep as much money as I have in my pocket, I surrender the policy now," she said.

                With further reporting by Olivia Chung, senior Asia Times Online reporter in Hong Kong.

                Richard Komaiko researches Sino-American relations, economic policy, terrorism and national security. He holds a degree in economics from the University of Illinois

Chinglish Strikes

Chris Gilbey — Fri, 16 May 2008 14:33:01 +1000

I came across a blog today that has some fantastically mangled English.

Here is a Cisco Data Sheet for a product that you probably want to have in your system... an Ether Lord Fucking Net...

Oil Prices

Chris Gilbey — Mon, 25 Jun 2007 19:49:20 +1000

Oil prices are heading north.

None of us have seen any real increase like the sort of prices we have ahead of us.

The International Energy Agency, which monitors oil markets on behalf of industrialized nations, is forecasting average global oil demand of 86.1 million barrels a day this year, up 2 percent from last year. That is twice as fast as the 0.9% growth recorded in 2006, compared with 2005.

Demand is expected to accelerate further in the fourth quarter to 88 million barrels a day, an unprecedented quarterly volume and up 2.6 million barrels a day from the year-earlier period. In the second quarter, global oil demand already has risen at a 1.7% rate, more than double the 0.8% a year ago, according to forecasts and data compiled by the IEA.

Google losing users in China: study

chrisbroad — Mon, 07 May 2007 20:21:29 +1000

A little dated but still worth knowing, I found this article about a chap - "Matt Cutts works for Google and has a blog about how to court their search engine; so, when Matt flaps his blog wings in America there is a tsunami on the far side of the Internet."

Which alleges that - According to China Internet Network Information Center, CNNIC, Google is losing market share from 33% last year to current 25.3%.

It goes on to support this at the following link @ Linux World .

Vquence targets Asian Media Companies

Richard McKinnon — Tue, 10 Apr 2007 17:26:47 +1000

For a while we've been talking about video, China and incredible growth.

Today, we bring the three together, along with contributors to this blog, Chris Gilbey (Sydney) and Chris Broad (Hong Kong). Startups need to operate across the globe right out of the gate. Vquence is running fast. Read the press release

Video Search Company Opens Hong Kong Office.

Hong Kong; Sydney, Australia; Santa Monica, Ca. Video search, socialization, and advertising company, Vquence has started targeting business in China and Hong Kong just days after the startup company’s initial launch. Vquence is aiming to partner and build relationships with global media companies headquartered in Asia.

“China’s internet growth will lead the world this year. Vquence is China focused; it’s a market and a community we aim to succeed in” Chris Gilbey, Vquence CEO said today. “We intend to develop business relationships with major media companies to deliver video search for deep vertical markets”

Vquence is a technology leading video search engine. When launched, users will easily and intuitively discover relevant video content. An authoring toolset then permits easy creation of a playlist of thin sliced videos (or ‘vquence’). The vquence is presented through a specialized video player. This playlist will play in any Web page. Users will be able to cut and paste the code for their vquence into a blog or web page. Dynamic insertion by Vquence places ads into the vquence based on relevance.

“Video is the centre of the internet’s next big leap forward. Vquence will be a key accelerator.” Gilbey said. “That’s why China’s market is so important to us.”

Vquence has appointed Chris Broad as Vice President, China, to head its new China/ Hong Kong Office. Broad has had over 10 years of experience in Asian and Global technology businesses. Broad brings a record of success in establishing technology markets, elevating corporate presence and image, and facilitating the start-up of operations in various worldwide locales.

Based in Hong Kong, Broad worked for Thorn EMI, Leccotech, (now part of Quest Software), Surface Mount Technology, and SubmediaAsia. Company knowledge includes IT enterprise solutions, ODM consumer electronics, and entertainment technology businesses.

“In China our focus is on advertising and content opportunities moving away from old print media, pc’s, and traditional TV to the web, and handheld devices. Our goal is to facilitate that transition and help content owners easily monetize their content.” Broad said

“My role is to introduce Vquence into China’s market dynamic. Our social media solution for mainstream Chinese corporate media is totally market and community facing” Broad said.

China’s 14 million site blogosphere is joined by a new blog or online social forum every second.

“China’s unique cultural character is well-matched to developing a Web-based economy and consumer social media.” Broad commented. “China is a rapidly evolving media market. Video consumption is up 30% on last year. Vquence is about to become part of that evolution.”

Known for innovative strategic marketing and business development, Broad has been tasked by Vquence to develop media relationships in Hong Kong and China, followed by other parts of Asia. He has been set ambitious first year targets.

“Injecting Vquence and its unique business model into China’s media and internet business community will rapidly build out our business, and those of our partners.” Chris Gilbey commented. “China’s social structure and media environment encourage social communities and sharing. To become part of the Chinese media market we need to establish early in the evolution of this company that we are prepared to listen to the Chinese marketplace, rather than assuming that there is a one size fits all solution for all media.”

Vquence was formed in July 2006 by Gilbey and Dr Silvia Pfeiffer, a former CSIRO research scientist. Gilbey is a long time entrepreneur in the content and technology arenas. Pfeiffer is a leading authority on Digital Media Analysis; helped develop Annodex, an open source platform for video distribution; and has developed application algorithms to analyse and mediate video content.

“Vquence’s technology and business model aim to turn today’s video assets and costs into online reach and revenue. Our model is to unite consumers, publishers, and content owners.” Gilbey said, “We facilitate social networks,” Gilbey said, adding “Consumers find and aggregate video, then share it widely. They get paid. Content creators and publishers are rewarded from embedded ads in the vquences their communities share.”

The Vquence move into Asia follows the company’s launch two weeks ago. Vquence’s technology affords an instantaneous approach to clickable video. Content owners can monetize video to consumers seamlessly.

“We change market dynamics. We work with media companies where there is an established chain of title to the IP and then help them monetize it. Consumers become legitimate distributors of the video asset rather than pirates.” Gilbey said. “Community drives the opportunity – the wisdom of crowds determines what is truly viral content. We provide the acceleration.”

The Vquence R&D team is internationally spread and headquartered in Sydney. The company expects to announce a slate of initial customers that includes media and content companies in both the US and Australia

Further Information;

Chris Gilbey,
CEO, Vquence
Sydney, Australia

Chris Broad
VP, China
Hong Kong, China

About Vquence: Vquence is a video search, socialization, and advertising company that has a comprehensive model of monetizing video for content owners to consumers. Demonstrations of the technology are being conducted under NDA. The Vquence website has more information on the company. www.vquence.com. The company has offices in Sydney Australia; Hong Kong, China; and Santa Monica, Ca.

IOC tendering Beijing Games new media rights for China

chrisbroad — Sun, 25 Mar 2007 20:31:36 +1000

Revenues from broadcasting and new media rights for the 2010 and 2012 Olympics have already risen nearly 40 percent from the previous two-Games package, which includes the Beijing Olympics, and will be in excess of $3.0 billion.

The IOC estimates some 15 percent of that will come from new media including the internet and mobile phones.

Flickr targets Hong Kong market

chrisbroad — Wed, 21 Mar 2007 19:13:53 +1100

Popular photo-sharing site Flickr has announced plans to launch a version in the Chinese language.

The move from Yahoo-owned Flickr is part of its attempts to localise and increase the accessibility of its websites, especially in Asia.

Yahoo in China - Introduction. Original Author: 宋保强孙立彬

chrisbroad — Sun, 04 Mar 2007 16:10:45 +1100

Yahoo's Fiasco in China translation off of, this by Paul Woodward and the China Web 2.0 Review for pointing me towards the new English version of YeeYan.

Check out : "US Internet companies' top 10 mistakes".

CNNIC Released the 19th Statistical Survey Report on Internet Development in China

chrisbroad — Thu, 01 Mar 2007 21:39:04 +1100

Some good granularity here on the state of the internet in China, the full report is attached as a pdf.

"On January 23, 2007, CNNIC published "the 19th Statistical Survey Report on Internet Development in China".

The report shows that by the end of 2006, the Internet users in China reached 137 million, account for 10.5% of China's population. The Internet penetration in Beijing exceeded 30% for the first time. The total amount of domain names in China increased remarkably. Over 1.8 million .CN domain names had been registered.

The registration increased 64.4% in just one year. 75.9% of Chinese Internet users or 104 million people use broadband connections that include xDSL, Cable Modem and leased line. The scale of mobile phone Internet users has also expanded with the total number reached 17 million.

Comparing to the same period last year, China's Internet users increased by 26 million. The growth rate (23.4%) rose again since the rate dropped in 2004 (18.2%) and 2005 (18.1%).

Under the native environment of rapid development of the Internet, China show greater demand and developed broader application on Internet addresses.

Total domain names in China now touched 4,109,020, which is 1.16 million more than 6 months ago, averaged at 200 thousand net growths per month.

The .CN domain name reach 1,803,393, which are 706,469 or 64.4% greater than the same period last year. The .CN today ranks fourth among all ccTLDs and brings China's Internet into the .CN era.

The report newly added the survey on network resources of domestic webpage number and byte quantities of website contents.

The results show that by the end of 2006, China has 4.47 billion webpages and 122,306 GB of webpage contents, the annual growth rates of these two are 86.3% and 81.7% respectively. Along with vast growth of these domestic Internet resources, the total websites and IPv4 addresses in China also grow rapidly and reached 843 thousand and 98 million respectively."

China's Web Economy will surpass the West's due to cultural differences..

chrisbroad — Thu, 22 Feb 2007 23:12:29 +1100

An interesting insight into China and the Web.

" February 16 -- A top official from China's official agency in charge of press and publishing suggested in an interview with the overseas edition of China's official People's Daily that China's unique cultural character made it particularly suited to the development of a Web-based economy, and that he expected the country's Web economy to surpass that of many Western countries. "