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Peter called to wish me Happy Christmas and new year

Peter called now that his back home from China.  There is no doubt that it was a traumatic experience, first and foremost was what he found.  He had nearly 100 meetings, all his meetings with the founders or CEOs of successful private Chinese companies.  100% Chinese companies, not subsidiaries or joint ventures.

His observations:

(1) The government has zero interest in the Chinese private sector.  There is no room for discussion, in fact, the CEOs of Chinese companies universally told Peter that there is no one to talk to in government.  They cannot get a callback.  All production data is now considered secret and there are daily inspections of their offices by the police.  

(2) Fines for everything.  These rich Chinese complained that they get fined for all kinds of crazy things, windows are not painted red, get a fine, paint the windows red, get another fine for painting the windows red. Cars are towed away for no reason, and fines are imposed.  There are no reasons, and there is no reasoning with the police who enforce "rules" they pluck out of thin air.

(3) Supply chain disruption; never mind common electricity shortages (cannot have a generator -- they have all been confiscated by the PLA), material shortages are common, if the supplier is a state-owned enterprise, there is NO recourse.  they hang up when you call.

(4) Growth is negative in the private sector (maybe not in the food sector). Every CEO complained that banks cut their credit facilities but anyway, demand is down or falling.  

(5) They are not looking for exit strategies, they are executing their exit plans; first to leave are the children -- going to school abroad.  Wives accompany children to "monitor their behaviour".  Of the 100 CEOs/owners he met, 56 have already had their families leave the country, and they are not coming back!  

(6) As a general comment all the CEOs agreed that the days of foreign companies in China are over (the worst is Apple, but look also at all the car manufacturers).  The government has taken the view that China is for Chinese companies only, but only for state-owned ones.

He told the most amazing anecdote; he was travelling by car with a chauffeur between two large cities North of Beijing.  He was tired and not paying much attention, but after a while, he noticed that on either side of the motorway, there were hundreds of towers partially finished (no windows) or abandoned.  The distance was 275 km.  He said during the entire trip 95% of buildings appeared abandoned (no craine or windows).  Peter said he could not comprehend the scale of waste that all these buildings represent.  

I asked him how they would renew their Chinese passport (every 10 years).  He said that all his clients have alternative passports.  Canada, Malta and Montenegro are the most popular (It appears to be also popular with Russians who have fled the country).

Anyway, by the end of 2024, 100% of my ex-firm's Chinese clients will have left China. They are a small firm, but it sure looks like the rats are leaving the sinking ship...

Note:  One thing Peter told me is that BA only flies four times a week to Beijing, and has no flights to the economic capital that is Shanghai...disturbing before the pandemic there were at least two BA flights per day to Shanghai and a daily flight to Beijing.  


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