China

[Parsad]

Just now, Spekulatius said:

My wife is ethnically Chinese too, but grew up in Thailand. We know a lot of 1st and 2nd generation Chinese emigrants and they are deeply distrustful of what happens in China. Those living in HK or Macau want out or have already a foreign passport ready to go if needed.

This was not the case 15 years ago.

 

Well, it was 25 years ago as the handover was about to happen, but then they thought things would be ok and business was great.  Now they are fleeing again after a significantly more dangerous crackdown on rights, etc. 

 

Problem is, Beijing has gotten smarter on how to prevent capital outflows, so many stay in HK, etc to access their Chinese bank accounts.  PDH has a couple hundred thousand USD stuck in China for 6 years now from the MRI joint venture we had that was arbitrarily shut down by the CCP.  We've tried numerous ways to get it out, but can't!  Cheers!

[Luca]

13 minutes ago, Parsad said:

 

Well, it was 25 years ago as the handover was about to happen, but then they thought things would be ok and business was great.  Now they are fleeing again after a significantly more dangerous crackdown on rights, etc. 

 

Problem is, Beijing has gotten smarter on how to prevent capital outflows, so many stay in HK, etc to access their Chinese bank accounts.  PDH has a couple hundred thousand USD stuck in China for 6 years now from the MRI joint venture we had that was arbitrarily shut down by the CCP.  We've tried numerous ways to get it out, but can't!  Cheers!

You can not get money out for 6 years? For which reason? What did they tell you?

[Luca]

https://www.scmp.com/news/china/diplomacy/article/3233143/long-overdue-chinas-new-foreign-state-immunity-law-will-align-it-western-practices?module=lead_hero_story&pgtype=homepage

 

 

[Parsad]

1 hour ago, Luca said:

You can not get money out for 6 years? For which reason? What did they tell you?

 

The Chinese bank won't release the funds.  We attempted numerous ways with advice from Chinese and HK experts after several attempts to just withdraw the funds and transfer to our HK bank account were declined.

 

A couple of examples:

• We've tried to produce invoices from here to indicate there are expenses paid in Canada that are owed by the Chinese subidiary...the bank declined saying that the Chinese government was restricting the withdrawal.  
• We tried to sell the subsidiary to our general manager, in turn he would transfer ownership of his HK company to us with equivalent cash...wouldn't let the Chinese transfer occur.
• Tried to sell to another Chinese company...they demanded audited financial statements...which we produced.  Still declined the transaction.

Six bloody years and still no way to get at the funds!  And people want to invest in China!  Cheers!

[UK]

5 hours ago, Parsad said:

Six bloody years and still no way to get at the funds!  And people want to invest in China!  Cheers!

 

China’s Xi Vows to Continue Opening Up Market, on Own Terms

 

In previous years, Xi has used the fair to reaffirm China’s commitment to opening up. There have been indications that foreign businesses are looking for more than just pledges this time around, with European Chamber President, Jens Eskelund, saying last month some executives are feeling “promise fatigue.”

 

Edited September 2, 2023 by UK

[Spekulatius]

5 hours ago, Parsad said:

 

The Chinese bank won't release the funds.  We attempted numerous ways with advice from Chinese and HK experts after several attempts to just withdraw the funds and transfer to our HK bank account were declined.

 

A couple of examples:

• We've tried to produce invoices from here to indicate there are expenses paid in Canada that are owed by the Chinese subidiary...the bank declined saying that the Chinese government was restricting the withdrawal.  
• We tried to sell the subsidiary to our general manager, in turn he would transfer ownership of his HK company to us with equivalent cash...wouldn't let the Chinese transfer occur.
• Tried to sell to another Chinese company...they demanded audited financial statements...which we produced.  Still declined the transaction.

Six bloody years and still no way to get at the funds!  And people want to invest in China!  Cheers!

Currency movements in China are not free and need approval from ministries. The Yuan is not freely convertible into other currencies in large volumes either.

 

China is a bit like a roach motel, you can get money in easily but getting it out can be quite difficult. I suspect quite a bit of cash from international companies is trapped in China.

[Luca]

 

David Tepper doesnt seem to think there is a lot of risk with China, Nvidia with 400m, 400m in Baba, 200m in TSMC, 200m in Baidu, 70m in JD.com, 60m in ASML, KWEB and China Largecap etc...

Edited September 2, 2023 by Luca

[SharperDingaan]

18 hours ago, Parsad said:

 

The Chinese bank won't release the funds.  We attempted numerous ways with advice from Chinese and HK experts after several attempts to just withdraw the funds and transfer to our HK bank account were declined.

 

There is a reason why BTC is so heavily controlled in China, and why Binance is under such tight control (& mistrusted). Talk to your Lebanese/Iranian/African friends.

 

SD  

[Parsad]

15 hours ago, Luca said:

 

David Tepper doesnt seem to think there is a lot of risk with China, Nvidia with 400m, 400m in Baba, 200m in TSMC, 200m in Baidu, 70m in JD.com, 60m in ASML, KWEB and China Largecap etc...

 

Well there are people invested in Rwanda, Iran and North Korea.  There are people who collect cheeses, wine and cigars.  I know a guy who invests in old typewriters.  Tepper investing in China is of no more significance than them.  Cheers!

[Luca]

17 hours ago, SharperDingaan said:

 

There is a reason why BTC is so heavily controlled in China, and why Binance is under such tight control (& mistrusted). Talk to your Lebanese/Iranian/African friends.

 

SD  

To me that makes a lot of sense, economy and state are always intertwined, people and business can't just do whatever they want.

[james22]

7 hours ago, Luca said:

To me that makes a lot of sense, economy and state are always intertwined, people and business can't just do whatever they want.

 

Why not?

[Luca]

1 hour ago, james22 said:

Why not?

Because they can harm societal development, food companies in Mexico as an example, huge obesity problems etc. A movement by doctors pressured the government to install warning labels etc on Coke and Soda. There are many examples and currency is just another one, living in a society together requires individuals to cooperate. 

 

I think investing in asia generally requires the knowledge of mentality difference compared to the west, individuals dont matter as much as the collective does. Thats the Jack Ma vs CCP story. This comment was quite nice from VIC and highlights the massive bias some investors have: 

 

 

 

[Luca]

15 hours ago, Parsad said:

 

Well there are people invested in Rwanda, Iran and North Korea.  There are people who collect cheeses, wine and cigars.  I know a guy who invests in old typewriters.  Tepper investing in China is of no more significance than them.  Cheers!

David Tepper having big positions in China has the same level of significance on an investing level as a guy you know who invests in typewriters? I have to disagree. 

[RichardGibbons]

2 minutes ago, Luca said:

Because they can harm societal development, food companies in Mexico as an example, huge obesity problems etc.

 

 

Do you view the CCP committing genocide against the Uyghurs and grinding peaceful protesters to a pulp beneath the treads of tanks as harmful to societal development?

 

I suspect not, because the CCP said this was a good idea, right?

[james22]

15 minutes ago, RichardGibbons said:

Do you view the CCP committing genocide against the Uyghurs and grinding peaceful protesters to a pulp beneath the treads of tanks as harmful to societal development?

 

"You can't make an omelette without breaking eggs," Richard.

[Luca]

34 minutes ago, RichardGibbons said:

Do you view the CCP committing genocide against the Uyghurs and grinding peaceful protesters to a pulp beneath the treads of tanks as harmful to societal development?

Well, they think that it somehow strengthens their society at least there are reports about such a motive, but I also don't have any insider information on these camps, information also is limited. People who fled obviously report torture rape etc, it's hugely problematic indeed. 

34 minutes ago, RichardGibbons said:

I suspect not, because the CCP said this was a good idea, right?

I said many times that they do mistakes, some severe ones too. 

[no_free_lunch]

Since we are investors, I just look at things from that perspective.  Is there really a history of profits made in China by investors?  If I look at something like the ETF FXI, I have to go prior to 2005 to get to a profitable investment.  This, in spite of huge growth of the Chinese economy during that period. If economic growth doesn't translate through to shareholders, why bother.  Is there a real argument for profitably investing in China?  I haven't run the numbers, is it just that the PE is much more compressed?

[no_free_lunch]

Richard, I recall a police state or martial law being imposed, in Canada, within the past couple years.  All to silence some blue collar workers.  Not so democratic, not so liberal.  You probably scoff at this but then Luca thinks lightly of our opinion on China human rights abuses too.  From my perspective, it's similar, just different degrees of authoritarianism.  China might kill you, in Canada the most they will do is take your job if you oppose them.  For the average joe either option is catastrophic.

[Luca]

1 minute ago, no_free_lunch said:

Since we are investors, I just look at things from that perspective.  Is there really a history of profits made in China by investors?  If I look at something like the ETF FXI, I have to go prior to 2005 to get to a profitable investment.  This, in spite of huge growth of the Chinese economy during that period. If economic growth doesn't translate through to shareholders, why bother.  Is there a real argument for profitably investing in China?  I haven't run the numbers, is it just that the PE is much more compressed?

I have posted comparisons to the DAX as an example, it doesn't look that bad and consider that the Hang Seng index is very cheap right now. There have also been many 100x baggers and many investors outperformed hard in china (David Webb).

[Luca]

31 minutes ago, no_free_lunch said:

Richard, I recall a police state or martial law being imposed, in Canada, within the past couple years.  All to silence some blue collar workers.  Not so democratic, not so liberal.  You probably scoff at this but then Luca thinks lightly of our opinion on China human rights abuses too.  From my perspective, it's similar, just different degrees of authoritarianism.  China might kill you, in Canada the most they will do is take your job if you oppose them.  For the average joe either option is catastrophic.

Exactly, you have corruption and abuse on both sides, in the US some black communities are so disregarded and poor, the insane isolation sentences, prisons filled to the max, worker abuse etc. I don't think Chinas Government is great per se, the party developed their country on a speed that is insane and they lifted a lot of people out of poverty, nice! Many regulations I also do approve of. Now what about investing? The CCP and Xi wants China to grow, they want those poor people in the countryside and underdeveloped regions to climb the ladder and get wealthy, they want to be respected worldwide, make up for the century of humiliation. On a per capita basis they are still very much behind of the west, LOTS of development left. Huge and attractive market despite short term problems and also very cheap valuations. 

[RichardGibbons]

2 hours ago, no_free_lunch said:

Richard, I recall a police state or martial law being imposed, in Canada, within the past couple years.  All to silence some blue collar workers.  Not so democratic, not so liberal.  You probably scoff at this but then Luca thinks lightly of our opinion on China human rights abuses too.  From my perspective, it's similar, just different degrees of authoritarianism.  China might kill you, in Canada the most they will do is take your job if you oppose them.  For the average joe either option is catastrophic.

 

I don't scoff at it at all.  I think it's atrocious. The government has effectively said, "Because you publicly disagree with our policies, we're going to take away your ability to feed your family."  This is a huge overreach by the government. So, I think my opinion matches yours on that issue (or maybe I'm actually more extreme than you on the Emergency Act invocation. I'm against it to an extreme degree.)

 

On the vaccine mandates, I'm on the fence. I think there shouldn't be mandates outside healthcare, but I'm on the fence whether a healthcare worker should have the option of not using proven prophylactic measures.  (Like, should they have the option of not washing their hands or not wearing masks during a surgery?) I think I probably settle on exactly how proven the "proven" measures are.

 

I believe in liberal values, but there's no doubt that the Trudeau government is authoritarian and very far away from liberal values. I think there's a reasonable chance that because of this government, I'll never again vote for the Liberal Party of Canada.

 

(I really didn't like Harper because of his anti-science stance. But now I wish I could vote for him today.)

Edited September 4, 2023 by RichardGibbons

[RichardGibbons]

2 hours ago, Luca said:

Exactly, you have corruption and abuse on both sides

 

Yeah. But, the corruption and abuse on the Chinese side is at least an order of magnitude (and maybe two) worse that the that in the "free" world.  You might want to "both sides" it, but the CCP is obviously much more evil, just like the Nazis, Khymer Rouge, and Soviets were evil.

 

The kid who shoplifted the chocolate bar from the store was a criminal, and so was Jeffrey Dahmer.  Really, both of those two were criminal.  Just like poverty in the US and running people over with tanks are basically the same thing.

[no_free_lunch]

1 hour ago, RichardGibbons said:

 

I don't scoff at it at all.  I think it's atrocious. The government has effectively said, "Because you publicly disagree with our policies, we're going to take away your ability to feed your family."  This is a huge overreach by the government. So, I think my opinion matches yours on that issue (or maybe I'm actually more extreme than you on the Emergency Act invocation. I'm against it to an extreme degree.)

 

On the vaccine mandates, I'm on the fence. I think there shouldn't be mandates outside healthcare, but I'm on the fence whether a healthcare worker should have the option of not using proven prophylactic measures.  (Like, should they have the option of not washing their hands or not wearing masks during a surgery?) I think I probably settle on exactly how proven the "proven" measures are.

 

I believe in liberal values, but there's no doubt that the Trudeau government is authoritarian and very far away from liberal values. I think there's a reasonable chance that because of this government, I'll never again vote for the Liberal Party of Canada.

 

(I really didn't like Harper because of his anti-science stance. But now I wish I could vote for him today.)

 

Apologies.  This is certainly a nuanced and balanced approach.  It gives me hope.  It is important that the west maintain some sort of moral consistency and the events of the last couple years really shook my belief in that.  However, I do see more and more questioning the politicians and their motives and as long as that is the approach I hope things will turn out ok in the end.

 

 

[RichardGibbons]

2 hours ago, no_free_lunch said:

 

Apologies.  This is certainly a nuanced and balanced approach.  It gives me hope.  It is important that the west maintain some sort of moral consistency and the events of the last couple years really shook my belief in that.  However, I do see more and more questioning the politicians and their motives and as long as that is the approach I hope things will turn out ok in the end.

 

 

 

No big deal, I didn't take it the wrong way.

 

I think the big problem with North American politics now is that countries prosper when there is high social cohesion--when everyone shares a common broad vision and everyone tries to act in good faith to achieve that vision.

 

Politicians and media, however, seem to believe that destroying social cohesion is good for their careers. They seem to want wedge issues, polarization, and villainization of their political enemies because it leads to engagement.

 

The problem is, I suspect if you destroy social cohesion, you also destroy democracy.

[Parsad]

8 hours ago, Luca said:

David Tepper having big positions in China has the same level of significance on an investing level as a guy you know who invests in typewriters? I have to disagree. 

 

You're right.  The guy investing in typewriters is not exposed to political or property rights risk.  

 

My point is that there is absolutely zero need for an investor to accept political or property risk by investing in China.  You can do perfectly fine in North America by just being patient and waiting for fat pitches. 

 

Especially if you are managing less than $150B!  I'm guessing most people are.  Cheers!