Diligence China

Just had an interesting conversation with my brother in NY.  It sheds a little light on the extreme drop in China’s export numbers.

My brother buys chemicals in China and processes them for sale to manufacturers in the US, Europe and parts of Latam.  

He tells me that Chinese suppliers have a problem.  In the run-up to the Olympics, Chinese sellers of chemicals were pushing everything they could out the door at shortage-level prices because they were facing shutdowns to help improve Beijing air quality.  Now my brother’s warehouse in New Jersey is full of raw materials – bought at a high price in the first half of this year.  He can’t move his existing inventory because downstream demand is dead.  Lately he’s started getting calls from Chinese suppliers who are trying to get him to buy more by slashing their prices.   He just laughs at them, because they are the same guys who jammed tons of high-priced goods on him when the market was running high.

Until downstream demand picks up, the warehouses will remain clogged with 1Q2008 priced goods.  Discounts or incentives don’t matter – that’s what “pushing on a string” means.  The Chinese are way in the back of the demand chain.  Retailers and distributors have to work through their inventory – then draw down the distributors’ supply of unsold goods.  Only then will Chinese suppliers start moving product again. 

 It could be a cold first quarter in China.

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It’s hard out in a recession for a market bear.  The US has already capitulated, and now China is on the way.  They only thing that separates the gloom & doom guys from the once-chirpy main-street pundits is our ability to stay ahead of the curve and give people new things to worry about. 

That’s where Diligence comes in.  No matter how bad you thought the situation could get – we’re always here to keep you current on newly developing problems that you’ve only been vaguely aware of.  It’s a tough job, but without people like us telling you how bad the situation might get you’d never know just how dangerous the road ahead really is. 

China-US relations have the potential to be 2009’s Great Pothole.  We’ve seen the beginnings of trouble on the US side with a Democratic administration arriving just as the call for protectionism and isolationist policies is on the rise.  Obama’s foreign policy team is strong – but they are no friends of China.   The Chinese side has been dipping their toe in the unilateralist side of the pool, opting to DEVALUE the RMB and lecture the US on what constitutes proper economic conduct.

The big problem with international relations is that you often don’t know how bad things are getting until they are already pretty bad.  Just like economists before the recession is confirmed, politicos have to make sense of lots of conflicting or unrelated data points during transitional periods.  Right now international relations are looking as chilly as the December weather.

Anyone who expects China to forgo it’s national interest and sacrifice the well-being of it’s own people for the benefit of US bankers and European consumers simply hasn’t been paying sufficient attention.  After Beijing’s decision to drop the RMB and skip the European summit, it should be clear that ‘concerted international action’ is little more than a pleasant-sounding but hollow wish.  There is nobody steering the boat.  Bush is doing us all a favor by knocking off the job a few weeks early – but no one has stepped up to take up the slack.  Obama is already sounding Presidential – but his focus is domestic.  Sarkozy may be leading Europe, but he is looking a little light-weight in the face of a global recession.   The committees that pull the levers of power in Beijing are working off their own script – and it is fear of the countryside that motivates them.  Sure, dropping the RMB to spark demand in the West makes about as much sense as pushing on a string – but that’s the playbook they are working off so we had better adjust to the new reality.  International crises sometimes bring people together – but usually we have to unify against someone else first.  We had all better stop accepting the notion of “concerted global action” as a given, and start to consider what happens with Beijing and Washington both start acting in the names of their constituents.  

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Nationalism in China is a double-edged sword.  On the one hand, it can be a powerful creative force in China, as people from every walk of life and level of society are exhorted to excel and improve.  On the other hand, Chinese nationalism often manifests itself as xenophobia and isolationism. 

Is China growing more nationalistic?  Almost certainly – but it is not necessarily a negative or even an unexpected phenomenon.  It’s completely natural for a country with China’s recent history to see an upsurge in national pride and confidence.  But it’s also possible that Chinese view their rise as overdue – and in direct opposition to Western intentions.  A rising China may seek partnership with other leading nations and global institutions – or it may turn inward and become isolated and defensive. 

3 big factors are contributing to the rise of Chinese nationalism, and will determine the intensity and direction of China’s nationalism.

1. China’s growing competence
   From moon-shots to localized management, Chinese are getting the job done. The Grand Reform movement was started as a means for Chinese to learn from and catch up to the West.  By many measures they are reaching the point where they don’t have much left to learn.  We’ve already seen the curtailing of tax-incentives and SEZs designed to lure overseas investment and business set-up.  The recent purges in the Ministry of Commerce http://english.caijing.com.cn/2008-11-18/110029281.html seem to indicate that Beijing feels that maybe FDI needs to be monitored a bit more closely.
    
2. Western disengagement
   New administrations, new crisis, new global cutbacks.  MNCs are shutting down plants and shelving expansion plans.  Western governments have plenty of problems at home and are becoming more inward looking.   The glossy business press has taken to referring to China as an economic superpower that is now able to shoulder an increasingly burdensome share of global bailout plans.  China has been stable, cooperative and prosperous – and thus a fairly low priority when it isn’t being asked to give money or other aid to big global causes.  US and European policy makers will increasingly view relations with China as “not broke” – as in “if it’s not broke, don’t fix it”.  China is becoming a low priority on the world stage as people’s bandwidth gets occupied by recession, war, terrorism and environmental/energy issues.    
    
3. Blame game 
   There are more problems than solutions on the world stage at the moment.  That’s a sure recipe for blame and recrimination, which play very well on the Chinese national stage.  China and the new US administration can be expected to trade barbs and accusations on a wide range of subjects.  The recession, foreign exchange rates, pollution, product safety, trade surplus/deficits, IP protection, technology exports, etc…  The new US administration is untested, but various member of team have shown a willingness to blame China for a wide range of US woes.  On the Chinese side, once the nationalism genie turns ugly, there is no getting it back in the bottle.  Chinese leaders have long known how to turn anger at home into resentment of foreign devils. It’s not pretty. 

 What direction will Chinese nationalism take over the next few years?  There’s no reason to think it will be anything but positive and constructive for all parties.  But strategic planners have to factor in the forces of nationalism when formulating business plans in China.   

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Let’s assume that Senator Hillary Clinton becomes Secretary of State under the new Obama administration.  What will that mean to US-China relations?

It all depends on WHICH Hillary Clinton we see – because there are two.  

On the one hand, there is HC that views China as a competitor and a serial human rights violator.  As First Lady and later as Senator from NY, Hillary Clinton has been very public in her criticism of Chinese policy about human rights, women’s rights (closely associated with China’s one-child policy), Tibet, Sudan and currency exchange rates. 

On the other hand, there is the politically savvy, pragmatic – some would say opportunistic — Washington insider who knows how the game is played.  She knows that as Secretary of State she would be playing to a bigger audience – and for much higher stakes.  She would be the smooth but tough political pro who understands the strategic value of the US-China relationship, and would work hard to insure its integrity. 

HC the Basher

Senator Clinton urged President Bush to boycott the opening ceremony of the Beijing Olympics the opening ceremony to protest China’s human rights record.  ABC News quotes her: 

 “The violent clashes in Tibet and the failure of the Chinese government to use its full leverage with Sudan to stop the genocide in Darfur are opportunities for Presidential leadership,” Clinton said in a written statement. “These events underscore why I believe the Bush administration has been wrong to downplay human rights in its policy towards China. At this time, and in light of recent events, I believe President Bush should not plan on attending the opening ceremonies in Beijing, absent major changes by the Chinese government.”

In May of this year, Senator Clinton co-sponsored (along with Senator Obama) the bill s.796 - otherwise known as the Fair Currency Act of 2007.  The bill defines ‘exchange-rate misalignment by any foreign nation (as) a countervailable export subsidy…”  See the full text of the bill here:  http://www.opencongress.org/bill/110-s796/show   In other words, China’s exchange rate policy is an unfair trade restriction that requires a response of some kind.  

She has also criticized China’s investment in US Treasury Bonds as being inappropriate and damaging to US interests.  On the campaign trail she is reported to have responded to a constituent’s question about the US getting tough with China on trade by saying, “how do you get tough with your banker?”    

HC the Pragmatist

But as a Democratic Senator from NY, Hillary Clinton represents a fairly liberal constituency.  When the cameras aren’t pointed at her, Mrs. Clinton can be extremely pragmatic.  (Some would say a little too pragmatic – as the confirmation hearings next year may reveal.)  She would probably want to focus as on the Middle East and Eastern Europe, and would likely do her best to maintain smooth relations with China and the rest of Asia.  The new administration may very well continue the Bush administration’s practice of letting  Treasury and Commerce to take the lead on China relations. Treasury has had a warmer relationship with China than State for the last few years, and PE Obama’s choice of Timothy Geithner could keep that trend alive.  Geithner has lived in China and studied Chinese, and is said to already have a good working relationship with Zhou Xiaochuan, China’s Central Bank Governor.

Wildcard in the House?

It’s likely that Treasury will continue to build bridges to Beijing – but the question is what impact a Clinton-Pelosi combo will have on those bridges.  Both House Speaker Nancy Pelosi and Senator Hillary Clinton have staked out positions that could quickly undercut US-Sino relations.  It’s widely expected that they will both moderate their language - but not necessarily their stance on issues like exchange rates, human right, Tibet and trade.  I think it would be overly optimistic to think that relations will improve – or even remain on the level they are on now.  As unemployment rises in the US it is likely that protectionist policy will be proposed, if not enacted, and rhetoric can quickly escalate into diplomatic trouble.  

Relations may be tested

2009 would be a terrible time to see relations between China and the US turn cold and fractious.  Both sides have many great reasons to see that it doesn’t happen, and that the US-China relationship remains close and stable.  But the new US administration has a long history of viewing China as competitor – not cooperator.  Those that say, “US and China will have a strong relationship because the alternative would be a catastrophe” are merely voicing their wishes.  Strategic planners have to consider all possibilities and formulate scenarios. Don’t discount the very real possibility that relations between the US and China could turn sour in the coming year.

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Thanksgiving is a happy time – where friends and family come together to celebrate their blessings of the past year.  That’s why I want you to look at two posts now – before the holiday starts.  The good news is that the bad news is becoming clearer.  Still bleak, but what do you expect from two economists?  They call it the Dismal Science for a reason.  (Malthus was an optimist.)

First, take a look at Andy Xie on Caijing.com.cn ( http://english.caijing.com.cn/2008-11-24/110031275.html)  .  He’s written a wonderful piece called The Natural Bottom in which he assesses the recent G-20 Summit (and no, Mr. Xie was NOT impressed).  Stick with this article (which can ramble a bit in the middle), because he analyzes the state of the global economy from a very interesting historical perspective.  Here’s a sample:

The leadership failure that is so apparent now all over the world has a generational twist to it. The baby boomers that were born after World War II pretty much run all the major economies in the world in governments and big companies. They have lived during extraordinary prosperity. The past recessions, even the stagflation during the 1970s, were quite mild by historical standards. In particular, the past two decades since the Berlin Wall fell were extraordinarily prosperous. The leaders that rose during this period were all very optimistic. Unfortunately, optimistic people are not the smartest people. Indeed, optimistic people are usually not very smart. But they rise to the top during prolonged prosperity that rewards optimism. When the catastrophe arrives, they are not equipped to handle it. As the crisis discredits them, a new generation of leaders, hopefully smarter, will rise to the top, and the right decisions are made. Hence, the solution to this crisis may require a leadership change. The United States took the first step. Others may follow over the next 12 to 18 months. The political process suggests that the solution to the crisis will take time.

The saddest thing about the Summit was how France and Japan dominated the limelight. The former championed a global super regulator. The later doled out US$ 100 billion for the IMF. France and Japan are great countries with wonderful cultures, but they represent the past, not the future. They tend to enforce equal outcome rather than opportunity. China and the United States are much more in synch with the future. The United States is not strong enough to run the world on its own. An alliance between China and the United States could. Unfortunately, neither country is embracing the idea.

 Xie goes on to talk about the likelihood of inflation, bottoming out, new growth cycles, bursting asset bubbles and the virtues of  owning gold.  It’s a long, grim piece – but invaluable for strategy-makers in China.

Another pre-holiday read is ‘Can China Adjust to the US Adjustment?’ by Michael Pettis in today’s RGE monitor (registration free but required) http://www.rgemonitor.com/asia-monitor/254562/can_china_adjust_to_the_us_adjustment .  Professor Pettis raises some fascinating analogies between the Great Depression of the 1930s and today’s economic turmoil – only now it is China that fills the role then held by the US as the engine of global asset deflation.  Overcapacity isn’t a new problem, apparently, and Pettis makes some very compelling arguments about how China may be following in the footsteps of 1929 USA.  Pettis writes:

Might China repeat the US mistake?  Perhaps.  It already seems to be in the process of engineering its own Smoot-Hawley-with-Chinese-characteristics.  Although there has been an attempt to boots fiscal spending, most analysts argue that this so far has been too feeble to matter much.  On the other hand it has tried to protect and strengthen its export sector (resulting in rapidly growing exports and three record trade surplus months in a row).

This cannot work for long.  The world clearly suffers from overcapacity, and as the US reduces its demand and increases its savings, which it must do as part of its own adjustment, this overcapacity will only rise.  The proper place for new demand to originate is, as in the 1930s, in current-account surplus countries.  

They should be engaged in demand creation, not supply creation.  If they continue trying to export their way out of a slowdown, there will almost certainly be a trade conflicts, as there were in the 1930s, in which case the full force of the adjustment will be borne by the current-account surplus countries, again as in the 1930s.  The current-account deficit countries know this, and as the world’s economy contracts, their domestic tolerance for rising trade surpluses, or even just a continuation of trade surpluses at the current level, is likely to decline.

It is not hard to see why this could easily end in trade war… 

Strategic managers are already trying to think through to the recovery – which seems to want to take place at the end of 2009 or early 2010.  If these two heavyweights are correct, then we could be waking up to a very different US-China relationship in 18 months.  Inflation, protectionism,  and sluggish demand all rolled up into one big, ugly package.   

Be thankful that guys like Xie and Pettis are laying out the options for you.  The only thing worse than bad news is a vacuum.    Happy Holidays.  May you and your families have a safe and comfortable 2009.

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The biggest single threat to US-Chinese relations over the next year is disengagement.   The US is going to take its eye off the ball and put the most successful international relationship of the last 100 years in jeopardy.

Bush is redefining ‘lame duck’ as he buries his head and hides from sight.  2-term presidents are all about the Legacy, and his is pretty grim.  I would expect him to keep a low profile and try his best to keep this stink of financial meltdown off him for the next 8 weeks or so.  Obama and his team are going to be fighting the big fires at home for the first few YEARS.  If Hillary does make it as Sec of State, I wouldn’t look at China to be her first priority.  She’ll be dealing with the Mid-East (which breaks down to the Israel/Palestinian crisis, Iraq crisis, Afghan crisis, Iran crisis and maybe a Syria/Lebanon crisis) a Russia that grows scarier by the day, and a Europe that is increasingly mired in recession.  All of her spare time will probably to towards helping to forge an international consensus on whatever new financial order.

China looks stable.  It looks strong.  It looks solid – at least compared to the rest of the world.  It doesn’t look like a top priority.  The rest of the world is crashing, and China is just starting to slow down.  The new administration will probably assess that China isn’t a top priority at the moment – particularly if China balks at funding a World Bank led bailout.

What will happen when the US disengages from China? 

China, the absentee owner
China, which now holds more than half a trillion US$ of Treasuries, is the largest single investor in USA Inc. As long as the US seems like a secure place to keep funds, this won’t be a big issue. China is not investing in Treasuries because it wants to help the US – it makes sense for China.  But it also makes China a stakeholder in US policy.  If there is constant dialogue and consultation, China is more likely to stick with its T-bond strategy for the long term.  But if China is learning about US policy from Reuters, then it makes it much easier to pull funds out according to its own timetable.

Hostage to the House
If a vacuum develops where US-China policy used to be, look for the House of Representatives and House Speaker Pelosi to become more assertive.  She is no friend of China, and you can expect her to lead other bashers on a crusade to help Beijing see the light of western-style human rights and civil liberties.  As unemployment in the US gets higher and stays high, this will be a very popular stance.   Jobs and product safety are going to be common themes in House debates. 

China the Magnet
China probably doesn’t want to use the global recession to raise it’s stature among regional economies – at least not yet.  Beijing wanted to emerge as an economic and finance leader – in about 15 – 20 years.  But if the US and Europe turn inward, look for China to end up as the default leader of the Eastern World.  It was already heading that way 6 months ago, but if the US and Europe turn inward, then wary neighbors are going to decide that China is a known quantity and the West is unreliable when the going gets tough.  Indonesia, Malaysia, Singapore, Thailand, Viet Nam and South Korea are already in China’s orbit to some degree.  Japan is getting very quiet these days.  Looks like a RMB zone isn’t as ludicrous an idea as it once seemed.

The fact that President Elect Obama was born in Hawaii and lived in Indonesia doesn’t necessarily mean that he will be more engaged with Asia – the truth is that his familiarity with the region will make him more willing to put East-West relations on the back burner.  Asia isn’t an area where  Obama needs to beef up his resume, and there are more pressing matters closer to home.   

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 My name is Andrew Hupert, and I’m a teacher and writer in Shanghai. I am now working on a project for my International Negotiation class at New York University’s Shanghai campus (in cooperation with East China Normal University). 

Thanks very much for your cooperation in my research. I would be happy to share raw data with any participants who wish to see it, and will publish my findings on ChinaSolved.com , ChineseNegotiation.com and DiligenceChina.com .

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The statistics and trend lines have already had almost all of the impact they are going to have in the US.  My mother just told me that the recent stock market drops left her so upset that she couldn’t sleep.  When retired grandmothers on Long Island are going sleepless because of the Dow Jones Industrials, then - as they say on Wall St-  ”all the bad news is in the market”.  In other words, any more bad news won’t have an impact because things are already as bad they can get.

We’re probably approaching that point in the US.  Christmas has some potential to dissappoint, and if we lose the auto industry to uncontrolled bankruptcy and collapse then that could also leave a mark.  But by February or March, this recession isn’t going to be about statistics — it will be about sentiment.  If people believe that things will get worse, then they won’t spend or invest — and then things really do get worse as deflation feeds upon itself and devalues real assets. 

In China, sentiment is still relatively good — though it’s showing signs of wearing thin in spots.  That’s why I was a little suprised to see CNN poking the bear with a stick this morning — and trying out their own completely original spin on the recent protests and rioting in Gansu.

CNN’s headline was, “China Fears Job Riots”

BEIJING, China (CNN) — China’s job outlook is “grim,” and the global financial crisis could cause more layoffs and more labor unrest until the country’s economic stimulus package kicks in next year, the nation’s minister of human resources and social security said Thursday.

Xinhuanet, the official government news agency took a different approach:

30 arrested in violent protest in NW China’s Gansu, dozens injured

    LONGNAN, Gansu Province, Nov. 20 (Xinhua) — Police arrested 30 people involved in a violent protest in northwest China’s Gansu Province, a local official said at a press conference here on Thursday.

    A group of 30 petitioners, who opposed a resettlement project in the Wudu District of Longnan City, initiated the protest on Monday. Eventually, more than 2,000 people became involved.

 Ok, it’s no surprise that XinHua missed the jobs-riot angle, but what about the New York Times?  They’ve been anti-China longer then they’ve been anti-Bush, but even they seemed to dropped the ball on this one. 

So let’s say you are a NY business owner and you’re watching demand for your services collapse around your ears.  Structurally, your company is in OK shape.  You’ve got retained earnings, your debt isn’t crazy, your spend is high but manageable.  The only problem you’ve got is that your forward cash flow is looking very, very thin.  You need to start thinking about new models – or new markets.  Then you remember that trip to China a few years ago.  Yeah… China.  That might be the answer.

And you’re right.  China might be the answer for what ails the B2B service sector in big US cities.  But the question has changed.

China isn’t about cheap manufacturing anymore.  It’s about high-level business services and market expansion.  Except this time, the Chinese are buyers of the business services – and they are the ones expanding their markets to include the US and Europe.

More and more high value-added business services like lawyers, accountants, management consultants, software developers, and designers are going to be forging cross-border partnerships with their opposite number in China.  In a typical arrangement, both sides will actively develop business in one-another’s markets.  The top guys from BOTH offices will service high-profile clients in NY and Shanghai, while the Chinese office can bulk up its team with plenty of skilled, moderately-paid staffers who can do the basic jobs just as well as their American counterparts – for about 60% of the cost.  Every high-value business service follows a similar structure – a few very expensive rainmakers out front, and dozens of overworked college grads in staff positions making the bosses look good.  Whatever the field, there is always a back-office.   Settlement clerks, AR managers, paralegals, logistics, researchers, bookkeepers, accountants, designers, and coders – this is the army that keeps modern law, accounting, advertising, and consulting practices going.   New partnerships will develop to take advantage of the lower costs – and market potential in China.  Chinese partners are going to want access to mid-range clients in the US.  

This is a whole different ball game from OEM factory work or old-style Sino-Western JVs.   Westerners walked into those agreements like the fat rich uncle coming to a poor relative’s wedding.  We just wanted to get in and out as quickly as possible without getting ripped off too much.    

This time both sides have more to offer – and more to lose.  Westerners have to know what to ask for and how to structure this new kind of partnership.  Your list of deal points and variables will now include:

• Marketing partnership
• Your access to China
• His access to US
• Staffing – how you’ll use it as a competitive advantage 
• Quality control
• BizDev responsibilities

If you have a business plan that doesn’t include aggressively marketing your top-end services to businesses in major Chinese cities, then you have to scrap it and start over.  Marketing B2B services to China just became a much higher priority for business owners and senior managers in the US.  China may end up being one of the last markets standing – but it takes time to develop.  Start looking at your options now.
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Please help with a research project by taking a brief, simple & anonymous survey about US-Mainland negotiation. http://app.icontact.com/icp/sub/survey/start?sid=6256&cid=355149

 My name is Andrew Hupert, and I’m a teacher and writer in Shanghai. I am now working on a project for my International Negotiation class at New York University’s Shanghai campus (in cooperation with East China Normal University). 

Thanks very much for your cooperation in my research. I would be happy to share raw data with any participants who wish to see it, and will publish my findings on ChinaSolved.com , ChineseNegotiation.com and DiligenceChina.com .

http://app.icontact.com/icp/sub/survey/start?sid=6256&cid=355149

The old stories are the best stories, but sometimes you have to pull back and skip over some of the details. 5 years ago the glossy newsweeklies were gushing about a China that would leapfrog the west. Now they are talking about the China that will outlast the west. 

The engine of China’s growth is about to get throttled down significantly, and when it comes back to smooth ground it’s going to be running a lot cooler than double digit GDP growth.  Look for 7.5 to be the new 9.  No more tax breaks for FDI, no more SEZs – except for the new ones that will pop up deep inside the country.  People will talk about the ‘good old days’ of the Wild Wild East.  Yeah – some of you are about to become ‘nostalgia guy’ without even knowing it.  There’ll be plenty of opportunities left in China, but first mover advantage is pretty much played out.  It’s organized and citified now – like all great gold rushes after they peak. 

But 7.something sure beats 1.something – and that may be the middle side of average for US GDP growth for a few years yet.  I’m no economist, but I’m figuring that

A) We were spending off our curve in the first place,

B) New taxes will be need to pay for the bailout and basic services 

C) Interest rates will rise (to service debt for the bailout)  

D) Regulation will intensify

E) Greater international influence will be brought to bear on US regulators.

All of this stuff is going to drive down our natural GDP.  (Natural GDP is the rough equilibrium rate of speed that the economy would move at over long periods of normal conditions with no external shocks.  It never, ever happens, but it tells you what normal might be.  Right now it’s around 3%.  Clearly, though, the number itself doesn’t matter.  The direction matters.  Our Natural GDP just got a lot more constrained.  US business, in the midterm (10 years), will have much less economic activity than it did in 2007.  That means fewer buyers, fewer sellers, and fewer middlemen.  If that group includes you, it’s time for some deep thinking.

That’s what brings us back to those gleaming Chinese towers on the cover of Time.   Well, they’re going to be looking a little tarnished and gritty in the near future, but they’ll still be there.  China will only be taking a couple of quick jabs from this.  They’ll fall to a low of 5 or 6% growth during their worst quarter and come quickly back up to 7 or 8% — where it will stay.  Their world isn’t going to fall apart.   They’ll be back – slower and more expensive.  But that’s ok with Beijing.  NY and Europe, however, are going to look like very, very expensive places to operate – especially if there are no more customers.  

China won’t outperform the West – it will drop less than the west does, and eventually get back on a stable, albeit slower, path forward.   We’re all going down the same hole together, but China is only going to fall half as far.    And once we all get up, the US and Europe will be limping and broken.  China will only be banged up a little.  

China is set to become one of the world’s last big buyers of high value-added goods and services.  They are going to achieve this in a very traditional Chinese fashion:  quietly outlasting all the other players who were too busy exhausting their own resources to notice.

US owners and partners with a little downtime on their hands should glance over their preliminary marketing plan for China – and make sure they have one.  They’re going to need one.