Tuesday, November 9, 2010

The pictures of Guy Bourdin

With their startling fairytale imagery, the fashion photographer Guy Bourdin's pictures have lost none of their uncomfortable allure. Drusilla Beyfus takes a look, as a new book and exhibition celebrate his work.


Though he died 19 years ago, the French photographer Guy Bourdin, one of the unquestioned innovators in his field of fashion photography, suddenly finds himself part of a hot topic. He was sworn to the printed magazine page. It was his chosen medium of expression throughout his four-decade career. But, goes the argument, with advances in technology and viewers increasingly turning to websites and apps, is there a future for magazine photography?

The case for the defence occurs in a new monograph of Bourdin's work, In Between, curated and edited by London-based Shelly Verthime. In her words, 'He mastered the transient fashion magazine as a stage and a story board.' The material in In Between focuses primarily on work produced between 1955 and 1985 for Bourdin's longest-lasting patrons, Condé Nast's French Vogue and Charles Jourdan, the French shoemaker.

'What you see in Bourdin,' Philippe Garner, a Sotheby's director, has said, 'is a linking of two great themes: desire and death.' Bourdin's first photographs for French Vogue in 1955, some of the most daring fashion images of the 20th century, according to Verthime, featured a model in an exquisitely designed hat photographed among the animal carcases at Les Halles, the Paris meat market.

In one shot a row of eviscerated animals hangs behind the model, who gazes impassively at the camera. His advertising shots for Charles Jourdan alluded to dark fairy tales and horror stories (such as the 1967 photograph depicting three slender legs dressed in brightly coloured hosiery and satin slippers, all roped together and stretched out across a railway line).

Bourdin had a hard attitude to women - in life as well as in his photographs, it seems. His biographers attribute this to his abandonment by his mother in infancy. His wife, Solange Greze, died in inconclusive circumstances in 1969; his lover Sybille Danner committed suicide in 1981. In the studio he was renowned for making extreme demands of his models.

Anthony Haden-Guest, writing in the New Yorker, recounted a French Vogue shoot in which Bourdin had the faces of two models covered in a layer of glue, over which he scattered black pearls. Bourdin decided to go further and wanted to do their entire bodies with pearls. Probably because of overheating, the two models passed out.

Painting was and remained Bourdin's first love, but having received training as a photographer during his military service with the French Air Force, he took to the camera with determination. After introducing himself to Man Ray in Paris he became a protege of the artist and a child of the Surrealist movement. Magritte's familiar image of a bowler-hatted man was subsequently invoked in a shoe advertisement.

In the mid-1950s, having shown his photographs to the editor-in-chief of French Vogue, Edmonde Charles-Roux (Bourdain had no commercial pictures in his portfolio), he was commissioned to try his hand at fashion. It was the beginning of a 30-year relationship with the magazine in which he was accorded almost complete creative freedom. He pushed the boundaries of fashion photography both aesthetically and in terms of their erotic content. In the 1960s his then Vogue editor Francine Crescent brought him together with the business of Charles Jourdan, a connection that lasted for 15 years and which produced arguably his most imaginative images.

The political correctness of the 1980s saw Bourdin fall out of favour; towards the end of his life he was said to have become a recluse. But in the past decade people have looked at his pictures in a new light.

Although not as well known in Britain as his contemporary Helmut Newton - with whom he is frequently (if wrongly) compared - Bourdin is now a major influence. David Lynch, the film director, has acknowledged his input, the photo-grapher Nick Knight has attributed his own 'neo-glam look' to Bourdin, while Glen Luchford, the creator of campaigns for Prada and Calvin Klein, has admitted a creative debt to him. Madonna has described Bourdin's erotic 1970s images as being 'sick and interesting'.

Although many of the sexual taboos that he played with have lost their punch, his work is appreciated now much more as a branch of the decorative arts. During his lifetime he cold-shouldered highly prestigious professional awards and refused to allow his work to appear in exhibitions, book compilations or to sell single prints. What he cared about was producing magazine photography of a quality likely to ensure a future for the form.

Monday, November 8, 2010

What Is The Best Non-Prescription Eyelash Enhancer


Eyelash enhancers are the latest beauty trend these days, and cosmetic companies everywhere are launching products that promise to give women longer, fuller, darker lashes without the fuss of mascara or false lashes. But with all these options, it’s hard to know what really works and what doesn’t.

Luckily, there are reputable beauty sites out there that have put many of these eyelash enhancers to the test. The results for this year’s top-performing eyelash enhancers are in … with iQ Derma’s SmartLash coming in with a solid 5-star rating on Dermstore.com, the #1 online destination for skin care and beauty.

What Is Eyelash Enhancement?

If you aren’t yet aware of this increasingly popular method of achieving longer lashes, eyelash enhancers are formulas that are topically applied to the base of your lower and upper lashes. They can even be used on sparse, thin eyebrows.

Is It Safe?

While prescription eyelash enhancers are often formulated with prostaglandin, a hormone that can cause side effects such as darkened irises (potentially irreversible) and blurred vision, more and more companies are developing safer, non-prescription alternatives that deliver impressive results.

Most non-prescription formulas are hormone and paraben-free. Instead, they’re formulated with polypeptides, amino acids and conditioning ingredients to help rejuvenate lashes and strengthen them against breakage. So you still get longer, fuller, darker-looking lashes and shapelier brows without the negative side effects.

How Soon Can You See Results?

In some cases, users have reported seeing results in as little as 7 days, while others may see results in 4 weeks.

SmartLash, for instance, has published its clinical results, which show that 46% of participants saw a difference in their eyelashes and/or brows in just 7 days while 100% saw a difference in 14 days. They also experienced up to a 68% increase in the appearance of lash length.

Sunday, November 7, 2010

Ugg Classic Arglye – Pick of the Ugg Fall Collection


The pick of this years Ugg Fall collection was undoubedly the Ugg Classic Arglye Knit Boot. The Ugg Argyle is a natural progression from the best selling Ugg Classic Cardy range. These knitted boots have been a firm favorite for the last few years and contiue to sell well.

The argyle adds a little extra knitted design making them stand out from the crowd. Available in 4 colors, Black, Cream, Charcoal and Fig (dark purple to you and me!). I am quite suprised that Ugg have foregone the Grey color this year as that was one of the best selling Classic cardy colors.

One suprise and one that best left un commented was the Striped Classic Tall Cable Knit Boot, it seems you really can have too much of a good thing!

Back to the Classic Argyle, as whth all the knitted Ugg boots there go great with jeans and short skirts, i suspec tthis year well see them being worn with floral print dresses and leggins. Hell they’ll go with anything!!

If you loved the Classic Cardy then you will undoubtedly love the Classic Argyle Knit Boot.

However one word of caution Once again I suspect that they will be in very short supply. When the Cardy fist appeared 2 years ago they sold out almost overnight. The only place you could get them was on eBay and the prices there were at a premium.

Get out there and secure your pair today before they are all gone, I suspect that just like the cardy The Classic Argyle Boot will probably appear on Oprahs Favorite Things It is the type of boot that she adores both comfortable and practicle and above all fashionable.

Tuesday, November 2, 2010

Links à la Mode: The IFB Weekly Roundup

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The Five P’s of Fashion Partying

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China Momentum Continues, But What Does It Mean?

Oct. 10 2010 - 11:25 pm | 1,803 views | 0 recommendations |

China GDP will grow 9.5% to 10% in 2010, and U.S. GDP will grow 2.5%. While GDP growth in China is likely to be between 7% and 9% longer term, U.S. GDP growth will be between 2% and 3%. The differences in GDP growth will affect the exchange rate and relative levels of wealth in China and the U.S. The housing bubble in China continues to be controlled, and property prices in most of the larger cities will increase in the next 12 to 24 months. The defaults that have plagued the U.S. housing market are not occurring in China, and while many houses and apartments lie empty due to speculators, there are shortages of affordable residences in China. While demand for residences will continue to be strong in China, there is the need for a steady increase in salaries to allow a growing base of buyers to pay for higher-priced properties. China has excess commercial properties, and many are highly leveraged, but if the economy can continue to grow at 7% to 9% per year, the excess in most regions can be systematically absorbed. The industrial and financial base in China needs to continue to expand in order to absorb the excess commercial properties. China will steadily increase the consumption of goods it produces, which is consistent with the growth of the middle class to be 30% of the total population by 2020. The increase in internal consumption in China is being done in an orderly and planned way so that large deficits are not built. Who can blame China for managing consumption? The U.S. is clearly not in a good position to advise China how to manage consumption and manage its economy. The growth of China, however, continues to be heavily dependent on exporting. Without exports to developing countries such as in South America and Asia as well as developed countries in North America and Europe, the economy of China would stagnate. With the resulting increase in unemployment, the likelihood of social unrest would be high. The interdependence of supply and demand is being carefully managed in China, but the U.S. is the key foundation on which China and most other global economies depend. If U.S. consumption of goods from China, Japan, South Korea, Germany, etc, drops precipitously, the industrial miracles of these countries collapse rapidly. These countries need for the U.S. to continue to consume. The U.S. is, however, consuming based on borrowing, which can only be addressed by the combination of reduced spending and increased taxes. There is also the option of inflation, which destroys the value of the dollar and the other currencies that are linked to the dollar. We in the U.S. are living in a world of illusion, where the cost of continuing with our lifestyles is escalating rapidly. Measures are being enacted to have China increase the value of the Yuan, and while this can make some of the goods made in China, including the iPhone 4 and iPad, have higher prices for U.S. consumers, the impact on the balance of trade between China and the U.S. in the next 12 to 24 months will be low. The raising of the value of the Yuan can make it less expensive for China to import oil and other commodities but can also increase the price of oil to the U.S. consumers as the value of the dollar continues to decline. Forcing China to increase the value of the Yuan is a no-win situation for the U.S. The U.S. needs to develop new industries to strengthen its exports. While the relative position of the U.S. is weakening, China is becoming more assertive and willing to be confrontational. To date, Japan has been the primary target for the stronger China. This is a new phase of China foreign policy and is probably an early indicator of the positions that will be taken by the new leaders that come into power in 2012. The global economic power base is changing. It is important to understand these trends and have policies to address them. Some of the new industrial policies of China, such as in the high-fuel-efficiency automobile arena, should be of major concern to the U.S., European, Japanese, South Korean, and Indian automobile companies. Under the new agreement, Chinese companies will own at least 51% of the joint ventures, and the foreign joint venture partners will need to provide key areas of technology to even have minority ownership. While this is a very astute approach by China, it will dramatically weaken the ability of the foreign automobile companies to compete in the China market. With high market share of the China market, the Chinese automotive companies will have the financial and technical resources to build strong positions in the global markets. The analysis of China and the actions of the Chinese leaders shows that excellent strategies are generally developed for long-term market domination. While there is the willingness to concede in some areas, there is also strong protection of areas that are considered strategic. In chess, it is the equivalent of giving a pawn to capture a rook. Soon, we have no major pieces left and we are defenseless. When checkmate occurs is a matter of convenience. China is an efficient industrial giant that is managing its internal policies effectively and is also managing its external environment. The strategies of China are well-planned for winning the war on wealth. We in the U.S. have many strengths but are also highly fragmented in our approaches. The U.S. is also too concerned with continuing consumption in the short term and is not taking care of the future of our children and the children of our children. We need to understand China and how we can collaborate with China in building wealth. When the Titanic and iceberg collided, we know what happened. The iceberg drifted to the equator and melted and the Titanic sank. We all need to prosper.


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Monday, November 1, 2010

3 Tips to Keep Your Top Chinese Talent

Oct. 11 2010 - 10:40 pm | 1,232 views | 0 recommendations |

“If you’re not switching jobs every two years, then you’re doing something wrong.” I continue to hear Asia Pacific-based senior executives echo the same sentiment about the career mindset of young Chinese white-collar workers in China. When I worked as a consultant in Beijing, it was clear that my co-workers seemed to be on a constant rotation program among the top multinational management consulting firms operating in China. During my first weeks on the job, I reviewed training presentations blatantly taken from the China offices of McKinsey & Company, Boston Consulting Group and Accenture. My co-workers did not seem to mind using this information, because so many had spent significant time at these different firms that to them it was public knowledge and not viewed as proprietary information.

Once you identify, recruit, and train top local employees in China, how can you retain these individuals to ensure they do not leave to work for a competitor taking your company’s proprietary information for a minor pay increase?

There is no surefire solution for retaining talented local employees, but many innovative western multinational firms have developed strategies to keep their prized hires within the firm. Here are three strategies worth considering:

Be flexible about employee titles

In general, it’s not wise to give inflated titles to employees whose skills and responsibilities don’t match up. While the title may initially satisfy an employee, he or she is likely to eventually consider themselves underpaid for the rank and demand more compensation. However, some companies have found a way around this dilemma by committing to a standard company-wide title and pay grade internally, while granting the employee a more appealing outward facing title on their business cards and in the marketplace. As one Asia Pacific CEO at a leading technology firm put it, “if the regional sales manager for China and Taiwan wants his business card to read ‘Greater China Director of Business Development’ I am ok with it, if that’s what it takes for him to stay in the company and continue to hit his sales targets.”

Think long-term when it comes to incentives

Convincing your local talent to buy into the company vision and stick around over the long-term may prove challenging. Nevertheless, you may be able to increase the likelihood your top employees will stay past the two-year mark by tying their incentives to aspirational purchases. The ideal path for a top graduate on the white collar career track is to graduate, get married, and buy a house. In recent years, a second major purchase typically follows home ownership – a car. Understanding this phenomenon, one company set up an incentive scheme for top sales managers. The company would provide an interest free loan to selected employees to buy cars and match a portion of the payments for 5 years. If the employee leaves the company before five years, they would lose the car and the company’s contribution. For those who stick around, they receive a car at a significantly reduced price. This is somewhat similar to companies outside of China issuing stock option plans, in which employees’ options fully vest only after a set number of years working for the company.

Shatter the glass ceiling

The Asia Pacific CEO at most Western multinational companies is often a foreigner from headquarters. Typically, other key positions such as VP Strategy, VP Marketing, even down to middle-management posts are filled by expatriates. This is unsustainable for a business seeking to localize for the long-term. As soon as a key Chinese employee sees a glass ceiling looming above her head, she will opt to join other firms. Interestingly, an increasing number of mid-level managers are choosing to leave Western MNCs for domestic firms. According to Frontier Strategy Group’s 2010 China Talent Engagement Survey, domestic Chinese firms empower their mid-level managers with greater responsibility than their counterparts at multinationals. On average, the typical mid-level manager (age 31-35) at a Chinese firm oversees 13 direct reports, while those at Western MNCs on average only directly manage 9 employees. It is important for top talent to see a clear career path at your company, or else ambitious employees seeking career advancement with increased responsibility may leave for a competing local firm such as Mindray, Baosteel, Huawei Technologies or Haier where there is more potential for career advancement.


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Three Rising Consumer Trends In China

Apart from the headline making stories about China’s growth rate, its currency, and sky-high property prices, three major trends are developing that are changing the competitive landscape in the country. All three, in one way or another, deal with the vast local market which largely exists in China’s interior.

In the broadest terms, approximately 400 million of China’s 1.3 billion population have annual per-capita income equivalent to $8,000, while the remaining 900 million have per-capita incomes one-tenth that amount. The lower income group tends to live in the countryside and China’s interior provinces, whereas the people with higher incomes primarily live in the country’s larger cities.

This vast income disparity in China creates two distinctive markets for almost every product — a high price, high technology segment catering to the country’s more affluent consumers; and a large, purely local market at the low end of the price-technology spectrum.

In the higher price market, which is not too dissimilar from markets one might find in the U.S. or Europe in terms of price, quality and technology, international companies compete with the best of the Chinese companies. Few international companies, though, venture into China’s lower price local market.

Three important trends are now creating a dynamic whereby the lower income segment of China’s population will play an increasingly important role in the country’s future development. As these trends unfold, international and local companies that are able to address both markets will have the greatest amount of success.

1. The local market is getting larger and more important as an increasingly restless workforce demands higher wages and a path to higher income jobs.

Wages are rising and workers in China are no longer content to accept whatever factory bosses in their sole discretion decide to pay them. Today’s workers are better educated than previous generations and aren’t satisfied with assembly-line jobs that offer few transferable skills and little prospect for advancement. They are demanding higher wages, a better work environment and a path to higher income jobs.

Much as Henry Ford’s decision to dramatically increase the wages of the workers at his factories created a new group of potential buyers for the company’s low-priced Model T, rising wages for migrant workers in Chinese factories are increasing the spending power of those at the bottom of China’s income pyramid. China’s local market will continue to grow and will become even more important in the future as a result.

2. As economic development evens out in China, growth will be fastest in the interior, further increasing the size and importance of the local market.

Shanghai’s per-capita income is over eight times that of China’s poorest province, and more than three and a half times that of all but a handful of the country’s other provinces. By comparison, the per-capita income of Connecticut, the wealthiest of America’s 50 states, is less than twice that of the poorest.

Traffic is also becoming a problem in China’s largest cities. Beijing officials estimate that, if the vehicle population continues to increase at the same rate, the average speed will slow to 15 miles per hour in China’s capital city by 2015.

The inner provinces are where growth will be the fastest going forward. The government is encouraging this trend, and many companies are now establishing large manufacturing facilities in the interior that employ hundreds of thousands of workers.

3. As the local market expands, local companies are gaining market share.

As China’s local market expands, and the demand for goods and services extends to a greater portion of the country’s population, local companies are gaining market share at the expense of their international rivals. China is the largest truck market in the world. Yet, local companies produce 98% of the trucks used in the country, and 90% of the diesel engines that power them. In the commercial vehicle market, price and affordability are the key issues. The same goes for construction equipment, where local companies now dominate the wheel loader market and occupy one-third of the market for excavators.

From virtually zero when passenger cars were first introduced, local brands now account for 33% of the cars being sold in China. As demand for cars broadens, smaller, less expensive models, where local car companies are most competitive, increases in proportion to the larger, more expensive models.

Even the newest industries are increasingly being dominated by local companies. In wind turbines, local companies account for 80% of the market, up from 13% in 2004. And the list goes on.

So far at least, the local Chinese companies appear to be benefiting the most from the expansion of China’s local market. Stay tuned.


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How The Internet Plays Key Role In China’s New Long March To Modernization

Oct. 5 2010 - 12:37 am | 665 views | 0 recommendations | National emblem of the People's Republic of China Image via Wikipedia

October 1 marks the 61st anniversary of the founding of the People’s Republic of China. For Chinese, 60 years represent one cycle in the Chinese calendar, which gives this 61st anniversary special significance.

For the first 30 years of the People’s Republic, China was dominated by Mao’s presence and his emphasis on politics and political movements at the expense of almost everything else. In the beginning, the political campaigns began as an inconvenience, but gradually became more extreme, culminating in the Great Leap Forward and Cultural Revolution, which permanently scarred Chinese society in very profound ways. The next 30 years after Mao died were largely about bringing China up from poverty and healing those wounds.

The period from 1978 till today, from an economic development point of view, are a huge success. China has risen from beggar nation status to one of the world’s wealthiest if measured by cash reserves. The Chinese government speaks with a new confidence, which often comes across as worrying, especially to its neighbors in the region, such as Japan, India and the members of ASEAN. In the Chinese officially controlled media, there are endless reminders of how much the government has done to raise Chinese standards of living, and frequently vilifying any criticism of official policy. The official line is that everything will be fine if China continues on its current path of development.

The only problem is that no one in China really believes that continuing previous policy will work. Chinese, through their actions, have made it very clear that they want more than just a higher standard of living and economic growth. Frequently, they feel that they are victims of corrupt local officials who have abused their power to enrich themselves. Furthermore, the system does not have checks and balances through which people can make appeals for justice. Since all political, legislative and executive power is dominated by one institution which has 79 million members, there are no other channels for the average Chinese citizen.

Until now.

In today’s China, the only system which permits some kind of appeal and checks and balances is the Internet. One of the most interesting stories in China which most foreign observers have missed is how the Chinese, in their own very ingenious ways, have adapted the Internet to fit their needs. In a previous article, I talked about how Sina’ s adaptation of Twitter, Sina Weibo, has become a tool for digital petitions to the Beijing central government, completely circumventing corrupt local officials. This presents a special challenge to Sina editors who are in charge of censoring content in real-time on Weibo on the government’s behalf. If they allow the content to go out, it will spread rapidly, creating a huge number of followers and supporters. If they suppress it, they will seem like they are working in collusion with corrupt local officials.

What are they to do?

In another instance, a Chinese author published a novel online, and was arrested and jailed for publishing pornographic content. Many Chinese came to his defense, and in the face of protests which came ONLY on the Internet, the author was released. Please note: because it is very hard for protesters to organize in the real world, Chinese are organizing to protest on the Internet. And they are doing it very successfully.

So, when Google and other western companies protest censorship in China, they really miss the big story. The Chinese Internet represents a channel for Chinese which they have not had before in the first 61 years of the People’s Republic. It represents a channel for protests and representations which did not exist during Mao’s lifetime. And it is VERY effective. This power comes from the Chinese people and their ability to swiftly organize on the Internet.

Google’s failure to grow significantly in China is based on its failure to understand how the Chinese would develop the Internet to suit their own needs. Sina is a company which is under very tight Chinese government supervision, yet they developed Sina Weibo. Why couldn’t Google have developed it? My guess is that Google’s management wasted so much attention and cycles on the government censorship issue that they failed to spot any other opportunities in China.

And western political pundits who support more freedom for Chinese miss the point by complaining about the Great Firewall of China. Most of the sites outside the GFW are in English anyway, a language the vast majority of Chinese just are not interested in. Instead of building more tools to go outside the GFW, they should focus on building tools to make it easier for Chinese to express themselves on the Internet within China. Ironically, Sina has done a much better job at this than Google.

Looking to its next 60 years, it is plain to see that economic development at the expense of everything else will not be sufficient to satisfy most Chinese. They want accountable government and freedom to express their ideas, and to live in dignity. Only when Chinese have free access to information will Chinese society become truly modern.


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Peace Hotel Still Shines But Could Use More Stars

Oct. 23 2010 - 10:48 am | 451 views | 0 recommendations |

It’s not every day that you get to stay in a hotel as legendary as the Peace Hotel in Shanghai. So yes, my expectations were running high.
That’s why I was disappointed when I arrived by taxi to the corner of Nanjing Road and the Bund, and was not immediately whisked inside with my luggage following. Instead, a bellman stood guard over the front entrance trying to keep the prying tourists away and nearly blocking my entrance.
Once inside, things did look up. While my room was not available yet, I was awed to see how the hotel had been transformed since my first touristy visit in 1995 to the historic place. The chandeliers and the white marble floors were glistening, and the staff stood at attention, greeting guests.
I observed as a steady stream of well-dressed visitors paraded inside and took seats at the lounge to order drinks. It seems that the Peace Hotel, closed for two years while a renovation by the Fairmont was underway, was once again the place to be seen. Some parts of the hotel are still a work in progress as I discovered when I walked upstairs to a darkened second floor, and immediately followed and directed back to a lobby by staff.
My room was not one of the spacious, oversized spaces I had peaked in on during my stop here 15 years earlier, but the high ceilings and large windows overlooking the rooftops of buildings along the Bund made it appear larger. Despite the hustle below of tourists in town for the Shanghai Expo, all was quiet and comfortable in here—no surprises.
For some reason I nearly quite fully understood, I was discouraged from using the executive lounge, which was nearly always empty, and directed to one of the hotel’s many restaurants.
I remembered the Chinese restaurant on the 8th floor overlooking the Huangpu River, and was glad to see that it’s kept most of its original feel and has not gone ultra-glitzy like many restaurants and nightclubs along the Bund. One evening, I met up with some San Francisco colleagues and had drinks at the bar while a jazz band of six veteran musicians made harmony together once again. We felt as though we were in our own special club.
One of the joys of visiting Shanghai today is having options like newly refurbished and brand new hotels to stay in. There is no shortage of them now, owing to all the new hotels that opened in time for this year’s Shanghai Expo.
See China’s Five-Star Infrastructure, Underused http://blogs.forbes.com/china/2010/05/26/chinas-five-star-infrastructure-underused/
Even as the skyline fills with more and more luxury hotels – the latest being the Intercontinental, the Peninsula and the Ritz-Carlton – still more are springing up in newly developing areas of the city. One wonders who is going to fill these rooms once the expo closes at the end of the month.
See Growth in China for international hotel chains may be poised to slow: http://blogs.forbes.com/russellflannery/2010/09/23/growth-in-china-for-international-hotel-chains-may-be-poised-to-slow/
I recently stayed at the just-opened five-star Guoman Hotel in yet another up and coming district of the city. My room had a bird’s eye view of a scenic lake inside Changfeng Park. This certainly beat most of the surroundings, largely a construction zone. Indeed, my taxi driver couldn’t find the hotel entranceway among all the roadblocks.
In case you haven’t heard of Guoman, it’s a British hotel group with four landmark properties in London. This is the group’s first of many hotels in China (including Beijing next year) where hoteliers are concentrating their expansion efforts. Certainly, the British heritage meant that the staff had extra-fine training in English skills – always a plus for foreign visitors. Another treat was the iconic London cabs.
Within a year’s time, this whole area will not be recognizable. A shopping mall is going up right next door, and on the other side of the hotel will be a MGM studio and believe it or not, a Jackie Chan museum.
Who says Shanghai isn’t exciting?


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The Great Currency Debate

On Thursday, the U.S. House of Representatives passed the Currency Reform for Fair Trade Act, which aims to crack down on Chinese currency manipulation by targeting imports from China and other countries with currencies that are perceived to be undervalued. With a final tally of 348 to 79, the bill was bi-partisan and passed with ease.

The fact that more than 100 Republicans voted in favor of the bill suggests that no Congressman wants to be on the wrong side of the China issue in advance of the November elections. Imports from China are generally blamed for the loss of American jobs overseas and stubborn high employment in the United States. With jobs now the number one issue on the minds of voters, any measure that promises to reverse job outflow, whatever its merits, is viewed as good politics.

Congressional leaders were quick to try and make political hay out of passage of the bill.

“For so many years, we have watched the China-U.S. trade deficit grow and grow and grow,” Speaker Nancy Pelosi said. “Today, we are finally doing something about it by recognizing that China’s manipulation of the currency represents a subsidy for Chinese exports coming to the United States and elsewhere.”

“I believe in free markets and open competition. I believe that American companies and workers can win under those conditions. But the rules have to be fair—and for years now, it has been clear that China’s currency policy unfairly tilts the field in its direction,” Majority Leader Steny Hoyer said in statement. “By deliberately keeping the value of its Yuan low, China is able to sell products here at an artificially low price. As a result, domestic manufacturers — whose prices would be much more competitive if China allowed the market to set the value of its currency — go out of business. And American workers lose their jobs.”

In the great currency debate which is now raging and which threatens to grow wider, June 19 is a key date. That is the day that China, by far the world’s largest currency trader, announced that it would no longer peg the yuan to the U.S. dollar, but would instead peg it to a basket of currencies. What China’s announcement meant in practice is that at the margin, beginning on June 19, China would tilt its purchases in favor of buying assets denominated in the euro, the Japanese yen, the British pound or some other major currency, rather than those denominated in the U.S. dollar. When an investor with $2.5 trillion of buying power makes such a statement, markets tend to listen.

Here is what has happened since.

As of the September month-end, the euro has increased in value by 10.3% against the U.S. dollar since June 19, the pound by 6.3%, and the yen by 7.8%. In fact China’s purchases of yen-denominated securities has heightened trade tensions between Japan and China to the point where the Japanese have complained publicly that China is effectively pricing Japanese products out of the market with its yen purchases, threatening to derail Japan’s economic recovery.

In the broadest measure possible, the United States Dollar Index (“USDX”) has declined by over 9.6% percent since June 19. The USDX measures the value of the US dollar against a basket of currencies that includes the euro, yen, pound, Canadian dollar, Swiss franc and the Swedish krona — exactly the currencies that China is most likely including in its own basket and which are now appreciating as a result. The USDX began in March 1973 with a value of 100.000 and has since traded as high as the mid-160s. At its current level of 78.691, the USDX is approaching its 33-year low of 70.698, which was reached on March 16, 2008.

While it is true that China’s yuan has appreciated by less than 2 percent against the dollar since June 19, and the slow pace of yuan appreciation is what has drawn the ire of U.S. policymakers, the fact is that the exchange rate between the yuan and the dollar is only part of the overall currency picture. China is a $5 trillion economy, but the gross domestic product of the European Union is $16.4 trillion, that of Japan is $5 trillion, and that of the United Kingdom is $2 trillion. Against the currencies of all of these countries, the value of the U.S .dollar is anywhere between 2 and 10 percent lower today than it was on June 19. Meanwhile, the dollar continues to weaken as speculation of quantitative easing by the Federal Reserve mounts.

If anything, the U.K., Japan and the ECU countries are being hurt more by U.S. currency policy than they are by China’s. As the economies of these countries struggle to recover, expect the currency debate to widen beyond China’s currency policy, to include the weak dollar policy being pursued by the United States.

As the Beggar the World editorial which appeared in today’s Wall Street Journal so aptly put it:

China’s ambassador to the World Trade Organization, Sun Zhenyu, was speaking for much of the world this week when he said that “We are very much concerned about how the U.S. would take practical and responsible measures to prevent the dollar glut and maintain the stability of the currency.”


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