March 3, 2009

Tax Reform on Foreign Profits of Multinationals Coming To a Government Near You?

Now what might this be about?

The Obama administration will propose a series of measures "over the next several months" to reform taxes on the foreign profits of multinational companies, and to crack down on abusive offshore tax shelters used by firms and wealthy individuals, Mr. Geithner said.

Posted by Richard at 8:51 PM | Comments (0)

Fiddler on the Roof in Japanese -- Really!

Performers and date of performance unknown. Looks like a rehearsal(?).

素晴らしいよ！　

[Thanks to Mother Zion for the onpass.]

Posted by Richard at 5:45 PM | Comments (0)

March 2, 2009

Another Attorney Scam E-Mail Purportedly from China

For those of us who are collectors of attorney scam e-mail, yours truly included, here's another:

From: Mr. Qiming Wang.
Legal Representative/Owner,
Quanzhou Haitian Textile Co.,Ltd,
Address: Haitian Industrial Park,
Jiangnan Development Zone,
Quanzhou, Fujian
China.
Email: qimingwang41@gmail.com
Website: http://www.htt.cn

Dear Sir,

Request for Legal assistance.

This is an official request for legal representation on behalf of Quanzhou Haitian Textile Co.,Ltd. We are a textile company with principal business in garment manufacturing and trading.

We are presently incapacitated due to international legal boundaries to exert pressure on our delinquent customers and we request for your services accordingly. We got your contact information from the Online Lawyers Directory as a result of our search for a reliable firm or individual to provide legal services as requested.

After a careful review of your profile as well as your qualification and experience, we are of the opinion that you are capable and qualified to provide the legal services as requested.

On behalf of Quanzhou Haitian Textile Co.,Ltd, Please accept my sincerest appreciation in advance for your willingness to render your services as we look forward to your prompt response to our request.

Thank you..
Mr. Qiming Wang.
Legal Representative/Owner,.
Quanzhou Haitian Textile Co.,Ltd..
Website: http://www.htt.cn

Notice how the content is basically similar to all those that have come before it:

1) The recipient is addressed neither by name nor by firm.
2) The text is written in a slightly archaic English "we are presently incapacitated..."
3) The proposed legal service required is the collection of the debt.
4) The question an attorney may have -- how did you find out about me? -- is answered with the proffered validation that the contact information came from the "Online Lawyers Directory." But which one?

Note the use of a gmail account, which enables the sender to hide important information about the origin of the e-mail.

Posted by Richard at 9:06 PM | Comments (1)

February 24, 2009

China: A Couple of Former Billionaires, Fraud, Bribes, Prison

Recommended: this story -- Jailed Billionaires Show New Face of China as Markets Unravel -- rich in detail, like this:

Greaves hasn’t seen or spoken to Huang, 39, since. One morning in November, the dapper, baby-faced tycoon failed to turn up, along with his Maybach limousine, at Gome’s Beijing headquarters, where he normally worked such long hours that he had installed a double bed in the office adjacent to his own.

Well-worth reading.

Posted by Richard at 4:56 PM | Comments (0)

February 20, 2009

van Etten v. Mitsui -- A Few Hackles Raised on First Reading

I've now had a chance to review the complaint in Van Etten v. Mitsui, 09 CV 1071, a reverse discrimination class-action suit brought by an American executive of Mitsui USA fired in 2006.

While I was originally favorable toward the idea of such a claim, the complaint itself tends to move me in the other direction. Avoiding the legal issues for the moment, let's look at a number of relevant cultural issues indicated in the text which render much of the complaint less persuasive than hoped for.

Hackle #1

The first hackle on my sensitive spine raised itself in profound discomfort in only the second paragraph of the first page:

Plaintiff brings this action to challenge a pattern and practice of race and national origin discrimination and retaliation committed by Mitsui USA and Mitsui Japan against current and former non-Japanese/non-Asian employees.

This last phrase -- non-Japanese/non-Asian -- is curious in itself. Does this equate Japanese with all Asians? Or does it make a distinction between the two?

And besides, what is an "Asian?"

For several centuries, the word “Asia” referenced a geography of indistinct determination, stretching from Syria to Japan, and from Siberia to the Andaman Islands, encompassing all nations, races, skin colors, languages, cultures. Essentially, a mishmash, due in large part to the impoverished understanding of Western explorers and mapmakers.

However, no Chinese I know would wish to be lumped together with a Japanese, or mistaken for him, and vice versa. Nor would a Taiwanese wish to be lumped together with the Shanghaiese, etc. But Westerners who didn’t know better, for no fault of their own -- they were only just coming in contact -- essentially classified everyone who lived in basically the same place: faraway.

Along comes 20th-century America, with its increasingly fractious ethnic and racial "melting pot," the elements of which, despite their occasional averments to the contrary, make strong demands for what they see to be their own people, community, tribe, but not for the community at large. Over time, the law recognizes certain races and ethnic groups, providing benefits to those with specific attributes. A census must be taken every decade and various groupings are statistically analyzed. It is a convenient shorthand to group Indians, Chinese, Japanese, Papua New Guinean aborigines, Uzbeks and Fijians into one mother lode of a political grouping, the sheer weight of which would seem to have somewhat nearly the political capital other large groups like blacks and Hispanics would have.

But there is no such thing as an "Asian." (Well, perhaps there is under federal law, but that fantasy I will avoid for the moment.) Things are too complex for this now rancid simplification.

In the complaint under discussion, the phrase “non-Japanese/non-Asian" is particularly troublesome.

Note this paragraph 18:

One of the central elements of the pervasive discrimination at Mitsui USA and Mitsui Japan is the use of and favorable treatment towards "rotational staff," who are employees of Mitsui Japan set to take tours or rotations with Mitsui USA, usually for a term of three to five years.

Rotations are common in international corporations, especially among Japanese companies, for whom the practical experience of in-country work and residence has always been held to be invaluable. It is a practice Americans have cut out of their budgets, much to their discredit and disadvantage. The bias away from direct in-country knowledge within the American company is, in my opinion, a substantial reason for American loss of market share globally. How is it, do you think, that the Japanese automakers have learned so much about operating successfully in the United States, while we now see the American automakers on bended knee begging for government assistance?

Generally speaking, who is rotated out of Japan? A young Japanese with some in-country skills or scholarship who shows promise -- someone who is marked for his potential to rise perhaps 10 or 20 years down the road.

I very strongly doubt that any non-Japanese -- the “Asian” referred to in the complaint -- would be drawn from India or China into a rotation into the United States. In fact, none is mentioned. No one without a Japanese surname, with the exception of a reference to two former complaints by Americans against the company, is even mentioned in the entire complaint.

To what classification is the complaint referring with the phrase "non-Japanese/non-Asian?" It is this ill-defined phrase, which recurs dozens of times in the complaint, that thoroughly confuses things for me. The fact finder may not find it so, relying upon the common Western conglomeration of all things "Asian."

But if I were the defense, I would attack it.

Hackle #2

My jaw dropped when I read paragraph 67:

Mr. Van Etten was also disadvantaged within Mitsui USA by the fact that Japanese was used to communicate, orally and in writing, throughout the day by top Mitsui USA/Mitsui Japan executives as well as with/by their underlings. This practice was rampant, notwithstanding the fact that non-Japanese/non-Asian employees would not be able to understand, leading to greater isolation and exclusion of non-Japanese/non-Asian employees. By way of example only, Mitsui USA held monthly, quarterly and annual business meetings where Mr. Van Etten's business was discussed, but the meetings were conducted in exclusively Japanese and no national staff were included.

This is an extraordinary assertion and, in my eyes, damns the plaintiff and not the defendant. Essentially, it makes the claim that, for purposes of employment discrimination claims, all communication must be made in the English language.

The plaintiff, thus, despite having worked for a Japanese company for 18 years, had never learned the language of its parent company. In his position, most likely, he would not have to. But what language would he speak if were he to become a top-level executive having to make his reports to headquarters in Japan? English? If the plaintiff had been thoroughly fluent in Japanese, had lived and worked in Japan and possessed the very significant in-country skills required of a top-level manager, I would give greater credence to his claim.

But it is entirely unpersuasive to suggest that an American employee of a Japanese subsidiary without such skills is thoroughly qualified to take on a senior role, which would include significant, perhaps daily, contact with headquarters, and an understanding of Japanese practices in the home office. Life is very different in the office in Tokyo than it is in Manhattan.

Hackle #3

By his own complaint, Mr. Van Etten was extremely accomplished -- a producer. He claims that his termination for discrepancies in expense reports dating to 5 years prior was, in a nutshell, trumped up because he complained vociferously about discriminatory practices.

In and of themselves, these factual allegations, as written, do not portray him as one particularly suited to the resolution of a major dispute within a Japanese company. He must have some skills, because he lasted in there a long time, and life is tough going in a Japanese company.

But the complaint shows him to be repeatedly complaining, over the course of several years, orally and in writing, while hinting at a distinct lack of respect for many of his colleagues. While the record of complaints may be necessary evidence to show notice, it, on the other hand, gives us a clue as to the tension in the office that appears to have surrounded this issue.

Read this from paragraph 84:

...Defendants admit that Mr. Van Etten complained that the rotational employees were not qualified for the positions they held and that the practice of bringing Japanese/Asian executives from Japan amounted to discrimination against non-Japanese/non-Asian employees could have been awarded these positions. They also admit that Mr. Van Etten complained that he should have been promoted to general manager and was not because he is not Japanese/Asian.

Numerous incidents, involving HR and executive management, are detailed in the complaint.

While Japanese are more likely to expect open friction within an American workplace, and rather more tolerant of it, it is still considered at the very least unpleasant. Often, when taken to extremes, it becomes a distinct mark against the one who breaches that etiquette.

This is not to say that resolutions are always possible in a Japanese company -- often not -- but simply that jousting is the art of remaining hidden, while advancing in plain sight. Mr. Van Etten may be a complete gentleman in an American sense and he may have comported with the law, but the facts as related by his attorneys give the impression that his repeated straightforward complaints to HR and, more importantly, to Japanese senior colleagues accelerated the movement of the grindwheel, upon which the ax was finally sharpened.

The complaint raised other hackles as well, including the assertion that discipline was more tolerant of Japanese than of Americans, which assertion I find -- based on my own experience and that of other foreigners I know in Japanese enterprises -- almost totally incredible.

I am eager to read Mitsui's answer. More on this case as it develops.

Posted by Richard at 9:00 PM | Comments (1)

February 17, 2009

For Your Review: Reverse Discrimination Complaint, van Etten v. Mitsui, 09 cv 1071, SDNY

To download the van Etten v Mitsui complaint discussed in this post, click this link.

Posted by Richard at 8:43 PM | Comments (0)

February 16, 2009

EVENT: ABA International Section China Committee Mixer in Shanghai

Sponsor: Shanghai Chapter of the American Bar Association International Section, China Committee

Blurb: Come mix and mingle with attorneys with diverse backgrounds from our legal community here in Shanghai and learn more about the ABA and China Committee activities.

Date: Thursday, March 5, 2009
Time 6:30-8PM
Venue: Mesa Manifesto, 748 Julu Rd (east of Fumin Rd), 巨鹿路748号(富民路东侧)
Tel: (86-21) 6289-9108
URL: www.mesa-manifesto.com
Cost: 120 RMB for members and non-members. Cost includes 2 cocktails/beverages and appetizers

Please RSVP by sending an email to jzhang (at) orrick.com on or before Friday, February 27, 2009.

Posted by Richard at 2:10 PM | Comments (0)

February 11, 2009

Japanese Bar Cracks Down on Foreign Attorneys

Times are tough and guilds are supposed to protect their own, as the Japanese Bar has done, here requiring all foreign attorneys operating in Japan, even, apparently, employees supervised by gaiben partners, to register as gaiben

A requirement that all foreign lawyers be registered as gaiben would fundamentally change the landscape of firms operating in Japan. To qualify as a gaiben, a lawyer must have practiced for at least three years, two of which have to have been outside Japan. The registration process can also take anywhere from six months to two years.

Posted by Richard at 1:58 PM | Comments (0)

February 9, 2009

Massive Fire in Rem Koolhaas Designed Mandarin Hotel Structure

Some have arrived at this blog after searching for news of the fire in Beijing. Here is a link to the most complete news report I've seen yet (in Chinese):

Posted by Richard at 6:38 PM | Comments (0)

Attorney Scam -- Bank Checks from East Asia and

Very briefly this morning, another article on the scam affecting American attorneys, originating in "East Asia."

"I've had clients from Taiwan and Hong Kong who I've never laid eyes on, and collected unclaimed property for them without any trouble," Sack said. But when a call to Citibank proved this check was invalid, Sack called Eagle Power Equipment. He said he got a laugh from that company's controller, who said he was not only not paying any debts to Tomen, but that he'd been getting calls from small firm lawyers across the country.

Not sure I understand the first sentence. Think I get the middle part. Amazed to read the final sentence. How many "small firm lawyers across the country?"

Posted by Richard at 2:10 PM | Comments (0)

February 7, 2009

Reverse Discrimination Alleged -- White Executive Terminated by Japanese Company

Van Etten v. Mitsui, 09-cv-1071, brought in Federal Court in Manhattan, alleges that the Japanese company practice of installing a "glass ceiling" above which only Japanese may rise constitutes an unlawful practice of discrimination. [Download the complaint..]

“Mitsui USA and Mitsui Japan have a strict policy requiring that the top positions and virtually any position managing personnel at the company be filled by the all Japanese/Asian staff,” according to the complaint.

Japanese routinely informed me, working in Tokyo and Osaka in the 1980s, that no Gaijin would ever be permitted to manage a Japanese. One Englishman, fluent in Japanese with Japanese wife, had spent 20 years with a major local securities firm. He was promoted to Senior Manager of his department with its one direct report-- himself.

Only within the past 10 years has this taboo been broken in Japan. In 2005, Sony, where I once worked, appointed Howard Stringer as top dog, raising hackles throughout the rank and file. And Sony is regarded within Japan as a company which routinely breaks new ground in HR practices.

However, this suit alleges a glass ceiling in Japanese companies operating in the U.S. Sad to say, I have no recent personal experience directly on point here, i.e. in the U.S.. But, it is, at first glance, an entirely believable claim, based on strongly-held cultural ideas and traditional practices.

Is the executive management of Mitsui and its subsidiaries in the U.S. entirely Japanese? Does the plaintiff speak Japanese? How will the plaintiff prove an unspoken rule -- a silent convention, as it were -- that may no longer be applicable in Japanese companies in the United States? Let's keep an eye on this one.

Posted by Richard at 1:28 PM | Comments (0)

February 3, 2009

Protectionist Policies in the Third World -- India Bans Chinese Toy Imports for Six Months

India's Directorate of Foreign Trade announced last week a temporary ban of six months on Chinese toy imports.

The Toys Manufacturers Association of India said it was pleasantly surprised by the decision of the Commerce Ministry to prohibit shipments of cheap toys from China.

Love that: "pleasantly surprised." Of course, it's all because of safety and quality concerns (heavily spiced with patriotic protectionist sentiment of the industry).

"You see Chinese toys everywhere. The good, upper-end toys are made in India, but the cheap toys in the street and small shops were being dominated by them. They are bringing in toys without safety norms," he said.

This may amount only to another inning in the game of international trade hardball these two nations have played over the past 15 years. Or it may be a harbinger of protectionist policies -- WTO be damned -- that may spread throughout the Third World. We now hear popular echoes -- ones heard and ignored for years -- redoubled in the U.S.

More than half of all Chinese toy exporters are reported to have closed their doors in 2008. Chinese toy exporters who've recently shipped product to China now find their inventory aboard ship unable to offload in Indian ports and probably unsaleable.

“虽然印度不是我们出口的主要国家,但影响肯定存在,特别是对企业士气的消极影响。”中国玩具协会副会长郭卓才表示...“

[Editor's Translation: "Although India is not one of our primary export nations, the effect will definitely be felt, especially a negative effect upon the morale of our enterprises," said Guo Zhuo-cai, the Vice-Chair of the China Toy Association...]

The smaller Chinese factories with overflow and lower quality goods are more likely to suffer from the Indian ban. But protectionist sentiment may have taken root in the Third World. Watch it grow throughout those nations -- indeed, we may see a Chinese response in kind, not simply the bureaucratic nonsense of a WTO dispute China has threatened to lodge.

Posted by Richard at 1:49 PM | Comments (0)

January 30, 2009

On Again, Off Again (Repeat) -- The "Bad Bank"

The Bad Bank (see yesterday's post) has hit a snag and may not progress past the light bulb stage. Executive regulators don't seem to know how it would work in practice.

Federal Deposit Insurance Corp Chairman Sheila Bair is apparently pushing for the top post of Baddest Banker:

FDIC Chairman Sheila Bair is pushing to run the operation, which would buy the toxic assets clogging banks’ balance sheets, one of the people said. Bair is arguing that her agency has expertise and could help finance the effort by issuing bonds guaranteed by the FDIC, a second person said.

Surely this sounds like Iraq all over again: a massive invasion frantically cobbled together with little planning as to the "after party."

Posted by Richard at 8:55 PM | Comments (0)

January 28, 2009

US to Implement Chinese-Style Toxic Asset Buy

American lawmakers appear to have shelved the frightful idea of "nationalizing" failing banks. However, they've now settled down to discuss -- from media commentary, frantically -- a plan that mimics the experience of modern Chinese banking regulators: the creation of a "bad bank" to remove toxic assets from the system.

You may remember that the Chinese banking system was (and remains) functionally bankrupt. [This article from 2005 is worthwhile reading.] Through deft financial sleight-of-hand, a satisfactory percentage of non-performing loans (NPLs) were removed to a state-controlled holding companies (AMCs), thus allowing, among other benefits, quasi-state-owned financial institutions to list on foreign stock exchanges, sporting "acceptable" NPL ratios. But NPLs continue to rise, despite Chinese statistics (read "notorious.") to the contrary. (Whom to believe?)

PWC Hong Kong's China NPL Investor Survey 2006 -- evidently the last issued, for good reason (remember that Ernst & Young retracted its NPL report of 2006 under pressure from Chinese regulators) -- states:

The size of the China NPL market is extensive. Based on the statistics provided by the China Banking Regulatory Commission ("CBRC") as at the end of the 3rd quarter of 2006, the total number of NPLs in China's commercial banks was approximately RMB1.3 trillion (US$160 billion). However, this amount does not include the NPLs that are presently held by the AMCs -- the only NPLs from China's banking system that to our knowledge are available for sale to investors.

It is difficult to estimate the amount of unresolved NPLs within the AMCs as they generally only report the amount disposed from their initial 1999 transfer loans of RMB1,400 billion (US$170 billion), and not amounts disposed from the various subsequent transfers made in 2004/05 which, based on press reports, we estimate total approximately RMB1,225 billion (US$153 billion). Recent press reports indicate that as of the second quarter of 2006, the AMCs have resolved approximately RMB1,169 billion (US$145 billion and paren of the 1999 transfer loans. That leaves a balance of RMB231 billion (US$30 billion) of the 1999 transfer loans that still need to be resolved and an unknown number of the RMB1,225 billion (US$153 billion) subsequent transfer loans requiring disposal. Whatever way you look at it, the AMCs still have a large number of NPLs on their books that they need to resolve.

It shouldn't surprise that foreign investors are no longer in the market for NPLs:

The China NPL market for foreign investors is very quiet and we expect it to remain so for some time. While there is supply and demand, only a handful of transactions have been completed this year and foreign NPL investors are leaving the market in droves. In addition, we have not noticed any new entrants to the market.

Now, with the U.S. very likely to purchase its own children's toxic assets, perhaps it will turn to China for expertise? With similar "success?"

And who will buy these assets, if they can be called that, from the proposed "bad bank?" And for what prices: who will determine them and by what method? Mark to market? What market? what astronomical sum would it, in fact, cost? No one, it seems, really knows...

Posted by Richard at 4:47 PM | Comments (0)

January 27, 2009

Indian Migrant Workers in Dubai Drive to Airport, Leave Keys in Ignition and Fly Away

Not only are Korean expats leaving China, as we posted earlier this month, but migrant Indian workers are no longer willing to call Dubai home:

It's the great escape by Indians who've hit the dead-end in Dubai. Local police have found at least 3,000 automobiles -- sedans, SUVs, regulars -- abandoned outside Dubai International Airport in the last four months. Police say most of the vehicles had keys in the ignition, a clear sign they were left behind by owners in a hurry to take flight.

[Many thanks to Miss Johnson From London for the onpass.]

Posted by Richard at 2:04 PM | Comments (0)

January 26, 2009

Watch Out! The Email Scam Some Attorneys Fall For

Due diligence on potential clients purporting to hail from foreign lands means more than simply calling the bank and asking if their "Official Bank Check" is good. This article follows the latest court filing, Buckley, White, Castaneda & Howell v. Citibank, in which an eager attorney is now on the hook for $182,500. Petition / Answer

[See our posts on the attorney email scam in our Legal category.]

Posted by Richard at 1:45 PM | Comments (0)

January 23, 2009

Here We Go Again! New U.S. Treasury Secretary and Manipulation of the RMB

Paulson's Legacy: Geithner:

Timothy F. Geithner, who moved closer to confirmation as Treasury secretary on Thursday, told senators that President Obama believed China was “manipulating” its currency,

Again? Since 2006, we've discussed Treasury's desire to move the RMB, but, by now, it's become a dreadful bore. [Search this page or click the Foreign Exchange category of this blog.]

Perhaps Washington believes that China has been weakened and leverage may be exerted where popular opinion supports the administration. Watch out for the push-back!

UPDATE (8 hours later):

Sure enough, the Chinese have fired back.

A Chinese ministry Saturday strongly denied Obama administration claims that China "manipulates" its currency, as the first contact between the new administration and China takes a markedly sour tone.

Posted by Richard at 5:10 PM | Comments (0)

January 20, 2009

Transparency in the U.S. -- Who Can Now Say the Chinese Government is Opaque?

Federal Reserve Board Vice-Chairman Donald Kohn before Congress on the importance of keeping secret the names of the recipients of the American banking bail-out.

Gasp. I don't think I can muster up even a single comment on this one.

Posted by Richard at 2:32 PM | Comments (1)

January 19, 2009

The Trade Surplus: Will China, Like Garbo, Continue to Plead: "I Vant to Be Alone?"

An enjoyable article by Alan Wheatley: China and the "Garbo Defense." Indeed, what economic policy toward China will the Obama administration adopt? Any at all?

"In bad times everybody talks more about financial cooperation, but the reality is that in bad times everyone wants to take care of himself first," said Shi Yinhong, an international security professor at Renmin University in Beijing.

"There is a great deal of interdependence, but built into that interdependence there are many potential conflicts," he said.

Posted by Richard at 2:08 PM | Comments (0)

January 7, 2009

A Treat -- The Markopolos Madoff Letter to the SEC

Sorry, China Hands, but this is too fascinating -- must share it with all those following the Madoff Meltdown.

Harry Markopolos's 2005 letter to the SEC. Lengthy, detailed, intelligent, outrageous.

Posted by Richard at 4:06 PM | Comments (0)

1 in 5 South Koreans Living in China Have Left

One in five of an estimated 700,000 South Koreans living in China at the start of 2007 have left [China], according to the [South Korean] consulate in Beijing.

A brief article on its causes, worth reading.

Posted by Richard at 3:15 PM | Comments (0)

January 6, 2009

Electric Power Generation No Longer a Growth Industry in China?

Growth in electric power generation "has collapsed under the weight of the global economic implosion — at least for now," claims Andrew Revkin, author of the New York Times Dot Earth blog,. Environmental activists appear to consider this progress in the climate control wars -- the necessity for which I question. Global warning is a theorem whose proof I find circumstantial and unpersuasive. [But then, I'm generally skeptical and don't usually rush to judgment. Let's give it another generation or two...]

Certainly, the graph the weblog displays, based upon China's notoriously unreliable National Bureau of Statistics, claims a decrease in growth. Here, here and here (from 2002), just for starters. To what extent have these energy stats been studied, picked apart, cross-tested?

In 2001, Tom Rawski, economist at the University of Pittsburgh, in "What's Happening to China's GDP Statistics," argued persuasively that the unreliability of Chinese energy statistics has caused serious flaws in official GDP calculations. Has something happened between 2001 and 2008 in China that have made these statistics more trustworthy? [That was a rhetorical question.]

Yes, yes, I know. It seems believable: a widespread decrease in manufacturing will most likely cause a drop in energy generation. But where are the hard numbers? Why are Stanford academics parroting official Chinese numbers? Where is the analysis?

For a brief summation on Electricity Regulation in China, read this short paper, authored by Lehman, Lee and Xu, which Aldo de Nobili and Ed Lehman were kind enough to send me. Download file

Posted by Richard at 2:34 PM | Comments (0)