In August 2010, the China Daily reported, “The number of private enterprises reached 7.5 million, accounting for half of China’s gross domestic product, 70 percent of the nation’s technical innovations and 60 percent of its patents.” In addition, “China’s top 500 private companies have surpassed State-owned enterprises in many indicators, especially tax payments and employment creation, according to a report from the All-China Federation of Industry and Commerce.”
In fact, Bloomberg.com says, “Many of the world’s richest self-made women are Chinese,” and Psychology Today.com tells us, “Women own more than 40% of private businesses in China.”
Meet one of those women. Judy Leissner was 24 when she became the CEO and President of 168-acre Grace Vineyard in Shanxi province, south of Beijing after she quit her job at Goldman Sachs.
The first grape-vine plantings were in 1997 and the first vintage in 2001. Judy started the winery because her father liked to drink. Today, Judy produces a quality wine—about 700,000 bottles annually.
Most people do not know that quality wine is produced in China. In fact, Judy has competition since there are about 400 wineries in China.
Judy says there is an opportunity in China to make a lot of money in a short period of time, because the country is developing and growing.
The difference between the wine market in China and the rest of the world is that most drinkers in China must drink because they have to. It’s part of the culture of doing business and developing guanxi.
In an update, Grape Wall of China.com visited Grace Vineyard in September 2011, and Jim Boyce says he visited Grace CEO Judy Leisser. He says, “About a week ago, she sent an email that the wines Grace bottled under screw cap earlier this year are doing fine and, if all goes well with final trials, the winery will switch closures this year for its entry level and premium level wines. Grace’s Premium Chardonnay ranks among the better Chinese wines and is found in top hotels and restaurants in Beijing and Shanghai.”
In addition, in an interview at 24×75.com with Judy Leissner October 17, 2011, she was asked how different the work environment for Grace Vineyard was compared to Goldman Sachs where she worked prior to becoming CEO of the vineyard in Shanxi Province. She said, “Goldman Sachs is a fast-pace, can-do, efficient place.” However, for the winery, she said, “The whole atmosphere was rather sleepy.”
In another question, Judy was asked about social responsibility and what those two words mean. She responded with, “We guarantee our growers basic income… Grace is a perfect example of an environmentally friendly and sustainable business. We provide many jobs for people from nearby villages.”
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Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.
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Sometimes I wonder about the sanity of most Americans. It seems they will drink or eat anything that arrives on an attractive plate or in a fancy bottle. I read a piece recently that said Lindsay Lohan and other Hollywood types like Madonna, Kirsten Dunst and Halle Berry are into this new (but old) synergy drink called Kombucha.
No one knows for sure where this fermented tea originated but recorded history says it started in Russia during the late 19th century.
However, promotional material says the drink comes from ancient China or Japan. In fact, some say that kombucha, known as Godly Tsche, dates back to the Qin Dynasty (221-206 BC) and was “a beverage with magical powers enabling people to live forever”. Since the first emperor, Qin Shi Huangdi, didn’t live forever, we can discount that claim.
I asked my wife about this tea and she said that as a child she saw it being fermented and that the stuff floating around inside the jar reminded her of dead cockroaches.
Once someone like Pepsi or Coke gets hold of something old like this there is no telling what kind of chemicals will be added. If you want to make this tea, click Kombucha Tea for the home brew recipe.
If you believe the health claims of this tea, you may want to learn about the Chinese “Chong Cao“. Remember, the Food and Drug Administration (FDA) hasn’t evaluated any of these claims.
Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.
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After the “Puer” tea is ready, the journey begins.
For the Pu’erh that I buy, Emperor’s Pu’erh, it leaves Yunnan, reaches China’s coast and then crosses the Pacific to end on a shelf at a Whole Foods Market. However, before that, for centuries, Puer tea traveled to Tibet and China’s capital for the Emperor.
CCTV 9 Travelogue – Tea and Horse Road – Part 1 1/2
Most people have heard of or read about the Silk Road from China to Europe. I’m sure that few have heard of the Ancient Tea Horse Road, which I discovered in the May 2010 issue of National Geographic magazine.
CCTV 9 Travelogue – Tea and Horse Road – Part 1 2/2
Legend says that tea from China arrived in Tibet as early as the Tang Dynasty (618- 906 A.D.). After that, the Chinese traded tea for horses, as many as 25,000 horses annually.
CCTV 9 Travelogue – Tea and Horse Road – Part 2 1/2
But that isn’t what struck me the most about the piece. It’s the example that demonstrated why the peasants loved and possibly worshiped Mao Tse-Tung.
CCTV 9 Travelogue – Tea and Horse Road – Part 2 2/2
For more than a thousand years, men fed their families by carrying hundreds of pounds of tea on their backs across rugged mountains into Lhasa. Some froze to death in blizzards. Others fell to their deaths from the narrow switchbacks that climbed into the clouds.
CCTV 9 Travelogue – Tea and Horse Road – Part 3 1/2
This all ended in 1949 when Mao had a road built to Tibet and farmland was redistributed from the wealthy to the poor. “It was the happiest day of my life,” said Luo Yong Fu, a 92-year-old dressed in a black beret and a blue Mao jacket, whom the author of the National Geographic piece met in the village of Changheba.
CCTV 9 Travelogue – Tea and Horse Road – Part 3 2/2
Before ending the four posts on Puer [Pu'erh] tea and moving on to Kombucha Fermented Tea in Post 5, Numi Organic tea, Emperor’s Pu’erh, the one I buy at Whole Foods, says, “These old-growth rare Pu’erh trees are communally owned by the local villagers who pick them for their livelihood, ensuring that they continue to grow for generations to come… Pu’erh is an ancient healing tea picked from 500-year-old organic wild tea trees in Yunnan, China. Pu’erh has more antioxidant than most green teas.”
Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.
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The fermentation of “Puer” tea demands a perfect mix of water, moisture and air. This provides the conditions for the development of microbes and the necessary fermentation.
The fermentation of broad leaf “Puer” tea produces a substance called theaflavin often called the soft-gold of tea.
Clinical experiments show that theaflavin reduces blood fat and cardiovascular disease among other benefits.
In animal experiments, the mice fed theaflavin had their blood fat reduced by 30% compared to the control group’s 10% blood fat reduction.
Due to the process of producing “Puer”, the tea may be stored as long as a century without losing its flavor or health enhancing benefits.
The 110 days of fermentation for “Puer” is important to achieve the best flavor and enhanced, health benefits—the time must not be shortened. The temperature and humidity must also be stable and many warehouses are built partially underground to achieve this.
I’ll bet you didn’t know much about the process the tea you may be drinking went through before filling your cup. The process to produce Puer tea represents almost two thousand years of China’s tea culture.
“Puer” got its name because it used to be sold in a town by the same name.
Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.
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Puer tea is mellowed by aging, the period by which it is transported and stored.
The largest, tallest tea trees in the world grow in the mountains of Yunnan. This region also produces black, green, Oolong and other kinds of tea.
The leaves for “Puer” tea are divided into three sizes and the largest contain more of the health benefits attributed to “Puer” tea.
For centuries, the process of making tea from picking, to washing, to boiling, mixing, pressing, clustering, baking, and packing has been improved to enhance the flavor of the tea.
Chinese Puer tea – Part 2/3
Dao Linyin, the governor of Xishuangbanna Dai Autonomous region in China says, “Puer tea contains many vitamins. Very few Puer drinkers get high blood pressure.”
Standards for selecting the thickest broad leaves for “Puer” tea means only about 30% of the tea leaves that are picked pass inspection to be processed into the final product. This selection process is important because the wrong leaves will have a negative impact on the fermentation process.
The fermentation step in the process of producing “Puer” tea takes 110 days.
Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.
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The CIA Factbook [where I found the data used in this post] says China’s GDP [Purchasing Power Parity or PPP] was more than $10 trillion and its real GDP growth rate was 10.3% in 2010, foreign exchange and gold reserves were about $2.9 trillion and its external debt was $529 billion. The current account balance was a positive $305.4 billion (2010 est.) Public debt was 16.3% of GDP (2010 est.).
India’s GDP [PPP] was $4 trillion with a growth rate of 10.4%, reserves were $287.1 billion and its external debt was $316.9 billion. The current account balance was a negative – $51.78 billion. Public debt was 50.6%.
Brazil’s GDP [PPP] was about $2.2 trillion with a growth rate of 7.5%, reserves were $288.6 billion and its external debt was $396.2 billion. The current account balance was listed as a negative – $47.36 billion. Public debt was 54.7%.
Russia’s GDP [PPP] was a bit more than $2.2 trillion with a growth rate of 4%, reserves were $479.4 billion and its external debt was $538.6 billion. The current account balance was a $71.13 billion. Public debt was 9%.
South Africa’s GDP [PPP] was $524 billion with a growth rate of 2.8%, reserves were $43.84 billion, and its external debt was $109.4 billion. The current account balance was a negative – $9.987 billion. Public debt was 33.4%.
Summary for the BRICS
The BRICS combined GDP [PPP] for 2010 was $18.9 trillion, overall growth of GDP was 7%, foreign exchange and gold reserves were about $3.99 trillion and its external debt was almost $1.9 trillion so the BRICS had more than twice the reserves than it did external debt. The current account balance was a positive $168.263 billion
The WEST
The Economic Health [or should I say Illness] of the United States
Meanwhile the United States GDP [PPP] was more than $14.6 trillion with a GDP growth rate of 2.8%, reserves were $132.4 billion and its external debt was $14.71 trillion, which means debt is more than 111 (one-hundred-and-eleven) times that of reserves. The current account balance was a negative – $470.2 billion and public debt was 62.9% of GDP.
The Economic Health [or should I say Illness] of Canada
Canada’s GDP [PPP] for 2010 was $1.33 trillion with a GDP real growth rate of 3.1%, reserves of foreign exchange and gold were $57.15 billion, and its external debt was $1.181 trillion in June 2011. The current account balance was a negative – $48.5 billion (2010 est.) and public debt was 84% of GDP (2010 est.)
The Economic Health [or should I say Illness] of the European Union
Member states of the EU (year of entry) — Austria (1995), Belgium (1952), Bulgaria (2007), Cyprus (2004), Czech Republic (2004), Denmark (1973), Estonia (2004), Finland (1995), France (1952), Germany (1952), Greece (1981), Hungry (2004), Ireland (1973), Italy (1952), Latvia (2004), Lithuania (2004), Luxembourg (1952), Malta (2004), Netherlands (1952), Poland (2004), Portugal (1986), Romania (2007), Slovakia (2004), Slovenia (2004), Spain (1986), Sweden (1995), United Kingdom (1973)
The CIA reported that in 2010, the European Union had a GDP [PPP] of $14.82 trillion with a GDP growth rate of 1.8%, there is no listing for foreign exchange and gold reserves. However, the current account balance was a negative -$11.07 trillion with external debt of $16.08 trillion as of June 2011. Public debt is listed for each member country but not for the European Union. For example: Germany’s public debt was 83.4% of GDP, the United Kingdom was 76.1% and Greece was 142.7%. Source: CIA Factbook
Summary for the WEST
The WEST’s GDP [PPP] was $30.75 trillion, the average GDP growth rate was 2.56%, external debt was $31.971 trillion and the current account balance was a negative – $11.525 trillion.
As of 2011, the five countries that make up the BRICS were among the fastest growing emerging markets.
Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.
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When you read something disparaging or criticizing another individual or a country such as China or one of its BRICS partners, you may see something like the question Troy Parfitt recently asked in a comment on this blog: “What about China’s debt problem?” The immediate thought after reading Parfitt’s entire comment might be that China has a debt problem that will slow or stop its economic progress leading to a crises.
In fact, few readers dropping by for the average thirty seconds to read a blog post will take the time to find out the facts to see if the claims of critics are as bad as they sound.
The result is that individuals motivated by cultural biases that resort to using confirmation bias in what they write will often leave behind a negative image of the subject they have criticized.
A cultural bias is the phenomenon of interpreting and judging phenomena by standards inherent to one’s own culture, and confirmation bias is a method used to support this.
Confirmation bias (also called confirmatory bias, my side bias or verification bias) is a tendency for people to favor information that confirms their preconceptions or hypotheses regardless of whether the information is true. As a result, people gather evidence and recall information from memory selectively, and interpret it in a biased way.
Another example of country’s economic health may be found in the spending and saving habits of its households. Canada’s household savings rate in 2008 was 3.8%, the United States was 2.7%, the EU total was 5.8%, the Russian Federation was 12.6% in 2005, Germany’s household saving rate was 11.2%, Greece was a minus -7.3% in 2006, and the United Kingdom was a minus – 4.5%. Source: Global Finance magazine
On page 45, Table 1, the GDP per Capita and National Saving Rate (annual average) for China was 54.4% up from 35.6% in 1980-1990. Wow! More than fifty-four percent saved (annual average) out of what a family earns!
On page 43, Figure 6, there was a chart comparing the saving rates of China with the United States. In 1980, the US saving rate was about 12.4% but by 2008, it was down to almost 5%. By comparison, China’s household saving rate was closer to 15% in 1980 and climbed from there to about 30% by 2008. After the 2008 global financial crises rolled across the globe from New York, the household saving rate in China jumped allmost 20%. Talk about saving for a rainy day!
If a financial crises is coming to China, that household saving rate tells us that the average Chinese family is getting ready to survive it.
Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.
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It may be no secret that China’s economic health will have an impact on the rest of the BRICS countries in addition to America and Europe. India and China need the resources of Brazil, Russia and South Africa and those three countries prosper due to the business from India and China.
For a better understanding of the BRICS, I turned to Investopedia for a definition, which said, “The BRIC thesis posits that China and India will become the world’s dominant suppliers of manufactured goods and services, respectively, while Brazil and Russia will become similarly dominant as suppliers of raw materials.
“It is important to note that the Goldman Sachs thesis isn’t that these countries are a political alliance (like the European Union) or a formal trading association – but they have the potential to form a powerful economic bloc…”
Due to lower labor and production costs, many companies also see the BRICS as a source of foreign expansion opportunities.
In addition, what was once only an acronym has become something else.
Although the BRIC acronym came into existence in 2001 when there was no real political organization among the four original countries, on June 16, 2009, due to the 2008 global financial crises, the leaders of the four BRIC countries held their first summit in Yekaterinburg, Russia, and issued a joint declaration. Since then, they met in Brasilia in 2010 and again in Sanya, China in 2011.
In 2010, South Africa launched efforts to join the BRIC group, and the process of its formal admission began in August. Later in 2010, the BRIC countries expanded to include South Africa, becoming the BRICS.
The next meeting of the BRICS is scheduled in New Delhi, India, March 2012.
Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.
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Because of the structure of China’s land ownership and banking system, the risk of losing money is much less than in the West and when the government resells property that lost value the first or second time around, the government banks collect another 30% to 60% down payment and also makes money off the interest of the new loans, and the property still belongs to the government—it is only leased for 70 years with an option to extend the lease.
In America, private property seldom belongs to the government. Even when the government repossesses property for any reason, it is usually sold at auction for very low prices with little to no chance to make up for what was lost.
In China, however, the government recycles the money mostly in a loop while the US government is not part of the loop—except when baling out private sector banks, and the money flows in one direction toward the private sector while adding to the national debt.
In addition, in China, Bloomberg reported in December 2011, that China’s property sector equals about 12 percent of China’s GDP and then Bloomberg goes on to discuss property values in China dropping 10, 25, 40 and even 50 percent or more—something that is still devastating the economy in America.
To learn more about property values dropping in China, I suggest reading More on Property Downturn at Patrick Chovanec’s An American Perspective from China
Chovanec wrote, “The revenue shortfall is making it hard for some cities to pay for basic services like police and hospitals, much less repay the massive amount of debt they borrowed for stimulus projects – which, according to this report from Bloomberg, may be much larger than official statistics suggest.”
However, before I move on with more about the BRICS countries, let’s not forget what caused China to borrow for stimulus projects in the first place—the 2008 global economic crises, which led to about 20 million Chinese losing jobs. Is it possible that the 2008 economic tsunami from New York is finally being felt in China?
Interestingly, Global Issues.org says, “While Europe and the US consider more socialist-like policies, such as some form of nationalization, China seems to be contemplating more capitalist ideas, such as some notion of land reform, to stimulate and develop its internal market…”
Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.
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In China, where do you think most or all of the money from those 30% to 60% down payments mentioned in Part 2 go? For a first-time property sale, the government owned banks loan the money to private citizens or businesses to buy property owned by the government. Once the loan is complete, the down payment and the amount of the loan flows to the same or another government owned bank and then the buyers make payments with interest to the government owned bank that holds the loan.
When re-sales of these properties take place, the first mortgage on the leased property is paid off and the second loan is either 70% (for a buyer’s first home) or 40% (for a second home).
Thirty percent of property in China is bought with cash.
Due to the high required down payment, the risk to China’s government owned banks is much less than the risk in the US private sector banking system, which really has no risk, since the government often steps in to make up for the losses in the private sector while ending up increasing the national debt.
In China, even when property values drop, the bank, which the government owns, may repossess the property (that the government always owned) and resell it. This means after a property has dropped 50% of its value in China, the government may lose either 30% or 10% of the value of the loan. In the US, if a bank cannot re-sell the house at the current value, then it losses all of the value of the loan.
However, when the same property that was repossessed is sold again, the down payment will be between 30% to 60% in addition to the fact that 30% of property sold in China is bought with cash.
In the long run, will the government owned banks in China make a profit or a loss?
Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.
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Posted by Lloyd Lofthouse 
