Notes on CBS China Business Conference :: 中国式增长 pt2

Private Equity and Venture Capital Panel: New Cycle, New Paradigm, New Landscape

Anla Cheng of Sino-Century

  • increase in PE fund managers – going for pre IPO deals
  • increase in general partners
  • “There’s too much money chasing for too few good companies.”
  • this may be the reason for an “increase in art sales” and other luxuries
  • as the gov’t is trying to cap the impending real estate and stock bubble
  • An increase in RMB funds
  • US dollar GPs are creating RMB funds
  • there are over 2,000 RMB funds
  • adjusted the hukou system to help people move in quicker
  • Fund Sources
  • US dollar GPs are creating RMB funds
  • gov’t (ex: solar sector : ¥400B
  • fund to fund
  • Sino-Century Investment Examples
    Women’s Healthcare
    In China, women’s healthcare is just beginning
    ex: A product to scan for cervical cancer

    • “There isn’t a clinic they can go to, so they have to go to the hospital.
    • “The co. has to go an extra layer to create a servicing network.”
    • “But even the doctor might not know how to use it.”
    • This company was sold to a Fortune 500 company
    • “In the US, this makes a lot of sense,”
    • “Translating that to China is hard”
    • [Service Design problem and opportunity]

    Food
    ex: logistic systems – complicated

  • 40 built(?) in China [recording inaudible]
  • 6,000 SKU
  • the complexity of the business “made the company unique”
  • What is the EBIDA – “should you build the [same scale and complexity of a] company” or just buy it?
    [blend of backstage logistics (critical path, sourcing, BPM) and front end user experience]
  • Alternative Energy
    ex: a pure play solar company

  • IPOed on the Shenzhen stock exchange.
  • It now has #2 brand recognition
  • and also sells in Germany
  • Sustainable Energy
    ex: wind turbine blades made out of bamboo

  • “we’re not just focused on alternative energy.”

  • “we’re focused on sustainable energy.”

    Andrew Hudders

  • mostly deals with flow of finances from US -> China
  • sees an increase in Chinese capital and Chinese investing in the US
  • PIPE – Private Investment in Public Equity
  • Gov’t influence – encouraged to invest outside of china
  • ex: food sources, alternative energy

    Problems and Differences

  • The small PE funds are inefficient, they are more like stock investors
  • doing deals overnight is not PE
  • What is occurring in China is “not what we traditionally consider PE in the US, which are arguably more skill intensive.”
  • They’re not to be “fe generating at the beginning, but to wait for the payout (3-5 years later). -Roger Leeds
  • Monita

  • Parallel funds can be created – going through the Ministry of Finance
  • RMB: Domestic Side can be created quickly – 2 days
  • US side: can take 9 months
  • -Chinese currency is not convertible
  • Government

  • In China it’s not “the government.”
  • There is: provincial, city, and above city level
  • ex: The provincial gov’t may invest maybe 20%into a company that is in a city [see sketchnote]
  • 20% “for that business’s fund for that business in the city
  • Gov’t support (via Anla)
  • she focuses on the three areas of the 35 year plan
  • is given funds by the gov’t to manage
  • ex: cooling towers – approaching provinces to purchase Xinbei Cooling Towers
  • Gov’t approval
  • very rarely do you get gov’t approval to create a financial entity
  • gov’t can’t support purchasing new technologies
  • deal flow involves the provincial government
  • creates a tremendous opportunity for the PE
  • use of local currency takes up some of the saving of RMB
  • ex: “Wind” (company – the “Bloomberg of China”) gained support from the mayor of SH
  • Growth Capital

  • small to mid size companies where you buy a significant but not controlling stake
  • The term “buy out” is different and focuses on a “significant stake” but not controlling and does not require loans and debt
  • Exit Markets

  • US timeline: invest—disinvest (sell) (five year) (via IPO)
  • CN timeline: invest—disinvest (sell) (18-3year) (via IPO, but or often by trading or selling)
  • time horizons are different
  • Often “No due diligence is done as the wire transfers are encouraged to be done very quickly.”
  • “In the next few years, a bubble will burst because the valuations are too high.”
  • The funds are “not run by real PE professionals” and are “just looking to get in before an IPO.”
  • Trends & Future of PE
    Average entry multiple is 6-12 times.
    the multiples can be 60-100 times.
    “I don’t know if this is sustainable” – Anla

    “deb structures that Chinese use are unsophisticated”
    “it will become more and more of a domestic industry…more and more Chinese.”

    this will cause

  • tougher regulation on companies
  • speed of growth and amount of money going into
  • How do you use foreign tech to fuel traditional business?

  • a company where you can increase the profit margin (by brining in new tech)
  • uncover crown jewels or diamonds”
  • most companies don’t want to be listed for financial reasons: they do it for the status symbol to say they’ve arrived.”
  • We’re in the process of creating brand names in China
  • Takeaways

    Q: Diff btw merchant banks and PE?
    A: Merchant banks – at a very high level
    PE – the real work begins after you invest
    In the US, we tend to think of VC as a subset of PE.

    Q: To what extent do you manage [and do more] than just stay on the bard?
    A: We get involved in every level
    -Anla Cheng
    As an equity investor, can you actually get involved in every level? What are ways for you to see insights form deep at the operation and level and consumer side?

    My Question:
    How can you that insight without having to spend excessive time there?

    What form do these deliverables take place?

    This is harder for multiple reasons.
    1. The time between initial investment and sale, trade or IPO is shorter than it is in the US.
    2. The companies that help transition to a service economy operate and exist differently.
    -The have different metrics of success and often those metrics are not well defined

    How do you translate not only technology to a new physical location, or management to a new cultural environment, but how do you translate success to future “industry” and future “companies.”


    Event Info

    Now the second-largest economy, having recently eclipsed Japan, China is becoming the anchor for a new cycle of self-sustaining economic development. The VC/PE industry, regarded as one of the major drivers of China’s innovation and industrial progress, will play an increasingly important role during this cycle. China’s VC/PE industry has reached a critical point in its development, with opportunities for explosive growth of the industry itself on the one hand and overall structural transformation on the other.
    Key Topics:
    How will the newly unveiled government policies such as “Opinions on Further Optimizing Usage of Foreign Capital” and the “New 36″ affect the equity investment industry? Along with the establishment of large-scale industrial funds backed by state assets, what will the pattern and prospects of Chinese VC/PE market look like? Will the rapid rise of RMB-denominated funds trigger new bubbles or cause supervision problems? What are the hot areas for VC/PE investments in 2011?
    Roger Leeds
    Chairman of Emerging Markets Private Equity Association (Moderator)
    Dr. Roger S. Leeds is the Chairman of the Board of Directors of EMPEA, and a Professor at the School of Advanced International Studies (SAIS) of the Johns Hopkins University, Director of the School’s Center for International Business and Public Policy, and an Adjunct Professor at the Wharton School, University of Pennsylvania. Prior to SAIS, Dr. Leeds worked as Managing Director and co-head of the emerging markets practice at Patricof & Co., Partner at KPMG, senior staff member at the International Finance Corporation, and, Associate at Salomon Brothers in New York. A renowned expert in the field, Dr. Leeds has worked in 100 countries in Latin America, Asia, Eastern Europe and the former Soviet Union, and Africa, and is a member of Council of Foreign Relations in New York. Dr. Leeds has a bachelor’s degree from Columbia University, and a M.A. and Ph.D. from SAIS.
    Monita Mo
    Founder and President of Ascend Capital Partners (Panelist)
    Ms. Monita Mo, the founder and president of Ascend Capital Partners, is a Chinese-American with sino-US bilingual cultural background. She graduated from Baruch College of CUNY with Master degree in Taxation and is a CPA licensed to practice in NY, NJ and California.
    Monita has a total of 30 years of experience in private equity, financial restructuring, and operating/financial management in China and the United States, engaged to help Chinese and American corporations to raise fund or go public in overseas market. She started her consulting experience with Arthur Andersen NYC participating in mega M&A deals in the 80’s primarily in the media and financial industries. She then started her accounting business in 1992 based in US and focusing in China. She is currently the consultant for 18 banks from China and Taiwan who conducting business in the US. She helped the first wave of abroad students in US come back to China to set up their business and assisted the earliest US investors investing directly in China. Meanwhile, she participated in the earliest online times investment, such as: 8848, Tongtech, PRC EDU and so on.
    Ascend Capital Partners was founded in 2002 by Monita, expanding the concept of consulting + investing primarily in privately owned enterprises in China (www.ascendvp.com.cn). Ascend has completed several exits in its investment and onto raising a fund to increase each of its investment size. The successful cases of Monita in recent year are Acorn International (listed in US), NVC Lighting (listed in HK), Changfeng Agricultural, TCT Medical, YOYI Media, Sinodis and so on.
    Anla Cheng
    Partner of Sino-Century China Private Equity (Panelist)
    Ms. Cheng is partner at Sino-Century China Private Equity, a mid-cap growth capital China PE RMB Fund focused in Financial Information and Services, High End Manufacturing and Sustainable Environment. She has spent more than 25 years in the field of investments and finance. She began her career at Goldman Sachs on the GNMA bond desk after completing the company’s training program. She joined Citibank, first as a Pacific Basin analyst, and later as Asian portfolio manager. She then moved onto Prudential-Bache where she headed the Japanese Institutional Desk.  She subsequently joined Robert Fleming, New York, eventually becoming senior vice president and head of the Japan/Taiwan/Korea Institutional Sales Group. Ms. Cheng ran a Family Office focusing on Asia hedge fund of funds which included PE funds before joining Sino-Century.
    She has an MBA from The Wharton School of Business at the University of Pennsylvania and has a magna cum laude B.A. from Pratt Institute. Ms. Cheng grew up in Japan and is proficient in English, Mandarin and Japanese. She is a member of the Committee of 100. She is also a Trustee of The Riverdale Country Day School and was honored at MOCA in 2009.
    Christian Giannini
    Director of ChinaVest (Panelist)
    Mr. Christian Giannini now serves as director at ChinaVest, a leading merchant bank founded in China by Americans over a quarter century ago and one of the oldest and largest private equity firms exclusively targeting the rapidly growing Greater China market. Prior to joining ChinaVest, Christian worked in the M&A and Corporate Finance groups at Robertson Stephens & Co. His transaction experience in China and the United States spans Infrastructure, Manufacturing, Energy and Distribution.
    Christian graduated from the University of San Francisco with a B.S. in International Business and he received his MBA from The University of Chicago, Booth Graduate School of Business. Outside of the office, Christian is an avid sailor, telemark skier and chef.
    Andrew Hudders
    Partner, Golenbock Eiseman Assor Bell & Peskoe LLP (Panelist)
    Mr. Hudders is a partner in the Firm’s securities and corporate departments. He regularly represents companies and placement agents/underwriters in public and private offerings, including private placements, IPO’s, 415 transactions, PIPE’s and secondary and resale offerings. He has extensive experience in SPAC offerings and SPAC business combination transactions as well as reverse merger transactions and related financings, typically PIPE transactions to finance the acquisition of and working capital for an acquisition target. He also advises and assists companies with their SEC reporting obligations, annual meeting requirements, corporate governance and securities compliance. He has substantive experience representing smaller underwriters and placement agents in underwriter compliance and compensation under FINRA regulation and blue sky issues.
    Mr. Hudders’ corporate practice includes the general representation of well-established, emerging growth, and start-up companies as outside general counsel. He represents these companies in a variety of matters, including equity and debt financing transactions, venture capital and private equity transactions, stock option plans, SEC reporting, executive compensation and employment related matters, strategic alliances and mergers and acquisitions. He also advises on listing requirements for issuers.
    The issuer clients that he represents operate in such diverse industries as computer services, on-line services, alternative energy, oil and gas exploration, mining, media, film and television production, beverages and food distribution, and medical devices. Clients are both United States based and have headquarters and operations in Canada, China, Hong Kong, Singapore and the the United Kingdom, among other locations.

    Event info and bios via http://www.columbiachinaconference.org/panels1.html

    Notes on CBS China Business Conference :: 中国式增长 pt1

    Opening Keynote – Frank Newman
    Spoke on how he turned Shenzhen Development bank into a highly profitable organization. He notes it is one of the few banks that is not state owned.

  • Main changes he made
  • -sent out bonus plans to have the branches vet them.
    -printed a formal code of conduct.
    -code of conduct iterated into “user friendly cartoons” for the second version.
    -verified via feedback surveys
    -created a way to define bonuses on “merit” not on “favoritism” or other means.

  • Crowd Questions
  • Q: Concerns for others than just shareholders.
    A: success of the bank was focused on: serving the economy, serving society.

    Q: What were the main challenges?
    A: “culture, trust, team management with language separatism.”

    Takeaway – he said he improved “efficiency and customer experience” – they’re two areas that I focus on (see my “About Page”).

    “Frank Newman has recently completed 5 years as Chairman of the Board of Directors and CEO of Shenzhen Development Bank, China (“SDB”). In 2005, SDB, a national listed bank with operations in 20 major cities of China, was seriously troubled. After a US-based private equity firm purchased about 20% of the bank’s shares, Mr. Newman led a team that turned the bank around substantially, to become healthy and highly profitable — with no government funding or guarantees. At the end of June 2010, after the successful sale of the major interest in the bank, Mr. Newman announced his retirement, and became an independent Senior Advisor to the bank.
    Mr. Newman also served as an active director of Korea First Bank, then controlled by a US-based private equity firm, as the bank recovered from substantial problems to become healthy and profitable. Previously, Mr. Newman served as Chairman and CEO of Bankers Trust Corporation, a major international bank based in New York. When Mr. Newman was asked to join BT, it was in a difficult, unprofitable position, facing substantial business, regulatory, and legal challenges. Mr. Newman led the program of resolution of the legal and regulatory issues, and recovery to a broader, profitable business base. Mr Newman then led the successful sale of the bank to Deutsche Bank, with a strong return for shareholders.
    From early 1993 through late 1995, Mr. Newman served as Undersecretary, then Deputy Secretary of the United States Treasury Department. As Deputy Secretary, Mr. Newman was the number two official of the Treasury Department and represented the Treasury on a broad range of issues domestically and internationally, including economic and banking policy. He also served as Chief Operating Officer of the Department. Upon completion of his service with Treasury, he was awarded the Alexander Hamilton Award, the Department’s highest honor.
    Prior to his government service, Mr. Newman served as Vice Chairman of the Board and Chief Financial Officer of BankAmerica Corporation, San Francisco. Mr. Newman earlier served as Executive Vice President and CFO of Wells Fargo Bank.
    Mr. Newman has also served as a director of a number of corporations in the US and other countries, including Dow Jones & Company. He is a member of the Board of Trustees of Carnegie Hall, and a member of the Investment Committee. Mr. Newman graduated from Harvard University with a BA, magna cum laude in economics.”

    Bio via Columbia China Business Conference Site. http://www.columbiachinaconference.org/keynote.html
     

    Ned Cloonan
    A great speaker, and Columbia alumnus
    He gave the history of AIG (AIG, American International Group) starting in Shanghai in 1919 and a background of CV Starr.

  • 4 Fundamentals to Succeed:
  • 1. Committed – long term, commitment has to come from the top, “The example starts at the top.” (speaking with regards to an organization)
    2. Relevant – be seen as the solution to their problems (China’s problems/ Chinese people’s problems).
    3. Informed on the differences between local, regional, versus Beijing
    4. Strategic

  • Skills you need

    -_________ of the secretary of finance
    (diligence with quantitative data that can scale and have large impact)
    -the cultural sensitivity of a sociologist
    -the tact of a diplomat
    -the eye of an art historian

  • Examples:
  • commitment – Post Mao, it took 17 trips to Shanghai to ask for a license for AIG to start again. The business must bring something to China.
  • cultural sensitivity and appreciation of culture – AIG top level employee notices Chinese works of art are for sale in a US antique store. Those works of art were from the Summer Palace and were stolen during the Boxer Rebellion. AIG returns them to China.
  • Relationships with people – even if they’re in a different group (age, industry etc). He stress the importance of relationships and notes “China is a country driven by relationships, not rules.”
  • IBLAC (International Business Leaders Advisory Council) – engaged with other, economic reform to make SH a financial center, and worked on air traffic in addition to more
  • See beyond the normal business framework, beyond bilateral US-China relations, but the relations that shape your country’s relation with the world.
  • Edward “Ned” Cloonan
    Retired Global Vice President, American International Group
    Mr. Edward “Ned” T. Cloonan held the position of Vice President of Corporate and International Affairs for American International Group (AIG).  He was responsible for developing and executing business development strategies, as well as strategic corporate giving.  He helped build AIG’s global businesses, including playing a leading role in successful market access strategies in China, India and Vietnam.
    Mr. Cloonan had a 30-year career with AIG.  As Vice President for Corporate and International Affairs, he worked closely with CEO Hank Greenberg in expanding the firm’s international business, with an emphasis on China, India, Vietnam and Latin America.  Mr. Cloonan led efforts in five key areas: Political Management, Market Access, Issue Management, Business Development, and Philanthropy.  Some of his accomplishments include: he attained the first ever 100% foreign owned license to operate in China; defeated legislation in Russia that disallowed foreign life insurers from operating there and developed strategies that resulted in AIG being the only foreign life insurer allowed to operate in Russia; led winning strategy to overcome India’s previous thirty years of insurance industry nationalization and secured operating license in India; developed $75M global corporate giving program that promoted entrepreneurship, innovation, diversity, and empowerment.
    Mr. Cloonan is a member of the Council on Foreign Relations, and serves on the board for the Asia Society, National Committee on U.S. China Relations, the Americas Society/Council of the Americas and the American Indonesian Chamber of Commerce.  Mr. Cloonan was named a “C.V. Starr Partner,” the highest form of recognition within AIG, for his outstanding leadership and performance.  As Hang Greenberg once said, “Ned is simply the best at what he does.”

    Bio via Columbia China Business Conference Site. http://www.columbiachinaconference.org/keynote.html
    ————

    China Business Conference :: Growing Like China 中国式增长

    Columbia Business School is hosting a conference on business in China.
    I am most interested in the talks on venture capital, entrepreneurship, and cleantech.

    My Goals:
    Understand more about entrepreneurship (and VC) in the context of China.
    Understand more about VC (and how that can be blended with IB).
    Identify opportunities for (devel and implementing) alternative energy application.

  • Specifically – networked cleantech + alternative energy where the users are co-creators.
    (area where Shell is not interested in see URB CN outline)
  • Highlight current discrepancies and problems w energy usage
  • Id specific geographic markets.
  • Id new technologies (that have been engineered, but the way they interface with local users needs to be designed.)*


  • This will help me understand how to refine my capabilities of:

  • a. Researching and understanding how these technologies (some of which currently exist and some of which are being devel’d can engage in user-specific scenarios – culturally, and usefully.**
  • b. Designing the services to be implemented and operated with metrics that can be appreciated with the likes of a tangible product or physical environment.***


  • *[obviously in an iteration, the specs will need to be re-engineered.]
    **[see Future Perfect – efficiency 50-100% (delivery to consumption) vs 5-10% improvement (manufacturing) for products – exponentially or at least increased figures with co-created svcs].
    ***[see Doblin 10 Types, Continuum’s Rajesh on new metrics etc.]


    See the following details from their website.

    Macro-Economy Panel: China’s Economic Restructuring – Challenges and Opportunities
    Since China’s economic opening in 1978, the Chinese economy has been enjoying rapid growth. China has come to a point where it is reevaluating its economic model focused on growth in order to counter current inequalities and destabilizing factors. Looking ahead, the Chinese economy will embrace great opportunities as well as encounter some potential challenges. Thus, social and economic restructuring needs to be taken into consideration by both policy makers and all the other economic participants. The direction of the Chinese economy will also have a significant impact on the global economic landscape.

    Key Topics:
    What does China’s macroeconomic environment look like at present? What challenges and opportunities will China’s economy face in the future? What key factors will influence China’s future macroeconomic development, both domestic and international? What direction will China’s economic restructuring take in the next decade?

    Private Equity and Venture Capital Panel: New Cycle, New Paradigm, New Landscape
    Now the second-largest economy, having recently eclipsed Japan, China is becoming the anchor for a new cycle of self-sustaining economic development. The VC/PE industry, regarded as one of the major drivers of China’s innovation and industrial progress, will play an increasingly important role during this cycle. China’s VC/PE industry has reached a critical point in its development, with opportunities for explosive growth of the industry itself on the one hand and overall structural transformation on the other.

    Key Topics:
    How will the newly unveiled government policies such as “Opinions on Further Optimizing Usage of Foreign Capital” and the “New 36″ affect the equity investment industry? Along with the establishment of large-scale industrial funds backed by state assets, what will the pattern and prospects of Chinese VC/PE market look like? Will the rapid rise of RMB-denominated funds trigger new bubbles or cause supervision problems? What are the hot areas for VC/PE investments in 2011?

    Investment Banking Panel: Cross-Border M&A – The Next Wave
    As China has gained increasing economic power and prowess in the global economy, we have witnessed the first wave of Chinese outbound M&A deals, led by the country’s huge state-owned enterprises and aimed at securing critical natural resources such as oil and minerals. The ranks of Chinese companies executing cross-border transactions are swelling, and the latest wave is led by auto-makers looking to acquire technological know-how and brand equity. What is next? As Chinese companies look overseas to maintain their stellar profit growth and compete with global enterprises, M&A becomes an essential and critical part of their strategic decisions. Similarly, plenty of opportunities exist for foreign companies looking to establish or grow their presence in China through M&A.

    Key Topics:
    How do Chinese anti-monopoly law and other legislation impact deal flows? What current obstacles prohibit foreign companies from making strategic acquisitions in China? What will the M&A landscape in China look like over the next 10 years?

    Capital Markets and Investment Panel: The Outlook for Chinese Capital Markets
    Since the economic liberalization of the late 1970s, Chinese capital markets have been through rapid developments and expansion. Today, the markets have become the driving force shaping the ecosystem of modern Chinese business society. With more sophisticated legal and regulatory systems, bigger and more efficient markets, and improved international competitiveness, China’s capital markets, with their unique dynamics, have attracted more and more world attention and academic studies as an engine for the global financial system.

    Key Topics:
    With the rampant inflation threats looming in emerging economies, is the China Story still intact? How can investors invest in China both strategically and rationally? What are the latest developments in China’s investment management industry? How does the Chinese capital market introduce and implement innovative financial instruments such as futures and ETFs? How does the emerging derivatives instruments affect market trading behaviors? What are the priorities and concerns for Chinese policy and regulatory authorities to manage the high growth and capital inflows? What is the next potential step for the RMB liberalization, given the successful offshore market? What are the major risks investing in China compared to other Asian emerging market? Will the fear raised by the Japanese nuclear meltdown impact the nuclear industry and the renewable energy development in China?

    Green Energy and Cleantech Panel: Charging Ahead on the Sustainable Energy Road

    As one of the world’s highest energy consuming countries, China is making a great effort to increase energy utilization efficiency. The promotion of new energy applications has been widely recognized as one of the most promising strategies. The January 2010 establishment of the Chinese National Energy Commission, headed by Prime Minister Wen Jiabao, was regarded as an extremely important step. The government’s New Energy Industry Development Plan (2011-2020) has also entered the final stage before its public announcement; it is expected that the Plan will include 5 trillion RMB investment during the next 10 years.

    Key Topics:
    Will China truly create another miracle along the road to new energy sources and then migrate to a more sustainable development pattern? What role will China possibly play in this global game of new energy? Which new energy will be most promising in China?

    More info on www.columbiachinaconference.org
    Text via Columbia China Conference.
    Connect with Columbia Business School www4.gsb.columbia.edu

     

    Thoughts:
    The conference webstie somehow looks so Chinese.  Not in terms of “Ancient Chinese aesthetics,” which is what most western people think of in terms of Chinese style and visual design.  But the color pallete of light blue and green, as well as the gradients and borders with thick white space between columns looks like a lot of Chinese websites.  I do appreciate how the business school can set up their own site for each conference, and has a consistent online presence.  That says something quite positive about their efforts.  That is in addition to having a conference since 2008 (maybe earlier?) on the impact of China.

    Cultural power shifts :: China

    In 2010, China reached first place as the largest art market “with 33% of global fine-art sales stemming from auctions based there.”* (Crains)

    “Four Chinese artists made it into the top 10 ranked by auction revenue for 2010, up from just one in 2009.” (Crains)

    If US fairs featured more galleries that represented Chinese artists, that would give Chinese artists the opportunity to visit the US.  Simply visiting the US during an at fair and taking that experience back to China is a great way to cross pollenate ideas and culture.

    A gallery owner from Shanghai said that he would not be coming to New York for Art Week because the US economy is still feeling the recession.

    The Armory Show 2010
    This year for New York Art Week, Eli Klein Fine Arts, one of the most prominent US galleries representing Chinese artists, was rejected from The Armory Show.  I specifically did not make it to The Armory Show nor VOLTA this year because I did not see any Chinese focused galleries listed.  Not having representatives from the most populated country and the largest art market not only stems potential financial flow, but also cultural flow.

     Last year during New York Art Week, I met Zhang Gong and Liu Ye.

    Zhang Gong’s most recent exhibition, features cityscapes of New York and Beijing. “Zhang Gong was fascinated with New York City on his first visit which was his debut at Eli Klein Fine Art; he became inspired to portray this metropolis as a counterpart to his Beijing cityscapes.”

     Zhang Gong’s “Beijing – New York” at Eli Klein Fine Arts

    Crain’s states that Zhang Gong’s current exhibition is “three-quarters sold out after just three week.”

    Power doesn’t just shift, it flows.  And if people are concerned that power in a specific market is being shifted to China, what can be contributed to this current?
    What do we want to carry in that power, or more importantly where do we want to carry that power to?

    Joseph Nye of Harvard University’s Kennedy School of Government takes the concept of “soft power” which is used to describe development of infrastructure, hospitals, energy plants, or schools. Soft power is in contrast to the “hard power” of the military.

    Nye suggests furthering the soft power to development of art and media that represents culture.

    So why are so few in the US supporting another nation’s development of culture?

    Nye states that, “Great powers often try to use culture and narrative to create soft power that promotes their advantage.” In a global and international context, the effort is less about promoting one’s advantage as it is about increasing a dialogue.  In this age, it is increasingly difficult to sell one form of corporate or nationalistic propaganda to the people of that organization, let alone to people in a different market or country.  Art is a great means for creating a dialogue, especially outside of a highly rigid framework, hopefully New York will embrace it in 2012.

    Crains, Art-world power shifts to China, 艺术世界的权力转移到中国 – http://www.crainsnewyork.com/article/20110327/SMALLBIZ/303279971
    Eli Klein Fine Art – http://www.ekfineart.com/html/exhibinfo.asp?exnum=713
    Washington Post – http://www.washingtonpost.com/opinions/chinas-repression-undoes-its-charm-offensive/2011/03/24/AFdlxRYB_story.html

    *Art Info says that “China has outpaced the United Kingdom to become the second-largest art market in the world.”

    Rising Tigers Sleeping Giants

    Rising Tigers Sleeping Giants
    Asian nations set to dominate the clean energy race by out-investing the United States

    Core Clean Energy Technologies – including:

    • -solar
    • -wind
    • -nuclear power
    • -carbon capture and storage
    • -advanced vehicles and batteries, and high-speed rail.

    Asia’s “clean technology tigers” – China, Japan, and South Korea

    CTTS aka Clean Energy Technologies – can be variously defined. Throughout this document, unless otherwise specified, we refer to zero- or low-carbon energy generation and transportation technologies and efficient end-use energy technologies.

    1. Asian Nations will out-invest United States in the production of virtually all clean energy technologies over the next five years

    2. Large, direct and sustained public investments will solidify the competitive advantage of China, Japan, and South Korea.
    Allow them to capture:

    • -economies of scale,
    • -learning-by-doing,
    • -innovation advantages

    3. If the investment gap persist, the US will import the overwhelming majority of clean energy technologies it deploys.
    could jeopardize America’s:

    • economic recovery
    • its long-term competitiveness

    4. U.S. Government policy and support are modest and not as strong as the governments of Asian nations.
    US: to invest $172 billion over the next five years
    China: to invest $397 billion in China

    5. U.S. must close the widening gap between government investments in the US and Asia’s CCT and provide more robust support for U.S. clean tech research and innovation, manufacturing, and domestic market demand.
    U.S. energy policy must include large, direct and coordinated investments in clean technology R&D,
    manufacturing, deployment, and infrastructure.

    Asia
    government investment:

    • -larger
    • -aim: to support clean technology research and innovation, manufacturing capacity, and domestic markets, as well as critical related infrastructure.
    • public investment:
      • -larger
      • -more direct

    US Situation

    foreign reliance :: manufacture the majority of its wind turbines,
    produces less than 10 percent of the world’s solar cells,
    losing ground on hybrid and electric vehicle technology and manufacturing
    risks importing the majority of the clean energy technologies necessary to meet growing domestic demand.

    CTTs are already on the cusp of establishing a “first-mover advantage” over the United States in the global clean tech industry. (Notes and quotes via Break Through Institute)

    While that report is from 2009, its message rings true.  Last year, Breakthrough Institute Project Director Devon Swezey testified in congress that the US needs “a robust and long-term investment strategy in critical areas such as research and innovation, advanced manufacturing, market creation, infrastructure, education, and new industry clusters.”   Not just a “low price on carbon–as proposed in current congressional climate bills.” (Break Through Institute).

    That is going to be hard if Vinod Kholsa is correct in saying  that in the US, “we do not support innovation capitalism,” preferring instead to support established corporations through what he termed “incumbency capitalism.” (Market Watch).
    Sources:
    Rising Tigers Sleeping Giants, more intese notes on their blog:  http://thebreakthrough.org/blog/2009/11/rising_tigers_sleeping_giant_o.shtml
    Rising Tigers Sleeping Giants, download the PDF here, http://www.notes.slcstudios.net/wp-admin/thebreakthrough.org/blog/Rising_Tigers.pdfMarket Watch http://www.marketwatch.com/story/another-clean-tech-ipo-imminent-khosla-says-2011-03-03

    Chinese Avant-Garde Art 前卫艺术

    CHINESE ART STYLES:

  • Guohua 国画 – defined China’s physical beauty as an appropriately patriotic subject for painting.
  • Scar Paintings – described the calamities and spiritual wounds caused by the Cultural Revolution.
  • Rustic Realism – depict ordinary citizens, particuarly herders, peasants, or minority people, the type of people encountered by the young artists during their years spent working in the countryside.
    with a “high degree of realism [and naturalism] and [featuring] extreme technical finesse.”
    “Realism is acceptable to people in almost all ideological camps politically and socially”
  • Political Pop – One senses the artists’ self-mockery, because they are unable to do anything about their own circumstances and environment.
  • Avant-Garde
  • AG characteristics
    -“involved occasional political dissidence”
    -“context of the conflict between the old and new traditions”
    -often “in a situation of suppression”
    -“it has no links with the official art of the Cultural Revolution and was developed in opposition to official styles.”
    -“promoted creative freedom and individual human freedom.”
    -“unconcerned with commercial trends, but instead sought critical recognition, first, within China and, now, abroad.”
    Advents – (that allowed for the movement)
    -“partial ‘retreat of the state.'”

    ACTORS INVOLVED
    Star Group Show 星星美展 – (a group that produced a show was that avant-garde for Avant-Garde style).
    AG Groups of 85 and 86
    functions:
    1) “defensive” – strength in numbers concept – (protection after being highly critical – sort of like the revolutions in the M.E./N.A. – you can shut the show, but the party still continues.) “As an exhibition, it will be closed, but as art it will not be concluded.”
    2) individual value for the artists
    “provided individuals with opportunities to vent the instincts that would otherwise be suppressed.”
    in a group setting identity is often merged or lost, here being part of the group is definition and provides a platform.
    3) self funded exhibitions – group pooling of funds

    TYPES OF CHINESE AG ART
    related to the question of humanism

    -rationalist painting
    “expressed their ideas in a cold, severe tone, so as to create a new, tightly controlled structure in which emotions play little role.”
    -“Current of Life” school
    “addresses the question of the nature of life in order to explore the value of humanity.”
    “painters express their opinions about the nature of life by means of venting their own individual emotions or expressing their own life situations.”
    -performance art – “expressed individual moods of oppression”

    CONCLUSION
    “The Chinese avant-garde is a movement that seeks to attack and destroy the traditional order in the art world, with the ultimate goal of attaining artistic freedom.
    It “strived for cosmopolitan values linked neither to the dominant official style nor to the new markets its advocates seek.”

    “To a great degree, the avant-garde art movement was not about art; it concerned cultural attitudes and concepts that were bigger than the forms of art that contained them.”

    THOUGHTS
    Like most art, I find that the most valuable part is art’s effect on culture and the societal changes that can come from that.
    The links between advents in art and politics can be plotted out with connections of varying degrees of influence between them.

    APPLICATION
    Initial Question
    How to apply this to current urban status quo?

    “All five of these artists wish to transcend the level of psychological and personal feelings to make more universal statements. They have the potential for being more dangerous to the old artistic culture in China than the more openly critical artists because they seek to create a viable alternative to the old art. The new artistic styles they create, if successful, may replace the styles of the status quo.”

    Applied Arts and Culture
    Theodor Adorno and Max Horkheimer argue that “mass culture” is constantly created by the “culture industry” like publishing houses, film studios, and the record industry.
    What is the connection between mass culture and what Xu Bing calls “applied arts”? What is the appropriate connection?
    The industrialization of culture caused “artistic excellence to be displaced” and evaluated on new artificial grounds like “sales figures as a measure of worth.” (wikipedia) For instance “a novel, for example, was judged meritorious solely on whether it was a best-seller”

    Currently, views, clicks and unique visits are some metrics in the digital realm. Those are the metrics for false systems of evaluation and profit that Umair Haque dubs “fake costs.”
    So not only are many of the metrics false, but the actual “value creating system” is false in this “zombieconomy.”

    What are the effective systems and what are new domains and metrics for evaluation (or judgement)? Exploration of systems that create value and that culture culture.

    OTHER
    “practice is the only measure of truth.” Deng Xiaoping
    “truth is no more than validated practical reality caused Chinese who were disillusioned by the Cultural Revolution to shift their values to pragmatism and individualism.”

    img
    “One example is Zhang Qun and Meng Luding’s Adam and Eve’s Rev- elation in the New Age”
    but what is the apple?

    quotes via: Andrews, Julia F. and Gao, Minglu. “The Avant-garde’s Challenge to Official Art”, ibid. pp. 221-278.
    wikipedia: Avant-Garde http://en.wikipedia.org/wiki/Avant-Garde
    Mix: Umair Haque. “Why Busines is Brain-Dead and how to Wake Up” http://www.managementexchange.com/blog/why-business-brain-dead-and-how-wake

    Ziba – Sunshine Generation – Design At The Edge

    Sunshine Generation
    Bruce Nussbaum brought Ziba’s Karen Reuther and founder Sohrab Vossoughi to Parsons on Monday the 7th. They open the presentation with “The revolution is underway.” The presentation was based around the “Sunshine Generation” in China, young urbanites that grew up not knowing Tian’anmen’s square and have only seen economy growth.


    Karen Reuther of Ziba says “They call themselves sunshine because they are smiling”
    Some of what was presented can be related to the article “Oh, to Be a Millennial in China,” by AdAge in 2010.

    Ziba developed a few findings from their ethnographic research.

    1 the youth are comited,
    their weapon is optimism

    2 the shift is radical,
    and it is happening from the inside out
    they see china influenceing the world.

    3. the scale is unprecedented
    w 340M ‘revolutionaries’ participating

    One of their main insights was
    They are more similar than different (with us)
    Unbridled Optimism – “I don’t just want to follow what others are doing. I want to do it myself”
    they like to “look different together.”
    Anticipating Greatness – “My generation likes challenges. We want something unexpected.”

    I will post more on this later, including my views in relation to my experiences in China.







    More about Ziba here: http://www.ziba.com/


    This lecture is part of Bruce Nussbaum’s Design At the Edge lecture series.

    NYU in Shanghai

    NYU currently has a presence at East China Normal University (华东师范大学). They’re opening a full campus in Pudong, the new district. Maybe they understand they can’t just feed Wall Street, so Pudong is a logical decision. But it’s a good decision for more than just being situated in the new financial district of a new financial power.

    “In the 2011-12 academic year, NYU plans to begin an executive education program, which will not grant degrees. A degree-granting, professional Masters program would begin in the 2012-13 academic year, and in the fall of 2013, NYU hopes to welcome its first undergraduate class to NYU Shanghai. ”

    East China Normal Uni is located at what was the campus of St. John’s University right by Suzhou Creek. St. John’s University was dissolved after the revolution with parts of it absorbed into Shanghainese Second Medical College and Fudan University.

    Even though St. John’s University was registered in Washington DC, a BA from St. John’s University and a CPA from Hong Kong (which is qualified through the UK) would not even let you sit for the CPA in the United States. NYU is really (has really been) leading the curve. They accepted programs from St. John’s back in 1956, organized semesters abroad with ECNU and now are opening their own campus.

    I am still trying to have Parsons give me credit for my semester at Fudan.

    Original source:

    http://nyunews.com/blogs/on-assignment/2011/01/22/22shanghai/

    Education in China

    ; approach pushes students to top of tests

    “Many educators say China’s strength in education is also a weakness. The nation’s education system is too test-oriented, schools here stifle creativity and parental pressures often deprive children of the joys of childhood, they say.”

    “These are two sides of the same coin: Chinese schools are very good at preparing their students for standardized tests.” “For that reason, they fail to prepare them for higher education and the knowledge economy.”

    “In an interview, Mr. Jiang said Chinese schools emphasized testing too much, and produced students who lacked curiosity and the ability to think critically or independently.

    “It creates very narrow-minded students,” he said. “But what China needs now is entrepreneurs and innovators.”

    This is a common complaint in China. Educators say an emphasis on standardized tests is partly to blame for the shortage of innovative start-ups in China. And executives at global companies operating here say they have difficulty finding middle managers who can think creatively and solve problems.”

    Related:
    “Why Chinese Mothers Are Superior” http://online.wsj.com/article/SB10001424052748704111504576059713528698754.html?mod=WSJ_hp_mostpop_read

    Source:
    “Shanghai Schools’ Approach Pushes Students to Top of Tests”
    David Barboza, New York Times

    http://www.nytimes.com/2010/12/30/world/asia/30shanghai.html?scp=1&sq=shanghai%20schools;%20approach%20pushes%20students%20to%20top%20of%20tests&st=cse

    NeochaEDGE

    NeochaEDGE “is a Shanghai-based creative agency that produces inspiring visual arts and music content with China’s leading creators – the EDGE Creative Collective – for the most forward-thinking brands and agencies in the world.” It is also a “web-magazine dedicated to celebrating Chinese creativity.”

    View them: edge.neocha.com

    They have a presence in the East Coast USA – Boston.