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BUSINESSBRUIN

REVIEWVOLUME 3 ISSUE 4WINTER QUARTER, WEEK 8

CHINESE MARKETS

Want To Work In Asia?Interview with PricewaterhouseCoopers

Hong Kong Division P.12

China and The CrisisWhat Asia is Doing to Recover P.30

Housing Bubble In China?International Real Estate P.24

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INSIDE

News of the Week 4China Drives the Global Economic RecoveryWith Its Holdings in the U.S.

Calendar 6Events from February 19 through March 9

Business School Profile 7Booth School of BusinessUniversity of Chicago

Investment Banking 10Recent Investment Banking NewsAccounting 12A Look at an Internship In Hong Kong

Consulting 14Deloitte Case Competition

Career Tips from Kaplan Test 16Prep and AdmissionsInsight on How to Get into DifferentProfessional Schools

Overview 18An Interview with Professor Tornell 19Professor Tornells Thoughts on ChinasEconomy

The Housing Bubble 24A Possible Crash in the Housing Market?

The Chinese Financial System 26Rules, Regulations and Developments in

the Chinese Financial System

Chinese Tech Companies 28Lenovo, TCL, and The Shanghai Electric Group

The Governments Reaction 30What Are They Doing for National andInternational Recovery?

THE CHINESE MARKETISSUE

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PRESIDENT | Sunny Wong

EDITOR IN CHIEF | Benjamin LoVICE PRESIDENT, OPERATIONS | Julie ChenVICE PRESIDENT, MARKETING | Christine Liu

VICE PRESIDENT, FINANCE | Eric ParkASSOCIATE EDITOR |Cristina Yamasaki

Jesus HerediaOPERATIONS | David Vayzner

FINANCE | Stephen MoockJin Sun

Andrew EdwardsMARKETING | Stephanie Ju

Robert ChangChris YoungSteven Laird

Jane KimCREATIVE DEVELOPMENT | Junior Bustamante

Amorette JengLona Zhao

ADVISORS | Fred KimDmitry Shuster

PHOTOGRAPHY

CREDITSCover | weim

Table of Contents | Henry S., Adrian van Leen,Credits Page | Flashon Studio, Kai Hendry, Peter Morgan

Benjamin Earwicker, Daniel CubillasBusiness School Profile | Jane Kim

Accounting | Max Mak, C.H. So, Panda ChanInvestment Banking | Ben Schafer, Sebastian Fissore,

patriarca12, Maria LiConsulting | Deloitte

Kaplan Career Tips | Razvan Caliman, Ivan ProleChina Title Page| weim

Overview |Interview with Professor Tornell | Sergio Roberto Bichara,

Clix, Ivan PetrovThe Housing Bubble| netean, Michal Zacharzewski,

Augapfel / ChristopherChinese Tech Companies | Svyatoslav Palenyy,

Michal Ufniak, Przemyslaw SzczepanskiThe Governments Reaction | Caijing.cn.com

BBR STAFF

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Bruin Business Review - Calendar 6

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ith a rapid increase in globalization and the current

international economic crisis, demand for MBA(Masters of Business Administration) degrees is rising. Ac-

cording to the Financial Times, the Booth School of Business

at the University of Chicago is ranked 9th

internationally for

its International MBA (IMBA) program. The two-year IMBA

program at Booth emphasizes its curriculum on issues of in-

ternational business and fostering fluency in a foreign lan-

guage. Diminishing possibility of a language barrier, Booth

fosters fluency by requiring students to study abroad for one

academic term through Booths International Business Ex-

change Program, which also helps students attain internships

and volunteer projects while abroad. Students can choosefrom a wide range of classes including managerial leadership

courses, such as Strategic Leadership and Managerial Ac-

counting, to elective courses, like Investment and Finance in

China and Enhancing Personal and Organizational Creativity.

W

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Many international clubs and co-curricular activities exist

outside Booths lectures. Students involved in the EmergingMarkets Group on campus investigate relevant issues con-

fronted by many of the worlds developing countries. During

the school year, this group hosts speaker events and confer-

ences on microfinancea field in finance that deals with ex-

tending small loans to those with little or no collateral. An-

other group, the European Business Group (EBG), provides

Booth students with career advancement opportunities in

Europe. Current and past EBG members have held positions

abroad at companies including McKinsey & Company, CB

Richard Ellis, Merrill Lynch, and Accenture.

Students at the Booth School have access to its expansive

alumni network42,000 alumni located in 101 countries,including the United Kingdom and Kenya. Ahead of leading

MBA schools such as the Harvard Business School and the

Stanford Graduate School of Business, the Booth School sur-

passes both with its percentage of international faculty (40%)

and students (40%) . In addition to having one of the most

diverse and distinct student and faculty population, the Booth

School of Business has 4 different campuses and numerous

research centers worldwide, including London and Singapore.

In 2008, a proposal for a University of Chicago Center in China

was set forth for consideration. This is due to the growing

global economic power of China and because Chinese stu-

dents constitute the largest group of foreign graduate stu-dents at the University of Chicago (UC), according to the UC

Ad Hoc Committee on China. Booths Ad Hoc Committee pro-

posed creating a permanent space in China to reduce long-

term costs of renting out conference rooms, holding semi-

nars, and conducting research. Using it more as a study cen-

ter than a campus, the University of Chicago Center in China

aims to assist ongoing research and collaborate with nearby

Chinese universities and research institutions. In addition,

multi-purpose rooms are created to hold workshops and fac-

ulty and graduate student meetings. Approved by the Presi-

dent and Provost of the Booth School, the center is currently

being established in Beijing and is scheduled to open fall

2010. By arranging each Chicago student with a Chineseroommate and providing students with local knowledge of

the city including famous historical sites, public transporta-

tion, and nearby restaurants, Booth students not only gain

knowledge in the classroom but also experience and familiar-

ize with the Chinese language and culture.

As the first and only U.S. business school to have permanent

campuses in three continents, the Booth School of Business is

pertinent to students interested in an international business

career.

the University of Chicago Center

in China aims to assist ongoing research

and collaborate with nearby

Chinese universities

and research

institutions.

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OBAMA THROWS

SUPPORT TO VOLCKER

The fierce debate on Capitol Hill over

how to prevent another economic col-

lapse rages on. Recently, President

Obama switched sides from supporting

the moderate regulations proposed by

Treasury Secretary Timothy Geithner tothe more strict regulations suggested by

former Federal Reserve Chairman Paul

Volcker. The new proposal, dubbed

Volckers Rule, will forbid commercial

banks proprietary trading. Banks collect

money from deposits and use most of

this money in loans to borrowers, but

they also use some of the money for

speculative investing in order to maxi-

mize profits. Speculative investments

that include mortgage-backed securities,

a name that should sound very familiar

to a nation still recovering from the fi-

nancial meltdown they caused. Mortgage

backed securities are investments that

get their value from mortgage payments,

when too many people default on their

mortgage payments the securities be-

come worthless. This was the primary

cause of 2008 financial meltdown.

Advocates of

the rule argue

that Wall Street

uses depositors

money to make

speculative investments in order to maxi-

mize company profits to no benefit of

their commercial banking customers.

They argue that banks make dangerous

investments under the protection of gov-

ernment insurance, a measure designed

to fuel cheap lending, not risky entrepre-

neurial behavior. Some banks would only

be minimally affected by this, Wells

Fargo only makes 2.5% of its profit from

trading revenues. But the financial giant

Goldman Sachs gets a whopping 55%

percent of its income from its proprietary

trading arm.

In his address to Congress, Volcker

pointed out a conflict of interest that

stems from commercial banks funding its

own investments from its clients

money. When the banks make good in-

vestments, this greatly increases revenue

and allows banks to lend at lower rates.

But when things go south in the financial

market, as they did drastically at the end

of 2008, this association can cause the

harm to spread to the commercial sec-

tors. For example, Bank of America, one

of the biggest bank failures during the

meltdown, suffered as both one of the

biggest commercial banks AND invest-ment bank. This caused B

of A trouble on two fronts

as families defaulted on

their mortgages and the

mortgage-backed securi-

ties plummeted in the

market. The Volcker plan

hopes to put commercial

banks on safer ground by

forcing its loose change

into reserves or government securities,

not volatile markets.

But increased risk and potential damage

was not the only consequence of Bank of

Americas proprietary trading. Its size notonly caused it to fall harder, but the US

government could not afford to let it

dissolve because it had large stakes in

both the commercial and investment

markets. This created a dilemma, B of A

was too large to survive but too impor-

tant to fail. This forced the government

to use taxpayer dollars to keep it alive.

The Volcker plan is aimed at preventing

banks like Bank of America from being

too big to fail, a term that dominated

government discussions during the wave

of bank failures in 2008. The argument isthat banks that are too large to safely

collapse in the free market need to be

saved by the government and the tax

payers, by putting a wall between finan-

cial and commercial markets the banks

will be able to dissolve more safely than

in 2008. It will also prevent financial

companies from growing too quickly by

limiting their focus to a either proprie-

tary trade or commercial banking.

InvestmentBanking

By Robert Chang

Staff Writer

Recent News in

The Volcker plan is aimed at preventing banks from beingtoo big to fail, a term thatdominated government dis-cussions during the wave of

bank failures in 2008.

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support. By proposing strict limitation on banks, the govern-

ment can capitalize on the outrage against Wall Street caused

by the corruption and compensation controversies of the last

few years. John Varley, chief executive of Barclays argues that

the Volcker plan is not only unfair to banks, but also ineffec-

tive as a crisis prevention policy. Varley claims that some

banks, including his, do not use commercial funds for their

financial arms and the plan will only force banks to close legiti-

mate operations. Even democrats like Senator Mark Warner

argue that the plan is unfair to banks. The Volcker plan will

also do nothing to prevent the main contributing causes of thefinancial meltdown. Mortgage-backed securities will still be

traded by strictly financial banks and the securities rating sys-

tem will still be broken.

Whether this is an effective prevention tool will be debated

for months to come during the long process for lawmakers to

turn Volckers rhetoric into an actual bill.

EMERGING MARKET SHARES TAKE HIT,

INVESTORS PREDICT A BULL MARKET

Drastically falling prices in emerging market funds halted ear-

lier this month and many investors expect a swift rally. The

drop in stocks, led by China, hit in mid-January after the Peo-

ples Bank of China tightened the states monetary policy to

curb volatile inflation. On January 19 the MSCI Emerging Mar-

kets Index peaked at42.80 before dropping 10% to 28.28 by

the end of January. Prices bottomed out at 36.83 on February

8 and look to be on the rise.

The Chinese government is expected to loosen capital flows in

order to meet growth expectations; this has caused many in-

vestors to expect a huge surge in emerging world prices,

greatly overcoming Januarys losses. Analysts at Morgan

Stanley predict that the MSCI Emerging Markets Index will

rally by 34 percent by the years end. Experts in the field have

noted that this pattern of a slight bump before a large rally is a

repeating phenomenon in emerging markets.

This pattern of a slight bumpbefore a large rally is a repeating

phenomenon in emerging

markets.

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Q&A With Grace ChanOn Her Internship in Hong KongThe Big Four (Big 4) refers to the four largest public accounting firms in the world: PricewaterhouseCoopers (PwC), Ernst &

Young, Deloitte, and KPMG. Together, these four firms deal with the vast majority of audits for large corporations around the

world. The Hong Kong PwC office provides professional for auditing, tax, and advisory services. Its clients are some of the largest

organizations in the world, such as the Bank of China.

Grace Chan is a recent UCLA alumna who currently works at PricewaterhouseCoopers in the tax department. She interned in the

international tax department for Deloitte in Hong Kong, China, in the summer of 2008.

BBR: How did you find this internship and why did youchoose tax?

GC: I applied online for the position. During the process I kept

in contact with the HR department in Hong Kong. I did not

express a preference for tax or audit. I was placed in the tax

department. I worked with the international tax group, be-

cause I was not fluent with the local language or fully aware

of all the customs. In audit your time is primarily spent at the

client site. However, I thoroughly enjoyed the tax internship

and found the work interesting.

BBR: How did you prepare for your current role while at

UCLA? Did you find any classes that were particularly helpful?

GC: Our accounting program definitely prepares you for

working in a Big 4 environment. I would recommend taking

Auditing (Management 123) as well as Individual and Corpo-

rate Tax (Management 127A and 127B) to better understand

what theyre about. Our accounting classes also prepare you

well for the CPA exam. However, youll learn the most on the

job. Excel and ten-keying skills are an absolute must.

More importantly, I would encourage students to talk to theirprofessors as well as other recent grads who are working in

the accounting profession so that they will know what to

expect. It is extremely important to understand the lifestyle

and demands of the job.

BBR: Whats the working environment and lifestyle like in

Hong Kong?

GC: Working in Hong Kong is very interesting. The lifestyle is

fast-paced and the people work very hard. They are generally

a bit more on the serious side, but they also know how to

joke around. The environment is more globally oriented. In

Hong Kong, there are many ex-patriots, so I met people from

Britain, France, and Australia. It is also really convenient to

grab lunch or dinner, because there are so many shops and

restaurants, and the public transportation is amazing.

BBR: Were there any sort of language or cultural barriers you

had to overcome while interning in Hong Kong?

GC: There were some language and cultural barriers that I

had to overcome. Maybe the most important thing that I

learned was that it is only awkward if you make it awkward.

You have to be willing to step out of your comfort zone in

order to communicate and try new things. I was a little bit

uncomfortable speaking Cantonese because I was pretty sure

that I was butchering the tones and pronunciation, but then I

realized that some of my coworkers were equally

I would encourage students to talk

to their professors as well as otherrecent grads who are working in theaccounting profession so that they

will know what to expect. It isextremely important to understand

the lifestyle and demands of thejob.

You have to be willing to step out ofyour comfort zone in order to

communicate and try new things.

Bruin Business Review - Accounting 12

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uncomfortable speaking English. This realization helped me to

relax a little bit, and even if I sounded a bit funny, or if they

couldnt understand what on earth I was trying to say, wed

usually get a good laugh out of it and get someone else to

translate. I even got to brush up on my French when I was in

Hong Kong.

BBR: I understand that there are different accounting stan-

dards over in China. Was it difficult for you transition to thenew standards?

GC: To be honest, the transition wasnt that difficult. As an

intern, my knowledge of the U.S. taxation system was only

very limited to begin with, so it was not a radical change. Also,

because I worked in the international tax department, about

half the projects that I worked on actually dealt with U.S. tax.

The tax system in Hong Kong is different from the Chinese tax

system, and in general, most tax systems in other countries

are less complex than the U.S. tax system.

BBR: What did you enjoy most about your time while interning

in Hong Kong?

GC: I enjoyed meeting people from all over the world and get-

ting the chance to explore Hong Kong. Ive gone to Hong Kong

many times before, but only for short vacations, so the chance

to fully immerse myself in a different culture for three months

was an eye-opening experience. Its very different to vacation

somewhere and to work somewhere. I also became good

friends with some of my coworkers and we still keep in touch

to this day.

BBR: What are some tips and recommendations you would

give students who are interested in working abroad in East

Asia?

GC: Simply put, I would tell them to be open to trying out new

things and to go for it!

To learn more about interning in

Hong Kong, visit:

http://www.pwchk.com/home/eng/

students_internships.html

Email

[email protected]

for any questions about the

internship recruitment

process.

Bruin Business Review - Accounting 13
http://www.pwchk.com/home/eng/students_internships.htmlhttp://www.pwchk.com/home/eng/students_internships.htmlhttp://www.pwchk.com/home/eng/students_internships.htmlmailto:[email protected]:[email protected]:[email protected]://www.pwchk.com/home/eng/students_internships.htmlhttp://www.pwchk.com/home/eng/students_internships.html

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Bruin Business Review - Consulting 14

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To ensure that prospective business, law and medical school

students receive accurate and up-to-date information on key

trends and relevant issues in the admissions process, Kaplan

Test Prep and Admissions annually surveys admissions officers

from programs across the U.S. Following is advice based on

insights from Kaplans 2009 surveys of admissions officers at

top MBA programs, law programs and medical programs:

For students getting ready to apply to business school:

GMAT vs. GRE: Though increasingly the most competitive

MBA programs are accepting both, if you are a student

considering applying to business school, take the GMAT it

gives you more options. 76% of business schools told us

that they only accept the GMAT for admissions, while 24%

accept both the GMAT and the GRE. Of the GMAT-only

schools, only 5% said they are considering shifting to a pol-

icy of also accepting the GRE.

A Low GMAT Score is an Application Killer: If you are a stu-

dent whose GPA is not where it should be by the time youapply, its critical to achieve that highly competitive GMAT

score: 44% of business schools say that a low GMAT score

is the biggest application killer. Kaplans new GMAT course

featuring the first-of-its-kind virtual test prep center that

allows students to manage their course progress, access

online resources, connect with their teachers or fellow

GMAT prep classmates, attend live online business school

admissions events and more, can help you do that.

For aspiring lawyers preparing for the LSAT:

Your LSAT Score is Key: For the four years Kaplan has been

conducting this survey, admissions officers have said that

an applicants LSAT score is by far the most important ad-

mission factor.

Law Schools Look At Your Highest LSAT Score: 76% of law

schools evaluate an applicant based on his or her highest

score submitted. Just a few years ago, most schools evalu-

ated applicants on the average score of multiple LSATs

they submitted. Advice: Prepare adequately and aim to

score high on the first LSAT you take. But if you do need to

take it again, its good know that law schools say they

evaluate you only on the highest score.

For those who have their sights on practicing medicine

and are readying for the MCAT:

Dont Wait for Your MCAT Score: If you havent received

your MCAT score by the end of June, 70% of admissions

say to submit your application without it, and then submit

your MCAT score as soon as you receive it.

Be Careful About Social Networking: 30% of medical school

admissions officers say that they or a colleague have re-

ceived a Facebook or MySpace friend request. Only 15% of

schools said they have a policy in place on visiting appli-

cants social networking pages and 100% of those that do

have policies prohibit admissions officers from taking a

peek. Advice: Social networking is the Wild West of the

admissions process make sure that what you have posted

doesnt embarrass you or make sure you keep it private,

but focus most importantly on your MCAT score and GPA.

Kaplan Test Prep and Admissions (www.kaptest.com), a divisionof Kaplan, Inc., is a premier provider of educational and career

services for individuals, schools and businesses. Established in

1938, Kaplan is the world leader in the test prep industry. With

a comprehensive menu of online offerings and a complete array

of books, Kaplan offers preparation for more than 90 standard-

ized tests, including entrance exams for secondary school, col-

lege and graduate school, as well as English language and pro-

fessional licensing exams. Kaplan also provides private tutoring

and graduate admissions consulting services.

SURVEY SAYS:Admissions Officers Share Insight

with Kaplan Test Prep and

Admissions

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Chinese Markets

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I recently had the opportunity to sit down with Professor

Tornell of the Economics department at UCLA to discuss vari-

ous topics in regards to Chinas economy. Topics discussed in

this interview include Yuans exchange rate, its trade with

the U.S. and the state of the Chinese housing market.

Aaron Tornell specializes in International Finance, Economic

Development, and Political Economy. He obtained his under-

graduate degree from ITAM (Instituto Tecnolgico de

Mxico) and his Ph.D. in Economics from MIT. He has served

as an advisor to Minister of Finance of Mexico and has

worked for a private investment firm.

BBR: In the 4th quarter of 2009, China reported that its econ-omy grew by 10.1%. Chinas economy has become one of the

fastest growing and largest economies in the world. What are

some of the factors you see as the driving forces behind this

emergence?

AT: In the last few years, China has become the most impor-tant exporter in the world. China is now exporting a tremen-

dous amount of consumption goods and many of the products

bought here in the U.S. are exported from China. The high

growth of China in recent years has come from an increase intheir amount of net exports. Growth in China has not come

from an increase in domestic consumption. This means that

savings in China are very high, which means that the disposable

income of the Chinese people is mostly saved as opposed to

consumed. These savings are reflected in their current account

surplus.

BBR: Many currency experts have stated that the Yuan hasbeen valued at an artificially low level for years, what kind of

market adjustment do you see in regards to the Yuans ex-

change rate?

AT: There are many views on what the exchange rate shouldbe in China. The view I subscribe to is that of the real exchange

rate. In each country, there are two types of goods. The two

types of goods are those that are traded internationally and

consumed domestically such as haircuts. As countries become

richer, the prices of non-tradable goods rises and the priceratio

of non-tradable goods to tradable goods will rise. Over time, as

China becomes richer, the Yuan will undergo real appreciation

with respect to other currencies such as the dollar. The nomi-

nal exchange rate will appreciate between the present and the

future. How fast this nominal exchange rate will appreciate

depends on other factors such as financial markets. Eventually,

over time a real appreciation of the Yuan will occur and the

cost of Chinese goods will increase as Chinas domestic wages

and non-tradable goods rises.

BBR: Economists have been speculating in recent months thatChina will experience its own housing bubble. What are your

thoughts on this situation?

AT: China has experienced a growth in the rate of credit givenby banks to its citizens. This has allowed its citizens to purchase

more assets such as real estate, which has lead to an increase

in the prices of real estate. In theory, the rental prices of

homes should be similar to that of mortgage payments on a

purchase of a home. A bubble occurs, when the prices of real

estate are significantly higher than that of rent prices and this is

currently what is occurring in China.

It is important for the Chinese

government to set sufficient

requirements on banks to possess

enough reserves to cover losses on

mortgages in the event that loan

borrowers default on their loans.

Professor AARON

Eric Park

Staff Writer

Bruin Business Review - Chinese Markets 22Q & A With

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China must insure that its banking system stay afloat. It is

important for the Chinese government to set sufficient re-

quirements on banks to hold enough reserves to cover losses

on mortgages should people default on their loans.

BBR: Banking regulation has been a hot topic in the U.S.since the onset of the recession, how do you think U.S. bank-

ing principles differ with that of Chinese banking principles?

AT: In the U.S., banks collect deposits from its customers andlend those deposits out to other customers and can also use

these funds for other speculative activities. U.S. commercial

banks and investment banks are not separated. The question

today is whether the U.S. government should impose limits

on the activities of banks. In China, the banks are subject to

much more stringent banking rules as banks are limited on

the activities in which they can engage. For instance, foreign-

ers cannot invest as freely in Chinese institutions as there are

few qualified foreign investors and the Chinese bond market

is not as deep as it is here in the U.S.

BBR: What action do you believe the U.S. needs to take inregards to its trade deficit with China and what negative ef-

fects do you think will occur if this problem is not remedied?

AT: A current account deficit occurs when the private sectoris not saving enough or when government expenditures are

greater than that of the taxes it collects. If the U.S. continues its

current account deficits and the deficits percentage of U.S. GDP

grows faster than the U.S. growth rate in G.D.P., fewer countrieswill be willing to lend to the U.S. at low interest rates. The U.S.

government is able to finance its debt to China through the sale

of U.S. treasury bonds to China. China currently owns more than

$2 trillion worth of U.S. treasury stock and because of that there

is a mutual dependence between the two countries.

BBR: Considering Chinas past government regulations and laws

along with current market conditions, where do you see Chinas

economy heading in the next 5-10 years?

AT: Chinas economy is growing faster than other major econo-

mies and the income per capita rate is increasing but its growthrate will decrease and level off as the income per capita rate

catches up to major economies such as that of the U.S. and Ja-

pan. However, China must deal with its substantial poverty rate,

as there are over 700 million in China living in poverty.

Over time, as

China becomesricher, the Yuan

will undergo

real apprecia-

tion with re-

spect to other

currencies such

as thedollar.


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Plan on investing about 80 times the average an-

nual income of a Beijing resident for a standard

1,000 square foot apartment. Prices have not al-

ways been so high. In 2009 Chinas real estate

market grew at a rate that put the pre-crisis US

housing market to shame. According to Bloomberg

News, average housing prices rose over 57% on the

year. While at first, the rapid growth of Chinas real

estate economy was viewed as a testament to

Chinas successful stimulus package which ex-

panded lending to individuals seeking to finance

their homes. However, soon analysts began to real-ize the rate of growth could not be withstood for

much longer without the formation of a bubble

prime for popping. "It's definitely a bubble," said

Beijing real estate broker Xu Xiangdong.

Chinas Stimulus Package

Property Value Surges

The stimulus was certainly effective, and it undoubtedly

motivated 1.6 million people of China to invest in real

estate. Urban areas have seen the most explosive

growth. Shanghais Pudong district saw a rise in prop-

erty values of 57% over the course of only a few months

in 2009. According to Bloomberg News, Gloria Gu, aresident of this district, moved into a $483,000 apart-

ment so her son could attend a reputable kindergarten

there. She was shocked that several months later there

was a unit in her building similar to her own which sold

for $615,000. Rapid increases in value like this cause a

frenzy of investors to buy every property they can get

their hands on. As a result prices continue to soar and

bring in more investors.

Chinas $586 billion stimulus package passed in Decem-ber 2008 and was an important catalyst that initiated

and fueled the housing boom. Much of the enormous

sum was devoted to promoting lending and develop-

ment in the real estate sector. The scale of this stimulus

package is overwhelming. While the US spent $787 bil-

lion in federal stimulus funds for everything from bailing

out banks and automakers to building roads, our GDP is

still $13.8 trillion compared to Chinas $4.3 trillion. The

14% of their GDP that China spent on stimulus is nearly

triple that of the US, and it included many lending initia-

tives that encouraged people to buy new property.These initiatives had a direct effect on the publics ability

to purchase property.

Most new construction is centered

on the luxury market.

Shanghais Pudongdistrict saw a rise inproperty values of

57%

CHINAS HOUSING BUBBLEBy Stephen MoockStaff Writer


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The TCL Corporation is another large-scale Chinese

technology company. It is an electronics manufacturer that

began selling its products overseas in the 2000s. It is Chinas

main manufacturer of cell phones and televisions. TLC also

makes household appliances, personal computers, and other

technological goods, but its focus lies with the two former

mentioned products. Today, these products are sold in over

40 countries, under four different brand names: TCL, RCA,

Thomson and Alcatel. Its main competitors in the global mar-

ket include Nokia and Haier.

THE GROWTH OF

The Tech Dragon hasproved its

technological prowessto the world market

ChineseBY STEFANIE JUSTAFF WRITER

Tech CompaniesWith such nicknames as Tech Dragon and Silicon

Dragon, in recent decades, China has proved its techno-

logical prowess to the world market. Consumers look to

Chinese technology companies for products rangingfrom

cell phones to semiconductors. Seeing and acknowledging

this success, private investors also entered the stage by funneling large sums of money into technology compa-

nies. There has also been growing talk about a tech race

between China and the United States. This fear has led

many Americans to seek greater understanding of the

Chinese technology boom. As a powerful competitor in the

global technology market, China provides an array of com-

panies that challenge global powerhouses such as Mo-

torola and IBM. Three examples of these companies are

Lenovo, the TCL Corporation, and the Shanghai Electric

Group.

Lenovo is a multinational computer technology corpora-tion and is currently Chinas largest manufacturer of both

desktop and notebook personal computers. These com-

puters are highly recognizable in the United States, and

are sold at such popular technology retail sites as Best

Buy and Circuit City. As of July 2009, Lenovo held approxi-

mately 29% of Chinas PC market. But this influence in

the technology industry extends outside of Chinas bor-

ders. As the fourth largest seller of PCs in the world,

Lenovo competes with American companies like Hewlett

Packard and Dell. Its combined sales for the fiscal year

ending March, 2009 totaled $14, 901 million, showing an

8.9% growth in sales.

Lenovo has been manufacturing quality computers since

the 1980s. Formerly known as Legend, it introduced its

very first self-branded Legend PC to the market in

1990. In the mid 1990s, Legend was listed on the Hong

Kong Stock Exchange. In 1996, approximately a decade

after its inception, Legend became the market share

leader in China. In 2005, Lenovo acquired IBMs Personal

Computing Division for $1.75 million. According to IBMs

website, this agreement was a marketing alliance in

which Lenovo receive*s+ sales and marketing support

from IBM in exchange for its products being integrated

into IBM Global Services offerings. This agreement givesLenovo permission to sell IBM PCs until sometime this

year. Not content with solely being a PC distributor,

Lenovo issued a statement of intent to purchase Lenovo

Mobile Communication Technology, a company that

ranks third in Chinas mobile handset market. This pur-

chase will further expand Lenovos sphere of influence;

not only will it be one of the largest PC sellers in the

world, but it will also provide a significant amount of mo-

bile phones to consumers.


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As a powerfulcompetitor in theglobal technology

market, Chinaprovides an array of

companies thatchallenge global

powerhouses such asMotorola and IBM

Established in the 1980s, the TCL Corporation spent its

time manufacturing consumer electronics such as tele-

phones and cassette tapes during this decade. With its

successful launch of a self-branded big screen color TV, the

TCL brands popularity grew throughout mainland China

and Hong Kong. In the 1990s, the TCL Corporation ex-

tended its product list by creating TCL International Elec-

trical Appliance Co., TCL Electronics and TCL Telecom-

munication Equipment Co. With the creation of theseextensions of the TCL brand, the corporation quickly ex-

panded its influence in China, and around the world. Tin

2002, the TCL Corporation was ranked number 6 among

the most valuable brands in China. Its cellular phones

sales are the 3rd largest in the China market (competing

against international brands, as well).

In quarters one through three of 2009, the TCL Corpora-

tions gross profit totaled $3,617 million. This was up from

$2,987 million in the previous year. The corporation has

been steadily growing in the past decade. According to its

website, its global market share of LCD televisions was

8th largest in the world in 2008, as compared to 13th inthe previous year. Both statistics point to the TCL Corpora-

tions steady growth in global influence.

The Shanghai Electric Group is a government-owned corpora-

tion based in Shanghai. As Chinas largest electrical and me-

chanical equipment manufacturer, this corporation produces

power for much of the country. According to its website, its

most popular products include: elevators and air-conditioning

units. In producing these products, the Shanghai ElectricGroup hopes to increase its global competitiveness and influ-

ence. Shanghai Electric Groups mission statement include

three major strategies to create a world-recognizable brand

include: core business concentration, self-mastered innova-

tion, global resource consolidation. It has a very long history

that dates back to one of its subsidiaries being established in

1880. However, the company has existed as a state owned

enterprise since 1949 and has achieved a number of break-

throughs in its field since this time. This growth and Shanghai

Electric Groups positive credibility (that comes from time in

the industry) allows it to retain an influential role in its indus-

try. In the fiscal year ending December 2008, the Shanghai

Electric Groups sales totaled $8,594.5 million. As compared to

the previous year, this was an 11.4% growth. In sales of spe-

cific products like fire-powered generating equipment, the

Shanghai Electric Group holds a 30% market share. However,

this has been a drop from previous years.

Chinese technology companies seem to exhibit great strength

in terms of market share, and the three companies profiled in

this article also show strong (and steadily growing) sales num-

bers. It seems as if the Tech Dragon does pose somewhat

of a threat to other technology companies around the world.


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