Beijing itself has more cars than the population in Singapore. It currently has over 5 million cars in the city and to my surprise, I saw a lot of European brands like Audi, BMW and Volkswagen running the streets. There were also the familiar Japanese brands like Mazda, Honda and Toyota. The cabs were mainly Hyundai. I noticed that there is always a Chinese company at the back of these imported cars. I suspect the government has made it mandatory for any foreign brand to partner with a local company. Of which, I think FAW Group has the biggest market share (based on what I observed on the roads) – FAW partners with Volkswagen, Audi, Toyota and Mazda.
The traffic is worse than Singapore and there is a restriction to driving on weekdays according to the car plate number. The car plate numbers can end in 10 variations, that is, 0 to 9. There will be two numbers each day that could not drive. This would put about 1 million cars at home, but it is not sufficient to alleviate traffic congestion during peak hours.
To control the car population, one have to ballot for the right to own a new car. This is similar to our COE system but they do not need to pay for the certificate. So you cannot outbid just because you have money.
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The car population in China will definitely grow in the future.
Growth stocks – Wumart
We all know supermarket business is very profitable. I learned that supermarket business’s main profit does not come from selling products. They make most money from selling shelf space to brands. Secondly, they collect a lot of cash at the point of sale and given the 60 to 90 days invoice period, they can deposit these large amount of cash in the banks to collect stable interest payouts.
Wumart is one of the largest mart operators in China. In 2009, Zhao Danyang, a fund manager, bidded $2.1m for Warren Buffett’s charity lunch. He was bullish on Wumart and suggested it to Warren. By the time Danyang returned to China, the Wumart shares soared 25%, or a short term gain of $14m for him.
I learned that the founder, Zhang Wenzhong, got into trouble with the law and was sentenced to 18 years in prison in October 2008 for bribery, embezzlement and fraud. Wu Jianzhong has took over as Chairman since 2006. I did not manage to go to their superstore but they do have smaller marts in neighbourhoods. According to Wiki, “The company has about 430 stores, 330 of which are convenience stores and 100 of which are hypermarkets. The stores are located primarily in the Chinese cities of Beijing, Tianjin and the cities of Hebei province.” I would see it as there are more room for growth.
With the rising affluence of Chinese will demand for more groceries, would Wumart be in a position to capture more market share?
I was curious to find out how Breadtalk was doing in China. I only managed to see it while traveling on the bus. I also saw Food Republic at Beijing APM shopping centre’s directory but I did not have the chance to visit it. Breadtalk’s growth is highly dependent on their success in China, it is almost a make or break opportunity.
Alternative Investment – Pu’er Tea
Pu’er Tea is recognised as the French wine of Asia. The older the tea leaves, the more valuable it will be. I saw an advertisement that Pu’er Tea was auctioned for RMB 1.6 million. The shop that I visited said that any purchase of 8 blocks of Pu’er tea, there will be a certificate to verify the purchase and after three years, you can exchange for another 8 blocks of Pu Er tea with just 1 block. I am not suggesting that you go ahead and buy Pu’er Tea. I do not understand enough so I will not invest. Likewise, invest only if you understand enough.
Alternative Investment – Crystal Jade
Crystal jade is the top grade jade variety. It is hard and I was told the hardness is after diamond, sapphire and ruby. 90% of the crystal jade comes from Myanmmar and hence, probably cheaper to buy there. These alternative investments are precious only when the society in general accord a high value to them. Otherwise, jade is just another piece of stone.
Tourism is booming in Beijing and I see buses carrying loads and loads of tourists to the various places of interest. The tour guides could cater to different nationalities and languages. I saw Americans, French, Japanese, Indians, Arabs and even Chinese from other provinces. I have never been to a country with so many tourists squeezing with one another. More people will definitely go to China as this country continues to awe the world with it’s rapid development and culture.