Shanghai Scrap

[UPDATE 12/1 - A hearty recommendation for Richard Spencer's piece in today's Telegraph, "Why China hasn't abandoned North Korea - and why wikileaks is a work of flawed genius." Very much related to this post, only better.]

Earlier today the New Yorker’s Evan Osnos blogged disappointment (shared by many, including me) at the lack of juicy wikileaks about China and the Chinese leadership (ala the Qadaffi “voluptuous nurse” cable). And then, as if it were meant to be, wikileaks released the “Shenyang Cable,” complete with a section entitled “Princelings Behaving Badly.” (for those who don’t follow these things – ‘Princeling‘ is the nickname given to the children of high-ranking Chinese officials). The cable is entertaining/interesting for two reasons. First, it describes how the Princelings secure business deals in North Korea. And second, it describes two Chinese companies competing for sole mining rights to North Korea’s largest copper mine. One of those companies, Wanxiang Group, is described as close to Chinese Premier Wen Jiabao. And then we get this:

Without naming names, XXXXXXXXXX also suggested the strong possibility that someone had made a payment (on the order of USD 10,000) to secure the premier’s support.

That’s right: somebody at the US Consulate in Shenyang reported the “strong possibility” that China’s premier had been bribed for less than the cost of a used Buick in Shanghai. That is to say, somebody at the US Consulate in Shenyang – probably several somebodies – believes that the Premier can be bribed for less than the cost of a used Buick in Shanghai. Now, you don’t need to know anything about graft in China, much less world leaders, or Wen Jiabao, to know that $10,000 not only wouldn’t get the job done, it’d be viewed as an insult and an automatic disqualification from this any other mining contract. So I’m going to go out on a limb here: there’s simply no way that happened. None. Zero. Zilch. Now, is it possible that Wen has a “relationship” with Wanxiang? Sure. But not the one described in the cable.

And this gets to something that I think is going to become increasingly, uncomfortably obvious as more and more of these cables are released: US State Department employees in overseas posts often don’t know very much about the countries in which they’re posted. This is the result of a number of factors, not least of which is that they’re often sheltered – I mean truly isolated – from the countries in which they’re posted, living on upper-middle class wages in secure compounds where they have little to no contact with anyone but officials and employees of major US companies. US Consular employees in Shanghai, for example, live in serviced apartments at the Portman Ritz-Carlton (at US taxpayer expense), and often socialize accordingly. I don’t know the situation in Shenyang, but I feel comfortable suggesting that the person who felt comfortable reporting the alleged $10,000 bribe doesn’t regularly associate with people doing business in Shenyang (expat or otherwise). If s/he did, there’s no way that level of stupidity would have made its way into the cable.

That’s why I’m taking much of what I read in these cables – out of China or elsewhere – with a giant grain of salt (such as yesterday’s ridiculous ‘revelation’ that google’s problems in China are to due to a personal vendetta launched by a Politburo member). In the case of the Shenyang Consulate, at least, there’s now little reason to believe that the employees are equipped with even a budget-grade bullshit detector. If the State Department has anything to be embarrassed about, it’s not that these cables leaked, but that somebody once took them seriously enough to label as secret.

[UPDATE: Just to be clear - I'm not labeling the entire State Department as naive. Nor the entire US mission diplomatic in China. I've met some great FSOs - you know who you are, and you probably don't want to be named - and I've also met a very fair share of not-so-great ones. That a diplomatic cable was sent to D.C. with the strong suggestion (whether endorsed by the reporting FSO or not) that the Chinese premier was bribed for the price of a used Buick - I blame that on a systemic failure of the not-so-great, naive ones. With thanks to Gady Epstein of Forbes for reminding me that I need to be careful about generalizing. He's right.]

[UPDATE 2: Some interesting comments being left below, and in my inbox. For now I'm going to pull up comment #8 from Richard A, in part because I agree with it. And in part because it is just so vivid:

I know a lot of FSOs and other consular officials in Guangzhou. I am consistently unimpressed by their knowledge of China. The young FSOs who are shipped over for 2-3 years spend little time engaging with anyone besides Americans, other consular officials, or the Chinese who apply for visas and related documentation. I have found that many consular officials hold negative, sometimes hostile, views of Chinese people and the Chinese government, and other than language ability, demonstrate little capacity to understand China beyond what can be gleamed from mainstream, English-language media. I had dinner once at a consular officials house (after he and his family were well into their second year in China) and he was surprised when I explained that, “No, I can’t make turkey for Christmas because like most people here, there is no oven in my apartment.” Of course, he had never seen the inside of a Chinese home…

Not to belabor this point, but an FSO who hasn't been inside of a private Chinese home is an FSO who lacks the cultural context to evaluate intelligence in China. This is a problem.]

Late last week I posted in regard to a bizarre encounter I had with a ‘freelance’ salesman/thief attempting to sell stolen iPhones inside of the Best Buy located in Shanghai’s Xujiahui neighborhood. In response, over the weekend I received several comments, two phone calls, and one email suggesting that the man who approached me is part of a wider gang problem in Shanghai that has plagued retailers in addition to Best Buy. See, for example, anonymous comment #8 [attributed to Marketing Manager] on my original post, and this excerpt from an email received overnight (the author requested that it be published without attribution):

We do not represent Best Buy, but we do represent a company in a similar position and let me tell you that keeping these guys out of the store borders on impossible.  The people selling this stuff in the store are gangsters and they intimidate and they have connections.  The staff are afraid and with good reason.  The issue is much bigger than just Best Buy.  In most cities, the police are absolutely no help at all.

This is credible information, and makes complete sense in light of what I saw last week: the staff of the Best Buy store could see precisely what was happening, and made no move to interfere. Store management, when I told them what was happening, expressed zero interest in interfering. And, let’s be honest here, it’s no secret that illegal commercial activity occurs all over Xujiahui (just take a look at the hawkers working the entries to the Xujiahui subway station) without any interference from the police (ie, full acceptance by the police).

What I don’t know – and I’d love to know – is whether or not gangs actively target foreign-owned retailers, knowing that they lack the resources and connections that Chinese businesses have, to deal with them. It’s a widely accepted fact of commercial life in China that foreign businesses have to comply with laws that Chinese businesses regularly ignore (politely, overlook). Perhaps this is one more expression of that widespread competitive disadvantage.

[UPDATE 11/29:

I was in the neighborhood this evening around 6:30, so I stopped into the store and rode the escalator to the third floor. It was definitely gangster free. In their place were relaxed, low-key sales staff eager to help me find a mobile.]

In observance of the American Thanksgiving holiday, the staff of Shanghai Scrap will be mostly offline for the next five days. I’ll check emails, but sporadically, but because for goodness sake we can all use two things: a) a break from the communication treadmill, and b) a nice Thanksgiving meal with friends and family.

And since it’s Thanksgiving — thanks to all of the folks who read my blog. I appreciate every link and comment, every last reader. And, heck, I’m especially thankful for those folks who I’ve befriended through this blog – who knew you could make friends through blogging? So, in a year when I have more to be thankful for than others, I wish the friends of the ‘Scrap a Happy Thanksgiving. See you next week.

Just in time for the Thanksgiving holiday shopping rush I come across evidence that at least one high-profile US-based entry into China’s cut-throat, price-sensitive retail market isn’t working out exactly as planned. I’m talking about Best Buy, North America’s largest electronics retailer. Three years ago they entered the Chinese market with plans to counter China’s aggressive sales culture with a low-key, service-oriented sales method (I wrote about these plans in early 2008 for MinnPost). They might have succeeded – but I’ll leave that question for another time. Tonight I’d like to talk about where they’ve clearly failed: security. (more…)

Way back in January 2009 the staff of Shanghai Scrap told you about the demolition of Shanghai’s (then) 135-year-old Carmelite Convent  on the edge of the expensive, rapidly re-developing Xujiahui neighborhood (part 1, complete with historical background, here, and part 2, here; background on Carmelites, here).  The building wasn’t anything special – except for the fact that it was one of the city’s oldest structures, foreign or Chinese. But what made this demolition so egregious, so patently ridiculous, were the stated intentions of the (re) developers to build a 20% smaller replica of the convent just a few meters south of the original one. [UPDATE: also see comment #1, below, left by Lisa Movius, on why the destruction of the convent "was criminal - literally"] This struck me as stupid and wasteful, but I’ve been here long enough to know that it should also  strike me as one more thing: typical. That is, the Carmelite Convent is not the only historic structure in Shanghai to be demolished in favor of a replica that – for whatever reason – is more in the interests of the developer. In fact, in the case of some dilapidated slum dwellings, this might often be a good thing. In others, less so, to put it lightly.

Anyway. I’d mostly forgotten about this sorry Carmelite episode until this weekend, when I happened to pass the site of the old convent in a taxi and saw that it was being rebuilt. I returned a couple of days later, with a Benedictine, to photograph it. Here, from January 2009, is the historic convent in the last stages of its demolition.

Take note of the roof, and the close proximity of the remaining structure to the fence. And then, have a look at the photo below. The arrow points to the roof of the new convent. The white buildings in place of the old convent are dorms for workers building the replica convent and the highrises that will surround it.

After the page jump, a before and after view from the development’s gate. (more…)

In my near decade-long association with China I have never witnessed something so remarkable or so moving as what I witnessed today, on the evening of the traditional seventh day of mourning, in the aftermath of the fatal Jiaozhou Road fire in Shanghai. My readers in Shanghai, and China, are already familiar with this event; for those outside of China, and not following the event and its aftermath: on Monday, a 28-story high-rise burned, and at least fifty-six people died as a result. Video here, a live blog here, and an excellent New York Times piece examining questions raised by the fire here. And finally, and best-written of all, a blogged dispatch, “Don’t Cry, Shanghai” by my friend Marta Cooper.

Around 2:00 this afternoon I was with two friends when one received a call notifying us that thousands of people were converging on the site of the fire with flowers. I hesitated to follow, but only for a moment: I’ve lived in this city, and among its people, for years, and I consider it and them as much home as anywhere I’ve ever been. I decided to go, but as a mourner for what happened in my home, and with flowers. When we arrived we came upon a line that stretched for blocks. Below, a photo taken while looking back, after having turned a second corner:

What this photo doesn’t show, because of the vantage point, are the bouquets of flowers carried by all of those mourners. I think it’s no exaggeration to suggest that at least half of these people were carrying carnations. As for those who weren’t, they were reverent and quiet. I did not sense gawkers, rubber-neckers, or the Sunday curious.

What I did sense, what I will not forget, was the rhythm to this procession. For the last long block, as the procession slowed, we began this odd stutter-step: we would walk five or six steps, and then we’d come to a dead stop, pause for ten seconds or so, and then start the cycle against, five, six steps. Nobody said anything, nobody was pushing ahead – rather, the crowd seemed to accept this odd, almost reverential step. As we moved slowly along, it took on a life of its own, almost like a mourning dance. I’ve never experienced anything quite like it. I wish i could explain it. But, when we reached the intersection beneath the burnt-out building, there was nothing and nobody directing this movement – we just flowed into what felt like a sacred space, with a brief admonition – quite right – that I should remove my hat before proceeding further. I laid my flowers atop a pile of thousands of bouquets, extending in two directions, for two blocks:

After the page jump, a brief note on the security and how one news organization covered it badly … (more…)

Below, a stack of old PCs, monitors, and printers that, at one time, cost hundreds of thousands of dollars, new. Yesterday, at the time that I took this photo, they had just arrived in bulk at a Hong Kong warehouse where they were to be sorted and – for the most part – disassembled and recycled.

The warehouse is owned and operated by the Li Tong Group, the company designated to operate Hong Kong’s municipal computer recycling program (they also handle electronics recycling for private clients – including Apple, and its entire Asia Pacific recycling program). And yesterday Li Tong walked me through their EcoPark warehouse, home to the municipal program (client confidentiality prevented them from showing locations that handle waste generated by private clients), and allowed me to photograph most of it (understandably, proprietary processes were off-limits to the camera – but not my eyes).

I’m going to post a few of those images, for two reasons: 1) searches for “waste electronics” and “Hong Kong” typically generate horrific images of polluted, unsafe workshops where workers risk their health to extract gold from circuit boards. No doubt, that’s how electronics are usually recycled in Asia, but the situation is beginning to shift a bit, and Li Tong is at the head of the Asia Pacific pack. So, hopefully these images reveal another side; and 2) Just as many American hunters believe that meat eaters should, at some point in their lives, should kill and dress their steak, I – a non-hunter – believe that every techie should have to face up to what happens to that old monitor/PC/printer/scanner/iPod after it gets tossed to the curb. (more…)

Some bloggers have all of the luck. While I’m in Hong Kong, listening to a guy explain that laptop battery fire is actually a “runaway thermal event,” Shanghai Shiok!‘s Christine H. Tan has been wandering around the ghostly 5.25 sq km of prime Shanghai riverbank once home to Expo 2010 [Shanghai World's Fair]. It’s something that I hope to do soon, but surely by the time I get there, much of it will have disappeared. So I’m going to do something I’ve never done before at Shanghai Scrap: I’m going to cross-post content from another blog. I do this in part because I think that the material will be of considerable interest to the people who have followed Expo through Shanghai Scrap, and in part because Shanghai Shiok! is one of the best-written and most interesting new English-language China blogs out there (think I’m exaggerating? see here and here). She also, it seems, shares Shanghai Scrap’s early and intense interest in the North Korean pavilion and Axis of Evil Square. So, without further ado, an excerpt from Christine H. Tan’s terrific dispatch from the ruins of Expo 2010 …

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4:00 p.m. — NORTH KOREA HAS DISAPPEARED!

After five hours wandering around the site, I had to admit that I was disappointed. The Expo was over, I complained to my friend. So far, I had mostly seen piles of scrap metal, a few uprooted benches, some beaten walls. I wanted to see actual demolition. At the very least, I wanted to see a pavilion so stripped that it was unidentifiable.

And then I came upon this:

No signage, no trimmings, nothing. Just the bare bones. I knew which pavilion it was, simply because I had been there many times; my friend, on the other hand, had no idea until I told him. A ‘before’ shot of the pavilion, taken in April this year:

North Korea really knows how to strip a pavilion bare. As far as I could tell, it is the only country that chose not to linger at the Expo.

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Read the rest of Christine H. Tan’s dispatch from from the world’s largest demolition site at the Shanghai Shiok! blog …

The other day I stopped into one Shanghai’s many Expo merchandise liquidation depots with my old friend, the highly observant Karen McGrane. While I was browsing the keychains, Karen turned to me and said something like, “It says rare earths.” At that, I turned to see Karen holding a small package that contained a mobile phone chain hung with the Expo’s much-reviled mascot, Haibao. Below, the name of the product, and a photo of the complete package.

The translation of “rare earth” is accurate, and the manufacturer definitely means it, as the back-side packaging makes clear … after the page jump … (more…)

So am I, and I’ll be keynoting the 5th World Recycling Forum on Tuesday morning. More info on the event, here. I’ll be discussing China’s impact on the global trade in recyclables (occasionally over-rated, I’ll argue), and touching on the important news – reported first on Shanghai Scrap – that China is re-considering its ban on the import of electronic scraps such as old computers and monitors.

Forecast: posting to be light.

The price of gold is currently hovering around a record US$1400/oz, leaving the sensible investor with, as I count them, three options:

1. Buy it.
2. Run from it.
3. Eat it.

Per the last option, I direct my readers to the Shang Palace Restaurant at the Shangri-la Hotel in Ningbo, China where, per chef’s instructions I suppose, shrimp dumplings are served with a light garnishment of 24k gold leaf.

Now, I may be a rube, but I’m no simpleton, and so I’m well-aware that edible gold leaf has been used to decorate desserts and cocktails for years, now. But adding gold leaf to dumplings strikes me as something a little different. Desserts and cocktails, after all, are already luxury edibles, whereas dumplings – shrimp or not – are staples of sorts. Seven floors down and around the corner from my Shanghai apartment dumplings like those above (minus the gold leaf) are available for RMB 20 (US$3) for 12 (given, pricey by China standards). In American terms we’re talking the relative equivalent of sprinkling a mushroom cheeseburger with 24k gold leaf (though I guess it wouldn’t surprise me if somebody was doing that before the housing bubble burst). [UPDATE! In fact, they were: in comment six, below, my friend Karen McGrane points me to proof that at least one New York chef was serving a mushroom cheeseburger sprinkled with gold leaf around the time of the housing crash.]

If I were an Old Testament prophet, a Calvinist, or a New York Times columnist (“when the revolution comes …”), I’d have more to say about this. But I’m not, so I’ll end this post by pointing to a delightful 2005 Q&A regarding edible gold that ran in the Washington Post. Worth a read.

[End note: I was a guest at the meal at which those dumplings were served, and didn't have a chance to learn their cost. Still, I must admit, the commodities reporter in me was tempted to scrape the gold off mine, and into an envelope, in anticipation of US$1500/oz.]

In the interest of expanding the English-language discussion of China’s air quality situation beyond Beijing, I give you two photos taken, roughly 24 hours apart, from the 27th floor window of a hotel in downtown Ningbo. Let’s begin with yesterday.

Next, today’s image (that’s my shirt shimmering in the foreground glass – sorry).

This afternoon an influential leader in China’s multi-billion dollar recycling industry gave strong indications that China will soon loosen its ban on the importation of waste electronic devices such as computer circuit boards. The import of such devices is a sensitive issue in China, particularly due to the intense foreign media interest on so-called “toxic villages” where these devices have long been smuggled and recycled in informal workshops.

In prepared marks delivered at an industry conference attended in Ningbo, China, Wang Gongmin, the chairman of China’s Non-Ferrous Metals Recycling Association asked that the ban on imported waste circuit boards be lifted. CMRA has close government ties, and often consults with government in Beijing and China’s provinces on the recycling industry and laws related to it. Wang, meanwhile, was part of a team of three who drafted language on solid wastes for the 11th Five Year Plan, and he was a leader of the expanded team that prepared language for the upcoming 12th Five Year Plan. The new plan does not call for lifting the ban, but rather speaks in general principles and policy goals. Wang’s speech, however, was quite specific. Below, the official English translation provided to attendees:

We will add to the variety of and expand the scale of imported scrap metals. On the one hand, scrap home appliance, circuit board scraps, [and] scrapped cars are all valuable renewable resources. On the other hand, recycling technology has matured, and the processing shall not result in secondary pollution. But those products are all on the list of prohibited goods. It is suggested that relevant departments should make policies to approve the import of such products.

Attending Wang’s speech were leading officials from the Ministry of Environmental Protection, Commerce, Customs, and AQSIQ.

In 2010, China began the roll-out of a long-delayed program to funnel domestically generated electronic waste to trusted, environmentally-sound recyclers. Among industry observers, it has long been assumed that a successful domestically-run recycling program would ultimately pave the way for China to lift its ban on imports. Today’s announcement was much earlier than many expected, especially due to the fact that there are still many questions and problems to be answered with the Chinese domestic program.

Wang announcement also suggests that at least some officials in China are reconsidering the country’s commitment to the Basel Convention on Transboundary Wastes, a 1989 treaty that prohibits the export of hazardous wastes to developing countries. In developed countries, the processes used to recycle circuit board scrap and other hazardous materials are expensive, but relatively safe. In recent years, China’s nascent e-recycling industry has imported and modified some of these processes on a trial basis, and with greater and lesser success, in anticipation of the 2010 domestic recycling program. Though no breakthroughs have been reported, it is undeniably the case that developed world e-recycling methods can be utilized in China for smaller costs and greater profit. On background, some Chinese recycling industry figures argue that circuit boards cannot be considered hazardous – and thus, not subject to Basel – if they’re exported to China and recycled using means demanded by Western environmentalists.

Over the years there have been some very fine books written about the experience of moving to China as a young foreigner, and the struggles encountered in trying to learn the language and culture. But I’ve long thought that an equally interesting experience – moving to China as an adult, post-30 foreigner, and struggling with the language and culture with some life experience under the proverbial belt – has been overlooked. And that’s a missed opportunity, I think: every year, it seems, there are more and more adults having that experience. It can be a humbling experience, as well an exhilarating one, and that’s why I’m so enthusiastic about Deborah Fallows‘ Dreaming in Chinese: Mandarin Lessons in Life, Love, and Language, recently published in its American edition.

This modest, lovely book documents Fallows’ adventures in learning Chinese (culture and language) while she and her husband, Jim, lived in Shanghai and Beijing for three years (disclosure: we became friends during that period). What I like about the book, really like about it, is the unusual narrative structure: each chapter is named for a Chinese word or phrase that serves as a touch-point for Fallows to recount episodes during her stay in China, and connect them to her study of Chinese. As she writes in the introduction:

Foreigners I met and knew in China used their different passions to help them interpret China: artists used China’s art world, as others used Chinese cooking, or traditional medicine, or business, or music, or any number of things they knew about. I used the language, or more precisely, the study of the language.

After finishing the American edition, I sent along a few questions to the author, which she graciously answers, below (fyi: my friends at danwei did a Q&A with her on the occasion of the UK edition, here).

Scrap: Upon finishing the book, I reacted in a way that was different than how I usually react to China books. I thought “Now here’s a book I can give to my Chinese friends who think that foreigners don’t understand China.” I’m guessing that wasn’t the target audience. So: the acknowledgments indicate that you received some encouragement to write this book, and move it from “book idea” to book. I wonder if you could give some sense of what the “book idea” was, and how you arrived at the unusual structure of the book as it now exists. Was there an audience in mind? (more…)