China interbank market freezes - record high overnight repo rate

[c1ue]

Re: Can China do it?

oh!!! the walkman - when they came out with ver2 (the smaller one) that was when i became a fervent fan - there was NOTHING quite like blasting down thru a field (ski trail) of fresh fluff with something like AC/DC pounding into my brain....

Calling the Walkman a toy is a bit rich C1ue. Like lektrode, all of us in my crowd bought them for when we went skiiing.

The Walkman came out in 1979 - a little late to have been brand building during the '70s...

The Swiss watch industry was brought to its knees by the Japanese watchmakers. It was widely acknowledged that Japanese watches were of exceptional quality and far less expensive than Swiss watches. And Seiko in the U.S. was considered a brand that made high-quality wristwatches.

Sorry but your memory is seriously flawed. Seiko had the high end digital watch market all to itself by 1980...they had already driven Texas Instruments, their only real competitor, out of the market by then. The Seiko quartz that I got on graduation was a beautifully finished stainless steel piece, the type of craftmanship the USA had forgotten how to do by then. I still have a 25 year old Seiko watch with dual time zones and an E6B time/speed/distance/fuel calculator on the bezel that I use when flying.

Having done consulting on site at Seiko in Japan -I can say that the watch division is a really, really tiny part of that company.

For 2011, the entire division the watch group is based in constituted about 7% of Seiko's overall revenue:

http://global.epson.com/IR/report/ar2012/pdf/ar2012.pdf

Statements of income data	2011
Net sales	973,663
Information-related equipment	702,918	72.19%
Electronic devices	231,235	23.75%
Precision products	68,276	7.01%
Other	1,279	0.13%
Eliminations and corporate	-30,046	-3.09%

Devices and precision products business segment

This segment comprises the device business and precision products business. This segment mainly includes the development, manufacture and sales of crystal oscillators, CMOS LSIs, watches, watch movements, plastic corrective lenses for glasses and horizontally articulated robots.

Seiko itself doesn't consider its watch business its 'brand'. I'm sure the Seiko watches are great - but that isn't the point. A great product does not itself constitute a brand; that's why we have things like 'cult' favorites.

Did kids beg their parents for Seiko watches? Did girlfriends and wives hope in their deepest hearts for a Seiko? Did lines form outside stores for the latest Seiko? Did Seiko's watch business transform that company from a largely component/B2B manufacturing product supplier to a consumer company? Did Seiko achieve price premiums vs. its direct competitors both digital and mechanical? Have you 'made it' when you get a Seiko?

Sure, Seiko completed the exit of TI from the consumer market. But TI was already on the way out; that company's core business is much like Seiko's: B2B.

By the late 70s Sony was the top of the heap of the Japanese consumer electronics companies, able to charge a premium (like Apple does today) over their competitors for their stereo gear and well on their way to wiping out the top audiophile American brands like SAE and Harmon Kardon by the mid-1980s.

Once again, you're focusing on a very specific high end. Sony may have had a presence for Trinitrons or fancy audiophile stuff, but their penetration of the consumer market as a brand did not explode until post Walkman, and the examples I put forth concerning their notable consumer electronics failures like betamax underscores that they were a visible part, but hardly a primary driver.

By the way, it was the Japanese brand car makers that almost put Chrysler out of business until the first government bailout of that company in 1979.

Sure, but the Japanese cars competed on price and gas efficiency, not on brand.

It was not until the US got Japan to agree to export quotas that Toyota started its brand initiatives.

I drove a Datsun for many years as a youth - I loved that car, but it was not one which turned heads and impressed the ladies.

[GRG55]

Re: Can China do it?

...Seiko itself doesn't consider its watch business its 'brand'. I'm sure the Seiko watches are great - but that isn't the point. A great product does not itself constitute a brand; that's why we have things like 'cult' favorites.

Did kids beg their parents for Seiko watches? Did girlfriends and wives hope in their deepest hearts for a Seiko? Did lines form outside stores for the latest Seiko? Did Seiko's watch business transform that company from a largely component/B2B manufacturing product supplier to a consumer company? Did Seiko achieve price premiums vs. its direct competitors both digital and mechanical? Have you 'made it' when you get a Seiko?

...

Sorry C1ue, but you are the one that is confusing a brand with a cult (or a fad) or a conglomerate.

Is Coke a brand? Is McDonald's a brand?

Perhaps kids beg their parents to buy them a Coke, or a Happy Meal. But when was the last time your girlfriend or wife "hoped in their deepest hearts" for a Big Gulp or a Big Mac? When have you ever seen anybody line up overnight for one? Can Coke command a premium over Pepsi, or a McDonald's cheesburger over the Burger King equivalent? Have you "made it" when you get a Coke or a McDonald's Egg McMuffin?

I guess Coke and the Golden Arches aren't brands after all...

Your "analysis" of Seiko is similar to examining the percentage of sales that the classic formulation of Coca Cola, a great product that built that brand, now represents for that corporation (which today sells fruit juices, ice tea, energy drinks, bottled water and a host of other products, including gawd knows how many variations of the original sugar water). When someone thinks of Coke what comes to mind? Minute Maid orange juice? Not bloody likely. "Seiko itself doesn't consider its watch business its 'brand'".You must be joking. Seiko doesn't make anything other than timepieces...when someone thinks of Seiko what do you think comes to mind? An Epson printer? Not bloody likely. Seiko has a long and storied history including official timekeeper for the 1964 Tokyo Olympic Games, and NASA Flight Director Gene Kranz wore one during the Apollo missions ("I don't care about what anything was DESIGNED to do, I care about what it CAN do" - Apollo 13)

But let's use your "brand" criteria for the Japanese carmakers, and see if it stands up.

Nope. You have conveniently forgotten that when Nissan Motors introduced the Datsun 240Z in late 1969 the demand and the buzz was such that the dealers couldn't get them fast enough and customers waited months and paid over sticker price to get one, especially if they wanted one in silver. The introduction of a new Corvette didn't produce that kind of result. The 240Z, a product of Nissan's California design studio, took Datsun out of the "cult status" following of petrolhead 2000 Roadster and 510 aficionados (most of us followers of the incredibly successful exploits of Pete Brock, John Morton, Walter Maas and Bob Sharp on the SCCA circuit on the way to a record 80 SCCA racing titles for Datsun in the 1960s/70s) and put the company on the map. Starting in 1970 the Datsun Z went on to win an unprecedented 10 consecutive SCCA C Production Championships, racing against Porsches, Alfa's, BMW's and Corvettes, and Nissan flogged a lot of them to boy racers. Unfortunately it then went on to squander that opportunity by producing a series of utterly forgettable slab-sided Japanese-bland studio designs - the 610, 710 and F10 - and never recovered the lead it handed to Toyota. Some believe this is the reason Nissan abandoned the Datsun brand name in its biggest market, the USA, and tried to emulate Toyota and Honda by switching to the corporate name.

A great product may not constitute a brand, but a great product can MAKE a brand. Squandering that opportunity, the way Coca Cola almost did with "New Coke" and Nissan did by moving its design effort back to Japan when the USA was its key market, is always a danger of management hubris.

China doesn't yet have regional brands, much less a global brand. Yet. (Huawei might be an emerging arguable exception). Worse, however, is that China does not even have an executive leading any global brand company...unlike the Indians with which China is so often compared.

But that might not stop them. Samsung is now globally recognized, and some other Korean firms are making changes to strive for the same result. Few know that white goods maker "LG" was originally known as Lucky Goldstar...try creating a global brand out of that if you're an advertising exec China won't be far behind...

EDIT ADDED: For those that don't know, my passion for the Datsun 240Z comes in part from building up a highly modified 1972 Z and racing from 1975 to 1979 on the local gymkhana circuit as a college student. Another bit of brand trivia, the tenth consecutive Datsun Z SCCA C Production Championship (1979) was won by actor Paul Newman driving a Bob Sharp prepared 280Z. Newman was a serious racer, including driving CanAm cars, and went on to co-found Indycar series Newman/Haas Racing with Mario Andretti as their first driver.

[jk]

Re: Can China do it?

just a small point here... part of the allure of "the original formulation Coco Cola" was that it contained cocaine. i don't think they sell that original formulation anymore.

[GRG55]

Re: Can China do it?

just a small point here... part of the allure of "the original formulation Coco Cola" was that it contained cocaine. i don't think they sell that original formulation anymore.

Okay, let's call it the "classic formulation" ;-)

[rogermexico]

Re: Can China do it?

The Walkman came out in 1979 - a little late to have been brand building during the '70s...





Having done consulting on site at Seiko in Japan -I can say that the watch division is a really, really tiny part of that company.

For 2011, the entire division the watch group is based in constituted about 7% of Seiko's overall revenue:

http://global.epson.com/IR/report/ar2012/pdf/ar2012.pdf




Seiko itself doesn't consider its watch business its 'brand'. I'm sure the Seiko watches are great - but that isn't the point. A great product does not itself constitute a brand; that's why we have things like 'cult' favorites.

Did kids beg their parents for Seiko watches? Did girlfriends and wives hope in their deepest hearts for a Seiko? Did lines form outside stores for the latest Seiko? Did Seiko's watch business transform that company from a largely component/B2B manufacturing product supplier to a consumer company? Did Seiko achieve price premiums vs. its direct competitors both digital and mechanical? Have you 'made it' when you get a Seiko?

Sure, Seiko completed the exit of TI from the consumer market. But TI was already on the way out; that company's core business is much like Seiko's: B2B.



Once again, you're focusing on a very specific high end. Sony may have had a presence for Trinitrons or fancy audiophile stuff, but their penetration of the consumer market as a brand did not explode until post Walkman, and the examples I put forth concerning their notable consumer electronics failures like betamax underscores that they were a visible part, but hardly a primary driver.



Sure, but the Japanese cars competed on price and gas efficiency, not on brand.

It was not until the US got Japan to agree to export quotas that Toyota started its brand initiatives.

I drove a Datsun for many years as a youth - I loved that car, but it was not one which turned heads and impressed the ladies.

Sony was a big deal and sold for premium prices throughout the 70s with transistor radios, radio alarm clocks and mass market audio gear like tape decks. Nakamichi was the premium tape deck when I came of age in the 70s and 80s. I still use a Nak digital clock radio I got in the early 90s.

The walkman was first sold in the US in summer of 1980. I bought one in the spring of '81 and that summer went climbing on the Commander glacier massif in BC Canada.

Climbing while listening to This Year's model by Elvis Costello and Boy by U2 was mind-blowing for someone who grew up with vinyl records and the device was an object of wonder with my climbing companions.

I submit the jump from no portable personalized music at all to the Walkman was much bigger than Walkman to iPod.

Oh, and I paid almost $300 for it at a time when I lived on $2500 per year in student loans and painted houses every summer for about $10 an hour....

Seiko was indeed a premium watch brand in the 1980s. Seiko watches were given as graduation and birthday gifts when mechanical watches like Rolex were considered bizarre almost luddite exotica - before the Swiss watch industry latched on to the anti-utilitarian argument to sell them to bond traders and real estate agents of the FIRE spawned new wealth industries.*

As far as car brands, how about Honda? Honda was every bit as cult-like as Apple from the late 70s through the 1980s. I recall friends in my college town traveling 50 miles to the dealership in Davenport, Iowa to hand over a deposit check just to get on a waiting list for the 1988 Honda Civic. And paying a non-factory authorized $2000 premium to buy a car that only listed for about $11,000 AFAIR.

My 70 + year old parents, ever 20 years behind the consumer quality curve, now think of American cars as unreliable crap and will only drive a Honda.The ones whose benchmark was the Chevy Caprice when Honda's were "it"......


* I have Swiss mechanical watches but I favor German brands like Stowa and Nomos for value to quality ratio and their "under the radar - I am not a dentist" aesthetic....

[jpatter666]

Re: Can China do it?

Sony was a big deal and sold for premium prices throughout the 70s with transistor radios, radio alarm clocks and mass market audio gear like tape decks. Nakamichi was the premium tape deck when I came of age in the 70s and 80s. I still use a Nak digital clock radio I got in the early 90s.

The walkman was first sold in the US in summer of 1980. I bought one in the spring of '81 and that summer went climbing on the Commander glacier massif in BC Canada.

Climbing while listening to This Year's model by Elvis Costello and Boy by U2 was mind-blowing for someone who grew up with vinyl records and the device was an object of wonder with my climbing companions.

I submit the jump from no portable personalized music at all to the Walkman was much bigger than Walkman to iPod.

Oh, and I paid almost $300 for it at a time when I lived on $2500 per year in student loans and painted houses every summer for about $10 an hour....

Seiko was indeed a premium watch brand in the 1980s. Seiko watches were given as graduation and birthday gifts when mechanical watches like Rolex were considered bizarre almost luddite exotica - before the Swiss watch industry latched on to the anti-utilitarian argument to sell them to bond traders and real estate agents of the FIRE spawned new wealth industries.*

As far as car brands, how about Honda? Honda was every bit as cult-like as Apple from the late 70s through the 1980s. I recall friends in my college town traveling 50 miles to the dealership in Davenport, Iowa to hand over a deposit check just to get on a waiting list for the 1988 Honda Civic. And paying a non-factory authorized $2000 premium to buy a car that only listed for about $11,000 AFAIR.

My 70 + year old parents, ever 20 years behind the consumer quality curve, now think of American cars as unreliable crap and will only drive a Honda.The ones whose benchmark was the Chevy Caprice when Honda's were "it"......


* I have Swiss mechanical watches but I favor German brands like Stowa and Nomos for value to quality ratio and their "under the radar - I am not a dentist" aesthetic....

Sony Trinitron TVs -- for years I knew people who'd buy nothing else.

[GRG55]

Re: China interbank market freezes - record high overnight repo rate

Hmmmm. Let's see now...first a rampant stock market speculation:

New York Times

Published: Tuesday, February 27, 2007

SHANGHAI — In China's wild, cowboy stock market, record-breaking run-ups have been followed by mini-market crashes that have been largely confined within this country's borders...

...Millions of everyday investors are rushing blindly into stocks, emptying out their savings account to "play the market," as many of them here say. Perhaps the most remarkable sign of the recent irrational exuberance underpinning China's stock markets is that during the past year, when a company has announced bad news, its stock price has been shooting through the roof.Early this year, for instance, when a group of 17 Chinese companies was cited by regulators for misappropriating corporate funds, their stock prices all skyrocketed. When the Tianjin Global Magnetic Card Company failed to report quarterly earnings last April, its stock doubled.

With shares in Shanghai tumbling, stocks listed in Shenzhen also collapsed, falling 9.3 percent. In Hong Kong, the benchmark Hang Seng Index fell 1.76 percent, and in Japan, the Nikkei dropped about half a percent to 18,119.92.

But none of the world's major stock markets has been as volatile as in China, where people refer to the stock market as "dubo ji," or the slot machine. The gyrations have become almost commonplace for a stock market that suffered through a five-year depression until 2006, when it rose more than 130 percent, the world's best performance...

Followed by an equally enthusiastic property speculation:

China Home-Price Gains Add to Dilemma on Cash Crunch

By Bloomberg News - Jun 17, 2013 10:57 PM MT

Chinese property prices rose at the fastest pace in more than two years in major cities, defying tougher government curbs and constraining the ability of policy makers to ease credit in response to weakening economic growth.
New home prices in Beijing, Shanghai and Guangzhou posted the biggest gains in May since at least January 2011, and 69 of the 70 cities tracked by the government showed increases...

All of it fueled by abundant and cheap credit through both official and "shadow bank" channels:

China’s credit bubble unlike anything in modern history: Fitch

Mon, Jun 17, 2013 10:23 AM EDT

According to Ambrose Evans-Pritchard of the Telegraph, Fitch analyst Charlene Chu has concluded that China's growth is fueled by a credit bubble that is unlike anything the modern world has ever seen. This debt bubble is leading to massive overbuilding, Chu says...

Now where have we seen that sequence and combination before?

If Fed-parlance the phrase is "taking away the punch bowl just as the party gets started". Does anybody truly think the PBOC is going to take away the dim sum cart just as the feast is really getting underway? Might be too early to put down the chopsticks just yet...

Did the Chinese just blink? Again. Difficult to be certain, but worth keeping an eye on...

From the FT:

Last updated: June 25, 2013 12:54 pm
China in fresh effort to calm shaken markets

China has pledged to backstop banks suffering from cash shortfalls, giving rattled investors hope the country’s money squeeze could be nearing an end.

The statement by the People’s Bank of China on Tuesday was the clearest attempt yet by the government to calm the turmoil that has shaken global markets over the past week and fuelled concerns that the world’s second-biggest economy could be on the verge of a credit crisis.

“If banks have temporary shortages in their planned funding, the central bank will give them liquidity support,” it said in the statement. “If institutions have problems in managing their liquidity, the central bank will apply appropriate measures under the circumstances to maintain the overall stability of money markets.”

It added that it had already provided money to some banks, though did not specify the amount or the banks...

...In its latest statement, the central bank said money markets were already on the mend after interbank rates spiked to double digits last week. It noted that the overnight bond repurchase rate had fallen to 5.83 per cent, more than half what they were last week, though still about twice as high as normal.

“Several strong banks have already started to play an important role in providing funds to the market and stabilising interest rates,” it said.
It also reiterated its view that a series of temporary technical factors, including tax collection and end-of-quarter regulatory deposit requirements, had exacerbated the market’s tightness...

...Lu Ting, an economist with Bank of America Merrill Lynch, said the central bank had little choice but to soften its approach.

“They will have to end the credit squeeze soon,” he said. “We believe the People’s Bank of China and Chinese policy makers will be aware of the potential dangers and take decisive measures to revive the interbank market, to calm investors and to stabilise the economy.”...

[Chris Coles]

Re: China interbank market freezes - record high overnight repo rate

Today, everyone talks about "Credit". No one seems to understand the qualities of equity capital. All feeding more credit into the system will do is put off the end game for a little longer. Sooner or later, all the credit has to be redeemed. WE can only sit back and watch the show; EJ's Concrete block is getting very near to letting loose and flying across the Chinese economy.

[goadam1]

Re: China interbank market freezes - record high overnight repo rate

Today, everyone talks about "Credit". No one seems to understand the qualities of equity capital. All feeding more credit into the system will do is put off the end game for a little longer. Sooner or later, all the credit has to be redeemed. WE can only sit back and watch the show; EJ's Concrete block is getting very near to letting loose and flying across the Chinese economy.

Didn't the brick fly and land already. Nanocrisis. No time to even mark the calendar.