Monday, March 14, 2016

Monopoly Money

Let's take a few minutes to talk about how Chinese businesses are buying US$ and Euro denominated assets, as well as why they might be doing it.

Today's Thesis:

Think of it this way, if, by some magic, some invisible force in the financial universe allowed me to convert “monopoly money” to US$ and I knew that relatively soon, the clock would strike midnight and my monopoly money would become worthless again, I’d be buying up every dollar denominated asset I could get my hands on.  The asset price would be irrelevant.  Of course, in my fairy tale, the RMB is the monopoly money and the invisible force is the currency markets.  Money for nuthin' ...US$ denominated assets for free.

Let's start with how we got here

I won't bother recapping the odyssey of the Renminbi over the last half decade.  If you feel so inclined, please refer to the post I did eleven months ago, China's Dream.....Defying Financial Gravity. To refresh your memory.  Here's the thumbnail of what I said:

"Even though the "supply" of RMB has increased four fold since 2007 the RMB per US$ exchange rate has remained rock solid in a range of about 6.5 +/- RMB to the US$.  You'd expect a significant decline in the exchange rate with a money supply increase of this magnitude, yet it hasn't happened.  The RMB is a miracle of modern economics."


"If I were a betting man, once the PBoC starts to exhaust it's Great Wall of Currency after trying to support an unsupportable Renminbi, I'd think the value would settle in much closer to a nickel than fifteen cents.  Once this value is reestablished, the value of China's assets, including all of those US$ denominated ADRs & Bonds will also be re-priced, and that's not going to end well for anyone.  China's Dream will soon become the world's Nightmare."

There are also a couple of excellent, recent articles, one by Kevin Dougherty on Forbes on the expected depreciation of the currency and the history/role/effectiveness of currency/capital controls, and  another by Christopher Balding, picked up by Gordon Chang, discussing the probability of China's Trade Surplus being faked for years, even suggesting that a current surplus may not exist at all.  Both articles pave the way, to at least to a preliminary understanding of how the Alice-through-the-looking-glass NBS numbers and the actions of the PBoC are seemingly becoming more divorced from reality by the day.   Moreover, hard, or even anecdotal evidence of a fudged trade surplus and/or overstated currency reserves would tend to accelerate the decline toward the Renminbi's true, intrinsic value (IMO ...a nickel), further explaining why it's currently under such pressure.

The New York Times also published a wonderful Keith Bradsher piece on how the Chinese People are Losing Confidence in their Currency.  When people are paying other people to stuff currency in their  underwear to get it out of the country, I'd think that's a pretty obvious warning bell that there's a problem.  The article is a worthwhile, fun read.

Finally, I've never heard (until now) of a Central Bank (PBoC) issuing a statement warning a Hedge Fund (Soros) of the repercussions of shorting a currency (RMB) before.  I guess, it's a brave new world out there now.  Things are clearly different.

So, now for the recap.  We've got a large Central Bank (PBoC) making monetary policy decisions based on "fake" metrics, driven by fiscal policies which require it to support what I, along with many, would argue are un-achievable, unproductive, capital deployment directives in pursuit of an unrealistic real GDP growth target in the current economic environment.  That's where we are today.

If you have a moment, please take a few minutes to read through the above referenced articles.  They are very well done and help describe the puzzle pieces I'm referring to in this post.  I'm sure Kevin, Chris, Keith and Gordon, as I always do, would appreciate the page views.

Now, let's examine where we are...

As described above, it seems that everyone on the planet wants to get out of the RMB.  The clock is about to strike midnight and they want to convert as much monopoly money to real assets as possible.

We need to only look at the unwinding of the carry trade and the parade of Chinese acquisitions of US assets that have taken place or are contemplated over the last few months to see what's going on.  Whether it's Syngenta ($43 Billion), GE Appliances ($5.4 Billion), Blackstone Luxury Hotel Portfolio ($5.9 Billion in two transactions) Deutsche Bank China Assets ($3.8 Billion), Sharp Electronics ($5.9 Billion), Chicago Stock Exchange, AGTech ($300 Million), IBM Credit ($550 Million), SAB Miller ($1.6 Billion), Carmike Cinemas ($1.1 Billion),Soccer Teams, Real Estate, the establishment of China's $30 Billion Electronics Industry Acquisition Fund , China's State owned $338 Billion VC Fund,or even Alibaba's US$ debt fueled spending spree, etc., etc.  (Links Below), it's clear that the China's demand for US assets is accelerating.  Alibaba's IPO alone facilitated the thinly disguised off shore transfer of more than US$20 Billion to Shell Companies in the Caymans and BVI.

Moreover, US Barristers and banks are only too happy to facilitate the spending spree.  Both the New York Times and 60 Minutes did great work describing the "enthusiasm"  Real Estate Developers/Managers, brokers and NYC law firms have for laundering (allegedly) illegal overseas money into "clean" US assets.  I can just imagine the effort and fervor these firms would put forth, and the relative ease which the transactions might be accomplished, if the money were actually provided from a seemingly legitimate source.

As an aside, especially with Alibaba's acquisition spree, am I the only financial person out there who thinks that the lack of participation by Chinese Banks in these deals is odd?  In Alibaba's case, 97% of all revenue is derived from China operations, yet, according to their filings, not one Chinese Bank participated in the IPO, (US$23B) Bond Issue (US$8 Billion) or Credit Facilities (US$5 Billion and proposed $3 Billion).  All financing is provided by US & EU Investment Banks?  Really?

Finally, I also find it curious that Chinese acquirers are routinely willing to pay much more for a target than other suitors. In some cases, nearly double competing offers, presumably to make sure the deal gets done. Again, am I the only financial person who finds this phenomenon peculiar?



GE Appliance Sale to Haier

Now, let's look at one of the deals mentioned in the long list above.  I bring up GE for two reasons; First, I've followed GE for years (full disclosure, I own some shares) and know a little bit about the business.   Second, this deal is a poster-child for my Monopoly Money thesis.  Here are a few relevant bullets on GE's direction.

1.) Ever since the GE Capital debacle almost wrecked the company back in 2009, Jeff Immelt has been on a mission to focus on "core industrial business".
2.) GE operating businesses rarely, if ever, lose money or have negative cash flow.  If they do, they are either  quickly fixed, sold or (metaphorically of course) taken out back and shot.  GE Managers are really smart people who understand their businesses.  GE managers are committed to understanding and using financial metrics/data to improve the business, as opposed to the alternative, yet increasingly more popular management style which emphasizes using accounting gimmicks to fix the metrics/data while leaving the underlying business unaffected and/or languishing.  
3.) GE has been transitioning for a few years.  Non-Core businesses have been sold or are up for sale. NBC Universal, GE Capital Business Segments and now GE Appliances, etc.

Brief chronology of the GE Appliance Sale to Qingdao Haier Co., Ltd. (Haier) per the GE 10K:

During the third quarter of 2014, GE signed an agreement to sell its Appliances business to Electrolux AB for $3.3 billion. On July 1, 2015, GE was notified that the Department of Justice had initiated court proceedings seeking to enjoin the sale of Appliances to Electrolux AB. On December 7, 2015, GE announced that it had terminated its agreement to sell its Appliances business to Electrolux AB and would pursue other options to sell the Appliances business. GE received a break-up fee of $175 million from Electrolux AB.
On January 15, 2016, GE announced the signing of a definitive agreement to sell its Appliances business to Qingdao Haier Co., Ltd. (Haier) for $5.4 billion. The transaction has been approved by the board of directors of GE and of Haier, and remains subject to customary closing conditions, including Haier shareholder approval, and regulatory approvals. The transaction is targeted to close in mid-2016. 

Everyone wins!....Right?.....The DOJ was focused on protecting the American consumer from a presumed monopoly pricing, effectively killing the Electrolux purchase.  A month after killing the deal, GE announced a new agreement to sell the same business to Haier for $2.1 Billion more (A 63% premium to the Electrolux AB offer).   Everyone did their job flawlessly.  The DOJ protected the American Consumer.  GE generated a quick, additional $2.1 Billion for their shareholders and Haier gained a valuable foothold in the lucrative US Consumer Market and a respected US Brand.  Just like in our pre-financial crisis markets, the "invisible hand" seems to be operating perfectly.

The frequency and size of these transactions is increasing.   The game plan is always a variation on the following theme:  The Chinese Acquirer looks for a target business, using a US, Swiss or EU Investment Banks (USIB). The deal is structured and advised by a USIB and funding is provided (and usually syndicated) in US$ by USIB's.  The USIB sells off the risk and collects significant fees for doing the deal. The resulting securities are rated AAA and eventually find their way into Mutual Funds, Pension Funds and ETF's.

What We're Really Dealing With....

I believe it was Ronald Reagan, addressing a concern that Japanese Investors were buying up US Real Estate, specifically when he was told that a consortium had agreed to buy the Pebble Beach Golf Course, he quipped.... "Well...at least they think America is a good investment..."

Let me be clear.  "This is not that".  What's happening today is nothing like the market driven free flow of capital that began in the 80's, when freely-traded, floating, unrestricted currency had begun to find its way around the globe establishing a global, rather than local equilibrium for asset and business valuations.

As Ronald Reagan put it, America was, and has (almost) always been, because of our legal system, regulation, free markets and financial system, a preferred destination for global capital and a "good investment".

The following quote, is dubiously attributed to Mark Twain in the opening minutes of "The Big Short". For the purpose of this post, it's a perfect illustration of what's going on in global currency markets. The quote's origin is irrelevant.

"It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so."

When you are a financial manager, doing a deal virtually guaranteed to make a ton of money, it's difficult to see or even look for things that "just ain't so". US Businesses believe that they are taking the Chinese Investors to the cleaners when they accept an offer double what competing buyers are willing to pay.  Are Chinese business-people somehow able to generate synergies that no other potential bidder is able to realize?  Are they that much smarter than US Managers in a market they have no experience in?  Are US businesses somehow suddenly worth double simply because of who owns them?  Do these new Chinese acquisitions and their economic prospects skyrocket overnight? Would the SEC/DOJ step in and stop an arms length sale of a business when there are no apparent Anti-Trust or restraint of trade implications?  Of course not.

So why are these deals taking place at these prices?  For more than a year I've discussed the ramifications of China's facade economy, fake, nonsensical NBS Data and the steady stream of (allegedly) fraudulent IPOs and Bond Issues fueled by an artificially pegged "Monopoly Money" RMB which bears no resemblance to economic reality.  All of the aforementioned windfall sales of US Assets are happily facilitated by complicit US Investment Bankers, for size-able fees, of course.

Winners and Losers

Hypothetically, let's just say I'm right.  Let's say that at some point in the near future, market forces somehow bust the Renminbi peg and that the real value of the Renminbi , unsupported by intervention (or threatened intervention) of the PBOC is really closer to a nickel than fifteen cents. Of course, it's impossible to predict with precise accuracy the implications and timing of the fall of the Renminbi,  I can't do it.  Nobody can.  99% of the time, market behavior is rational and steady, and the other 1% or less (i.e. during crashes) it's a complex adaptive nonlinear system with sometimes unexpected, perverse feedback loops.  Things begin to move in very unpredictable ways.  Yet, I feel that this is a worthwhile exercise.  So....let's make some guesses.  Who wins and who loses?

Hypothetical Big Winners:

1.) China's elite.  They've been able to buy "real" assets at a net discount. If they can "get the hell out of Dodge" they'll be able to live a wonderful life in San Francisco, NYC or the Caymans.
2.) US & EU businesses who have goods manufactured in (Apple) and import goods (Walmart)  from China.
3.) Travelers allowed to visit China.  (presumably after the RMB is revalued there will be a new normal re: travel and financial transactions)......US$50 hotel rooms in Beijing and Shanghai would be wonderful if you're fortunate enough to get a visa!
4.) Hedge funds who understand what's happening.  They've made huge leveraged bets on the outcome of this scenario,  We just don't know who they are.
5.) That's about it.


Hypothetical Big Losers (This list is a little longer):

1.)  The hard working Chinese people.  Their work and effort will be worth a third of what it should be worth had China's financial architects not taken the path they did.
2.) US Investors.  Exchange traded assets will be revalued.  ADRs will be repriced.  Bond issues will be repriced and/or default.  The direct effect will be roughly $2 Trillion.  The liquidity effect multiplier could be virtually any number depending on how rapidly the revaluation takes place.
3.) Holders of Renminbi denominated collateral, specifically HK & EU banks (HSBC, Deutsche, Credit Suisse, Standard Chartered) who have significant interests in Mainland Real Estate Collateral.  When 90% of a project is financed and the underlying collateral takes a 66% haircut, the math no longer works.  
4.) Chinese Retail Investors.  Capital inflow will dry up.  Equity markets will collapse.  Loans will default, real estate values will be reset and life savings will be lost.  Tienanmen Square II?
5.) Hedge Funds.  There are huge leveraged Bets out there going the wrong way.  We just don't know who's swimming naked.   We'll find out only after it's too late to do anything about it.
6.)  The US retail Investor.  Those of you who continue to blindly plow a percentage of your paychecks into Index funds and Mutuals in the mistaken belief that US Stocks, like real estate, will always go up "for the long run".
7.)  The FED.  Once everything is revalued we'll need a TARP II (maybe even a three and four) to hold all of the troubled assets generated by yet another mess brought to us by the US Banking System.  Moreover, if all of this carnage takes place in a zero-interest rate environment, all bets are off as to what the FED might be able to do to support capital formation and keep the economy out of a recession/depression.  Quadruple M2, to keep up with the EU and China?  Negative 10% Interest Rates?
8.) US Investment Banks.  There will be a populist uprising (Bernie, Hilliary, Donald) to "break 'em up"...."close the borders"...."build a wall"...."get 'em outa here".  This time, someone might actually be going to jail.  Money will flow out of Wallstreet and back to Main street.  Capital formation will be crippled for years, perhaps decades to come.
9.) International Trade - There will be a political "Anti-China-Anti-Trade" backlash the likes of which we've never seen.  Like mortgages today, the cost of trade may actually drop....but try to get a mortgage (or a trade deal) done.  Similarly, the cost of Chinese goods will be next to nothing (plus freight), but the probable administrative, political, compliance and tariff costs and red-tape would likely increase geometrically.
10.) New York City, Bay Area and Silicon Valley Real Estate prices will correct/collapse.  Foreign money would dry up with a Renminbi revaluation.   No more vacations and second homes in America for rich Chinese. Alibaba, Yahoo and Softbank will all be gone, along with many of the Unicorns in the pipeline..  Bankers will have to find jobs  and move to the country's new financial centers, Chicago, Omaha, Denver, Atlanta and Cleveland (Ok....I admit Cleveland is a bit of a reach...but you get the drift).  $5 Million condos with a view of the Bay or the River will become a thing of the past and banks will be writing off/down mortgages at a pace that will make 2010 look like a walk in the park.
11.) The PBOC.  After loosing control of the currency and the Chinese economy, Chinese bankers will no longer be allowed unrestricted playtime in the global financial sandbox.

Well, that's it for today.  Of course, the above is all hypothetical based on myriad assumptions and best guesses.  As always, the above is not investment advice.  As an Investor, you should always do what you think best.  As for me. I'm going to hunker down and keep out of the fray, at least until I can confirm I'm wrong.  Obviously, I hope I am indeed dead wrong on all of this....but sadly, my track record on these impending disasters doesn't often, if ever, coincide with my hopes.





Syngenta - $43 Billion
http://in.reuters.com/article/syngenta-m-a-chemchina-idINKCN0VC19V

GE Appliance $5.4 Billion
http://money.cnn.com/2016/01/15/investing/ge-haier-appliances-sale/index.html

China Electronics Industry Fund - $30 Billion
http://www.nytimes.com/2016/01/09/technology/china-setting-up-fund-for-its-electronics-industry.html?_r=0

Deutsche Bank Assets - $3.8 Billion
http://www.nytimes.com/2015/12/30/business/dealbook/deutsche-bank-joins-retreat-from-china.html

Sharp Electronics to FOXCONN - $5.9 Billion  (As you read this you might think "Hey Foxconn is a Taiwanese company.  Please think it through.)
http://www.reuters.com/article/us-sharp-restructuring-idUSKCN0VD0CN?xid=nl_daily

Chicago Stock exchange - No Terms disclosed
http://www.chicagotribune.com/business/ct-chinese-investor-group-buying-chicago-stock-exchange-20160205-story.html

http://www.bloomberg.com/news/articles/2016-02-05/obscure-chinese-firm-dives-into-22-trillion-u-s-stock-market


Casin Group's offer comes amid an unprecedented overseas shopping spree by Chinese companies. Businesses from Asia's largest economy have announced $70 billion of cross-border acquisitions and investments this year, on track to break last year's record of $123 billion, according to data compiled by Bloomberg.

Alibaba Buys AGTech - $300 Million
http://www.bloomberg.com/news/articles/2016-03-07/alibaba-finance-affiliate-buy-h-k-firm-for-china-lotteries?cmpid=yhoo.headline

China Life buying CITI China Loan Business US$3 Billion  & IBM Credit for $550 Million
http://finance.yahoo.com/news/citigroup-raise-3-bln-guangfa-stake-sale-china-125045870--sector.html

Alibaba mulling over buying Yahoo! and Groupon
http://www.forbes.com/sites/dougyoung/2016/02/29/alibaba-raises-more-cash-yahoo-stake-in-sight/?utm_campaign=yahootix&partner=yahootix#57da60be24fd

Alibaba seeks $4 Billion Loan to fund acquisitions
http://finance.yahoo.com/news/alibaba-talks-several-banks-4-130713373.html
https://finance.yahoo.com/news/chinas-alibaba-says-agrees-3-000649613.html

Alibaba SEC Filing re: $B Loan Syndication
http://www.sec.gov/Archives/edgar/data/1577552/000110465916103882/0001104659-16-103882-index.htm

Alibaba.....spending spree on acquisitions
http://www.bloomberg.com/gadfly/articles/2016-03-10/too-much-cash-not-for-alibaba?cmpid=yhoo.headline


China Resources buying INBEV $105B & SABMiller $1.6B


Alibaba spends $12 Billion on Investments in 2015
http://finance.yahoo.com/news/jack-ma-expensive-lowkey-strategy-200423126.html

Dalian Wanda buying Carmike Cinemas - $1.1 Billion
(Dalian Wanda already owns AMC Cinemas making DW the largest theater operator in the US)
http://fortune.com/2016/03/03/amc-entertainment-to-buy-carmike-cinemas-for-1-1b/?iid=leftrail&xid=nl_daily

China's Shopping Spree - Ken Rapoza
http://www.forbes.com/sites/kenrapoza/2016/03/10/china-deal-makers-increase-spending-in-u-s/?utm_source=followingweekly&utm_medium=email&utm_campaign=20160314#4607a77ed816

China's State Owned $338 Billion VC Fund
http://www.bloomberg.com/news/articles/2016-03-08/china-state-backed-venture-funds-tripled-to-338-billion-in-2015

60 Minutes - Lawyers, Guns & Money - the US legal system is only too happy to facilitate the acquisition of US assets anonymously.....for a fee of course.
http://www.cbsnews.com/news/anonymous-inc-60-minutes-steve-kroft-investigation/

New York Times - Anonymous Ownership of high end real estate gone wild....
http://www.nytimes.com/2015/02/08/nyregion/stream-of-foreign-wealth-flows-to-time-warner-condos.html?_r=0

Forbes - Sports Teams - Football/Soccer
http://www.forbes.com/sites/ywang/2016/02/04/chinese-billionaires-invest-in-football-is-it-worth-it/?utm_source=followingweekly&utm_medium=email&utm_campaign=20160208#6035411b2181

Blackstone sells Hotel Portfolio to AnBang Insurance - $6.5 Billion
http://www.usatoday.com/story/money/2016/03/13/blackstone-selling-strategic-hotels-to-anbang-for-65b/81726894/

Where is all that Chinese Money Really Going?
http://www.forbes.com/sites/kenrapoza/2016/01/31/this-is-where-all-that-chinese-money-is-really-going/?utm_source=alertscalledoutcomment&utm_medium=email&utm_campaign=20160209#8e991017c649

Why China Doesn't Have a Trade Surplus
http://www.baldingsworld.com/2016/02/23/why-china-does-not-have-a-trade-surplus/

Gordon Chang - Commentary on Balding's World
http://www.forbes.com/sites/gordonchang/2016/02/28/china-ran-a-36-billion-trade-deficit-in-2015-says-peking-u-prof/?utm_source=followingimmediate&utm_medium=email&utm_campaign=20160228#d8258377cf04

Kevin Dougherty - Capital Contrils
http://www.forbes.com/sites/realspin/2016/02/25/china-capital-controls-confusion/#1d5d78742417

Chinese Losing Faith in their Currency - New York Times
http://www.nytimes.com/2016/02/14/business/dealbook/chinese-start-to-lose-confidence-in-their-currency.html?_r=0

PBOC Warns the Hedgies against shorting the RMB
https://larouchepac.com/20160215/pboc-warns-soros-gang-again

GE 10K
http://www.sec.gov/Archives/edgar/data/40545/000004054516000145/ge10k2015.htm

Towers of Secrecy - Time Warner Center & Foreign Shell Companies
http://www.nytimes.com/2015/02/08/nyregion/stream-of-foreign-wealth-flows-to-time-warner-condos.html?rref=collection%2Fnewseventcollection%2Fshell-company-towers-of-secrecy-real-estate&action=click&contentCollection=us&region=rank&module=package&version=highlights&contentPlacement=1&pgtype=collection&_r=0

4 comments:

  1. …and monopoly transactions to go with the monopoly money….


    China CCTV Raps Fake Sales on Alibaba -- Update
    Today 9:07 AM ET (Dow Jones)Print
    By Kathy Chu and Laurie Burkitt

    After criticizing foreign companies from Apple Inc. to McDonald's Corp. in past years, China's powerful state broadcaster has taken aim at Alibaba Group Holding Ltd., ramping up pressure on the e-commerce giant to tackle fake sales on its shopping platforms.

    In a two hour, prime-time broadcast Tuesday, China Central Television said faking orders, or "brushing," as it is called in China, remains widespread on Alibaba's largest shopping platform, Taobao. The practice--which involves sellers paying people to place fake orders--pads vendors' sales figures and boosts their standing on online marketplaces.

    An Alibaba spokesman said the problem plagues e-commerce sites globally and that Alibaba "is continually upgrading our technology to better detect and identify these practices."

    The CCTV report comes at a time when Alibaba also faces criticism from some Western brands that it isn't doing enough to crack down on counterfeit goods on its platforms. Last week, the company's co-founder, Jack Ma, told hundreds of Alibaba employees that the company would spare no expense in ridding itself of counterfeits.

    Critics say the fake sales call into question the volume of transactions conducted on Alibaba's platforms, a metric that has been cited by analysts in declaring that the Chinese company is the world's largest e-commerce platform. Alibaba counters that it uses sophisticated tools to identify and exclude fake transactions from its financials.

    ReplyDelete
  2. HHHAAA!!!.....I'm sure Jack is doing his best.....though I don't understand why you'd need sophisticated technology to catch containers of "Gucci, Prada, Dior and Chanel Bags" and "Canadian Whiskey" shipped from China....but I'm sure it's priority one.....LOL (Jack....This was a joke....you are a public figure....no need to call the lawyers....just publish the real numbers in your SEC filings...generally, the truth will set you free....or in your case, maybe not.)

    http://www.alibaba.com/product-detail/China-manufacturer-supply-best-whiskey-in_1752048148.html?spm=a2700.7724838.0.0.uedJQB&s=p

    http://www.alibaba.com/product-detail/Used-designer-genuine-leather-handbag-popular_173131707.html?spm=a2700.7724838.0.0.uHhU4N

    ReplyDelete
  3. I can tell you from personal experience the "brushing" problem is way worse than people think! I will share with you a story how it works....... My wife and I have a company that sells on the Taobao platform. Our biggest vendor was a Canadian supplier. After building the brand up they decided to switch from us to a "local" Chinese agent (we are in HK) that promised to build a local network that didn't rely on Tabao sales (yes, most of us over here and a lot of overseas vendors know it's all horse hockey). This was enticing to the vendor that thought they were going to get a national distribution system in China.

    Fast forward three months. In late February my wife searches Taobao For the brand in question. We had always been one of the only sellers and were still carrying inventory. Winter is the slow time of year for this brand. We come to find that the new "agent" has a Taobao site and remarkably their sales were 20 times higher than ours! This is beyond statistically impossible. There was no way that consumers would suddenly purchase from this new seller. They literally faked hundreds of transactions. My wife literally went through each transaction and could figure out that no of the consumers had ever purchased from us, and more remarkably, never really made any Taobao transactions. How is that even possible? The brand I am talking about is a micro brand and yet in three months this Taobao shop which was open for one week had created an enormous market out of thin air!

    One last thing, another very undertold story is that Taobao is the main platofrm for smugglers. Chinese that live in the US open companies and purchase goods from US vendors at great prices. They turn around and ship those goods to relatives or friends in China who then sell it at discounted prices on Taobao. IMO, this problem is more widespread than fake goods being sold. And yes, we've been a victim of that as well!

    ReplyDelete
  4. http://www.zerohedge.com/news/2016-03-31/reason-anbang-pulled-starwood-offer-it-couldnt-demonstrate-it-has-funds

    uh oh.......

    ReplyDelete