Chinese Businesses Busted in Russia and North Korea

A Zhejiang businessman asked the central government to intervene when his forest harvesting farm was confiscated by the Russian government.

Mr. Fu Jianzhong a forest farm in Russia in 2003. According to the news report by 21CN, Mr. Fu obtained the operation of the farm through a stock transfer (no money involved). A RMB 230 million ($40 million) loan from the Chinese National Development BanK was used to improve infrastructure. At the same time, due to price change on the international market, value of the farm raised from RMB 7 billion ($1.2 billion) to RMB 15 billion in 3 years.

Fu's trouble started when a driver was stopped for stealing stock from another farm. The Russian authority found the driver worked for Fu's farm. Fu disputed the accusation. Four more charges were thrown at Fu's farm, citing varies violations in operation. Russian taxation authority forced a bankruptcy because of back taxes.

Within a few month, Fu was severed from the farm, and as a result, 'Ten Billion Estate Vaporized.'

This incident mirrored a case in North Korea. Mr. Zhou Furen claimed he lost RMB 240 investment in a mine he operated in North Korea, after the mine was taken over by the Korean government.

Zhou signed a contract with a Korean firm in 2006 to set up a joint venture. Zhou holds 75% share with technology, management and cash valued Euro 36 million. The Korean side gets 25% with mine valued Euro 12 million.

The project was completed in April 2011. One hundred fifty Chinese workers worked along 500 Korean workers. Projected revenue was RMB 5 billion per year.

Things turned the opposite way in June, when the Korean side piled up new fees and profit sharing demands. When Zhou attempted to fight back with suspension of production, Korean workers who had already learned the rope restarted the mining on their own.

Korean authorities accused Zhou's venture started operating without many required approvals. Also, many documents including contracts and approvals were forged. Zhou disagree with the findings, but said it would be impossible to prove one way or the other due to the gray area in which his company was operating because of Korea's political status.

Both cases took place in extreme high-risk areas where corruption are abundant under volatile political systems. Both cases involved natural resource that Chinese business obtained at unreasonable low price. Mr. Fu paid literally nothing for a forest farm worth in his own words US $2.5 billion. Mr. Zhou paid some labor cost and electricity bills for a mine which in his own words could bring US $900 million net profit a year. In both cases, the companies were taken away by foreign governments moment after they were fully operational. In both cases, the accusations employed by foreign governments were shady at best, but the Chinese businesses still had trouble to prove their own innocence.

Now, the billion dollar question is: what are they complaining about?

Russian Navy Sank Chinese Cargo Ship

According to Russian media, a Chinese cargo ship was sunk by the Russian coast guard. New Star, the Chinese cargo ship left Russian port of Nakhodka before obtaining permission from the port authority. The Russian warship fired at least 500 rounds and sank the cargo ship into the sea.

The Chinese media held the story until a Sino-Russia oil accord was signed. China will providc $25 Billion loan in exchange of privileges of importing oil from Russia in the next 25 years.

Russian media alleged smuggling goods, but later clarified the cargo ship did not carry any smuggling goods. Russia stated the firing was legal and had been authored by higher authority. However, they would investigate the accusation that Russian warship did not make any effort to rescue drowning sailors during a period of 24 hours after the cargo ship issued a distress signal and started sinking.

Hong Kong based ship owner issued a statement, revealed that the Russian port would not release the ship without a kickback. Ship owners to Russia always faces the choices of bribing the port authority, or paying $10,000 port fee for each delayed day. Some chose fled Russian ports, but this is the first case when a cargo ship was sunk by Russian warships.

Seven Chinese sailors are assumed dead.

Women Change World

A woman changed the world - what did Secretary Rice tell Georgia on July 10?

US Secretary of State Condoleezza Rice visited Georgia on July 10, 2008. Rice met Georgian President Saakashvili, and discussed issues of Georgia's perspective in NATO and South Ossetia separatism.

South Ossetia is a autonomous republic within Georgia, across the Russia-Georgia border to the North Ossetia, part of Russia. Based on a truce agreement between South Ossetia and Georgia made in 1992, Russia keeps a peace keeping force in South Ossetia. More than 70% of the South Ossetia citizens hold Russian citizenship.

What happened after this was history.

On August 8, 2008, Georgia military bombarded Russian peace keeping forces and seized the capital city of South Ossetia despite resistant from local militias. One thousand of five hundred residents were to die in the very first day of this war. At the time, Russian Prime Minister Vladimir Putin was in Beijing watching the opening ceremony. As anyone can expect after the Bear is awakened, Russian President Dmitry Medvedev ordered counter attack. Russian Tanks rolled into Georgia, with Russian bombers bombed military targets across entire Georgia. It has been reported that up to 7000 Georgian soldiers had been captured out of the total of 27000 strong army. Georgian military withdrew from the capital city Tskhinvali. In diplomatic field, Georgia President begged Russia for an immediate truce.

What did Rice tell him?

An Independent Taiwan Benefits China in the Long Run

The Chinese ambassador to Russia, Mr. Liu Guchang told Hong Kong based Phoenix TV in a recent interview that although new changes in the Russian immigration laws hurt some Chinese business, it will benefit to China in the long run.

Russia revived their immigration laws so that foreigners could no longer work in the retail sector. Currently, there are about 100,000 Chinese business people working in the retail sector. They will have until April to liquidate their stock and back China. Many faces bankruptcy while others loosing whatever they have.

If this will benefit the Chinese traders, then an independent Taiwan will also benefit China in the long run.