...the press continues the now popular assault on the business practices and "creative accounting" endemic to Chinese firms. I continued to be amazed that all of this was either ignored and how the investment world got caught up in this bubble.
First, the African problem (from The Economist)
Once feted as saviours in much of Africa, Chinese have come to be viewed with mixed feelings—especially in smaller countries where China’s weight is felt all the more. To blame, in part, are poor business practices imported alongside goods and services. Chinese construction work can be slapdash and buildings erected by mainland firms have on occasion fallen apart. A hospital in Luanda, the capital of Angola, was opened with great fanfare but cracks appeared in the walls within a few months and it soon closed. The Chinese-built road from Lusaka, Zambia’s capital, to Chirundu, 130km (81 miles) to the south-east, was quickly swept away by rains.
Business, Chinese style
Chinese expatriates in Africa come from a rough-and-tumble, anything-goes business culture that cares little about rules and regulations. Local sensitivities are routinely ignored at home, and so abroad.
Continuing on to creative accounting...
By FLOYD NORRIS
Published: May 26, 2011
To pull off a fraud that humiliates the cream of the global financial
elite, you need to have some friends. And where better to have them
than at the local bank?
The fraud at Longtop Financial Technologies, a Chinese financial
software company, was exposed this week in an amazing letter from its
auditors, Deloitte Touche Tohmatsu. It appears to be a tale of corrupt
bankers and their threats to auditors who had learned of the lies.
Deloitte, which had given clean audit opinions to Longtop for six
consecutive years, apparently was well on its way to providing a
seventh, for the fiscal year that ended March 31.
But for some reason — Deloitte did not say why —the auditor went back
to Longtop’s banks last week to again seek confirmation of cash
It appears Deloitte sought confirmations from bank headquarters,
rather than the local branches that had previously verified that
Longtop’s cash really was on deposit. And that set off panic at the
“Within hours” of beginning the new round of confirmations on May 17,
the confirmation process was stopped, Deloitte stated in its letter of
resignation, the result of “intervention by the company’s officials
including the chief operating officer, the confirmation process was