Re: Pentagon and Oil

[Marvin Gandall <marvgandall@xxxxxxxxxx>]

Louis Proyect wrote:

> michael perelman wrote:
> > Today's Wall Street Journal has a relatively sympathetic front page
> > article about the Hubbert peak theory.
>
> It also has a fascinating article on the Chinese government giving the
> boot to an open air market just to keep Westerners happy. Vendors were
> selling bootleg copies of just about everything. It also turns out that
> the CP official who is pushing for the eviction will profit from sale of
> the land presently occupied by the bazaar. I actually bought the WSJ
> this morning to read the piece on oil, but there's other useful stuff as
> well--including the items Michael and Marvin posted. Maybe Marvin can
> post the item on China as well.
--------------------------
Fascinating, yes. It's thrown me into a crisis of confusion. I've never had
to consider supporting Chinese "merchants" against the Communist Party --
where the US sides with the CPC, no less... :)

MG


Why Beijing Vendors Who Built Silk Alley Feel Hung Out to Dry

As Outdoor Market Prospers, City Is Moving It Inside; Piracy and Conflicts
Swirl By PHIL TINARI Staff Reporter of THE WALL STREET JOURNAL September 21,
2004; Page A1

BEIJING -- Zhu Dingya, a merchant in Beijing's Silk Alley, sees himself as
one of China's first entrepreneurs. When he quit a steady job with the
Beijing No. 1 Construction Co. to open a stall selling silk clothing and
curios to tourists in 1984, he says, "My family was so upset they didn't
speak to me for a year."

That didn't stop him, or 147 other merchants, who in two decades have built
Silk Alley, an open-air market of makeshift stalls abutting the U.S. Embassy
in Beijing's diplomatic district, into one of the city's most popular
tourist destinations. Each day, an estimated 10,000 visitors squeeze into
its crowded passageways to search for bargains on knockoffs of top designer
labels, including fake Prada handbags, North Face parkas and Ralph Lauren
polo shirts. The market generates tens of millions of dollars in sales each
year.

Now a plan to tear down the strip and move the stalls indoors to a new
high-rise mall next door has ignited a battle over Silk Alley's future. The
fight pits Communist Party apparatchiks and developers who hope to profit
from the move against the market's 148 merchants, who complain they're being
forced out of a business they created. Also weighing in is the U.S. Embassy,
which views the move as an opportunity to nudge China to crack down on the
sale of counterfeit and pirated goods.

The Silk Alley tiff highlights the perils that face many business ventures
when they grow too big or successful in China's go-go market economy:
Everyone wants a piece of the action.

Crowds make their way past stalls at Beijing's Silk Alley, popular with
tourists for inexpensive knockoffs.

"We built this place with our sweat and blood, and now they want to take it
away," says Mr. Zhu. An auction for space in the new mall made headlines in
early June when five-year leases on some six-square-yard stalls went for as
much as about $477,000, making it some of the most expensive commercial real
estate in China. Few of the current vendors in the outdoor market bid on the
new space. "First, we can't afford it. Second, it's not right," says
58-year-old Zhang Xiuqin, who has teamed up with Mr. Zhu to mobilize
merchants against the closing of the outdoor market. After paying taxes and
fees, Mr. Zhu and Ms. Zhang say their Silk Alley stalls generate income of
about $600 per month -- enough to put them squarely in the middle class but
not enough to pay for a spot in the new mall.

The tussle over Silk Alley's future has kicked up boisterous public hearings
and exposés in the local press uncovering conflicts of interest. One
controversy surrounds Guo Liwen, the Communist Party head of the
administrative office that oversees the market. Ms. Guo and her allies have
branded the outdoor stalls illegal and decried them as a fire hazard to the
local press, while touting how the new mall will "raise up the Silk Alley
brand."

Ms. Guo's critics allege that she also stands to gain personally. She is a
shareholder in both the property-management company that will collect rent
for the new market's developers, and in the company that has registered a
trademark for the market's Chinese name. That company has licensed the Silk
Alley brand to the developers. Ms. Guo's office declined to comment on the
matter.

Silk Alley already is a cash cow for the tiny subdivision of the city
government that Ms. Guo runs. It collects $600,000 in management fees and
$1.3 million in taxes each year from the vendors. But a new market could
generate even more. When completed at year end, the new mall will be able to
house more than 1,000 stalls, nearly triple the current number, and also
sell jewelry and antiques.

The private merchants allege that Ms. Guo and her allies want to demolish
the current market to make room for large buses that will deliver tourists
directly to the new mall from hotels.

In June, a local party office announced that it would hold a hearing on Silk
Alley's future but canceled it at the last minute when it became clear that
angry merchants and representatives from the U.S. Embassy wanted to be
heard. Instead, it held a closed meeting of government officials. "A hundred
merchants showed up, but they wouldn't let us enter," recalls Mr. Zhu, who
eventually elbowed his way inside but wasn't allowed to speak.

But someone else spoke up for the vendors, a local legislator named Li
Jiantong. "You can't say the market is illegal," he scolded. "It conformed
to every standard when it was first built." Mr. Li should know: In 1985, as
an official in charge of the district, he personally approved the
establishment of Silk Alley. He put it more bluntly: "The government should
not be wiping the b-t of this developer," he quipped, a line that Beijing
tabloids reported with delight.

The U.S., meanwhile, sees the squabble as a platform to debate the ethics
and legality of allowing the sale of counterfeit goods, an issue that some
charge China has been slow to address. In July, the U.S. Embassy issued an
open letter saying it expects that any decision regarding Silk Alley's
future will consider "the decision's symbolic statement regarding China's
commitment to intellectual property." The embassy declined to elaborate. But
Joseph Simone, a partner at Baker & McKenzie who is advising the embassy on
the issue, is more direct. "People say the market is fun, but hey, they
could say the same about prostitution. What these people are doing is
illegal," he says.

A recent study commissioned by his law firm put the daily sales value of
counterfeit goods at between $181,159 and $301,932, or more than 90% of the
market's revenue.

The U.S.'s opposition has confused the vendors. "Most of our customers are
Americans," says vendor organizer Ms. Zhang. Among them: former U.S. Trade
Representative Charlene Barshefsky, once the country's top official in
charge of fighting piracy, who in 1998 surrendered at U.S. Customs 40
pirated Beanie Babies, which she had bought at the market.

The final fate of the original Silk Market remains unclear, awaiting a
decision from the district government. Every Thursday before dawn, merchants
arrive at the district government office to wait in a long line of aggrieved
citizens to voice their complaints.

Ms. Zhang has even imprinted the question: "Do You Like the Silk Alley?" on
scrolls of cotton, and invited customers to leave their opinions. "YES!"
scrawls one shopper. "I love the Silk Alley and hope it never moves inside."

Meanwhile, tourists continue to flock to the market. On a drizzly morning
adjacent to the new Silk Alley's concrete-and-steel shell, Los Angeles-based
sculptor Fred Maslavi spent almost $10 for a white "Tommy Hilfiger" sweater,
half the price initially offered by the vendor. It was Mr. Maslavi's third
trip to Beijing, and he made sure to stop again at Silk Alley.

"I've been to indoor markets, but this is different," he says. "If Silk
Alley turns into an indoor market, then it would be just like all the
others."

--Cui Rong and Kersten Zhang contributed to this article.

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