The High Price of Digging Up Dirt in China

Canadian stock analyst Kun Huang has been locked in a Luoyang, China, jail for more than a year, charged with defaming a Canadian company whose shares trade on the New York and Toronto exchanges. In 2011, a report circulated by Huang's hedge-fund employer alleged that ore samples from a mine run by Silvercorp Metals tested low for silver content.

The researcher is one of hundreds that Chinese media say have been rounded up since May 2012 for helping foreign investors check out U.S.-listed Chinese companies, or for conducting the due diligence required of multinational corporations by their home countries' antibribery laws.
Chinese television recently broadcast the handcuffed image of well-known fraud investigator Peter Humphrey, a Brit accused with his American wife of accessing state records in the course of background checks performed by their Shanghai-based firm, ChinaWhys, on dozens of Chinese businesses -- including Silvercorp (ticker: SVM). 

Investigators like Huang and Humphrey helped expose unflattering evidence on companies listed here via the back-door maneuver known as a "reverse takeover" -- inspiring a wave of short-selling, delistings, and fraud charges by U.S. regulators.

Astronomical Myths of Mercury & the Sun

The following has been taken from a post by Wal Thornhill, one of the proponents of Plasma Cosmology:
Myth No. 1. Mercury’s motion is convincing evidence for Einstein’s general theory of relativity.

Myth No. 2. We can use Newton’s law of gravity to determine the mass of a celestial body and from that its density.

Gravity is a weak manifestation of a dipolar electric force between distorted subatomic particles. The distortion is a sum due to the presence of matter in the rest of the universe. Empirically, we observe subatomic particles accelerated in an electric field apparently gaining in mass. That apparent mass increase is not due to the particles’ motion but the absorption of energy in the form of particle distortion instead of acceleration. So the mass of a body is an electrical variable!

Myth No. 3. The solar system was formed in a single gravitational collapse event of a widely dispersed cloud of gas and dust, 3.7 billion years ago. The solar system has no recent history.

Stars are formed in an electrical Z-pinch at the intersection of cosmic ‘power lines’ or Birkeland current filaments.

Myth No. 4. Radioactive dating can give reliable estimates of the ages of rocks. The solar system is 3.7 billion years old.

Radioactive dating relies on a planet being essentially a closed system since shortly after its formation. However, powerful plasma discharges are a copious source of neutrons, which can introduce radioactive species to planetary surfaces. Matter is also irradiated and transferred between planets by cosmic discharges. Radioactive ‘clocks’ cannot be relied upon under such circumstances.

Myth No. 5. The Sun evolves over time as a result of consuming itself in a central thermonuclear furnace.

A star is not just a fancy version of the old ‘campfire in the sky.’ It is not self-immolating. A star’s size and appearance are a plasma discharge phenomenon, the discharge being powered externally via galactic circuits. That is the simple explanation why the Sun’s corona is millions of degrees hotter than its surface. As commonsense would dictate, stars are chemical element factories, producing in their intense photospheric plasma discharge all of the heavy elements observed in their spectra. Stars may therefore change appearance and apparent age at any time in response to their environment and in some instances have been observed to do so rapidly.

Myth No. 6. Mercury was formed where we find it today.

Mercury had nothing to do with the Sun in its early history. Mercury was never twice the size. All planets and moons are born fully formed from their parent body — usually a flaring dwarf star (or gas giant planet). The birth process involves intense plasma discharging between the parent and its departing newborn satellite, which modifies the infant’s atmosphere and ‘spark etches’ the surface electrically, forming circular craters and distinctive Lichtenberg figures of canyons, or rilles.

Myth No. 7. Planets collide mechanically.

Modern astrophysics has degenerated into computer games based upon mechanical and gravitational concepts that are a century out of date. That is when Kristian Birkeland, in his brilliant but little known Terrella (little Earth) experiments, electrically modeled auroras and many other phenomena seen on the Sun and in space. However, the space age discovery of magnetic fields and charged particles (plasma) permeating space has not changed thinking one iota. Electricity is rarely mentioned except to say that “it does nothing” in space. Yet recently the magnetic field tracing the circuit between the Sun and our auroras was discovered. All bodies in the solar system are electrically charged. Asteroid-like objects do not simply “collide and coalesce.” The smashing scenario suggested is entirely imaginary.

Collisions are generally avoided. Before mechanical contact can be made, electrical exchanges will occur. This is particularly so for large bodies. It is the missing element in explaining why planetary orbits are so circular. It is the missing element in all fanciful renditions of an asteroid or comet collision with the Earth. The Tunguska explosion in Siberia is an example where the incoming bolide was destroyed in the upper atmosphere by discharges from the ground.

Myth No. 8. Planetary magnetic fields are generated by a hidden ‘dynamo’ in the core.

A rotating charged body will produce a dipolar magnetic field. Scientists discard this simple explanation because it is calculated for the Earth that the moving charge would have to constitute a current of a billion Amps, which implies a tremendously strong electric field at the Earth’s surface. But this simple electrostatic argument fails in a plasma environment. The electric field at the Earth’s surface reflects merely the difference in voltage between the Earth and its plasma sheath at the magnetospheric boundary with the solar wind. Like a bird sitting on a high-voltage transmission line, we are unaware of the electrification beneath our feet.

Comment: Since gravity is a property of matter, which in turn is an electrical phenomenon, Einstein’s hyper-dimensional geometry is not going to reveal the true nature of gravity whether general relativity gives the right answers or not.
Read his full post here:

Chinese Reciprocation of Foreign Generosity

In the 1970's, Americans moved to China to provide helpful support like free courses on several topics. Many Americans funded the compassionate initiatives, including the Federal Government, in order to help the Chinese raise from their dire situation. For many decades, Americans were very generous towards the Chinese. Now, the Chinese are reciprocating such generosity in several ways:
  • They are stealing American research through state-sponsored hacking. 
  • They are stealing American properties through state-protected frauds. 
  • They are stealing American technology through misleading laws. 
The Chinese have strong envy tendencies. They envy the American standard of living. They are specially envious of White Americans. Such envy motivates spiteful actions against Americans. They will lie, steal and blackmail Americans. For them, the best deal is one where you give them something in exchange for nothing. Nowadays, they feel highly successful since they have been able to obtain industrial know-how, technologies and money at almost no cost for them. Furthermore, they are very happy to see America in trouble. They are rejoicing about America's economic and social problems, and the federal government incompetence at protecting its own citizens from the detriment promoted by the Chinese state. And the Chinese nation alongside its state will continue to pull the rug out from under the Americans, who are not being protected by their federal government. From their point of view, the Chinese state and its citizens are at war with America (and Europe). And they will continue to obtain a benefit at America's expense for as long as they can get away with it.

So why are the Chinese causing Americans harm after Americans helped them get back on their feet? Since those early beginnings in the late 1970's, the Chinese perceived such American generosity as weakness. And, like the dog who bites the hand that feeds him, they seized the opportunity to dominate over what they believed to be weak masters, instead of seeing them as generous collaborators.

The moral of the fable is: If you give a Chinese a hand, he will eat your arm.

The Shaving Cream Racket

Why don't people know this? It's just part of the lost knowledge of our time. Wean yourself from it for a week, and you will find that your shaves will be closer, unbloody, and quick. Imagine a full shave in less than a minute, with no cuts, gashes, or discomfort. It is within your grasp.
In fact, it is not our protector. Shaving cream is destroying your skin, turning it into a whining, pathetic, dependent, beaten, insipid layer of pasty pulp. Your skin has become the fatted calf that has been killed, the lamb slain on the altar, the virgin sacrificed in some ancient cannibalistic ritual of an uncivilized people.
The core problem is shaving cream itself, and the solution is a radical one: throw it out and never buy it again. It is destroying you and making your skin weak and sickly. 
The first stage of freedom uses only a razor (double blade is fine) and a bit of baby oil or mineral oil. While in the shower or soon after you get out, put some oil on the skin area you want to shave. Then shave it. The end. 
After a week, you can even give up the oil and use only warm water. You will find that you will be able to shave ever more swiftly and with ever more abandon. A man can shave his whole face in 20 seconds without a single abrasion.

Chinese State Increases Protection To Fraudsters

The Chinese are a nation of embezzlers. They have become wealthy not due to hard work, but due to theft of foreigners' assets by embezzlement. Once foreigners leave with their assets from that cunning country, and therefore, there is no more property to steal from foreigners, the Chinese will, once again, defalcate each other and send its nation back to poverty. In the meantime, the Chinese state will continue to protect the ill gotten wealth of its citizens by imprisoning investigators who use public records to reveal the extent of rottenness underneath the phony propaganda:
In retaliatory crackdowns, one in May 2012 and one in January 2013, more than 1,000 local investigators and their alleged sources each time were detained, according to Chinese media.
Since intimidation has not been enough, the Chinese state decided to conceal the lies of Chinese "businessmen" by blocking access to what used to be public records:
In January 2013, forensic and investigation firms -- and local law firms -- found that they or their search agents could no longer freely access records filed with the Administration of Industry and Commerce (AIC) bureaus around the country. The AIC registers, incorporates, inspects and regulates all companies in China, and collects their annual returns. These records, until recently accessible in full, contain useful data and documents relating to the birth, evolution and status of a company, names and personal details of shareholders, annual financial data and annual audit reports.
And in February 2013, the Chinese state fully blocked access to such public records by relabelling them “personal information." Now, it will be even easier for the Chinese to steal cash funds, brands, fixed assets and whole companies from foreigners. And if that is not enough incentive for the Chinese to continue embezzling foreigners, the Chinese state has also guaranteed to continue its policy of dismissing lawsuits by foreign victims and imprisoning their investigators, so that stolen wealth has full protection.


After Losing Money In China, Danone Returns To Lose Even More

In 2005, Danone found out that Zong Qinghou, Wahaha's chairman, was running a parallel operation outside their joint venture that was stealing hundreds of millions of dollars from the partnership. In 2007, Danone realized that, in collusion with the Chinese state, Zong also stole the Wahaha brand from them. In 2009, Danone left the partnership after being extorted to sell its 51% stake in the $11 billion business for just half a billion.

But Danone CEO Franck Riboud has decided that they have not lost enough and they should go back to China because they "are quite nothing in Asia." So they are throwing away $417 million to "invest" in Mengniu. In addition, Danone will provide their yogurt know-how to the Chinese. In essence, Danone is paying Mengniu to take Danone's yogurt know-how. They might as well give their know-how away for free. Niu Gensheng can't be happier as the French has fallen, once again, into another Chinese scheme, which will only benefit Mengniu and bring ruin to Danone.

A Nature Journal Gets Conned By The Chinese R&D Center Of GlaxoSmithKline

Nature Medicine, which is one of the journals of the reputable Nature Publishing Group, published in 2010 an article which contains data fabricated by the Chinese R&D Center Of GlaxoSmithKline and the Department of Neurology of Baylor College of Medicine. The pseudoscientists who collaborated in the fabrication of such article are Chinese, including the one who works for Baylor College of Medicine.

The Chinese have managed to create the illusion that they are more intelligent than Americans or Europeans. And such illusion is driving Western companies to establish R&D centers in China. Eventually, those companies will realize that their Chinese employees are uncreative plagiarists who thrive on theft and deception. And when that realisation happens, they will close their research centers and leave that cunning country forever.


Fraud At The Hong Kong Mercantile Exchange

When prices fall, frauds arise. This time, after the price of precious metals have fallen significantly, the deception at the Hong Kong Mercantile Exchange became evident. The fraud consisted in overstating the Exchange's cash balance, which was being used by Chinese insiders to speculate in the price of gold and silver. When such bets didn't go their way, the amount by which the cash balance was being overstated became too wide to keep concealed any longer, as its cash funds were too low to keep the Exchange operating. And thus, the money was "vaporised," à la Corzine.

The insider fraudsters speculated on a daily basis with the Exchange's cash but closed their positions at the end of the day. That's the reason why the daily volume increased every month whilst the open interest decreased every month. In 2011, the average daily volume was 4,229 for the 1 kilo gold futures and its year-end open interest was 772. In 2012, the average daily volume was 5,042, but its year-end open interest was just 112.

As most Chinese frauds, this was a multi-year operation. The reason these frauds take so long to be uncovered is not because of fraudsters' ingenuity, but because of victims' gullibility, who keep funding the fraudsters' operation. Among those involved in this fraud is its chairman, Barry CHEUNG Chun-yuen, who will never be charged of any wrongdoing, as he is an associate of LEUNG Chun-ying, Hong Kong's head of government. Thanksfully, the funds of both hedgers and speculators were not stolen, but this was not because they didn't want to steal them, but because they couldn't: the Exchange didn't have a clearing house of its own since LCH.Clearnet was clearing trades for them.

Unsurprisingly, this is not the first time a Chinese futures exchange goes bankrupt due to fraud. In 1987, the Hong Kong Futures Exchange (HKFE) closed its doors due to a margin fraud perpetrated by Robert NG Chee Siong, the chairman of Sino Group. As it happened, the perpetrator was rewarded with HKD 500 million, which were raised from taxpayers by the government of Hong Kong to rescue the Exchange. Simultaneously, the Hong Kong Stock Exchange (SEHK) was also rescued by the government, but it required a much larger amount: HKD 4 billion.

By the way, it is a matter of time before the London Metal Exchange suffers a premeditated "vaporisation" of its clearing house funds at the hands of its new Chinese bosses: the Hong Kong Exchanges and Clearing, which also owns the HKFE and the SEHK. But the likelihood of fraud at futures exchanges managed by Chinese presents an opportunity for American and European futures exchanges to offer competing products such as futures on the MSCI China index and the like. Offer them, and they will come.

All That Glitters In China Is Probably Fake

An American entrepreneur moved to China to start a franchised service business. As it turns out, things didn't go out as he expected. This is his story:
Six years ago I moved to China and within five months of arriving I was screwed out of $280,000 in a a Mr. GoodWrench franchise scam. Since then I follow all the scams that are the best disguised frauds with the most clever chinese cheaters I have ever come across. These sleaze have everyone on the take - the bankers, the cops, shills, singers, etc. I'm ashamed to say this but I am a retired military MP and although I'm no rocket scientist, I graduated cum laude from BYU. 
But some serious advice, if you're thinking of doing business in China - look elsewhere. In this country, if you're not fast, you're lunch. The stress of always being on the defensive is enough to make Mike Tyson paranoid. Everyone of my foreign friends here got scammed - one way or another. Even if the cops find and arrest the slime, a $2,000 bribe gets them released and a $10,000 bribe gets the judge to dismiss the case! My hobby is scuba diving and I have swam amongst many sharks in the ocean. But it is the mainland Chinese sharks that scare the hell out of me - not those in the sea.
He suggests reading this weekly column, which, by the way, is no longer being published. Nevertheless, you can find their previous articles here.


Canadian Expat On China

A Canadian expat shares his observations of the Chinese:
It has been my consistent experience that foreigners are viewed locally as resources to be exploited, by right of skin color, ethnicity and location of birth. This incident, one of many, has in no way altered my opinion.
Perhaps of most interest; we were discussing the myriad ways by which the Chinese take financial advantage of Westerners (through dishonest and illegal contracts and outright lying and cheating), when she came up with the comment that she felt Chinese were more intelligent than Westerners, by virtue of their ability to ‘outsmart’ them in business dealings. Needless to say, I merely nodded and smiled.

Chinese State Attempts to Hack Muddy Waters' Google Account

Muddy Waters gets notified by Google about attempts by the Chinese state to hack their account on June of last year.

Warning: We believe state-sponsored attackers may be attempting to compromise your account or computer.

Block Gives Up on China Shorts, Says State Protects Fraud

Carson Block, founder of Muddy Waters LLC, said he’s lost interest in betting against Chinese stocks and speculates the government is protecting fraudulent companies.
“China has gotten harder in the sense that the government has really taken the side of the fraud,” Block said in an interview on Bloomberg Television’s “Market Makers” program today. “The government is working with a number of these companies to try to conceal records that are public. When you are up against that sort of strength of the ability to revise history, it becomes difficult. That is one of the reasons we’re not that interested in China anymore.”

Indian Entrepreneur on China

An Indian software entrepreneur recognized the crooked nature of the Chinese nation about 10 years ago.
When I read the news on how Alibaba and Ja Ma are cheating Yahoo and just robbing its partners (Y! and Softbank), I am LEAST surprised. Its the nature of everything Chinese to CHEAT. I have had a 5 year hands on experience working and living (intermittently) in China. Mobile2win was a Company that we set up in 2001 that was LUCKILY acquired (by Disney) in 2006. Produced are excerpts of my writings on my experiences in China with links to the articles for further reading. If you want to do business in China - do so on your own RISK. It will be like writing your own death certificate.
And this is part of his commentary:
In 2002 in Seoul, I met the CEO of Actoz Software - the global pioneer of massive online multiplayer games. In 2001, he had (unfortunately) licensed his game to a Chinese online games Company that very quickly cheated Actoz by duplicating their game and also not paying Actoz the committed royalty payments. This Chinese Company grew very fast and became a giant and also listed on the Nasdaq. Its valuation today is U.S $2.5+Billion [Shanda Games]. Believe it or not, it also bought Actoz out at throwaway valuations since they had anyway bankrupted the tiny Company.
This philosophy perfectly reflects China. Having stayed there for months in between 5 years, built and sold a company, it's all about taking advantage of people, being very short termist, trying to make a quick buck and then quickly retracting if needed. As the ex Indian co-founder of my Chinese Company brilliantly put it once to me ' Alok! In China, the folks can't understand WIN - WIN - it means that you have something you shouldn't have... for them it's always WIN-LOSE - and they want to win and make you lose'.

Global List Of Chinese Stock Frauds

The Chinese stock frauds are not exclusive to the United States. They have been happening in Singapore, Hong Kong, United Kingdom and Germany. Stock frauds committed by the Chinese are not recent either. They have been ongoing since the 1990's. In this post, you will find non-exhaustive lists of Chinese stock frauds committed worldwide as well as a table comparing such frauds. It will help you visualize the global extent of the Chinese stock frauds. At the end of the post, there is a small list of stock frauds perpetrated against foreigners by Chinese over a decade ago.

By the way, there is a lingering misconception that all Chinese fraudsters managed to have access to American capital markets thanks to reverse takeovers. This is not the case for all of them. Some of them did initial public offerings of shares in offshore companies. If you want to learn more about how the fraudulent Chinese companies were legally structured, you can go here.

Hopefully, this massive swindle will soon come to an end.

Global Comparison of Common Characteristics of China Stock Frauds

Investment Market: United States Singapore Hong Kong United Kingdom
Affected Investable Set: China Concepts Stock
Affected Investable Subset: N share S chip P chip L share
Country of Operations: China
Place of Incorporation: Cayman Islands, Bermuda, British Virgin Islands, Delaware, Nevada, Florida, Jersey
Citizenship of Managers: Chinese
Citizenship of Promoters: American Singaporean, Malaysian Hong Kongers British
Auditors for Chinese subsidiaries: Local Chinese audit firms
Auditors for listed company: Big Four and Top 10 (45%), Top 100 and Unrated (55%)
Bankers for Chinese subsidiaries: Agricultural Bank of China, Bank of Communications, Xiamen International Bank,
Guangdong Development Bank, China Zheshang Bank, Daqing City Commercial Bank,
and other banks owned by local governments.

List of Chinese Stock Frauds in Singapore
This list includes name of company, stock symbol, and place of incorporation.
Beauty China Holdings Limited (SGX:B15) (Cayman Islands)
Celestial NutriFoods Limited (SGX:C56) (Bermuda)
China Aviation Oil (SGX: C47) (Singapore)
China EnerSave (SGX: 531) (Singapore)
China Fibretech Ltd. (SGX: F6D) (Bermuda)
China Hongxing Sports Limited (SGX: BR9) (Bermuda)
China Milk Products Group Limited (SGX:G86) (Cayman Islands)
China Printing & Dyeing Holding Limited (SGX: M67) (Singapore)
China Sports International Limited (SGX: FQ8) (Bermuda)
China Sun Bio-Chem (SGX: C86) (Cayman Islands)
China XLX (SGX: B9R) (Singapore)
China Zaino International Ltd. (SGX: FP1) (Bermuda)
Falmac Limited (SGX:559) (Singapore)
FerroChina Ltd. (SGX: F33) (Bermuda)
Fibrechem Technologies Limited (SGX: F12) (Bermuda)
Hongwei Technologies Limited (SGX:H80) (Bermuda)
KXD Digital Entertainment Limited (SGX:K07) (Singapore)
New Lakeside Holdings Limited (SGX:5EG) (Singapore)
Oriental Century (SGX: 5II) (Singapore)
Sino Techfibre (SGX: AD8) (Bermuda)
Sino-Environment Technology Group Ltd. (SGX: Y62) (Singapore)
Zhongguo Jilong Limited (SGX: Z03) (Singapore)
Zhonghui Holdings Ltd. (SGX: Z04) (Singapore)

List of Chinese Stock Frauds in Hong Kong
This list includes name of company, stock symbol, and place of incorporation. 
A - S China Plumbing Products Ltd. (SEHK: 8262) (Cayman Islands)
ABC Communications (Holdings) Ltd. (SEHK: 30) (Bermuda)
Asia Aluminum (SEHK: 930) (Bermuda)
Automated Systems Holdings Ltd. (SEHK: 771) (Bermuda)
Bep International (SEHK: 2326) (Bermuda)
CIL Holdings Ltd. (SEHK: 479) (Bermuda)
China Information Technology Development Ltd. (SEHK: 8178) (Cayman Islands)
China Jin Hui Mining Corporation Ltd. (SEHK: 462) (Cayman Islands)
China Medical and Bio Science Ltd. (SEHK: 8120) (Cayman Islands)
China Nickel Resources Holdings Co. Ltd. (SEHK: 2889) (Cayman Islands)
China Packaging Group Co. Ltd. (SEHK: 572) (Cayman Islands)
China Post E-Commerce (Holdings) Ltd. (SEHK: 8041) (Cayman Islands)
China Star Film Group Ltd. (SEHK: 8172) (Bermuda)
China Trends Holdings Ltd. (SEHK: 8171) (Cayman Islands)
Climax International Co. Ltd. (SEHK: 439) (Bermuda)
EganaGoldpfeil (Holdings) Ltd. (SEHK: 48) (Cayman Islands)
Extrawell Pharmaceutical Holdings Ltd. (SEHK: 858) (Bermuda)
First Natural Foods (SEHK: 1076) (Bermuda)
Fu Ji Food and Catering (SEHK: 1175) (Cayman Islands)
Grand Field Group Holdings Ltd. (SEHK: 115) (Bermuda)
Hong Kong Resources Holdings Co. Ltd. (SEHK: 2882) (Bermuda)
Info Communication Holdings Ltd. (SEHK: 8082) (Cayman Islands)
Jackin International Holdings Ltd. (SEHK: 630) (Bermuda)
Kith Holdings Ltd. (SEHK: 1201) (Bermuda)
M Dream Inworld Ltd. (SEHK: 8100) (Cayman Islands)
Mitsumaru East Kit (Holdings) Ltd. (SEHK: 2358) (Cayman Islands)
Nam Fong International Holdings Ltd. (SEHK: 1176) (Bermuda)
Nam Hing Holdings Ltd. (SEHK: 986) (Bermuda)
New City (China) Development Ltd. (SEHK: 456) (Cayman Islands)
Ngai Lik Industrial Holdings Ltd. (SEHK: 332) (Bermuda)
Ocean Grand Holdings Ltd. (SEHK: 1220) (Bermuda)
Pan Asia Mining Ltd. (SEHK: 8173) (Cayman Islands)
Pan Sino International Holding Ltd. (SEHK: 502) (Cayman Islands)
Peace Mark (SEHK: 304) (Bermuda)
Peaktop International Holdings Ltd. (SEHK: 925) (Bermuda)
Prosten Technology Holdings Ltd. (SEHK: 8026) (Cayman Islands)
QPL International Holdings Ltd. (SEHK: 243) (Bermuda)
Rojam Entertainment Holdings Ltd. (SEHK: 8075) (Cayman Islands)
SMI Publishing Group Ltd. (SEHK: 8010) (Cayman Islands)
Smart Union (SEHK: 2700) (Cayman Islands)
Tack Fat (SEHK: 928) (Cayman Islands)
U-right International (SEHK: 627) (Bermuda)
Wai Chun Group Holdings Ltd. (SEHK: 1013) (Bermuda)
Warderly International Holdings Ltd. (SEHK: 607) (Cayman Islands)

List of Chinese Stock Frauds in the United States and Canada
This list includes name of company, stock symbol, and place of incorporation.
A-Power Energy (APWR) (British Virgin Islands)
Advanced Battery Technology (ABAT) (Delaware)
Agfeed Industries (FEED) (Nevada)
American Oriental Bioengineering (AOBI) (Colorado)
AutoChina International (AUTCF) (Cayman Islands)
China Agritech (CAGC) (Delaware)
China Century Dragon Media (CCDM) (Delaware)
China Direct Industries (CDII) (Florida)
China Education Alliance (CEAI) (North Carolina)
China Electric Motors (CELM) (Delaware)
China Energy Savings Technology (CESV) (Nevada)
China Infrastructure Investment (CIIC) (Nevada)
China Integrated Energy (CBEH) (Delaware)
China Intelligent Lighting (CILE) (Delaware)
China MediaExpress (CCME) (Delaware)
China Natural Gas (CHNG) (Delaware)
China North East Petroleum (CNEP) (Nevada)
China Nutrifruit (CNGL) (Nevada)
China Ritar Power (CRTP) (Utah)
China Shenghuo Pharmaceutical (CKUN) (Delaware)
China Sky One Medical (CSKI) (Nevada)
China Valves Technology (CVVT) (Nevada)
China Water & Drinks (HEK) (Nevada)
China-Biotics (CHBT) (Delaware)
ChinaCast Education (CAST) (Delaware)
Deer Consumer Products (DEER) (Nevada)
Duoyuan Global Water (DGWIY) (British Virgin Islands)
Duoyuan Printing (DYNP) (Wyoming)
Fuqi International (FUQI) (Delaware)
HQ Sustainable Maritime (HQSM) (Delaware)
Jiangbo Pharmaceuticals (JGBO) (Florida)
Keyuan Petrochemicals (KEYP) (Nevada)
L&L Energy, Inc. (LLEN) (Delaware)
Longtop Financial (LGFTY) (Cayman Islands)
NIVS IntelliMedia Technology (NIVS) (Delaware)
Orient Paper (ONP) (Nevada)
Orsus Xelent Technologies (ORSX) (Delaware)
Puda Coal (PUDA) (Delaware)
Qiao Xing Mobile Communication (QXMCF) (British Virgin Islands)
Qiao Xing Universal Resources (XINGF) (British Virgin Islands)
RINO International (RINO) (Nevada)
Shiner International (BEST) (Nevada)
Sino Clean Energy (SCEI) (Nevada)
Sino-Forest Corp. (TSX: TRE) (Ontario)
SinoTech Energy (CTESY) (Cayman Islands)
Subaye (SBAY) (California)
Universal Travel Group (UTRA) (Nevada)
Wonder Auto Technology (WATG) (Nevada)
Wuhan General Group (WUHN) (Nevada)
Yuhe International (YUII) (Nevada)
ZST Digital Networks (ZSTN) (Delaware)

List of Chinese Stock Frauds in the 1990's
Akai Holdings & Grande Holdings
Euro-Asia Agricultural Holdings & Yang Bin
Shanghai Land Holdings & Zhou Zhengyi

China Central Television Coverage Of Longwei Petroleum Fraud

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On Monday, January 28, 2013, China Central Television Channel One (CCTV-1), the largest national Chinese government-run news network, aired a special investigative report titled “Investigation of the Truth Behind Longwei Petrochemical” verifying Geoinvesting's findings on the Longwei Petroleum (LPH) fraud.


Hackers In China Attacked The New York Times For Last 4 Months

The timing of the attacks coincided with the reporting for a Times investigation, published online on October 25, that found that the relatives of Wen Jiabao, China's prime minister, had accumulated a fortune worth several billion dollars through business dealings.
Last year, Bloomberg News was targeted by Chinese hackers, and some employees' computers were infected, according to a person with knowledge of the company's internal investigation, after Bloomberg published an article on June 29 about the wealth accumulated by relatives of Xi Jinping, China's vice president at the time. Mr. Xi became general secretary of the Communist Party in November and is expected to become president in March.

Hackers Linked To China’s Army Seen From EU To D.C.

During almost two months of monitoring last year, the researchers say they were struck by the sheer scale of the hackers’ work as data bled from one victim after the next: from oilfield services leader Halliburton Co. to Washington law firm Wiley Rein LLP; from a Canadian magistrate involved in a sensitive China extradition case to Kolkata-based tobacco and technology conglomerate ITC Ltd.
“What the general public hears about -- stolen credit card numbers, somebody hacked LinkedIn -- that’s the tip of the iceberg, the unclassified stuff,” said Shawn Henry, former executive assistant director of the FBI in charge of the agency’s cyber division until leaving earlier this year. “I’ve been circling the iceberg in a submarine. This is the biggest vacuuming up of U.S. proprietary data that we’ve ever seen. It’s a machine.”

Americans Lose Billions In Chinese Investment Frauds

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Beginning in 2008, the NYSE & NASDAQ began to aggressively recruit Chinese firms to list on their exchanges. According to ABC, the exchanges did a poor job in verifying the financial health of the Chinese firms. SEC Chairman Mary Schapiro agreed they were "not as rigorous as they could have been." The SEC is focused on the liability of the "gatekeepers," the American auditing firms and middle men who helped bring these companies to market. Ultimately the biggest losers were pension funds and individual investors. Dan David of GeoInvesting believes the scandal could ultimately cost investors hundreds of billions of dollars. NASDAQ declined to speak to ABC as did General Wesley Clark, former chairman of Rodman and Renshaw, the American investment bank that raised the most money for fraudulent Chinese companies, such as China Integrated Energy. Jon Carnes conducted 4 months of video surveillance of China Integrated Energy and concluded that the company was essentially producing nothing. The factory only came to life during an investor tour hosted by Rodman and Renshaw. Mary Schapiro agrees that the the common theme seen by regulators is the brazenness of the fraud.


No Global Warming For Almost Two Decades

The Science and Public Policy Institute has been asked to comment on the apparent inconsistency between the news that July 2012 was the warmest July since 1895 in the contiguous United States and the news that the Meteorological Office in the UK has cut its global warming forecast for the coming years. The present paper is a response to that interesting question.


Caterpillar Was Embezzled In China

Caterpillar Inc uncovered "deliberate, multi-year, coordinated accounting misconduct" at a subsidiary of a Chinese company it acquired last summer, leading it to write off most of the value of the deal and wiping out more than half its expected earnings for the fourth quarter of 2012.
Caterpillar closed the purchase of ERA Mining Machinery Ltd and its subsidiary Siwei, China's fourth-largest maker of hydraulic roof supports, last June, paying HK$5.06 billion, or $653.4 million. ERA had been publicly traded in Hong Kong, doing business through Siwei, which is known for making equipment to support roofs in mines.

Global Banks Get Conned By The Chinese State

Five years after China said it fully met World Trade Organization obligations to open its economy to global financial firms, Citigroup Inc. and HSBC Holdings Plc are among companies still largely shut out of the world’s third-biggest banking market as they face government restrictions on adding branches and offering products.

Jim Rogers Gets Duped In Singapore

China cheerleader Jim Rogers decided to put his mouth where his money is and went to the dentist in Singapore for a cosmetic treatment. Less than one year later, his dental ceramics fell off his teeth. After an initial request for reimbursement was rejected by his dentist, Ernest Rex Tan, Rogers sued him for at least $48,150. Tan counter-sued him for defamation.

Rogers seems to be surprised about the lack of professional integrity he has experienced in Singapore. After all, he moved there because he believes the future progress of mankind is going to happen in China and its colonies. Hence, he won't be going back to the United States. However, if he continues to trust the Chinese, he won't go back to the US due to a personal choice, but because he will have no money left after being scammed out of all of it. Ultimately, the corruption of the Chinese nation is not cultural, but genetic. That is, the Chinese nation is genetically corrupted and it gets reflected in its culture.


An Inside Look At Business In China And Its Culture

While working for a Chinese manufacturing and trading company, expat realises the Chinese nation is uncreative, dishonest, and spiteful. He also discovers what their culture is really all about.

Read his story here: and here:

The Legal Structure Of Chinese Stock Frauds

Every exchange-listed Chinese company that committed fraud in Hong Kong, Singapore, New York, London or Frankfurt had the same legal structure. The exchange-traded company was incorporated in the Cayman Islands, Bermuda, British Virgin Islands (BVI), Singapore, Jersey, Nevada or Delaware. These offshore entities were then used as holding companies for the China-incorporated subsidiaries. Or the exchange-traded offshore entities held other offshore companies, which in turn held the subsidiaries incorporated in China. And some of these offshore companies were reverse merged into US-listed companies incorporated in an American state.

These legal setups provide full protection to Chinese mischief and none to foreign investors. If the Chinese are allowed to take advantage, they will, as can be witnessed by reviewing the delistings since 2001. The "China concepts stocks" delisted from Hong Kong, Singapore and the US in the last ten years had these legal setups. Thus, if an exchange-traded company has this legal setup, more likely than not, the Chinese managers are committing fraud to some extent.

It is important to note that not every Chinese company listed in American markets is of the reverse merger category. Offshore companies are listed in American exchanges as well. To make it very clear, have a look at the following sample of US-listed Chinese companies classified according to its place of incorporation:

Cayman Islands: BORN, CCM, CISG
British Virgin Islands: HOLI, JST
Nevada or Delaware: CXDC, YONG, HOGS, LIWA

All of the Nevada- or Delaware-incorporated companies listed above "reverse merged" a company incorporated in the BVI.

That being said, shareholders who own shares in a Chinese company trading in Hong Kong, Singapore, New York or London may not own an economic participation in the China-incorporated subsidiary because the holding company could have been stroke off its share register and replaced with the name of the Chinese manager or his newly incorporated Chinese company, which would have no relationship whatsoever with the exchange-listed holding company.

Even if the holding company appears as the shareholder of the Chinese subsidiary, it is possible that, unbeknownst to shareholders of the publicly traded company, such shares have been placed as collateral for, say, a personal loan to the Chinese manager. In other cases, the land or fixed assets of the Chinese subsidiary may have been hypothecated by the Chinese manager in order to obtain a personal loan, or a loan for his newly incorporated Chinese company.

To ensure that Chinese subsidiaries are owned by the holding company, their share registers at the State Administration for Industry and Commerce (SAIC) could be checked frequently. In addition, checks on local shares, fixed assets, and land could be performed to ensure that they are mortgage free. Of course, frequent checks will help alert an investor of potential irregularities, but they won't protect him from fraud once such actions have been committed.

By the way, it is helpful to be aware of the many indexes that track the stock price performance of Chinese companies. The most useful are:

Hong Kong: MSCI China P Chip
Singapore: FTSE ST China Index
United States: Bloomberg Chinese Reverse Mergers Index

In the United States, no index exists to track the offshore companies listed in American markets. The Bloomberg's reverse mergers index is helpful but it doesn't include the whole lot.

If you want to learn more about Chinese stock frauds, have a look at this article.

Bosideng: A Subsidiary Of The Gao Conglomerate

I believe the Gao family are running a low-profile embezzlement operation against the investors of Bosideng, the Hong Kong-traded holding company which was incorporated in the Cayman Islands. Although it might be in the process of becoming one, it's not your typical Chinese capital-expenditures fraud. I think it is a bit more elaborate. Mainly, it consists on two different strategies:

1) Selling economic participations of their family businesses to Bosideng (Cayman) at a significant overprice.
2) Using the cash of Bosideng (Cayman) to finance the expansion of the family conglomerate.

The Gao family conglomerate owns land, factories, retail shops and maybe even hotels and other investments not related to the apparel sector. Their businesses are spread across a wide array of corporations incorporated in China, UK and offshore (Cayman, Bermuda, and others). From the Gaos point of view, Bosideng (Cayman) is just another subsidiary, from which they can take the cash they need to finance the expansion of the family conglomerate. So, whenever Bosideng goes into a lease agreement, the Gao conglomerate is the lessor. And whenever a batch of clothes are manufactured, the Gao conglomerate manufactures it and dispatches it to Bosideng.

Have a look at the last two "acquisitions": Jiangsu Kangbo Clothing Co., Ltd. (Menswear company), and Talent Shine Limited and Sunny Bright Global Investments Limited (Womenswear companies). The total goodwill paid on those two transactions is CNY 777 million. In addition, Bosideng paid CNY 597 million for "customer relationships". Whether or not real contracts exist, the "Customer relationships" account actually represents economic participations in the Chinese subsidiaries owned by the Gao conglomerate. With such an arrangement, the Gaos never lose control over the Chinese subsidiaries that really own the factories, and yet Bosideng could be benefited somewhat.

It is interesting to note that the Womenswear companies were owned by another "independent third party." In this case, the "independent third party" is Talent Shine International Limited, which was incorporated in the British Virgin Islands (BVI). Now, Talent Shine International Limited (BVI) was incorporated around the same time Talent Shine International Limited (Hong Kong) (朗材國際有限公司) was dissolved. I believe this was done to conceal the identities of the individuals behind Talent Shine, as it is easier to do so with a company incorporated in the BVI. Nevertheless, they left a paper trail. If you are curious about who the directors of Talent Shine International Limited (Hong Kong) were, you can find the answer at the Companies Registry in Hong Kong. Obviously, Talent Shine is yet another subsidiary of the Gao conglomerate.

Moreover, as opposed to the previous acquisition, Bosideng issued shares to raise CNY 507 million in order to purchase the Womenswear companies. However, they supposedly had CNY 3000 million in cash at the time. Why not use it to purchase the Womenswear companies? My explanation is that the Gao conglomerate has already used that cash for its own benefit, and not for the benefit of Bosideng. It may have even been used by the Gaos to purchase the UK retailer Greenwoods Menswear, which was acquired by Harvest Fancy (Hong Kong), the "independent third party" who sold the Menswear company to Bosideng. The names of the original Greenwoods directors will sound familiar to you: Xiadong Gao, Lifang Gao, and Kin Wa Tso, who used to be a director at Bosideng Corporation (Hong Kong) before being a director at Harvest Fancy. It is highly likely that the Gao conglomerate will eventually sell Greenwoods to Bosideng for a hefty price.

Parallelly, keen observers will notice a significant rise in bank borrowings from CNY 587 million to CNY 1740 million in spite of the cash on hand. Be wary if they say that it was done so in order to comply with the State Administration of Foreign Exchange.

Finally, there has also been a significant increase in fixed assets. Fixed assets used to be minimal until 2008. But in the last three years, they have begun to rise at an unprecedented rate. I'm wondering whether that change marks the beginning of a classical Chinese capex fraud, or an actual transfer of assets from the Gao conglomerate to Bosideng, of course, at an overprice. As a consequence, I think that Bosideng will issue more shares in the coming months in order to raise the necessary cash that the Gao conglomerate needs.

The China Illusion Stops You From Recognizing Fraudulent Patterns At Chinese Companies

Asian Citrus Holdings claims to be doing well. And you believe they are? They are not doing well. They claim to have CNY 975 million in cash by June 2010. However, by December 2010, Wang Chow Tong along with his son Hung Wai Tong saw the need to raise even more cash by issuing even more shares. The proceeds from such issuance netted CNY 1,284 million. Now he claims to have CNY 2,232 million in cash.

Do you really think that a business that generates CNY 600 million every year would need even more cash from investors? Do you really think that a business that generates so much cash every year would need even more money than the cash already generated by the business itself?

Furthermore, Asian Citrus was incorporated in Bermuda. You will have no legal protection when it delists. Do you think a judge in a Caribbean island can enforce a judgement in China? Not even a judge in Delaware or Nevada will be able to accomplish such a feat, which is why investors of Chinese reverse mergers will never see their money back. Check what is happening at the delisted Chinese frauds. It is a never-ending nightmare for the Americans and Europeans who trusted the Chinese goons at the helm of the companies they invested in.

Moreover, their securities issuances, cash balances, fixed investments, financial statements, financial ratios, dividend payouts follow the same patterns found at other fraudulent Chinese companies. Asian Citrus is doing what other Chinese frauds did before. Check them out and compare them! They are copycats.

Stay away from Chinese companies! No one will protect you if you don't do so yourself. The Chinese government is not going to stop the fraudsters because they are in cahoots with them. Check the Chinese court rulings in the past years! Their abuses are blatant, and they are real.

Stop having a romantic perception of reality. These people are not your friends and are not trustworthy. They want to harm you by taking your money to use it for their own benefit. They have no integrity. They were raised with different values than ours. They are, in two words, your enemies. And they are going to be fully protected by the Chinese state against your fair claims. Check out the other cases of Chinese frauds!

The money trails being discovered by bankruptcy trustees show that the Chinese have been using the cash in lots of things, except the business itself. They have discovered that the former CEOs were really using the raised money (of the company) to build mansions and hotels and buy land across China and elsewhere. It is even possible that they are the owners of the house next door to yours!

Don't be so keen to jump into an investment just because you hear pompous phrases such as "China is growing at 9%" or "we're a leader in the world's fastest growing industry." They are nothing more than propaganda which keeps getting repeated over and over by the Chinese promoting their companies and by the mainstream media. Where were the headlines saying "China's money supply growing at 30%"?

If you choose to believe them, and they embezzle you, don't blame them, because now there are more stories than last year that serve as warnings for everyone investing in Chinese companies. You just have to be curious enough to look for those stories and read them with an open mind.

Do You Feel Alone? An Anthropological Explanation To Your Feeling Of Loneliness

Your emotions developed during the paleolithic period. Before the neolithic revolution, which gave rise to farming villages, people used to live in communities of about 150 individuals. But they were not communities of unrelated individuals, they were all family. Pre-neolithic families were composed of 150 individuals, who collaborated with each other to insure the survival of the community. So, throughout his life, a pre-neolithic individual lived together with 150 other individuals. Throughout his life, an individual lived together with the same 150 individuals. Not only were they related, they all did something for each other. They all emotionally invested in each other by way of conversations and collaborative actions. Because each individual had a very significant emotional investment in the other members of the community, the consanguineal bonds were very strong.

For over 150,000 years, 150-member communities existed. But that began to change during the neolithic period, when 400-member farming villages appeared. The rise of farming villages modified the social structure of those early families. Several early families agglomerated in a single community but spread over a larger area. In addition, living quarters compartmentalised those early families. So, a member of the village didn't interact with the same individuals on a daily basis as was the case when he was a member of a pre-neolithic community. The frequency of interactions with the same individuals was reduced in order to increase the social interactions with the other members of the village. And, due to the new social structure, bartering took precedence over collaboration. Therefore, an individual's emotional investment in the other members of the community was significantly reduced.

Nowadays, related individuals are spread over enormous distances. So they don't see each other on a daily basis. They don't talk to each other on a daily basis. They don't even interact between each other by way of bartering. Due to the current social structure, they don't need to collaborate with each other in order to survive, although if they were to collaborate, consanguinial groups could increase their chances of survival. In the current social environment, the emotional investment between related individuals is almost nil.

Apple Pays $60 Million In Extortion Fees To Chinese Blackmailer

Yang Rongshan, a Taiwanese chiseler, extorted 60 million dollars from Apple with the help of the Chinese state. Earlier this year, at his request, the Chinese state ordered iPad distributors to stop selling them in China and actively blocked iPad sales. Thus, Apple was intimidated into unwillingly pay the extortion fees to Yang's company, which last reported 500 million dollars in annual sales.

China is famous for promoting embezzlement of foreigners' assets, and aiding and abetting Chinese larcenists. Not so long ago, Yang defrauded foreign investors through his Bermuda-incorporated company called Proview International Holdings, which was suspended from trading on the Hong Kong exchange after the 1 billion dollar fraud became evident. As in other Chinese stock frauds, the Chinese state will ensure that the embezzled assets permanently remain in the hands of the Chinese fraudsters, because, in China, larceny is a virtue.

China's Qunar Considers Duping American Investors

Yesterday, Bloomberg published your usual Chinese propaganda hoping to lure more American investors into China's next scam: Qunar is yet another travel portal who will be raking in "millions" of dollars within a travel industry that is growing at "14 percent annually." Even so, it doesn't sell airline tickets, hotel deals or vacations packages. Rather, they sell “a few hundred million” yuan in ads, which amounts to 1% of total adspend done online in China.

With the avail of Boston Consulting Group, "the world's leading advisor on business strategy," the Chinese hope to grab more funds from American mutual and pension fund managers who are willing to breach their fiduciary duties and please the Chinese by handling to them whatever amount of money they happen to be managing without asking them any questions.

Qunar has already been injected with 300 million dollars that used to belong to American investors. Such a feat was accomplished by Baidu, a company incorporated in the Cayman Islands that claims to be making billions of dollars in profits, claims to have billions of dollars in cash, and still needs billions of dollars in additional financing.

Like other Chinese executives before listing their companies in American exchanges, Chenchao Zhuang, Qunar's CEO, doesn't know how much his company sold last year. He doesn't know what to do with the $300 million either. And yet, he knows what he is going to do with the money raised in the IPO: buy mobile device applications because "mobile travel is going to be big."

Have a look at the Bloomberg article:

Qunar Considers U.S. IPO as China Travel Demand Fuels Search Site’s Growth

As you can see, it is loaded with the usual Chinese propaganda, courtesy of the Boston Consulting Group and Chenchao Zhuang:
China travel industry revenue is expected to increase 14 percent annually to 5.5 trillion yuan ($871 billion) in 2020 from 1.5 trillion yuan in 2010.

China’s tourism market may overtake Japan’s as the world’s largest after the U.S. by 2013.

Travel booked on the Internet accounts for about 7 percent of China’s tourism market and that ratio is expected to surge to 30 percent in the next five years, similar to current levels in the West, Zhuang said.

Qunar broke even in 2010 and more than doubled sales in 2011 to “a few hundred million” yuan, Chief Executive Officer CC Zhuang said in an interview.

“In the next few years, mobile travel is going to be big,” he said.
After being bombarded with exciting-sounding Chinese propaganda, you are explained Qunar's business model:
“We are a unique platform that connects the traditional IT system of airlines and hotels with massive information searches on the Internet," Zhuang said.

The website gets most of its revenue from cost-per-click travel ads.
That's right, their website connects to the IT system of airlines and hotels in order to sell online ads. You know, it is more profitable to build a "unique platform" in order to sell online ads than to sell travel tickets in the "world's fastest growing travel industry" TM. Although Qunar gets most of its revenue from online ads, Zhuang is eager to convince you that his company is an online travel company, and a proud member of a booming travel industry that will be the next "largest market after the US."

In addition, the article contains pictures that show you that they have a reception and an office full of employees. With that visual evidence, you can rest assured that the company is real and the employees are not hired actors who used to work for China MediaExpress Holdings Inc.

To further convince you that Qunar is a legit company, they want you to know that a multi-billion dollar company has entrusted them with $300 million. If others are throwing millions at them, you should too, and soon Zhuang will give you the opportunity to do so:
[Qunar] may raise money from U.S. investors after selling a $306 million majority stake to Baidu
It will be the "opportunity of a lifetime" because thanks to a "visionary" like Zhuang, Qunar will tap the growth potential in mobile device applications. He goes on to explain why:
“In the next few years, mobile travel is going to be big"
But what has Zhuang done with that money?
Qunar hasn’t used the cash from Baidu’s investment so far, according to Zhuang.
And yet, he wants to go after more American money.

China Stock Frauds

As of December 2010, the SEC had initiated an ongoing investigation into Chinese stock frauds in the United States,[1][2] and in April of 2011 the SEC Commissioner warned investors that a growing number of Chinese companies were "proving to have significant accounting deficiencies or being [sic] vessels of outright fraud."[3] The frauds appear to have been orchestrated on a massive scale by Chinese companies traded on North American stock exchanges.[4] A December 2010 review of the market capitalization losses of 150 China RTO companies estimated Americans' losses to have exceeded $34 billion.[5] The same review estimated that at least 30%[5] of the 500 China-based companies traded in American markets were fraudulent.[5]

China Protects Larcenists From Foreigners

China provides full protection to Chinese larcenists who have embezzled foreigners. They are protected by judges, executive authorities and the media. Judges either dismiss lawsuits or rule against foreigners. Executive authorities transfer intellectual and physical property to Chinese without the consent of foreign owners. And the media, from newspapers to professional journals, tergiversates stories in order to justify the actions perpetrated by Chinese larcenists.

Apple To Lose Trademarks And Patents In China

Apple is not yet a success in China. It could have been by now, if the success of that country wasn't dependent on the embezzlement of foreigners' assets. Of course, that is impossible because Chinese culture is embedded with despise for foreigners and envy of their material possessions. These cultural values are embodied in the longstanding policy by the Chinese government to promote larceny of foreigners' property and to protect Chinese larcenists. Thus, Apple is on the brink of losing its trademarks, patents and other assets in China.

The Future Of Coffee

The future for coffee producers is bright. So bright that they will become blind, blind of greed, once the price of coffee exceeds the 3.59 dollars per pound reached in May of 1997. Barring some catastrophe that could decimate the population in this planet, the volume consumed worldwide will continue to increase. What's more, not even 10 dollars a pound would stop growth in consumption of this delicious product of nature. There will be so much joy that they will shout the same phrases said by a Sufi mystic when he first discovered this beloved fruit: Allahu Akbar! Allahu Akbar! And so, new fortunes will be made​​.

The Honest Mind Of A Chinese Crook

The following is an email that started to circulate in Singapore around April 2009. It is mostly assumed that the author is James Zhang, the CEO of Fibrechem Technologies, a Chinese company incorporated in Bermuda whose stock used to trade in the Singapore Exchange until it was suspended under allegations of fraud. Currently, as of July 2011, he is living a luxurious life in China. It is a sample of what you should expect if you invest in Chinese companies.

Baidu To Steal Microsoft's Search Engine Technologies

Since 1998, Microsoft has had the China fever. When Microsoft got infected back then, they built a research center in Beijing. It was followed by more research centers in Shenzhen and Shanghai. Although no major breakthroughs have been achieved by the Chinese, Microsoft is now pumping over 300 million dollars every year into these centers. After all, China is growing at double digit rates and will become the next superpower, or so they believe and hope.

In the meantime, Microsoft's technologies will continue to flow to China. Because it is an American company, none of the Chinese working at Microsoft has any loyalty whatsoever to their employer. In fact, the Chinese employees feel compelled to steal Microsoft's technologies and transfer them to Chinese companies. Eventually, Microsoft will realize the mistake they have done.

Since that moment hasn't arrived yet, Microsoft is now collaborating with Baidu with the hope of increasing its online market share in China from its current 1%. Even after their previous collaboration with Alibaba failed in achieving the same hope, Microsoft still fails to see that the whole Chinese market is rigged, and it was not just Alibaba's agreement. This continued blindness will allow Baidu to steal Microsoft's search technologies to the delight of the Chinese government.

Nestle To Lose Money In China

Because Nestle has the China fever, they are ready to waste several hundreds of millions of dollars in fueling China's massive ponzi scheme. This time, they are buying a dodgy company called Hsu Fu Chi International, a Singapore listed company incorporated in the Cayman Islands that supposedly sells over one billion dollars in candies, cakes and cookies in China. Even though they have 260 million dollars in cash, they requested a bank loan of 85 million dollars. After the takeover goes through, Nestle will be in denial, for quite some time, that they will never recover their money. Hopefully, at some point in the future, Nestle will recognize that they had been duped and had fallen for the mirage that is investing in China, where the abundant profits that can be seen from a distance suddenly transform themselves into intimate losses to thirsty foreigners. Maybe then they will promise themselves never to go back to a country whose growth is based in embezzlement of foreigners' assets.

China Bears Have It Wrong: Jim Rogers

I like Jim Rogers, but I think he has the China fever. Like most people, he has been blinded into believing that the economic boom in China will continue for posterity. He likes to make the analogy that, just like America rose to power in the 20th century, China will continue to rise to power in the 21th century. But there is a big difference. America rose to power on a foundation of integrity whilst China is doing so on a foundation of deceit.

He is quick to criticize Jim Chanos' view about China by pointing out that "he's been dead wrong for two years, I hope he's still solvent." As early as 1995, Rogers was expecting a bull market in commodities, and it didn't really start until the year 2001. So he was dead wrong for six years. As a consequence, Rogers has described himself as the worst market timer. Well, now he is not alone. In the same way as Rogers was off by a few years although his views were right, Chanos will be off by a few years although his views are right.


China's Massive Ponzi Scheme

The Renaissance is marked with a revival of former trade routes and the discovery of new ones. Since Italy was at the intersection of old and new trade routes, it was the region where cultural flowering was most notable. This cultural flowering was found not only in libraries, workshops and churches but in kitchens as well. By combining noodles, coming from China, with tomatoes, coming from the Americas, Italy invented a new culinary creation: pasta.

Several hundreds years later, another cultural movement is being marked by a revival of former trade routes and the discovery of new ones: Globalization. This time, however, the most notable country is China. By combining a financial system, coming from America, with Ponzi's scheme, coming from Italy, China invented a more elaborate version of Carlo's infamous hustle that if it were to be named it could be called: massive Ponzi scheme.

China's massive Ponzi scheme gives foreigners the illusion that not only their private property will be protected in China, but their investments will be increasingly profitable as well. And so, driven by hope, more and more foreigners pour money into China. They buy shares of Chinese companies listed in exchanges around the globe. They directly invest in China by building brand recognition, research centers, factories, stores and restaurants. These foreigners receive validation to their decisions by the double digit growth that the Chinese government and Chinese companies report year after year.

But little do most foreigners know that a few of them, one by one, has lost more than their money by now. In addition to losing their money, these foreigners have also lost their brands, patents, copyright, merchandises, factories, buildings and even their liberty by way of extortion. These foreigners are the first wave of victims in China's massive Ponzi scheme. Although their testimonies could put into evidence China's machinations to foreigners who are about to invest there, they could also serve as the catalyst for the crumbling of China's skullduggery which will bring a second and, hopefully, final wave of foreign victims.

Sharia Law And The British Pound

There are over 85 Sharia Courts operating in Britain, and the rulings of over five of them are now enforceable through Common Law courts of the British judicial system. This small group of Sharia Courts, whose rulings are enforceable, forms a network known as the Muslim Arbitration Tribunal, which in 2007 made use of a clause in the Arbitration Act to formalize its position in Britain. Lord Phillips, the former Lord Chief Justice, personally endorsed this Tribunal.

The Pound Sterling, which for centuries has been part of British culture, has been one of the strongest currencies in the world thanks to responsible monetary authorities and faith in the Pound. But that's no longer the case. In the last couple of years, the Bank of England has been printing massive amounts of Pounds to save overleveraged banks and government. This action doubled the amount of money in the banking system. However, the consequences haven't been felt yet because they lag behind this massive increase by several years. Nevertheless, the increased amount has already benefited a few people: the ones who first received it, that is, bankers and government. In other words, the monetary authorities benefited a small group of people in prejudice of the rest of the population.

The rise of Islam in Britain is correlated with the downfall of the Pound Sterling to the extent that the Bank of England increases the money supply to facilitate the expansion of credit by the British government. Its credit expansion allows the enlargement of socialist programs encroached decades ago, including programs for asylum seekers and refugees, which keep serving as gateways for muslims into Britain.

The Economics Of Feminism

Feminism is the dominant ideology in our society. Men are portrayed as goofs in comedy movies. If a woman accuses a man of rape, he is taken straight to prison. Whether or not her accusation was motivated by envy, revenge or remorse is unimportant in court. After a divorce, the wife keeps the kids. The standard judgment by divorce courts to let the wife keep the kids is followed by giving her the house of the husband, and forcing him to provide her with so called child support. With the standard judgment by a divorce court, the husband gets deprived of his children and wealth, and becomes a modern slave to the wife. The social contract of marriage is easily broken because current laws make it easy, and divorce court judgments provide massive incentives for the wife to divorce. Due to these reasons, men find the social contract of marriage not very appealing, and a newly created essential building block of a civilized society, a family, ceases to exist after just a few years of existence.

Opposing Asylum Seekers And Refugees Programs

Many governments put forward socialist programs that are intended to protect asylum seekers and refugees of other nationalities by allowing them to enter the sponsoring state and then providing them with shelter, food and employment. In order to finance such programs, taxes are collected from domestic citizens. Such a policy has the effect of transfering capital from the domestic population to a foreign population. Domestic citizens should not be forced to collaborate with people of other nationalities. Rather, they should be free to collaborate with people of other nationalities if, individually, they are willing to do so.

Biotech And The Extinction Of Bees

Bee colonies can die in several ways. One of those ways is the Colony Collapse Disorder whereby a large proportion of the colony's worker bees suffer a sudden death, although the queen remains alive. The death of colonies due to Colony Collapse Disorder has been increasing over the last few years. In the United States, this has caused annual colony losses to increase from the usual range of 10 to 20%, to over 30%. Some studies have associated this disorder with Bt crops. Bt crops, which are sold by Monsanto (MON) and Syngenta (SYT), are crops genetically modified to include a gene of Bacillus thuringiensis, a bacterium related to Bacillus anthracis, the cause of Anthrax. The added Bt gene enables the genetically modified crops to produce a toxin deadly to insects. And, thus, by being the ones in contact with Bt crops when foraging, only the worker bees suffer a sudden death.

Mad Cow Disease Outbreak: A Possibility

What if prion-infected fish is used as a protein source to feed cattle, which, after becoming infected, transmit the agents to humans, in whose brains they incubate for 30 years, and after that period, an Creutzfeldt–Jakob disease outbreak ensues?

Cuentos Chinos

In Spanish, "cuentos chinos" literally means "Chinese stories." This phrase is used to refer to very elaborate misrepresentations of the truth, and it may have its origins in the Spaniards' disbelief of Marco Polo's travel stories. This centuries-old phrase perfectly suits the description of all Chinese companies whose ongoing "cuentos chinos" have come to an end after a very long journey.

Bosideng And Its Small Lie

Bosideng (3998), in its filings to the Hong Kong Exchange, has reported that Harvest Fancy Limited (盛怡有限公司), from whom they bought the Menswear Company (江蘇康博製衣有限公司), is an Independent Third Party to the best of the Directors’ knowledge, information and belief having made all reasonable enquiry. The shareholders of Harvest Fancy are Kin Wa Tso and Yin Kwan Kwok both living in Flat C, 62/F, Block 5, Sorrento, 1 Austin Road West, Kowloon. So far, it looks as if Harvest Fancy is an independent third party. However, it turns out that Tso is handicapped and, for a living, he loans his name as figurehead to several companies. In fact, Dekang Gao, Bosideng's Chairman, used Tso's name before when he registered PRC-incorporated Bosideng Corporation (波司登股份有限公司) in Hong Kong in 2003! Therefore, to the Chairman's knowledge, Harvest Fancy was never an independent third party, so the purchase agreement entered into was not based on negotiations at arm's length, as repeatedly stated in the filings.

Chinese Fraud Test

The purpose of this test is to identify whether or not there is fraud in a Chinese company by just looking into the eyes of the Chinese CEO. Here, there are five Chinese CEOs. Could you correctly guess all five?

Death Penalty Will Not Be A Deterrent In Chinese Stock Frauds

Death penalty will not be a deterrent in Chinese stock frauds because the Chinese court system will never enforce such a sentence on a Chinese if the fraud was commited against a foreigner, even if the Chinese deprived the foreigner of his wealth by deceit, theft or extorsion.

Not Only Chinese Reverse Mergers Are At Risk Of Slant Frauds

The Chinese reverse mergers, which are incorporated in Nevada or Delaware, are not the only ones at risk of fraud. Chinese companies incorporated in Bermuda, Cayman Islands, Singapore or Jersey also need to be considered as having an equal risk of fraud as reverse mergers. Chinese companies incorporated offshore trade everywhere: New York, London, Hong Kong, Singapore. In New York, we have Baidu (BIDU), which was incorporated in the Cayman Islands. In Hong Kong, we can find Tencent (700), which was incorporated in the Cayman Islands as well. In Singapore, we can find Yangzijiang Shipbuilding (BS6), which was incorporated in Singapore, but, just like in the other two examples, its management team is Chinese and lives in China. They all have the same risk as Chinese reverse mergers because the companies are incorporated and listed outside of mainland China. Therefore, the Chinese have the same legal protection on both reverse mergers and offshore corporations. This setup offers a great opportunity for the cunning Chinese to dupe the gullible foreigner. Even after the foreigner raises his attention and chooses to sue the Chinese swindler, it is highly unlikely that he will be successful in the Chinese court system, which, above all, protects its own nationals from foreigners.

Financial Syphoning Of Hong Kong-Listed Red Chips

Many Hong Kong-listed companies partially owned by the Chinese state, also known as Red Chips, have been used as dumpsters by their Chinese holding companies, which are managed by the Chinese state. The holding company sells lowly profitable, or even unprofitable, subsidiaries to the Red Chip in exchange for cash consideration. Had Chinese authorities not done that for the past years, the performance of Red Chips would have been more remarkable.

Exploring Competitive Devaluations In The European Parliament

A few European members of Parliament have been pondering on the idea of competitive devaluations, but such solution will require a vast increase in the money supply, which will benefit the people who first receive the increased amount (bankers and government) in prejudice of the rest of the population. Rather than punishing everyone else (by either printing money or bailouts), let bankers and governments go bankrupt, which will be their own punishment for overleveraging themselves.

Incentives For Fraud At Chinese Companies

Chinese managers have incentives to deceive foreign investors of Chinese companies as long as the Chinese court system and local authorities continue to protect Chinese swindlers from foreign victims. So they have massive incentives to deceive their foreign shareholders. The Chinese managers are people that are not being punished for their bad behaviour, so they will continue doing so. Because of that, any foreign investor will be better off avoiding Chinese companies incorporated outside of mainland China, ie, Cayman Islands, Bermuda, Singapore, Delaware or even Hong Kong. If the Bermuda-incorporated Chinese company listed on Nasdaq has commited fraud, where will the foreign investor start his lawsuit against the company, in Bermuda, the US or China? If he sues in the US and Bermuda and wins, the courts will not be able to enforce their judgments in China. And even if he sues in China, it is highly unlikely that he will win.

Chinese Stocks Liquidation Procedures

During liquidation, they will pay their local creditors about eighty cents per dollar and their foreign creditors just twenty cents per dollar, leaving shareholders with nothing. Once that's done, everything will be owned by the Chinese managers. In other words, after liquidation, the Chinese managers would have legally embezzled millions of dollars from foreigners with the support of Chinese authorities and courts.

Facebook In China And American Reciprocity

The block of Facebook in China is another great example of how China protects its market. The US, EU and Japan should reciprocate China's actions and protect their own markets from the Chinese, by doing to the Chinese what they do to them, that is, by raising tariffs, creating quotas, restrictions, regulations, allowing piracy of copyrighted Chinese creations, transfering ownership of Chinese brands to American and European companies, removing Chinese patents protection, enforcing court judgements against Chinese properties, imprisoning of Chinese managers, promoting industrial espionage against Chinese companies, and other sleezy actions that could only come up from a deceitful mind such as the Chinese mind. The Chinese laugh at the WTO. If American, European and Japanese products and services cannot enter China, their tanks will!

Class Warfare In The United States

The likelihood of class warfare in the US is raising. Although class warfare hasn't begun, class envy has. Class envy is being stimulated in increased amounts by a growing class disparity. And the main causes of class disparity are: 1) loose monetary policy by the Federal Reserve, and 2) free trade with emerging markets, especially China.

Loose monetary policy benefits the people who first receive the increased amount of money, that is bankers and government, in prejudice of the rest of the population. This policy rewards the overleveraged government and bankers, and punishes everyone else. Rather, let bankers and the government go bankrupt, which will be their own punishment for overleveraging themselves.

The free trade the US has with China is only benefiting the latter, because while the US lets Chinese products enter easily whilst protecting Chinese property, China imposes all sorts of barriers to foreign products and services, from raised tariffs, increases in targeted regulations, industrial espionage in the form of forced disclosure of know-how (and others), deceitful factory managers, stolen brands through court judgements, judgements against foreigners’ rights via courts, to imprisonment of foreign managers. After being duped for over a decade, at least some German firms have realized the extent of the China con and are leaving China. Hopefully, Dell, Apple, Google leave that cunning country forever, and European and American governments start protecting their own markets, rather than punishing their own middle class.

The United States Should Leave The WTO

Trade blocs are redundant because of the WTO. But the EU and the anglosphere will be better off if they leave the WTO and form their own trade bloc while they still have similar pay levels. So long as the industrialized countries continue in the WTO, China, just like Taiwan and South Korea before it, will keep taking advantage of their markets while protecting its own home market. In the meantime, the economies of industrialized countries will continue to undiversify, perpetuate their underemployment and lower their weekly earnings.

Not All Chinese Companies Are Run By Crooks

Not all Chinese companies are run by crooks. They are run by human beings who know that there is no punishment for bad behaviour. In fact, there is substantial incentive for bad behaviour. Imagine yourself in the following scenario: If someone you don't know gives you a million dollars and that someone cannot punish you if you don't give it back, would you use that money for your own benefit? No need to answer this question, just something to ponder about.

Foreign Companies Should Leave China

Foreign companies should leave China before more of their intelectual property and know-how gets stolen by the chinese. The Chinese lie and steal and foreigners cannot punish that behaviour because the Chinese courts protect their own citizens. Foreign investors get their money stolen straight from the bank. Chinese salesmen cheat on their foreign employers by lying on the sales figures and stealing part of the production to resell it in collaboration with factory managers. Chinese suppliers collaborate among themselves to give the worst price to foreigners. The more this comes to light, the more foreign companies leave.

US And EU Should Match Abuses To Foreign Companies In China

Commercial activities of foreign companies are being limited by the lack of integrity of the Chinese at every level, from local staff to government officials to judges. China is one of the worst places in the world to make an investment since it promotes abuses to foreign investors by Chinese nationals. Since China isn't following the WTO agreement, the US and the EU should raise tariffs to Chinese products and services and reciprocate China's actions by systematically undermining all Chinese companies operating in their territories.

An Explanation For The High Foreign Direct Investment In China

The FDI is high because Chinese are incorporating holding companies abroad which are subsequently used to own newly PRC-incorporated companies. This gives the illusion of foreign investment. This set-up should be widely advertised and promoted to even more Chinese businessmen by the US and the EU so that the Chinese government receives fewer tax revenues in the future. In addition, the US and the EU should impose high tariffs on Chinese products and services and stop Chinese immigration since they don't have honesty, integrity or morality.