SOMEONE FORGOT TO THINK OF THE UNINTENDED CONSEQUENCES
Marc-David Seidel, UBC Apologist for the Amazon Deal Predicts Pie In the Sky Bye and Bye
Tech workers are already in short supply and Amazon’s increased presence likely to lure workers away from local technology-based startups
What upsets me most about this well-written article by Jenny Peng, is that she has exposed the fact that the enthusiasm for bringing Amazon to Vancouver appears to have caused long-term economic blindness in exchange for short-term political gain. Prime Minister Justin Trudeau, BC Premier John Horgan, Vancouver Mayor Gregor Robertson, and the Vancouver Economic Commission’s acting CEO Brian Buggey, and Sean Elbe, head of VEC’s Technology Sector all need to address serious questions about the probable negative economic impacts of the Amazon deal, not to mention the disconnect with earlier official enthusiasm for Vancouver as an entrepreneurial hub. Which will it be, Amazon or high-tech startups?
Prior to the Amazon deal, the Trudeau government, BC and the Vancouver Economic Commission had been promoting the Global Talent Streamvisa initiative, which will indeed most likely benefit Amazon, but the situation for the Canadian government’s Startup Visa for immigrant entrepreneurial companies is far from favorable. So the Amazon deal seems to have sent another torpedo into the growth of the high-tech entrepreneurial economy in Vancouver.
Poignantly, one UBC Professor, Carson Woo, offers strong prima facie evidence from local companies of the probable damage, while another UBC Professor Marc-David Seidel acts as an apologist for Amazon, claiming that Amazon will create high-tech spinoffs sometime mañana. While Seidel may have a point, the reality is that such spinoff economic growth can literally take decades to develop, which offers weak justification for the Amazon decision. I offer the underwhelming examples of other such deals. Portland, Oregon is one such example. Intel and Nike remain the anchor employers of thousands of employees between them, and though there has been some spinoff growth over the years, it has been not much to write home about or to rival the economic importance of Intel and Nike. It is Seattle’s problem with Boeing. Vancouver has just done the identical thing.
VANCOUVER—Following Amazon’s announcement Monday that the company plans to add 3,000 jobs in Vancouver by 2022 with a new office, observers say this could increase the competition for highly skilled tech workers already in short supply.
The Seattle-based retail giant, which opened its first software development site in Vancouver in 2011 with over 1,000 employees, announced that the new jobs will be in e-commerce technology, cloud computing, and machine learning. Employees will be working in a tower the company plans to build on top of the old Canada Post office in downtown.
Carson Woo, associate professor of accounting and information systems at UBC’s Sauder School of Business, said hiring is “a zero-sum game” for tech companies.
He recalls sitting in on board meetings among high-level executives from some of the city’s top employers, who hoped Amazon doesn’t expand in Vancouver. Their reservation, Woo said, comes from the time and money they’ve invested in training these workers.
“Essentially, you’re taking people from other companies,” Woo said.
This is why Woo believes the Canadian government will eventually allow Amazon to hire from overseas like it did for Facebook and Microsoft in the past.
“Because otherwise, the local companies will really suffer,” he added.
Bill Klug, an instructor of cloud computing at the British Columbia Institute of Technology, said small and medium-size companies will feel the pressure especially in what they pay their staff when competing with large multinational tech corporations.
In addition to demand outweighing the supply of tech workers, Amit Venugopal, managing director at Ecenta Canada Services, said Vancouver’s high costs of living has deterred workers he tried to recruit from the east coast who said the salaries offered don’t always match the cost of living.
“Vancouver has a very small native growth of technology workers and the cost of living is prohibiting people from other parts of Canada” moving to B.C., he said. In addition, workers aren’t always interested in being a programmer and opt for work in business or technology management that create a skills gap that employers need to fill.
Despite the growing competition for skilled tech workers, Marc-David Seidel, associate professor at Sauder, said his research in labour mobility indicates that these jobs will help Vancouver’s ecosystem to grow because as some employees will stay with Amazon long-term, others will create start-ups of their own, invest in other start-ups or work for other organizations, adding to the diversity of the workforce.
He highlighted Austin, Texas and Silicon Valley as examples of where the spin-offs helped grow the local tech economy.
“These types of announcements are more a sign that the ecosystem has been growing,” he said, “and that the culture that’s developing the ecosystem is being recognized by international players.”
Jenny Peng is a Vancouver-based reporter covering business. Follow her on Twitter: @JennyPengNow
The Vancouver technology industry may well be on the verge of an extraordinary period of growth. Global, national, and regional factors appear to be aligning in ways that could create an extraordinary economic opportunity for the Lower Mainland which could not have been anticipated. Vancouver has been an endless topic of discussion about its comparability (or not) to Silicon Valley, the historical Canadian investment conservatism, and the lack of other resources necessary to create the “secret sauce” that makes a region achieve critical mass. That may be changing if only the convergence of factors is grasped and exploited.
The Vancouver technology industry may well be on the verge of an extraordinary period of growth. Global, national, and regional factors appear to be aligning in ways that could create an extraordinary economic opportunity for the Lower Mainland which could not have been anticipated. Vancouver has been an endless topic of discussion about its comparability (or not) to Silicon Valley, the historical Canadian investment conservatism, and the lack of other resources necessary to create the “secret sauce” that makes a region achieve critical mass. That may be changing if only the convergence of factors is grasped and exploited.
In an expansion of regional cooperation, the University of British Columbia and the University of Washington today announced the establishment of the Cascadia Urban Analytics Cooperative.
Universities establish joint centre to use data for social good in Cascadia region
Media Release | February 23, 2017
University of Washington President Ana Mari Cauce, Microsoft President Brad Smith, and University of British Columbia President Santa J. Ono at the Emerging Cascadia Innovation Corridor Conference in Vancouver, B.C., September 20, 2016.
In an expansion of regional cooperation, the University of British Columbia and the University of Washington today announced the establishment of the Cascadia Urban Analytics Cooperative to use data to help cities and communities address challenges from traffic to homelessness. The largest industry-funded research partnership between UBC and the UW, the collaborative will bring faculty, students and community stakeholders together to solve problems, and is made possible thanks to a $1-million gift from Microsoft.
“Thanks to this generous gift from Microsoft, our two universities are poised to help transform the Cascadia region into a technological hub comparable to Silicon Valley and Boston,” said Professor Santa J. Ono, President of the University of British Columbia. “This new partnership transcends borders and strives to unleash our collective brain power, to bring about economic growth that enriches the lives of Canadians and Americans as well as urban communities throughout the world.”
“We have an unprecedented opportunity to use data to help our communities make decisions, and as a result improve people’s lives and well-being. That commitment to the public good is at the core of the mission of our two universities, and we’re grateful to Microsoft for making a community-minded contribution that will spark a range of collaborations,” said UW President Ana Mari Cauce.
Today’s announcement follows last September’s Emerging Cascadia Innovation Corridor Conference in Vancouver, B.C. The forum brought together regional leaders for the first time to identify concrete opportunities for partnerships in education, transportation, university research, human capital and other areas.
A Boston Consulting Group study unveiled at the conference showed the region between Seattle and Vancouver has “high potential to cultivate an innovation corridor” that competes on an international scale, but only if regional leaders work together. The study says that could be possible through sustained collaboration aided by an educated and skilled workforce, a vibrant network of research universities and a dynamic policy environment.
Microsoft President Brad Smith, who helped convene the conference, said, “We believe that joint research based on data science can help unlock new solutions for some of the most pressing issues in both Vancouver and Seattle. But our goal is bigger than this one-time gift. We hope this investment will serve as a catalyst for broader and more sustainable efforts between these two institutions.”
As part of the Emerging Cascadia conference, British Columbia Premier Christy Clark and Washington Governor Jay Inslee signed a formal agreement that committed the two governments to work closely together to “enhance meaningful and results-driven innovation and collaboration.” The agreement outlined steps the two governments will take to collaborate in several key areas including research and education.
“Increasingly, tech is not just another standalone sector of the economy, but fully integrated into everything from transportation to social work,” said Premier Clark. “That’s why we’ve invested in B.C.’s thriving tech sector, but committed to working with our neighbours in Washington – and we’re already seeing the results.”
“This data-driven collaboration among some of our smartest and most creative thought-leaders will help us tackle a host of urgent issues,” Gov. Inslee said. “I’m encouraged to see our partnership with British Columbia spurring such interesting cross-border dialogue and excited to see what our students and researchers come up with.”
The Cascadia Urban Analytics Cooperative will revolve around four main programs:
The Cascadia Data Science for Social Good (DSSG) Summer Program, which builds on the success of the DSSG program at the UW eScience Institute. The cooperative will coordinate a joint summer program for students across UW and UBC campuses where they work with faculty to create and incubate data-intensive research projects that have concrete benefits for urban communities. One past DSSG project analyzed data from Seattle’s regional transportation system – ORCA – to improve its effectiveness, particularly for low-income transit riders. Another project sought to improve food safety by text mining product reviews to identify unsafe products.
Cascadia Data Science for Social Good Scholar Symposium, which will foster innovation and collaboration by bringing together scholars from UBC and the UW involved in projects utilizing technology to advance the social good. The first symposium will be hosted at UW in 2017.
Sustained Research Partnerships designed to establish the Pacific Northwest as a centre of expertise and activity in urban analytics. The cooperative will support sustained research partnerships between UW and UBC researchers, providing technical expertise, stakeholder engagement and seed funding.
Responsible Data Management Systems and Services to ensure data integrity, security and usability. The cooperative will develop new software, systems and services to facilitate data management and analysis, as well as ensure projects adhere to best practices in fairness, accountability and transparency.
At UW, the Cascadia Urban Analytics Collaborative will be overseen by Urbanalytics (urbanalytics.uw.edu), a new research unit in the Information School focused on responsible urban data science. The Collaborative builds on previous investments in data-intensive science through the UW eScience Institute (escience.washington.edu) and investments in urban scholarship through Urban@UW (urban.uw.edu), and also aligns with the UW’s Population Health Initiative (uw.edu/populationhealth) that is addressing the most persistent and emerging challenges in human health, environmental resiliency and social and economic equity. The gift counts toward the UW’s Be Boundless – For Washington, For the World campaign (uw.edu/boundless).
The Collaborative also aligns with the UBC Sustainability Initiative (sustain.ubc.ca) that fosters partnerships beyond traditional boundaries of disciplines, sectors and geographies to address critical issues of our time, as well as the UBC Data Science Institute (dsi.ubc.ca), which aims to advance data science research to address complex problems across domains, including health, science and arts.
Accelerate Okanagan should be commended for publishing a document, the stated goal of which is to “assist in attracting new talent, companies, and potential investors to the Okanagan, as well to inform policy makers and the media.” Such reports are commonly used to promote a community or region’s economy. However, as with the earlier 2015 report, there are persistent issues, particularly with the industry definition and methodology of the study. The result is questionable data and numbers that simply do not pass a basic “sniff test.” Accepting the results of this study as published may only serve to mislead community leaders on planning, and mislead prospective entrepreneurs considering relocating here.
Problems Persist With New 2016 Accelerate Okanagan “Tech Industry Analysis”
Accelerate Okanagan should be commended for publishing a document, the stated goal of which is to “assist in attracting new talent, companies, and potential investors to the Okanagan, as well to inform policy makers and the media.” Such reports are commonly used to promote a community or region’s economy. However, as with the earlier 2015 report, there are persistent issues, particularly with the industry definition and methodology of the study. The result is questionable data and numbers that simply do not pass a basic “sniff test.” Accepting the results of this study as published may only serve to mislead community leaders on planning, and mislead prospective entrepreneurs considering relocating here.
I taught Industry Analysis at the University of British Columbia, and my entire career has been in high-tech in Silicon Valley and globally, beginning with many years at Intel Corporation, so my assessment is exclusively from a professional perspective. A PowerPoint presentation of my work in this area is posted on this website, under the heading Professional Stuff.
The report begins by explaining that the study was completed by an unnamed third party, apparently affiliated with Small Business BC. A review of the Small Business BC website, staff, and services indicates the organization is almost exclusively organized and resourced to provide services only to individual small businesses. For example, scanning SBBC’s “Market Research” heading, it indicates that its services are focused entirely on smaller scale research for an individual small business, not a large scale analysis of an entire industry in a region. Industry analyses of such scale are better suited to a local educational institution like UBC, with all the requisite skills and resources. Though I have no inside knowledge, it seems reasonable to surmise that some degree of budgetary constraint and political influence were involved in the selection of SBBC, and a desire to emphasize local promotion over objective accuracy.
With regard to methodology and industry definition, the Report states that it follows the methodology of British Columbia’s High Tech Sector Report, the most recent of which is from 2014. A closer look at this methodology can be found on the provincial government website. A separate document is listed, “Defining the British Columbia High Technology Sector Using NAICS,” published fifteen years ago in 2001. My review of this document indicates that while it offers some useful discussion, it is seriously out of date and in need of revision. A more professional approach would have required the development of a more current methodology relevant to the Okanagan situation. The BC methodology document does provide some very cogent cautionary remarks on high-tech industry definition and methodology:
The “high technology” sector is a popular subject of discussion and analyses, partly because it is viewed as an engine of growth both in the past and for the future. However, the high-technology sector has no specific and universally accepted definition. Defining and measuring the high technology sector can be done as part of basic research at the level of individual firms. A second, more “modest” approach uses pre-existing data collected on “industries” which are defined for general statistical purposes. The challenge is to determine which of these industries warrants inclusion in the measurement of the high technology sector.
The AO Report author seems to have accepted both approaches. Page 4 of the Report explains that the author decided to also include “the previous survey undertaken by Accelerate Okanagan.” The previous AO survey was simply a Survey Monkey survey submitted by individual local businesses. The results were apparently compiled without additional professional judgment applied, or follow-up contact with companies by phone or other means and cross-referencing with the more “modest” macro data methodology mentioned in the 2001 BC document. IMHO, if my assumptions are correct, the Survey Monkey data should have been thrown out as unreliable, or regenerated with much greater scrutiny and judgment applied.
Then there is the issue of Kelowna as an employment market, as noted in the recently reported Bank of Montreal (BMO) and BC Business low national and provincial rankings of Kelowna’s employment market. These issues have also been reported in KelownaNow. Hootsuite, whose founder is from Vernon, consciously chose Vancouver to start his company. CEO Ryan Holmes openly admitted that he did not base Hootsuite in the Okanagan because he knew he would not be able to attract the necessary talent here. It is also important to note that a significant number of local business and community leaders met with the BC Labour Minister and reported that their primary concern was a lack of Temporary Foreign Workers, not economic development or the growth of the local high-tech industry.
The AO Report touches on these issues only very tangentially and indirectly in the closing pages. A more credible approach would have been to confront these local problems directly, citing the BMO report for example, and what AO and the community plan to do about it. Clearly, there are unresolved and ignored contradictions with the AO report that damage its credibility and usefulness.
Finally, this week’s media coverage of the report has died down, having duly reported all the desired sound bytes, but a Google search shows that the media coverage has so far been nearly exclusively from the local Okanagan media which does not meet the stated goal of the AO effort to broadcast the promotion beyond the Okanagan.
AO Tech Industry Report Lacks The Rigor Necessary To Give It Much Credibility
Read the AO January 2015 press release and access the full report here
The AO report’s “economic impact” conclusions are based on 2014 Survey Monkey voluntary responses, which are problematic due to an apparent lack of critical assessment. The report does not follow the kind of rigorous industry analysis performed by leading technology consultancy firms like International Data Corporation (IDC)or Gartner. The definition of an “industry,” for example the “automobile industry in Canada,” involves broad activity around all aspects of “automobiles,” but at some point, firms like Kal Tire or “Joe’s Brake Shop” might be excluded from a definition of the automobile industry. The report does not mention the rigor applied to this industry analysis, so the question is left open, “What exactly is the “tech industry” in the Okanagan?” A well-defined $1 Billion industry is the mobile advertising industry in Canada. Is that what we have in the Okanagan? By way of comparison, I reported on New Zealand’s Ice House tech incubator economic impact report, which has much greater credibility. The AO report is essentially claiming that the Okanagan technology economy is more than twice the size of New Zealand’s…That’s too big of a leap of faith for me. Read New Zealand’s Ice House Startups Achieve Impressive Resultsand contrast it with the AO report.
Then there is the issue of Kelowna as an employment market, as noted in the recently reported Bank of Montreal (BMO) and BC Business low national and provincial rankings of Kelowna’s employment market. These issues have also been reported in KelownaNow. Clearly, there are unresolved contradictions with the AO reports.
A mysterious Chinese company, Anbang Insurance Group has attracted the attention of The New York Times, The Wall Street Journal, Forbes, Fortune Magazine, and government authorities in the United States and other countries. The cause of the scrutiny has been Anbang’s sudden involvement in a number of massive multi-billion dollar real estate investments around the World. Formed in 2004, Anbang apparently holds assets worth at least $295 Billion, but a months-long investigation by the New York Times has revealed an extremely opaque structure, empty offices, obscure shareholders, and extensive political connections to the Chinese elite. Analysis of Anbang and its operations holds a potential lesson for Canadian authorities fretting over foreign buyers and skyrocketing real-estate prices.
A mysterious Chinese company, Anbang Insurance Group has attracted the attention of The New York Times, The Wall Street Journal, Forbes, Fortune Magazine, and government authorities in the United States and other countries. The cause of the scrutiny has been Anbang’s sudden involvement in a number of massive multi-billion dollar real estate investments around the World. Formed in 2004, Anbang apparently holds assets worth at least $295 Billion, but a months-long investigation by the New York Times has revealed an extremely opaque structure, empty offices, obscure shareholders, and extensive political connections to the Chinese elite. Wu Xiaohui, Anbang’s Chairman, is married to Deng Xiaoping’s granddaughter and involved with at least two others with family connections to the People’s Liberation Army. Both Wu and his wife, Zhuo Ran have disappeared from Anbang’s list of shareholders after the New York Times investigation began. Anbang has all the earmarks of a Panama Papers situation: Chinese money laundering, corruption at the highest levels, and mysterious shell companies. Analysis of Anbang and its operations is a cautionary tale for Canadian authorities fretting over foreign real-estate buyers and skyrocketing real-estate prices.
Last Spring, as B.C. Premier Christy Clark was preparing to announce new regulations to stem the flood of non-resident residential real-estate buyers, she simultaneously flew to China on a trade mission with a group of B.C. commercial real estate moguls, apparently to reassure the Chinese that B.C. was still interested in Chinese commercial real-estate investment. But by the time Clark made her trip to China, questions about the Anbang Insurance Group’s ownership had already been flying in the U.S. financial press for over two years. Whether it may have been more prudent for Clark to defer promoting Chinese commercial real estate investment in Vancouver, only time will tell. What does appear clear is that China is demonstrating a much more aggressive, arrogant and even hostile tone in its relations with both Canada and the United States. This is evidenced by this week’s G20 Summit in Hangzhou, beginning with the deliberate snubbing of Barak Obama on arrival in China, and a number of other incidents, including Trudeau’s inability to achieve an agreement with China on canola oil. Canada needs to be smarter about how it deals with these new realities.
Anbang Insurance Group Corporate Headquarters, Beijing
The dingy fourth floor of this building in Beijing houses two companies that control assets of Anbang Insurance Group worth more than $15 billion.
Wu Xiaohui, Chairman of Anbang Insurance Group
Reblogged from The New York Times
A Chinese Mystery: Who Owns a Firm on a Global Shopping Spree?
Owners of Anbang, a Chinese insurer behind a wave of multibillion-dollar deals, include relatives and friends of its politically connected chairman.
Pingyang County’s verdant hills still hint at a long-lost China. Rice paddies and villages surround its bustling towns, and in the fields, farmers wade into the mud to plant seedlings as they have for thousands of years.
It is an odd place to find the people behind a Chinese corporate powerhouse that is turning heads on Wall Street with a global takeover binge. Yet the area is home to a tiny group of just such people — small-time merchants and villagers who happen to control multibillion-dollar stakes in the Anbang Insurance Group, which owns the Waldorf Astoria in New York and a portfolio of global names and properties.
American regulators are now asking who these shareholders are — and whether they are holding their stakes on behalf of others.
The questions add to the mystery surrounding a company that seemed to come out of nowhere, surprising deal makers with offers to pay more than $30 billion for assets around the world.
Anbang’s shopping spree is part of an outflow of money from China that has reshaped global markets but has often been shrouded in secrecy, sometimes by prominent Chinese looking to shift their wealth abroad without attracting attention at home. That poses a problem for international regulators trying to identify the buyers behind major acquisitions and to assess the riskiness of these deals.
The Anbang shareholders in the Pingyang County area hold their stakes through a byzantine collection of holding companies. But according to dozens of interviews and a review of thousands of pages of Anbang filings by The New York Times, many of them have something in common: They are family members and acquaintances of Wu Xiaohui, Anbang’s chairman, a native of the county who married into the family of Deng Xiaoping, China’s paramount leader in the 1980s and ’90s.
In many ways, Anbang and Mr. Wu appear to be archetypal products of China’s mix of freewheeling capitalism and Communist Party dominance, a formula that has fueled nearly four decades of untrammeled growth.
Anbang got its start as an auto insurance company in 2004 in the eastern Chinese city of Ningbo. For years it was only a minor player. But it took off as it became more aggressive with its finances, buying stakes in Chinese banks and bringing in money by selling high-risk, high-yield investment funds to ordinary Chinese.
Mr. Wu, 49, a former car salesman and low-level antismuggling official, led Anbang through this transformation and is now known as one of China’s most successful businessmen. He wears tailored suits and polished loafers,hobnobs with the likes of Stephen A. Schwarzman of Blackstone, and sometimes holds court at Harvard.
But he does not appear in Anbang’s filings as an owner.
It is common in China for the wealthy to have their shares in companies held in others’ names. Known in Chinese as baishoutao, or white gloves, these people are often trusted relatives or acquaintances. Many defend the practice as a way to protect their privacy in a nation where riches can be a political liability. But others say white gloves can be used to hide ill-gotten gains and thwart corruption investigators.
On the fourth floor of this shabby building in Beijing is an office that is home to two companies with a total stake of more than $15 billion in assets of one of China’s biggest financial conglomerates: the Anbang Insurance Group.CreditGilles Sabrie for The New York Times
Anbang did not respond when asked if Mr. Wu was a shareholder and declined to answer questions about its owners.
The company, a spokesman said, “has multiple shareholders who have made all required disclosures under Chinese law. They are a mix of individual and institutional shareholders who made a commercial decision to invest in the company. Anbang has now grown to be a global company thanks to the support of these long-term shareholders.”
For investors and regulators, white gloves can make it difficult to evaluate the financial health of a Chinese buyer. Ownership may be concentrated in the hands of a few people, posing hidden risks, and companies with government connections could be vulnerable to political shifts or become magnets for corruption.
“It is very important for businesses to know who they are ultimately doing business with, and for investors, what they are investing in,” said Keith Williamson, a managing director in Hong Kong at Alvarez & Marsal, a firm that carries out corporate fraud investigations.
It is not clear whether the shareholders in the Pingyang County region are holding large stakes on behalf of anyone else. But on May 27, Anbangwithdrew its application with New York State to buy an Iowa insurer, Fidelity & Guaranty Life, for $1.6 billion. Regulators had asked about ties between several shareholders with the same family names, said one person briefed on the matter who spoke on the condition of anonymity.
A $6.5 billion deal for a portfolio of hotels that includes the Essex House in New York and several Four Seasons locations is awaiting results from a security review by the American government. In March, Anbang withdrew a $14 billion bid for Starwood, the operator of Sheraton and Westin hotels, in a move that surprised Wall Street.
The company could come under greater scrutiny as it prepares to sell sharesin its life insurance business on the Hong Kong stock exchange next year. Already, at least one major New York-based investment bank has raised concerns about Anbang’s ownership after studying its shareholding structure to evaluate whether to help with its overseas deals, according to two people involved in the matter who asked not to be identified because the process was private. The bank did not participate in Anbang’s deals.
Separately, the Chinese magazine Caixin reported in May that Chinese regulators were examining Anbang’s riskier financial products. It is unclear where that inquiry stands or whether Anbang’s ownership structure is being investigated.
President Xi Jinping has waged a campaign against graft since taking office, and the use of white gloves has recently come under scrutiny. “White gloves are accompanied by power’s black hands,” the Communist Party’s disciplinary watchdog wrote in a report last year.
Questions about Anbang’s owners come as Chinese companies make deals around the world — sometimes representing efforts by China’s powerful to move money out of the country, as the economy slows and the party tightens its grip on everyday life.
Photo
Wu Xiaohui, chairman of Anbang, at a global insurance conference in 2015.CreditBen Asen/International Insurance Society
China has encouraged some capital outflow to improve the performance of its investments and expand its influence. But the subject of the elite moving money overseas is politically sensitive, raising questions about the source of their wealth and their confidence in the Chinese economy.
Luo Yu, the son of a former chief of staff of China’s military, said China’s most politically powerful families had been transferring money out of the country for some time.
“They don’t believe they will hold on to power long enough — sooner or later they would collapse,” said Mr. Luo, a former colonel in the Chinese Army whose younger brother was a business partner with one of Anbang’s founders. “So they transfer their money.”
At its founding in 2004, Anbang had an impressive list of politically connected directors. Records show early Anbang directors included Levin Zhu, son of a former prime minister, and Chen Xiaolu, the son of an army marshal who helped bring Communist rule to China.
Then there was Mr. Wu, who was born Wu Guanghui but was known as Wu Xiaohui from a young age. Relatives said he grew up in a Catholic family; a crucifix sat on his aunt’s dining room table, and she wears a necklace with a portrait of the Virgin Mary.
Mr. Wu married Zhuo Ran, a granddaughter of Deng, the Chinese leader who brought China out of the chaos of the Mao era. Together, Mr. Wu, Ms. Zhuo, Mr. Chen and their relatives owned or ran the companies that controlled Anbang, according to company filings.
Anbang leapt onto the global stage with last year’s purchase of the Waldorf Astoria and its aborted bid for the Starwood chain. By this year, Anbang’s assets had swelled to $295 billion.
It is not clear what prompted Anbang’s sudden interest in overseas assets. But the shift came after a reshuffling of its ownership structure that also led to the injection of more than $7.5 billion into the company.
Company documents filed with Chinese agencies show that the number of firms holding Anbang’s shares jumped to 39, from eight, over six months in 2014. Most of those firms received large injections of funds. At the same time, Anbang’s capital more than quintupled.
Ms. Zhuo disappeared from the ownership records by the end of that year. Many of Mr. Wu’s relatives did as well. Mr. Wu and Mr. Chen had disappeared earlier from the records.
Photo
The Anbang Insurance Group owns the Waldorf Astoria in New York, above, and a portfolio of global names and properties.CreditChang W. Lee/The New York Times
Mr. Zhu, who does not appear to have owned shares, disappeared in paper filings from Anbang’s roster of directors by 2009, though he was listed as a director on online government filings as late as 2014.
Mr. Wu, Mr. Chen and Mr. Zhu did not respond to requests for comment, and Ms. Zhuo could not be reached. In March, Mr. Zhu told Chinese reporters that he was not an Anbang director.
Anbang’s current shareholding firms are not well-known names in China, and some appear to have been set up just to hold Anbang shares. One lists its address as the empty 27th floor of a dusty Beijing office building. Two more list an address at a mail drop above a Beijing post office.
Using corporate filings, The Times compiled a list of nearly 100 people who own shares in the firms and traced about a dozen to Pingyang County or nearby. Reporters visited the area, in China’s eastern Zhejiang Province, and interviewed dozens of residents, including several whose names appeared on the list. They also interviewed an uncle, an aunt and a nephew of Mr. Wu.
The latter two, as well as others in the area, said one name matched that of his sister, Wu Xiaoxia. The family members said several other names matched those of Mr. Wu’s extended kin, including two cousins and others on his mother’s side of the family. Through their various stakes in Anbang shareholding companies, these people control a stake representing more than $17 billion in assets.
Other names matched local acquaintances of Mr. Wu, including Huang Maosheng, a local businessman who confirmed in a brief phone interview that he had a business relationship with Mr. Wu but declined to elaborate.
One village leader and neighbors identified the names of four of Mr. Huang’s relatives — including some whom they described as common workers — from among those on the list. Their Anbang holdings represent about $12 billion in assets.
Another resident, Mei Xiaojing, said two names on the list matched those of her relatives. Asked if she knew Mr. Wu, she said, “Well, yes,” then ended the phone conversation and did not respond to subsequent calls. Through multiple holding companies, those three people have a stake representing about $19 billion in Anbang assets.
As Anbang rose, so did Mr. Wu’s profile. In 2013 Mr. Wu secured a yearlong position as a visiting fellow at the Asia Center of Harvard, joining a growing list of politically connected Chinese billionaires with ties to Harvard.
Ezra F. Vogel, a professor emeritus at Harvard who wrote a biography of Deng, said he met Mr. Wu on several occasions.
“He had this staff of sharp people who were working for him,” Mr. Vogel said. “It seems that they were doing the detail work, and he was the friendly man supplying the connections.”
Imagine if Canada was implementing environmental policies like those proposed by one of its own, author & filmmaker Naomi Klein. What if Canada were to restore its historical image as a progressive country leading the World with its policies? In the following video published on the UK Guardian website, Ms. Klein argues that making policy moves now to increase investment in renewable energy make sense, while oil prices are at very low levels, and likely to remain low for the longer term.
Imagine if Canada was implementing environmental policies like those proposed by one of its own, author & filmmaker Naomi Klein. What if Canada were to restore its historical image as a progressive country leading the World with its policies? In the following video published on the UK Guardian website, Ms. Klein argues that making policy moves now to increase investment in renewable energy makes economic sense, while oil prices are at very low levels, and likely to remain low for the longer term.
Report Lacks The Rigor Necessary To Give It Much Credibility. The AO report’s “economic impact” conclusions are based on 2014 Survey Monkey voluntary responses, which are problematic due to an apparent lack of critical assessment. The report does not follow the kind of rigorous industry analysis performed by leading technology consultancy firms like International Data Corporation (IDC) or Gartner.
AO Tech Industry Report Lacks The Rigor Necessary To Give It Much Credibility
Read the AO press release and access the full reporthere
The AO report’s “economic impact” conclusions are based on 2014 Survey Monkey voluntary responses, which are problematic due to an apparent lack of critical assessment. The report does not follow the kind of rigorous industry analysis performed by leading technology consultancy firms like International Data Corporation (IDC)or Gartner. The definition of an “industry,” for example the “automobile industry in Canada,” involves broad activity around all aspects of “automobiles,” but at some point firms like Kal Tire or “Joe’s Brake Shop” might be excluded from a definition of the automobile industry. The report does not mention the rigor applied to this industry analysis, so the question is left open, “What exactly is the “tech industry” in the Okanagan?” A well-defined $1 Billion industry is the mobile advertising industry in Canada. Is that what we have in the Okanagan? By way of comparison, I reported on New Zealand’s Ice House tech incubator economic impact report, which has much greater credibility. The AO report is essentially claiming that the Okangan technology economy is more than twice the size of New Zealand’s…That’s too big of a leap of faith for me. Read New Zealand’s Ice House Startups Achieve Impressive Resultsand contrast it with the AO report.
Then there is the issue of Kelowna as an employment market, as noted in the recently reported BC Business low ranking of Kelowna at 17th. Clearly, there are unresolved contradictions with the AO report.
Apparently all we need are more Temporary Foreign Workers
BC Business low ranking of Kelowna jobs market only adds to the problem
Future Shop, The Sequel
UPDATE: January 15, 2015.Target announced today that it will be closing all 133 stores in Canada, including the Vernon and Kelowna stores. eliminating at least a couple of hundred local $10/hr jobs and a handful of slightly better paid management jobs. The Wall Street Journal is reporting that Target’s 17,000 + Canadian layoffs of low income workers will be the largest in Canadian history.
Just this week, Kelowna Nowreported that B.C. Business ranked Kelowna 17th in B.C. for the quality of its jobs market. Seven key economic indicators were used to help reflect the health of a city’s job market including: income growth, average household income, population growth, unemployment, labour participation, the percentage of people with degrees and taking transit. This came as no surprise to many. As if to underscore the issue, the comments on Kelowna Now’s Facebook page were in overwhelming agreement with the poor ranking, sprinkled with scathing criticism of the local jobs market, local government, and the local establishment, who seem not to be interested in the local economy.
In a jaw dropping display of callous indifference to the local economy and jobs market, local Kelowna community leaders, including UBCO Deputy Vice Chancellor, Deborah Buszard, met to discuss local employment. Coming on the heels of the B.C. Business report, Kelowna Now reported the discussion at the meeting. The main theme in this reported discussion was how can Kelowna get more cheap TFW labour for tourism. Apparently there was no higher level discussion about the recent B.C. Business ranking of Kelowna at 17th in jobs. No discussion of the local Target closures, or the lack of economic development, and denial of impending oil economy crash. This is why Kelowna is going nowhere fast.
As if to make matters worse, the plummeting price of Western Canadian Select, essentially Alberta refined bitumen, and dire global oil economy forecasts, have cast a dark cloud over the Okanagan economy’s prospects in 2015. Our largely seasonal tourism and service industry economies are likely to suffer serious shocks from Alberta’s problems. The sightings of those red numbered license plates are likely to decline next summer. Both The Wall Street Journaland CNN Moneyare forecasting a recession in Texas in 2015, which mirrors the situation in Alberta, and is a wake up call to Kelownan’s. At the same time, CBC’s The National has been broadcasting a discussion series this week on The Politics of Oil, and how Canada has bet the entire economy on oil rather than diversifying and investing in the future.
mayo615 