Double Handshake

Here’s an illustrative anecdote of one on-the-ground service that can vary widely between China and Latin America: Moneygram.

Earlier this year when I was in Peru, I began using Moneygram, an international money transfer service similar to Western Union, to have money sent from the US in order to avoid exorbitant ATM charges. The service generally works well, but your results may vary.

This is how Moneygram worked in Lima, Peru. I would walk one block from my house, turn right at the corner and walk into a small shop that specialized in international wire transfers. I told the clerk an eight-digit number and handed over my passport. The clerk filled out a single Moneygram form, made a copy of my passport and asked if I wanted my cash in US dollars, Nuevo Soles or a combination of the two. The process took literally ten minutes.

This is how Moneygram works in Beijing, China. Before setting out this morning, I checked Moneygram’s website for locations. Ostensibly, there are 331 agents around Beijing that one can receive a transfer, according to the company’s website. Bank of China branches make up most of the list. So far so good. Armed with my transfer number and passport I set out on my bike looking for the nearest BOC branch on the list.

Four hours and five banks later, I had the RMB in my pocket. The first BOC bank referred me to their head Beijing City branch, saying that was the only place I could accept a transfer. Fine. I peddled to Chaoyangmen and waited an hour in that bank’s immense lobby waiting for my number to be called and studying the display of commemorative coins celebrating the upcoming 60th anniversary of the People’s Republic of China.

When I made it to counter, the teller had no idea what a Moneygram was. Luckily he called for help and, after some serious digging through drawers, came up with the requisite paperwork. He slid the paper to me and told me to fill it out. When I handed it back, he took the sheet and my passport and disappeared for 20 minutes.

“This is no good,” he told me when he returned, “the names are wrong.”

“Oh, here,” I tried to explain, “she must have written ‘Tom’ for ‘Thomas’” I wrote down T-O-M Pellman in my notebook and showed him.

“No, that’s not right. You need to telephone the sender to confirm the names.”

“How about ‘Thomas Pellman’ instead of ‘Thomas Eugene Pellman’? Sometimes in the US we don’t write our middle names.”

“That is right,” he said hesitantly but then walked off and talked on a phone for ten minutes. “Sorry, Moneygram will only let us transfer money if the name the sender writes matches the name you write. You need to tell the sender to add this word,” he pointed to my middle name, “and then we can finish it.”

“This is stupid. I don’t have time to call her; I’ve already wasted an hour here. Do you think I’m tricking you into getting this money because I wrote down my middle name and the sender didn’t?”

“Sorry, there’s nothing I can do.”

And so, back on the bike. The next bank had, miraculously, heard of Moneygram, but the computer system was down. I stopped next at an Industrial and Commercial Bank of China, which referred me to another branch down the road. I bit more peddling and I found myself at another ICBC further down the road, waiting, again, for the better part of an hour. This time, I carefully filled out the form leaving out my middle name on the sheet and luckily the teller didn’t raise the issue. I signed my name at least five times to various papers. The teller stamped a red oval at least a dozen times. Suddenly he looked up.

“Wait, what’s your zip code in Beijing?”

“I’m not sure; it’s in Nanluoguxiang.”

He grimaced, turned and shouted to his manager down the row. He turned back and wrote “10000″ in the zip code box.

Finally, I had my cash.

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I know grinding bureaucracy in China is nothing new, so I hope this doesn’t come across as whiny. Truth be told, this banking episode is about on par with every other time I’ve stepped into a bank in China.

There are some fairly obvious reasons for why using international money services like Moneygram are so different between places like China and Peru. The RMB not being a fully convertible currency makes every international money move in and out of the country a major headache. Even having to step foot in a bank (versus going to a specialty shop like I dealt with in Lima) adds time and hassle. Also, I’m sure that the money remittance infrastructure around Latin America is much more sophisticated due to emigrants needing easy ways to send their pay from abroad back home.

Deeper though, there is something deeply defeating about how every time you step into a bank in China, you expect something (invariably for ridiculous reasons) to go wrong. Makes you yearn for that South American efficiency!

We’re on something of a Venezuela binge of late; here’s one more noteworthy item. Al Jazeera aired a nice video on China’s impact in Venezuela last week. In it, Dima Khatib reports from Caracas on how the country now leads Latin America in Chinese investment dollars. A lion’s share of these investments are in energy procurement, but there are a few lesser-known industries as well. From the video:

This mobile phone, baptized the vergatario, or in colloquial Spanish, “the very best”*, is the first Venezuelan mobile and one the Bolivarian revolution’s latest inventions. It is assembled in a mixed Chinese-Venezuelan socialist company, where China contributes to Venezuela’s new model of industrial production by providing technology and parts, while Venezuela provides all the rest …

In another socialist factory, the first Bolivarian computer is being assembled. Venezuelans hope the technology and know-how will be transferred to them by the Chinese in the future.

This talk of “socialist” companies and factories is Khatib trying to capture the rhetoric of Venezuela’s Hugo Chavez himself, who’s fond of pretending his country and China have some kind of ideological connection. In reality, China’s interests in Venezuela (and “Bolivarian computers” for that matter) extend only as far as its own economic bottom line. That’s the brand of socialism China has been practicing for twenty years, whether Chavez recognizes it or not.

H/T: Latin American News Review

*Or male genitalia, apparently

Venezuela’s Hugo Chavez says he’s planning to shutdown two of his country’s best-known golf courses. Victims of the economic recession? Nah. Just the latest move in Chavez’s Great Socialist Revolution:

“Let’s leave this clear,” Mr. Chávez said during a live broadcast of his Sunday television program. “Golf is a bourgeois sport,” he said, repeating the word “bourgeois” as if he were swallowing castor oil. Then he went on, mocking the use of golf carts as a practice illustrating the sport’s laziness.

Let’s see, where have we heard this before?

Image: New York Times

The billion-dollar Chinese investments in Latin America are flying; I can barely keep up. Today, The Wall Street Journal reports (subscription needed) two state-owned Chinese oil companies – China National Petroleum Corp and China National Offshore Oil Corp (Cnooc) – have proposed paying at least US$17 billion for a majority stake in Argentina’s biggest oil company, YPF. The two Chinese firms want to buy an 84% stake in the Argentine unit from its beleaguered Spanish parent, Repsol YPF.

This is literally and figuratively a big deal. If successful, it would be China’s biggest-ever overseas investment. The current largest Chinese investment happened last year, when mining firm Chinalco, along with US-based Alcoa, bought a US$14.3 billion stake in Anglo-Australian firm Rio Tinto.

However, in June this year, Chinalco made moves to buy another US$19.5 billion in Rio Tinto, but the deal collapsed because of shareholder and political pressures. On the oil front, Cnooc bid US$18.5 billion for US oil firm Unocal back in 2005, a deal that was scuppered by US congress. There are plenty of other overseas Chinese investments that have gone a rye.

The central sticking point: When it comes to country’s strategic resources, how much Chinese ownership is too much? The answer varies by country, political climate and desperation of the seller. In Argentina’s case, Repsol YPF has been hit hard by the global slowdown and needs cash to pay off its US$14 billion debt. Argentina’s government does not own any of YPF but has the right to veto important transfers of ownership like this deal. If Buenos Aires decides that Chinese ownership would too greatly affect oil pricing and supply at home, the deal may be canned.

We’re a long way from knowing whether or not this deal will clear all its hurdles, but even if it does, is it a smart investment? Some question why China would go to Argentina to secure energy sources at all. From the WSJ’s Environmental Capital blog:

China is spending billions to gain access to energy resources around the world, from gas in the Middle East, gas and oil deals with Russia, offshore oil deals with Brazil, and more.

But the possible YPF deal is odd, because Argentina’s oil fields are old and tired. Repsol has seen production of both oil and gas fall every year recently, even as production costs have risen. As YPF noted in a securities filing:

“Argentina’s oil and gas fields are mature and our reserves and production are declining as reserves are depleted. In the last two years our proved reserves declined by approximately 20%, and we replaced 51% of our production with new proved reserves during 2007; average daily production in 2007 declined by approximately 4.1% from 2006. We are engaged in efforts to mitigate these declines by adding reserves through technological enhancements aimed at improving our recovery factors as well as through deepwater offshore exploration and development of tight gas. These efforts are subject to material risks and may prove unsuccessful due to risks inherent to the oil and gas industry.”