Open Thread: How To Invest In The New Silk Road
Part 1 of an ongoing topic.
Our Q&A open thread topic this week is about investing in the New Silk Road / Belt and Road and our guest is Chris Devonshire-Ellis, the chairman and founder of Dezan Shira and Associates, a consultancy firm that advises corporations and governments on their Asian investment strategies. He is the author of several books, speaks multiple languages, and was part of the first wave of foreign investors to move into China.
Most of you here are probably by now very familiar with Chris. He has been one of the most enthusiastic participants in these open threads, taking his time to share his knowledge, experience, and opinions with the community here. Many of you, I am sure, appreciate his in-depth responses and advice, while others may find him to be, well, a little controversial. Whatever the case, I’ve have known Chris for quite a while — he was one of the earliest researchers / investors to take the New Silk Road seriously — and I find what he has to say to be extremely valuable. While we disagree on some topics, we are still friends, and being exposed to outside and sometimes contrarian viewpoints is what ultimately drives our understanding of the world a little deeper.
One of the main ideas of this newsletter is to bring together as many different perspectives as possible and provide direct access to players across various sectors of Silk Road research, investment, operations, politics, and travel. One week we may have on a university student who has traveled the Silk Road on a bicycle, the next week we may have a CEO of a major logistics hub in the Caucasus, the next week our guest may be the director of a prominent think tank.
Feel free to ask Chris any questions you’d like, but some points to consider may be:
1) How to get started investing in the Silk Road?
2) What has been the impact of the novel coronavirus pandemic on Silk Road business? What advice do you have for people running such businesses during this time?
3) What are your strategies for learning the business environment in a foreign country?
4) What does art and culture have to do with Silk Road investing?
5) What are some personal highlights from your years of working on the business side of the Silk Road?
As always, be nice — challenge ideas, not people. Fire away.
Walk Slow,
Wade
Hey Chris, thanks for those responses to my intro questions above. Correct me if I'm wrong, but it seems as if you came into Asia with a background in business. How did you get started in this? What's your origin story?
Ok, I'll kick off with some answers to Wade's questions. Please feel free to add to, or ask others.
1) How to get started investing in the Silk Road?
There's three component answers to this question:
a) Travel. Acquire knowledge. just that is an investment, and are experiences and academia you need to have behind you in order to understand what is going on. Travel right now may be difficult, so do online research, and acquire a library. Amazon and Ebay are great resources for inexpensive books, choose your subject and go buy a library. As we're all locked down for while it makes sense to use this time to study.
b) I just wrote three articles this past week about investing in stocks in Belt & Road Countries, these are basically broken down as follows:
* Central Asia: https://www.silkroadbriefing.com/news/2020/04/27/investing-emerging-belt-road-initiative-stock-markets-central-asia/
* Caucasus: https://www.silkroadbriefing.com/news/2020/04/29/investing-emerging-belt-road-initiative-stock-markets-caucasus/
* South-East Asia: https://www.silkroadbriefing.com/news/2020/04/30/investing-emerging-belt-road-initiative-stock-markets-south-east-asia/
c) There are opportunities for foreign investors in China to take advantage of China's just announced 15% profits tax breaks for businesses fitting in with China's Western Regional Encouraged Industry scheme. You can read about that here: https://www.silkroadbriefing.com/news/2020/05/01/15-reduced-profits-tax-rates-preferential-policies-announced-foreign-investors-china-support-belt-road-initiative/
I have written material on how to get involved in Big Ticket investments, including Due Diligence and Joint Venture issues. Ask me questions about that if you want me to provide links.
2) What has been the impact of the novel coronavirus pandemic on Silk Road business? What advice do you have for people running such businesses during this time?
Again, I have covered this very recently here: https://www.silkroadbriefing.com/news/2020/04/24/impact-covid-19-chinas-global-belt-road-project-financing-qa/ and concerning the BRICS nations of Brazil, China, India, Russia and South Africa here: https://www.silkroadbriefing.com/news/2020/04/13/current-social-economic-impact-covid-19-upon-brics-nations/. My firm produced a complimentary magazine about operating your business during Covid-19 and the steps to take at this time here: https://www.asiabriefing.com/store/book/managing-china-business-crisis-infectious-disease-outbreak.html. It's free, all you need to do is subscribe (also free).
Basically what is happening is an IT enhancement of having staff working securely from home, and having the right tools to do this safely without compromising IP, communications and confidentiality issues. Covid-19 is ushering in more flexible, and permanently applicable office-staff work capabilities and technologies.
3) What are your strategies for learning the business environment in a foreign country?
Immerse yourself in the local culture. That means learning the local language as best you can, and not being afraid to make mistakes. Locals will be more impressed you're making an effort than wanting to criticize. Go to the local museums, read books on the history and culture, and make local friends. Seek out like minded expats. Most expats are frankly horrible people, narrow-minded, jealous and scared. They get drunk at bars and never explore. Steer clear of the bores. Find your own path.
4) What does art and culture have to do with Silk Road investing?
The way people think and behave can be different than you may be used to, so research the culture. See (3) above, but also hang out with liberally minded locals, make friends. Most business magazines feature boring talking heads on their covers, or piles of cash. They have the worst covers ever. My magazines (see www.asiabriefing.com) always feature art on the front covers, firstly because the likes of Elon Musk are weird looking people, but they're also frankly pompous, overbearing twats hooked on overselling their importance. I use art to illustrate the importance of culture in local business environments, not photos of billionaires. Elon Musk and his ilk aren't going to lend you money, or give you any advise. But you might learn something from reading "The Art Of War", "Journey To The West" "Kama Sutra" or "The Brothers Karamazov" among others, and have more fun in doing so. Especially the third suggestion.
5) What are some personal highlights from your years of working on the business side of the Silk Road?
There are several, and hopefully many more to come. Here's a few, listed and answered in the (tongue in cheek, so don't take it too seriously) format of the seven deadly sins:
Pride: Because its cool to be working on something that not many other people can;
Envy: To see our competitors and others look at us and wish they could afford too, or have the time to do it. But they can't. Ha ha ha!
Gluttony: Because one business involving China isn't enough. I have to have two.
Greed: I'm not actually money-motivated, but I am greedy to have new challenges and life experiences.
Lust: I've been wanting to kick the ass of China Law Blog, in the past they have been very unkind to me online. But now their Alexa rankings are half of those we achieve at Silk Road Briefing. Ha ha ha! (again). Yes, it's petty but I don't care....Otherwise, how can we mention lust about the Silk Road without falling in love 15 times a day with all those fantastic looking ladies that live all the way along those countries. Mama Mia! I must belong to about 28 Silk Road dating sites LOL.
Sloth: Well it's hard to be sloth when the Chinese ate them all. But that aside, the Silk Road is so full of vitality - from the ancient romance, to the joys of travel, to making business happen, that there is simply no time to be lazy.
Wrath: Let's depict this as learning to be less wrathful, and more tolerant. I've certainly learned to be more chill and less easily angered while dealing with the Silk Road. Adventures have mellowed my temperament, and made me far more tolerant when the shit hits the fan, and that's a good thing. These days I am more inclined not to let stuff freak me out, or worry about it as much. Travel in places along the Silk Road taught me that. It's hard to be cool or even try to be when a Mongolian horse has just dumped you on your ass. You just have to get back on and do it again.
So those are my replies. Fire away if you wish to ask about those, or have any other questions.
Thanks!
Chris