Saturday, May 30, 2009

Massaging the Numbers in China

The Wall Street Journal considers Chinese Government's growth statistics: "China's economic data are a bit like sausages: If you're a fan, it's best not to scrutinize how they're made." The question of course is whether or not China is really growing nearly as fast as it is because electrical consumption numbers are down. China's solution, amusing as it is, has been to stop publishing the electrical consumption numbers.

SRI Blog riffs off this pointing to how numbers are manipulated by companies and how you as buyer or even factory owner can get conned - let's count the ways:

  1. Kickbacks
  2. Exaggerated Costs
  3. Supplemental Costs
  4. Double Billing
  5. Unnecessary Taxes, Licenses and Fees
  6. Testing Fees (that never happen)
  7. Hostage Payments
  8. Cost Increases
  9. Unnecessary Fees
  10. Flat out Lies
Read on - but some useful advice I'd highly agree with: "Of course all of these “mystery meats” are in every country ... The keys to not getting snookered include: knowing your market, getting bids from competing suppliers, doing your research on wages, licenses, taxes and personally participating in as much of the process as possible. Double checking on all invoices and using different people for various sensitive portions of the purchase process will help too." I'd further emphasize the point that whenever goods are purchased across borders (and many times when they're not) you become increasingly vulnerable to any one of these manipulations.

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