04/08/16 Michael Greer, Portland Ballet

 
Michael Romy Greer is the current Executive Director at Portland Ballet. He started by recognizing Don Zillman, Rusty Atwood and guest Jim Shaffer for service to Portland Ballet. He is very proud to take over as executive director. He told us that many organizations are integral to the success of Portland Ballet. He also could not resist telling us about the next show, 'The Armed Man,' presenting on May 20 and 21. (For tickets, go to: www.portlandballet.org/tickets/)
 
Michael was previously General Manager at Sino-European Recycling Resources in Ningbo, Zhejiang, China. From this point of view, he shared many observations of the Chinese people and the Chinese culture. 
 
China is a country of 1.4 billion people, versus 300 million people in the USA. Everything in China is multiplied due to this large population. There are numerous similarities between China and the US: 
  • the geographic size is similar
  • the population densities are along the coast
  • both are monolingual
  • for both, a large part of the population is not aware of things outside their country
  • neither country is required to learn a new language
  • both feel their country is center of all
The areas where China is different than the US are linked strongly to the very large population, or at least emphasized by the population. Real estate is a driving force within the whole society. Most Chinese live on the eastern coast, in very high densities. From 1997 to 2014 the percent of GNP invested in real estate development has risen from 4% to 15%. A big part of this growth is because 20% of loans go to real estate, or commodities like concrete devoted to real estate. The drivers behind this are the one-child policy, and a society that still favors the male child. Therefore, the proportion of males are much higher, which creates strange problems. Melded with the idea that in order to get married, a son must own real estate; real estate ownership is required for acceptance by a family. Michael was asking his future wife’s father for her hand in marriage. He was immediately asked, "Do you have a house?" When told no, the father replied that he believed Michael will have a house, so he approved the marriage.
  
Due to the male/female ratio, marriage is very selective. A male must have property. To achieve this, saving rates of 30-50% are common to save for a house. Three generations will save for the house of the young male. Developers know of the need, so they are anxious to provide real estate.
 
Capital flight is limited to $50,000 per year per person to the US. Most people want to keep money in China, but investment instruments are limited to real estate, day trading, or starting a business. Real estate is considered the most secure. High returns are generated on real estate investments. Banking is very loose, with limited due diligence. The daily cost of living is very low and there is no need for insurance, which provides the ability to save a large portion of salaries. It is a very excited real estate market; ghost towns do exist. Major cities have demand to fill developments, but new construction is performed with very poisonous products. Therefore, all renovations sit for at least 6 months waiting for all fumes to air out. During the first year, it can be too dangerous to live in a new development. When developments open, there can be miles of people in line trying to get units.
 
There are many overnight millionaires and even some overnight billionaires for those who own property. In the scrapyard, Michael found people had windfalls on selling property and decided to buy scrap because someone said it was a good idea, not because they had any knowledge of scrap metal. Windfall investors drive the economy. Government is aware and can see the real estate investment bubbles. The government tries to curb them, but the government is not good at it. By law, for a first home, one can get a 90% loan. For a second home one can only get a 50% loan, and for a third home, it must be an all-cash purchase. This is not controlled or enforced across geography, so people just buy second and more homes in a different location. The alternative, day trading is a very unstable market, with high volatility, tied to real estate prices. When the real estate market is going down, the stock market goes up, and vice versa. The two booms and busts are somewhat complimentary.