SymbolPriceChangeAAPL404.95+0.26BIDU144.62+6.23MSFT26.98-0.27YHOO16.56-0.07{“s” : “aapl,bidu,msft,yhoo”,”k” : “a00,a50,b00,b60,c10,g00,h00,l10,p20,t10,v00″,”o” : “”,”j” : “”}

67 WALL STREET, New York – October 28, 2011 – The Wall Street Transcript has just published its Internet Services Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Internet Infrastructure and Services Consolidation – Enterprise Adoption of Cloud Computing – Growing Cybersecurity Demand – Social Networking Economics

Companies include: Blue Coat (BCSI); TJ Maxx (TJX); Yahoo! (YHOO); ATT (T); Akamai (AKAM); Amazon (AMZN); and many more.

In the following brief excerpt from the Internet Services Report, expert analysts discuss the outlook for the sector and for investors.

Herman Leung is an Analyst with Susquehanna Financial Group LLLP. Previously, he was the Vice President, Internet Research, for Deutsche Bank Securities Inc. Before that, he was an Associate at RBC Capital Markets. He’s also held positions with Nextag, Inc., TeleSoft Partners and Thomas Weisel Partners Group. Mr. Leung has a B.S. in finance from the California Polytechnic State University, San Luis Obispo.

TWST: In terms of the online travel space, you have a “positive” rating on Priceline, but you’re “neutral” on Expedia. What’s Priceline doing differently and better than Expedia?

Mr. Leung: I’m generally more positive on the online travel space. I think Priceline is enjoying a lot faster transaction-based growth compared to an Expedia, and it all has to do with Priceline’s positioning in the European market, the Asia Pacific market as well as the Latin American market. Now Priceline continues to enjoy the fragmented nature of the European hotel market, where they have the largest supply, and with the large supply they’re able to buy a larger and more relevant inventory of keywords to drive a very successful marketing campaign for the business for a very long time, and that has kind of entrenched themselves to be in a position to benefit from strong transactions volumes on the hotel side of the business.

Now compared to an Expedia, I think Expedia enjoys a lot of the same kind of dynamics of an online travel agency. But because of their positioning – which is larger in the U.S., where the chain hotels are operating – there is a higher risk because of the concentration of inventory on a limited number of chain hotels, and I’d say that the Expedia business has a lot more legacy technology infrastructure that they’re working to upgrade. So when you’re running on a legacy platform, there are disadvantages associated with scaling and getting the right levels of optimization. So over time, I think they’re working on it, trying to make things better.

TWST: Which of Priceline’s business units is currently experiencing the best growth, and what does that say about which direction the online travel space is moving toward?

Mr. Leung: I think online travel agencies benefit where there are areas of high fragmentation and a need for improved distribution to consumers. I’d say most of the online travel agencies are primarily hotel based, except for Orbitz (OWW). So where Priceline is moving are more geographies, and the focus for both Expedia and Priceline is to do a good job of expanding into Pan Asia as well as Latin America. Now in China, Ctrip (CTRP) basically dominates, for the most part, the China travel market today. But just because of the dynamics in China – where occupancy rates are near 90% plus to 100%, compared to Europe, where it’s more like 50%, and the U.S. is more like the 50% level – the need for online travel agencies is probably a little bit less because they’re able to just fill so much inventory. Ming Zhao, my colleague, covers CTrip in China. So where these guys are going are to geographies that need distribution, and I think Pan Asia, the Thailand, Singapores of the world and India I think are important markets, as well as Latin America, which is still an early-stage market for them.

TWST: Looking at the big picture, what are the risks for Google that investors should monitor?

Mr. Leung: I think with the MMI (MMI) acquisition for $12.5 billion, I would say that could be viewed as a big opportunity. We think the big opportunity is also balanced with plenty of risk and concerns around the hardware business they bought and how it protects the long-term growth of wireless and the Android ecosystem that Google is looking to protect for the long term. Google basically purchased 17,000 patents, a hardware business and a set-top box business for $12.5 billion. There’s little visibility into what Google bought for $12.5 billion other than that. The big focus was on: one, protection from a legal standpoint; and two, to extend the Android ecosystem; and three, to basically have a legal arsenal of patents to basically make potential litigators think twice before trying to sue Google because of its 17,000 patent black box.

The Wall Street Transcript is a unique service for investors and industry researchers – providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This special issue is available by calling (212) 952-7433 or via
The Wall Street Transcript Online
.

The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.

For Information on subscribing to The Wall Street Transcript, please call 800/246-7673

If you live near a tourist attraction in the U.S., you might want to practice your Mandarin and Portuguese.

International travel to the U.S. is expected to grow by 5% to 6% each year over the next five years, with the greatest rate of growth coming from China and Brazil, according to a new forecast by the U.S. Department of Commerce.

The latest numbers are a revision of a May forecast that said visitation numbers should grow by 6% to 8% annually over the next five years. Department of Commerce officials said they lowered their prediction slightly based on visitation numbers over the last few months.

Still, the projected increase is good news for the U.S. economy, as foreign travelers spend far more per visit than domestic tourists. The U.S. Department of Commerce projects a record 64 million international travelers to spend $152 billion during their stays in 2011, an increase of 13% from 2010.

“More than 1 million Americans owe their jobs to a strong travel and tourism sector,” said Under Secretary of Commerce for International Trade Francisco Sánchez. “This record-breaking forecasted growth in travel exports will help put more Americans to work.”

Over the next five years, the greatest number of visitors will continue to be from Canada and Mexico, according to the forecast. But tourism is expected to grow the fastest from China (274%), Brazil (135%) and Australia (94%), the forecast said.

RELATED:

Princess Cruises to return to Mexican ports

Korean Air launches A380 from Los Angeles

Report says tourism in Japan is rebounding slowly

– Hugo Martin

Photo: Planes from foreign airlines line up at Los Angeles International Airport. Credit: Los Angeles Times

Thu Oct 27, 2011 7:24pm EDT

* Macau, Singapore drive Q3 again

* Shares rise 3.5 percent after hours

By Edwin Chan

LOS ANGELES, Oct 27 (Reuters) – Las Vegas Sands Corp posted better-than-expected revenue in Asia and rode a
rebound in U.S. growth on Thursday, calming fears that economic
weakness would discourage leisure travel and gaming.

Sands’ numbers helped dispel fears its Asian cash cow –
Macau — would suffer if China slows or chokes off a lucrative
flow of gamblers from the world’s second largest economy.

In Singapore, investors were taken aback by a 37 percent
surge in “VIP” or high-roller gambling volumes. Back home, its
signature Venetian and Palazzo resorts on the Las Vegas Strip
also outpaced Wall Street’s expectations with 62 percent
earnings growth.

Analysts say Sands heads into 2012 with few costly outlays.
Its sole major expansion will be in Cotai Central in Macau,
which the company hopes will help it catch up with rivals in
the high-margin VIP or high-rollers’ market segment, in which
it admits it lags.

The shares of the company run by billionaire Sheldon
Adelson rose 3.5 percent to $47 after closing at $45.40 on the
New York Stock Exchange.

Adelson told analysts on a conference call he was keeping
an eye on new development opportunities — in particular if
parts of Asia were to open their doors to gambling resorts.

“In Asia, which would be our first choice, it appears as
though Korea and Japan are making louder … and more urgent
moves in the direction of legalizing federal gaming and
integrated resorts,” he said. “If one of those legalizes, the
other one is going to do it in a heartbeat.”

Macau, the only Chinese city to legalize gambling, has been
a boon for Las Vegas Sands, Wynn Resorts Ltd and MGM
Resorts International , which reports results next week.
Rich gamblers from the mainland make up most of the visitors
who flock to the former Portuguese enclave.

Analysts said the concerns, which surfaced in October and
pressured the shares of the three largest U.S.-listed gaming
companies, may have been overblown.

They cite an 18 percent surge in visitor arrivals to Macau,
as well as a 39 percent surge in gaming revenues to almost $2.7
billion in September, according to official data.

“The Chinese are not likely to have a hard landing. They
have more tools at their disposal and are more apt to use
them,” said Bernstein analyst Janet Brashear.

WIPING EGG FROM FACE

Sands, run by billionaire Sheldon Adelson, which derives
most of its income from its Venetian Macau, Sands Macau and
Marina Bay Sands casinos, reported third-quarter revenue of
$2.41 billion compared with $1.91 billion a year earlier.

That exceeded forecasts for $2.34 billion, according to
Thomson Reuters I/B/E/S.

Sands’ U.S. operations — anchored by the signature
Venetian and Palazzo casinos in Las Vegas — also fared well.
Together, those two casinos drove a 62 percent surge in
adjusted operating earnings to $94.3 million in the quarter.

That was dwarfed as usual by the Macau operation, which
chalked up a comparable profit of $388 million, although up
just 16 percent.

Sands’ Singapore arm delivered $414 million, exceeding
internal projections.

“It’s very balanced across all markets,” Brashear said.
“It’s now very geared towards volume growth.”

Las Vegas Sands reported an adjusted net income of $444.8
million, or 55 cents a share, in the third quarter, compared
with $265.2 million, or 34 cents a share, a year earlier.

That exceeded the average Wall Street estimate of 52
cents.

Longer term, Sands has lagged its peers in the VIP — or
high-roller — segment in Macau and is spending to expand its
footprint in that high-yielding market, with results expected
to emerge fully only by 2012.

Many travel agencies in China canceled their package tours to Thailand due to the prolonged flooding there.

Widespread floods from heavy monsoon rains and tropical storms since late July, have lashed 62 provinces in Thailand, affecting some 9.4 million people.

According to a travel agency in Zhuhai City, they had to cancel almost all their tours to Thailand.

[Zhang Junjie, Travel Agent]:
“Some of our clients did not want to go on the trip. About five package tours have been canceled. Normally we have one or two package tours to Thailand every week. It is a popular destination among Southeast Asian countries.”

Another travel agency in Zhuhai also had to cancel five of its package tours to Thailand.

[Li Yu, Travel Agent]:
“Currently, the trips to Bangkok will be canceled for sure. Whether trips to other routes, like Phuket, will continue or not we cannot say for certain. If there are no floods in the destination areas, we will consider running the tours.”

Meanwhile, the prices of Thai fruits in Shanghai have also gone up. The prolonged floods in Thailand have blocked local traffic, affecting the country’s exports.

Production shot of “Chinglish.”

Just saw Chinglish, a new comedy at Broadway’s Longacre Theater by David Henry Hwang who won both a Tony and Pulitzer Prize for his play M. Butterfly in the late 1980′s. Since then Hwang has written opera librettos, screenplays and more plays, most of which explore the taught, tangled relationship between Occident and Orient.

I jumped at the chance to see his latest because, like other people who have traveled in China, I got a lot of entertainment from signs in hilariously mangled English. “Chinglish,” as its called is only the most obvious cultural barrier met in Hwang’s play by an American trying to do business in the People’ Republic, where signs advise English-speakers to Take Note of Safety: The Slippery Are Very Crafty (a very rough translation for Watch Your Step). A bathroom that accommodates a disabled person is designated Deformed Man Toilet.

In the play, Hwang takes the theme of miscommunication a step further with scenes showing the American in meetings with a Chinese minister whose words are rendered into English by an inept interpreter, with closer translations shown to the audience in subtitles. In this way, the Chinese for “His hands are tied“ becomes “He is in bondage,” and when the minister says “Travel home safely,” the American is told, “Leave in Haste.”

If it weren’t so funny, it would be depressing, one more instance of fundamental incompatibility between East and West, of Kipling’s “Never the twain shall meet.” When the American embarks on a liaison with the minister’s beautiful deputy, it seems as if hot sex in a hotel room may form a bridge. But that proves even more misleading than language, as in Sofia Coppola‘s haunting 2003 movie, Lost In Translation.

What’s an English-speaker in China to do? Learn Mandarin, of course, but that’s not so easy. With tens of thousands of characters, some requiring over 20 strokes to write, and tone-driven pronunciations hard for foreign-speakers to discern, standard Chinese is the study of a lifetime. Still, more and more students are taking it up. The Chinese Ministry of Education recently estimated that 40 million people around the world are studying Mandarin, and China’s popularity among U.S. exchange students increased more than 100% between 2002 and 2007.

I spent 5 months in 2008 studying at Beijing Language and Culture Institute, a government-sponsored school that specializes in teaching Chinese to overseas students. Three hours of instruction 5 days a week left me with a semi-permanent migraine, a 6-inch stack of vocabulary flash cards and the ability to haggle for fruit and vegetables in the market near my dorm. Alas, I‘ve forgotten most of it now. But I still have a trusty little book, “I Can Read That!” by Julie Mazel Sussman, teaching travelers to identify basic characters and phrases. These are good to know because, trust me, the slippery are very crafty.

Economists were probably too busy watching markets gyrate to contemplate last month’s big news in science. Physicists detected particles travelling faster than light, which, if the reading was accurate, means time travel is possible.

Now, let’s play a quick mind experiment that would surely captivate the deans of the dismal science: Pretend you have just been transported 10 years into the future to see how this incipient global crisis pans out. It would be hard to find anyone who isn’t desperate to know.

What if, a decade from now, the US comes out the winner of today’s market chaos at the expense of Europe and China?

This intriguing contrarian view is the subject of The American Phoenix, a new book by Hong Kong economist Diana Choyleva and her Lombard Street Research colleague Charles Dumas. Bargain bins are loaded with China-crash titles. What’s different about this book is that it turns all we think we know about the interplay between the Group of Two on its head.

If the past few years taught us anything, it’s that the unthinkable has an uncanny knack of happening. From Arab Spring protests to China bailing out Europe’s markets to a US presidential candidate suggesting it’s treasonous for the Federal Reserve to do its job, the world really is upside down. So it’s worth considering an alternative trajectory for the US and China as another meltdown seems to be unfolding. It’s hard to be optimistic for next year as Europe dithers, Washington bickers, Japan’s paralysis deepens and China experiments with ways to avoid overheating.

If there is an accepted narrative about the G-2 in Asia, it goes something like this: China will grow 8 per cent or 9 per cent a year indefinitely, grabbing global market share as it moves from sweatshops to a knowledge-based, innovation-driven model. Hiccups may happen, but China will surpass the US economy 10 or 20 years from now.

The US, meanwhile, experiences a slow, steady slide as the magnitude of its challenges overwhelms a political system ridden with gridlock, an excessive debt load and joblessness. The reason Occupy Wall Street went global in ways the Tea Party didn’t is that the former reflects the reasons for America’s decline, while the latter is mere handwringing over it.

The question is whether the US recovers relative to Europe and China as global markets swoon anew. The operative word is ”relative”. No one should expect the US to prosper in some great way from a 2012 crisis. It’s that Europe and China will be far worse off as contagion whips around the globe.

”When you look at the problems facing the world, the bubbles and imbalances, America’s are easier to fix than most,” Choyleva says. ”It says a lot about the state of things globally.”

It would surprise few to imagine Europe having a harder decade than the US. A Greek default is a given and may drag down Portugal, Spain and, in the worst case, Italy.

Many would be taken aback to think that China, too, might experience its share of setbacks compared with the US. Some are well-known, including inflation that fans social unrest and a financial crisis erupting as the massive stimulus of 2009 comes back to haunt Beijing. All that investment created the illusion of economic vitality. Too much of it was funnelled into unproductive sectors of the economy, setting up China for a banking meltdown.

Choyleva adds a less obvious twist to the critique: how China’s financial proximity to the US is a bigger problem than many people appreciate. By tying itself to the dollar and amassing more than $US3 trillion of currency reserves, China essentially merged with the US financial system. When the Fed pumps money into the economy, it inflates China more than America.

There are rumblings in Washington about punishing China for its undervalued currency. Yet China is only now realising the extent to which it surrendered sovereignty to the US. As the Fed adds more cash to markets, China’s inflation becomes more entrenched and Beijing loses even more control. Over time, this will harm China’s competitiveness more than if Beijing had allowed the yuan to strengthen, as per the US’s demands. China could increase interest rates to temper rising prices but that would devastate growth. The thing about the G-2 is that pundits often see China as being in the stronger position – its massive reserve holdings are both leverage and a fortification. Yet China is trapped. It’s addicted to cheap US financing and is increasingly feeling the side effects.

For all its troubles, the US has inherent strengths: it’s home to many of the world’s top 20 universities; it has institutions that may still get their act together in ways Europe can’t; a fertility rate that exceeds deaths, meaning America can ultimately outgrow its debt – unlike, say, Japan and Europe.

If Japanese and European officials could travel in time, it wouldn’t be to fix mistakes of the past. If Chinese officials don’t act more assertively to tweak their model, they’ll have similar regrets a decade from now.

Bloomberg

October 28, 2011 – The Wall Street Transcript has just published Internet Services Report offering a timely review of the sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.

View This Special Report

Recent Wall Street Transcript Special Reports.

Herman Leung is an Analyst with Susquehanna Financial Group LLLP. Previously, he was the Vice President, Internet Research, for Deutsche Bank Securities Inc. Before that, he was an Associate at RBC Capital Markets. He’s also held positions with Nextag, Inc., TeleSoft Partners and Thomas Weisel Partners Group. Mr. Leung has a B.S. in finance from the California Polytechnic State University, San Luis Obispo.

TWST: In terms of the online travel space, you have a “positive” rating on Priceline, but you’re “neutral” on Expedia. What’s Priceline doing differently and better than Expedia?

Mr. Leung: I’m generally more positive on the online travel space. I think Priceline is enjoying a lot faster transaction-based growth compared to an Expedia, and it all has to do with Priceline’s positioning in the European market, the Asia Pacific market as well as the Latin American market. Now Priceline continues to enjoy the fragmented nature of the European hotel market, where they have the largest supply, and with the large supply they’re able to buy a larger and more relevant inventory of keywords to drive a very successful marketing campaign for the business for a very long time, and that has kind of entrenched themselves to be in a position to benefit from strong transactions volumes on the hotel side of the business.

Now compared to an Expedia, I think Expedia enjoys a lot of the same kind of dynamics of an online travel agency. But because of their positioning – which is larger in the U.S., where the chain hotels are operating – there is a higher risk because of the concentration of inventory on a limited number of chain hotels, and I’d say that the Expedia business has a lot more legacy technology infrastructure that they’re working to upgrade. So when you’re running on a legacy platform, there are disadvantages associated with scaling and getting the right levels of optimization. So over time, I think they’re working on it, trying to make things better.

TWST: Which of Priceline’s business units is currently experiencing the best growth, and what does that say about which direction the online travel space is moving toward?

Mr. Leung: I think online travel agencies benefit where there are areas of high fragmentation and a need for improved distribution to consumers. I’d say most of the online travel agencies are primarily hotel based, except for Orbitz (OWW). So where Priceline is moving are more geographies, and the focus for both Expedia and Priceline is to do a good job of expanding into Pan Asia as well as Latin America. Now in China, Ctrip (CTRP) basically dominates, for the most part, the China travel market today. But just because of the dynamics in China – where occupancy rates are near 90% plus to 100%, compared to Europe, where it’s more like 50%, and the U.S. is more like the 50% level – the need for online travel agencies is probably a little bit less because they’re able to just fill so much inventory. Ming Zhao, my colleague, covers CTrip in China. So where these guys are going are to geographies that need distribution, and I think Pan Asia, the Thailand, Singapores of the world and India I think are important markets, as well as Latin America, which is still an early-stage market for them.

TWST: Looking at the big picture, what are the risks for Google that investors should monitor?

Mr. Leung: I think with the MMI (MMI) acquisition for $12.5 billion, I would say that could be viewed as a big opportunity. We think the big opportunity is also balanced with plenty of risk and concerns around the hardware business they bought and how it protects the long-term growth of wireless and the Android ecosystem that Google is looking to protect for the long term. Google basically purchased 17,000 patents, a hardware business and a set-top box business for $12.5 billion. There’s little visibility into what Google bought for $12.5 billion other than that. The big focus was on: one, protection from a legal standpoint; and two, to extend the Android ecosystem; and three, to basically have a legal arsenal of patents to basically make potential litigators think twice before trying to sue Google because of its 17,000 patent black box.

The remainder of this 25 page Internet Services Report can be immediately viewed by purchasing online.

The Wall Street Transcript is a unique service for investors and industry researchers – providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.

For Information on subscribing to The Wall Street Transcript, please call 800/246-7673

Enlarge image

Baidu Inc. CEO Robin Li

Nelson Ching/Bloomberg

Robin Li, chief executive officer of Baidu Inc.

Robin Li, chief executive officer of Baidu Inc. Photographer: Nelson Ching/Bloomberg

Oct. 28 (Bloomberg) — Jin Yoon, an analyst at Nomura Securities Co Ltd., talks about Baidu Inc.’s financial results and business outlook.
Baidu, China’s biggest Internet company by market value, said third-quarter profit rose 80 percent, beating analysts’ estimates, as revenue from search-engine advertising surged. Yoon speaks in Hong Kong with John Dawson on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)

Baidu Inc., China’s biggest Internet
company by market value, said third-quarter profit rose 80
percent, beating analysts’ estimates, as revenue from search-
engine advertising surged.

Net income attributable to Baidu climbed to 1.88 billion
yuan ($296 million), or 5.38 yuan per American depositary
receipt, compared with 1.05 billion yuan, or 3 yuan, a year
earlier, Baidu said yesterday. That exceeded the 1.85 billion
yuan average of eight analysts’ estimates compiled by Bloomberg.

Chief Executive Officer Robin Li, named by Forbes magazine
as China’s second-richest man, is boosting investments on
services, such as wireless and travel features, to meet
competition from rivals Alibaba Group Holding Ltd. and Tencent
Holdings Ltd. (700) Fourth-quarter revenue is forecast to rise at
least 80 percent, Baidu said, after advertisers paying more for
keywords to reach online users in China boosted sales 85 percent
in the three months ended September.

“Baidu reported strong results in 3Q and offered robust 4Q
guidance,” Eric Wen, a Hong Kong-based analyst with Mirae Asset
Securities, wrote in a note today. The fourth quarter “is
traditionally the high season for online retailers” so heavy
advertising spending likely will continue, wrote Wen, who rates
the stock “buy.”

Third-quarter sales jumped to 4.18 billion yuan, from 2.26
billion yuan a year earlier, the company said. That exceeded the
3.93 billion average of 16 analysts’ estimates.

Baidu shares rose 5.8 percent to close at $138.39 in Nasdaq
Stock Market trading yesterday. The stock has climbed 43 percent
this year, outpacing rivals.

Sales Forecast

Revenue is expected to rise to between 4.41 billion yuan
and 4.54 billion yuan in the fourth quarter, Chief Financial
Officer Jennifer Li said on a conference call today. That
compares with the 4.1 billion yuan average of 13 analysts’
estimates compiled by Bloomberg.

“Baidu is getting its customers to increase their
advertising spending,” Kelvin Ho, who rates the stock “buy”
at Yuanta Securities in Hong Kong, said before the earnings
announcement. Baidu is gaining market share in China from rivals
including Google Inc. (GOOG), he said.

Gaining Share

Baidu, which fields more than 80 percent of its search-
engine queries in China, accounted for 77.7 percent of the Asian
nation’s search-engine market by revenue in the third-quarter,
rising from 77.3 percent in the previous three months, according
to research company iResearch. Google’s share dropped to 18.3
percent from 19.3 percent, the researcher said.

Google has been losing ground in China’s search-engine
market since January 2010, when the Mountain View, California-
based company said it was no longer willing to comply with
Chinese regulations to self-censor Web content. Two months later,
the U.S. company shut its Google.cn service and redirected
Chinese users to its site in Hong Kong.

Mobile Internet and cloud computing are the focus areas of
Baidu’s investments this year, Chief Financial Officer Li said
last month.

In September, Baidu revamped the design of its homepage to
offer users increased access to external websites and
applications, and unveiled a new mobile-phone platform. Baidu is
working on an online travel service with Qunar, where it
acquired a majority stake for $306 million this year, CEO Li
said in July.

Baidu’s new homepage caters to past search requests to
automatically display information that may interest users, the
chief executive said today. That may have a “slight negative”
impact on sales because users will do fewer searches, Li said.
Over the long run, it will make users spend more time on the
site, he said.

Robin Li’s wealth increased to $9.2 billion from $7.2
billion a year earlier, ranking him behind only Sany Heavy
Industry Co. Chairman Liang Wengen among China’s richest, Forbes
Asia said last month.

To contact the editor responsible for this story:
Michael Tighe at
mtighe4@bloomberg.net

• Tweet

• More

• Print
• Email

As more and more Chinese move to cities, the small villages of Anhui offer a respite. And perhaps even more surprising, young artists and entrepreneurs are embracing these spots with a renewed sense of pride in their modest scale and tangible sense of history.

After the sun begins sinking behind the whitewashed walls of Xidi’s houses and the day-trippers board their buses home, the art students, visiting from the large provincial capital of Hefei and other nearby cities, linger overnight or for the weekend. Perched behind easels in the granite-tile lanes or on rocks in the shallow streams flowing through the village, they appear inspired by the classical architecture, which has all but disappeared in their skyscraper-studded cities. “Young people don’t typically like this; they prefer big-city culture,” said Wang Nanyan, an 18-year-old from Hefei. “But I’m different. I’m an artist — I like these kinds of buildings.”

Two reasons these villages — about 20 of which are worth visiting, spread across the southern part of Anhui, an area roughly the size of Belgium — have retained their centuries-old charm are location and economics: they are set deep in the countryside of one of China’s poorer provinces, where residents have lacked the resources to tear down the old and start anew.

But preservationists have played a key role, too. In 2000, Xidi (pronounced shee-dee) and the nearby village of Hongcun were declared Unesco World Heritage sites. Rather than force residents out, Xidi officials wisely devised a plan to guarantee them a share of profits from entrance tickets to the town (104 renminbi, about $16.60 at 6.25 renminbi to the dollar), as long as they maintained the traditional appearance of their properties. Seeing opportunities, entrepreneurs from other parts of China began to trickle in, snapping up rundown properties to refurbish and turn into shops and inns. The result is that tourism is booming — aided in part by the villages’ proximity to another attraction, the famously striking Huangshan (Yellow Mountain), but mainly thanks to their historical and aesthetic appeal.

Xidi, in particular, has an illustrious history. Founded in 1047 by the Hu family, Xidi began to grow rich as a trading center during the Ming dynasty (1368-1644). As the population swelled, the Hus gained power as imperial officials and built elaborate two-story compounds and giant archways, one of which still stands at the entrance to the town. The fortunes of the town began to decline came after the end of the Qing dynasty (1644-1911), but signs of Xidi’s former glory still abound. (The name Hu, for one, is shared by about 80 percent of residents.)

The size of many of the former merchant homes still impresses. The most majestic were built in the 1600s and designed in the traditional Huizhou style (as the region was once known). Interior courtyards, filled with gardens and small fishponds, open on to formal meeting halls where portraits of ancestors hang from the highest points on the walls. Nearly every surface, whether wood or stone, is elaborated carved — the door frames, the braces supporting the ceiling beams, the second-story balconies. But perhaps the most distinctive features are the “horse-head walls” that bookend the rooftops, so called because the upturned edges of the multitiered walls resemble horses’ heads.

Li Guoyu, an artist from Shanghai, was drawn to this graceful architecture when she started looking for a property to turn into an inn in the early 2000s. The one she settled on wasn’t nearly as grand as others in Xidi — it was a teacher’s home during the Ming dynasty and was being used as a pigsty when she found it. But Mrs. Li saw potential in the 400-year-old property. “Many people dream of finding a paradise, but they never really find such a place,” she said. “But I did.”

In 2006, she opened the Pig’s Heaven Inn — named in honor of the building’s one-time function. The hotel is modest in size, with five bedrooms, a small courtyard garden and a third-floor lounge with stunning views of the village’s black-tiled roofs. But what it lacks in space, it makes up for in character: Mrs. Li has carefully appointed the interiors with antique chests, chairs and wash basins, as well as cheerful touches like mirrors painted with Peking Opera stars, vintage floral wallpaper, and lanterns and birdcages hanging from the rafters.

A short time later, Mrs. Li purchased a second property in the nearby village of Bishan — a Qing dynasty merchant’s home — which she transformed into a nine-bedroom inn and opened in 2008. She scoured the countryside to find interesting antiques (including a spectacular red and gold Qing-era wedding bed for one bedroom), hung art by her son, Mu Er, on the walls and planted an organic vegetable garden in the back. She believes her restoration work has inspired her neighbors to fix up their properties, too. “Old houses have memories,” she said. “When I’m old and pass this house along to my son, he’ll remember his childhood here. If I go back and look for my own childhood house, I wouldn’t find it because it’s gone already.”

Most tourists focus solely on Xidi and Hongcun because of their Unesco status and proximity to each other, but there are other hamlets in the Anhui mountains that have equally exquisite architecture and, more important, a fraction of the visitors. One is Zhaji, a two-hour drive north of Xidi. The tiny village is also made up of whitewashed homes with black-tile roofs clinging to the banks of a muddy stream, but the houses here are far simpler, belonging mostly to farmers. There are few shops and restaurants and no art students. Locals dry peanuts on giant bamboo baskets in the sun and make their own tofu. Xidi feels like Shanghai in comparison.

This rural idyll is exactly what Julien Minet was looking for when he became a homeowner in the area in the early 2000s. Mr. Minet, a Frenchman, had traveled around Anhui for years writing an ethnographic study on ancient villages for Unesco, and he took such a liking to Zhaji, he bought an abandoned Ming dynasty-era house in 2003 for the shockingly low price of 10,000 renminbi (about $1,570). Needless to say, it was a fixer-upper. “The house had chickens living inside,” he said. “But then I saw all the mountains outside. The panorama is just wonderful.”

After an arduous three-year renovation — which included finding antiques from the area and the addition of a small pool ensconced in bamboo, essential for the region’s scorching summers — he opened his three-bedroom guesthouse, Chawu, in 2006. Catering mostly to French tourists, including the occasional V.I.P. (a French education minister once stayed there), Mr. Minet aims to offer a traditional Anhui experience to his guests, with a personal tour of the village and “country food” cooked by one of his neighbors. His only concessions to the 21st century and his native France: free Wi-Fi and the pastis he serves beneath the chestnut tree in his garden at sundown.

Though he depends on visitors to make a living, Mr. Minet is mindful of the impact that tourism can have on the fragility of the region. In fact, when a Lonely Planet guidebook writer contacted him, he requested that he not mention the village; as a result, Chawu is not listed in the book. “In other places, all the activity is around tourism, but here people still live the way they always have,” he said. “It’s not all about money. That’s very important.”

IF YOU GO

XIDI

Round-trip flights between Shanghai and Huangshan City (also known as Tunxi) start at 580 renminbi (about $93) on China’s leading online flight aggregator, ctrip.com. Xidi is a one-hour journey by car from the Huangshan airport; the Pig’s Heaven Inn can arrange a driver for 200 renminbi each way.

Pig’s Heaven Inn (86-559-515-4555). Staff members speak only Chinese, so arrangements are best made by a hotel in Shanghai. Doubles from 360 renminbi per night.

ZHAJI

Round-trip tickets on the high-speed train between Shanghai and Nanjing start at 280 renminbi. Zhaji is a three-hour journey by car from Nanjing; Chawu can arrange for a driver for 700 renminbi each way.

Chawu (86-1370-518-7277; chawu.com). Doubles from 750 renminbi a person, per night, including all meals (minimum stay, two nights). Julien Minet can also arrange for a driver between Zhaji and Xidi for 500 renminbi each way.

U.S. Agriculture Sec. Tom Vilsack is headed to China and Vietnam on a trade mission in November. (Photo by Chip Somodevilla/Getty Images)

Agriculture Secretary Tom Vilsack has announced plans to travel to Vietnam and China on a trade mission next month.

Vilsack is the first sitting American Secretary of Agriculture to visit Vietnam.

He said the trip to China is an opportunity to visit with both agriculture and trade officials there, to talk about a variety of issues ranging from beef to horticulture to fruits and vegetables to poultry.

“It’s an opportunity for us to strengthen the relationship and hopefully, over time, be able to reopen the beef market, which has been closed for some time in China,” said Vilsack.

The trip will also include a visit to Vietnam, which is a trading partner that has emerged as a major player over the past several years.  Vilsack said just 15 years ago, Vietnam was ranked 50th in terms of trading with U.S. agriculture. Today Vietnam ranks 15th among trading partners.

“I think it’s hard to understand the growth of that Vietnamese market.  In just a few short years, we’ve seen dramatic growth in Vietnam,” Vilsack said.

To further demonstrate that growth, Vilsack shared that during the six year period from 2004-2010, the United States saw a 1,000 percent increase in ag exports to Vietnam.  A record $535 million in consumer-oriented agricultural products went to Vietnam in 2010 alone.

Over the past 15 years, the bilateral trade with Vietnam has grown by 4,000 percent.  Vilsack believes we have not yet exhausted the opportunities for trade with that country.

China is an extraordinarily important market, as it consistently take turns with Canada as the number one trading partner for the United States.

Vilsack said the United States has good relationships with these countries, but in Vietnam, he’ll be talking about the Trans-Pacific Partnership multilateral trade agreement that’s being discussed with a number of countries in Asia, as well as New Zealand and Australia.

“The importance of that is that Vietnam takes a different attitude relative to biotechnology.  And China, as well,” said Vilsack.  “We’ll be talking to both the Chinese and Vietnamese officials about how we might be able to ensure that there are science-based rules that govern trade discussions and govern trade rules and regulations in those countries.”

The United States recently signed free trade agreements with South Korea, Colombia and Panama that will increase agricultural trade exports by a projected $2.3 billion.  Vilsack said every billion dollars of additional ag sales generates roughly 8,400 jobs in the economy.

“These are people that will package, process and ship items that are exported,” said Vilsack.

That results in a total of nearly 20,000 jobs.

“So, trade in the agricultural sphere is not just about opportunities to increase the bottom lines for farmers and ranchers and producers, but it’s also designed to help create jobs in the economy, so it’s a double win situation for us,” explained Vilsack.

He said it is important to couple trade agreements with Trade Adjustment Assistance to help those who may be negatively impacted by trade.

The trade mission is scheduled for the middle of November.  Vilsack is hopeful that as a result of the Korean agreement the United States can re-engage the Chinese, particularly on the beef issues.  He also will focus on biotechnology rules.

“We’d like to get them to perhaps sync up better with our regulatory process than they have in the past,” Vilsack said.

Vilsack expects the two countries to continue to be strong purchasers of American agriculture products.  So far, 2011 is a record year for agricultural exports.

To hear the complete interview with U.S. Agriculture Secretary Tom Vilsack, click here:

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

Carrie Muehling can be reached at carrie@wjbc.com.