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Thursday, April 08, 2004

Thu, 08 Apr 2004 06:20:36 GMT

Aldo Lau

MAR 452 Export and Import

April 8, 2004

Chinese Medicine

Traditional Chinese Medicine in the modern world is rapidly gaining popularity and recognition as an alternative medication. The medicinal field of science actually holds no differentiator between the practices of the Western tradition against the Chinese tradition, but each has its own distinctions. Traditional Chinese Medicine includes acupuncture, herbal remedies, and maintenance of the chi within the human body system. The antiquated practice of medicinal science in China has been revamped and standardized by the government of the People’s Republic of China. In an increasingly internationalized business economy, the Chinese people in their world Diaspora have brought with them the arts of Traditional Chinese Medicine and incubated its global market. The awareness and demand for Tradition Chinese Medicine strengthened under the gradual liberation of world trade with China. The herbs required in the medicine potions can be found throughout the world, but they are still popularly imported from China. To consolidate the global market demand and guarantee the best quality possible, the Chinese government has implemented measures of quality control to assure the safe consumption and value for Traditional Chinese Medicine.

Traditional Chinese Medicine is known for its distinctive approach to cure the ailments of the internal body. Herbal medication is an effective art of healing that has little if any side effects. Chinese civilization has long viewed sickness as an internal imbalance in its energy derivatives from ingestion of external food sources. To treat this sort of disorder, one would only need to ingest another food source with the opposite type of energy to recover the balance. There are no two illnesses of exact cultivations within two different body systems. Everyone is sick for a different reason and maltreatment of their bodies. The decay of trade barriers and isolation of Chinese markets have led to myriad opportunities and development to the industry of Chinese herbal medicines.

The People’s Republic of China has formed a system for Chinese herbal medicines that is accountable for its production and circulation. The production of Chinese medicinal materials is the base of the system, Chinese herbal medicament industry is the main body, and the Chinese herbal medicament commerce serves as the link for the three. China is richly endowed with more than the 5,000 determinable medicinal herbs as their pool of medicinal resources. For the production of Chinese medicinal materials, the government and business stakeholders made available more than over 600 bases across the country. China has a domestic output of about 400,000 tons of Chinese medicinal, produced every year on approximately 5 million mu of land. Chinese herbal materials are processed from over 1,500 plants produce. China claimed more than 4,000 Chinese patent herbal medicines in over 40 drug forms in its 684 pharmaceutical factories for herbal medicaments within its soils. In 1995, there were more than 30,000 wholesale and retail shops for herbal medicines in China. Chinese herbal medicines are desired whenever proven effective and made possible. It is a preferred medication. Across international borders, citizens around the world regardless of ethnic descent increasingly demand Chinese herbal medicines.[1]

Regulation and documentation procedures in China have been adapting to reflect the needs of modernity. The State Administration of Chinese Traditional Medicine, Ministry of Foreign Trade and Economic Cooperation, State Administration of Import and Export Commodity Inspection and Customs General Administration have collaboratively created and placed into effect the quality registration, inspection and releasing system of traditional Chinese medicines to be exported.[2] Effective ever since May 1, 1996, the State Administration of Chinese Traditional Medicines (SACTM) would delegate inspection responsibilities to regional quality inspection organizations.[3] All herbs and its extraction derivatives to be exported, along with their manufacturing enterprises, are to undergo strict inspection before attaining qualification and deport from the borders of China. Quality registration certificates will be verified and issued to those who meet all the necessary requirements by the State of Administration of Chinese Traditional Medicines.[4]

The foreign corporation that imports must file an application for the proper Chinese authorities to insure the quality of the Chinese traditional medicines. In their application, copies of the supply contracts of the production enterprises and the quality registration certificates of Chinese traditional medicines must be submitted.[5] The commodity inspection authorities must verify Chinese herbal medicines that are to be exported. A commodity inspection certificate will be issued to prove compliance with the Chinese traditional medicines if all requirements are fulfilled. In accordance to the relevant provision, the production enterprises will also be published.[6]

The name list of Chinese traditional medicines to be exported accompanied by their production enterprises, which are approved for quality registration and inspection, is published once a year. The State Administration of Chinese Traditional Medicine, Ministry of Foreign Trade and Economic Cooperation and State Administration of Import and Export Commodity Inspection makes available the publication annually. Included in the contents of this publication are the names of production enterprises, varieties of Chinese traditional medicines, specifications, trademarks, quality registration and testing organizations.[7] Foreign corporations that have business ventures and trades with Chinese traditional medicines must be transacted with those production enterprises, which manufactured the exports with approval for quality registration.

The State Administration of Traditional Chinese Medicine (SATCM) is the hegemony in decisive matters regarding Traditional Chinese Medicine. Besides the tedious labor of working out department rules and regulations and supervising their administration, the State Administration of Traditional Chinese Medicine formulates the guidelines, policies, laws and regulations for Traditional Chinese Medicine. At times of disaster, pestilence, and military requirements, the State Administration of Traditional Chinese Medicine is able allocate emergency funds and loans. The organization guides the therapy, nursing, rehabilitation and health care of Traditional Chinese Medicine. It is also responsible for the integration of Traditional Chinese Medicine and Western medicine and nationality medicine. The production and trade of all Chinese medicines are under the supervision of the State Administration of Traditional Chinese Medicine. In a perpetual strategy to intellectually enhance and delegate the knowledge of all Traditional Chinese Medicines, the organization organizes personnel training, scientific research, technology development, and protection of intellectual property rights. To foster a globally synergistic relationship, the development of international scientific exchange and cooperation receives substantial attention. The State Administration of Traditional Chinese Medicine is also responsible for the creation of export and import plans of Chinese herbal medicines.[8]

The exponential gain in popularity of Traditional Chinese Medicine is due to word of mouth recommendations by friends and relatives. The benefits and effects are promoted in the most personal and convincing medium. Chinese herbal medicines are made available to the public in a wide range of prices. There are some potions that are expensive, but most can even be found below the price of over the counter drugs, which can validate that Chinese traditional medicines are relatively more affordable. Consumers of various social statuses can be served and have their needs satisfied. Traditional Chinese Medicines can be a cheater alternative to the rising price of modern medicine.[9]

Traditional Chinese Medicine is an emerging global industry. As an alternative medication that is preferred, it is by no means without the need for regulation, corporate accountability, and responsible management. The effectiveness of these potent remedies is derived from the essence of the herbs. Fake herbs and counterfeit extraction medication is a prosperous plague that have caused the death and illness of numerous consumers. The practitioners and manufacturers of Chinese herbal medicines must receive qualifications against international standardizations. As in China with its awakening to health security of the present market, the world can only benefit from growing importance and administration of natural medication.

Sources Cited:

1) http://www.jus.uio.no/lm/china.traditional.medicine.circular.1996/doc

2) http://www.satcm.gov.cn/english_satcm/zhongyao.htm

3) http://articles.ibonweb.com/magarticle.asp?num=388

4) http://www.taotoearth.com/links_laws_asia.html

[1] http://www.satcm.gov.cn/english_satcm/zhongyao.htm

[2] http://www.jus.uio.no/lm/china.traditional.medicine.circular.1996/doc

[3] Ibid.

[4] Ibid.

[5] Ibid.

[6] Ibid.

[7] Ibid.

[8] http://www.taotoearth.com/links_laws_asia.html

[9] http://articles.ibonweb.com/magarticle.asp?num=388

Monday, April 05, 2004

Mon, 05 Apr 2004 03:18:17 GMT

Aldo Lau

HIS 241 Modern China

April 8, 2004

The Change of Communism

The meaning of communism underwent different interpretations through its usage by different leaderships at various time periods. Before 1949 in China, communism was a cohesive ideology that enticed brotherhood and camaraderie amongst the diverse Chinese population to strengthen itself as a unified nation against external invasions and internal weaknesses. In the post-1949 Maoist era, communism was a destructive mechanism to subjugate all potential rivals of Mao. In the subsequent era of Deng, communism is the paradox that is at once both the tool for advancement and constraint for the Communist Party. Communism in China has been above all else the political philosophy of the then current head of state.

Before the establishment of the People’s Republic of China in 1949, communism was a theological force used to unite the people of China against the common threats that endangered its survival as an independent civilization. China faced both the perils of external conquests and internal maladies. Communism was the defensive shield in repulsion of foreign imperialism and capitalist exploitations. Communism was also the remedy to the retrogression of the Chinese sovereign state. The detailed principals of practical communism were not a significant matter. The majority of the population remained uneducated about the true meaning of communism. The masses of Chinese people only knew communism was guiding their civilization in the creation of a new China. The establishment of a unified Chinese nation for the Chinese people, free of foreign influences and civil warfare, was the coveted dream of every citizen of China. Any and all sacrifices to achieve this dream under the communist cause were deemed insignificant. To become a communist was the equivalent of becoming a patriot. To be a good Communist and Chinese patriot was to bare arms and join the fellow countrymen in the revolutionary struggle.

After 1949, Mao bore communism as the weaponry of conquest in his political campaigns. Communism was no longer a belligerent force for the Chinese people to liberate their indigenous soils, but was to become the foundational principals for a systematic government. Under the leadership of Mao, the Communist Party was able to defeat its enemies in war, but proved fallible in governance. When the authority of Mao was marginalized as a result of his failures to manage the prosperity of an entire country, Mao altered communism to become his personal arsenal to remonstrate his impotence at public administration. Communism once promoted the advancement of China in a modern world, but during the Great Proletariat Cultural Revolution, communism propagated mass ignorance and complete Maoist domination of the heart and mind on the collective population. Communism in post-1949 China was an internal purge of the Party members who are condemned for taking the capitalist road. The necessity of a pure socialist state was but an excuse for Mao to purge his opponents within the Party and those with questionable loyalties to his cult. The Maoist era emphasized the strengthening of a cult of Maoism to uproot and convert those without Mao Zedong Thought and absolute loyalty in following his leadership. Mao demanded blind loyalties from the mass populace, and valued ignorance among his followers to do his exact bidding. To be a good Communist and Chinese patriot was to worship Mao as the equivalent of a deity.

Deng interpreted communism as the impregnated force that will give birth to new achievements for China, yet simultaneously also as the constraint of continuity for the Party. Communism in the Deng era stresses more on building China to become a modern nation and management for perpetual prosperity. It is a strategy to emancipate the Chinese minds to achieve the four modernizations of economics, science and technology, and management. There was an emphasis on freedom of thought, democracy, and pragmatism. Deng wanted to recover the trust of intellectuals for both the Party and the communist reformations. Reforms were only to be conducted on the terms of the Party, and it was to be at all times under their direct control. There were also limitations on the progression of democracy and human rights. The Communist Party cannot totally and blatantly reject communism because it is the source of legitimacy to govern the Chinese people. Communism is the present stabilizer between innovations for the future and legitimate mandate to govern since the past. To be a good Communist and Chinese patriot was to reform the country for tomorrow within the boundaries of the Communist Party.

Communism is the theological embodiment of a socialist dream, yet it has been a political instrument all throughout Chinese history. Prior to 1949, communism was used to assemble the mass population of a shattered China to halt the onslaught of aliens, and cure the ailment of the Chinese nation. In the Maoist era, communism was bent into an assault organ for Mao’s monomaniacal quest to become the supreme authority. And in the Deng era, communism was a compromise between the Communist Party and the Chinese population with its present reforms. The interpretations of communism before 1949, in the Maoist era, and in the Deng era, were all manipulated to fulfill the interests of the political authorities of their respective eras.

Thursday, April 01, 2004

Thu, 01 Apr 2004 08:57:27 GMT

Aldo Lau

HIS 241 Modern China

March 25, 2004

Wild Swans: Birthright

The international bestseller Wild Swans: Three Daughters of China, by Jung Chang, is a personal reflection of the tumultuous times of twentieth-century China. Chang attests to the struggles of her family, shared by countless millions of others, in a nostalgic journey back in time. Accounting for three generations of her family, Chang relives the experiences of her grandmother, her mother, and herself in the formation of modern China. These three Chinese women were strong characters, yet ordinary nonetheless. Their epic adventures were vastly different but reflective of their respective time periods and environments. Her testimonial work of literature provides eyewitness accounts for the economical, social, and political helplessness of the Chinese masses to the turbulence of history. The intricate web of social relationships and interchanges between characters both reveal the subtle cultural changes unique to Chinese psychology in the whirlwind of time. Wild Swans is a trilogy that thoroughly explores three generations of family history seized by the environmental and cultural maelstroms that millions of Chinese people faced in a century of incessant upheavals.

Chang’s grandmother, Yu-fang (1909-1969), is representative of the Chinese populace who are attached to the dogmatism of traditions and customs. Her philosophy of life and traditional upbringing augmented a firm homage to the Confucian values. Yu-fang was born and raised in a time of martial law. The revolutionary father, Doctor Sun Yat-sen, was dead before his dream of a Republic of China was consolidated. A unified country was yet to be established after the 1911 revolution, and “the new republican government soon collapsed and the country broke up into fiefs.” (Chang 23) In order to insure his swift rise in the political echelon, Chang’s great-grandfather used Yu-fang as the bribe and wedded her off as the concubine of a warlord general. The Chinese had no such notion of love between two affectionate individuals. “Marriage above all else was seen as a duty, an arrangement between two families.” (Chang 23) Individuals whom acted upon love without the approval of the two families were ostracized from society, and also tainted their entire lineage with shame and disgrace. Yu-fang had only one alternative to a mandated marriage to General Xue Zhi-heng: suicide.

The Chinese civilization was still ignorant of human rights and gender equality. The inferiority of the female sex was still a common belief. “Only a son could perpetuate the family name – without him, the family line would stop, which, to the Chinese, amounted to the greatest possible betrayal of one’s ancestors.” (Chang 22) Yu-fang was a daughter that was unable to perpetual the family name. She was born with the presumption to become the property of another family after marriage. Her consent was unnecessary as she was given away to become a concubine. The subjugation of women was also a prevalent practice. The ideal figure Yu-fang embodied was not considered essential for a good marriage, “her greatest assets were her bound feet, called in Chinese ‘three-inch golden lilies’ (san-tsun-gin-lian).” (Chang 24) Bound feet was a desirable practice because it was “suppose to have an erotic effect on men, partly because her vulnerability induced a feeling of protectiveness in the onlooker.” (Chang 24) It also represented social prestige in the sense that it was unnecessary for the women to labor about, and a life of luxury was affordable within the household. Chang’s grandmother, along with all the women in China at that time, was treated with regards as a property within the institution of marriage, and also endured the painful abuses to her body in the process of foot-binding.

Marriage is considered to be a ceremonious event that is to be performed with extravagance in traditional China. In the following passage, Chang vividly describes the procession of her grandmother’s wedding ceremony:

“On the day of wedding … In front came a procession carrying banners, plaques,

and silk lanterns painted with images of a golden phoenix, the grandest symbol for

a woman. The wedding ceremony took place in the evening, as was the tradition,

with red lanterns glowing in the dark … Making a lot of noise was considered essential

for a good wedding … My grandmother was splendidly dressed in bright embroidery,

with a red silk veil covering her head and face … visiting all four gates, as a full ritual

demanded, with her expensive wedding gifts displayed on carts and in large wicker

baskets carried behind her.” (Chang 31)

The correct performance of rituals and opportunity to lavish publicly were very important in traditional Chinese culture. Rituals show filial piety towards the ancestors of the family. An opulent ceremony reveals the abundance of finances within the household, and also reflects their societal status. It was only appropriate for a warlord general to supply a good wedding to match his reputation and communal expectations. The Chinese culture was still foreign to the axiom that the ultimate fortune of a woman was not in a good wedding of huge expenditure, but in a union of two individuals that have discovered the divinity of love.

Yu-fang’s life as a concubine was identical to one of incarceration within a brothel. The main duties of a concubine were the provision of sexual services and reproduction. “Wives were not for pleasure – that was what concubines were for.” (Chang 30) Yu-fang was a virtual prisoner within the Xue household, with all her time spent in leisure. “Throwing mah-jongg parties was a normal part of life for concubines all over China. So was smoking opium, which was widely available and was seen as a means of keeping people like her contented – by being doped – and dependent.” (Chang 34) In the ten years that Chang’s grandmother was married with General Xue, they had been together a total of three times. The rare union between the two was due to both the ongoing war between the Kuomintang warlord fractions, and her insignificance as a concubine. Under the brief republican governance of a shattered China, women were still suppressed through gross injustice into an inferior social class.

Yu-fang finally found her purpose in life with the birth of Bao Qin (b. 1931), Chang’s mother-to-be. General Xue was soon at his deathbed due to serious illness. Yu-fang, being born a female and married as a concubine, “had no rights.” (Chang 39) With an internal struggle for power by the general’s wife and other concubines, Yu-fang feared that her daughter would be stolen from her or worse. The household of General Xue was no environment to raise her daughter. In an act of decisive courage, Chang’s grandmother escaped house arrest with her daughter and fled as far as her will carried her. It is only through a force so innately divine would such an obsequious woman forsake all societal damnations and worries of consequences for such a risky venture. This force was none other than a mother’s love for her offspring. General Xue passed away later in the year, but not before he granted Yu-fang her freedom with his final words. “This, for its time, was exceptionally enlightened, and she could hardly believe her good fortune.” (Chang 42) The good fortune of Chang’s grandmother continued, as she was able to find true love and remarried later as a wife proper to a Manchu, Doctor Xia. Yu-fang regarded the successful upbringing of Bao Qin as her greatest achievement in life. The lifestyle of Yu-fang provides the basis of contrasting tradition with modernity. All throughout the latter years of her life, she would be unable to find middle ground between her lifelong antagonism for the cultural adage and the Communist values of society.

Bao Qin’s childhood is one tainted with multitudinous warfare. In her early years, Chang’s mother experienced the helplessness of civilians to militant authorities. Her home village, Jinzhou, and its natives were defenseless against the victimization of various waves of invading forces. The Japanese, Russians, and Chinese Nationalists, all shared identical and belligerent qualities. Murder, rape, and plunder were all common and rampant practices among the unfortunate denizens. The Chinese people were a scattered civilization, without a nation, and ripe for exploitation. “Twenty years after the republican revolution there was still no unified nation to replace the rule of the emperor, nor, in Manchuria, did the people have much concept of being citizens of something called ‘China.’” (Chang 37) The ultimate liberators were the Chinese Communists, where their courage, nobility, and egalitarianism were the harbingers of peace and stability to the land. Bao Qin thought that these unsung heroes were a sight of grandeur and majesty, but their keen adoration of frugality radiated an appearance that “looked poorer and scruffier than beggars. She was disappointed because she had imagined them as big and handsome, and superhuman.” (Chang 78) She would later admire the commonness of the communists in contrast to “the casual extravagance of the Kuomintang elite while people were starving to death in the streets.” (Chang 98) Chang’s mother was soon converted over to the communist cause. In the performance of her patriotic duty, Bao Qin played the roles of a spy, a communism propagandist, and a valiant soldier. Under the leadership of Mao Zedong, the Chinese Communists were able to unify the country, restore economic stability, and administer a government of order. The Communist Party was finally able to claim victory in the revolutionary war, and the People’s Republic of China was established in 1949.

The establishment of a communist state meant monumental social changes for the people of China. After thousands of years of subservience, Mao had emancipated the female sex in the wake of a modern China. “The new Communist moral code … in a radical departure from the past, enjoined that men and women should be equal.” (Chang 127) In the tireless labor towards a complete socialist revolution under the vision of Mao, Bao Qin soon found herself attracted to another devout communist, the incorruptible Wang Yu. After much trails, Chang’s parents were able to join one another in wedlock. The institution of marriage shifted from its traditional notion of a mutual agreement between two families, to a permitted “talk about love” and view of marriage by the Communist Party and government. “The Communist Party was the new patriarch” within the family. (Chang 127) “The Communists were trying to institute a frugal approach to weddings, which had traditionally been the occasion for huge expenditure, far out of proportion to what people could afford.” (Chang 132) The union of Chang’s mother and father is exemplary of a revolutionary marriage contrasted with the traditional wedding of Chang’s grandmother.

Chang’s parents dedicated their entire lives and sacrificed selflessly to the creation of an egalitarian China. Wang Yu was legendary for his strictness and principals as a stout communist. His philosophy in life was never to abuse his powers deemed in any way inappropriate. His family and relatives faced equal treatment under his jurisdiction, as would any other unknown civilian. Chang’s mother “thought bitterly that he always seem to act against her interest and that he did not care whether she lived or died.” (Chang 176) Bao Qin had lost her first baby in a miscarriage from over exhaustion, and deteriorated her health permanently in an endless trial to prove her ardent communist membership. It would fortuitous when Bao Qin gave birth to Er-hong/Jung (b. 1952) with her lungs undamaged and did not threaten her life. Jung Chang grew up herself with her childhood days as one of Mao’s Red Guards. Chang was a sentinel in blind vindication to the ideologies of Mao. The following passage describes the adoration and gratitude of the general Chinese populace for Mao’s leadership of China:

“It was under Mao that China became a power to be reckoned with in the world,

and many Chinese stopped feeling ashamed and humiliated at being Chinese, which

meant a tremendous amount to them. In reality, Mao turned China back to the days

of the Middle Kingdom and … enabled the Chinese to feel great and superior again

… national pride was so important to the Chinese that much of the population was

genuinely grateful to Mao, and did not find the cult of his personality offensive,

certainly not at first.” (Chang 262)

Chang was seduced by Mao’s charisma and virulent campaigns to mobilize the masses. In her years of naivety, Chang believed it to be her mission in life to bring about a world revolution upon the capitalist world. The masses perceived Mao as their entire world, and Chang was no different as a child. Bao Qin, Wang Yu and Chang were about to realize how hopelessly optimistic their dream of a golden utopia forthcoming due to the communist revolution was.

Power corrupted Mao to become a monomaniac for dictatorship. Mao demanded ignorance and absolute authority. The Communist Party focused on conformity within societies, where individualism was condemned for its unpredictability. There was no longer such a concept as a personal or private life. Life only existed in the context of politics. Loyalties to Mao and the communist cause were not to be divided or ambiguous. China was governed through constant suspicion and fear. It did not take long before Mao and his fraction of the Communist Party demonstrated its inability for economic management. China was rapidly thrust into an illusional reality of mass production with steel and miracle harvests. In actuality, only useless chunks of metal were produced and crops were moved constantly from one plot of land to another. The Great Famine erupted upon the unsuspecting nation, and reduced the Chinese population to mass starvations or cannibalism. One would sell their own child for food: ‘Daughter for sale for 10 kilos of rice.’ (Chang 97) In extreme cases, one would even eat their children for sustenance: “Eventually it came out that he had killed his own baby and eaten it. Hunger had been like an uncontrollable, force driving him to take up the knife.” (Chang 234) In the aftermath of these national blunders, Mao was marginalized into political seclusion, yet nothing was to prepare the country for the onslaught of his return.

The Cultural Revolution reflected how China was a mere political playground for Mao. “The lesson was that Mao’s authority was unchallengeable even though he was clearly in the wrong.” (Chang 229) In his return to power, Mao provided the mass populace channels to release all their hatred, angers, frustrations, and violent qualities. The poem “The Four Seasons” by Lei Fend describes best at how fully manipulated minds were during the Cultural Revolution:

“Like spring, I treat my comrades warmly.

Like summer, I am full of ardor for my revolutionary work.

I eliminate my individualism as an autumn gale sweeps away fallen leaves,

And to the class enemy, I am cruel and ruthless like harsh winter.” (Chang 257)

In Mao’s great purge of his political rivals and usurpation of power, he unleashed an unstoppable force that brought about the fall of Chang’s parents and led to the eventual death of Wang Yu. In reflection of his life, Chang had these words to say about his father:

“I thought of my father’s life, his wasted dedication and crushed dreams. He need

not have died. Yet his death seemed so inevitable. There was no place for him in

Mao’s China because he had tried to be an honest man. He had been betrayed by

something to which he had given his whole life, and the betrayal had destroyed him.”

(Chang 479)

The death of Mao bought the Cultural Revolution to an end, and with that, brings about a closure to an ignominious chapter in Chinese history. It is also in this tragedy that inspired the rebirth of another life. In summary of very own past, Chang reveals her ultimate revelation to the purpose of life:

“I contemplated my twenty-six years. I had experienced privilege as well as

denunciation, courage as well as fear, seen kindness and loyalty as well as the

depths of human ugliness. Amid suffering, ruin, and death, I had above all

known love and the indestructible human capacity to survive and to pursue

happiness.” (Chang 504)

Chang derives from misfortune the ability to independently think for herself, and strives to take flight in search of her identity. Writing has been an expressive channel for her since childhood, yet have been suppressed due to external environmental factors. In pursuit of her birthright, Chang left China to obtain a Ph. D. in linguistics from York University in 1982, the first person from the People’s Republic of China to receive a doctorate from a British University. Through her unrelenting search for the truth and academic scholarship, Chang reclaimed her past and immortalized the history of her family with Wild Swans.

Jung Chang’s biography and autobiography, Wild Swans, captures her inevitable search for an inner sense of tranquility with the haunted memories of three generations in the making of contemporary Chinese history. Chang traces her family history, starting with herself, to her mother, and ending at her grandmother, to correlate the simultaneous search for modern China. Beginning with the fall of the Qing dynasty, their subsequent stories coincided onwards with historical events inclusive of the Civil War between the Kuomintang and the Communists, the Sino-Japanese War, the birth of the People’s Republic of China, the Cultural Revolution, and onto the present day with a glimmer of hope for an enlightened tomorrow. It is a journey into the past in examination of her individual identity. It is also an evaluation to the significance of her family contributions for the establishment of a unified Chinese state for the Chinese people in the modern world.

Tuesday, March 30, 2004

Tue, 30 Mar 2004 06:32:37 GMT

Aldo Lau

MGT 341 Comparative Management Systems

March 30, 2004

Managing A Multiethnic Work Force In France

Some of the general cultural and historical differences among these workers that will make it difficult to run a harmonious plant are inclusive of a foreign environment, management inaptness, a multiracial workforce, historical conflict, religious variance, and miscommunications.

Expansion of operations into the market of France is a change that will have to be managed efficiently. Headquarters have just acquired a manufacturing facility that makes parts for the French automobile industry. Top management will have to decide on the type of operations to which the French economy will best accommodate. An effective and efficient plant takes essence from the compatibility of the strategies implemented, such as whether the operations should be an independent plant with managers and philosophy of the indigenous region, or shall it import management expertise from the human resource of headquarters. The plant will also encounter innumerable legal and political hurdles unbeknownst to foreign managers in a new business environment. Such hindrances include the processes to the legal establishment of a plant, accounting methods for profitability and losses, hiring and laying off of employees, salaries, wages, and benefits computations, health and environmental regulations, taxation, and corporate responsibility to the community. French citizenship and all its associated benefits would have to be applied to employees of the native populations in the past French colonies. These external variables mentioned above are potential issues that may or may not affect the harmony within the plant and its operations.

French managers have been historically incompetent at properly handling the cultural differences to a work force of myriad backgrounds. The employees at the newly acquired plant include first- and second-generation immigrants from Vietnam, Algeria, and Morocco, as well as French natives. Corporate tactics will be rendered obsolete as the workers are employed in a hostile working environment. The management of the plant will be perceived as no more than illegitimate leaders in an increasingly competitive business environment. A diverse work force within the plant under bad management will result in an atmosphere of hate, suspicion, and destructive competition. Segregation of social groups and violent reactions may result from the ignorance and misunderstanding of the general staff of employees. A remnant history of colonialism and repression will also help to perpetuate the feud between rival fractions.

A different valuation for cultural ideologies and communication means foster an ambiguous working environment. The diverse ethnic groups of employees are also from different religious backgrounds, including Roman Catholicism, Confucianism, Buddhism, and Islam. The different religious practices and believes will instigate suspicion upon the staff of the plant. Religion is also the foundation for interpretation of transmitted messages to make sense in their cultural sense, which allows capacity for confusion and obstruction of cooperative relationships. Communication would also be a major problem within the plant and the workers. The workers all speak their distinctive native languages, although all of them are familiar with some French. The messages of the sender would be subconsciously translated into the receiver’s native language. The complexity of lingual translations and different conceptualizations for ideas will result in the bewilderment of the employees and a disoriented plant.

Consultation with American managers about coping with and mediating these disruptive differences suggests the outsourcing of management expertise, employment of native professionals in legal and environmental field, internal educational trainings on world cultures, theologies, and languages, standardization of a corporate culture, and provision of readily available means to conflict resolution.

The alleviation of chaos within a professional work environment requires strategic leadership that sets standardizations for roles, responsibilities, and ramifications to all employees of the corporate echelon. It is reasonable and vital to outsource management from a more historically capable region of multiethnic and change managers. There will also be the need to employ legal and environmental consultants to provide assistance in the fluid flow of operations to profitability within the French market. It has been predetermined that it would be more cost-effective to retain the full staff of assembly line workers. There should be a corporate emphasis on creating synergistic cooperation between the various groups of employees. In the alteration of labor hours, the plant will incubate a friendly atmosphere of tolerance, understanding, and constructive professional relationship building. Trainings on world cultures, theologies, and languages will enlighten the perspectives of all the workers within the plant. Education on world knowledge will also help to set the basis for standardized communication. Out-of-work social activities sponsored and encouraged by the corporation will allow opportunities for teamwork and trust to evolve and applied back to the efficient operations of the plant assembly line. Lastly, counselors will be accessible for problem shooting and resolution of any conflicts of interest that arise between different groups of employees. This new conglomerate of changes imposed within the infrastructure of the plant will establish a new corporate culture. The alignment of corporate and employee interests, along with the synthesis of differences between the workers, ensures the effective and efficient business operations of a harmonious plant.

There are similarities and differences between this situation and that found in American plants that employ workers from diverse cultural and ethnic groups. The problematic kinks are generally identical. Such international issues include the quality of management, lack of expertise within the market environment, disparity in a multiethnic work force regarding social status, economic gaps, and ignorance of world citizenry. It is the actual history of these predicaments that provide their distinctness. In the plant work force, the employees have citizens who were the actual victims or descendants of French colonialism, and the descendant or actual colonizers. In the United States of America, the children of White Anglo-Saxon Protestants may well have to work with those immigrants their ancestors once exploited in the past. Examples are the African-Americans, where they are the descendants of those enslaved before the Civil War, and the Japanese-Americans, where they may have experienced the injustice of being interned into concentration camps. The essential demands to operate an effective and efficient business are identical. The ability to adapt to the details within the situational cultures and environments are the key determinants of success and failure for any business venture.

Sunday, March 28, 2004

Sun, 28 Mar 2004 01:43:09 GMT

Aldo Lau

MGT 341 Comparative Management Systems

March 27, 2004

The Economic Environment Comparison Between Germany & Japan

Germany and Japan are two of the most industrially and technologically advanced economies of the world. After its unification of the West and the East in 1990, Germany is currently the largest economy and most populous nation in Europe. Germany has a gross national product purchasing power parity of $2.16 trillion, and has a total population of approximately 83.4 million at which 41.9 million are representative of its labor force. Japan has rapidly become the worldfs 2^nd most technologically powerful economy only behind the United States of America, and the worldfs 3^rd largest economy after the United States of America and the Peoplefs Republic of China. Japan has a gross national power purchasing parity of $3.651 trillion, and a total population of approximately 127.2 million at which 67.7 million are representative of its labor force.

The subsidiaries of the IBM Corporation in the German and Japanese markets have similar economic conditions. Germany and Japan both suffered economic devastation after their defeat in World War II, but in the latter half of the past century both have been focused on strategically revamping their economies and rapid reconstruction of the prosperity of their nations. The fiscal management of both countries has been allocated on the basis of advancement towards the technology and industry sectors, with an effective decreased emphasis on military expenditures. Germany has been spending $70 billion annually to help the ex-communist nation, East Germany, catch up to the economic progress shown in West Germany after its unification into a single sovereignty. Germany is trying to bridge the wealth gap between the opulent West and the destitute East, and foster a synergistic cooperation that will enrich their citizens in its entirely in the future. Germany has a military expenditure of only 1.38% of its total gross domestic product. Japan has also recorded a military defense expenditure of 1% of its total gross domestic product, comparably little with other nations across the globe. Germany and Japan have both shown remarkable success in rebuilding their economies to be the powerhouses of modern day.

The affluent economies of Germany and Japan are both mature and are suffering sluggish growth in recent times. The performance of the German economy in much of the 1990s and early 2000s has been weak. Its entrance into the European Union and global competition has also added complexity into the German market, hampering its effectiveness in establishing readily available integration strategies for synergistic relationships between corporate cultures from around the world. The Japanese economy has recently been climbing out of its recession, but the intricate restructuring of its ineffective banking systems and regulations, augmented with the slowing economies of the United States of America, Europe, and Asia, have both impeded on the potential progress of its economic recovery. The real growth rates of both the German and Japanese gross domestic product are 0.2%. The German and Japanese governments will have to collaborate with corporate leaders to implement cooperative strategies to rid their economies of internal strife and become more competitive in an increasingly global business market.

Germany and Japan has similar economic structures, but dissimilar monetary policies. January 1, 2002, was the deadline where Germany along with another 11 other European Union countries implemented the Euro as the common European currency in circulation, and sought to phase out the myriad indigenous currencies that was to become obsolete. The European market suddenly became more easily comparable in terms of monetary transactions and financial valuations. The Yen is the national currency of Japan that is used in financial transactions. The valuation of currencies of both nations along with the Dollar of the United States of America has undergone wide fluctuations of appreciation and depreciation as of late, adding on more complications to the international business community. The per capita income of Germany is $26,200. Japan has the higher per capita income of $28,700. The gross domestic product of Germany is composed of 1% agriculture, 31% industry, and 68% services sectors of the economy. The Japanese gross domestic product is composed of 1.4% agriculture, 30.9% industry, and 67.7% services sectors of the economy. Germany and Japan both do not have available their information on population below poverty line. The Euro has an inflation rate of 1.3%, while the Yen has been deflating at the rate of 0.9%. The interest rates of both countries are also not available information. The economic components of both nations are identical, while their currencies are fluctuating in opposite directions.

The governments of Germany and Japan struggle against comparable social dissatisfaction with ineffective policies and regulations for their economies. The subsidies of IBM Corporation should consider Germanyfs strict regulations for laying off workers and the setting of wages on a national basis. Germany has a high unemployment rate of 9.8% of its total German population, while the Japanese has an average unemployment rate of 5.4% of its total population. The external debts of both nations are information that is not available, but both countries have shown ineffective fiscal management in their internal bodies of governance. For the fiscal year of 2002, Germany recorded their revenue as $802 billion, while its expenses were $825 billion. The German state is running into a government deficit to strengthen their national infrastructures and also the modernization of East Germany. The German deficit has dangerously risen above the 3% debt limit standardized by the European Union. The Japanese has a huge government deficit of 150% of its gross domestic product. Germany and Japan must provide effective management to the dynamic changes from their respective international business environments, and ensure the continued growth and success of these two affluent global economies.

Friday, March 19, 2004

Fri, 19 Mar 2004 22:52:59 GMT

Fundamentals of Investment Management

Chapter 1: The Investment Setting

Investment is the commitment of current funds in anticipation of receiving a larger future flow of funds.

A financial asset represents a financial claim on an asset that is usually documented by some form of legal representation.

A real asset represents an actual tangible asset that may be seen, felt, held, or collected.

Direct equity claims represent ownership interests and include common stock as well as other instruments that can be used to purchase common stock, such as warrants and options. Warrants and options allow the holder to buy a stipulated number of shares in the future at a given price. Warrants usually convert to one share and are long term, whereas options are generally based on 100 share units and are short term in nature.

Indirect equity can be acquired through placing funds in investment companies (such as a mutual fund). The investment company pools the resources of many investors and reinvests them in common stock (or other investments). The individual enjoys the advantages of diversification and professional management (though not necessarily higher returns).

Creditor claims are debt instruments offered by financial institutions, industrial corporations, or the government.

Preferred stock is a hybrid form of security combining some of the elements of equity ownership and creditor claims.

Commodity futures represent a contract to buy or sell a commodity in the future at a given price.

Liquidity is measured by the ability of the investor to convert an investment into cash within a relatively short time at its fair market value or with a minimum capital loss on the transaction.

Those who attempt to engage in short-term market tactics are termed traders. To help reach decisions, short-term traders often use technical analysis, which is based on evaluating market indicator series and charting.

Those who take a longer-term perspective try to identify fundamentally sound companies for a buy-and-hold approach, not necessarily anticipating being able to buy right at the bottom or sell at the exact peak.

The Taxpayer Relief Act of 1997 increased the impact of tax considerations on investments. Prior to the act, the maximum tax rate on long-term capital gains was 28 percent. It lowered the maximum capital gains tax rate to 20 percent for assets held at least one year.

The Tax Act of 2001 further modified tax considerations by phasing down the 39.6 percent maximum tax for dividends, short-term capital gains, and other forms of income to 35 percent by 2006. The maximum deduction for an IRA is also phased up from $2,000 in 2001 to $5,000 in 2008.

Rate of return = [(Ending value – Beginning value) + Income]/Beginning value

Specifically to stocks is written as follows:

Rate of return = [(P1-P0) + D1]/P0

Where:

P1 = Price at the end of the period.

P0 = Price at the beginning of the period.

D1 = Dividend income.

The risk for an investment is related to the uncertainty associated with the outcomes from an investment.

Three components make up the required return from an investment:

1) The real rate of return. 2) The anticipated inflation factor. 3) The risk premium.

The real rate of return is the return investors require for allowing others to use their money for a given time period.

The anticipated inflation factor must be added to the real rate of return. Combining the real rate of return and inflationary considerations gives us the required return on an investment before explicitly considering risk.

Risk-free rate = (1 + Real rate)(1 + Expected rate of inflation) – 1

The risk premium will be different for each investment.

Chapter 2: Security Markets: Present and Future

The financial markets in the last decade have been one of deregulation, new laws, mergers, global consolidation, online (Internet) brokerage, and electronic communication networks (ECNs). These structural changes have been accompanied by 24-hour trading, decimalization of stock quotes, and intense global competition.

The 1998 merger between Citicorp (the parent of CitiBank) and Travelers Insurance (including the Salomon Smith Barney division) created Citigroup. For the first time since the 1930s we had an institution that was able to sell insurance, underwrite securities, perform brokerage functions, and offer commercial banking under the same roof.

In 1999 the U.S. Congress passed the Gramm-Leach-Bliley Act allowing financial institutions to offer full financial services as well as insurance and brokerage, repealing the Glass Steagall Act, which prohibited banks from offering both investment banking services and commercial banking services.

A market is simply a way of exchanging assets, usually cash, for something of value.

An efficient market occurs when prices respond quickly to new information, when each successive trade is made at a price close to the preceding price, and when the market can absorb large amounts of securities or assets without changing the price significantly.

Liquidity is a measure for the speed with which an asset can be converted into cash at its fair market value.

Secondary markets are markets for existing assets that are currently traded between investors. These markets create prices and allow for liquidity.

Primary markets are distinguished by the flow of funds between the market participants. Instead of trading between investors as in the secondary markets, participants in the primary market buy their assets directly from the source of the asset.

The investment banker acts as a middleman in the process of raising funds and in most cases, takes a risk by underwriting an issue of securities.

Underwriting refers to the guarantee the investment banking firm gives the selling firm to purchase its securities at a fixed price, thereby eliminating the risk of not selling the whole issue of securities and having less cash than desired.

The investment banker may also sell the issue on a best-efforts basis where the issuing firm assumes the risk and simply takes back any securities not sold after a fixed period.

A very limited number of securities are sold directly by the corporation to the public.

With a private placement, the company may sell its own securities to a financial institution such as an insurance company, a pension fund, or a mutual fund, or it can engage an investment banker to find an institution willing to buy a large block of stock or bonds. Most private placements involve bonds (debt issues) instead of common stock.

Investment banking firms will share the risk and the burden of distribution by forming a group called a syndicate.

The firms at the top of the tombstone advertisement have agreed to underwrite the largest number of shares and the firms on the bottom have taken the smallest number of shares.

A shelf registration under SEC Rule 415 allows issuing firms to register their securities with the SEC and then sell them at will, as funds are needed in the future.

Bringing private companies public for the first time is called an initial public offering (IPO), and distribution costs to the selling company are much higher than offerings of additional stock by companies that are already public.

The organized exchanges fulfill this need in a central location where trading occurs between buyers and sellers.

The over-the-counter markets also provide markets for exchange but not in a central location.

A new type of market that has developed in the last several years is the ECN or electronic communication network.

Brokers are registered members of the exchanges, and their number is fixed by each exchange.

The national exchanges are the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX). A board of directors consisting of one-half exchange members and one-half public members governs both these exchanges.

Regional exchanges include the Chicago Stock Exchange, the Pacific Coast Exchange in San Francisco and Los Angeles, and the smaller regionals.

Companies that are traded on regional exchanges and also listed on national exchanges are referred to as dual trading.

A consolidated ticker tape was instituted on June 16, 1975, that allowed brokers on the floor of one exchange to see prices of transactions on other exchanges in the dually listed stocks.

Securities can be traded on an exchange only if they have met the listing requirements of the exchange and have been approved by the board of governors of that exchange.

Minimum requirements for initial listing set minimums for the net income of the firm, the market value of publicly held shares, the number of shares publicly held, and the number of stockholders owning at least a round lot of 100 shares.

The company must pay annual listing fees to the exchange and additional fees based on the number of shares traded each year.

The New York Stock Exchange also has the authority to remove (delist) a security from trading when the security fails to meet certain criteria. Generally, a company’s security may be considered for delisting if there are fewer than 1,200 round-lot (100 shares) owners, 600,000 shares or fewer in public hands, and the total market value of the security is less than $5 million.

The NYSE has 1,366 members who own “seats,” which may be leased or sold with the approval of the NYSE. Multiple seats are owned by many member firms so that the number of member organizations totals 1,192. The price of NYSE seats ranged from a low of $35,000 in 1977 to a high of $2,650,000 in early 1999. There are five distinct categories for members owning these seats, each with a specific job.

The commission brokers represent commission houses, such as Merrill Lynch, the execute orders on the floor of the exchange for customers of that firm.

Floor brokers are registered to trade on the exchange but are not employees of a member firm, owning their own seat and charge a small fee for services.

Registered traders own their own seats and are not associated with a member firm. They are registered to trade for their own accounts and do so with the objective of earning a profit.

Odd lots (less than 100 shares) are not traded on the main floor of the exchange, so dealers will buy their own inventory of the particular security and sell for their own accounts.

Each stock traded has a specialist assigned to it, and most specialists are responsible for more than one stock. First, they must handle any special orders that commission brokers or floor brokers might give. The second major function is to maintain continuous, liquid, and orderly markets in their assigned stocks.

Price continuity is measured by the size of the price variation in successive trades.

Super Dot (designated order transfer system) allows NYSE member firms to electronically transmit all market and limit orders directly to the specialist at the trading post or the member trading booth. This order routing system takes orders and communicates executions of the orders directly back to the member firm on the same electronic circuit.

As part of the Super Dot, specialists are informed through OARS (Opening Automated Report Service) of market orders received before the opening bell.

Another feature of Super Dot that greatly aids the specialist is the Electronic Book. This database covers stocks listed on the NYSE and keeps track of limit orders and market orders for the specialist.

The American Stock Exchange trades in smaller companies than the NYSE, and except for one dually listed company on the NYSE in 1983, the stocks traded on the AMEX are different from those on any other exchange. After merging with Nasdaq in the late 1990s, it appears that a divorce is on the horizon.

For years the tradition on the New York Stock Exchange and other U.S. markets was to quote stock prices in eighths of a point or $0.125.

The difference between the bid and the asked price is called the spread; it represents the profit the dealer earns by making a market.

The Securities and Exchange Commission gave the major U.S. stock markets until April 9, 2001, to convert the pricing of stocks and options to decimals.

Trading in call options started on the Chicago Board Options Exchange (CBOE) in April 1973 and proved very successful. The CBOE standardized call options into three-month, six-month, and nine-month expiration periods on a rotating monthly series.

A call option gives the owner the right to buy 100 shares of the underlying common stock at a set price for a certain period.

A new wrinkle in the options game has been options on stock market indexes or industry groupings (called subindexes).

Purchasers of commodity futures own the right to buy a certain amount of the commodity at a set price for a specified period. When the time runs out (expires), the futures contract will be delivered unless sold before expiration.

The over-the-counter (OTC) markets have no central location where securities are traded. Being traded over-the-counter implies the trade takes place by telephone or electronic device and dealers stand ready to buy or sell specific securities for their own accounts. These dealers will buy at a bid price and sell at an asked price that reflects the competitive market conditions.

The National Association of Securities Dealers (NASD), a self-policing organization of dealers, requires at least two market makers (dealers) for each security, but often there are 5 or 10 or even 20 for government securities.

OTC markets exist for stocks, corporate bonds, mutual funds, federal government securities, state and local bonds, commercial paper, negotiable certificates of deposits, and various other securities. These securities make the OTC the largest of all markets in the United States in dollar terms.

Nasdaq stands for the National Association of Securities Dealers Automated Quotations system. This system is linked by a computer network and provides up-to-the-minute quotations on approximately 6,000 of the OTC stocks traded on the Nasdaq system. These Nasdaq stocks are divided between national market issues and small cap issues.

Commercial paper, representing unsecured, short-term corporate debt, is traded directly by finance companies, but OTC dealers specializing in this market handle a large portion of commercial paper sold by industrial companies.

The trading in NYSE-listed securities in OTC markets became known as the third market.

The fourth market is that market in which institutions trade between themselves, bypassing the middleman broker (replacing the broker with a computer). Much of the trading in this market is done through Instinet (Institutional Networks Inc.).

Electronic Communication Networks (ECNs) are also known as Alternative Trading Systems (ATSs).

The repeal of Rule 390 allows ECNs the right to make markets in all NYSE issues (Rule 390 prohibited off-exchange trading of listed NYSE securities).

Congress in the Securities Amendments Act of 1975 mandated a national market system.

The composite tape reflects trades on all exchanges for listed NYSE companies, helps create competition between specialists in different markets, making markets in the same stock through dual trading on the regional markets.

Organized securities markets are regulated by the Securities and Exchange Commission (SEC) and by the self-regulation of the exchanges.

Three major laws govern the sale and subsequent trading of securities. The Securities Act of 1933 pertains to new issues of securities, while the Securities Exchange Act of 1934 deals with trading in the securities markets. The Securities Acts Amendments of 1975 has its main emphasis on a national securities market.

The Securities Act of 1933 was enacted after congressional investigations of the abuses present in the securities markets during the 1929 crash and again in 1931.

All offerings except government bonds and bank stocks that are to be sold in more than one state must be registered with the SEC.
The registration statement must be filed 20 days in advance of the date of sale and include detailed corporate information for SEC for verify it to be factual and accurate.
A prospectus, a detailed summary of the registration statement, must accompany all new issues of securities. It is called a red herring because stamped on the front in red letters are the words “Preliminary Prospectus.”
Officers of the company and other experts preparing the prospectus or registration statement are accountable and liable for all of the information provided.

The Securities Exchange Act of 1934 created the SEC to enforce the securities law. It was empowered to regulate the securities markets and those companies listed on the exchanges.

Guidelines for insider trading were established. Insiders must hold securities for at least six months before they can sell them.
The Federal Reserve Board of Governors became responsible for setting margin requirements to determine how much credit one had available to buy securities.
Manipulation of securities by conspiracies between investors was prohibited.
The SEC was given control over the proxy procedures of corporations (a proxy is an absent stockholder vote).
Corporations must file quarterly financial statements with the SEC, send annual reports to the stockholders, and file 10-K reports with the SEC annually. The SEC also has company filings available on the Internet under its retrieval system called EDGAR.
The act required all securities exchanges to register with the SEC.

The major focus of the Securities Act of 1975 was to direct the SEC to supervise the development of a national securities market.

The Investment Advisor Act of 1940 is set up to protect the public from unethical investment advisers. Any adviser with more than 15 public clients (excluding tax accountants and lawyers) must register with the SEC and file semiannual reports.

The Investment Company Act of 1940 provides similar oversight for mutual funds and investment companies dealing with small investors. The act was amended in 1970 and currently gives NASD authority to supervise and limit commissions and investment advisory fees on certain types of mutual funds.

The Securities Investor Protection Act of 1970 established the Securities Investor Protection Corporation to oversee liquidation of brokerage firms and to insure investors’ accounts to a maximum value of $500,000 in case of bankruptcy of a brokerage firm.

Program trading simply means computer-based trigger points are established in which large volume trades are initiated by institutional investors.

Under Rule 80A as amended by the SEC, all daily up or down movements in the Dow Jones Industrial Average (DJIA) of 50 points or more cause a tick test to go into effect. In down markets, sell orders can only be executed on an increase in price (a plus tick) and buy orders can only be executed on a decrease in price (a down tick).

In 1989 circuit breakers were also put in place; circuit breakers shut down the market for a period of time if there is a dynamic drop in stock prices.

Chapter 3: Participating in the Market

Dow Jones Industrial Average (DJIA) consists of 30 large industrial companies and is considered a “blue-chip” index (stocks of very high quality). These 30 common stocks comprise more than 25 percent of the market value of the 3,000 firms listed on the NYSE.

Dow Jones also publishes an index of 20 transportation stocks and 15 utility stocks. It also shows a Dow Jones 65-stock composite average that summarizes the performance of the Dow Jones industrial, transportation, and utility issues as well as the Dow Jones indicator of the total U.S. market.

The Dow Jones Industrial Average is a price-weighted average, which means each stock in the average is weighted by its price.

Standard & Poor’s 500 Stock Index is widely followed by professional money managers and security market researchers as a measure of broad stock market activity. In 2001, S&P 500 Stock Index included 371 industrial firms, plus 15 transportation, 49 utilities, and 65 financial firms. The stocks in the S&P Stock Index are equivalent to approximately 75 percent of the total value of the 3,000 firms listed on the NYSE.

The Standard & Poor’s 400 MidCap Index is composed of 400 middle-sized firms that have total market values between $1.2 billion and $9 billion.

Standard & Poor’s 600 SmallCap Index provides an opportunity for comparison of stocks that are smaller than MidCap.

The Standard & Poor’s 1500 Stock Index combines the S&P 500, the S&P 400 MidCap, and the S&P SmallCap 600.

The Standard & Poor’s 100 Index is composed of 100 blue-chip stocks on which the Chicago Board Options Exchange has individual option contracts.

For the S&P 500 Stock Index, the base period of 1941-43 (10).

The Standard & Poor’s Indexes are value-weighted indexes, which means each company is weighted in the index by its own total market value as a percentage of the total market value for all firms.

Standard & Poor’s also compiles value-weighted indexes for more than 100 different industries, and they are reported in the Standard & Poor’s Security Price Index Record.

The Value Line Average represents 1,700 companies from the New York and American stock exchanges and the Nasdaq market. The Value Line Average is an equal-weighted index. This means each of the 1,700 stocks, regardless of market price or total market value, is weighted equally.

The Nasdaq 100 is made up of the 100 largest firms in its market and is heavily populated by high-tech firms.

The American Exchange (AMEX) Composite Index is composed of all stocks trading on the American Stock Exchange.

The indexes of the New York Stock Exchange, Nasdaq, and the American Stock Exchange are all value-weighted indexes.

The Wilshire 5000 Equity Index represents the total dollar value of 5,000 stocks, including all NYSE and AMEX issues and the most active Nasdaq issues.

The Russell 3000 Index is comprised of 3,000 U.S. stocks as measured by market capitalization (market value times shares outstanding). The Russell 1000 Index includes only the largest 1,000 firms out of the Russell 3000, while the Russell 2000 specifically includes the smallest 2,000 out of the Russell 3000.

The Dow Jones Global Indexes cover 34 countries in three major sectors of the world (Americas, Europe/Africa, and Asia/Pacific). There is the World Index that excludes the United States, and the overall Dow Jones (DJ) World Stock Index that includes the United States.

Besides the Dow Jones World Stock Market Index, there are other important global indexes such as the Morgan Stanley Capital International Indexes and the Solomon-Russell World Equity Index. In terms of averages for specific countries outside the United States, the Tokyo Nikkei 225 Average is probably the most actively watched.

A cash account requires full payment, while a margin account allows the investor to borrow a percentage of the purchase price from the brokerage firm. The percentage of the total cost the investor must pay is called the margin and is set by the Federal Reserve Board to control speculation. Either account allows you three business days to pay for any purchase.

Margin accounts are used mostly by traders and speculators or by investors who think their long-run return will be greater than the cost of borrowing.

Minimum requirements for equity in a margin account are called minimum maintenance standards (usually 25 percent).

When investors establish a position in a security, they are said to have a long position if they purchase the security for their account.

Those who have no position at all may wish to take a short position to profit from the expected decline. When you short a security, you are borrowing the security from the broker and selling it with the obligation to replace the security in the future.

A short sale can only be made on a trade where the price of the stock advances (an uptick), or if there is no change in price, the prior trade must have been positive.

A margin requirement is associated with short selling, and it is currently equal to 50 percent of the securities sold short.

A limit order limits the price at which you are willing to buy or sell and ensures you will pay no more than the limit price on a buy or receive no less than the limit price on a sell.

A stop order is a two-part mechanism. It is placed at a specific price like a limit order, but when the price is reached, the stop turns into a market order that will be executed at close to the stop price but not necessarily at the exact price specified. When used to eliminate a long position, a stop order is often called a stop-loss order.

Limit orders and stop orders can be “day orders” that expire at the end of the day if not executed, or they can be GTC (good till cancelled) orders. GTC orders will remain on the specialist’s books until taken off by the brokerage house or executed.

An investor can now merely access an online broker’s website to open an account, review the operating procedures and commission schedule, and initiate a trade.

Average tax = Taxes paid/Taxable income

A capital gain or loss occurs when an asset held for investment purposes is sold.

A long-term capital gain takes place when an asset is held for more than a year, and the maximum tax rate is 20 percent on long-term capital gains under the Taxpayer Relief Act of 1997. If an asset is not held for more than 12 months, its sale represents a short-term capital gain or loss, and the tax treatment is exactly the same as ordinary income.

Chapter 4: Sources of Investment Information

The Board of Governors of the Federal Reserve System, Washington, D.C., publishes the Federal Reserve Bulletin monthly. It contains an abundance of monetary data such as money supply figures, interest rates, bank reserves, and various statistics on commercial banks. Fiscal variables such as U.S. budget receipts and outlays and federal debt figures are also found in the Bulletin. This publication also contains data on international exchange rates and U.S. dealings with foreigners and overseas banks. Also includes:

Domestic Financial Statistics
Federal Reserve Banks
Monetary and Credit Aggregates
Commercial Banks
Financial Markets
Federal Finance
Securities Markets and Corporate Finance
Real Estate
Consumer Installment Credit
Domestic Nonfinancial Statistics
International Statistics
Securities Holdings and Transactions
Interest and Exchange Rates

The 12 Federal Reserve banks in the Federal Reserve System represent different geographical areas (districts) of the United States.

Eight times each year the 12 district banks publish “The Beige Book” on their region’s economy.

FRED stands for Federal Reserve Economic Data maintained by the St. Louis Federal Reserve Bank.

The Bureau of Economic Analysis of the U.S. Department of Commerce publishes the Survey of Current Business monthly. It serves as a major outlet for economic time series data.

Many graphical presentations of economic time series data, including the lending, lagging, and coincident indicators, are shown in Business Cycle Indicators.

Many websites charge you for information either through a subscription fee or a fee for each data series. Other websites may provide information and data for free.

Several other government sources are available such as Economic Indicators prepared by the Council of Economic Advisors and the Annual Economic Report of the President. Additionally, many periodicals, such as Business Week, Fortune, and Barron’s, contain raw data as well as economic commentary. Moody’s and Standard & Poor’s investment services both publish economic data along with other market-related information.

Mergent (Moody’s) publishes several databases for bonds and stocks that were formerly called Moody’s Manuals. These are widely used and present historical financial information on the companies listed, their officers, and the companies’ general corporate condition.

Mergent Bond Record, a monthly publication, contains data on corporate, convertible, government and municipal bonds, and ratings on commercial paper and preferred stock.

Mergent also publishes a weekly Bond Survey that reviews the week’s activity in the bond market, rating changes, new issues, and bonds called for redemption.

Mergent Dividend Record presents quarterly dividends and the date of declaration, date of record, date payable, and ex-dividend dates. This is an annual publication.

Mergent Handbook of Common Stock is a quarterly reference guide that summarizes a company’s 10-year historical financial data along with a discussion of corporate background, recent developments, and prospects. Approximately 1,000 companies are listed in the Handbook.

Standard & Poor’s Corporation Records are similar to Moody’s Manuals except they are organized alphabetically rather than by trade categories. The Corporation Records are published monthly, and the six volumes are updated by daily supplements. Information found in the volumes includes historical company background, financial statements, news announcements, earnings updates, and other news of general interest.

The Bond Guide has the same format as the Stock Guide. A monthly publication in booklet form, it presents data on corporate and convertible bonds.

Corporation Reports are often mailed from brokerage houses to customers who want basic information on a company. It is contained in two separate alphabetized publications. Each company is updated quarterly with new earnings, dividends, and recent developments.

Value Line Investment Survey, a publication of Arnold Bernhard & Co., follows 1,700 companies, and each common stock is covered in a one-page summary. Value Line also publishes two other products: Value Line Options, featuring put and call options, and Value Line Convertibles, featuring convertible bonds, preferred stocks, and warrants.

Morningstar has various print and software products for everyone from investors to finance professionals, including Morningstar Mutual Funds, Morningstar No-Load Funds, Morningstar Investor, Morningstar Mutual Fund 500, Morningstar Variable Annuity/Life, Performance Reports, Morningstar Japan, Morningstar Stock Tools, Morningstar Principia and PrincipiaPlus.

Dun & Bradstreet publishes Key Business Ratios in bound form. This publication contains 14 significant ratios on 800 different lines of business listed by SIC code.

Another good source of ratios is Robert Morris Associates, which provides ratios on more than 150 industry classifications.

Dun’s Marketing Services division of Dun & Bradstreet also publishes the Million Dollar Directory.

Thompson Financial, Inc., also publishes information on mutual funds (The Investment Company Yearbook). The annual issue covers a 10-year statistical history.

Another publication that is like an investment service is the annual issue of The Individual Investor’s Guide to No-Load Mutual Funds published by the American Association of Individual Investors.

The annual 10-K report filed to the SEC contains the same type of information in their annual report but in greater detail.

The 8-K report must be filed to the SEC when the corporation undergoes some important event that stockholders would be interested in knowing about, such as changes in control, bankruptcy, resignation of officers or directors, and other material events.

10-Q statements are filed quarterly no later than 45 days after the end of the quarter. This report includes quarterly financial statements, changes in stockholdings, legal proceedings, and other matters.

Proxy statements disclose information relevant to stockholders’ votes; a prospectus must be issued whenever a new offering of securities is made to the public; and a registration trading statement, which is normally required for new issues by firms trading on an organized exchange or over-the-counter.

EDGAR is an acronym for Electronic Data Gathering, Analysis, and Retrieval.

Fortune is published biweekly and is known for its coverage of industry problems and specific company analysis.

Forbes is a biweekly publication featuring several company-management interviews.

Barron’s Business and Financial Weekly, published by Dow Jones every weekend, contains regular features on dividends, put and call options, international stock markets, commodities, a review of the stock market, and many pages of prices and financial statistics.

Media General’s Industriscope is an exceptional source of fundamental and technical indicators for the professional manager. More than 3,400 common stocks are divided into 60 industrial groups and analyzed based on relative strength (whether they are leading lagging the market), trends, earnings, and other variables that may be useful to the analyst.

Investors Management Science Company, a subsidiary of Standard & Poor’s Corporation, publishes Compustat. The Compustat tapes are very comprehensive, containing 20 years of annual financial data for more than 16,000 companies. Each year’s data for the industrial companies include more than 300 balance sheet, income statement, and market-related items.

Chapter 7: Valuation of the Individual Firm

Valuation is based on economic factors, industry variables, an analysis of the financial statements, and the outlook for the individual firm. Valuation determines the long-run fundamental economic value of a company’s common stock.

Dividend valuation models rely solely on dividends expected to be received during the future.

Earnings valuation models substitute earnings as the main income stream for valuation, and may also call for the determination of a price-earning ratio, or a multiplier of earnings to determine value.

The risk-free rate (R_f) is a function of the real rate of return and the expected rate of inflation.

R_f (risk-free rate) = (1 + Real rate) (1 + Expected rate of inflation) – 1

K_e = Total required rate of return with an additional risk component to the risk-free rate

K_e = R_F + b(K_M – R_F)

Where:

K_e = Required rate of return

R_F = Risk-free rate

b = Beta coefficient

K_M = Expected return for common stocks in the market

(K_M – R_F) = Equity risk premium (ERP)

Beta measures individual company risk against the market risk (usually the S&P 500 Stock Index). Companies with the betas greater than 1.00 have more risk than the market, companies with betas less than 1.00 have less risk than the market, and companies with betas equal to 1.00 have the same risk as the market.

The Equity Risk Premium (ERP) represents the extra return or premium the stock market must provide compared with the rate of return an investor can earn on U.S. Treasury securities.

General dividend model:

P₀ = D₁/(1 +_e K)¹ + D₂/(1 + K_e)² + D₃/(1 + K_e)³ + … + D_x/(1 + K_e)^x

Where:

P₀ = Present value of the stock price

D_i = Dividend for each year, for example, 1, 2, 3, … ¥

K_e = Required rate of return (discount rate)

P₀ = D₀(1 + g)¹/(1 + K_e)¹ + D₀(1 + g)²/(1 + K_e)² + D₀(1 + g)³/(1 + K_e)³ + … + D₀(1 + g)^¥/(1 + K_e)^¥

Where:

D₀(1 + g)¹ = Dividends in the initial year

D₀(1 + g)² = Dividends in year 2, and so on

g = Constant growth rate in the dividend

The Combined Earnings and Dividend Model rely on earnings per share (EPS) and a price-earning (P/E) ratio (earnings multiplier) combined with a finite dividend model.

Economic value added (EVA) is based on the concept that decisions should be made or projects accepted only if net operating profit after taxes (NOPAT) exceeds the capital costs to finance the investment.

Market value added (MVA) represents the total market value of the firm minus the total capital provided since day one (including retained earnings).

The price-earnings ratio (P/E) is simply the price per share divided by earnings per share, and it is ultimately set by investors in the market as they bid the price of a stock up or down in relation to its earnings. Price-earnings ratios are often expressed in the financial press as historical numbers using today’s price divided by the latest 12-month earnings.

Investors will consider growth in sales and earnings, future risk, the debt position, the dividend policy, the quality of management and earnings, and a multitude of other factors in arriving at the P/E ratio.

The Pure, Short-Term Earnings Model:

P₀ = Earning Per Share_{Present Year} X P/E_{Average of Total Years}

Other valuation models using average price ratios and 10-year averages simply determine whether the current stock price is selling above or below its historical valuation.

Average Price ¸ Average Sales per Share = Price-to-SPS Ratio X Estimated Year’s SPS = Projected Year’s Price

Average Price ¸ Average Dividends per Share = Price-to-DPS Ratio X Estimated Year’s DPS = Projected Year’s Price

Average Price ¸ Average Earnings per Share = Price-to-EPS Ratio X Estimated Year’s EPS = Projected Year’s Price

Average Price ¸ Average Cash Flow per Share = Price-to-CFPS Ratio X Estimated Year’s CFPS = Projected Year’s Price

Average Price ¸ Average Book Value per Share = Price-to-BVPS Ratio X Estimated Year’s BVPS = Projected Year’s Price

EBITDA stands for earnings before interest, taxes, depreciation, and amortization.

Amortization usually represents the write-off of intangible assets (perhaps goodwill), while depreciation represents the write-off of physical assets (such as plants and equipment).

One of the most common ways of forecasting earnings per share is to use regression or least squares trend analysis. It is a straight line that minimizes the distance of the individual observations from the line.

Seasonal companies show earnings variability because their products have seasonal demand.

Cyclical companies have earnings related to the economy and exhibit variability over many years rather than three-month seasons.

A more process-oriented method of forecasting earnings per share is to start with a sales forecast and create a standardized set of financial statements based on historical relationships.

A growth stock may be defined as the common stock of a company generally growing faster than the economy or market norm.

Growth companies are those companies that exhibit rising returns on assets each year and sales that are growing at an increasing rate (growth phase of the life cycle curve).

Hidden assets refer to assets that are not readily apparent to investors in a traditional sense but that add substantial value to the firm.

Chapter 8: Financial Statement Analysis

The major financial statements are the balance sheet, the income statement, and the statement of cash flows.

The income statement is the major device for measuring the profitability of a firm over a period of time.

The balance sheet indicates what the firm owns and how these assets are financed in the form of liabilities or ownership interest.

The statement of cash flows, referred to as Statement of Financial Accounting Standards (SFAS) No. 95, is to emphasize the critical nature of cash flow to the operations of the firm.

The three primary sections of the statement of cash flows are:

Cash flows from operating activities.
Cash flows from investing activities.
Cash flows from financing activities.

Financial ratios are used to weigh and evaluate the operating performance and capital structure of the firm.

The first Edward Altman research study indicated that five ratios combined were 95 percent accurate in predicting failure one year ahead of bankruptcy and were 72 percent accurate two years ahead of failure, with the average lead time for the ratio signal being 20 months.

Altman developed a Z score that was an index developed through multiple discriminate analysis that can predict failure.

The Z (zeta) score relies on the following variables:

Retained earnings/total assets (cumulative profitability).
Standard deviation of operating income/total assets (measure of earnings stability during the last 10 years.
Earnings before interest and taxes/total assets (productivity of operating assets).
Earnings before interest and taxes/interest (leverage ratio, interest coverage).
Current assets/current liabilities (liquidity ratio).
Market value of current stock/book value of equity (a leverage ratio).
Total assets (proxy for size of the firm).

The greater the firm’s bankruptcy potential, the lower the Z score.

Profitability ratios:

Operating margin.
After-tax profit margin.
Return on assets.
Return on equity.

Asset-utilization ratios:

Receivables turnover.
Inventory turnover.
Fixed-asset turnover.
Total asset turnover.

Liquidity ratios:

Current ratio.
Quick ratio.
Net working capital to total assets.

Debt-utilization ratios:

Long-term debt to equity.
Total debt to total assets.
Times interest earned.
Fixed charge coverage.

Price ratios:

Price to earnings.
Price to book value.
Dividends to price (dividend yield).

Other ratios:

Average tax rate.
Dividend payout.

The profitability ratios allow the analyst to measure the ability of the firm to earn an adequate return on sales, total assets, and invested capital.

Operating margin = Operating income/Sales (or revenue)

After-tax profit margin = Net income/Sales

Return on assets =

(a) Net income/Total assets or (b) [(Net income/Sales) X (Sales/Total Assets)]

Return on equity =

(a) Net income/Stockholders’ equity or (b) [Return on assets/(1 – Debt/Assets)]

The methods employed in (b) of return on assets and return on equity arise from Du Pont Company’s financial system to help the analyst see the relationship between the income statement and the balance sheet.

The asset-utilization ratios measure the speed at which the firm is turning over accounts receivable, inventory, and longer-term assets. In other words, asset-utilization ratios measure how many times per year a company sells its inventory or collects its accounts receivable.

Receivables turnover = Sales/Receivables

Inventory turnover = Sales/Inventory

Fixed-assets turnover = Sales/Fixed assets

Total asset turnover = Sales/Total assets

The primary emphasis of the liquidity ratios is a determination of the firm’s ability to pay off short-term obligations as they come due.

Current ratio = Current assets/Current liabilities

Quick ratio = (Current ratios – Inventory)/Current liabilities

Net working capital to total assets = (Current assets – Current liabilities)/Total assets

The debt-utilization ratios provide an indication of the way the firm is financed between debt (lenders) and equity (owners) and therefore helps the analyst determine the amount of financial risk present in the firm.

Long-term debt to equity = Long-term debt/Stockholders’ equity

Total debt to total assets = Total debt/Total assets

Times interest earned = Income before interest and taxes/Interest

Fixed-charge coverage = Income before fixed charges and taxes/Fixed charges

The price ratios relate the internal performance of the firm to the external judgment of the marketplace in terms of value.

Price to earnings = Common stock price/Earnings per share

Price to book value = Common stock price/Book value per share

Dividends to price (Dividend yield) = Dividends per share/Common stock price

The dividend yield is part of the total return that an investor receives along with capital gains or losses. It is usually calculated by annualizing the current quarterly dividend since that is the cash value a current investor is likely to receive over the next year.

The other ratios are to help the analyst spot special tax situations that affects the profitability of an industry or company and to determine what percentage of earnings are being paid to the stockholder and what is being reinvested for internal growth.

Average tax rate = Income tax/Taxable income

Dividend payout = Dividends per share/Earnings per share

In October 1979, the Financial Accounting Standards Board (FASB) issued a ruling that required about 1,300 large companies to disclose inflation-adjusted accounting data in their annual reports. This information shows the effects of inflation on the financial statements of the firm.

Extraordinary gains and losses may occur from the sale of corporate fixed assets, lawsuits, or similar events that would not be expected to occur often, if ever, again.

Additional areas for detective work are in accounting methods for the following: pension fund liabilities, foreign exchange transactions, off balance sheet financing, research and development expenditures, deferred taxes, tax credits, merger accounting, intangible drilling and development costs, and percentage depletion allowances.

Thursday, February 05, 2004

Thu, 05 Feb 2004 04:35:14 GMT

Spring 2004 Class Schedule Block
TIME PERIODS	MON	TUE	WED	THUR	FRI
7:00-8:50am
7:20-8:40am		SY SCI 150 E326		SY SCI 150 E326
8:00-10:00am
8:35-10:00am
9:05-10:00am		AL HIS 241 W508		AL HIS 241 W508	CM CHI 101 W627
		SY HIS 241 W508		SY HIS 241 W508	KC CHI 101 W627
10:10-11:05am	HC LAW W506		HC LAW W506	AL HIS 241 W508	CM CHI 101 W627
	SY CHI 271 W623		SY CHI 271 W623	SY HIS 241 W508	KC CHI 101 W627
		KC COM 200 E331		KC COM 200 E331	HC MGT W617
11:15am-12:10pm	HC LAW W506	SY ACC 204 W510	AL MGT 355 W401	SY ACC 204 W510	AL MGT 355 W401
	SY CHI 271 W623	KC COM 200 E331			CM CHI 101 W627
					KC CHI 101 W627
12:20-1:15pm	HC HIS W606	SY ACC 204 W510	HC HIS W606	SY ACC 204 W510	AL MGT 355 W401
	SY MGT 250 W605				HC MGT W617

1:25-2:20pm	AL LIT 211F E332		AL LIT 211F E332	CM LAW 313 W615	HC MGT W617
	HC HIS W606	KC CS 241 W525	KC PHY 109 W608	KC CS 241 W525
	CM LIT 211F E332		CM LIT 211F E332
	SY MGT 250 W605		SY MGT 250 W605
2:30-3:25pm	AL LIT 211F E332	CM LAW 313 W615	KC PHY 109 W608	CM LAW 313 W615	KC PHY 109 W608
	CM LIT 211F E332	KC CS 241 W525	HC KEY W313	KC CS 241 W525
3:35-4:30pm
3:35-5:35pm			KC PHY 109 W313
EVENING
4:00-5:20pm
4:00-5:50pm
4:30-5:55pm
4:30-6:20pm
5:00-5:55pm
5:30-6:50pm
5:30-7:50pm
5:35-7:25pm			CM ACC 301 E305	CM ACC 319 W511
				KC CS 232 E330
5:35-8:15pm
6:00-7:20pm
6:00-8:50pm	AL FIN 351 W517	AL MGT 341 E329		AL MAR 452 E328	HC IS W303
	HC MGT W617
7:30-8:50pm
7:30-9:20pm			CM ACC 301 E305	CM ACC 319 W511
				KC CS 232 E330

ALDO LAU	CINDY MAK	HELEN CHENG
SHARON YEUNG	KATIE CHAN

Wednesday, January 07, 2004

Wed, 07 Jan 2004 18:02:20 GMT

The world population of White Tigers is at 220. That's only 3 digits in a world population. That is sad ... this is why more humans (that I have no regard for) should die, and let the population of nature grow. But then again, evolution creates the strongest of species, yet ... we cannot live without others ... ah ... imagine the world of white tigers through a frequency of the oscillating invisible strings ... a parallel earth of one possibility of infinity.

Saturday, January 03, 2004

Sat, 03 Jan 2004 15:05:04 GMT

A lot of people have been dying. I must say, only 30,000 people are estimated to have died in BAM. People been telling me 6 digits or 50,000. Just a correction in statistics. Crash in the Red Sea gives 148 more, while the cold weather in India has an additional 189. It's ... very noticible to have a lot of accidents and natural disasters happening in a relatively short period of time. I guess it's balancing in life.

Tuesday, December 30, 2003

Tue, 30 Dec 2003 13:20:33 GMT

Cancer claims Canto-pop diva Mui

Tuesday, December 30, 2003 Posted: 0030 GMT ( 8:30 AM HKT)

Undated file picture of Anita Mui.

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HONG KONG, China (AP) -- Canto-pop diva and actress Anita Mui has died after a battle with cancer, according to friends. She was 40.

Mui died at Hong Kong's Sanitorium Hospital at 2:50 a.m. Tuesday (1850 Monday GMT) after suffering from cervical cancer, according to her friends, including fellow singer Alan Tam, who were keeping vigil at the hospital.

Known as Hong Kong's Madonna, Mui kicked off her career by winning a local singing contest in 1982. She rose to stardom with the song "Homecoming" in 1984.

In 1987, she held a concert in Hong Kong known as the "Everchanging Anita" for a then record-breaking 28 nights.

Mui also gained fame as an actress, winning Taiwan's Golden Horse award for best actress in 1987 for her role as a tormented ghost in the movie "Rouge."

In September, she announced at a news conference that she was fighting cervical cancer after media speculation about her deteriorating health.

"I am not a weak person ... I can tell you that I have never had any fears and I will win this fight," she said.

More than 20 celebrities, including action film legend Jackie Chan, Bond girl Michelle Yeoh, and fellow Canto-pop singers Jackie Cheung and Nicholas Tse, appeared at her side in a show of support.

Canto-pop refers to hits sung in Cantonese, the dialect of Chinese that is widely spoken in Hong Kong and in many overseas Chinese communities.

Mui, who was not married, was also known for her charity work. She set up the Anita Mui Charity Foundation in the early 1990s. Her elder sister, Mui Oi-fong, died in 2000, also from cancer.

Funeral arrangements were not immediately available.