Thinking Macau

Happy serendipity. I have been trying to make sense of my superficial impressions of Macau and this morning, a former student pointed me to the article, Capital Flight of China’s Wealthy Gets Ready for Takeoff. Long story short — using credit card purchases to transfer Chinese savings into international accounts. If this loophole sounds suspiciously like the money laundering another friend attributed to Yongfengyuan, that’s probably because the same group of people are involved: China’s officials and/or those with business ties to the current administration.

What have I seen and overheard? Before I came, a Hong Kong friend explained to me that last year (2011), Macau’s GDP had exceeded estimates by over 300%. This unexpected windfall, he continued, resulted from opening Macau to Mainland gamblers and tourists. And indeed, much of Macau is under construction. However, looking closely, it seems that the construction is theme park casinos and attached luxury malls. To walk through or between casinos and the malls is be overwhelmed by namebrand accessibility — Prada, LV, Swaroski, Piaget, Armani, all within credit card reach.

Here’s the rub. What I saw when walking Macau has been the ever clearer demarkation between the casino-luxury mall complexes and everyday life as if by visiting a casino-luxury mall, one had visited Macau. In fact, the MGM takes this claim to its logical conclusion, building a reproduction of a Macau plaza in its lobby. Likewise, on the Cotai Strip, these complexes themselves are tourist destinations, conveniently located near a border-crossing checkpoint for Mainland visitors from Zhuhai. Indeed, outside of a few internationally renowned local landmarks (St. Paul’s and the Leal Sentado Plaza, for example), most historic sites and neighborhoods were pleasantly empty, even on the last weekend of Chinese New Year.

What I’m wondering about are gambling losses. On most streets, I also saw pawnshops, with neon signs glittering as brightly as the Casino facades. The stories I have neither heard nor seen are stories about how gambling destroys families, stories that I have heard frequently on Hong Kong television as part of anti-gambling public service announcements. In contrast, Shenzhen, which has daily ferries to Macau has been silent about the evils of gambling. That said, the SEZ’s anti-drug campaigns do continue.

And so I pack my bag and head for Hong Kong, I leave with three questions. One, what is the Party’s cut of the construction and wealth that’s being redistributed through the casino-luxury mall complexes? If there was no cut, this enterprise could not be funded because (1) Mainlanders could not get travel passes and (2) they couldn’t use their credit cards to make local purchases. Two, how and are the new casino-luxury malls helping Macau people? Or is this new influx of Mainland capital concomitant with the ongoing transfer and concentration of South China wealth into the hands of a lucky few? And three, what are the policies (if any) for dealing with Mainland gambling losses and gambling addictions? I know that casinos are designed to take money from players — that’s the point, but I don’t know how cross border bankruptcy is handled or if even recognized as a problem?

If you know the answer to any of these questions, please let me know. I’m especially interested in hearing from someone in Zhuhai about how the relationship between Zhuhai and Macau is presented and if fallout from gambling has been incorporated into public discourse.

9 thoughts on “Thinking Macau

  1. Maryann

    These are very interesting observations and comments.

    For Macau’s political economy and history you might take a look at this July 2009 phd dissertation by Maria Inês Rosa Trigo de Sousa,
    “Regional integration and differentiation in a globalizing China: The blending of government and business in Post-colonial Macau”:
    http://dare.uva.nl/document/142788

    Contains fascinating detail about the relationship between Macau and the regional economy, China and globalization.

    I found CHAPTER 2. Macau in the Colonial Period (1557-1949) and CHAPTER 5. The Macau Gaming Industry: historical patterns, contemporary policies and state-business relations in the local casino economy, particularly interesting.

    Happy reading. Please enjoy Hong Kong – I would love to hear your observations!

    • Hi Perspectivehere,

      Happy Lantern Festival! Thank you for the link to Dr. de Sousa’s dissertation. I’ve already downloaded and am looking forward to reading, especially after your long citation helped place my impressions of Macau in context.

      With respect to different colonial formations, I’ve just finished reading Debt by David Graeber and am thinking about structural alignments between the market and society versus those that link the market and the military. I’ve found it especially fruitful in helping me look at the forms of violence that sutured 城 to 市 in Chinese history.

      Enjoy the day.

      • Thank you for your reference to David Graeber’s Debt. It looks fascinating and I will look for it in bookstores.

        I’m reading Britain’s Empire: Resistance, Repression and Revolt (Verso 2011) by Richard Gott, a British journalist and historian. It looks at the period from 1755-1858, and the various forms of resistance and rebellion to English rule from indigenous peoples as well as white settlers (such as in the American colonies), and how these were put down or not. It also looks at transportation of peoples due the need for labor to exploit resources in newly settled areas once their indigenous peoples have been removed.

        http://www.amazon.com/Britains-Empire-Resistance-Repression-Revolt/dp/1844677389

        “Book Description
        Publication Date: November 7, 2011
        Magisterial history of the foundation of the British empire, and the forgotten story of resistance to its formation.

        This revelatory new history punctures the still widely held belief that the British Empire was an enlightened and civilizing enterprise of great benefit to its subject peoples. Instead, Britain’s Empire reveals a history of systemic repression and almost continual violence, showing how British rule was imposed as a military operation and maintained as a military dictatorship. For colonized peoples, the experience was a horrific one—of slavery, famine, battle and extermination.

        Yet, as Richard Gott illustrates, the empire’s oppressed peoples did not go gently into that good night. Wherever Britain tried to plant its flag, there was resistance. From Ireland to India, from the American colonies to Australia, Gott chronicles the backlash. He shows, too, how Britain provided a blueprint for the genocides of twentieth-century Europe, and argues that its past leaders must rank alongside the dictators of the twentieth century as the perpetrators of crimes against humanity on an infamous scale. In tracing this history of resistance, all but lost to modern memory, Richard Gott recovers these forgotten peoples and puts them where they deserve to be: at the heart of the story of Britain’s empire.”

      • As you visit Hong Kong, you may be interested to note how Gott’s book describes its early significance as a transport point in the world labor market:

        “The formal abolition of slavery within the Empire in 1834 had obliged settlers everywhere to search for new sources of cheap labour, and the end of the apprenticeship system in 1838, in practice a brief extension of slavery, accelerated the process. Workers had to be brought from elsewhere, since freed slaves and most indigenous peoples refused to work for the imperial settlers. They came chiefly from the seemingly inexhaustible pools of labour in India, and later from China, many of them traveling through the new port facilities at Hong Kong. Just as the British used sepoys in India and Khoi-Khoi in South Africa to man their imperial armies, so the imperial outposts in the Caribbean and elsewhere were able to use this cheap Indian and Chinese labour to replace their slaves from Africa, and provide a fresh economic resource for the Empire.” (page 323)

        “While the mainland traders came to Hong Kong largely because of the economic disruption caused by the British war, the island’s dramatic growth had other causes. The global need for labour, in the wake of the abolition of the African slave trade, was soon to have an important impact on the colony. Hong Kong became the principal centre for the vast Chinese immigration abroad in the middle of the nineteenth century. In the half century before 1900, nearly 2 million Chinese labourers embarked from Hong Kong for a variety of different destinations. Much of this trade in ‘coolies’ went to North America, but much was destined for parts of the British Empire.”

        “While some migrants went to replace the freed slaves, others supplied the demand for labour in territories where the indigenous inhabitants were being exterminated. As poisoned ‘damper’ took its toll of the Aborigines, and as the supply of Irish convicts tailed off, Chinese labourers were sent to take their place. In one year alone, 1857, more that 17,000 ‘coolies’ left Hong Kong for Australia. Racial animosity towards the Chinese eventually caused the trade to decline, yet a further 17,000 were sent out in the years between 1860 and 1874. Earlier the flow of migrants, often carried in Chinese-owned ships flying the British flag, was the partial cause of the second British War against China, in 1857, which concluded with a march on Peking and the burning of the emperor’s Summer Palace in September 1860.” (pages 327-8).

        I have not read this 2008 book on the Coolie Trade (which was but I hope to:
        http://www.amazon.com/Coolie-Trade-Traffic-Chinese-Laborers/dp/1436309433

        THE COOLIE TRADE Author: Meagher, Arnold J. A thorough study of the roots of modern human trafficking and Chinese emigration. Against the backdrop of China s rapid advance to the forefront of the world economy and sharp scrutiny over global trends in human trafficking, Meagher s exhaustive survey of Chinese indentured labor is a richly informative, timely release. His volume, much broader in scope than the Latin America in his subtitle indicates, is a careful examination of cultural, political and socioeconomic factors that contributed to this phenomenon. Meagher argues that the termination of the African slave trade, an urgent need for laborers in the West and a deteriorating Chinese economy conspired to spawn the emigration of more than a quarter million Chinese laborers to Latin America in the span of 28 years. Beginning in 1847, Chinese emigration quickly evolved into a prosperous black market cottage industry that, alongside the illicit opium trade, attracted enterprising, often dubious characters. These overlords relentlessly plundered China s human resources to satisfy a labor vacuum in the West. Scheming brokers often used any means available false promises, deceit and fraud to lure prey aboard ships. Victims of kidnapping account for more than a quarter of the human cargo, while appalling prison-like conditions, mutinies and disease resulted in a 12 percent mortality rate during the nine-month voyage. Great Britain and the United States abandoned the coolie trade in the mid 1860s after much public outcry. Trafficking, however, continued to flourish until 1874 aboard other ships sailing for Latin America, often destined for Cuba and Peru, where booming sugar, guano and mining industries demanded a steady flow of fresh workers. This authoritative account is acutely critical of the coolie trade as a means by which the slave trade continued in the West, but suggests it did have its advantages: challenging draconian Chinese taboos that once forbade emigration and introducing Chinese culture to Western society. The author s fluid, conversational style elevates Meagher s work from the weight that often bogs down other academic texts. Engaging and topical fare. –Kirkus Discoveries Review

      • Thank you. Both books seem well worth reading. Also, I have been to Zuni performances; are you in Hong Kong or nearby? If so, let’s get together. As you know, I rarely leave Shenzhen!

        Just realized, you said you can look in bookstores! Does this mean you have the joy of living near bookstores?!

  2. This may be too much information but you might be interested in seeing the prospectus disclosure from the MGM Grand Macau:

    http://psh.hkex.com.hk/userpages/eipo/english/MGM%20China_e.pdf

    Regarding collection of gambling debts, the prospectus had this to say:

    “Under Macau law, Concessionaires and Subconcessionaires (and gaming promoters upon engagement by Concessionaires or Subconcessionaires) are permitted to extend credit to, and collect gaming debts from, gaming patrons. We may not be able to collect all of our gaming receivables from our credit players. We have in the past experienced and may in the future experience payment defaults by patrons and may be unable to collect fully or partially in respect of such debts. As at December 31, 2010, an amount of approximately HK$120.0 million credit remained due from a single client. After taking into account the deterioration of the creditworthiness of this client, we have made full provision for the amount of this receivable based on our allowance for doubtful debts policy. As of the Latest Practicable Date, this HK$120.0 million remains outstanding. Although we have enhanced our standard operating procedures relating to credit policy for in-house VIP patrons and gaming promoters in response to this event, there is no assurance that we will be able to reduce our risk exposure in respect of credit we have extended to our patrons and gaming promoters, and our business, financial condition and results of operations consequently could be materially and adversely affected.

    We expect that we will be able to enforce credit-related obligations only in a limited number of jurisdictions, including Macau. To the extent that we extend credit to patrons from other jurisdictions, we may not have access to a forum in which we will be able to collect all of our gaming receivables because, among other reasons, courts of many jurisdictions do not enforce gaming debts and we may encounter forums that will refuse to enforce such debts.”

    Also see this:
    http://www.pacificnet.com/groupdynamicsShow.asp?id=30

    “SINGAPORE 新加坡商业时报 BusinessTimes.com.sg 2011-11-10) A growing number of Macau junket operators and their agents are getting licensed as moneylenders in mainland China to step up enforcement of gaming debt collections from Chinese gamblers, according to several junket industry experts.

    ‘If you’re licensed to lend, you can enforce the debt in mainland Chinese courts,’ said Tony Tong, an adviser with Pacific Financial, a Hong Kong-based company that invests in gaming and junket operators in Macau, Hong Kong, the Philippines and Laos.

    ‘The licence allows the junket operator to recover loans by legal means and to take over any collateral. Typically, borrowers would say they need the loans for personal use or investment purposes even if they’re using it for gambling,’ Mr Tong said yesterday at the Asian Casino and Gaming Congress at Marina Bay Sands.

    ‘In the past, the junket operators would outsource debt collection to debt collectors in China, who collected by any means they can,’ he said.

    Some gaming analysts believe that this is an effort by junket operators to skirt the problem of the unenforceability of gambling debt in China.”

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