from a long lost dear friend

This below is a post that a long term buddy of mine posted on another forum, I am sure that with his blessing I can share this with you all. See if you can guess who it is.

Harlee


Like all you I have been a bit frustrated by the Chinese approaches to KAH and I have had friends who have darkly suggested that perhaps the Chinese have grave misgivings about nasty information which is not available to the rest of us.

That is rubbish.

It is a cultural thing which I have encountered on my travels. Whilst there are all sorts of people in any country, there are always local norms, local ways of dealing with one another that differ (sometimes greatly) from other cultures.

In Australia, it is the done thing to go into a retail outlet, see the advertised prices and decide whether to buy or not. There is usually no question of going up to the counter and saying "too much, I will offer you this much less". For some consumer goods (TVs, white goods etc) there may be the question "can you do a better deal than that?" but it is a passive approach rather than an assertive one.

In Thailand (for example) I was hard pressed to find an advertised price for anything. The only way I could ascertain the price of anything was by asking the vendor. It was only through previous research that I was able to know that the asking price was often crazy and presented as a test of how stupid I was. I have alluded to that lack of respect for the other party in previous posts, this initial position is very common ie "I will start with a stupid offer (or request) to assess how stupid you are."

Please understand that I am speaking generalities and please don't inundate me with exceptions to what I am saying.

In Australia, in the case of house or vehicle purchases (big ticket items), it is the norm to offer less than the asking price but there are few Australians who will visit a house for sale at $500,000 and offer $200,000. In Asia this is expected, these audacious negotiations happen all the time and are often in response to equally outrageous initial asking prices.

Another thing you must understand about China is that the one child policy has led to a nation of predominantly single child families. I am not being disparaging about single children but my observation of them is that they usually grow up in a household where they have the full attention of their parents and rarely have to compete for resources (like toys, television, bedrooms etc) in the family home. They grow very used to getting what they want, when they want it.

Chinese business today is in the hands of people who have grown up getting their own way and they grow terribly frustrated when people won't capitulate to them as their parents always did. I suspect that Stern Hu (RIO Tinto exec) was imprisoned largely because he was too implacable a negotiator on behalf of RIO. He frustrated the hell out of the Chinese execs by holding the line in negotiations.

I have digressed (my apologies) but I will finish up forecasting that CGNPC WILL make an insulting offer because that's just how they roll. Expect it, build a bridge, and get over it guys.

However, they are going to be disappointed because EXT shareholders are not their Mum and Dad. EXT shareholders (in particular the top 20 who hold over 90% of the shares) know full-well the value of EXT shares and will politely reject the stupid offer. Ultimately EXT shareholders will get fair value for their shares (but I don't know from whom) because that's just how the world works.