In Episode #32, we are joined by Joel Gallo, CEO of Columbia China League Business Advisory Co., a cross-border transactions and management consulting firm. We discuss:

  • The deferential treatment to Chinese companies listed on U.S. stock exchanges and why that matters to the markets and investors.
  • The roles the Hong Kong, Shenzhen, and Shanghai stock exchanges play and how those roles have been changing in light of China’s reform and the opening up of its financial sector.
  • What is going on with global stock markets now as leading indicators of companies and global economies.
  • What increased interest in digital currencies within various countries’ governments will do to the global currency market.
  • Reading, listening, and watching recommendations from:

We’ll see you next week when we sit down to discuss venture capital in Southeast Asia with Uday Garg.


This podcast audio has been transcribed by an automatic transcriber.

Fred Rocafort  0:07 

Global law and global business go hand in hand, but never seem to keep pace with each other, developing and developed nations wax and wane in their importance in the global stage while consumption and interconnectedness both increase, laws and regulations change incessantly, requiring businesses to stay nimble. How do we make sense of it all? Welcome to Global law and Business hosted by Harris Bricken International Business attorneys. I’m Fred Rocafort,


Jonathan Bench  0:37 

and I’m Jonathan Bench. Every week we take a targeted look at legal and economic developments in locales around the world as we try to decipher global trends in law and business with the help of international experts. We cover continents, countries, regimes, governance, finance, legal developments, and whatever is trending on Twitter. We cover the important the seemingly unimportant, the relatively simple and the complex.


Fred Rocafort  1:02 

We hope you enjoy today’s podcast. Please connect with us via email and social media to comment and suggest future topics and guests.


Jonathan Bench  1:21

Today we are joined by Joe Gallo, the CEO of Columbia China, the Business Advisory CO, a cross border transactions and management consulting firm. He is a member of the board of directors for several Chinese firms that will IPO in the US. Joel has over 25 years of experience in international banking, capital markets, asset and wealth management and technology. He is a former executive at Deloitte, Deutsche Bank, Dell EMC. EY, and PwC his first time living in China was 2004. Joel has been living in China for about five years and is currently living in Shanghai. Joel, welcome to Harris Bricken’s Global Law and Business.


Joel Gallo  1:59 

Great. Thank you so much for the kind introduction, Jonathan. I really appreciate it. And it’s an honor to be here participating in your podcast.


Fred Rocafort  2:06 

Joel is great to be talking to you. Let’s get things started by having you tell us a little bit more about your background, especially how you got involved with the financial world and with China.


Joel Gallo  2:19 

Sure, absolutely. I would say that for me, the financial world and China have always been intertwined. I started my career in 1994 at a company called Scudder Kemper investments there was eventually bought up by Deutsche Bank. And at the time, it was a global asset manager with about 500 billion US dollars in assets under management. Not a big deal today. But certainly back then were one of the top 10 money managers in the world about 25 years ago. And we invested in more than 50 markets around the world, including Asia. And so we always had to be aware of what was happening in the Asian markets. And as you know, the Asian financial crisis in the 1997 1998 period was a really tumultuous period for the markets. And at that time, I headed the firm’s investment operations which provided me a fantastic perch to see how everything function in the company and in all the markets that we invested. I eventually left my mind my time there at Scudder Kemper investments and started a 20 year run in management consulting at Deloitte, EY,  PwC and others, or I advise global investment banks, acid wealth managers, hedge funds, private equity firms on a whole bunch of different strategic projects. My clients, we’re all leaders within the global financial services landscape, BlackRock, Blackstone, Bridgewater fidelity, JP Morgan, Morgan Stanley, the International Monetary Fund, the World Bank, dozens of others. And while I was working at Deloitte in 2004, I took my first trip to Asia for business, first Japan, and then China, in support of some of our global clients. And as a result of that trip, from a personal standpoint, I fell in love with China, the history, the culture, the food, clearly growing up over the years in school, you learn the importance that China has to world history. And I said to myself, if I ever have the chance to live and work here that I would take that opportunity. I would say that from a professional standpoint, over the years, I just got tired of reading about the incredible transformation in China and the pages of the New York Times and then in the Wall Street Journal. And so I decided that that I wanted to be here witness this incredible transformation for myself, and to the extent possible, use my experience to advise China’s financial sector as part of the reform and opening that was occurring. And you know, personally, I think that what we are witnessing is, at least for me, the the once in a lifetime transformation of a major world power, likely to never happen again in my lifetime. And so there’s no better place to be here in China, at least in my opinion.


Fred Rocafort  4:59 

I can certainly understand those feelings having having gone through through something similar myself. My original stint in China was supposed to last only two years. And I ended up spending over a decade out there. So I could what you just said really, really resonates.


Jonathan Bench  5:19

So, Joel, we’ve heard a lot in the past couple of years, even before the US China trade war about the somewhat deferential treatment given to Chinese companies that are listed on US stock exchanges. Does that really matter? And if so, why does it matter to the market and investors?


Joel Gallo  5:35 

Sure, that’s a very important question. I would say that over the last few years, the US has been very much interested in attracting Chinese companies to listen on American exchange, certainly the New York Stock Exchange and NASDAQ. And this has been happening despite the fact that regulatory bodies such as the such as the pcaob, the public company, Accounting Oversight Board, they’ve been struggling to obtain certain types of working papers reviewing examinations from Chinese firms that have listed on a US force. In fact, this had been such an issue and had been going on for some time that and even back in 2013, a memorandum of understanding and mo view was, was sort of entered into to address these challenges, and it was signed with the Chinese authorities. However, cooperation has not been sufficiently rectified for the pcaob to select audit, work, conduct inspections, and review potential violations consistent with its mandate. And I would say that certainly much of this is now front and center due to Luckin Coffee scandal. And if you’re if your listeners are not familiar with Luckin Coffee, it is a very large coffee chain here in China. It’s actually China’s answer to Starbucks. And they were able to grow to over 4000 stores since they first opened its stores back in 2017, I believe. And they were accused this past spring of cooking their books, inflating its revenue by several hundred million dollars. And so that was probably a seminal moments in these cross border listings coming from China listing in the in the United States. A corporate governance is an issue in China, it is starting to become more important in the boardrooms. But it’s still not followed as rigorously as it is in the United States and Europe. And so due to the increased regulatory scrutiny, I’m seeing a couple of different trends. And it’s something that I think that investors should keep aware of. One, you’re finding that Chinese startups who find the allure of an IPO in America resistible continue to kind of forge ahead undeterred their listing in the United States, although they could list here on the mainland, many of them still see listing in America doing an IPO in the States as the ultimate trophy price as of indication of all the work that they’ve put in over the years building their business. At the same time, you have larger well established companies that floated their shares on an American exchange in previous years like Jing Dong, which is and Alibaba. And they’re opting for a Hong Kong or Shanghai as a venue for secondary offering. I would say that after the the Luckin Coffee scandal Kingsoft Cloud who is one of the largest cloud services providers in China, and backed by Xiaomi, which is a big phone maker, they were the first major IPO to test the listing waters on NASDAQ, and they were able to raise more than 500 million US dollars. And right on its heels Data Nexus, who was an online grocery platform, with and Walmart as strategic investors, also listed in the United States. And so you had a couple of high profile listings that they very well, even after the Luckin Coffee scandal just showing that they’re still even appetite. Despite the Luckin Coffee scandal, there’s still appetite by us investors for Chinese firms to list. I think you’re going to continue to see these trends going into next year. Shanghai and NASDAQ are expected to have the largest value IPO of any listing of any stock exchanges in the world this year. And Shanghai will probably come out in first place certainly after the upcoming and financial IPO.


Fred Rocafort  9:07 

So this is a good segue to talk about the the exchanges in China. Could you please help us understand where Hong Kong Shenzhen and Shanghai their their stock exchanges where were they where they fit in the in the picture? I think people are in general more familiar with with Hong Kong maybe to a certain extent with with with Shanghai. Shenzhen in my experience is a bit of a dark horse really as far as the knowledge that that folks out here have of the financial market in China. So it’d be great if you could, if you could give us a an overview of what their respective roles are. And in particular, we’d be interested in hearing about any changes that there might have been with regard to those respective roles, and I these changes, if any, what do they have to do with with China’s ongoing process of reform?


Joel Gallo  10:08 

Sure, absolutely. So I think, first Hong Kong, Shenzhen, Shanghai, they’re all making a big push to attract domestic companies to list in their home exchanges, and sort of less than the number of Chinese firms that flock to the United States to do an IPO. And this year, they’ve been quite successful at that number of firms that had already listed in the United States in previous years. As I mentioned, they’ve decided to do a secondary offering back at home and what they call these homecoming listings. Jing Dong is one company jingdong is probably the second largest online marketplace, right after Alibaba. NET E’s another company who listed shares in NASDAQ. I even back in 2000. So they’ve been listed in the US for a long time, they decided to do a homecoming listing in China. And of course, we have the upcoming and financial IPO. Interestingly, and financial will will list in Hong Kong and Shanghai that’ll be a dual listing. And this is going to be the largest IPO in the world. So jack Maas company held the title of largest IPO back in 2014, when Alibaba listed its shares in the New York Stock Exchange. And it was dethroned last year by the Saudi Aramco IPO. But now what and financial looks like he’s gonna get back to the top. Part of the reason these firms and others have decided to list back in China is due to the trade war, the animosity that has unfortunately developed between Beijing and Washington. And as part of that there’s talk of closing access of America’s capital markets for Chinese firms. At the same time, as you mentioned, in your question, there’s been some changes to the Chinese stock exchanges themselves, some of the listing rules have been relaxed. The Hong Kong Stock Exchange removed a restriction on a dual class share structure. And what it does, it’s paved the way for technology and biotechnology firms with different stock classes to list on the exchange. So via that change in their listing structure, they’ve been able to attract some digital companies to to list on their exchange. In Shanghai. The star market, which is China’s and sort of NASDAQ has attracted a lot of attention in its first year of operation. It’s allowed unprofitable companies to list on the exchange, which is the first time for for Chinese exchanges. And so one of the main reasons so many Chinese firms listed in on NASDAQ was because they didn’t have to show a profit. The rules were a bit more were a bit more lacks on on the NASDAQ stock exchange compared to the ones on the mainland. So as a result of this changes for the stock market, many Chinese firms have been flocking to the stock market this year instead of going to NASDAQ. And also for the other reasons that I mentioned. Prior to stars debut, the China securities Regulatory Commission, the csrc, which is basically the equivalent of the SEC, had a very wide sweeping remit, or the entire financial industry, including the approval of the IPOs. And the SCR C’s review mechanism for IPOs was what is called application based It was very cumbersome and lengthy. And it scrutinized companies over many, many months. And it created a backlog of a lot of firms that were just basically just waiting to be to be listed. However, as part of the reform and opening and upgrading the financial infrastructure. There’s been a new registration system called a sort of a market approval of registration based system that fast tracks all the approvals through a simplified listing mechanism. And it’s largely overseen by the exchange less so the regulator, and so that has streamlined the process, and it enables the companies to come to market at a much faster pace. And it’s been providing a steady flow of deals just waiting to be gobbled up by institutional and retail investors here in China. And this is all part of the larger effort of reforming an opening of China’s financial services sector, which is worth about 45 trillion US dollars. And let me give you another example. There is a recently announced a wealth management Connect program that targets the greater Bay Area, along with proposals for overhauling the banking and brokerage sectors. And I think it demonstrates the the government’s willingness to really pursue forward thinking programs in the name of modernization. And so by doing so, you know, I think Beijing is placing a lot of emphasis on its own internal reform, separate from attracting foreign financial institutions, which is also part of the strategy, but it is placing a lot of emphasis on internal reforms, just just harnessing the innate dynamics of its fast growing financial sector, while also relying on opening up the market to foreign participants. I would say that wealth management Connect is probably the The latest in a series of Connect schemes that are intended to sort of bring together closer economic ties between the nine cities in Guangdong province and Hong Kong and Macau. And I can tell you as somebody that was a resident of Guan Jo in Guangdong Province for two years, this is something that is spoken about all the time. It’s something that the entire region knows and they’re under the spotlight from Beijing. This is supposed to be one of the main clusters of economic activity, not only for China, but Beijing wants to really propel it and let it become one of the main clusters of economic activity and technology innovation in the whole world. And so the greater Bay Area GBS and under intense spotlight from Beijing. At the same time, you have the reform and opening of the banking and brokerage sector that I mentioned, it’s trying to make it easier to attract foreign participation of and you’ve seen a lot of significant traction. Over the past year as a number of foreign financial institutions, including JP Morgan, Morgan Stanley, and others are on their way to becoming a majority stake holder in their local joint ventures are taking full control. In September, Citigroup was awarded a license for its fun custody business, enabling it to provide custody and safekeeping for its fun clients. And other institutions not present in the Chinese market have expressed a lot of interest in establishing a beachhead in China. And so you have a lot of activity, which fall into two camps. Just to summarize that one is China trying to take advantage of its own own internal synergies of its very large domestic market and trying to push reform there yet at the same time, opening it up to foreign financial institutions, making it easier for them to come into the country and be able to partner with firms and further push the reform and opening proposals that they’ve that they want to follow through on.


Jonathan Bench  16:50 

Joel, are you ultimately optimistic or pessimistic about the future of China’s growth  given its last couple of years with the US trade history? A lot of other countries seem to be getting in line behind the US. Do you think that even if there’s a strong decoupling that China will be able to continue its growth and, you know, push its domestic markets to grow and also continue to attract foreign investment?


Joel Gallo  17:17 

It’s a it’s a very good question. Um, you know, it’s interesting, because you have the trade war. And what started out as a trade war has spilled into other sectors and become this much larger structural competition between China and the United States, right. So it’s become a technology war, it’s become a lot of other things. But surprisingly, the one area where we are seeing a lot of cooperation is between China and Wall Street. So between Shanghai Lu jets way, right, which is sort of the wall street of China here in Shanghai, and Wall Street itself back in New York. And so you’re seeing a lot of cooperation between both firms, you’re still seeing between both countries, I should say you’re seeing a lot of IPOs that are still listing in the United States, despite the trade war, this is still going to turn out to be a pretty good year for the number of listings, based in dollar value that have flocked to the United States and to list and so considering the trade war, the Coronavirus slowed down, it’s, you know, surprisingly, it’s turned out to be a pretty decent year. And people are, you know, hoping that that trend will continue into into next year. So you’re still seeing that collaboration of fostering of closer ties between in cross border finance between the United States and China. And I expect that to contribute and certainly as Beijing continues to push forth proposals to make it easier to attract foreign financial institutions. Even though it made the couple to a certain to a certain extent in other spheres. It seems to be attracting closer ties in the financial sector.


Jonathan Bench  18:50

So you’d mentioned its financials IPO. as of the date of of today, it’s new news that that has possibly been put on hold. So I’m curious what your thoughts are, what your insights are for that. Most likely by the time this episode airs. We’ll have more information about what actually went on. But I’m very interested to hear your insights as to what you think about this. That would, like you said, would be the the biggest IPO today.


Joel Gallo  19:19 

Sure, absolutely. So that was certainly a late breaking development last night here our time in China. Yes, as you said, the it seems like the and financial IPO is going to be suspended at least for a couple of days. I’ll say that, you know, there was recently a very high profile meeting here in China where you had some very well known leaders in business and finance and other fields. JACK ma was one of the ones that was invited. And he was talking about he was sharing his views on financial regulation and the future of financial regulation. Certainly it affects his company and financial it does so much in lending and asset matters. sentiment in other financial spheres. He’s always wanting to express his own personal views. And he recently stated that the Basel accords and some of the Basel rules that go about in making recommendations for central banks and other institutions as to, you know, sort of how their the banking industry is regulated. You know, he mentioned that the Basel accords are like an old people’s club, and that we need to modernize the way that we regulate not only the banking industry, but about other sectors that are affected by these Basel rules. And so I would say that he certainly has the point, you know, the digital economy being serviced not only by banks, but also by FinTech and other non traditional financial players, like and financial. Certainly, any rules that affect them would have to take into consideration their roles. And, you know, at the same time, you know, the regulator’s here have a mandate to regulate anybody that is an actual bank, whether that’s JP Morgan, or China Construction Bank, or anybody that, you know, that looks and acts like a bank, even though they may not be a banking name. And so, you know, they have a very, very keen interest in making sure that there is stability in the financial sector. And back in September, the regulators issued some additional guidelines to contain some of those risks in the lending industry. And, and financial was already caught in some of those new sweeping regulations. And what they did was they they cap loans on rates and impose new capital and license requirements on Ant and other and other conglomerates. And although ant may be a financial company, it sorry, a FinTech company, since it is performing certain bank like functions, such as making loans, it is going to get regulated, similar to a bank and be subject to restrictions on capital and leverage. Regulators want to contain risk in the lending industry, and really, in the whole financial services industry. And so he certainly expressed his views, you know, he did rail quite strongly against how the regulators work. And, you know, I’m not sure if that’s the smartest thing to say, especially when you know, you’ve had regulations that were put on your industry back in September, and you have an upcoming IPO, I’m sure that the regulators probably want to have another chat with him, that sort of set expectations as to how they expect and to comply with some of these regulations. And so that’s what everybody is talking about today. And so, you know, we’re expecting to hear more news on that. And when the IPO will, will be given the green light to continue.


Jonathan Bench  22:42 

Do you see the Chinese regulators being more overbearing than regulators in the US? On the financial side?


Joel Gallo  22:48 

Probably not. But certainly, you know, the regulators are very smart. And, you know, they, you know, they certainly will look at what is happening in other parts of the world, the United States, Europe, you know, they’ve taken a close look at, you know, Sarbanes Oxley over the years, they’ve taken a close look at Dodd Frank over the years and the implications of that. Certainly, they were aware of, of the need for such regulation, yet, at the same time, you know, they understand the criticisms from the industries, even back in the United States, right. I mean, they’ve certainly had strong views as to where they think Dodd Frank has been overreaching on multiple fronts. And so they’re aware of all of that, you know, they’re trying to put in some common sense approaches to make sure that they’re stamping out any risks that may begin to bubble up in the financial services sector. And, you know, it looks like they’re taking a very prudent approach. And, obviously, you know, the industry here, whether it’s the banks or fin tech companies, they’re going to have their say, but at the end of the day, you’re gonna have to follow what the regulators say.


Jonathan Bench  23:52

So let’s zoom out for a minute then and look at, you know, we can talk about the US market, China market, India, whatever you’re comfortable talking about, you know, what’s going on with global markets right now? And can you help us understand a little better about how what’s going on the global markets, whether that actually reflects economic reality, you know, of the listed companies and of global economies?


Joel Gallo  24:16 

Sure, that’s a that’s a good question. Because I think when you look at the performance of the economy, of any, let’s say, China in the United States versus the stock markets, there seems to be a disconnect between the economy and the stock markets. And obviously, the Coronavirus slowdown has affected every nation, some are doing better than others. China is recovering better than all other major economies, and will likely be the only one to see positive growth for the year as a whole. considering other Western nations, including the United States are seeing a resurgent wave of cases. You know, it’s likely that any optimist optimistic forecasts that were made over the summer will probably need to be adjusted downward. As for the stock markets, you know, I think until about a month ago, they were performing rather well and had come off their lows from March and April, when those that huge market rout, part of it is due to the fact that the markets are leading indicators. So as such, they are going to be the first things that go down before the economy goes into a recession. And they’re going to be the first thing to come up as economy start recovering or even before they start recovering. The markets are also forward looking. So they will price out events and expectations from a few months to even a couple of years, two or three years out. And even though there’s a lot of uncertainty in the short term, the hope is that two years from now, let’s say if coronavirus is contained, there are vaccines that have been distributed and you know, the populations are able to build some immunity, the economy should recover, leading to higher profits, which ultimately moves the markets higher. And so the markets are certainly forward looking and they’re they’ve been hopeful at the stage. Then there’s also the factor that there has been so much central bank intervention, that to stimulate the economies around the world. And there are historically low interest rates, the whole system is awash with money. And so a lot of that money has been put towards investments and this is going to drive stock prices higher and the markets higher. However, with new lockdown measures in Europe and Coronavirus cases, and that’s surging higher in the United States, you know, I read that we’re hitting basically new highs and deaths and, and cases seemingly every day now for the past week we can have this has taken a lot of the euphoria out of the markets. And as this continues, corporate profits will eventually suffer. And that doesn’t bode well for the markets. Not to mention the uncertainty over the US election the fact that election results may be bitterly contested. And if there is an ensuing fight, it’s going to be protracted, all this uncertainty has disrupted the markets, the markets don’t like uncertainty. So you know that here’s a you know, this is a sort of why you see the disconnect up until about a month ago, but now you’re starting to see the markets reflect a little bit of the reality going forward.


Fred Rocafort  27:05 

So turning to a different topic, China is one of the countries that is rolling out a digital currency. Could you tell us about the motivations for for for this kind of development? Why Why do countries do this? And what are the real life impacts on the current the country’s currency? And its standing on global markets?


Joel Gallo  27:31 

Sure, that’s a it’s a very important question. And it’s something that has, again, been in the news over the last couple of weeks. So you have a couple of reasons why countries are issuing digital currencies, specifically for China. They have several concerns or several objectives. One is to counter Facebook’s Libra and other cryptocurrencies or tokens that are seen as a destabilizing force and encroaching on monetary authority. And, you know, I think that concern is shared by many central banks around the world, not just the pboc, the People’s Bank of China, but also the Federal Reserve and other central banks around the world. You know, they feel that any digital money is part of their purview, and should be left up to the private sector to to control an influence. But the greater significance for China is for it to gradually wean itself off the dollar. Why do they Why do they have that as an overriding concern? Part of it is, is you know, what I’ll call the principle of a chorus of interdependence that really, you know, can entangle and constrain China, from which decoupling would impose massive costs not just on China, but also in the United States. And in reality, a total decoupling may be unfeasible. You also have financial assymetry, where the Trump administration is taking advantage of critical nodes and choke points in the global financial architecture to compel policy change and others. Just look how the US under both Democratic and Republican administrations has in the past used power of the dollar to impose financial sanctions and shut rogue governments out of the US based payment system. China does not want to be in a position like that word is exposed to the mercy of the dollar. And this is not just something that President Trump has done, but it’s done. It’s been done for decades under Obama, Bush, one Bush to Clinton, this goes back decades, so they want to avoid that situation. So as a result, Beijing wants to establish alternative channels for international payments and expanding the use of the renminbi in cross border transactions. So one of the best ways to do that is through the digital Yuan. Last month, there was a pilot done in Shenzhen where 50,000 residents were randomly selected to receive 10 million yuan of electronic money. And they tested that very successfully. You know, and this is what happening inside of China, there’s been a couple of other pilots in other cities as well, in the People’s Bank, the people Central Bank of China is expected to roll out the digital Yuan, I believe at the end of this year or early next year. At a at a more national government policy level, looking outside of China, that the digital Yuan can capitalize on a lot of the massive amount of trade that is occurring out of the VRI, the belt Belt and Road initiative, including any Yuan denominated debt, issued in support of VRI activities. So there is a lot happening as part of the yuan, digital Yuan, and it touches on a lot of different areas.


Just sort of, you know, expanding on the last thought and looking at some of their trade activity outside of the country. You know, it’s it’s certainly very conceivable that China could partner with other like minded institutions such as the African Development Bank, and the Asian Development Bank, where they are doing a lot of VRI Belt and Road initiative work to sort of cast a wider net for you on and have a lot of that trade, even having further denominated in Yuan versus versus the US dollar. So Beijing, you know, I think stands to profit quite handsomely, from this very rare and limited occasion to internationalized Yuan. And I say limited because of the absence of other other state actors that have yet to introduce a competing digital currency. Any American and European efforts to roll out the digital currency are still further behind China, China is is the leading horse when it comes to this. conceivably, that the digital Yuan, or what they call the DC EP, the digital currency electronic payment could become the de facto currency for a lot of projects in developing nations and offering local economies. You know, I would say an opportunity to leapfrog sort of the incumbent entrenched financial infrastructures where they remove a lot of the friction that is associated with traditional payment mechanisms. And this involves some of the payment lags and high transaction costs that are associated with the current payment mechanisms. Certainly, any early rollout of the digital Yuan provides an opportunity for first mover advantage for for China to share some of the technical expertise with other nations that are thinking of building their own digital currencies and allows China to set standards that others may may adopt. And so it creates an incredible opportunity for China to create a new payment infrastructure that rivals the dollar denominated swift network with the digital Yuan as its as its focal point. So that’s certainly a very important development that, you know, to keep a lookout for. I would say beyond that, if you look at the larger global trading patterns, you know, we all know that China is the world’s leading trading nation. And you know, they export more than two and a half trillion US dollars in exports, a lot of that debt is still denominated in dollars. So here you have a third instance where China has an opportunity to denominate and convert some of that dollar denominated exports and turn it into Yuan, thereby expanding the international adoption of the currency and at the same time loosening the dollar is chokehold on global trade. So that’s another very significant development. Some have mentioned that the digital Yuan is going to be the demise of the dollar, I disagree, you’re not going to see that away. See the dollar go away. Besides the dollar or the yuan, or currencies, in general, being a medium of exchange money also acts as a store of value, right. And so most foreign governments and institutions, they’re not going to be flocking to the yuan, digital or analog, due to the strict currency controls and start flocking to it as as a store of value, at least not yet. And so I would Lastly, I would say that barring any economic or policy crisis of political crisis in the US, the dollar is still going to remain the preeminent safe haven for countries around the world.


Fred Rocafort  34:04 

Joel, I am a former resident of Guangzhou as well.


Joel Gallo  34:08 

Oh, Fantastic.


Fred Rocafort  34:09 

I spent a couple of years working yeah, I spent a couple of years that was actually the first place in China where I lived. spent a couple of years actually living and working in the city at the at the US consulate there and then there was a about a two year stretch when I was living in Shenzhen but going back and forth. Because of work I had to go to quando once or twice a week so all in all really more like four years living there and then add to that close to seven years living in Hong Kong. So glendo is definitely a city that that that is I don’t want to say close to my heart because that would come on up. The most accurate way of describing it but but it’s certainly been a Very important place for me. And, you know, I work do even when I was working in Hong Kong, the company that I was working for had an office there. So it’s been a pretty, pretty intimate relationship with with that city. So I’d like to ask you about what the experience was and and one thing, maybe maybe you can frame it in these terms. I think there’s a lot of folks who are familiar with Shanghai and Beijing, they maybe they visited maybe maybe they’ve actually spent time there. But who aren’t that familiar with with the South? So I just want to get your your perspectives on, on what is the city of rams I forget? I forget the nickname The flower city, there’s a few of them. What was your experience like? Maybe I’d love to hear about some of your favorite spots in the city. Maybe we’ll there will be some some choices there in common, some of your favorite hangout spots,


Joel Gallo  36:02 

For sure. Happy to talk about that. So I lived in Guangzhou for a couple of years. My wife and I were were both there. And we had a wonderful time there. You know, Cantonese culture is very strong in the south. As you know, there can’t the people in Guangdong will speak Cantonese, in addition to Mandarin. And so a lot of the times when you hear people walking in the streets, whereas in other parts of China, you might hear more Mandarin, you’ll hear a lot more Cantonese, that local dialect in Guangdong Province, and also in Hong Kong. Yeah, we just had a wonderful time there. One of the best things about living in Guangzhou is the food Cantonese is by far my favorite cuisine in China and the noodles and everything is wonderful. But living in China for a while I do eat a lot of what the locals eat probably this is that maybe most Americans mine I try like chicken feet and black bean sauce is fantastic. For those that are not as daring, you know, dim sum and some of the local dishes and the dumplings. And all of that is always high on most people’s lists. In addition to the food, we just liked a lot of the natural geography and topography. I enjoy doing a lot of hiking and walking. And so my wife and I we would enjoy climbing by Yun, Shawn, we are right by you in Mountain whitecloud Mountain, that, you know it’s in the background of the city and you can climb that there’s a lot of hiking trails up there. There’s a lot of old history still part of the old blonde Joe and can Tom. So there’s many different options to whether you want to look at some of the history of the city, some of the natural beauty, and it’s certainly become a much more cosmopolitan city over the last 10 years. You know, if you worked at the American Council, it’s I’m sure you spent a lot of time in Jiu Jiang New Town, the main downtown CBD in Guangzhou. And because a lot of the work that I did, I, I would travel very often every month to Shenzhen and Hong Kong, you know, which is very accessible, especially when they put in the high speed train between Guangzhou and Hong Kong, back in September of 2018. So that made it a lot easier to get to Hong Kong and they cut down my travel time and everybody else’s to under an hour. And so you could get to Hong Kong in about 45-50 minutes, which is much quicker than what it used to be when you would take the local train and so that that was a welcome change to you know, my sort of monthly commute to Hong Kong to visit clients. So we had we had a wonderful time all over the city just walking around exploring, trying different restaurants, you know, I found that people to be, you know, very warm and receptive, you know, very friendly, always wanting to talk to you about what lifelike used to be in England job before a lot of the modernization and then you, you know, fancy high rises and the the ultra modern downtown Giambi town, which was developed about, you know, 10-15 years ago. So it’s a it’s a great city to sort of explore, and I always tell my friends that are living in Shanghai and Beijing, you know, just take a quick weekend trip to Guangzhou, you’ll, you’ll love it. They’re great food friendly people, lots of sites to see it’s a it’s a good place to get away a much slower pace of life in Shanghai. So it’s a wonderful break from, you know, a fast paced city like Shanghai.


Fred Rocafort  39:33 

It’s funny, you mentioned Jiu Jiang  city, and I will share some a story about it. But I think it’s actually very illustrative of what was happening in China. Back Back during that time and then even now, I was actually in banjo from 2005 to 2007. You know, that area was a big construction site literally and often In you know, so the consultant wasn’t wasn’t there yet. And often, in order to get from the, the consular section, which was in Tahoe to, to where we live, we, you know, we, the taxis and the you know, they were they would go through through that area and I remember someone pointing out to me, once that the new console, it would be located there. And at that point, there was only one sort of modern building there, the rest of it was just just really an empty lot. And I just, I just thought to myself, like, why, you know, I could not visualize, I mean, it just there was, I just couldn’t imagine why anybody would want to put a consulate there or how that would even be feasible. And, of course, if you go there now, it’s it’s a, it’s unrecognizable. But as they did start building up the area, what the, the Chinese authorities, they were facing quite a bit of opposition from the different foreign missions. I mean, they, they, they wanted all of them to move there. But pretty much everybody was, was opposed to that, right? Nobody wanted to go to the, to the amputee lot. So basically, what they did was they, they, they couldn’t force the missions to move there. But what they did is when one of the consulates had to move, right, because their lease was coming to an end or whatever, they the Chinese would say, Well, okay, you have to go to, to Jiu Jiang . And the first unlucky ones that had to go, there were the Australians, their lease was coming to an end. And they needed a new consulate. And that’s where they had to go. So the there, they have to go there. And I remember talking to my counterparts, and they hated it at first, right? They’re like, Look, there’s there’s no place to eat. You know, it’s it’s terrible. It’s in the middle of nowhere. But now, again, if you go there now, and I mean, the if I if I were to tell someone, this story, as we’re walking around that part of sound they would they would not believe me, they would say this is I do not believe that there’s no way that you’re going to make me believe that back in 2005, this was barren. There’s no way that all just development could have taken place, you know, in 15 years, but that that is modern China. That is that is modern China. So anyway, Joel, this has been great, great trip down down memory lane. I’m glad we we got to talk a little bit about Guangzhou.


Joel Gallo  42:39 

Yeah, absolutely. And, you know, certainly that area where the council is now is unrecognizable. And it’s far from being that, you know, ugly, empty lots. This is prime real estate right now in downtown Guangzhou Right in Tiana district, as you mentioned. And I remember when I was walking by there, one of the earlier times that I’ve visited to Gwangju about, you know, 12 years ago or so you know, and they were building up the entire Jiu Jiang  new city area. And all the skyscrapers are going up I was wondering myself, Where is this place ever going to get filled up with people or is it just going to be a ghost town where you know they have all these buildings and they just remain rather empty with only a small percentage of them actually being filled. But I mean, the area is packed it is packed with people in the subway stations beneath Jiu Jiang  town and nearby  Yu Shi Lu. They are probably two of the most crowded subway stations in all of China. Some of them rivaling even some of the ones here in in Shanghai such as Lou jets way and in other places. These are some some of the most crowded train stations. And you know my friends don’t believe me when I tell them just to get in, especially in ujung you town. As you’re getting into the subway station, you have markers telling you, you know from this point on, you’re gonna have to wait 20 minutes if you’re coming into 20 minutes to get inside the actual station through the turnstile during rush hour and if you’re at this point, you’re going to wait 45 minutes and if you’re at this point, you’re going to wait one hour so that’s how crowded they are. And it’s already a huge station they have they put in major crowd control measures every day during during the commute. It’s incredible to see you’ve probably been on the line yourself.


Fred Rocafort  44:16 

Yeah, no and I’ll confess I would just wait outside I would just say you know that’s when I decided I would take trips to Taekwondo and if I found myself you know, faced with that line that’s when I would say okay time to time to go to the paddy field for for a beer or whatever watering hole was was nearby. I yeah, I get a little claustrophobic in some of those Chinese Metro and train stations. So, um, yeah, typically what I would do is just wait it out somewhere in the vicinity.


Joel Gallo  44:47 

Yeah, absolutely. So many people as the Chinese will say here, you know, people mountain people see right because, you know, you just don’t see the floor you all you see are people it’s just a sea of an ocean of people. It’s just a just in case So yeah, I will actually just when I was there, I would just wait and go home after eight o’clock or you take a DD right, which is China’s version of Uber there or you just walk it right good old foot power if you really needed to get home.


Jonathan Bench  45:13 

Joel, it’s been fascinating to have you with us today, we hope that we can catch up with you again, at some point in the future and pick your brain more about this sometimes mystical world of global payments and and global markets. For those of us that aren’t in that world day in day out. We always like to end our podcast asking our guests for recommendations for what our listeners could read or listen to or watch, either on topic on today’s topic or anything else. So what would you recommend for us?


Joel Gallo  45:47 

Sure, that’s it’s an interesting question. I would say that, you know, if I were to think about it, my all time favorite magazine that I’ve been reading since since probably sophomore year in college has been The Economist, you know, I remember taking an economics class, and we were asked to subscribe to the economist. And, you know, I thought it was an incredible magazine. It’s just coverage, as we all know, is global touching upon so many different disciplines, which is essential in today’s world, right? It’s business, technology, politics, social issues, and many more, are all bumping and colliding into each other. And so I just think the the breadth of the coverage is just just incredible. Besides that, I do maintain active subscriptions to the New York Times The FT, Bloomberg, Foreign Affairs, MIT Technology Review, the South China Morning Post, etc. And so I think it’s important to get perspective from from different sources, and each magazine provides a different angle on what is happening in the world. Beyond that, I will selectively read other national publications such as China’s where I’m a columnist that the UK is Guardian, Francis lamanda, of course, CNBC Reuters, and I do get a lot of material from think tanks, universities and many other sources. So, you know, I think I could, you could tell that I’m a news junkie. And I enjoy poring through the news and reading it while I’m having my breakfast in the morning. And during my morning commute. You know, as you mentioned, it’s just so much happening in the world these days. It’s tough to keep up. You know, we live in exciting times. And I’m just, you know, and I’m glad that I’m, you know, living in this day and age today was just such an interesting place to live in.


Jonathan Bench  47:33

Thanks Joel. Fred, what do you have for us?


Fred Rocafort  47:35 

Well, I have to  recommendations today, one of them, you recently recommended Google Translate almost as a kind of reminder that that this resource is there. And and every once in a while, when you when you when you think of the tools we have at our disposal these days, it’s easy to forget how great and revolutionary they are, because we we’ve gotten used to them. Along the same lines, I just like to put in a plug for Google Maps and Google Earth, they they really, they really go go together. My sometimes for work, I find myself having to use these tools. Much of the work we do right due diligence work, has us looking at addresses, for example, at businesses, and it’s just amazing how much information you can glean from these resources. And it’s worth pointing out that the they are constantly improving, right. I mean, Google Translate. I mean, I’ve certainly seen improvement over the years. And then the same goes for for the the mapping technology, there’s more areas that are being covered by by the by Street View, you’d be surprised, right? If the of the places that are that are that are coming up on street view these days, and the the amount of information that you can you can find then and it can be very, very fun. So that that’s the first recommendation. And then the second one is I was originally thinking of recommending some something that I heard recently very relevant to the elections, but by the time that we this podcast gets gets published, the elections will maybe maybe way it won’t be a done deal, but but certainly we’ll be looking at it very differently. So I’m just going to skip that and make a different kind of recommendation. Well, as you know, Jonathan, most people probably don’t, but I’ve been spending most of the COVID lockdown out here in Florida, more specifically in Tallahassee, Florida. And it just does, especially now that I’m getting a bit older. I’m just gaining a new new appreciation for this area. And in particular, the The natural beauty of some of the surrounding spots and it is surprising that even people within Florida don’t don’t don’t really know this part of the of the state. So especially in this day and age of travel restrictions where it’s it’s harder to, if not impossible to go overseas, and perhaps for for some people getting on a plane might not seem that that appealing so people might might be looking for for alternatives. I just like to recommend this. This area in general, the Big Bend area this weekend, my wife and I got to head out to just a gorgeous spot on the coast, the St. Mark’s wildlife refuge. And it’s I mean, I just don’t get tired of going there. And it’s just such a wonderful spot. And it’s almost worth making a trip by itself. Fortunately, that’s not the only thing that we have. There are some amazing beaches. Probably some of the more beautiful beaches that we have in the state and some of the few spots in Florida where you will not be where we you actually have to go to a beach that’s that’s not built up. So there’s a spot St. George Island, just great place. lovely little town not too far from there called Apalachicola great for seafood, just maintains that character. So yeah, it’s a tourist recommendation. Not particularly highbrow, perhaps. But if you’re looking for something different, if you kind of want to head somewhere warm, but you think you’re over Florida, you think you’re over the the south, well, if you haven’t been to this part of the country, I would, I would recommend that.


Jonathan Bench  52:05 

And for me, I would say I wanted to stay a little onpoint this week, I’m not always on point with our topics. But I do quite a bit of work in the private equity world, in my lawn practice. And so I’ve stumbled upon this resource website called pitch book calm. And they, they have a service where they send out a daily newsletter, and then they have a subscription service as well. And gives you a good view into the private equity deals that are going on, even day by day, week by week, month by month. And so if you are at all interested in the private equity world, to go along with the public stock markets, it’s a very interesting resource, a lot of free information. You know, that’s relevant to prospective investors, angel investors, VCs, and everybody likes data and charts and maybe not as much as I do. But they’re very helpful. So recommend that pitch and you can get on their mailing list and get give yourself a wider view into what’s happening in the markets in the in the private equity world around around the world, and particularly in the US. So Joel, we want to thank you again for being with us. We hope you enjoyed being with us as much as we enjoyed having you with us.


Joel Gallo  53:25 

Thank you so much, Jonathan and Fred. It’s a it’s an honor and a pleasure to be here on your show. And I hope I was able to provide some value and demystify some of some of these headlines that your clients and your listeners may be listening to coming out of Asia, specifically China. You know, it’s tough to keep up with it because there seems to be news almost every day and so glad to play a small part in helping bring a little bit more clarity and understanding for your listeners.


Jonathan Bench  53:56 

We hope you enjoyed this week’s episode, we look forward to connecting with you on social media to continue discussing developments in global law and business. and tune in next week for another episode. We’ll see you then.