For many years, China economic growth has increased tremendously in two-digits percentage. Even when US economy growth decreased, China never faltered. However, in this article, it is said that China’s economic growth is declining mainly due to unnecessary infrastructure (building skyscrapers and cities that are not utilized) which China can’t cover the costs. Investors are alert of the situation because China is 10% world GDP. If it keeps declining, it will have a huge impact globally. When you have a very low base, economic growth tends to increase rapidly until it slows down or reaches plateau. It slows down because other countries have cheaper labour (More people are moving up the social ladder to middle class).

The question is “should investors be worried?” Personally for me, I think they should because China has a collaboration with stake capitals and private capitals called “Wealth Management Product”. They manipulate people’s mind by saying it has 6% to 7% interest rate. Investors believe that it is safe to invest money in their bank.

However, the money is not used properly. In fact, the money is used to build a “ghost city”(wasted on infrastructure investment). So, they will not be able to pay their debt. It keeps going on for so long because of non-transparent financial product and ponzi financing. It will continue until something major happens and the bank cannot cover the problems anymore. So government has to fix it by using the reserved money that China has. This will cause break down of economic growth in China and finally affect the whole world. So, it is better to investigate and make a thorough research before investing in China companies.

Source: http://www.cbc.ca/news/business/slowing-chinese-gdp-growth-worries-investors-1.2559940

Tesco is UK no 3 grocery retailers who unfortunately, receive another blow to its financial annual profit due to accounting mistakes. Tesco’s error are revealed by a commercial manager who was doing a report on a financial statement. In this blog, it is said that Tesco had overstated profit by 23%. As a result, Tesco shares closed down 11.6 percent at 203 pence. For the persons in suspect, 3 senior executives are suspended.

In a huge company like Tesco, corruption and fraud often happens due to huge amount of expenses and revenue that need to be calculated. Auditors are hired to detect and prevent errors and fraud in accountant’s balance sheet. However, in this case, the mistakes pass through the thorough eyes of the auditors. Although the main cause of the problems are still not identified, personally I think it is due to corruption. Because as a professional, it is highly unlikely to make such a huge mistake in the middle of the work and not realizing it. The executives mind are usually covered and filled with desire and greed. Because of their power and authority, they may pressure employees to smuggle company’s profit and put it inside their own pockets. This can be categorized under situational pressure for accountants and perceived opportunity for the executives. Therefore, in this case, personally I think the accountants are not to be wronged and punished because they are forced to do so.

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Article by: http://www.nytimes.com/2014/02/06/business/cvs-plans-to-end-sales-of-tobacco-products-by-october.html

Large drugstores chains such as CVS and Walgreens are withdrawing “traditional” and e-cigarettes because they are more concerned about the health of citizen well-being rather than profits the companies earn. This plan to reduce death and lung cancer is supported by governments by rising higher taxes. This plan works successfully because in 1999 to 2003 percentage of high school girls who smoke drop 37%. Moreover, F.D.A attempts to raise awareness about harmful effects of smoking to deter youths from engaging in this detrimental activity.

However, it backfired on the financial profit of the company. CVS suffers huge financial losses annually. Because absence of cigars, people are keen ongoing to pharmacies to purchase prescriptive drugs for small disease like flu. To minimize the profit loss CVS are planning cessation program which will benefit both citizens and company. It reduces the losses until 6cents per share annually.

Profits are not necessarily gained by utilizing people’s addiction to toxic stuffs. Company can earn “good” profits by selling non-harmful and beneficial goods to the society. Good deeds will receive better reward. The saying goes “good begets good”. Morals and ethics should not be compromised at the expense of profits. In addition, CVS are planning to promote insurance to earn more profits in a way which is accepted by society.