I do not consider China the enemy of the USA, though there are some members of the old guard in Beijing, especially in the military who would disagree with me.  Competitor yes, but not enemy in the way the Soviet Union or the PRC under Mao was.

Marshall’s famous quote came to mind watching this stunning piece on the new “ghost cities” – an inarguable sign of a serious property bubble.  I know there are major skyscrapers in Shenzhen that look complete on the outside, but are unfinished and completely vacant on the inside.

I cannot urge you enough to spend 15 minutes watching this.

My post the other day which scornfully mentioned the Chevy Volt produced snark from my co-worker Adam, who is from Michigan.  Yes, it was voted car of the year.  It also is insanely expensive, and only in reach of some consumers because of very generous government rebates.  Its sales are also anemic and consumers are reporting serious problems with battery range, especially in cold weather, as was forecast by critics.

The Volt is an interesting idea, but it is still essentially an old idea – batteries and internal combustion.  Maybe a better version of that combo is the future, but I am still keeping my eye on fuel cells.

But more concerning should be the states with continued high birthrates.  They still are far below the average for life expectancy, but many times above replacement rate.  And they are all among the poorest countries on Earth.  From where I sit, I don’t see any of them developing rapidly à la China and India.  Cross-reference with the 2011 Index of Economic Freedom for the bright stars who have some hope, but the rest are a recipe for unrest and continued poverty.

What this picture shows me is that beyond maybe India or maybe Brazil (probably not, but maybe), there isn’t going to be a “next China”.  If anything costs in China will rise to the point that companies in the USA and EU look to bring business back home.  I don’t see the next economic titan rising out of sub-Saharan Africa or the Islamic world.

So it will be China for a while.  Let us know if PassageMaker can be of assistance.

It is a bit dated – you certainly won’t have any trouble buying condoms in Shanghai today – but one thing that really struck me was the insistance by the shopkeepers that what the customer (Mr. Adams) really wanted, no, what he needed (stupid round-eye), were the pills.

This is why you absolutely MUST specify what you want, and you MUST do so in the local language when you try to buy something in China.  Whether it is condoms or an engineered consumer product like an iPhone, you really have to take the time to put on paper in a language that the seller can understand, EXACTLY what you want.

That’s why we’re in the business.  PassageMaker is your office in China, all our senior employees are at least bi-lingual and we excel at helping you write your Product Quality Manual and purchase orders to properly document your requirements.

So enjoy the video and call us if you need help in China!

1. There is no such thing as a glass of wine with dinner.  If you say you don’t drink for religious or medical reasons, they will accept that, but if you start drinking, you are on a bus with no brakes, next stop Hangover Town.
2. Everyone smokes, everywhere, all the time.  Whether or not you smoke is irrelevant.  At table, in the restrooms, in elevators, they will smoke.  There will be smoking at dinner, and the further the drinking goes, the more smoking and the more they will encourage you to smoke.  If you are a professional athlete, not the place for you.  On that note, Chinese cities probably aren’t the best place for you anyway.
3. You should eat anything put in front of you.  As above, unless you have solid religious or medical reasons to say no, you WILL be eating whatever is ordered, especially if you are with me.  No sissies at my table.

These ground rules established in the audiences’ heads, I recounted the epic drinking contests, food poisoning, hangovers, food poisoning, blackouts, and yet more food poisoning.  You might think that with this track record I would be gun-shy trying new things but it is exactly the opposite.  The most exciting cuisines in the world are in Asia, and good food is everywhere waiting to be tried.  Including honey bees.

On my last trip to China, the highlight was donkey meat – best red meat I’ve ever tried.  The Chinese have a saying, 天上龙肉，地上驴肉, “tiān shàng lóng ròu, dì shang lú ròu”, or “the best meat in heaven is dragon meat, the best meat on earth is donkey meat.”  I have to agree.

Honey and Hebe horrified that the crazy lao wai (me) ordered stir fried honey bees

Corned Donkey Meat

As good as it gets...

PassageMaker‘s Director of New Project Development, Dave Learn, is an adventurous traveler and an exceptional photographer.  I live vicariously through Dave’s Flickr page, and his photos of his recent trip to Mongolia inspired the title of this post.

David Dayton of Silk Road International, a good friend of all of us at PassageMaker, says that there are really several different Chinas.  The interior (where 400 million people live on a dollar a day or less) is a different world from the conspicuous wealth of the Bund in Shanghai.  You need to get out and experience all that the Chinas have to offer, and the same applies to Asia in general. A friend of mine once said the cuisine is the principal art form of any culture, and nowhere is this more evident than Asia, and China specifically.  So if you are going to go to the trouble to journey to China, do NOT eat all your meals in the hotel or at McDonald’s.  Get out and risk food poisoning, because the rewards are worth it.

The “metrosexual” is a case in point.  When this first started showing up in the American press, I guffawed, loudly and regularly.  I am the polar opposite of this type of “man”, and the Justin Beibers of the world seem to me a sign of the exceptional prosperity of our modern world, even in this challenging economy.  Just as modern environmentalism is a luxury good, the foppishness of the “metrosexual” is a sign that we have so many creature comforts that you can afford to focus your energies on the right sort of hair gels over knowing how to survive in an inhospitable environment.  The remake of True Grit comes out soon, and I can only imagine Rooster Cogburn’s take on “metrosexuals”.

In my view, you always need to be ready for the coming zombie wars.  To quote Robert A. Heinlein again:

A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects.

So far this week, I have closed business deals, hung insulation, wired a light fixture, fixed a leaking tire, bled radiators, cooked breakfast, saved a baby mouse from freezing (my son named it “Cheddar”), etc.  Somehow getting a mud mask did not make the list.

Reading this article, China’s `City Jade Men’ Indulge in Mud Masks, L’Oreal Creams, I am intrigued to see China’s accelerated adoption of “metrosexuality”.  Not that it is without precedent in Chinese culture.  It is common to meet a Chinese man with at least one freakishly long fingernail, usually on a pinkey finger.  In the West, long fingernails on a man usually mean one of two things:

1. He’s a guitarist.  Years ago I tried to learn how to play the bass guitar and my teacher, a classically trained musician, had luxurious fingernails on his right hand, which he used as picks when he played.  Needless to say, the man was an exceptional guitarist.
2. He’s using it as a coke spoon.

This is NOT what it means in China.  It is a cultural sign that he has moved past the need to perform physical labor, a tradition that dates from the imperial court.  Pretty hard to dig a ditch or run a punch press without breaking a nail.

It is harder to find good factory workers in the USA than in decades past.  I say this from personal experience, that most the folks we interview can’t hack it in a manufacturing environment – they are too “soft” for real work.  If “metrosexuality” takes off in China, maybe Limbaugh’s onto something.

On several fronts, those surveyed said that the United States still compares well with other nations. Nearly three-fourths said that the U.S. leads all or most of its major competitors in the quality of its colleges and universities, and about two-thirds offer the same verdict on American science and research. To Julie Gordon, a computer programmer in Yorktown, Va., those advantages are grounds for optimism about the nation’s long-term prospects. “Definitely in areas of science and technology there is potential,” she said. “If we do focus on educating our young people in the right fields, we do have the right [prospects].”

Slightly smaller majorities give the nation high marks on two other key measures of competitiveness: 57 percent said that the U.S. outranks most competitors in the quality of corporate leaders, and 56 percent reached the same judgment on the quality of the American workforce. “I think we have a fairly well-trained workforce,” said Bill Scherer, a trucking-company manager in St. Joseph, Minn. “I think that would probably be the biggest benefit … that would help us compete against China.”

On other horizons, though, Americans see more clouds. Just half say that the U.S. beats out most of its competitors in the quality of government programs to encourage growth; only 46 percent said that business and government cooperate more effectively in the U.S. than in other nations. Most strikingly, only 43 percent said that the U.S. leads most other nations in the quality of elementary and secondary education; 53 percent said that we trail our major competitors. That pessimistic sentiment was broadly shared. At least half of both the affluent and the working class, and half of those with and without college educations, saw U.S. primary education as lagging.

I sadly have to agree with the decline of basic education in this country.  I spend a significant amount to send my children to a private school so I know they get a quality education.  I have no faith in the public system.  None.

However, what does it say about our current political and regulatory environment that a $14 B economy thinks they have lost out to a $4 B economy with about 4-5 times the number of citizens?  In marketing, perception equals reality.

The biggest problem in the USA is the uncertainty caused by the current administration.  If you don’t know what’s going to happen, you don’t invest, you don’t start a new business.  China has us beat on that front.

The fix for the USA is pretty straightforward, which means it will take a superhuman effort in Washington to stabilize the system.  Now that there is competition on a global scale, from China, India, Brazil, etc., it is not surprising that the perception is that the “American century” is well and truly over.

Tell me what you think, ’cause I’m just a drunk who doesn’t know any better…

China is different in a couple ways though. One is the fact that the West has yet to be developed, the other is there is still a huge labour [sic] pool waiting to be tapped. As long as there is still liquid [sic] in the Chinese economy, which there is, these people save like the banks are collapsing tomorrow, there will be room for development and the creation of new growth. Not today.

Dan has lived in Shenzhen for several years and I respect his opinion.  However, a couple of thoughts:

1. Yes, the Chinese west is undeveloped, but I suspect it will remain so.  If you look at the map of the world, the developed zones (outside of the USA) are mostly coastal regions.  This will, I believe, remain true for China.  If you are an export oriented economy built around finished goods, your customers are not going to want product shipped from Xinjiang province to the coast.  Energy, raw materials, minerals all lend themselves to transport over long distances but manufactured products DON’T.  Nearly 20 years ago, we were doing business in the Czech Republic, and we ultimately stopped because it was land locked and the transport costs made the price far higher by the time it made it to a boat in Rotterdam, regardless of what the ExW cost on the invoice said.
2. Yes, the Chinese nouveau riche save their money and invest heavily in the only vehicle they can trust – real estate – but that is precisely the point.  If you buy an apartment for $100,000 and then the market goes soft and that flat is now valued at $80,000, that is a loss no matter how you slice it.  The difference is that in Japan, the system is transparent enough that you can invest in government bonds with confidence.  China, not so much.

However Canada Dan is right that I do not see a popping of the Chinese real estate bubble will result in the total collapse of the Chinese economy.  There is too much low cost labor and manufacturing know-how there to be brought low by one sector of the economy taking a hit.  China will remain a destination for foreign investment, especially given the tenor of politics in Washington.

So thanks to Canada Dan for providing the material for another blog post and I look forward to having a beer the next time I am in Shenzhen!

People who live in the polluted areas of China know it, and any of them will tell you they’d like things to be cleaner, but most also understand this is a trade-off – one kind of green for another.  Green technology will fly in these markets as long as it works at a reasonable cost.  As I’ve said before, environmentalism as it currently exists in the West is a luxury.  When you are dirt poor, you are far less likely to get misty-eyed about dirt.

I cannot do better to close my commentary on this wretched bit of eco-fascist propaganda than quote the great James Taranto quoting the peerless David Burge, aka Iowahawk:

No, this video was made by green supremacists themselves, and with a high degree of technical proficiency. As 10:10 itself observed in a statement (since removed from its website), the video required the efforts of “50+ film professionals and 40+ actors and extras.” Blogger David Burge notes that “somehow, throughout this entire process, not one of the hundreds of people involved seemed to have questioned the wisdom of an advertising message advocating the violent, sudden death of people who disagree with it.”

Now, the original post, drafted way back in January 2010:

This is an excellent piece on how the “green” movement gets it wrong when it targets human beings as the problem.

Key paragraphs:

But the main, fundamental problem facing the movement after Copenhagen–which none of the green factions have yet addressed–is its people problem. The movement needs to break with the deep-seated misanthropy that dominates green politics and has brought it to this woeful state. Its leaders have defined our species as everything from a “cancer” to the “AIDs of the earth.” They wail in horror at the thought that by the year 2050 there will likely be another 2 or 3 billion of these inconvenient bipeds. Leading green figures such as Britain’s Jonathan Porritt, Richard Attenborough and Lester Brown even consider baby-making a grievous carbon crime–especially, notes Australian activist Robert Short, in those “highly consumptive, greenhouse-producing nations.”

Yet a slower population growth–while beneficial for poor, developing countries–can lead to a dismal, geriatric future in already low-birthrate nations like Germany, Italy, Spain, Japan, South Korea and Russia. And although birth rates are dropping in most developing countries, particularly those experiencing rapid economic growth, it will likely be decades before population stops increasing in most of the developing world.

Besides, people in developing countries have much more important things to worry about–such as earning a living and getting ahead. Fighting climate change ranks low on the list of Third World priorities. The sprawling slums of Mumbai need more energy, not less; they want better roads, not fewer. More economic development would produce the money to help clean the now foul water and air, but also provide access to better education, one of the best ways to assure more manageable birth rates.

Instead of looking to make developing countries even more dependent on Western largesse, greens should focus on ways to help improve the day-to-day lives of their people. Rather than prattle on about the coming apocalypse, they could work to replace treeless, dense slums with shaded low-lying clean houses that are easier to heat or cool. Those interested in nature might purchase land and rebuild natural areas. The children of cities like Mumbai should have the opportunity to experience wildlife other than crows, pigeons and rats.

The environmental movement also might as well forget fighting the aspirations of the burgeoning middle class in India, or other developing countries. No developing world politician, whether from democratic India or Brazil or authoritarian China will embrace an agenda that stifles such aspirations. [emphasis added]

My first post when I started this blog was about the passing of Norman Borlaug.  Despite developing strains of wheat and rice that fed millions and helped lift millions more out of crushing poverty, some in the “green” movement saw this as a bad thing.  Feeding people was a bad thing, as it leads to more people.  To those folks, and to the modern “greens” like them, I encourage them to lead by example.  Starve yourself to death if you believe in it that strongly.  Or if you can arrange to have your surviving relatives recycle the bullet, make it quick for yourself.

But since that’s not going to happen (the world needs them too much, don’t you know), I guess it’s back to ignoring the Luddites and finding technological solutions for the problems we face.  Care to make a bet on the Chinese and Indian contributions to said tech solutions?

I am not going to comment on whether I find Miss Chan attractive or not, as beauty is highly subjective, whereas weight is (mostly) objective.  Indeed, a woman can wear weight well or know how to dress her body (Kate Winslet comes to mind), but at the end of it, weight is measurable, whereas beauty is not.  I assume that when you’re worth US$4 billion and founded the 3rd largest “nation” in the world, meeting girls is not a problem.  Mr. Zuckerberg thinks she’s hot, and that’s what matters.

But I will say clearly that she ain’t fat.  Give the poor girl a break.

I find this all interesting and worthy of commentary because the Chinese diet has changed so radically with the prosperity of the last 30 years, that seeing a little extra weight on women is pretty common in the cities.  Listening to chatter on the streets, much air is spent bemoaning how fat so-and-so is now.  Fat, as in 105 lbs versus 90 lbs.  They are also 3 inches taller than their parents because they’ve had abundant food and animal protein their whole lives, and now have a discernible figure.  To me this is a good thing.

It has long been considered attractive in China for a man to have a few extra pounds, as it is a sign of wealth.  In a nation with a long history of famine, calories were the ultimate bling.  But women were supposed to stay skinny.

Since I do not see China’s economic trajectory reversing, it will be interesting to see how the Chinese physique changes in decades to come.  We know what’s happened in the USA, and India seems to be traveling a similar path (sorry – old article).  Even more so to see if the cultural biases change to match the new reality.  Should be fun to watch.

Rowe’s point delivered to Congress, is worth quoting:

Rowe explained that “dirty” jobs, like those in manufacturing and farming, used to mean success, but now look like settling. He wants that to change.

“I don’t think the country is going to fall back in love with manufacturing and I don’t think these policies are going to change, until or unless we reignite a fundamental relationship with dirt, work, and the business of making things, as opposed to the business of buying them,” he said.

He said one of reasons this is occurring is because community colleges and vocational education have taken the backseat to four-year college degrees.

“It’s not happening because people hate community colleges, it’s not happening because people hate the trades, it’s happening because we’re promoting a very specific kind of education at the expense of the others,” he said.

I’ve written before about the higher education bubble (here and here) and thoughts on American competitiveness and the attitudes towards work, but Mr. Rowe does a better job of laying out where we’ve lost our way a bit.  Convincing people that the only path to wealth is $120,000+ in debt for a degree in liberal arts or the soft sciences seems further from the mark than ever.

China has built serious capabilities in the last 30 years, skills and knowledge that many parts of the developed world have allowed to atrophy.  Part of the attraction to doing business in China is price, but increasingly it is because the domestic industries have shrunken to the point that China is the only place you can get it made, whatever “it” is.  That is why PassageMaker is there, so that if you are forced to do business with Chinese suppliers, you have an advocate that understands your concerns and requirements, and has your success as our primary objective.