Here’s a great interview with Mike Bellamy, founder of PassageMaker, discussing the importance of supplier audits and how PassageMaker and our friends at China Quality Focus can make them effective.
I’ve been watching the live-action version of Atlas Shrugged unfold in the USA in the form of The Great Recession with a profound sadness and morbid curiosity.
What is most striking is the sheer incompetence of the governments involved. California, once the beacon of American economic might is looking especially bad these days.
Here’s a fascinating article on Los Angeles’ epic bungling of what should have been the very cut-and-dry matter of medical marijuana distribution. Please trust me, it’s worth the time to read this long article – it is an excellent what-not-to-do guide to public administration. How in the hell do you screw up giving away dope?
And I remember reading this piece back in the summer, which started me wondering what happened to our formerly Golden State. Ouch.
This next article from San Francisco is probably Not Safe For Work (content, no pictures). I agree with the editorial writer in that it is jaw-dropping that a member of the Board of Supervisors is even considering such a measure.
Anyone want to start a business or relocate in California now?
Now the EPA has declared CO2 (that is the breath you exhaled just now while reading this) as a “pollutant” on par with NOx or SOx or particulate pollution. Such incredible power grabs – coinciding even more incredibly with Climategate and 17.5% true unemployment – have led American businesses to husband their resources for fear of what one Reuters columnist rightly calls “The Uncertainty Tax”.
Add to that uncertainty a unpopular push to “fix health care”, and it is no wonder that American businesses are sitting on their hands.
And as the coup de grace, Congressional leaders are now talking about placing a “global tax” on stock market transactions to fuel new spending. No word about paying off deficits or debts.Brilliant idea, Nancy.
The bolder American business leaders – like John Allison of BB&T and David Farr of Emerson Electric – are speaking out against the current governmental trends in the USA. Farr goes so far as to make the point plainly:
“Washington is doing everything in their manpower, capability, to destroy U.S. manufacturing,” Farr said today in Chicago at a Baird Industrial Outlook conference. “Cap and trade, medical reform, labor rules.”
Emerson, the maker of electrical equipment and InSinkErator garbage disposals with $20.9 billion in sales for the year ended September, will keep expanding in emerging markets, which represented 32 percent of revenue in 2009. About 36 percent of manufacturing is now in “best-cost countries” up from 21 percent in 2003, according to slides accompanying his speech.
Companies will create jobs in India and China, “places where people want the products and where the governments welcome you to actually do something,” Farr said.
I am not saying China is perfect. It’s not by any stretch. I remember when they repaved our road in Shenzhen 3 or 4 times in a row, for no apparent reason. But despite such silliness, the Chinese government writ large is certainly projecting an image of competence, even if it turns out to only be an illusion somewhere down the road. As they say, perception equals reality.
Writing this blog as someone who has investments in American manufacturing companies and in a China-based company serving clients worldwide, it should be obvious which market I find more predictable and worthy of further time, effort and money.
What a sad comment on the current state of affairs that is.
Yesterday I was in a perfectly justified foul mood at the rampant economic stupidity being foisted upon America by our semi-permanent governing class, but while I am disgusted with many elements of American society, I still have great faith in this country.
I am a minor stockholder in a local manufacturing company that celebrated 95 years in business last month. My family’s involvement goes back almost 50 years, which is quite a statement of longevity in itself, but 95 years is just extraordinary. Even more impressive is the growth and dynamism of this very old company in the last decade. Under the vigorous leadership of the “younger generation”, it has more than doubled in size while maintaining stellar profitability and taking on NO debt. Simply astounding to watch.
This company has been an international player in its core market for decades. They’ve been selling overseas for longer than I’ve been alive. While maintaining their core manufacturing in the USA, they were outsourcing before it was cool. The management has guided the company along this journey by focusing on product innovation, customer service, maintaining profitability and keeping debt to a minimum.
There’s been plenty of bad press about the USA recently – our relative decline in competitiveness, our gruesome debt burden, the decline of the dollar, rumors of a new global currency – and one could be forgiven for thinking the best was behind us and that it was now a Chinese (or Indian or Brazilian or pick your country) world. Perhaps I am guilty for spreading this sentiment.
While we aren’t going back to 1950 ever again, the USA will remain a major, if not the dominant player for some time to come. While atrocious government policies have wounded us, in a democracy those can be undone. Despite our demographic challenges, we are still the 3rd largest population on the planet, and by far the wealthiest of the major economies. All of our major competitors, including China and India have huge challenges of their own.
From where I sit, what will define the future is creativity, and in that the USA has an astounding advantage. I meet a great many people from all over the world, but the numbers of inventors from the USA dwarfs what we see from other markets. The downside is that no one would be crazy enough to start a manufacturing company in Salem, VA today as they did 95 years ago. Taxes, regulations, cost of materials and labor make it prohibitively expensive, not to mention a gigantic pain. The corporate buyers demand a world price, which drives manufacturing to China.
I’ve written before that I view my role at PassageMaker as having a moral component – helping to lift some the desperately poor people in China out of poverty, and helping companies around the globe grow and successfully bring their products to market in an intensely competitive world. If I didn’t believe this, I couldn’t do this job. It is very easy to blame the outsider for all your problems, but I the truth is always more complicated and usually involves looking in a mirror.
If the crowd in Washington want to keep this country in manufacturing, they won’t do it with protectionism. They can do it by getting out of the way – in the form of reformed labor laws, rational regulations, and lower taxes – but it is just so much easier to blame the Chinese instead.
As I look at the possibility of returning to Asia for an extended trip in the near future, I can honestly report a piquant combination of excitement and fear.
Excitement because it has been too long since my last trip, and I have missed China and Singapore.
Fear because I am not sure how much abuse I can take. I’ve mentioned the mixed pleasures of the Chinese business banquet before. You really can’t escape them forever.
I don’t drink coffee, can’t stand sodas and am no fan of hard liquor or wine. On the drink front, that pretty much leaves me with bottled water (suspect in China), hot tea (perfectly safe due to the “rolling dragon boil” required to brew it) and beer (bottled, carbonated and alcoholic = safe to drink).
For health and productivity reasons, when in the USA I tend to stick to decaffeinated iced tea and non-alcoholic beer. It’s a party a minute around here, but there are no such drink options in Asia.
Add to that the food sanitation and spices, and I’m pretty certain to be in for some “rapid weight loss programs”.
Don’t get me wrong, I am almost quaking with excitement at the prospect of seeing old friends and eating all my favorite dishes. Whenever I am in Asia I feel energized like you just don’t get in the USA. But I don’t stay in upscale hotels or dine exclusively at Western restaurants. Life is short and you’ve got to dive in to enjoy it, damn the consequences.
So heavily laden with Lomotil and Pepcid AC, off I head to my favorite part of the world. Now if someone would just tell my digestive tract.
Andrea Martins, our sales representative in Brazil, lived in China for 25 years. She makes Mike and I look like amateurs when it comes to the crazy China stories.
She has my favorite term for dealing with China – “Sweet & Sour”, like the famous pork dish. During our regular calls, she will say such-and-such a potential client has had a “sour” China experience and wants our help to get to “sweet”. More food-borne analogies, I know, but this time it’s not my doing! And she sounds wonderful saying it in a Brazilian accent, so there.
Recently, a potential client decided to visit us in China without letting us know in advance. They dropped in to see us towards the end of their trip, thoroughly dispirited with their journey thus far – didn’t like the food, bad hotels, creepy new Chinese “friends” approaching them on the street, etc. They were desperate for someone to treat them right and handle their requirements in China with professionalism.
I have no idea why people assume that China is going to be easy. What, did you think you could learn Chinese on the plane ride over? There are thousands upon thousands upon thousands of words printed daily on the challenges China poses, and yet we regularly see otherwise savvy clients naively blundering about as though nothing bad is going to happen. After the inevitable does happen, we are happy to help get things moving again, but it is so much simpler to do it right the first time.
And now, because Sweet & Sour Pork is one of the very few dishes that appears on “Chinese” restaurant menus in America in something close to its original form, here’s a link to a pretty good recipe. Enjoy!
I’ve written about the ghastly pollution in China before (here, here, here, here and here). With the recent bomb of “Climategate”, much of the core data supporting the theory of anthropogenic global warming (AGW) has been called into question. I am not going to get into a debate about AGW, or whether a trace gas like CO2 is something to worry about, but I am concerned that Climategate will take the the focus off the need to reduce pollution worldwide, especially in China and India.
The big immediate danger to humans in China is not a potential, theoretical increase of 1 degree Celcius, but rather toxic air, land and water. Vast amounts of coal and diesel are consumed everyday, all of it burned inefficiently in technologically primitive power plants or wretched Dong Feng trucks. No wonder so many Chinese people smoke (an estimated 70% of men); with that much soot, why the heck wouldn’t you smoke? If you don’t believe me, check out the photographs in this month’s National Geographic article on Xinjiang province (sorry for the link, but NG marks it hard to look at the pics if you don’t pay – freeze the video about 9 seconds in). I don’t know about you, but when the sky is the color of cat mess, CO2 is pretty far down on my list. And don’t get me started on the water pollution.
India has announced in advance of Copenhagen that they won’t be signing anything (heck, even Al Gore isn’t bothering to go). I am sure the Chinese will do the same. And there is no way the US Senate would ratify Copenhagen when they unanimously voted down Kyoto.
From my perspective, worrying about what might happen years from now and proposing fantastically expensive fixes to what may not be happening, detracts from practical efforts to mitigate what IS happening right now. I don’t need a climate model to tell me the Asian Brown Cloud is real – I can see it, smell it and taste it (*cough*).
Here’s an interactive map of Food Stamp usage in America.
The recession in the USA in a long way from over.
But my entirely anecdotal and unscientific research tells me that the rest of the world is recovering pretty well. PassageMaker is definitely seeing an influx of new projects from clients outside the USA. We had new project inquiries from India, Brazil, UK and Singapore today alone.
“Better put on a pot of coffee, Marge, this could take awhile.” (at 20:10)
Yesterday’s post discussed the possibility of the PRC as the world’s first mature fascist state. I received a number of comments, including this from Adam Supernant in our Shenzhen office:
I wouldn’t call China fascist (fascists were xenophobes; there’s not much of a racial superiority kick in China) but it’s also not Communist…I think the political title they gave to KMT China – “paternal autocracy” – is my favorite term.
There’s some food for thought: how similar China today is to the KMT-ruled state of the 1930s and 40s. That’s the first thing I thought when I heard about the gang busts in Chongqing last month. A tenuous connection, but I’m a big fan of KMT history so I’ll see connections anywhere.
There is a strong current of (Han) Chinese “exceptionalism” in Chinese culture, which makes a sound parallel to the nationalist xenophobia characteristic in fascist systems. It is interesting though that I’ve felt this in Taiwan more so than the PRC, which makes Adam’s KMT thought even more intriguing.
In either case, “communist” is no longer an accurate label.
I have often said that commentators in the USA are woefully uninformed when they talk about “Communist China”. This article in Slate by Daniel Gross is as good an example as any of the shock of first time visitors to China. The little red books are sold as souvenirs now, but no one reads them. China is assuredly a one-party state, but it is not communist.
I am of the mind that China is the first modern fascist state. Fascism has a rightly deserved bad name, but I believe the label fits. It is a one-party, statist model, using large government-owned entities to promote ‘critical’ industries like steel, aluminum, cement, etc., but allows a substantial amount of economic and personal freedom. It grew out of a Leftist movement (as did Italian and German fascism), but after the initial gruesome ideological violence, has mellowed to promoting the economic and military aspirations of the nation on a largely rational basis. As with the early “trains-run-on-time” iterations of European fascism, it has many supporters, who see it as the practical form of government.
Whether my political science is correct, it is clear that the Chinese Communist Party is only a label. The CCP now recruits the best students (not the most politically correct ones) from the elite schools in the hopes of building a solid governing class who can ensure the future prosperity of the country, a la Singapore. While I would prefer the democrat model as practiced in Taiwan, Singapore is a rather nice place and it’s hard to argue with their success. The trick is adapting a model that works well for 3 million folks to a country of 1.3 billion. Heck, the trick is adapting any model of government to a country of 1.3 billion people.
Over the last 20 years, I’d say they’re doing pretty well so far.
Fascinating article in the Telegraph about China’s gold buying binge.
I am reminded of this from the Onion.
Hope everyone is enjoying the holiday weekend – back to regular posts on Monday.
PassageMaker is a US-owned boutique firm providing a comprehensive and customized service to clients who wish to outsource aspects of their manufacturing and supply chain management. We have our own ISO certified manufacturing facilities in Shenzhen and are member or contributor of the following:
