Category Archives: China
The saga continues…
Weakening the dollar here causes inflation to happen abroad as investment money flows out of the U.S. and into China.
That’s the news over at Sovereign Man in his article also named Bernanke’s Inflation is Fueling a Bubble in Asia.
Real Estate prices are soaring and getting past the point of profitability. Rents simply aren’t keeping up.
These and other indicators are signs of a coming bubble.
Many other nations are also manipulating their currency to keep it from rising so fast against the dollar, and causing prices to soar on all things, including commodities.
All of this continues to amaze me as I think about just how interconnected the world economy is, and how much we rely on each other.
It also makes me think about how I can best prepare for the future. Where my money should be invested. And what skills I should gain as we continue on into this future we are putting together.
This may offend some people, but I don’t know how important intellectual property is these days. Or even if it ever was that important…
You invent a product, design, process, etc. and spend a lot of time and money getting it patented. Then you make a few bucks on it, and if it is even remotely successful, you have to spend a whole lot more time and money to protect your patent.
Meanwhile, people who make and market a slightly different product are making a killing without all the extra costs. They are producing it faster and cheaper then you ever could. It’s the continuing story of business everywhere… “Inventors make the product, Distributors make the the profit.” Just think of Amazon or Ebay…
This story is really playing out in China…
I just read an article over @ Sovereign Man entitled “Can Your IPhone Do This?“. It talks about how China continues to take technology and make it better….
Direct Quote: “This is a central theme among Asia’s technology developers. They start with a basic idea (like supercomputers, military aircraft, or mobile phones), analyze what the foreign companies are doing well, figure out how to make it better, and eliminate any dependency on western suppliers.”
Some of the best products are made from people who don’t care about gaining a patent and maximizing the profit they can ring out of it. Think Open Office, the free option that replaces Microsoft Office…
If you have a business that innovates you should definitely be watching the news on China and take some pointers from them. Whether you like it or not, the profits will flow to those who keep producing. Not those who rest on their laurels…
Last night I had the privilege of watching a live teleconference with The U.S. Ambassador to China, Jon Huntsman, and hear Sidney Rittenberg speak live courtesy of The National Committee on United States-China Relations.
Rather then offer up my own opinions on the evening, I will just list some of the major points made by both parties.
- The U.S. debt to China has never really played into the trade discussions he has with China.
- Since China has allowed the their currency to float (reference), we have seen on average a 1% appreciation of the Yuan per month.
- With the 2001 entry into the WTO China has started to go by the rule of law, instead of the rule by man. They are using the current laws to help establish their case in many instances.
- We only got to see about 15 minutes of the telecast because the uplink from China died, but the moderator happened to mention that he thinks we might see Jon run for president eventually. (sidenote: Jon has already served in numerous government positions, including Governor of Utah, so this could very well prove true.)
- Sidney is probably one of the only Americans left alive who has met every Chinese leader since Mao Zedong.
- His take on yuan appreciation is that it doesn’t matter a whole lot. And that more jobs depend on trade with China then in putting tariffs up.
- He states that China is much better off today then when he was because of the new regime. He states that your average person in China used to have a life expectancy of 32 years, but today life expectancy is 73 years old.
- He cited Colin Powell as saying, “There system (China’s) works better for them then our system works for us.” I haven’t been able to find a published source of this. His main point here was that we shouldn’t assume we know what’s best for China.
- 800 million cell phone users, 400 millions internet users, something to think about.
- China has to figure out how it will switch from government investment to capital investment.
- China also has to find ways to allow for more free speech and freedom of the press. He says that this is the valve that lets off the steam in any country. They are better off letting this go. He says any young Chinese person can find out anything they want to on the internet anyhow.
- Government must also protect whistle blowers to help end the corruption.
- There is a great disconnect between central government policy and it’s execution in the local governments.
- Most Chinese aren’t worried about the central government as they are about getting the local despots off their backs.
- Chinese have a lot of freedoms. The only freedom they don’t have is the ability to criticize the government. Local government despots are the biggest violators of human rights. Not the central government.
- Quotes Wen Jiabao as saying that political reform has to come before economic reform. Told a story of how Wen Jiabao was traveling through the countryside with the local officials and said he had to get out to “commune with nature” He then used the opportunity to run over to the local village to get the true story from the villagers. He asked questions like were they receiving payments for the fact that their spouse died in the war, etc…
- General consensus in China is that Tibet is ungrateful for all the investment China has put in Tibet. The Dalai Lama has stated that the 17 point agreement they worked out with China would work if everyone followed it.
- Law now requires 2 companies, a foreign and a domestic one, to audit a Chinese company. Deloitte is one of the biggest companies doing this now.
- If you want to find a Chinese partner to do business with look for the 3 C’s: Character, Competence, and Connections. Do your Due Diligence.
- Recommended books on doing business in China: Jim McGregor’s One Billion Customers, Mr. China by Tim Clissold, and Beijing Jeep by Jim Mann.
- Mentioned that Christianity is welcome in China because Christians tend to be good law abiding citizens.
Most of Sidney’s remarks revolved around the idea that we need to cooperate with China and find common interest through dialogue. And that we should avoid all the press that attempts to demonize China.
With China gaining power and influence over the world, it pays to keep abreast of current events going on. I will continue to talk about some of the more interesting things happening in China so please subscribe to keep updated. Thanks!