brainstorming

Catching Up with China: Hearts and Minds

I've got a collection of articles on China that are hanging around on my desk.  Let's jump right in:

Drudge is sporting a big headline today: Communist Christmas: Wal-Mart 'Made in China' Inventory to hit  $18B:

Following the link we learn:

The world's largest retailer, Wal-Mart Stores Inc, says its inventory of stock produced in China is expected to hit US$18 billion this year, keeping the annual growth rate of over 20 per cent consistent over two years.

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Nevertheless, he said China is Wal-Mart's most important supplier in the world.

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"If Wal-Mart were an individual economy, it would rank as China's eighth-biggest trading partner, ahead of Russia, Australia and Canada," Xu said.

By the end of September, 2004, the top seven trading partners to the Chinese mainland are the European Union, the United States, Japan, Hong Kong, ASEAN (Association of Southeast Asian Nations), South Korea and China's Taiwan Province, state statistics from the Ministry of Commerce.

Last year, the firm bought US$15 billion products from China, half from direct purchasing, the other from the firm's suppliers in China.

More than 5,000 Chinese enterprises have established steady supply alliances with Wal-Mart.

Good quality and low price are the major attractions of the retailing giant.

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So far, more than 70 per cent of the commodities sold in Wal-Mart are made in China.

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"Buying more products in China means more job opportunities, which helps the firm win not only the government's hearts, but also the customers' appreciations," said Wang Yao, director of information department under the China General Chamber of Commerce.

In the United States, poor people find it possible to afford cheap "Made In China" products for their daily necessities, Wang said.

Granted, there are a lot of stunning statitistics in this piece, but Drudge's spin, "Communist Christmas" misses the mark.  Here's what you should really pay attention to:

• Wal-Mart is a behemoth, the largest retailer and largest employer in the world.  As a result, they wield a tremendous amount of power.  They use this power to drive prices down which can have both positive and negative consequences for the consumer.  (Lower prices can both reduce the quality of goods or spur innovation.)  There was a time when there were more regional players in the U.S. retail market.  Market consolidation limits choices for consumers and for manufacturers.
• Notice who tops the list of trading partners with China.  Did you expect it to be the U.S.?  It's actually the EU.  U.S. companies literally can't afford to not do business with China, because every other country is driving their prices down by drawing on the inexpensive labor.
• Notice that more than 5,000 Chinese enterprises work with Wal-Mart in China.  That's why Drudge misses the mark in his claim "Communist Christmas."  Wal-Mart is not buying from state-owned enterprises.  They're buying from private firms in China.  The truth is that market reforms have changed China from a purely communist nation into one that may more properly be described as Fascist.
• Want proof of that?  What name brands do you see when you buy from Wal-Mart?  Black and Decker?  Conair?  Do these sound like Chinese brands?  They don't because they aren't.  Many US companies manufacture products in China.  Often, utilizing the things China is good at, like cheap labor , will allow a US owned company to continue to employ engineers, accountants, marketing, information systems managers, etc. in the US.  However, we have to maintain our competitve edge in these areas or these disciplines will eventually be outsourced as the skills of global labor forces increase.

• Another effect of this type of trade with China is the growth of a new middle class in China.  This development will change the world in ways we have yet to comprehend.

For example you've been concerned about the price of gas at the pump recently?  When you cursed the $2.00 a gallon price tag were your thoughts set on Iraq and the mideast or on China?  In spite of common wisdom, China may be more of a driving force.

From the Telegraph,  Demand in China fuels oil price:

Oil prices rose back towards $33 a barrel yesterday after the International Energy Agency said that China's booming economy would fuel faster-than-expected growth in world oil demand this year.

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China's soaring economy was driving up world consumption, the IEA said, estimating that Chinese oil demand in January hit a record 6.09m bpd, second only to the United States.

Again the Telegraph, "Tension rises as China scours the globe for energy":

The connection, however, lies in an order issued last year by President Hu Jintao to seek secure oil supplies abroad – preferably ones which could not be stopped by America in case of conflict over Taiwan.

<snip>

.......For the United States and Europe are far more concerned with the even more sensitive issues of China's relations with "pariah states".

In September, China threatened to veto any move to impose sanctions on Sudan over the atrocities in Darfur. It has invested $3 billion in the African country's oil industry, which supplies it with seven per cent of its needs.

Then, this month, it said that it opposed moves to refer Iran's nuclear stand-off with the International Atomic Energy Agency to the United Nations Security Council.

A week before, China's second biggest state oil firm had signed a $70 billion deal for oilfield and natural gas development with Iran, which already supplies 13 per cent of China's needs.

<snip>

Eurasia Group, a New York-based firm of political analysts, said its oil experts worked out that China was paying such an inflated price for its investment in Brazil that the cost for the oil it ended up with was three times the market price.

"If China's economy falters, which, in my view, appears increasingly likely, then commodity prices will plummet, and with them, the value of the assets that produce them," Jason Kindopp, Eurasia's lead China analyst, said.

"Beijing may end up in a early 1990s Japan situation, where it is forced to sell recently purchased overseas assets for a fraction of what it paid for them."

China's wider aggression to secure oil and gas was the greatest threat to its international standing in the next decade.

"Sudan is the primary example," he said.

"It marks the first time in recent years that China has promised to wield its veto power in the UN Security Council against a petition initiated by the United States and backed by France and Great Britain."

We've become used to the, "It's all about oil!" meme from the left in the U.S.  For their enlightenment, we may get to see what implementation of this actually looks like.  The US hasn't been willing to overlook genocide in Dafur, or nuclear proliferation in Iran to protect its oil interests.  China is signaling that they will overlook both for the sake of oil.

For more food for thought, also read Peter Brookes in the New York Post, Oil Obsession.

The bottom line is China is now awake and will continue to be a growing force in the world economy.  It's a reality.  It's good news for the west that a middle class is growing and that it's happening in a time when information is more available on a global level.  The question is how to win the hearts and minds of the Chinese people?

Cue the Black Helicopters

Have I mentioned that I'm slightly paranoid when it comes to personal privacy?  Take Onstar for instance, you know the service where you call their number and they perform magic by unlocking your doors, calling an ambulance, etc.  As helpful as the idea sounds, I abhor the concept that someone, somewhere can call up the location of my vehicle at any time.  It's much too 1984 for me.

Sure, I'm just a boring average middle class American, not a clandestine spy, and the Onstar agent would find me the least likely candidate to track vicariously..........

Onstar agent:  I see it's youth group night and she's headed to drop the Boy off at church.

Onstar agent:  Ah. They must need to check the post office box.  It's off to town for lunch!

Onstar agent:  The drive through at Arby's today.  She must have a meeting in the cities.  Bet that Hot Ham and Cheese tastes good right now.

You get the idea.  Not the fodder of your classic suspense novel, right?  Yet it gives me no comfort.  I can't reconcile myself to the idea that anyone could keep track of me and for that reason I would not want a car that shows up somewhere on a GPS screen that some stranger has access to.

So, when Teresa reports that they're now tracking school students with RFID tags, I freak out a little bit.   It amazes me that the parents in the story seem so blase' about their kids being monitored.  This parent would object.  (Besides who wants to miss out on the perfect opportunity to embarass their kids by being loud and obnoxious?  Not me!)

It's a Housing Crisis! - The Hand Up Project

Yes, friends it's my sad duty to report on a housing shortage........in the animal kingdom:

Right now, 30 percent of all hermit crabs on our shorelines are living in shells that are too small for them. In the springtime, when the animal has its growth spurt, this shortage skyrockets to 60 percent.

Just how bad is the problem, you ask?

The present lack of housing is so severe that biologists now routinely find land hermit crabs attempting to shelter themselves in glass jars and whatever other ill-fitting forms of refuse they may find at their immediate disposal.

In Jars! In Jars I tell you!  How can we not care?  You do know all about these creatures endearing nature, right?

Hermit crabs are scavengers and often locate these borrowed dwellings by smell, when the original gastropod inhabitant dies and begins to decay.

It makes my heart  go pitter patter it does.  But, wait, there's more!

Once a hermit crab adopts a shell, it will keep it until the shell is outgrown, carrying it continuously as a shield, wherever it goes. This is no easy feat, considering that a properly fitting shell must be larger than the hermit crab that wears it, and will often significantly outweigh the crab itself. In order to carry its home, one of the crab's front claws is completely dedicated to clutching the shell. This claw bends backward and holds on to the spool of calcium carbonate at the shell's center. In order to move, the animal must first use this claw to lift the shell and heave it onto its back. In spite of such difficulties, the drive to remain housed is so strong in this species that a typical hermit crab would rather be torn limb from limb than be pulled out of its shell.

Poor, poor babies!  It's such a hard life.  Quick!  How can we help?

Based on what we know about the new needs of these animals in their current environment, the Hand Up Project proposes to manufacture alternative forms of housing, specifically designed for use by land hermit crabs, out of plastic.

But, where's the guilt?  Surely we have to have guilt, right?

We acknowledge that such trans-species caregiving may in fact be a form of control. In recognition of this paradox, the new structures are aesthetically based on the architecture of Giuseppe Terragni, an Italian Fascist active in the 1930s.

Well, as long as we're following the Fascists, I feel so much better.  Now that I've done my duty, displaying caring and empathy, who are we going to get to pay for it?  (Not me, of course.)

The scope of the project is global, and accordingly, corporate funding has been targeted as a potential revenue source.

A great idea!  We're going to get those rich companies to pay for it.  Yeah!  But, wait........

The project is currently soliciting corporate and commercial sponsorship to fund manufacturing and distribution costs by licensing the houses for advertising. In exchange for financial support, each plastic shelter may be readily produced bearing a corporate logo

Logos?  We're going to go trans-species with corporate logos?  Is this really necessary?

While we recognize that this funding solution will increase the current proliferation of corporate logos on beaches and in other apparently pristine environments, we do feel that it is appropriate to utilize these insignias of global capital, and the wealth they symbolize, in the service of ameliorating environmental problems that have been caused by humans in the first place.

Well, as long as you put it like that, I guess.

The intended audience of the Hand Up Project is someone who, while walking on a beach, might pause to contemplate a slowly ambulating hermit crab, wearing on its back a tiny, man-made plastic house bearing a corporate logo.

I'll keep my eyes open and my contemplation at the ready during my next beach walk, because frankly, it would make me laugh to see a hermit crab sporting a Nike symbol, never mind the fact that it would make a great blog picture.  (On the other hand, I always think that the manufacturer should pay me to wear their clothes if their conspicuous logo results in free advertising.  Maybe we could set up a profit center for these crabs.  Yeah!  Give them the resources to buy their own housing.)

Read the whole thing here.

Bush Rescues Secret Service in Chile

Hmmm.  Guess I haven't done this for a while, cause suddenly Typepad has all these new post options.

Like This.

Or This.

Or Even This.

I feel like such a cool blogger now.  (OK.  It's a little chilly and I'm not much of a blogger really.)

You may have heard about Chile's security people trying to keep President Bush's Secret Service out of the dinner which resulted in President Bush returning to the door to help him gain entrance?  Well, hearing about it doesn't do it justice.

The Daily Recycler has the video.  Don't miss it.

Prediction: Bush Wins on Evangelical Vote

I predict that George Bush will win the election today, both popular vote and electoral college, on the basis of evangelical voter turnout and that we will know the results tonight. Anecdotally, we voted already this morning in rural Wisconsin. It took about 15 minutes from the time we left the house until the time we got back home. Sometimes the simple life pays off. That being said, our little burg had higher than usual voter turnout. I was already number 151 before noon.

Evangelicals know they cannot trust Kerry with social issues. We aleady feel we are under attack. It's inconceivable to allow him to appoint the next justices to the Supreme Court.

Bush wins. All that's left is the celebrating. (Now I can get some work done.)