Singapore as US Values Partner in SEA?

I had the very enjoyable opportunity to listen to two US Ambassadors to Singapore, Former Ambassador Steven Green who is a UofM alum and long-time resident of the Miami area, and also current Ambassador Wagar who lived/worked in SFL for a number of years prior to being posted to Singapore.  Both were engaging, informed and interesting, not to mention willing to take questions and discuss regional issues concerning China/ASEAN/Singapore. Here are 10 things stood out to me from their more than 2 hours of comments and answers to questions.

First, they are both absolutely pro-business and both see the professional and corporate world as a tangible extension of US foreign policy.  Both were big TPP supporters as well.  This is quite the contrast to the usual social science line that capitalism is THE reason for all the world’s problems.  For these Ambassadors rather, capitalism is THE key to getting massive numbers of people out of poverty and promoting US interests abroad.  And while there certainly are “quibbles about the number of ladders available,” as Amb. Wagar said, Singapore is example A-1 for the case that capitalistic meritocracy is the BEST option for the most number of people.

Second, as democrats (both of them—political appointees of Clinton and Obama respectively) they openly pined for the “efficiencies of authoritarianism.”  I really can’t keep up with most lefties as they switch from the values of a meritocracy to the advantages of unilateral policy decisions in getting things (notably, the Left’s social agenda) done.  While both repeatedly took the relativist approach that “we can’t judge their brand of democracy or human rights” they also reminded us over and over that the US just doesn’t get things done like the Singaporeans do and should really learn a think or two from them.  Now, I don’t doubt that Singapore has done many things successfully that the US could learn from.  But, I really like my leaders (and academic speakers) to be a bit more consistent.  Maybe this was the “gone native” part of the presentation that Ambassador Wagar warned us about?

Third, Singapore was seen as THE strategic partner (but not Ally) in the SEA region.  Most advanced air force, best education and economy, most transparent govt, best infrastructure, etc.  But again, I found it more than a little questionable that Singapore’s “un-committed” political position was repeatedly praised as such an advantage to the US. While we certainly avail ourselves of the logistics available in Singapore, that they also facilitate transportation for NK and Iran and others makes me question the on-balance value to US interests of Singaporean neutrality (as opposed to housing logistical services out of the Philippines, for example). Isn’t the ease of mobility for transnationals of questionable intent one of the problems with BKK and Manila?  How is the fact that it’s even easier via Singapore such an advantage?  And of what value has Singapore’s air force and logistical support for the US been in the last year or so as China builds airstrips in the South China Sea (which both ambassadors condemned)?  Exactly none.  Because Singapore is trying to be politically neutral (and is 75% ethnic Chinese) they are actually limited in what they are willing to do (or allow the US to do from their ports).

Fourth, “similar values” make the US and Sing natural partners. What values, you may ask, do the US and Singapore share? Why, transparency, efficiency, education, good governance, racial balancing and business success.  According to the Amb’s, these are traditional values (use you’re own fingers for air quotes) that both the US and Singapore aspire to and these make us natural trade/political partners. When did any of these become national values to either country?  Sure, they’re important business concepts….but national values?  Further, these values that Singapore holds dear were placed in direct contrast to Indonesia and Malaysia (and I think you could add in the rest of ASEAN too) and their endemic corruption and “that’s how it’s done here” acceptance of bribery and cronyism.  I agree that Singapore is indeed THE bastion of transparency in SEA, just about anyone would be compared with there other SEA countries—and this was their point: see how damn impressive Singapore is to pull this off in SEA!? But I’m just not buying that these are values held dear by either country. Or that other countries (Thailand, which means “free country,” or the mostly-christian Philippines, for a couple of counter examples) couldn’t work just as well as “value partners” if that really was the deciding factor in military-logistical decision making in SEA. Now if you just want to talk about business climate/infrastructure, then maybe Singapore does have the upper hand institutionally, but there are other issues to consider that I fear were glossed over too easily.

Fifth, Singapore is a democracy but just not “our” kind of democracy; so those in the US that are a bit squeamish about HR abuses need to relax and stop being so judgmental.  First, aren’t they our partners in values? I guess we should just forget about that whole “Asian Human (alternative) Human Rights issue?  And second, whose claiming they should be a mini-US? Certainly no one at the presentation.  And likely not any US businesses.  Maybe conservative lawmakers would like to see more corresponding actual values between the two countries, but in general, I found this to be a straw man argument to allow for justification of Singapore’s more severe politics and unique ideas about culturally specific “human” rights.  It’s also a convenient way to mock an opponent by attacking a position that doesn’t really exist.  Students won’t call these men on it and business people never want govt involved in the first place. This is likely a line that they’ve been using (successfully) for decades.

Sixth, Singapore has gotten education and public housing and multi-cultural society right!  And the US is basically just too parochial (stupid) to follow their lead.  Oh, what could the US be with just a bit more Authoritarianism behind left-wing social issues?! (Did Thomas Friedman, village idiot, write their talking points?)  While this may indeed be true, the accomplishments on education and what not, and that the US should overhaul it’s educational system, the finer point here is this: “what choices are made” to achieve 1.9% unemployment and almost universal post-high school education?  I often chuckle that those who fault the US education system are products of the same (devaluing themselves and their own education with their comments).  Further, when discussing Asia these same critics are often the ones who also point out how the US educational system is one of, if not THE draw for most Asians to the US. I don’t doubt that there could be MUCH more done to improve the system (K-12 specifically) in the US, but “what choices” are required to do so?  Do you really like China’s system of nationalized curriculum and standardized tests?  How about common core and or NCLB?  If we make some college mandatory for everyone in the US, what does that due to wages?  Political pandering is easy…getting things done either requires a majority vote, a “little more authoritarianism,” or willingness to live with other outcomes.

Seventh, China won’t take over the world any time soon. Or ever, actually.  Demographics won’t allow it. They are running out of people. Combine that with their soft power failures and (massive) regional mistrust and you have waking giant that can’t get out of it’s own way. Both Amb’s remarked on how the US was THE destination for education and retirement and rich Chinese because the standard of living, the freedom and “fun” lifestyle, the educational opportunities, etc., All these opportunities exist here and no where else, they proudly chest thumped. My question: how do you get all this freedom AND have a bit more authoritarianism? I don’t know either.

When I asked about the values and keys to Singapores rise, I used the word “authoritarian” and they pushed back specifically on that word.  They instead used words like “forced” and “mandatory” and “constructed” and repeatedly the phrase, “not our style of democracy.”  Their view of the US and Singapore was summed up with this pithy remark (designed to show how stupid the US population is in general in comparison to the more advanced Singaporeans), “In the US, the people don’t trust the government.  In Singapore, the government doesn’t trust the people.”  Standard socialist (democrat) line: Trust me, I’m the government. (At least we supposed to trust you in the off-years when Dem’s are in the Whitehouse, right?  You don’t want to trust the Govt with the GOP in there right?  “Bush lied,” et al.)

Seventh, the most interesting concept they presented was the idea that South Korea and Taiwan are virtually irrelevant to world politics outside of political debates in the US congress concerning US regional strategy.  The Amb’s claimed that both declining regional economic powers with little to no military power but are still strategic to US interests in the region.  Neither provide any special access to other countries/markets (as Singapore does with ASEAN, they claimed). And the two countries have decided to focus on trade with China instead of investment (from the US and other more developed countries).  This choice was, in the Amb’s opinions, the wrong horse to back for long-term growth.

Eighth, Singapore is THE hub for all int’l business in SEA.  Best government, best banking infrastructure, best education, best judicial system, etc. in the region. Better and more stable than any other metropolis in SEA.  And since the demographics of ASEAN are growing (more youth than old people) the future of middle-class Asia is in SEA, NOT China or NEA, whose populations are all getting old.  While I agree with the demographics argument visa vie China and NEA, there is no way that Singapore provides any advantage for entrance into the Burmese, Thai, Vietnamese or Philippine markets that couldn’t be had in spades in those home countries themselves.  Yes, international law is likely to be better upheld in Singapore and so regional offices (that support multiple countries) are likely to be established in Singapore (or Hong Kong), but there is no cultural or linguistic advantage to being in Singapore over Bangkok for these other ASEAN markets. Just like you’re not getting more of the Chinese market in Sichuan by having an office in Beijing (their argument), you’re also not getting more of the Vietnamese market by having an office in Singapore.  Actually, since I’ve done business in each, I would personally argue that yes, you are better off in Sichuan with an office in Beijing than you are in Vietnam with an office in Singapore. Further, that Singapore is less corrupt and more transparent than the rest of SEA is true, but these practices don’t extend beyond the border.  I’ve worked directly with Singaporean owned factories and Singaporean individuals in Vietnam, Thailand and China and they were just as willing to participate in kickbacks and other questionable ethical practices as any other locals.

Ninth, 7 guys with a vision of hard work, transparency, good-governance and education are the keys to Singapore’s success and the wonderful second generation is now carrying the torch forward.  I’m not sure how much of the job of Ambassador is promotion of US business interests into Singapore and the promotion of Singapore to the US business community, but it’s obviously the first or second (promotion of actual US foreign policy being the other) priority.  If that’s their job, then their doing great.  I’m all for making money, getting educated and getting govt out of my life as much as possible, but I’m not sure that promoting the Singaporean model is exactly “my kind of democracy.”  The Amb’s, close personal friends of LKY and his son (Green was one of three Americans invited to LKY’s funeral), were unequivocal in their support for Singapore as THE key to business, logistics, regional military power and the future of US interests in Asia.

Finally, both gentlemen were very polite, willing to talk afterwards and have been more than successful in their respective lives outside of public service (Ambassador Green was the CEO of Samsonite and has donated tens of millions of dollars to FIU—Thank you so much, sir.).  They have more experience than I do in Singapore and in govt. And while I respect their opinions though I obviously don’t agree with, as they stated to me, “the premise of [their] argument” on a number of issues.  But that’s kind of the point of education, isn’t it?!

Xi vs the Pope

President Xi and the Pope both arrived in the US this week.  Landing on opposite sides of the country, their arrivals couldn’t have been more different.  The Pope, great by President Obama with a bow and hand-kiss at the airport, was welcomed with all the pomp and circumstance usually reserved for, well, Presidents and Kings.  President Xi on the other hand, arrived in Seattle and was met with both supports and protestors, but no White House level dignitaries.

President Xi’s people released a tentative schedule of his actives, while the Pope’s “historic” visit has it’s own “Pope Tracker;” an app that follows his movements and allows you to upload your personal stories of meeting with the Pontiff.

So, if you’re the Pope or President Xi, you don’t come to the US at the same time on accident.  So what’s the message?  What’s the agenda of this timing?  The two of them are “almost” going to meet in DC on Wednesday or Thursday—at least one of them obviously nixed the opportunity to do so. Hmmm….which one?

The Chinese press have made a living out of interpreting slights, perceived or real, in the visits and surrounding reception of Chinese dignitaries overseas.  So you’d think that this week would an absolutely orgasmic occasion for them—a religious leader (one whom they do not allow to lead or select leaders for the Catholic church in China) is getting the full-blow red carpet treatment and Xi isn’t.  This should offend the sensibilities of all Chinese on both sides of the straight, right?

But what if President Xi planned it like this? He meets with business leaders in Seattle first; placing economics over politics is a veiled shot at the US political agenda.  (And here’s a great wrap up of how you force the hand of the US AND the int’l business community at that same time–attend or face sanctions in China.)And with all the press focusing on the Pope has relatively protest free (at least press-coverage of protests free) visit for the first week of his trip to the US.  The Chinese press gets all the comparative fodder they need to trash the US for receiving feudal superstitious splittists with more respect than the leader of the 2nd largest econ in the world.

Why risk the image of the Pope getting top-shelf attention in the Chinese press by condescending to a meeting or even a handshake?  No doubt completely unnecessary, from Xi’s perspective. China is not all the harmonious right now and one of the groups feeling the pressure to get inline are the Chinese catholics among other religious groups.

Xi’s goal with this visit is two fold. First, look strong—take a more leading role in world affairs (or at least appear to do so for the folks back home) and take a stand against the running capitalist dogs in the US.  And second, try to convince the US and China’s Eastern Pacific neighbors that while it’s strong, it’s not that strong.

Cyber security and the South China Sea are the big issues, but neither are likely to be resolved, over even preliminarily agreed upon during this visit.  China is playing the victim card in the cyber arena but considering that the US is considering sanctions against China for cyber espionage, offering to work together on cyber security is a gamble that likely won’t go over well with the US congress.  And China’s hardline position on the SCS means that it’s a non-starter as well.

This trip has been planned for months, if not years. No accidents, no mistakes.  The only frustrations for Xi’s people being the freedoms enjoyed by protesters living in the US—something that the the Pope’s visit and rock-start like press following will more than likely overshadow.  Mission accomplished.

Ah, the memories; The Made in China Diary

Wow.  Wish that I’d thought of this!  (h/t Wired Magazine)  Kudos the to (Swiss) authors/photog’s that did though.  Great idea.  Some really good shots of “what it’s really like to manufacture in China;” everything from shops set up in the living room to world-class tech.  I’ve been to each of these places, and while I doubt they are the exact same factories, it seems like I’ve worked in so many of the factories as well.

Is China a Threat? Part 20457948571-048571

Last month I was given a copy of an email from the local head of a national political party in the US with an all too common sentiment—China is a threat!  We need to limit our international exposure via govt fiat ASAP.  I won’t share the source or all the back and forth, but I’ll say this: In my opinion, anyone, political or otherwise, that suggests isolationism in any form is not only deluding themselves but is ignorant as well.  Shutting the US off from the rest of the world will never bring prosperity nor keep the US “safe.”  It hasn’t in the past and won’t now.

Having said that, in my mind, this is the real China Threat: The chilling effect on world business/news/politics as the Chinese giant starts to flex it’s (economic) muscles.

But here are some of the issues and my responses from the original email.

Q. Should the US be worried about the acquisition of assets by China?  For example, Smithfield food (the largest pork producer and processer in the world), AMC Entertainment and other buildings, land and houses.

A. There are really only three issues here.  1. That the US should not sell domestic assets to any company/individual that is not a US citizen.  2.  That the US should not sell assets to any individual/company from any country that is anything but dyed in the wool capitalist/democratic.  3. That the US should not sell to Chinese.

The British are the foreigners with the largest amount of US asset ownership.

The EU is second.   Isn’t the current fear in the US that “we’re turning into a copy of socialist Western European states?  Why is there no outrage at the British?  The Auzzies?  The French, Germans, Russians, etc? A Russian just bought the Brooklin Nets of the NBA—what’s more American than Basketball?!  Putin is “safer” than Xi?

Q.  But what about investments in the “beachhead” industries in the US like copper in Alabama, the Triple H Coal Company in Tennessee and the “auto industry” in Detroit?  The Chinese will export everything and take over the local economies!

A. Ever hear of Rio Tinto?  Look up their mining interests in Utah (and the world).

As for coal, was there a problem when the Tennesseans themselves were mining and selling the coal to the Chinese?  No.  Then why the concern now?  Who even uses coal anymore anyway?  Sure, many places in the US and other countries still use a bit, but it’s actively being phased out in the developed world.  It’s dirty and expensive and dangerous (even if you don’t agree with environmentalism).  If the US and the EU aren’t buying coal then who else is going to buy all the coal that those hard-working Tennesseans are mining?  Of the top 10 coal using/buying countries China uses more than 3x as much as country #2 (the US) and more than all the next 9 countries in the world COMBINED!!  China is also building more NEW coal plants EVERY YEAR than the US has total.  If we sell coal, we must sell it to China–there is no other market.

And finally, have you been to Detroit recently?  Thank God someone is investing there.

Q.  But this is really a question of strategic assets, not one specific mine.  (OK, that’s not a question, I know.)

A. How much is the US dependent on foreign Oil?  How much are we mining and going to war for in the Middle East?  Are the isolationists mad when Tennesseans and Utahans themselves were blowing up their own mountains and selling their own coal and copper to the Chinese?  Nope.  Hypocrisy.  Racism.

And one more thing about physical assets, especially things like mines, land and buildings—CHINA CAN’T TAKE THEM OUT OF THE US.  If push comes to shove, we just nationalize them.   Hell, we just did that with 1/5 of the US economy with no concern for the consequences or even how it was actually supposed to work.

Q. Well, what about all of the leverage that China has over us from buying up all our debt?

A. Most people probably think that China own most of the US debt; but that’s not true.  Not even close.  China is only 15th on the list of largest owners of US debt most of the top 14 are actually Western European countries.

Are you getting the picture?  China is the straw man for every reactionary that can’t handle the fact that China is likely going to pass up the US and become the biggest ____________ (fill in the blank) on the planet.  But you know what?  China should be the biggest!  They should be, they have 5x our population.  And if you’re really concerned about strategic defense, in all likelihood it’s safer for the planet if 1.5B people have enough to eat and options for growth.

Here’s a few other issues that were listed as “problems” with China.

China is now the number one trading nation on the entire planet.

Smart!  This is how Britain and US grew their economies in the past.  The US is still the biggest economy (by almost 4x), so why can’t we capitalize on this—oh, wait we do.  Not only do we have super cheap goods but those cheap goods have saved the US 2-3 percentage points in inflation over the past couple of decades.

Overall, the U.S. has run a trade deficit with China over the past decade that comes to more than 2.3 trillion dollars.

And all this while Chinese consumers are clambering for foreign goods.  The problem isn’t trade policy per se, which is actually horrible on both sides, but the fact that the EU and other Asian countries have consistently beaten out the US in the Chinese markets.  Yes, there are limitations, but to pretend that there are none here in the US is, again, delusional.

China has more foreign currency reserves than anyone else on the planet.

How is this something that the US can control or be responsible for?

China now has the largest new car market in the entire world.  China now produces more than twice as many automobiles as the United States does.

After being bailed out by U.S. taxpayers, GM is involved in 11 joint ventures with Chinese companies.  1. They should be the largest, they have the largest population.  But the US has more cars per person than China does.  2. China probably produces, with the help of US companies, more of just about everyTHING than the US does.   Anything that GM does to actually make money should be seen as a positive.  Investing in the largest and fastest growing market on the planet is smart!

China is the number one gold producer in the world.  The uniforms for the U.S. Olympic team were made in China. 85% of all artificial Christmas trees the world over are made in China. The new World Trade Center tower in New York is going to include glass imported from China.

These are just emotional hooks to engage stupid people in the “China threat” mantra.  “Christmas trees?!  How dare the Commies buy up Baby Jesus’s birthday!”  Next they’ll be buying up NASCAR.  Give me a break.  And with this logic, the Temple of Solomon should never have used the Cedars of Lebanon and we should give back the Statue of Liberty too (made in France).

China now consumes more energy than the United States does.

Um, it have 5x the people—how can it not?  Not to mention all the manufacturing that is, by the way, massively energy inefficient.  They’re wasting money buying more energy than they should if they were more efficient.  They’re giving money to us unnecessarily!  Damn those Commies!!!  Being frustrated at that is like Global Warmists not being happy that we’ve got record cold this year—there is an agenda behind the histrionics.

China uses more cement than the rest of the world combined.

More roads, more buildings, etc… get used to it.

China is now the number one producer of wind and solar power on the entire globe.

So…does this mean that they aren’t as smart as we thought?  What’s the point here?

China produces more than 90 percent of the global supply of rare earth elements.

Yes, they do.   But as noted in the coal example above, a HUGE percentage of those are produced in mines in OTHER COUNTRIES!  I agree that this could be an issue, if China pushed for exclusive sales and/or tarrifs.  But again, can’t countries just nationalize these mines if there are real issues?  And if China is a threat, why are countries so eager to sell these precious assets to the Chinese in the first place?  And isn’t the sale a domestic problem more than something to blame on China?  Maybe we need to clean house before we throw stones (Caution: mixed metaphor!)

In published scientific research articles China is expected to become number one in the world very shortly.

Being published and being respected are two different things.  China has 2 universities ranked in the top 200 on the planet (the US has more than 50 of the top 100!).  Besides, journals the world over are questioning Chinese scholarship due to rampant plagiarism.

When 5%-10% more is a bargin

The background on this great idea comes from Wired Magazine.  But more than the great idea, and a Utah company to boot, the look into their issues dealing with China are insightful.  From the article:

Davis has run billion-dollar divisions of global conglomerates with integrated supply chains and the company has produced millions of Orabrushes, but they’ve still faced factory setbacks. The Chinese manufacturer they selected was having trouble molding the critical microbristles and couldn’t properly mold the logo into the handle.

I’m sure that Davis is brilliant at what he does, but even people with a ton of experience still have setbacks in China–it’s part of the reality of working here.  But their solution is even more interesting:

This hiccup spurred the team to evaluate the entire overseas production model.”Producing the product in China, shipping it to the U.S., and then getting it to the retailers is a long cash cycle,” says Davis. “There are also negative rumors in the pet industry about having things manufactured outside the U.S.” Despite manufacturing in Utah costing 5 to 10 percent more in Utah, Davis and his team decided to contract with a local factory.

When timing and  product quality are the major production issues, a higher production cost no longer becomes a barrier to production.  And suddenly China is not as competitive as it was though to be previously.

I have similar discussions with companies just about every week.  Identifying what are the most important current goals and needs sometimes rules out China as a production center even before production can start there.  I would much rather tell a potential client that they need to do their manufacturing in the US, and not use any of my services (read: not pay me anything), and get what they want than have them pay me to get them something that they’ll not be completely happy with.

Things that you need to have researched BEFORE you commit to production in China.

1. Time to market constraints

2. Cash flow timelines

3. Marketing and distribution in your home market

4. Product quality and industry/customer standards and perceptions

5. Mold and product design, production and protection

Just because you have a great idea and have decided that, for whatever reason, China is the place where you have to do your production does not mean that China is the best option once other factors are considered.  Do your homework before committing to any production location simply because you’ve heard or decided that it’s the best value.