Silk Road International Blog

Feb 6 UPDATE–Like I said.  “6.8% growth might as well be 0.”  And guess what?  It actually was (more here)!

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I purposefully tried to avoid Asian news for the CNY Holiday.  A change is as good as a break, right?  It was nice to spend some time both in the US, at shows, and in a little Chinese village to gain a perspective other than President Obama’s Depression forecasts.

Back in the saddle, while discussing the recent events with a number of other friends of mine with connections to Thailand we commented on the fact that for Westerners the single most under appreciated or misunderstood concept in Asia, in business or politics or otherwise, is probably the concept of face and the corresponding reciprocal social relationships.

In Thailand, the library of academic literature is overwhelming on this—and current politics support it all.  A bit further north, I’ve read about a lot of theories about motivations for business success in China, but there isn’t one that, I think, is more powerful than the issue of face.  Sure the desire to be rich is a driver for everyone.  Yes, people want to be both safe and provide for their next generation.  Conspicuous consumption of wealth, which is a superficial express of the larger “face” concept, is certainly a motivator for many.  Even nationalism has been, more so in the past I think, a minor motivator to getting rich.  (I don’t see nationalism really motivating many anymore, without a actual physical threat.  In China the hatred for Japan is dying.  The Olympics are over.  Many, especially in China’s cities, certainly no longer see the West as evil; East-coast China just isn’t that oppressed any more.  And those in inner-China never really cared.)

But back to face, I usually get a major lesson in face a couple times each year.  Just when I’m feeling comfortable here, I get hit with a comment or an issue that puts my business (or even personal) interests in direct and glaring conflict with someone else’s face.  Often times it’s one of those “Ah ha” moments where I finally see through the circular logic and see that the central issue is not what I’ve been focusing on (usually the bottom line of time or money) but something more personal, for lack of a better term.

What’s going on in Thailand is not that simple, to be sure.  But so much of what is happening now is the continuing retribution for the loss of face and power from Thaksin’s (certainly corrupt) reign earlier this decade.  It seems that in the past 6 months, if we’ve learned anything, is that what’s best for Thailand is not necessarily what either faction really wants.  Not that Thai politics are unique in this regard, but in Thailand it has become blatantly obvious that “restoration” of the pre-Thaksin power structure, in the Name of the King, is the singular priority for much of Bangkok’s elite.

From the continued inept handling of the unrest in the South, to jailing of foreign authors (who printed 50 and sold only 7 copies) for les majese, to the in ability to resolve boarder issues with Myanmar and Lao, to boarder slap-fights with Cambodia, to the military hauling refugees out into the middle of the Indian Ocean and leaving them, to the physical occupation of the BKK airport, there seems to be no limit to the willingness to sacrifice what’s best for Thailand for political and/or economic advantage.

Really, if you want to get into the heads of your Asian counterparts, study their motivations—focus on personal relationships and responsibilities that may seem extraneous to “business” interests and you’ll start to understand what is driving business on the other side.  This isn’t a criticism or critique—it’s just how it is for many many people in East and Southeast Asia.

One last comment on Thailand.  I’m willing to bet that there will be blood in the streets of Bangkok after the death of the King and sometime before or within the first year of the reign of the Crown Prince.  He is not liked or trusted and does not have the resume of his father.  He is coming into power at a time where the perfect visage of his God-King father has been cracked for the first time.  And very publicly too.  His mother has alienated half of the country with her attendance at the funeral of the boy killed in last year’s protests and so much of the (generational) respect and good will she could have passed on to her son will now not transfer.  His beloved sister, not the Prince himself, manages the Thai-China relationship, arguable Thailand’s most important relationship now.  The country, very similar to the US, is now divided into distinct and very polarizing camps but does NOT have a history (despite their Buddhist roots) of peaceful dissent or conflict resolution.

Thailand has over and over failed to implement true independent government and judiciary.  There is, unfortunately, no reason to think they will be successful on their next opportunity either.

Now on to China and the debacle that is Western governmental economic policy.

If you didn’t know it before, don’t believe the press coming out of China now.  China will NOT save the rest of the world (and not because we are committed to destroying ourselves in the name of “hope” and “equality” either).  Mr. Hu is pretty flashy on the world stage in Europe this week, but let’s put his pride into a bit of context.

6.8% growth is certainly much better than the US retraction of about he same 6%+ to be sure.  But the US economy, even with the permanent loss of trillions of dollars of wealth, is still more than three times as big as the Chinese economy and with only 1/5 of the population.  The US lost the equivalent of the Indian annual economy in one day last fall and was still twice as big as Japan.  I don’t say this as mater of pride, but just as a matter of context—the US economy for the last 50 years has, in general, been mind blowingly huge.  I think that we just take this for granted.

The Chinese economy was at 6.8% for the 4th quarter of ’08—but that might as well be 0.  Why?  Because anything less than 8% spells social unrest.  And you know the books are cooked to make the numbers look better than they really are too.  CNY this year was quite at home, in Jiangxi, and much busier in Shenzhen—meaning people didn’t go home.  There was no traffic on our cross province drive either.

Other indicators: Higher numbers of laid off labors than expected.  Exports are down 40%.  Luxury goods purchases are down 30%.  Auto sales are down up to 20%.  Expenditures for Chinese New Year are estimated to be about 30% of last year’s total too.  This is CNY spending is nothing to shake a stick at either—typically CNY represents as much as 40%+ of many industries annual income!  How do luxury stores that are empty all year survive?  CNY.

The Chinese economy, rather than being a savior, is actually dragging down other export-oriented neighbors like South Korea and Hong Kong.  The NYT ran a class/race envy piece this week talking about how 400 rich Chinese people couldn’t tour the US to buy houses on auction and how Mainlanders were pouring into HK to buy gold and diamonds—no numbers, just cute stories.  But not only is this just the annual CNY story that we see from the uninformed US press every year, but the “flood” of mainland buyers into HK didn’t even make up for the drop in spending by local HK buyers.  Total sales of gold and diamonds are down over 10%.  That’s right—hundreds of millions of rich socialists couldn’t out-spend 8 million capitalist former English colonists.  Two can play the spin game.

Side Note: Let me say this, if I had to praise one leader, either Mr. Hu or Mr. Obama, for the handling of the crisis so far, my vote, hands down, goes to Mr. Hu.  Mr. Hu is specific and proud and has knows how to at least play the role of leader (i.e. sounding hopeful, positive and optimistic).  Who is writing the text for Obama?  Could his press conferences and public statements be any more dire, negative and (ironically) completely HOPELESS?!  I understand Obama’s need to manage expectations, but his words and positions so far not only lack of faith in America but come off as classless, boarder line dishonest, political to the hilt and certainly not helpful (unless you are trying to justify more govt spending…..hmmm).

So is the Chinese Economy going to continue to be slow or get better?  Growth in ’07 was 13%.  ’08 is expected to come in at around 9% and predictions for ’09 are ranging between 5% to 7.5%.  Even the Chinese government doesn’t have enough cash to raise their growth numbers 2-3 percentage points with public works projects.  But I will say this, the very impressive thing about China is the fact that they will keep themselves afloat, at all costs.  Give them props for having their priorities straight and their financial house (mostly) in order.

China will continue to be in positive numbers, but scarily low for controlling social unrest.  And the numbers will continue to be higher in print than they are in reality.  The Chinese people will, in the East continue to make less and less in comparison to 5 years ago.  There will be HUGE movements of industry into the inner provinces as experienced workers stay home and infrastructure and incentives improve.

If the recession in China, e.g less than 7% growth, continues into 2010 there will increasingly be more control exerted over the economy and especially international exchange and funds transfers.  Control of the media and the currency will continue, regardless.  Of course, currency manipulation always helps one’s own economy and numbers and that will continue.

Now I’m not saying that China’s currency manipulation is the reason for the US economic problems, but the artificially strong currency is certainly helping ONLY China.  So here’s a challenge to China: If there truly is no currency manipulation by the Chinese, Mr. Hu, then why not let the RMB float?  If Chinese officials are truly so confident about the strength of the RMB, then put the Yuan where your mouth is, Mr. Wen.  Take the lead of the world economic recovery, prove once and for all the dominance of the Chinese system.  Step away from the mic and let the economy speak for itself.

Regardless of the value of the RMB, the sad reality of China is that domestic strength in the Chinese economy simply does not translate into external stimulus for Western Economies.  Sure the Airbus deals make a small dent, but these orders are not the bulk of foreign transfers of wealth or FDI—something that China is not known for anyway.

Chinese do save 30% of their income, but you have to remember incomes are relatively low—middle class in China is $9,000 to $18,000 a year.  30% of that is nothing, even if you do multiply it by 200 million.  All this money is either saved in mattresses or spent locally—cars (mostly domestically manufactured), houses, and Chinese New Year gifts of food, clothes, jewelry and entertainment.  The Chinese economy is not like the US where EVERYTHING you see in your local Wal-Mart is imported from some other country.

Finally, my favorite quote from a Chinese friend this last week: “Obama is crazy!  He’s just copying what China used to do.  He’s trying to be socialist.”  Yup—can everyone but Americans see this?

What prompted this comment?  The news about the White House wanting to limit CEO bonuses for bailed out companies—“just like what China did with their SOE’s,” said my friend.  The unspoken reality of socialism, that Chinese willingly admit but westerner academics do not, is the fact that socialism makes everyone equally poor, not equally rich.  Where are the China SOE’s and their employees now and where will US companies (banks, auto manufactures) be in the future?  Either completely dead, sold to for-profit foreign businesses or losing money just to keep people employed to stop social unrest.  Hello, France!  Just because China has cash now and the West is a huge mess does not mean that socialism works. In fact, I think that China is Exhibit A for socialism NOT working.  If you think that China in socialist in anyway but in name, you’re wrong.  “Socialism with Chinese characteristics” is not socialism.  It’s a capitalistic totalitarian state—the best of both worlds; money and power with minimal (relative to 30 years ago) social responsibility.  The US is now trying to both gut capitalism and increase governmental social responsibilities at the same time—even if you are fine with this direction, please tell me who’s going to pay for it?!

And here’s a reward for reading that whole thing (or at least scrolling down to the bottom)!  America is now China’s “business bitch.”  Listen to “China Please” for a great laugh (unless you’re from Taiwan, then you probably won’t like some of the lyrics)!   The page automatically starts playing the first song on the play list–China Please is the last song–just click on the text.

Other News and Blog Links I found interesting this week:

Asia Sentinal

CFR

China Wall Street Journal Blog

CN Reviews

China Solved

China Supertrends

China Vortex

For sale in China

Caijing

CFR 2

Asia Times

The Economist

BBC 1

Asia Times 2

The Economist 2

Tags: Business, China, Culture, Politics, Thailand by David Dayton
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The much anticipated part II:

6.    No one can control Chinese workers around national holidays.

Despite the iron fist that most use to control their workers the rest of the year, Chinese New Year is the exception.  Workers rule with their feet.  They leave when they want and come back when they want.  With a real labor shortage here for the last two years most workers know that they will have jobs waiting for them when they get back.  Whenever that maybe.  And, if there still work too close to the holiday, many will just leave.

While the three big holidays are now changing into 1 big holiday and a number of other little breaks like the rest of the world, Chinese New Year is still the biggest deal.  Imaging having summer vacation, Thanksgiving and Christmas all in the same 10-day period and then x what ever traffic you can imagine by 100% and that’s CNY.

This year, we’ve had a number of factories tell us that if we didn’t have our orders and deposits in by Dec 31st then they wouldn’t take them until after CNY because everyone would have gone home (because they had nothing to do).

Some factories are already on holiday.  Many will leave as early as this week.  Some start this weekend.  Most start next week sometime.  But no one will be back before February and many won’t be back until the 15th.

For some reason, it seems that CNY is always a big shock to everyone every year.  Hello!  It’s annual—you can plan for this.   Sure, it follows the lunar calendar so it’s not a fixed dates but Easter and Thanksgiving back home move each year too and we still manage to get those right.  This just takes some planning—admittedly, factories often don’t know before New Year’s day when their CNY breaks will be but you can (and should) block off the two weeks surrounding Chinese New Year months in advance each year.

7.    Everything NOT specifically detailed in the contract will be charged back to you or substituted at the lowest possible cost by the supplier.

This isn’t Chinese, it’s everywhere.  That’s the point of contracts, right?  But in China it seems like there are myriad expenses and millions of variations in component quality that you’d not even think existed let alone you’d need to specify or contract.  The problem here is that often you’re not asked about unspecified details, they just plug in the cheapest option (and maybe charge you for better).

So this problem, like most of them, really turns into a communication and presence issue rather than a contract issue.  Possession is 9/10ths of the law and that’s how it works here too—if you are here, if you are seeing it, talking about it, watching it—you get exactly what you expect.  If not?  Someone else with different motivations/agendas is making decisions about your money and product.

8.    Build in extra time for every stage—even if it pushes you past your deadline.

Add extra time into EVERYTHING.  Even if it’s something you’ve a number of times before.  Especially if production schedules are near any holiday or during typhoon season.  You think I’m joking; I’m not.  Typhoons along the coast always give us at least one delay a year.

If the factory is telling us 20 days, we say 23. If the shipper says 16 days we say 21.  If the United States Post Office says two weeks, we say a month and a half. (Don’t ever send anything to China via the USPO.  If it ever does get here, it’ll be crushed beyond recognition, it will have been poked, prodded and “customed,” it will cost you an arm and a leg even if you’ve already paid for it on the other end—and that’s if they don’t loose it first!).

The most difficult times to schedule out are sample times.  Don’t ever ever ever commit to a delivery date if part of the time includes time for samples.  Especially if the product is a first time item that has never been made before.  Factories are notoriously overly optimistic in what they can do and foreigners are notoriously trusting of what people say.  That’s a bad combination if you’ve got to get product into Wal Mart within a 24-hour window.  Even simple adjustments can take weeks (there’s a reason you’ve never seen your idea before—chances are someone thought it up but couldn’t pull it off).

Another thing that we see foreigners do often, never to good ends either, is to assume that since general production times at large Chinese factories are overall so quick that late changes to “one little thing” will not make any difference.  WRONG!  Even the smallest of changes, if not specified prior to production starts can cause days or weeks of delay.  Materials are bought, cut, printed, dyed, molded, painted prior to final assembly and if you change one piece, the color of a molded part for example, you may delay the entire assembly line while they remix paint/dye or while they remake the entire piece because it was all ready all painted.

9.    Either specify up front or fix it later.

Similar to the situation with art and contracts, if you have specs that you’re not totally, well, specific, on then you’re going to have to fix it or change it later.  No if, and’s or but’s about it.  If there is a dimension or measurement that you’ve not specified someone else is going to have to guess.  And you have no clue who that someone is, what their experience is or what their motivations are (Cost? Quality? Timely production?).  If you ever think, “oh, this is just obvious, I don’t need to spec it out” you’ve actually just added a delay, a cost increase and probably an argument into your project.  Way to go!

10.    Double confirm that you are talking about the same thing.

Unless you are sitting in the factory yourself, there is really no way to confirm that you both talking about the same things.  Cameras and art are great, but not everything translates like you expect.  Taking a train/plane/taxi for a couple hours to sit down with the factory for a morning is worth the cost—unless two to four weeks of digital communications and a(nother) round of incorrect samples is your idea of a good use of time.  Really, talking face-to-face will save you weeks—not days, not hours but weeks.

But you absolutely can’t be here to double check yourself then make the factory describe back to you what they are doing.  Make them commit, in writing, to the updates/changes/next steps and get a date and responsible individual for each item.

Just because you sent a sample, a set of digital spec’s and even CAD or other 3D files doesn’t mean that you are all talking about the same thing nor does it guarantee that, even if you are talking about the same thing, both sides each what the other side is talking about.

The more you double check, the less you’ll have to pay for when mistakes are made later.  It’s just that simple.

11.    Assume that everything will NOT go according to plan and plan accordingly.

You will not get samples on time.  You will not get colors, packaging and art correct the first time.  You will not get the quality you thought you were getting the first time.  If you know this going in, life is much less stress full later on.  So plan on problems and you’ll be happier, more prepared and have the time/temperament to deal with them.

12.    Anything less than a signed stamped “YES” is a “NO.”  And even a contract is only as good as the verification/enforcement.

You know contracts don’t mean much here.  So if the contract is the beat-all end-all of legal documents why would emails, MSN chats or Skype notes be enough to convey production changes?  Hint: they’re not.  Like anything else, you first of all want to see it in writing to confirm that it’s both received and understood.  Then, second, you want someone that is actually responsible (for more than their sales commission) to confirm that the changes/updates are received and understood.  And finally you need at least one, not more, people to confirm what change the change/update will have on both price and production time.  Sales managers or reps are not the people that can give you these assurances.  They will agree with just about everything you ask for, unless you ask for a signed commitment from them—then they will have to go talk with a manager (which is whom you want to talk with anyway).

It’s a small thing to have the sales rep get a manager to sign off on changes/updates, but it can make a huge difference in what you eventually get/pay for.  So get all commitments signed, stamped and faxed back to you.

Now you’v got it signed, they confirmed it’s going to happen.  You’re safe, right?  Nope.  You still need to verify that everything is actually done like it was agreed to.

Good luck!

Tags: Business, China, Thailand by David Dayton
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We’re back!

No, we were not on vacation for all of last month.  Not all of it, at least.  We’ve actually been so busy that I’m wondering where the depression I’ve been reading about is.  Really.  Back in SLC, the stores, mall parking lots, theaters and restaurants were so full that we had to adjust evenings out and shopping trips because seats and parking spots we’re completely full/sold out.  I was thrilled to see this.  And I’m so glad that, while it’s certainly bad out there, it’s nice to see that it’s just the media that is making it worse—meaning it’s not as bad as we read about every day.

Also, I was told that a couple of interviews I did in November were on the CBS Evening News (with Katie Couric) in the US last month.  Twice!  December 1st and 11th.  Thanks for letting me know, CBS.  I’ve got a link to one of the clips here. Nothing for the other one, though.

A little bit of a story here.  I interviewed with CBS on camera for 20+ minutes each at of a couple of locations and there was a ton of factory film footage too.  I spent 6-8 hours total with them over two days.  All that for 5 seconds!  I guess that means I’m still due 14 minutes and 55 seconds more of fame.

Now for the real blog.

We’ve had a number of issues that have come up in production during the last month that individually wouldn’t be huge deals, but collectively they really begin to add up.  Not all of these problems happen on every project, of course.  But they are common enough on many projects that you’ve got to be aware of the potential for these to pop up at any time.

If you don’t know that these things could potentially happen to you, you’ll be caught of guard and the surprise can be almost as bad as the problem itself.  So, to help prep for impending issues (which WILL happen, you can count on it), here are some of the common avoidable “surprises.”

1.    Price changes will only make your price go up (except for shipping).

This isn’t as crazy as it sounds.  Typically, factories pre-buy a limited amount of product, as do local distributors.  When prices are going up, they bid out to you the new, higher price, before it actually hits them since they don’t know when you’ll actually pay a deposit.  The reverse is true when prices go down.  Since they economy slowed way down many suppliers have been left with stock in their warehouses—expensive stock at that.  Now that gas prices are back down they are still holding on to stock that they want to sell first.  So the drop isn’t as fast as the rise.  The only real exception to this is international shipping, which seems to go up and down just about as fast as other market prices.

The answer here is to know as much (or more) about the costs of component parts than your supplier.  This may not be worth if for small pieces or small orders, but for anything over $25K you can probably save yourself 1-2% and that’s certainly worth it.

An easy way to do this is to bid out the same item with multiple suppliers.  You’ll be able to tell what your price should most likely be by throwing out the outliers on both ends.

2.    Mistakes will be your responsibility.

This is probably the most irritating part about doing business in China.  No one is responsible for anything that has to do with “your” product.  For example, we had a factory bid on a product, totally spec’d out, with material samples and photos.  They gave us a bid and we placed an order.  Then, just today they came back and said: “Sorry, we made a mistake.  The cost is 30% more and there are dye fees for each of the colors (21).”  They refuse to eat the costs of their own mistakes despite the fact that we have a contract and PO and have paid the deposit.  Or, rather, it’s because we have all this in place already that they can just give us an ultimatum.  Why?  Because they know that the order, for less than $10K is not enough to go to court over.  And we need it as a component in a larger product.  And we’ve already paid a deposit.  We’re committed and they know it.

This is the worst kind of mistake.  Productions errors you at least can talk about and often, if you’re on-site, can even fix on the spot.  But this type is just something that comes out of left field.  Something that can’t be verified and leaves you with few if any options but to pay.  I swear that people stay up nights thinking up these types of issues just to make a buck or two.

3.    Delays will be your responsibility (unless otherwise contracted against).

Same as with the costs of mistakes, if you don’t plan for delays, they will be a major hurdle to you completing your project on time.  Everything is late and so up front we always build in a buffer for each item.  But sometimes you get a component supplier that is just killing you on time and slowing everything down.  I’m not talking about big orders.  Again. This is little stuff—$5K to $10K worth of component parts for a larger project.  My experience is that if you’re not willing to go to court over it then you have very little leverage.

This happens MUCH more with our Southeast Asian suppliers than it does for us in China.  Honestly, one of the good things about China is that so much of what we do is so close to Shenzhen and can all be done in huge capacities in relatively short amounts of time.

The key to keeping things on track is to get not just finish dates but process dates and then to (independently) confirm them.  Was raw material delivered on time?  Were molds delivered on time?  Did production start on time?  You should be doing in-line QC anyway, so you’ve got a least one day when you’ll be able to see where the supplier is in terms of production goals.  But verification (best way is in person) is essential to getting things done on time.

4.    Art and designs will be changed unless you are involved in the process.

If you are not involved in every step of the mold or (re)design process be warned that production will NOT match art.  As far as I can tell, this is due to three factors.  Engineer’s ability/experience, willingness of the factory to really do what you want, and material or technological limitations.  If we fly someone over from the US we can almost always get exactly what we want—and the factory usually learns a few tricks in the process.  If we are asking for a lot of molded items within a short time, we get cut corners.

But even simple stuff like the placement of text on printed cards can be “adjusted” by local suppliers, sometimes not on purpose.  Often if factories are not using the same software (version) as the US then the fonts or placements will not be the same over here.

Last month we were offered a molded sample of “our” new designed product that was the same general shape but nothing else matched.  Turns out, they already had a mold from a previous client and just thought that they could pass that piece off on us as our since they were relatively similar.

There is just no better solution to this problem them being here.  We had a client that asked: “should we send art for factory engineers to work with on their own or should we come over and work with them directly?”  No contest.  If you’re spending money you should be intimately involved with how it’s spent.  We bring engineers and designers over to work with factories many times each year and outside of a few issues of food poisoning, we’ve had great results—much better than if we had just passed along spec’s and waited for product.

5.    Extras and rejects will be resold to others and/or recycled into your final product.

Your exclusive distributor in the EU calls you one day and says “Hey, we’re going to end our agreement with you!! You’ve sold product to another distributor!”  You’re lost, confused and know that you haven’t sold to anyone else in the EU.  What happened?  Yup, all your production rejects found their way to market.  Surprise!  We’ve had a couple of people come to us with this problem.  And, I’ll admit, we know that it happened to us once with a factory in Thailand too.

In the normal course of production and printing you’ll have a decent % of rejects—probably a higher % than what you get in the US as process are just not as tight over here in many things.  This is to be expected.  And most of these will be sold to recyclers or recycled in house.  The qttys are so small that they may find their way into the local Chinese markets but no farther than that.  Not really a big problem.  But when you have a significant % of a production run or even an entire run of products that are rejected you really need to control what happens to them.  We’ve heard of people that have watch their product be loaded onto garbage trucks to be destroyed only to find out that the trucks went out one gate and rounded back to another and the product was sold to people who took it out of country and into the client’s home markets.  I personally know that multiple factories that I’ve worked with sell functionally correct but esthetically incorrect product to international distributors on a regular basis.  Do you really think that anyone outside of North American or Europe cares if the widget is lime green instead of forest green?  Well, they don’t.

Specify exactly what will happen to rejects, overruns, samples, etc.  Have QA confirm it.  Build into contracts that if any product that is found outside of the factory will be fined or sued.

Sorry, this is getting long….so I’ll break it into two parts and post the rest later this week.  Part II will included:

6.    No one can control Chinese workers around national holidays.
7.    Everything NOT specifically detailed in the contract will be charged back to you or substituted at the lowest possible cost by the supplier.
8.    Build in extra time for every stage—even if it pushes you past your deadline.
9.    Either specify up front or fix it later.
10.    Double confirm that you are talking about the same thing.
11.    Assume that everything will NOT go according to plan and plan accordingly.
12.    Anything less than a signed stamped “YES” is a “NO.”  And even a contract is only as good as the verification/enforcement.

Tags: Business, China, Thailand by David Dayton
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Two excellent articles on China from other sites.

First, China in the context of the world’s melt down–it’s not only not going to save the world, it’s probably going to make it worse. This is a great piece–if you don’t read any of the others, read this.

Second, Guangdong province in the context of the current political and economic directives from Beijing–basically, “Beijing is far away and we have our own problems to worry about.”

And a couple other pieces from The Economist.  First, China’s future.  And then the paradox of staffing shortages in a era of factory closings.

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T-Day Updates:

A really good look at the political implications of the EU Chinese relationship.

A mixed take on who will be hurt more by the slowdown, the East Coast or the West of China.

And the compete diseaster that currently is Thai politics.  Regardless of the PAD’s motives or agenda, this current occupation of the airport(s) is doing more damage to Thailand’s economy and to the PAD’s own support than hope-for coup will ever help.  Basics about the conflict and an airport update.  Breaking news at the BKK Post too.

Tags: Business, China, Politics, Thailand by David Dayton
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Since I’ve been at factories and solving project issues all week, I’ve not had time to write a “real” blog–so here is another of my (usually) tri-weekly news links list.  Enjoy.

1. China on President Elect Obama

First, be careful on Taiwan.   Second, in the short term, problems are expected. Third, a generally wary response from China to new US President Elect Obama.  Why not too excited?  Because the Chinese don’t know him from a hole in the ground.  Really?  Join the club.

So what will the first 100 days visa vis China be like?  And a better link (than last post) to more here.

Believe it or not, the US media thinks that Asia should swoon over Obama even though he’s still only the President Elect.  But he’ll soon be the next two-term President, I’ll bet.  Timing is everything—in 4 years the economy will probably be back up and President Elect Obama will get another 4 years.  It’s better to be luck than good, eh?

Surprise, surprise, surprise!  The same number of people voted this year as in 2004!!  Young neophytes showed up in droves this year and all the pissy old men stayed home.  Historic, indeed–it’s almost always the other way round.

And finally, what does Thailand think of President Elect Obama.

2. The Chinese Economy:

It’s crashing faster than expected.  Some say China growth will only be 8% next year (with extra links)!!  And some say 6%!  Yikes.

Airline and flyer demand slowing in China.  And China stocks keep dropping (and more) as do US stocks.  (Comment from a friend in the know about the US economy: “I just came from a bank regulators meeting in DC….it was beyond depressing.  There is a lot of pain still left to inflict out there in the economy.  The banks have already felt most of it…I suspect there will be more problems but most of the beating has occurred…as it works itself through the economy it is going to be very ugly.”)

And China’s banks are not immune.  And the Yuan will continue to weaken.  The incredible shrinking Euro won’t help China either.

And China is backing out of international investments to focus on the home market–not smart.

So the Govt wants a stimulus package.  I think that Chinese savers need an attitude adjustment, not a stimulus package, to get them to spent.  How about some confidence in domestic management?!   Most think that China will spend it’s way out of the recession, which is MUCH better than the US idea: borrow our way out (we are complete idiots!).

No matter what they do, this recipe won’t help anyone: Chinese (book) cooking!  Mmm, mmm, good.

But the bad economy will only last another 18 months, or so.  Maybe. The most tepid prediction of recovery every.  “expected” “should” “potentially” in 12 months.

But at least oil is dropping!!!

3. Doing Business in China

So what can a china business do to be safe(r)?  Part 1 and Part 2.

At least shipping is lower.   But be careful: Competition is going to heat up.  The US unemployed moving to China?!

Some advice from China: the west needs to change their earth-destroying lifestyles.  But let’s be real about climate change in China.  Remind me.  Where are 16 of the top 20 most polluted cities on the planet?

Good news!  Despite the blood in the streets, China and Taiwan are talking, that’s always good.  10K’s of protestors and riot police are actually good to—at least in Taiwan they can protest! OK, I guess you can protest/riot in China too.  Shenzhen incident last night; I didn’t see, hear or find any local news on this at all.

Tags: Business, China, Culture, Politics, Thailand by David Dayton
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