across the world economic ministers are asking themselves "What
are we to do about China?" Everybody wants to sell their goods
here, but inevitably, Chinese goods break through what trade barriers
are left in place in the 21st century and swamp the market,
putting locals out of business and sending consumers away smiling
at the new – lower – prices.
the US, the powerful American Textile Manufacturers Institute and
the U.S. Association of Importers of Textiles and Apparel are gearing
up for the end of textile quotas and tariffs next year. They see
Chinese textile imports, already expanding (by more than 800% after
quotas on baby clothes were lifted), as a dire threat. Textile manufacturers
and their political allies hope to keep "special safeguard
measures" in place to keep China from "dumping" their
goods into the market.
garlic merchants have surrendered and have begun importing Chinese
garlic, which is cheaper by 10 to 20 cents a pound. Amazing, how
a nation that lost 30 million or more to starvation 50 years ago
is now exporting food to a "breadbasket" nation. Chinese
these days can afford to waste food like never before – pigs eat
good in China and they are slaughtered by the millions each week
to feed a people in love with pork.
retaliation, the US wants to see China's currency re-evaluated –
say, to 12rmb to the dollar instead of 8.2 as it stands now. Fat
chance. Disregarding China's abhorrence of "interference"
of any kind from abroad, only a fool would kill the goose while
she still grunts out gold.
Do They Do It?
Chinese have a few tricks up their sleeve – and millions of extremely
broke, extremely hardy peasants.
thing China does very well is copy stuff. DVDs, clothes, shoes,
cars, highways, marketing methods, music, architecture etc etc.
Make it all Chinese.
Xichang, a dirty town on the Yunnan-Sichuan border – I saw a wonderful
copy of KFC: BDK (Best Delicious Chicken) is China's answer to the
big boys from abroad who plan to come in and destroy the local competition
with well-honed methods and really deep pockets. BDK has the same
color scheme, the same menu, the same ugly interior and that same
indescribable smell as America's beloved KFC.
their chicken is up to 5 rmb cheaper and they have a foothold in
the interior – Xichang is a city of 1 million+. Xichang, like most
towns outside of the capitals, is studded with China Construction
Bank and China Agriculture Bank towers. There is a Construction
Bank outlet on virtually every street in Chengdu, the capital of
Sichuan. Thus, is Citibank vanquished.
Brilliant Automobiles has a new car out, for about $15,000 that
looks like a Lexus, but has a Mitsubishi motor under the hood. They
are changing that now, due to complaints and a growing bad reputation,
but the point remains: No industry in China is taking foreign domination
lying down. The Chinese are willing to copy any model, cut any corner
and confront the West in any arena in the name of national sovereignty.
Chinese importer buddies of mine have been asking about "enhancement
herbs" such as Nonia, Creatine and OPC. There is a market here
in China (surprise). Two months following the first shipment of
Creatine, expect Creatone to reach the market, produced by your
very own friendly-neighborhood Mr. Ho and his band of peasant women.
peasants are out of control. Buildings shoot up like rice stalks
in China and every building is covered in little hardhat wearing,
bare breasted little rock men who ting-ting with their hammers and
weld this and that together all day for 600 – 800 rmb a month (less
than $100). At night, there are replaced with 200 other peasant
fellaz who ting ting and weld weld all night long. The day shift
is sweating somewhere else during the night, bringing some incomes
as high as $200 a month (1600rmb).
a month, you got yourself a four star hotel for about $40,000 in
construction labor costs.
walking down a small alley in the far side of town at 5 am and seeing
6 people. You turn the corner into a smaller alley and see 10 more.
All around you are high rise apartment buildings filled to the brim
with Chinese people. You wade through the same alley during the
day. Businessmen contemplate millions of customers, Beijing contemplates
millions of cheap workers.
produces so much that "rejects" or goods that surpassed
quota are housed in mammoth warehouses for the locals to haggles
over: Prada jackets, Armani suits, Nike apparel of all shapes and
sizes, those magnificent open-butt pants that Chinese toddlers sport
around town – you name it, any article of clothing is available
for a really low price. In Beijing by Sanlitun, the heart of foreign-occupied
Beijing, sits a bazaar of 5 maze-like levels of pirate product.
All made by the prodigious hands of erstwhile farmers who consider
themselves blessed to be done with land taxes and cow dung and making
twice what they were.
an interesting side note, an old law regarding vagrants and beggars
has been revised: instead of rounding up all that labor and keeping
them in jail until they pay up or die, China has decided to build
soup kitchens. The first have already been set up in Beijing, the
rest of the country will be quick to follow.
copying skill and cheap labor (which is enough to compete anywhere)
Chinese also are infamous cheaters and liars when doing business
with foreigners. Stories abound of partners absconding with the
cash, copying intellectual property, skimming off of the top, selling
secrets to buddies, stonewalling in favor of buddies, giving Mr.
Jones's cash to buddies etc.
is the peril of a transition economy that didn't exist 15 years
ago. The streets are full of Porsches and BMWs and Lexuses being
driven by 20 to 30 somethings who, like the Russians before them
and the Americans before them, love to spend thousands at
the bar on women and booze and not blink an eye. My Taiwanese and
Hong Kong partners tell war stories about spending $8000 in a night
on booze. Now they sit in their underwear watching CCTV hoping the
Mainland will be gentle.
won't help the foreign suit either. There are thousands of laws
on the books concerning land and taxes and fraud and theft and so
on, and every law can be ignored for a price in China. Especially
if foreign money is involved. Now other Asians won't come out and
say this about their neighbor, but naive Westerners who are used
to the price tag telling the truth howl to high heaven every time
they get cheated. Asians shake their head at the foolishness of
neat trick: keep the cash at home. China's currency controls enable
them to keep a substantial amount of cash on hand to help those
poor unfortunate Chinese souls who are speculated upon, trod upon
or who are just unconnected. And just in case Soros believes this
or that real estate deal is actually a joke meant to line Li Peng's
son's pockets, well there is more than enough cash in China to cover
that bank loan. It is quite doubtful that 1997 will be repeated
in China. Foreign businessmen won't have it, let alone Beijing.
Seen the Animatrix?
is one little part in that fine digital set of flics that describes
the rise and fall and rise again of Zero 1, the city state of the
1 was manufacturing so efficiently and so prodigiously that the
rest of the world felt obligated to wipe them out violently. It
didn't work and we all became batteries.
will America handle the auctioning off of its factories to Chinese?
A very complex relationship is emerging here:
Pentagon just released another fine assessment of Chinese capability
coupled with a warning that Taiwan may face imminent attack.
has conquered SE Asia as it never had before and Mahathir and Co.
are merely debating how they can make the best out of this situation.
is getting pushed around by China and is still begging to sell software.
the power of money. China is moving swiftly into every corner of
the globe and money and workers follow. Most Asian nations have
a substantial Chinese "minority" with substantial economic
clout. Although they may be hated in Indonesia and in Thailand as
the Jews were throughout their tenure in Europe – they still got
the money. The US will "lose" East Asia. Like Mahathir,
American policy makers and businessmen must decide how to get the
best out of this inevitable development.
past week marked the 50th anniversary of the end of the
Korean War. Everybody has a selective memory concerning this war:
The South Koreans fought bravely for their capital, the North Koreans
fought bravely for theirs, the US kicked China's butt, China kicked
the US's butt. Nobody remembers the good stuff: 2 million dead.
threat China poses to the US is thrown into disarray as soon as
Korea is mentioned. Without China, a settlement is probably impossible
– that is unless the US sits alone with the DPRK, which is quite
unlikely. Americans have a notoriously short memory, those that
remember fighting the Chinese at Chosin may find today's situation
strange, but such compromising by the "lone superpower"
may be what's needed in this age.
Americans have found the same business practices that made millions
back home fall to pieces in Asia, where truth is relative and money
rules all. Enough Chinese have spent time in the West and returned
to serve their homeland to give China a distinct advantage when
it comes to one on one encounters with Westerners.
order to adjust to a multi-polar world, the lone superpower better
get acquainted with those regions, be it the Islamic Middle East,
New Capitalist East Asia or the turbulent former USSR.
growers in California have adjusted while textile manufacturers
are attempting to stave off the future. Which path will future Administrations
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