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October 31, 2005
The White Sox Recipe for Success in Business
The Church of the Consumer blog observes the pride coming from a White Sox World Series victory accomplished through "an unshakable chemistry [and] . . . punctuated by the lack of outrageously expensive celebrity players or even more flamboyant egos."
That phrase struck me, because such a recipe in not only a winner in baseball; I’ve seen it work in young companies as well.
The Church of the Consumer, by the way, is worth your regular perusal.
Posted by John at 6:35 AM | Comments (0) | TrackBackTaiwan’s Trading Dependence on mainland China Increases
China Daily reports that Taiwan’s two-way trade with mainland China was $45.6 billion for the first eight months of the year, up 15% year to year.
Notably, Taiwan’s exports to the mainland were just under $33 billion for the period, comprising over 27% of Taiwan’s total exports. Last year’s proportion of exports attributable to the mainland was 25.9%.
Posted by John at 5:48 AM | Comments (0) | TrackBackMore Expressways for Beijing
Over the next five years, Beijing will add about 360 kilometers (over 220 miles) of expressways, according to a Xinhua News Agency press report.
Posted by John at 5:05 AM | Comments (0) | TrackBackChina’s Environmental Problems Recognized, Creating Opportunity
I don't recall one trip I've had to China in which the subject of pollution didn't come up. In every instance, tremendous concern was expressed over the problem, usually by someone in a position of authority.
After my partner Sam Zamarripa and I came back from China last July, for example, I wrote the following in Tidbits (I can’t link; "Tidbits" was e-mail only back then):
During our recent trip to China, problems with pollution were very evident virtually everywhere we went. Genuine concern from government and business officials, however, was just as apparent. One government representative in Guangzhou told us, in response to a question about the biggest economic challenge facing Guangzhou and Guangdong Province, that environmental issues were the biggest concern. "The Pearl River is the lifeblood of our region," he said, "and we must treat it as such."
Rightly so; according to an article in the Economist last year:
. . . the World Bank concludes that pollution is costing China an annual 8-12% of its $1.4 trillion GDP in direct damage, such as the impact on crops of acid rain, medical bills, lost work from illness, money spent on disaster relief following floods and the implied costs of resource depletion. With health costs escalating (see article), that figure will increase, giving rise to some grim prognoses that growth itself will be undermined. "Ignored for decades, even centuries, China's environmental problems have the potential to bring the country to its knees economically," argues Elizabeth Economy, author of "The River Runs Black", a new book on China's pollution.
China’s leaders know the size of the problem and the need to address it. That’s why the environmental and pollution control industry will be a rapidly growing sector in China for the foreseeable future.
Beijing the World’s Most Polluted City
Beijing is now the pollution capital of the world, according to satellite data gathered by the European Space Agency.
The city produces the world’s highest levels of nitrogen dioxide, which can cause fatal damage to the lungs.
The Guardian article on this subject notes that Beijing now has 2.5 million automobiles, a doubling over the last five years. This figure implies only about 160 cars per thousand population, however; most developed countries have about 400-500 cars per thousand.
Posted by John at 4:30 AM | Comments (0) | TrackBackQuote of the Day for Monday, October 31, 2005
Today's quote is from Kinky Friedman, born on this date in 1944: "Money can buy you a fine dog, but only love can make him wag his tail."
Posted by John at 12:00 AM | Comments (0) | TrackBackOctober 30, 2005
A Few China Facts Which Aren’t So Well Known
As part of its special section on China, the Globe and Mail offers a list of facts on China, some of which worth a highlight because they aren’t well known here:
Posted by John at 6:50 AM | Comments (0) | TrackBack--About 30 per cent of Chinese adults live with their parents, according to a study by a research institute for the elderly.
--Last year, more than 3.7 million people took to the streets, angry about such problems as official corruption, environmental degradation and home evictions.
--More than 50 per cent of China's exports come from foreign-owned producers.
--In the early 1980s, China introduced market reforms. Now, only a third of the economy is directly state-controlled.
--More than 70 per cent of Chinese immigrants [to Canada] have traditionally settled in Vancouver or Toronto. Chinese is the third-most widely spoken language in Canada after English and French.
Tips for Success in China, From the Escalator Handrail Kingpin
The story we just cited on Ron Ball, a Canadian who through foresight and perseverance has built a highly profitable business in China manufacturing escalator handrails, offers Ball's advice for companies trying to do business in China:
Posted by John at 6:32 AM | Comments (0) | TrackBackRecruit young people
One of his smartest moves was steering away from hiring managers from China's creaky state-owned enterprises. Instead, he recruited young people just out of school and trained them. Most are still with him.
Pay well
EHC has doubled its wage rates since opening in China, with the average hitting about 1,500 renminbi a month ($218). A worker fresh off the street is paid in the range of 750 renminbi, but wages can rise quickly as the person is trained and gains seniority.
Invest in training
EHC spends a lot of time on training, which is three times more intensive than in Germany. In past years, it experienced a steady turnover of middle managers, but not so much of labourers. But now worker defections are becoming more of an issue as new factories flock to Malu.
Set up a local supply chain
The toughest thing has been setting up a supply chain for a product that is very new to China. In North America and Europe, he could go to specialized shops to custom mix his rubber formula. Those shops don't exist in China, and he had to ask companies supplying rubber for other uses to set aside some mixing capacity. At times, he has considered setting up his own supply chain. "It's costly if your Chinese supplier screws up and you have to air-freight North American materials here," he says.
Innovate
EHC has designed handrails that display advertising, and developed thermoplastic polymer rails that are shinier, sleeker and more durable than the rubber kind.
You can fight corruption
There will be copying of processes, but Mr. Ball doesn't intend to make it easy. And he sees progress in China, particularly in enforcing employment contracts. EHC recently sued a former manager for violating a non-compete clause by joining a rival firm. The courts found in favour of EHC.
The company insists on anti-corruption agreements with its suppliers, who must agree that the price that they bill the company is the best available and that there are no kickbacks.
Learn to be tolerant
Mr. Ball believes he adjusted well to China because he came here as a globally seasoned manager in his mid-50s -- and had learned to be tolerant. "People come here and expect the same as they've had, but it isn't," he warns. He shows no signs of flagging enthusiasm, as he embarks on a new diversification push in China. "I think we have a pretty good shot at doubling our business over the next five years."
The “World’s Escalator Handrail Kingpin” Blazes a Profitable Trail in China
Saturday’s special Globe and Mail section on China is full of case studies on successes and pitfalls for Canadian companies.
One particular story, on the "world’s escalator kingpin," is particularly instructive and inspiring:
For the past nine years, Mr. [Ron] Ball, 64, has been driving, working and manufacturing rubber handrails in the Shanghai area, which he has adopted as his permanent home -- along with a lake cottage in Ontario.
"This is a businessman's haven, an entrepreneurial paradise," says Mr. Ball, a lean rail of a man who scuba dives in his leisure time. "That is part of the reason I love it here: There is every imaginable opportunity." [Emphasis mine]
Few Western business people have embraced the idea of doing business in China with as much gusto as Mr. Ball. He not only built a business here, he moved a lot of his life to China--and well before the Chinese thing became trendy.
Mr. Ball makes one of the world's truly pedestrian products, and he has ridden this niche to $30-million in annual sales, making him the global leader in his narrow sector. His private company Escalator Handrail Co. (EHC) and Austrian rival Semperit AG share 80 per cent of the world market for the rubber and plastic railings that help move people up and through airports, hotels and shopping malls.
More than a decade ago, he could see that his major customers, escalator makers such as U.S.-based Otis Elevator Co., Switzerland's Schindler Elevator Corp. and Finland's Kone Corp., were moving to China for low-cost production and to exloit commercial development. He had to be close to them.
China has boomed since then, and EHC's sales are rising about 20 per cent a year, providing escalator handrails for venues that include the Guangzhou subway and a raft of Beijing shopping centres. The firm is highly profitable in China. [Emphasis mine] By reacting quickly, he says, he probably saved his business and the 307 jobs that EHC maintains around the world, including 95 in Oshawa.
"Our business timing isn't always great, but coming here turned out to be nearly perfect for us," he says, adding that "we certainly would have been locked out of about half the world market if we hadn't been here."
When told about Mr. Ball, Jim Hemerling, senior vice-president in Shanghai for Boston Consulting Group, says this is the rare case of a small to mid-sized operator who saw China's promise early and seized it. "I would say this is a guy who got it, and then took the appropriate action," he says. "There is still a huge number of companies hoping China will go away."
Ball’s company has a 48% share of the China market. That’s no misprint.
A big part of Ball's success was good timing, but it was also recognizing reality and acting on it. As the Shanghai-based consultant implies, this characteristic put Ball well ahead of peers at similarly-sized companies.
Posted by John at 6:20 AM | Comments (0) | TrackBackCanada Struggles to Get a Bigger Share of the China Market
The Toronto Globe and Mail has an extensive section on China in Saturday’s edition; the space devoted to the subject is indicative of its importance to Canadian business, which has little foreign investment in China:
Even if many Canadian companies have no intention of trading or investing in Asia, they will need to heed the competition from Chinese companies that they will feel increasingly, even here at home, says Yuen Pau Woo, president of the Asia-Pacific Foundation in Vancouver.
"They're not just missing out on an opportunity" by failing to watch China closely, he said.
"They could also be setting themselves up for stiff competition."
The Canadian auto parts sector is particularly guilty of falling far behind in dealing with the China factor, he added.
And so unless the Canadian economy reorients itself, the sheer weight of China in the world economy could turn Canada into a nation dependent primarily on its oil and gas sector.
Canadian businesses are talking a lot about China, but so far, few have been successful in using Chinese markets to their advantage. Of all the recent foreign investment in China, only 1 per cent comes from Canada.
Ottawa is on a mission to have every company in Canada devise a "China strategy" that will focus even small firms on developing a competitive edge.
But it's not just because they're lazy or risk-averse that Canada's companies are not making the inroads into China that other countries' private sectors are, says economist Erik Nilsson of Bank of Nova Scotia.
Many of Canada's big companies are foreign-owned, and Canadian-owned firms are predominantly small or medium-sized, focused on servicing the North American economy, Mr. Nilsson says.
The article points out that Canada’s share of foreign investment in China has been stubbornly fixed around 1% for the last several years. Increasing that share is a national priority for Canada.
Strong encouragement for even the smallest businesses to have a China strategy is an excellent start. It’s still amazing how many American companies still have their head in the sand hoping China will go away, and that’s hopeful and unhealthy (for that business) thinking.
Posted by John at 6:02 AM | Comments (0) | TrackBackThe Best Countries for Entrepreneurial Financing
The Milken Institute has released a study (pdf) ranking countries by entrepreneurial access to capital. Factors considered include macroeconomic factors such as inflation and the volatility of interest rates, the access and structure of bond and equity markets,
The United Kingdom ranks first, followed by last year’s number one, Hong Kong. The remaining countries in the top ten, in order, are Singapore, the United States, Sweden, Denmark, Australia, Norway, Finland, and Canada.
While China improved their ranking from 43rd to 38th, the country still trails a number of countries not exactly considered bastions of entrepreneurism. This ranking speaks to recent comments from U.S. Treasury Secretary John Snow, during his recent visit, regarding China’s need to accelerate reform of its financial system.
India ranks even worse, however, at 53rd on the list, down two spots from last year.
Seventeen of the bottom twenty countries are in Africa.
Posted by John at 5:42 AM | Comments (0) | TrackBackQuote of the Day for Sunday, October 30, 2005
Today's quote is from Ezra Pound, born on this date in 1885: "If a man isn't willing to take some risk for his opinions, either his opinions are no good or he's no good."
Posted by John at 12:00 AM | Comments (0) | TrackBackOctober 29, 2005
Podcast Interview with John Daly
My friend John Daly posted his interview with me, conducted while I was in China. Among the topics we discussed: China’s rise and strategic intentions, U.S.-Chinese business relations, and business opportunities for American companies in China. A download to your media player will begin when you click on this link.
I’m surprised I sound reasonably calm, given the fact that I was on a cell phone in the back of a speeding van weaving in and out of traffic on the way to the airport in Chengdu. Some drivers in China would do quite well in Atlanta!
By the way, in the same podcast, John dissects the television show "My Name is Earl." I’ve never seen it (or even heard of it, which tells you something about my life), but John’s intelligent commentary on the show made me want to see it.
That’s what I enjoy about John; he’s got varied interests which he makes interesting to the reader and listener. Keep up with what he’s commenting on at his blog and on his podcasts.
Posted by John at 9:50 AM | Comments (0) | TrackBackCasual Glances of China (and the United States) are Extremely Misleading
Lew Rockwell posted, in full, an extremely thoughtful letter from a gentleman who has spent a lot of time in China, most recently nine days in beautiful Lijiang. It’s a provocative point of view worthy of your consideration; read the entire letter in full by following this link, but here’s a short excerpt:
. . . I've had plenty of opportunity to witness real Chinese life, and to get a feel for what type of society it is.
Here I am, living in "Communist" China, so why do I feel so free?
Is it because in Lijiang I never saw a policeman? Is it because everyone seems to be enjoying themselves, and doing exactly what pleases them? Is it because of the obvious entrepreneurial spirit that seems infuse Chinese culture? Is it because China is vastly more capitalist, in many respects, than most western countries?
All I know, is that labels like "communism", "totalitarianism" and the like seem to be completely misplaced when applied to the actual experience of living in China.
China is NOT like the old Soviet Union--with its state-owned stores, where shoes or toilet paper were forever in short supply. China is NOT like North Korea, where people are literally living in a time warp--and brainwashed to believe they live in a paradise. In fact, China is more like Hong Kong, or Singapore in the making. . . .
Why do I fear entering the USA more than China? Why do I feel safer walking down the streets of this city of 33 million [Chongqing] than most other large western cities? Why do I feel the energy of entrepreneurship and opportunity in China, compared with the lethargy and dead-weight of dealing with bureaucratic and tax hurdles in most western countries? Why do I feel less watched, less listened to? Why does China feel on the move, while many western countries feel stagnant?
These are important questions, because they point to a disturbing fact regarding our western countries--the direction they are headed.
We are used to calling ourselves the "free world"--a badge of honour earned in a bygone age. But we are fooling ourselves if we think we are still free.
What is both fascinating and disturbing to me, is the DIRECTION different countries are taking.
China is a previously impoverished Communist country which is moving decisively in the direction of more practical freedom. In matters economic, it is proving to be a powerhouse of capitalism--where the inherent business talents of the Chinese are being liberated to create a massive growth in productivity and wealth.
This surge in prosperity and accompanying education will change the face of China in the future. And as Chinese people have said to me repeatedly, they expect their transition to more political freedom to be just a matter of time.
On the other hand, we in the West are experiencing movement in a completely opposite direction. More socialism, more fascism, more stagnation and continual infringements of the freedoms we say we hold so dear. . . .
The world is not what it appears to be from a casual glance, or a moment's thought. Don't rely on what you read in the papers, or what your political leaders have to say. Their agenda is not yours. You have to go out in the world and look for yourself.
And, like me, you may be surprised to find practical freedom in the most unlikely places.
This letter is not a completely one-sided, starry eyed view of China; if you read it in full, you’ll see for yourself.
I wholeheartedly agree with one particular statement in this account of life in China, and by extension, the United States: the world is not always as it appears or how it is portrayed. You have to go look and decide for yourself.
Casual glances are extremely misleading.
Posted by John at 9:12 AM | Comments (0) | TrackBackChina and Chile Sign Trade Pact
China and Chile have signed a trade treaty which ends duties on most goods, most notably copper. According to Chile’s Foreign Ministry, only 1% of Chilean exports and 3% of Chinese exports are not included in the accord.
Of Chilean exports, 1 percent aren't included in the accord while 3 percent of China's exports aren't included, according to Chile's Foreign Ministry.
In addition to this agreement, Chile, a country of only 15 million people, has signed trade pacts with the United States, the European Union, and South Korea.
Chile’s per capita GDP is about $10,600, more than countries such as Russia, Mexico, Thailand, Brazil, Turkey, and yes, China.
Posted by John at 8:06 AM | Comments (0) | TrackBackSam Zell at Wharton: “You Don’t Understand, Sam”
Legendary real estate investor Sam Zell recently spoke to a packed house of students at Wharton; the Wharton Journal reported (registration required):
Zell was candid with his criticisms of top MBA programs such as Wharton for failing to teach students adequate people skills and instead "canonizing" empirical tools. Although Zell did not underscore the importance of quantitative problem-solving skills, "I don't think enough effort in graduate schools is devoted to the real world. The real world is a meritocracy. The real world has roles for leaders--leaders have to lead by example and by interfacing with people... the definition of success or failure, if you are gifted with a minimum level of intelligence, is all about motivation, dedication, people skills and desire...the elitism that has been created is dangerous."
Audience questions solicited Zell's opinion about such issues as the worldwide housing bubble ("Does not exist...started by people who have nothing else to do") to the next big opportunity ("If I knew, I wouldn't tell you"). Zell did share his recipe for success: first understand that everything boils down to supply and demand constraints, then get on the ground and meet people, make mistakes and do not stop until you find opportunities where your dollar is worth the most. Zell claimed that the recurring theme in his life has been people claiming "You don't understand, Sam." As his impressive career and continued success have proven, if Zell does not get it, there is little hope for eager MBA students.
In the dictionary under "contrarian" you’ll find Zell’s picture. A true contrarian is always being told "you don’t understand."
Thanks to Daily Dose of Optimism—-a blog I just found which deserves your attention—-for this pointer.
Posted by John at 6:32 AM | Comments (0) | TrackBackAn Immigrant Offers 26 Million Thank Yous
From the San Jose Mercury-News:
When Russian troops invaded Hungary in 1956 to quell a democratic revolution, some 200,000 Hungarians -- including a young man named Andras Grof -- spilled across the borders to escape. Humanitarian groups helped whisk him away to relatives in New York City.
Within a matter of six weeks or so of crossing the muddy border in secrecy, he was attending classes in chemical engineering at City College of New York. He changed his name to Andrew Grove, graduated at the top of his class, and went on to become the chief executive of the world's biggest chip maker, Intel.
The 69-year-old retired Grove, now Intel's senior adviser, has decided to pay back City College of New York with a $26 million donation.
The gift is the largest he has given to date and it is the largest that CCNY, founded more than 150 years ago to help low-income and immigrant students, has received. The school will name its school of engineering after Grove, who graduated in 1960. . . .
How many people would have picked out Andras Grof out of a crowd of Hungarian immigrants and bet that he would be in a position--half a century later--to lead one of America’s most well-known companies and to give his alma mater such a generous gift?
The Andy Groves of the world, and numerous others like him only lesser known, are the product of the magical recipe of openness, individual drive, and a system in this country that rewards such energy.
Posted by John at 5:24 AM | Comments (0) | TrackBackQuote of the Day for Saturday, October 29, 2005
Today's quote is from Fanny Brice, born on this date in 1891: "Let the world know you as you are, not as you think you should be, because sooner or later, if you are posing, you will forget the pose, and then where are you?"
Posted by John at 12:00 AM | Comments (0) | TrackBackOctober 28, 2005
On Alligators and Handbags
I was speaking yesterday with my friend Dave Slavik of Mesirow Financial; the conservation went as follows:
"How are you?," he asked.
"Up to my fanny in alligators," I honestly answered.
"Don’t worry," said Dave, "the handbags and shoes you’ll make with them will look great!"
Thanks for making me laugh out loud, Dave. Thanks also for the reminder that the alligators are there for us to make something out of.
Posted by John at 7:39 AM | Comments (4) | TrackBackBlending the Global Economy in a Mississippi Mixing Bowl
The Biloxi Sun Herald reported on the ground breaking of what will be a state of the art Columbus, Mississippi steel mill when it opens in 2007, producing hot band, cold-rolled strip, and coated sheet.
What the article failed to note, however, is that this venture, SeverCorr LLC, is 80% owned by Russian steelmaker JSC Severstal.
We reported that Nissan cars made in Canton have been getting shipped to China. Now Russian steel will be sold potentially to 14 different automobile plants within 250 miles of Columbus. These plants make Japanese, Korean, and German vehicles.
They’re liking globalization in Mississippi.
Posted by John at 5:45 AM | Comments (0) | TrackBackAn Interesting Chinese Import: Flight Attendants
China may have plenty of qualified employees for transportation equipment manufacturing, but flight attendants are being recruited from abroad:
Posted by John at 5:39 AM | Comments (0) | TrackBackAir China, the national carrier, has sent a team to Germany for recruiting the first batch of German stewardesses. If everything goes on smoothly, the German stewardesses will serve customers in Beijing at the end of this year, Beijing Daily said on Thursday.
Seventeen stewardesses from India arrived in Shanghai last week to join China Eastern Airlines.
Statistics showed that some 330 foreign stewardesses now work for Chinese airlines. . . .
What China and India Have in Common
According to the Economist, it’s political timidity. Without that, both economies would be growing even faster, the magazine says. An interesting viewpoint.
Posted by John at 5:26 AM | Comments (0) | TrackBackNeeding Skilled Workers, An Ohio Manufacturer Moves to. . . China
Here’s a remarkable anecdote from the IndustryWeek article I cited earlier:
Posted by John at 5:20 AM | Comments (0) | TrackBackOne Ohio-based transportation equipment manufacturer told IW it had moved some jobs to China not because the labor was cheaper but because it couldn't find qualified employees in the U.S. [Emphasis mine]
Deepening Shortage of Skilled Workers in the U.S.
IndustryWeek continues to follow this problem closely, most recently with this article:
Posted by John at 5:16 AM | Comments (0) | TrackBackThe predictions for how big this crisis will become are likely familiar but worth repeating: The U.S. Bureau of Labor Statistics says that by 2010, the number of unfilled skilled worker posts will reach 5.3 million, increasing to 14 million by 2015. According to a survey of 94 senior manufacturing executives conducted by AC Neilson for Advanced Technology Services Inc. (ATS) in 2005, two-thirds of responding discrete manufacturers expect the labor shortage to cost them $50 million over the next five years. Manufactuers in the automotive, electrical equipment, ball and roller bearing, metal valve and engine, and transmission sectors will suffer most, according to ATS.
Quote of the Day for Friday, October 28, 2005
Today's quote is from Charlie Daniels, born on this date in 1936: "Make sure to be honest with yourself, about if that's really what you want to do with your life - to make music. It takes a commitment--a tremendous, thick-skinned commitment of being the first one to get there and the last one to leave, doing what you want to do even if you have to work twice as hard as anybody else ever did."
Posted by John at 12:00 AM | Comments (0) | TrackBackOctober 27, 2005
Two Areas Not to Take For Granted: China and the U.S. Hispanic Market
In the same Courier-Post article I referred to earlier, Don Montori, editor for Market Research, notes that "the two areas that this country must not take for granted are the international markets in China and the national market of Hispanics."
At Heritage Capital, we couldn’t agree more strongly.
Posted by John at 6:29 AM | Comments (0) | TrackBack"I’m Living My Dream"
I was recently in a meeting with the CEO of one of our portfolio companies, Rafael Ortiz-Guzman. Rafael runs Hispanic American Broadcasting Company, the principal operating business of which is Georgia TeVe.
The gentleman we were meeting with asked Rafael: "What’s to keep you from jumping up and running out to do something else?"
Rafael’s answer was quick and unrehearsed. "Georgia TeVe is a dream for me," he said. "I would be doing this even if I didn’t get paid."
"Even when times are tough," he continued, "I stop to think, 'I’m living my dream . . .'"
Given the countless hours I’ve spent with Rafael, I can tell you this line isn’t some manufactured palaver he’s spouting because he thinks that’s what someone wants to hear.
I’ll never forget one particular moment the night of the launch party this past June. Rafael and I hugged, congratulated each other on getting to that point. Rafael then whispered: "Thanks for making my dream come true."
For the best entrepreneurs, its not about the money. It’s about a dream. It’s a deeply held passion.
It’s a dream to create not just a better product, but a best in class product. It’s about enduring failure and missteps. It’s ignoring the doubts of "experts." It requires tremendous sacrifice by not only the dreamer, but that dreamer’s family.
Some of your employees really don’t share the passion; they’re just there for a paycheck. Suppliers just want to get paid. The bank won’t lend you any money until you’re successful and really don’t need it.
Following the dream is lonely.
Rafael’s own quest is about producing locally the best possible television programming possible for a Hispanic community in Atlanta previously devoid of local choices.
As someone whose business is funding entrepreneurs like Rafael, hearing the authentically expressed "I’m living my dream" speech is truly a divine moment. It’s a revelation of the deep yearnings of the soul of a human being.
Taken alone, it makes my business worth it all.
Posted by John at 6:18 AM | Comments (2) | TrackBackWithout Hispanic Buying Power, Men’s and Children’s Retail Sales Would Be Down
South Jersey’s Courier-Post, in a story quoting a report published by MarketReseach.com, observes that men’s and children’s retail sales would have decreased over the last five years were it not for the Hispanic demographic.
Thanks to Hispanic Trending for the pointer.
Posted by John at 6:09 AM | Comments (0) | TrackBackGeorge Archer's Graceful Transition
You don't have to be a golf fan to melt while reading Steve Hummer's outstanding recounting of the late George Archer, who died of cancer about a month ago, and his last days with his wife Donna.
After reading the beginning of this story, you'll want to read the rest of the article by following this link:
Weeks after he died, George Archer still was finding ways to reach his wife. Golf had transformed the towering son of a mechanic into a Masters-certified champion. Golf had given him and his family a life rich in possibility and anecdote. Now, golf even would be his voice after cancer had snatched it.
Donna Archer finally was getting around to cleaning out an old golf bag, upgrading, when she pulled out a scorecard and felt all the breath leave her.
It was from one of the five rounds she and her husband had played in the last months of his life. George Archer's fairway farewell tour was a most private one, much more a tribute to an enduring marriage than to his 12 PGA Tour and 19 Champions Tour victories.
Sometime after that round at the Peninsula Golf and Country Club in San Mateo, Calif., George had scribbled on their scorecard and squirreled it away inside his wife's golf bag unbeknownst to her. It was his message in a bottle, cast into the unknown, to be discovered he knew only after he was gone.
He dated the scorecard: "7-29-05." And then attested: "I love you."
"He didn't usually write things like that on his scorecard," said his wife, pointedly understating. . .
The remainder of the story can be found here.
Posted by John at 5:25 AM | Comments (0) | TrackBackChinese Graduates Are Many, But the Challenges are Large As Well
Financial Times columnist Guy de Jonquieres writes that China’s "high-tech success is not patently obvious":
China has come a long way very fast and is determined to go much further. But statistics tell only part of the story and sometimes a misleading one. Take graduates. China produces two-and-a half times more each year than the US. But in proportion to its population, it produces barely half as many - and has only one-eighth as many engineers engaged in research and development.
Building basic infrastructure, healthcare, social security systems and better schooling is likely to occupy many of China's best brains for years. . . .
Mr. de Jonquieres has an excellent point. He specifically mentioned healthcare; let’s take diabetes as an example. We’ve noted that the number of diabetes patients in China will go up by two or three times over the next five years.
That’s a major problem which China’s health system, as it exists today, is not equipped to deal with. Chinese health professionals we’ve talked to admit that.
China is not graduating enough qualified healthcare professionals, in this case, to solve the problem. The country will need the expertise, management, and technology from diabetes care companies in various countries around the world, much less the United States.
That’s a business opportunity for such companies.
Posted by John at 5:01 AM | Comments (0) | TrackBackQuote of the Day for Thursday, October 27, 2005
Today's quote is from Rosa Parks, who passed away yesterday at the age of 92: "Memories of our lives, of our works and our deeds will continue in others."
October 26, 2005
Move Over Wal-Mart, Competition for the U.S. Hispanic Dollar is Growing
The San Jose Mercury-News offers an interesting profile of FAMSA, a Mexican retailer which has entered the U.S. with fourteen stores so far. With about 350 stores in Mexico, FAMSA decided to enter the U.S. to expand, unlike most of its homeland competition:
Francisco Trejillo browsed recently through washers, dryers, kitchen appliances and televisions at the new FAMSA store in San Jose, searching for the right items for his mother, who lives in Mexico.
A thirtysomething waiter who grew up in Mexico and now lives in San Jose, Trejillo could feel right at home. Mexican flags decorate the walls, employees are bilingual and signs advertise goods in both English and Spanish. . . .
One of FAMSA's hallmarks is a service that lets customers order and pay for items at a U.S. location that are then delivered from a store in Mexico to friends or relatives there. While many U.S.-based retailers operate numerous stores in Mexico, they don't offer a similar service. . . .
For Trejillo, the new store carries good memories along with familiar brand-name goods and competitive prices.
"I was driving by and saw the name FAMSA and I said, `I know that store, it's a good store.' So I stopped. The prices seem just a little bit cheaper here," Trejillo said.
The laws of competition dictate that Wal-Mart will not be allowed to dominate the retailing market for an increasingly lucrative U.S. Hispanic market.
Posted by John at 6:28 AM | Comments (0) | TrackBackA Proven Real Estate Pro is Cashing Out of the U.S.
Colony Capital’s Tom Barrack has delivered high teens returns to investors for better than a decade by being a contrarian buyer and seller.
In a recent interview, Barrack offers a bearish assessment of real estate in the U.S., seeing too much capital chasing too few good opportunities.
Condos in cities like Miami (an area we’ve highlighted) and Las Vegas will take the gas first, says Barrack:
The slump will show up first in speculative hot spots like Miami and Las Vegas, he says, where condo developers are preselling their projects for what looks like big profits. When they actually build the units over the next year or two, he predicts, they will end up spending more then the units are now selling for.
At that point, says Barrack, the developers will try to raise prices. "But most of these buyers are speculators," he says. "They will either sue the developers to get the original price or take their deposits back and walk away." The developers will then put the units back on the market, and the glut of vacant condos will drive prices down. "It's the busted deals caused by construction costs that will cause the turn in the market," he says.
He likens the current real estate market to a game of polo.
"I feel totally safe playing polo on a field full of pros," says the bronzed 58-year old. "But when amateurs are all over the field, someone can get killed. They have more guts than brains. They charge after every ball and don't know when to hold back."
It's the same with U.S. real estate right now. "There's too much money chasing too few good deals, with too much debt and too few brains." The amateurs are going to get trampled, he explains, taking seasoned horsemen, who should get off the turf, down with them.
If you’ve spent anytime around horses at all, you can fully appreciate what a beautiful metaphor that is.
And take heed, as well.
Posted by John at 5:39 AM
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Opportunity for Foreign Papermakers in China
China’s demand for paper is reportedly five times higher than that of Europe or North America, yet the country’s per capital consumption is only one-fifth that of those other mature markets.
Posted by John at 5:09 AM | Comments (0) | TrackBackBy 2008, 650 Million Mobile Phone Users in China
According to the head of Nokia’s China operation, the number of mobile phone users in China will reach 650 million in three years. (Reported by China Daily)
China's mobile phone users, by themselves, would be the world's third largest country, by far.
Posted by John at 5:03 AM | Comments (0) | TrackBackChina’s Banks Adopting "Self-Discipline" as Competition Intensifies
Jumping off from an excellent article by UBS's Jonathan Anderson in the Far Eastern Economic Review on the investment outlook for Chinese banks, we recently speculated on the likelihood, in our view, that the industry was neither a tremendously attractive opportunity nor a disaster waiting to happen.
Part of the reason for this "muddled" outlook is the significantly increased competitive environment for Chinese banking. Competition is intensifying well ahead of the opening of the county’s banking system, at the end of next year, to foreign players.
The Chinese Banking Association just adopted a convention on "industry self-discipline," after which the head of the CBA remarked:
Posted by John at 4:51 AM | Comments (0) | TrackBack"The Chinese financial market is becoming increasingly competitive as the date of China fully opening it up approaches," said Guo Shuqing, president of the CBA.
"Under these circumstances, we should build a competitive banking sector in a well-regulated and orderly market to get ready for the coming competition which will be even more intense," said Guo, also the president of the China Construction Bank.
Quote of the Day for Wednesday, October 26, 2005
Today's quote is from Napoleon Hill, born on this date in 1883: "The strongest oak tree of the forest is not the one that is protected from the storm and hidden from the sun. It's the one that stands in the open where it is compelled to struggle for its existence against the winds and rains and the scorching sun."
Posted by John at 12:00 AM | Comments (0) | TrackBackOctober 25, 2005
Free Trade Agreements, More Manufacturing Exports
The National Association of Manufacturers analyzed trade figures on manufactured goods for January to July of this year; their findings (pdf) do not conform to conventional wisdom on free trade agreements:
Posted by John at 5:42 AM | Comments (0) | TrackBack--The manufacturing trade deficit with NAFTA and other countries with which the U.S. has a free trade agreement (Australia, Chile, Israel, Jordan, and Singapore) shrunk by 25%.
--These countries account for just under half of U.S. manufactured goods exports, but only 6% of the deficit.
--Ex motor vehicles and parts, the United States is now running a trade surplus with Mexico in the remainder of manufactured goods trade categories taken as a whole.
--94% of the manufactured goods deficit is with countries like China with which the U.S. does not have a free trade agreement. China accounts for 77% of the total increase in the manufactured good deficit this year.
Two Africa Facts of Note
Courtesy of Marginal Revolution:
Posted by John at 5:27 AM | Comments (0) | TrackBackEstimated wealth of African wealth held in foreign accounts, expressed as a percentage of African GDP: 172 (Source: Harper’s Index, October 2005 issue, page 11)
A small African state like Chad has an economy smaller than that of a Washington suburb like Bethesda and a banking sector smaller than the Federal Credit union set up for World Bank staff. (The Undercover Economist, Tim Harford)
Reacting to Higher Energy Costs: Human Ingenuity at Work
Human creativity on solving the "energy crisis" may be hard to measure, but indications of it are around if you just look at the headlines:
Posted by John at 5:23 AM | Comments (0) | TrackBackA cryogenics expert, after tempering the hybrid engine for his Honda, is now getting 120 miles a gallon and expects the engine to last for 600,000 miles. (Thanks to the Watchful Investor for the pointer.)
Anonymous Honda engineers tell the Wall Street Journal that they have may have developed a way to jump ahead of Toyota in hybrid engine development. According to the story, Honda is perfecting a technology capable of helping a hybrid Civic get as much as 65 miles per gallon of gas.
Riches are “Glorious” in China
Headlines can be telling, such as this one from China’s Xinhua News Agency: "China's richest get gloriously richer." The article celebrates the release of the "Rich List," the 400 richest people in China.
The American Heritage Dictionary of the English Language, which is probably used more often in China than in the United States, defines "glorious" with terms such as "deserving glory," "advancing glory," "characterized by great beauty and splendor," "magnificent," "delightful," "wonderful."
According to the article, one in five people on the list are believed to be members of the Communist Party.
Posted by John at 5:06 AM | Comments (0) | TrackBackQuote of the Day for Tuesday, October 25, 2005
Today's quote is from Max Stirner, born on this date in 1806: "Whoever will be free must make himself free. Freedom is no fairy gift to fall into a man's lap. What is freedom? To have the will to be responsible for one's self."
Posted by John at 12:00 AM | Comments (0) | TrackBackOctober 24, 2005
Anheuser-Busch Getting Serious About the Hispanic Market
Monday’s Wall Street Journal reports that Anheuser-Busch will increase ad spending devoted to Hispanics by 66% next year, in addition to forming a new division focused exclusively on marketing to Latinos.
The 2006 Hispanic media buy for BUD is expected to be about $60 million, roughly 10% of its total buy. This figure is triple what the company spent in Latino media in 2004, according to the article.
Posted by John at 11:10 PM | Comments (0) | TrackBackAnother Sign of Technology Froth in China?
In just the last 18 months, 16 Chinese technology companies have raised over $4 billion on NASDAQ, and another 26 or more are in the pipeline. So says Stuart Patterson, senior managing director of NASDAQ’s International Corporate Client Group.
Recall our post on the destination for most private equity funds currently being deployed in China.
Thanks to Michael Moe at ThinkBlog, whose post on China and the Valley is worth your attention.
Posted by John at 9:21 PM | Comments (0) | TrackBackIn Britain, Encouraging Immigration—and Economic Growth it Brings
Great Britain, Ireland, and Sweden have actively encouraged immigration from Eastern Europe, reports the International Herald Tribune, yet their economies have not suffered.
Britain’s unemployment rate is below 5% and worker shortages are reported in a variety of occupations. More than 230,000 Eastern Europeans have entered the country in less than two years, with an estimated economic contribution of just under $900 million, according to the IHT.
The same number of Poles enter Britain every two days as France has allowed, in total, the last ten months.
Yet Britain grows.
Posted by John at 6:09 AM | Comments (0) | TrackBackCisco Agressively Hiring in India
Over the next three years, Cisco will hire more engineers in India than in the United States, reports CFO.com. Their planned investment over that time will amount to about $1.1 billion.
Posted by John at 5:50 AM | Comments (0) | TrackBackThe Energy "Crisis"
Please read Russell Roberts’ fine commentary on "The Fake Energy Crisis" at Cafe Hayek which puts the proper perspective on current events:
The worriers like to say that we've had cheap oil in the past and now we're going to have expensive oil in the future. They make it sound like it's a geophysical relationship between production and prices. As long as we're finding more oil, oil is cheap. When we're past the peak, it'll be expensive. Cheap oil means the good life. Expensive oil means misery. But prices aren't high or low. They move around. They are high or low relative to other prices. If oil becomes increasingly scarce, we'll do a thousand, (more like a billion) things to find other ways of doing what oil does. . . .
Meanwhile, read Julian Simon. Remember that human creativity is the ultimate resource. Remember that the geophysicists don't understand prices. Sleep well, despite the worriers' desire to keep you tossing and turning. And if you hear the sound of hoofbeats in the still small spaces of the night, it's probably just a horse.
Not only is human creativity the ultimate resource, but it’s also the most immeasurable one as well. Its immeasurability, moreover, makes it easier to discount.
By the way, I did hear those hoofbeats the other night, and in my case, they really are horses!
Posted by John at 5:05 AM | Comments (0) | TrackBackMore College Grads Create More Jobs and Higher Wages
A newly released study finds a connection between concentration of college graduates and and an area’s job growth and quality of life.
A 10% increase in the percentage of college graduates living in a metropolitan area, according to the study, produced a 1% increase in subsequent job growth. Wages and housing prices were pushed upward as well.
Cities with the largest percentage of college graduates among residents 25 and older, compiled by the San Jose Mercury News, are Seattle and San Francisco at 51%, followed closely by Raleigh at 50%. Washington, Austin, and Atlanta are at 48%, 45%, and 43%, respectively.
The smallest city in the top ten, with a 39% proportion of college graduates, is Lexington, Kentucky.
Posted by John at 4:52 AM | Comments (0) | TrackBackQuote of the Day for Monday, October 24, 2005
Today's quote is from Stephen Covey, born on this date in 1932: "One of the best ways to educate our hearts is to look at our interaction with other people, because our relationships with others are fundamentally a reflection of our relationship with ourselves."
Posted by John at 12:00 AM | Comments (0) | TrackBackOctober 23, 2005
Why Companies Which Should Make It, Don’t
Jeff Cornwall offers an outstanding blog on small business and entrepreneurism, all while teaching and running the Center for Entrepreneurship at Belmont University in Nashville, Tennessee.
One of Jeff’s guest lecturers for a recent class was Bobby Guy, a bankruptcy lawyer, with Waller Lansden, who outlined the top ten reasons "why companies that should make it. . . don’t":
- 10. Over-expansion. The need to get there first or to demonstrate revenue growth to anxious investors leads businesses to grow too fast.
- 9. Poor Capital Structure. Companies take on too much debt....Enough said!
- 8. Failure to Control the Controllable Costs. Businesses spend down the initial cash before it is flowing in at a positive rate.
- 7. Failure to Prepare for Volatility of Uncontrollable Costs. For example, energy, materials, labor, or insurance.
- 6. Add New Products or Divisions that Drag Down the Profitable Ones
- 5. Poor Internal Controls and Execution -- customer service, accounting controls, theft, fraud
- 4. Poorly Designed Business Model
- 3. Reliance on Critical Financing that Dries Up
- 2. Failure to Adapt to a Changing Market
- AND THE #1 REASON? Management in Complete Denial......
My own observation is that reasons 2-10 are typically, in some manner, a result of reason number 1.
Posted by John at 9:52 PM | Comments (1) |