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March 31, 2007
From Ho Chi Minh City to Tokyo to Peoria, A Shortage of Qualified Labor
BusinessWeek on the the world’s labor shortage:
Employers in some unlikely places say they're having trouble filling jobs. Factory managers in Ho Chi Minh City report many of their $62-a-month workers went home for the Tet holiday in February and never came back. In Bulgaria, computer experts are in such demand they can't be bothered to answer the want ads of a Los Angeles movie studio. And in Peoria, Caterpillar Inc. is struggling to train enough service technicians. The problem in each case: not enough people who are both able and willing to do the work for the posted pay. "We've got a global problem...and it's only going to continue to get worse," says Stephen Hitch, a human resources manager at Caterpillar. . . .
. . . "It's not just a U.S. phenomenon," says Jeffrey A. Joerres, CEO of Manpower Inc., the staffing agency. On Mar. 29, Manpower was to release the results of a survey of nearly 37,000 employers in 27 countries. The study found that 41% of them are having trouble hiring the people they need.Posted by John at 10:09 AM | Comments (0) | TrackBack
What's going on here? With global growth running at a strong 5% a year since 2004, the strategies that companies developed to hold down labor costs--including offshoring work to low-wage countries--are running out of gas far sooner than many expected. The seemingly inexhaustible pools of cheap labor from China, India, and elsewhere are drying up as demand outstrips the supply of people with the needed skills. "Companies were hoping they wouldn't have to worry about human resources at all," says Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania's Wharton School. "Now they do." . . .China, although far more youthful than Japan, could soon feel the same pinch. Sure, its biggest problem at the moment continues to be creating jobs for the millions of workers pouring into cities, and wages are barely rising overall. But that may be starting to change as the government boosts incentives for people to stay in rural areas and most factories remain concentrated in a few coastal regions. In an article published in early March in the China Daily, Beijing economist Cai Fang said China is approaching a "Lewisian Turning Point." That's a reference to the late Nobel laureate Sir Arthur Lewis, who said a developing nation's industrial wages begin to rise quickly at the point when the supply of surplus labor from the countryside tapers off. . . .
Getting to Know You . . . By Learning Your Language
Nearly a quarter of China's population--more than 300 million people--have studied English. In the United States, the number of students learning Chinese continues to swell, including in Nashville.
Posted by John at 4:30 AM | Comments (0) | TrackBackSurplus Asian Men
Posted by John at 4:20 AM | Comments (0) | TrackBack. . . Earlier this year, an official Chinese report projected that by 2020, one in 10 men between 20 and 45 would be unable to find a wife. Professor Valerie Hudson of Brigham Young University in the United States estimates that by 2020, there will be 28 million surplus Chinese men and 31 million surplus Indian men.
Quote of the Day for Saturday, March 31, 2007
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March 30, 2007
It's What We Call the "News"
The latest JibJab video creation perfectly captures, in a very funny way, my disenchantment with television news, and most likely yours as well:
Posted by John at 8:05 PM | Comments (0) | TrackBack
Where Companies are Now Locating in China
I recently met Sonia Diaz-Batson, who is a Senior Global Manager for Asia Netcom, a company which provides a variety of global communications services, including assisting multinationals setting up shop in China with their communications needs. Our conversation naturally drifted to China, and I asked her what recent trends suggested about where corporate newcomers to China where setting up shop.
Sonia was nice enough to follow up with a very specific answer later, and agreed to let me pass it on in Tidbits:
Out of all the multinational corporations gearing up to make financial investments in China from 2005 – 2007, 83% prefer 3 regions: 43% in the Yangtze Delta (Shanghai, Jiangsu, Zhejiang area), 22% in the Bohai Sea Rim (Dalian, Qingdao, Beijing area), and 12% Zhujiang Delta (Guangdong, Shenzhen area.). The balance would be 9% in the Northeast, 8% in the Mid-South and the 1% in “other” regions.
The advantages of China’s coast continue to outweigh those of western China, at least according to companies voting with their investment funds. Thanks Sonia!
Posted by John at 9:08 AM | Comments (0) | TrackBackQuote of the Day for Friday, March 30, 2007
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March 29, 2007
Continuing Market-Driven Reform in China
Caijing editor Hu Shuli is one of China’s most respected journalists, both domestically and around the world. Her latest editorial for Caijing is extremely thoughtful commentary on the country’s development and reform path. This commentary is just one rejoinder for those in the West who persist in believing that China’s system is completely monolithic—that is, if they care to open their eyes and minds. The debate over the country’s direction is clearly less visible than in the United States, but it exists nonetheless, and Hu Shuli touches on what’s at stake:
. . . According to a small but very noticeable group of people, harmony and reform conflict. Advancing reform will compromise benefits for special-interest groups, they argue, triggering social upheaval. For that reason, they say, reform’s pace should be slowed.
Some even blame the past 25 years of reform for the country’s current economic and social problems, such as a growing income gap, imbalances in regional development, more intense conflicts within society, as well as widespread corruption.
Those who share these ideas obviously have forgotten how poor and weak our country was under a planned economy. No wonder they tend to overestimate the nation’s current development and strength, and suggest solving all our social problems once and for all, simply by expanding China’s social welfare system. . . .
Posted by John at 9:25 AM | Comments (0) | TrackBack'Our country has a large population and a weak foundation,” Premier Wen Jiabao said in a recent report. “Development varies greatly between cities, the countryside and regions. The situation of low productivity has persisted.'
We strongly agree with Premier Wen Jiabao; the task at hand is to free up and improve productivity so as to increase material wealth throughout society. At the same time, while boosting productivity, China must balance social needs with justice while stimulating society’s willpower and creativity. In this way, market-leading reform should proceed as promised.
Adopting reform requires strong pushes from time to time, so instability and friction are inevitable. As evident nowadays, China has embarked on a long, gradual journey – with perils. Special-interest groups that benefited during the transition’s early period have strengthened and may decide to ally with conservatives who reject reform. This could make further efforts to deepen reform very difficult. But nothing should shake the reformers’ determination.
Market-oriented reform is a multi-dimensional process. In fall 2006, the Party advocated 'advancing reform and innovation in the economic, political, cultural and social systems, and continuing to open the door to the outside world.' This was a basic summary of the characteristics and tasks of the current reform effort. In addition, it clearly showed that reforms in various spheres will affect one another.
So we must think comprehensively while continuing reform, and advance it in various ways. Current efforts to deepen reforms of the economic system face many challenges. Therefore, it is high time that we continued on political system reform actively and safely. The core goal for political-system reform is to accelerate democratic change and establish a modern, socialist country with democracy and a full-fledged legal system.
Efforts to reform the political system and other arenas should proceed shoulder-to-shoulder. These changes should include ever-advancing – never retreating -- reforms of the economic system. This is a long and hard battle.
Current projects that should continue include efforts to establish a strong social-security system, break administrative monopolies, achieve fairness in the allocation of scarce resources, and reform both the financial system and state-owned enterprises.
Moreover, reform of China’s cultural and social systems should be more market-driven. These are also important components for building a harmonious society. . . .
How They Do It Better Elsewhere
I was chatting with my pal John Daly on the phone the other day, and he alerted me to an article in U.S. News & World Report on how some other countries “do it better”. It is a very good article. As John pointed out to me, it’s not anti-American at all, but it is a reminder that we have a lot we can learn from the world, and implement here in our own way. At the same token, it’s not the same old hyperbole on Chindia, either. China and India are barely mentioned.
Afganistan’s hospitality is probably the best in the world. I was struck by one particular anecdote from the story:
I have been in 110 countries in the world, but the people who really touched me deep in my heart were the Afghans," says Iranian-born photojournalist Reza Deghati, a veteran of more than 50 trips to Afghanistan. On his first, in 1983, he was traveling along narrow mountain passes with mujahideen who were fighting the Soviets. They had to walk single file, or risk falling over cliffs. Yet occasionally the men would crowd near Reza despite the peril. When he asked why, they told him they knew when they were near hidden pockets of Soviets and wanted to protect him from gunfire. "The commander told me that from the moment he took responsibility for me, I was his guest," Reza says. "If I had been killed, all his tribe's and family's honor would be gone.
In Bogotá, Colombia, the city’s bus system is privately-owned, turns a profit, and is utlized by all classes of society. (Atlanta, take note) The Domincan Republic produces a lot of top notch baseball players, in part because the fun and joy of the game are young kid’s focal points, not baseball averages calculated by the parents. This love of the game, for those that continue to play, morphs into a zeal for practice. The United Kingdom encourages its high school graduates to take a “gap year” before entering college, so they can see some part of the world beyond where they’ve grown up. “Gap year” students have a lower dropout rate in college, on average.
Read all thirty lessons; you’ll get an insight into quite a variety of countries, including a few I’ll bet you thought you knew quite well.
Posted by John at 8:16 AM | Comments (0) | TrackBackQuote of the Day for Thursday, March 29, 2007
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March 28, 2007
Entrepreneurs are the Heroes of the World
Johan Norberg, whose work I’ve pointed to previously on several occasions, has joined the Cato Institute as a Senior Fellow. In honor, the latest Cato’s Letter reprints a speech Norberg gave to the Cato Club 200 Retreat in 2006, entitled “Entrepreneurs Are the Heroes of the World”. It is a tremendously well-written treatise which you should read in its entirety, and bookmark to re-read periodically. It’s that good.
Here’s as short as excerpt as I could manage; please read the complete speech:
. . . There is a classic work by Joseph Campbell, a book on cultural history called The Hero with a Thousand Faces, about heroes in different cultures. Because Campbell traveled the world by reading books from other continents, he could see that there are heroes in all cultures, in all books, in all eras. We need heroes, because they say something about what our values are, what is good, what is great, what is bad, what we should strive for, and what we should try to avoid.
He saw a common pattern. He thought that in most cultures and in most eras the same kinds of things are seen as heroic. Something big happens, and our hero is forced to go on a journey to fight hostile enemies against all odds with a lack of knowledge of what to do and when and how. But along the way he makes some friends who help him along and give him the knowledge and the inspiration to do what is right.Posted by John at 4:48 AM | Comments (0) | TrackBackThink about that heroic journey once again, and think of the persons I just talked about—people like you,
thinkers, innovators, entrepreneurs. What makes it possible for us to buy equipment and goods from the other side of the world? Entrepreneurs face ancient traditions, political obstacles, taxes, and regulations, but they also have friends—people with access to capital, to knowledge, to other businesses. If they are lucky, entrepreneurs succeed. If not, they learn something new, make it even better the next time, and bring to the community something new that changes lives forever.That is the heroic epic. The entrepreneur is the hero of our world. We do not really need the Frodos, the Luke Skywalkers, or the Buffy the Vampire Slayers. We have the Malcolm McLeans of the world. . . .
Some anti-globalists and people opposed to free trade are now well-paid consultants who sit on the boards of big companies and tell them that what they do is really a bad thing and that they must accept much more corporate social responsibility. In their terms, corporate social responsibility means that what you have done so far is not social. It is not enough to create goods, services, and technologies that increase our life expectancies and save the lives of our children. No, you need to do something more. After making your profit, you need to give something back to society.
Give something back to society? As if the entrepreneurs and capitalists had stolen something that belonged to society that they have to give back! Profit is not something that we have to apologize for. Profit is proof that the capitalist has given something to society that it cherishes more than the material wealth it has given to the businessman. I must emphasize that entrepreneurs should never be grateful for a society that gives them license to act, to dream, to innovate, and to create. I think that we, the society, should be grateful to the entrepreneur and to the businessman for what they do. Entrepreneurs are the heroes of our world—that despite the risks, the hard work, the hostility from society, the envy from neighbors, and state regulations, they keep on creating, they keep on producing and trading. Without them, nothing would be there. . . .
Don't Mess with Uncle Joseph
One Ukrainian company employs a unique way to collect its receivables:
A heating company in Ukraine has cleared thousands of unpaid bills by using the image of Stalin to demand settlement.
Posters of the Soviet dictator have gone up all around the city of Donetsk with the words: "Comrades! This not the cinema, this is real life. Anyone who does not pay their heating bill will be punished."
Bosses from the state-owned Donetsk Heating Company said: "It was the nearest we could get to intimidating people without sending round the heavy mob, and it has worked."
Deputy-director Alexandra Semchenko added: "Most people associate Stalin with order and discipline. This campaign will force them to think about the consequences of being behind with their payments.” . . .
Are you surprised it’s a state-owned company resorting to such tactics?
[Thanks to the Club for Growth for the pointer.]
Posted by John at 4:22 AM | Comments (0) | TrackBackQuote of the Day for Wednesday, March 28, 2007
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March 27, 2007
Globalization Employs Georgians
An updated Selig Center for Economic Growth study of the economic impact of Georgia’s ports has been released, and the significance of these facilities to the state’s economy continues to grow:
“The Economic Impact of Georgia's Deepwater Ports in Georgia's Economy in FY 2006” report shows Georgia's deepwater port activity directly and indirectly supported 286,476 jobs and was responsible for $55.8 billion in sales, $14.9 billion in income and $2.8 billion in state and local taxes in 2006. The report was presented to The Georgia Ports Authority at its monthly meeting this morning.
Taking into account an adjustment for inflation, the port's output impact is 44 percent higher, its gross state product is 32 percent higher and its labor income impact is 26 percent higher than a similar study that was conducted for fiscal 2003, according to Jeffrey M. Humphreys, the report's author and director of the Terry College's Selig Center for Economic Growth.
[Source: Atlanta Business Chronicle]
I wonder what the results would be without all those imports, particularly from China? How many jobs would be lost? How much would the state’s coffers suffer?
The mercantilists don’t like it, but it’s a fact: an increasing proportion of Georgia’s citizens have a stake in globalization and increased trade.
Posted by John at 9:48 AM | Comments (0) | TrackBackBenefits of a "Global Schoolhouse"
Singapore aims to grow its education sector to about 5% of GDP by 2015, up from 3.8% at present. The initiative was announced not by education officials, but the Minister of State for Trade and Industry:
. . . Minister of State for Trade and Industry S Iswaran said the objective is to develop the city-state into a 'global schoolhouse' with a mix of international students. . . .
More than 200 student agents have also been certified across 11 markets to help potential students with school registration.
Past efforts have borne fruit. Mr Iswaran said Singapore hosted some 80,000 students from 120 countries last year, a jump of 11.6 percent over the previous year.This is about 46 percent more than in 2003 when Singapore first started cultivating the international student market. . . . [Source: Channel NewsAsia]
It’s one way to help insure economic vibrancy: attract as many of the world’s brightest minds as possible, and if you retain only a fraction of them you’ve seeded significant future economic gains.
Posted by John at 5:55 AM | Comments (0) | TrackBackQuote of the Day for Tuesday, March 27, 2007
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March 26, 2007
Historic Parallels for China's Move Toward Private Property Rights
Steve Forbes draws some interesting historical parallels to China’s passage of a private property rights law:
. . . As in China, America's property rights system grew out of what people were already doing. In the 17th century our British overlords didn't dream the colonies would become hotbeds of individual land-ownership. But the colonists took matters into their own hands, and subsequent laws codified actions already in practice.
That, by the way, is also how we achieved our mineral rights law, whereby individuals not only own the surface of the land but also what lies below. (In Mexico, in contrast, if oil is discovered in your back yard, the national oil company [PEMEX] simply comes and takes it. In the U.S., however, you can get rich through royalties.) Our mineral property rights grew out of what happened during the 1849 California gold rush and thereafter; those informal arrangements were passed into law in the 1870s.
Something similar happened in Japan after WWII. General Douglas MacArthur essentially took the informal web of land arrangements of Japanese farmers and made them transparent and legal, thus giving the farmers official possession of the land they worked.
Scores of developing countries around the world do not lack entrepreneurial hustle and bustle. But because they lack the extensive property rights that we take for granted, their economies are stunted. Their nonuniform, myriad property systems make ownership a dicey proposition. Result: Uncertainty inhibits long-term investing in those properties and makes capitalizing them impossible. In other words, there can be no vigorous mortgage market such as the U.S. enjoys. Remember, the biggest source of capital for new businesses in the U.S. is mortgages--people either increasing an existing one or taking out a second one on their home. Property rights expert Hernando de Soto once estimated that 4 billion poor people in the Third World and former communist nations owned $9 trillion worth of real estate. But because of insecure property rights, those assets were dead assets. Imagine what would happen to the global economy if even a fraction of that $9 trillion were liberated. . . .
I’m curious how much of that estimated $9 trillion worth of real estate is in China? Given China’s size and the development the country has experienced already in the last quarter of a century, it’s clearly a very large number, the collateral value of which could fund a multi-decade surge of growth.
Posted by John at 7:47 AM | Comments (0) | TrackBackChina's Middle Class: The Epitome of "Tricky"
One of Webster’s definitions for “tricky” is “giving a deceptive impression of easiness, simplicity, or order.” China’s middle class, while large and growing, will continue to be the epitome of tricky for Western companies. The Australian offers an excellent analysis of the subject:
[Arthur] Kroeber [of Dragonomics] expects "quite resilient consumption growth in the next few years". That's the good news for people wanting to sell stuff to the Chinese middle class. The bad news? Kroeber says he was recently speaking to US fund managers on this topic and they had a distinct image of people driving to the mall in their SUV and then heading off to dine at a Sizzler. "I had to tell them the number of people like that in China is, give or take, approximately zero," he says.
He says a foreign home furnishings company recently acquired a business in Shanghai and proclaimed the market was worth $US50 billion ($62 billion). His estimate: $US3-$US4 billion at the most. "And that seems to me just typical of what's going on."
Chinese workmanship in the new homes is mostly very poor, Kroeber says, but the cost is low - so people virtually make over their flats every couple of years, spending on the hardware side of the home rather than the more expensive software side.
Yes, he says, there is a sociologically defined middle class of about 150 million in China, and they will grow rapidly, to 280 million over a decade. But it will remain a price-conscious and fragmented market.
The threshold for defining a middle class household in China is total income of $US3000. The median US household income is $US45,000. Kroeber cannot see the Chinese consumer replacing the American consumer as a driver of world growth soon.
He prefers to focus on the 37 million households, with 110 million people, earning more than $US5000 a year, a fifth of the urban population. Their total spending is about 4 per cent of that of US consumers.
In a decade, he expects total consumer spending to double, to about $US1 trillion a year. But two-thirds of those main spenders live in three zones: Beijing-Tianjin, the Shanghai region and the Pearl River delta.
"In between: in consumer terms, nothing - but that makes distribution a bit easier," he says. . . .
Posted by John at 6:35 AM | Comments (0) | TrackBack
Quote of the Day for Monday, March 26, 2007
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March 25, 2007
Lack of Start-Up Financing a Development Bottleneck in China
The Los Angeles Times profiles the difficulty Chinese start-ups have in getting financed, using one young environmental technology company as an example:
Hundreds of miles north of here on the edge of the Mongolian steppes, Li Enhui is producing a "magic bag" to help China fight the fierce sandstorms that plague this city every spring.
Li's water-saving pouch, which he says enables trees to thrive in desert conditions, was selected as a special technology project by the organizers of the 2008 Beijing Olympics. Hoping to host sandstorm-free games, the government is planting a "green wall" of trees around the capital to keep the desert at bay.
But the frustrated 41-year-old scientist said he couldn't raise the $4 million he needed to turn his start-up operation into a full-fledged business.
"Though our project is very good and we have lots of support from the government, we only have technology," said Li, president and chairman of Beijing Yusen Environmental Protection Technology Co. "In China, banks don't think technology is worth anything. They want something else, like land." . . .
Join the club Mr. Li; your problem with banks would be the same in the United States. The difference, though, is that in the United States, someone like Mr. Li is much more likely to find venture financing beyond friends and family. In China, despite an influx of foreign venture capital firms in recent years, the venture capital industry is still rather small, particularly if you exclude funds devoted to technology.
It’s a major development bottleneck for China, highlighting the need for further deregulation of the financial services industry. For further reading on the elements of a healthy start-up climate, see Why America is a Hot-House for Start-ups, which highlights Paul Graham’s terrific essay on the subject.
Posted by John at 9:32 AM | Comments (0) | TrackBackSoutherners in New York and the "Stockdale Syndrome"
In the latest Oxford American, Roy Blount Jr. captures something every Southerner—I mean those of us with South in our mouth—have felt at some point while in New York:
. . . Years ago at a New York cocktail party I was chatting with George “Jerry” Goodman, who wrote and spoke trenchantly about money matters under the name of Adam Smith. Nice guy. Evidently I said something that struck him as halfway cogent (so it couldn’t have been about money), because he gave me a sincerely startled look and said, “You’re not so dumb.” I have to admit, I was surprised. Not so much by his surprise as by how unselfconsciously he expressed it. He seemed to have been caught more off guard than I was, so I was able to think to myself, “You’re not so broad-minded.” . . .
One way to respond to such snobbery, Blount suggests, to to use the “Stockdale syndrome”:
. . . named not for Vice Admiral James Stockdale, the heroic Vietnam POW, but for the character Will Stockdale, an Army draftee from backwoods Georgia in the ’50s novel and movie No Time for Sergeants. Andy Griffith played him in the movie, but Will is younger and goofier than Sheriff Andy of Mayberry. An Army psychiatrist says to Will, “I don’t think I would ever want to live in your rotten state. How about that?”
Stockdale replies, “Well, I guess you know where you want to live. Besides that, things is getting right crowded around home anyhow. Some folks moved in not long ago about two miles down the road from us and land ain’t as cheap as it once was. So it really don’t make no difference to me whether you live there or not, not that we wouldn’t be mighty glad to have you.” When the psychiatrist can’t understand why he won’t rise in defense of Georgia, Will says, “I don’t live all over it. I just live in one little place in it.”
That is Will’s way, and it drives the psychiatrist nuts. When Will’s only buddy demands to know why he doesn’t get mad at the Northern GI’s who rag on him nastily, Will says, “They don’t mean nothin’ by it,” which is a nice piece of de-signifying. . . .
One of my own Will Stockdale moments involved getting into a cab in New York City, years ago when cab drivers in the City were much more likely to have a Brooklyn accent. I jumped into the cab and gave him my destination. He wordlessly drove down the block, rounded the corner, and then looked in the rear view mirror and asked, “So, what part of the South are you from?”
I looked up and gave him my best Will Stockdale grin, coupled with an accent I didn’t really need to exaggerate that much: “How’d you know I’ze from da South?” (Making sure, of course, that the two syllables I use to pronounce “South” were quite drawn out.)
For an instant, his face briefly rippled as if an alien had just flown through the window. He then chortled heartily, and we swapped jokes and barbs, laughing the whole way to my destination. It was if he thought, but unlike Goodman had the manners to keep to himself, “Hey, you’re not so dumb . . . you’re ok!”
Blount’s entire essay is worth your consumption; he has some thoughtful points in his commentary while making you chuckle. Blount is one of the country’s finest writers; he can be hilarious and serious in close proximity—something difficult for most writers—and he invariably delivers turns of phrase I wish I’d written.
Posted by John at 8:33 AM | Comments (0) | TrackBackQuote of the Day for Sunday, March 25, 2007
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March 24, 2007
Gored Truth on Manufacturing
Pat Cleary, who’s ShopFloor.org blog I regularly enjoy, writes that Al Gore, in testimony before Congress earlier this week, referred to China as “the Saudi Arabia of manufacturing”. The implication, of course, is that China is world’s largest manufacturer.
The facts speak otherwise, notes Cleary. The United States, in fact, has the world’s largest share of manufacturing GDP, at 24%. Japan is second with 21%. China, in fact, is a distant third with a 9% share.
Now that’s an inconvenient truth.
Posted by John at 10:14 AM | Comments (0) | TrackBackChanges in Hispanic Television Lie in Culture, Not Just Language
Broadcasting & Cable sees the future of Hispanic television as being more about culture than language, as an increasing number of U.S. Hispanics are born in this country and are bilingual:
. . . as marketers and programmers better understand the complex new market and the way Hispanics use media, they will create new ways to reach the audience. “Rather than our industry focusing on Latinos who are Spanish-dominant and figuring that, once they start speaking English, they're no longer Latino, we've redefined what it means to be Latino in terms of culture as opposed to language,” says Carl Kravetz, chairman of the Association of Hispanic Advertising Agencies (AHAA) and chief strategic officer at ad agency Cruz/Kravetz: IDEAS.
Today, 60% of Hispanic population growth is coming from people born in the United States, says Sonya Suarez-Hammond, VP of multicultural marketing insights for marketing consultancy Yankelovich. It is the exact opposite of the growth trend of only a few years ago.
“The Hispanic population is acculturating to a great degree, but they are very much holding onto their heritage,” she says. “What our data are indicating is that the Hispanic population isn't necessarily assimilating, and we don't believe they will ever assimilate the way Europeans of decades ago did. Instead, they are acculturating where they have the best of both worlds and adapting to both cultures.”
Boston-based consulting firm Global Insight reports that this population shift is affecting the language used by Hispanics. The Hispanic population last year surpassed 44.2 million, according to Global. Of this group, just over 44% are foreign-born. That figure will dip to 37% over the next two decades. And, while nearly 77% speak Spanish at home, only 24% speak Spanish exclusively, a figure projected to steadily decline—and one that Spanish-language Univision must address.
The language shift has a direct affect on the media that Hispanics use. Research company Encuesta of Miami last year found that 23% of Latinos prefer to watch TV in English, with an equal percentage preferring Spanish and 47% watching equal amounts of English- and Spanish-language TV. . . .
. . . as larger numbers of the Hispanic population learn English, their viewing options will grow. Could Spanish-language TV go away altogether?
“We're seeing an increased number of options in Spanish, and we're seeing the birth of what is really still in its infancy: English-language, culturally Latino broadcast media,” says AHAA's Kravetz. “It's more complex, but it's a natural evolution of Hispanics' reaching parity.”
It’s too simple-minded to point out that such rapid evolution in the Hispanic demographic will put pressure on Univision. If addressing and responding to changing cultural subtleties will be the key to success, however, the real pressure won’t be on Univision, in my view. I suspect Univision and other networks which are Spanish-only today will have the personnel and sensitivity to navigate such change.
The real pressure is more likely to fall on the mainstream broadcast and cable networks. How will CNN (particularly with Lou Dobbs so prominently in the lineup) or Fox News, for example, hope to successfully address these changes? On a local front, how will local news operations in cities with rapidly growing Hispanic audiences be able to respond? Many of them are scared of going “so far” as to have a news anchor or a reporter speaking English with an accent.
ESPN, on the other hand, may be one mainstream network successfully navigating the changes in their audience. ESPN Deportes is part of their lineup of networks, of course, but the sports network complex is now engaging is a little cross-fertilization. On their SportsCenter news and highlights show, ESPN now has cut-in updates from ESPN Deportes which are heavy on sports like soccer which are more popular with Hispanics.
Making such changes will become increasingly important for mainstream networks, and may be the difference, in a saturated market, in preserving or growing audience share.
Posted by John at 9:43 AM | Comments (0) | TrackBackQuote of the Day for Saturday, March 24, 2007
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March 23, 2007
China's Patients are "Automatic Teller Machines" for Hospitals
"Healthy people are diagnosed with diseases. Small ailments are said to be serious problems. Patients have become automatic teller machines for the hospitals."
Such was just one editorial reaction to an investigation a group of Chinese reporters conducted on ten different Hangzhou hospitals, four of which are state-owned. The reporters passed tea off as urine samples, and when the test results came back, six of the ten hospitals diagnosed a urinary tract infection. Five of the hospital prescribed medication which cost up to 400 yuan (around $50). You can read the Reuters account of the story here.
It’s little wonder that China is actively promoting foreign investment in health care, while at the same time adopting policies which seemingly curtail FDI more broadly (including raising the corporate tax rate for foreign companies). Wang Jun, Vice Minister of the Ministry of Finance, spoke to this issue directly in recent days:
. . . Wang said the government would actively readjust the structure of the industry, including bolstering cooperation between public and private partners.
'Strengthening cooperation between public and private partners is one of the most effective means of improving the overall development of health care,' Wang said.
'The Chinese government will actively encourage private capital to enter the health care industry. We need to introduce market-oriented mechanisms in the provision of health care which would be conducive to the improvement of health care resources and better meet the diverse needs of the general public,' he added.
Preferential tax policies would help ensure everyone had equal access to health care, Wang said, without elaborating.
But he noted that rural health care lagged other areas and there is a 'huge gap' between government spending and the 'ever increasing demand from the general public for health care.'
'A lot of private capital is not being utilised effectively yet, and a diversified health care provision system is not yet in place, ' Wang said.
He added that a team assembled to plan the reform would use international experience and push for more expenditure in the sector and a greater emphasis on rural health.
[Source: Forbes.com]
Corruption is but one problem affecting healthcare in China. Across much of the country, the healthcare infrastructure, in the form of facilities and equipment, is out of date. I’ve been to a few hospitals whose infrastructure I would term “modern”, but the majority of Chinese hospitals I’ve visited have equipment even a layman like me recognizes as out of date. Most hospitals are seriously overcrowded. Further, an aging population will only serve to put even more pressure on an already weak healthcare infrastructure.
It’s little wonder that China’s national government seeks a “diversified” [i.e. more foreign providers] healthcare system with “market-oriented mechanisms” [more competition]. That’s exactly the kind of medicine this sick patient needs.
Posted by John at 5:27 PM | Comments (0) | TrackBackQuote of the Day for Friday, March 23, 2007
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March 22, 2007
Americans Economically Content, Yet Headlines Read Otherwise
Poll after poll indicates that Americans feel more secure than ever, feel good about their work and their job security, and are generally happy with the money they make. Yet, writes economist Kevin Hassett, much of the media, along with vote seeking politicians, keep pounding away at the notion that the rich have co-opted the country for themselves and the middle class is being squeezed. Quite simply, the facts are being twisted, and it poses a particular problem:
Americans feel so much better than we have been led to believe because they look at their wallets and not the New York Times when deciding what they think about the world.
But the general feeling of unease that is drummed up by the media has a real effect.
Most importantly, it creates a climate within which politicians are tempted to create big government programs to protect folks from increased danger that isn't there. Those measures, which would take us in the direction of the European welfare state, would surely harm just those individuals they purport to help. Voters might even be tricked into supporting them.
Even though most individuals feel secure, they might sympathize with those many others who don't and favor taking steps to help them.
It is time that we face up to an important fact: The basic characteristics of our economy are steadily being misrepresented by individuals with a blatant anti-market political agenda. The U.S. economy has prospered because free markets work. It's not a nightmare, it's a dream.
As I’ve noted previously, despite all the talk about those individuals hurt by global competition, we don’t really spend much money helping displaced workers in this country, relative to the amount of money poured into protectionist schemes to safeguard profits in industries like textiles, sugar, milk, and cement.
Posted by John at 9:38 PM | Comments (0) | TrackBackCounting Engineers Correctly in China, India, and the U.S.
A team of Duke University researchers, including entrepreneur and educator Vivek Wadhwa, have looked at the numbers of engineers produced in the United States, China, and India. While recent press reports have focused on the gross numbers of engineering graduates (which shows China with a substantial advantage), Wadhwa and his other team members found that the reality is much more subtle.
Chinese statistics, which suggest the country graduates about half a million engineers a year vs. roughly 133,000 in the U.S., are likely apples to oranges comparisons. The national government has encouraged students to pursue engineering studies, so much so that average class sizes have increased and graduate quality, in all but China’s top universities, has declined. China, in fact, is actually suffering from a lack of top quality engineers:
Our interviews with representatives of multinational and local technology companies revealed that they felt comfortable hiring graduates from only 10 to 15 universities across the country. The list of schools varied slightly from company to company, but all of the people we talked to agreed that the quality of engineering education dropped off drastically beyond those on the list. Demand for engineers from China’s top-tier universities is high, but employers complained that supply is limited.
At the same time, China’s National Development and Reform Commission reported in 2006 that 60% of that year’s university graduates would not be able to find work. In an effort to “fight” unemployment, some universities in China’s Anhui province are refusing to grant diplomas until potential graduates show proof of employment. The Chinese Ministry of Education announced on June 12, 2006, that it would begin to slow enrollment growth in higher education to keep it more in line with expected growth in the nation’s gross domestic product. Although Chinese graduation rates will continue to increase for a few years, while the last few high-enrollment classes make their way through the university system, we expect that the numbers of engineering graduates will eventually level off and may even decline.
At the same time, Indian and Chinese students are much more likely to receive engineering PhD degrees, and China’s trends are particularly favorable. Consequently, China’s future in this regard appears very bright:
In the United States, close to 60% of engineering PhD degrees awarded annually are currently earned by foreign nationals, according to data from the American Society for Engineering Education. Indian and Chinese students are the dominant foreign student groups. Data for 2005 that we obtained from the Chinese government show that 30% of all Chinese students studying abroad returned home after their education, and various sources report that this number is steadily increasing. Our interviews with business executives in India and China confirmed this trend.
The bottom line is that China is racing ahead of the United States and India in its production of engineering and technology PhD’s and in its ability to perform basic research. India is in particularly bad shape, as it does not appear to be producing the numbers of PhD’s needed even to staff its growing universities.
As it becomes increasingly lucrative for Chinese and Indians with advanced engineering degrees to return home, the United States will suffer, as we have a deficit of natives earning advanced degrees. Over time, unless we make create more incentives for students to continue their studies and therefore develop the ability to conduct advanced research, the U.S. will fall behind, relatively speaking. It’s not a question of producing raw numbers; the issue is producing enough high quality, in the form of PhDs.
Read the entire report, “Where the Engineers Are”, by following this link.
Posted by John at 9:08 PM | Comments (0) | TrackBackQuote of the Day for Thursday, March 22, 2007
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March 21, 2007
Farm Subsidies Run Amok in the EU
You don’t have to be a farmer, own land, or even live in Europe to claim them, reports the Times of London:
City dwellers are making huge profits out of an EU loophole that allows people who have never set foot on a farm to claim European farm subsidies.
The loophole allows investors to become classified officially as farmers and then buy the right to receive annual EU subsidies to cut agricultural production. Because the subsidies are decoupled from the land they relate to, investors do not need actually to own the ground they are claiming for or even go anywhere near it.
The profits to be made are enormous, with investors potentially increasing their capital nearly fivefold in 5 years. . . .
The EU pays £60 billion a year in farm subsidies, which were originally aimed at boosting production, but last year farmers were given — free — the automatic right to subsidies, known as the single farm payment entitlement, in return for reducing production. They were also given the right to trade the subsidy entitlements between themselves, but the legislation is so loose that in practice anyone can officially qualify as a farmer.
British farmers claim around £5 billion a year of the subsidies in return for which they are meant to make environmental improvements to the land.
However, many are using their new right to sell the subsidies in order to raise a lump sum when they retire or to pay for new equipment.
Giles Lane, of C&D Property Services, which brokers the rights to farm subsidies, said: “You don’t need a farm to claim the entitlements. Sitting in your living room in London you could be claiming them.
One farmer emigrated to Australia and he’s still claiming the entitlements from there. It seems bizarre, but it’s totally legal. It’s how the Government wanted to set up the reforms.” . . .
Most people buying the subsidy entitlements are other farmers, but many are investors, including owners of hunting estates, who want their land to generate a second income. One estate owner, who wished to remain anonymous, told his local newspaper: “You can play this game like a stock market. What I would say is that we shouldn’t be here doing this; it is a crazy world.” . . .
[Thanks to Johan Norberg for the pointer.]
Posted by John at 7:50 AM | Comments (0) | TrackBackShortages of Chinese Garment Workers
According to this report, Zhejiang, Jiangsu and Anhui provinces are experiencing shortages of clothing industry workers. As production costs rise, the Sock Guy will be on the move—again.
Posted by John at 7:42 AM | Comments (0) | TrackBackQuote of the Day for Wednesday, March 21, 2007
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March 20, 2007
Foreign Banks in China Won't Realize Profits for Years
According to a KPMG report, foreign banks seeking to make profits from their investments in credit card and mortgage joint ventures in China are going to have a long wait. Intense competition, consumer, and an aversion to fees may mean that all the money foreign banks will make in China for the foreseeable future is the profit on whatever equity stake they’ve purchased in a bank which has had a public offering:
Posted by John at 11:38 AM | Comments (0) | TrackBackSimon Gleave, KPMG financial services partner for China and Hong Kong, said: “There is a culture of no fees. It could take 10 to 20 years to make profits. China is not the same as other markets that banks might have come across.”
Worldwide Mobile Subscriber Growth Overwhelming Based in Emerging Economies
Other than the United States, the world’s fastest growing mobile phone markets are all in emerging economies:
Developing countries now account for more than half of mobile subscriber growth worldwide, with the top 10 adding around 285 million new subscribers in 2006 alone.
With the exception of the U.S., the world's top 10 mobile growth markets are all in countries considered to be "emerging" in Asia/Pacific, Africa, and Latin America. . . . [Source: Unstrung.com; thanks to Smart Mobs for the pointer.]
Posted by John at 6:26 AM | Comments (0) | TrackBack
Quote of the Day for Tuesday, March 20, 2007
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March 19, 2007
Here's How Heart Surgery Will Be "Offshored"
Oren Harari writes about a conversation over lunch with Texas Heart Institute’s Dr. Billy Cohn, who offered a preview of how technology will change heart surgery (and by implication, other types of surgery as well) in very profound ways:
. . . one scenario Cohn described was really wild: a prototype technology in which the surgeon, hunched over a computer screen showing the precise graphic details of the patient’s anatomy, was able to simulate the surgery online, and in the process control robots which did the actual invasive and non-invasive surgeries on the patient's heart. This is a much more precise and accurate intervention, and it will be scalable and common within a decade, if not sooner. Cohn showed a short video in which the surgeon, armed with his desktop computer, worked about 10 feet from the robots and the patient on the operating table. Fascinating. And then Cohn said something that really blew me away: He pointed out that there was no reason for the surgeon to be in the same room as the robots and the patient; in fact, there was no reason for him or her to be in the same country! As long as the computer can be digitally connected with the robots, the patient can be in San Francisco and the doctor can be in New York, Zurich or Delhi.
Wow! Suddenly the accelerating velocity of globalized offshoring took on a deeply profound dimension. If I want to have heart surgery (or, for that matter, any type of surgery), I can theoretically choose the best doctor for me from anywhere in the world, and I don’t have to visit him, and he doesn’t have to come here. He can do what's necessary from wherever he or she is: instantly receive whatever medical data he needs from the hospital, talk to me via phone or Web or videoconference, schedule the surgery, and then “do it” to me even if we’re separated by thousands of miles. And, technically, given the amazing precision of the hardware and software, he would do a better job that way than if he was actually doing the surgery by hand on site. . . .
And surgery will be done at a lower cost as well, since it will allow for greater competition among providers. The disruption about to occur in health care over the next several years is mind boggling.
Posted by John at 7:57 AM | Comments (0) | TrackBackGeneral Motors Learns to Draw on Global Creative Talent
Fast Company offers a fascinating look at how global design teams collaborating can strengthen a company’s ability to create . In this case, the company is General Motors, and the story is how the company’s Chinese and North American design teams are working in concert on the Buick LaCrosse. Read the entire article, but a tidbit follows:
. . . when [Ed] Welburn[, GM design chief] decided to pit the China team against the North American team to design the new LaCrosse, it was as if he'd asked a Chinese high-school basketball team to take on the Detroit Pistons. Leading a car's design isn't just about thinking up great lines to be stamped into raw steel. It requires creating hundreds, perhaps thousands, of three-dimensional computer models, building perfect clay replicas and knowing enough to specify which materials will be used. It means working with suppliers around the world and spending years looking after the smallest of details.
But Welburn had seen something in [GM China designer Joe] Qiu's design of the Chinese LaCrosse, as well as in the team's work on a Buick minivan and a stretched version of the Cadillac STS. . . ."Chinese consumers are so demanding--and that team had met their needs so well that even though the studio was small at the time, I knew that China was changing faster and growing up faster than most people realized," Welburn says.
The China team didn't disappoint, jumping into the competition with a vengeance. "There's no doubt, we wanted to beat the North American guys," says [James] Shyr[, head of GM China’s design team], who admits pressing his young team to outdo their more experienced colleagues. For months, over several rounds, design files flew back and forth between Shanghai and Detroit. The two teams occasionally saw each other's work--both feeding the sense of urgency and giving each other ideas.
One team would send a sketch that had closed the gaps on sheet metal by a few millimeters. A new sharper edge or angle would show up from America--and be incorporated in the next Chinese design. "It was a competition, but there also was this bond," says Stapleton. The process pushed the design "to the highest common denominator instead of the lowest. We had our ideas about what this car should be, and they had theirs. But we also had this web of ideas running between us."
Finally, Welburn chose a winner. Or rather, he didn't. He told the two teams, which had been competing so fiercely, that they would have to work together. China would create the LaCrosse's interior and take responsibility for the overall flow. North America would design the exterior--with input from Shanghai, since by the time the new LaCrosse appears, China is expected to be Buick's biggest single market.
"The design is going to be much stronger than if one team worked on it," Welburn explains now. "We're all going to benefit from this collaboration." Shyr describes it differently. "It was more like a war where two platoons are working against each other, and then the reality is that we are all fighting the same war. We had to realize that we had more tricks in our bag working together than just the ones we had here." . . .
Read the entire article; it’s a compelling preview of how companies will pull together their creative and innovation assets on a global basis. As for General Motors specifically, it’s a glimmer of hope for a company long dominated by headquarters command and control thinking.
Posted by John at 7:40 AM | Comments (0) | TrackBackQuote of the Day for Monday, March 19, 2007
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