Quick Links
XML/RSS Feed
Sections
The Honor Roll
Back Issues
Posts this Month
| Sun | Mon | Tue | Wed | Thu | Fri | Sat |
Our Sister Site
Statistics
Total entries in this blog:
Total entries in this category:
Published On: Apr 11, 2007 08:11 PM
Total entries in this category:
Published On: Apr 11, 2007 08:11 PM
Wed - April 11, 2007
PEKING REVIEW HAS MOVED!! PEKING REVIEW HAS MOVED!!
Update your bookmarks and your RSS readers,
folks.
We've done it.
Peking Review, and it's sister blog Silicon Hutong - soon to be joined by EcoHutong - are now hosted at typepad.
• Peking Review is now at http://siliconhutong.typepad.com/peking_review/, WITH all of the archived posts (there weren't that many, embarassingly). Outside of China, http://www.pekingreview.com works, too.
• Silicon Hutong is at http://siliconhutong.typepad.com/silicon_hutong/. Outside of China, http://www.siliconhutong.com will do.
• EcoHutong is at http://siliconhutong.typepad.com/ecohutong/. Outside of China, http://www.ecohutong.com does fine.
Sorry for any inconvenience. Really, the new sites will be MUCH easier on the eyes, if nothing else, and hopefully more convenient in a lot of ways, including:
• Better Permalinks
• More information
• Easier trackbacks
• Better comment features.
Thanks again. Give me a shout if you encounter any problems.
We've done it.
Peking Review, and it's sister blog Silicon Hutong - soon to be joined by EcoHutong - are now hosted at typepad.
• Peking Review is now at http://siliconhutong.typepad.com/peking_review/, WITH all of the archived posts (there weren't that many, embarassingly). Outside of China, http://www.pekingreview.com works, too.
• Silicon Hutong is at http://siliconhutong.typepad.com/silicon_hutong/. Outside of China, http://www.siliconhutong.com will do.
• EcoHutong is at http://siliconhutong.typepad.com/ecohutong/. Outside of China, http://www.ecohutong.com does fine.
Sorry for any inconvenience. Really, the new sites will be MUCH easier on the eyes, if nothing else, and hopefully more convenient in a lot of ways, including:
• Better Permalinks
• More information
• Easier trackbacks
• Better comment features.
Thanks again. Give me a shout if you encounter any problems.
Posted at 08:11 PM
Sun - January 21, 2007
The Next Four Game-Changing Mobile Technologies
Edwards, Cliff and Moon Ihlwan, "Upward Mobility: Ultrafast networks and whizzy features
are about to turn your cellphone into - well, your right arm,"
BusinessWeek,
December 4, 2006
I always worry about technology when I read about
it in BusinessWeek,
because I feel like this is one of those
signals that a given innovation has hit its apogee on the hype
meter.
In this case, however, I give the two authors credit for isolating four potential technologies that look set to significantly extend the number of things for which you can use a mobile phone. Well worth a read.
Dumping all of these cool features into a phone might sound like a good business plan to The Boys in Espoo, but frankly, I'd be happy if the big manufacturers could come up with user interfaces that actually made the features already on the phones more usable.
In this case, however, I give the two authors credit for isolating four potential technologies that look set to significantly extend the number of things for which you can use a mobile phone. Well worth a read.
Dumping all of these cool features into a phone might sound like a good business plan to The Boys in Espoo, but frankly, I'd be happy if the big manufacturers could come up with user interfaces that actually made the features already on the phones more usable.
Posted at 03:06 PM
Thu - October 19, 2006
Green Guards
"Xi'an Marks the Spot: The state of China's student
activist movement" by Dongli Zhang and Nathan Myeth,
Grist 17 October 2006
A fascinating article suggesting that the
government is allowing - if not encouraging - the growth of a student-based
environmental activist movement in China.
It makes sense for two reasons. First, it's a relatively safe direction in which to channel the political discontent of China's students. Second, it becomes a boogie-man the government can use to help bring to heel local officials whom, for reasons of self interest, refuse to strictly enforce environmental regulations.
All of which sounds good, and which promises to be interesting to watch. Best case scenario would be for these kids to do some real good in raising awareness, saving a few species, serving as hard-to-corrupt watchdogs, and perhaps even solving a serious problem or two. China could use it.
But political movements, no matter how benign their roots, can take unpredictable courses. I can't help but be concerned that eventually a lot of these kids are either going to a) wind up in jail, b) wind up as tools of the government, c) wind up as pawns in a political struggle, or d) become a force of nationalism.
I hope not. I really hope this movement gets China thinking about cleaning up its environment the way the environmental activists in the U.S. managed to do during the late 1960s and the 1970s.
It makes sense for two reasons. First, it's a relatively safe direction in which to channel the political discontent of China's students. Second, it becomes a boogie-man the government can use to help bring to heel local officials whom, for reasons of self interest, refuse to strictly enforce environmental regulations.
All of which sounds good, and which promises to be interesting to watch. Best case scenario would be for these kids to do some real good in raising awareness, saving a few species, serving as hard-to-corrupt watchdogs, and perhaps even solving a serious problem or two. China could use it.
But political movements, no matter how benign their roots, can take unpredictable courses. I can't help but be concerned that eventually a lot of these kids are either going to a) wind up in jail, b) wind up as tools of the government, c) wind up as pawns in a political struggle, or d) become a force of nationalism.
I hope not. I really hope this movement gets China thinking about cleaning up its environment the way the environmental activists in the U.S. managed to do during the late 1960s and the 1970s.
Posted at 01:20 PM
Thu - October 5, 2006
Finance: Debunking the White Tornado
When I was a kid, a large consumer products
company ran a TV ad campaign for it's line of detergents, likening the effect of
the product to a white tornado, a great whirlwind that would sweep in and clean
anything, erasing even the most embedded filth. Perhaps it is this kind of
marketing that contributes to an apparent belief among foreigners, particularly
Americans, that adding something clean to something filthy makes everything
clean.
I call this belief The Great White Tornado Theory.
The Great White Tornado Theory is used most often in China by advocates of foreign participation in China's financial industry. Listening to the tales of embezzlement, corruption, and malfeasance among China's banks, securities brokerages, and other sectors, executives of international firms shake their heads, tut-tut sadly, and remind media, policymakers, and each other that if ethically managed (read "foreign") companies were allowed to fully participate in the market, by competitive force and dint of example they would help eliminate unsavory practices.
It's an attractive theory, and as an advocate of greater competitiveness in China, I want to agree. A lot of my friends do, as do many people whom I respect deeply.
But both the theory and those who expound it have some credibility problems with Chinese audiences and impartial observers.
What're We Doing Here?
Let's say for a moment China were to allow open foreign participation in, say, the securities brokerage sector. Once we get past the rhetoric and the high-minded ideals, foreign firms are not coming to China to clean the place up - they're coming to make money. After making investments in staff, high-priced offices, and years of lobbying, headquarters in New York, London, or Tokyo are not going to be telling their China teams "okay, guys, go out there and help build an ethical market." No, the word from HQ is going to be "get out there and start making us a mint, or we'll fire you and find somebody who will."
The pressure to perform will be intense, and the competition - intensified by the arrival of foreigners - will make performing extremely difficult. The pressure to engage in common but unsavory practices to get business and drive results will be intense. In such a cauldron, the question of making the ethical choice and the profitable one will not come down to the name on the door or the pedigree of the firm - it will come down to the character of the individuals making those choices, and to how willing firms will be to sacrifice profits for ethics.
If the situation in other industries and places is anything to go by, the prognosis is not good.
Doing Like the Romans
The experience of other industries in China suggests the path that foreign securities firms might take.
There are those who believe that only a very limited number of foreign firms engage in unethical practices in China, and there are others who have confided with me that they believe it impossible to make a profit in China without bending your morality a bit - the system is simply rigged against that. In reality, China can be extremely hard on ethical corporate practices. As Peter Goodman wrote in The Washington Post last August:
"American business leaders often describe their China operations idealistically, suggesting that their presence here will compel Chinese competitors to adopt more ethical business practices. But in one key regard, the dynamic operates in reverse, with U.S. companies adopting Chinese-style tactics to secure sales, as they compete in a market in which Communist Party officials routinely control businesses, and purchasing agents consider kickbacks part of their salary.
Managers of U.S. companies say they are caught in a dilemna: They are answerable to shareholders on Wall Street and home offices that demand a piece of an increasingly lucrative Chinese market. Yet they are also held to account at home by the Department of Justice and the SEC."
In short, when in Rome, companies are not acting like the Greeks. Foreign firms in the telecommunications, medical equipment, airport security, software, and computer hardware industries have all been accused of, have admitted, and/or have been fined for practices that are not only unethical but are indeed illegal in the U.S.
For the finance industry, is there anything to suggest that the record would be different?
The Record Elsewhere
A scan over the checkered history of the financial industries in the U.S. over the past two decades does nothing to suggest that there is something about an international institution that inhibits impropriety. The savings-and-loan scandal from the late 1980s, the insider-trading convictions of people like Ivan Boesky, the tainting of research by investment bankers, the growing options pricing scandal, boiler rooms, pump-and-dump schemes...all evidence drawn from the front pages of America's largest newspapers, all representing ethical lapses in finance, and all taking place under the aegis of the toughest regulatory system in the world.
Taking the show on the road hasn't helped. Failures in ethics and systemic controls at places like Morgan Stanley Japan Securities and Goldman Sachs Japan make clear that financial firms are not above rolling around in the mud with the locals like Mitsubishi Securities and the Murakami Fund in the name of profits. Indeed, if Japan is any model, one could argue that it is not foreigners who will clean up a market, but local regulators with sufficient political air cover to do the right thing.
So again, I ask - if foreign financial firms can find themselves in hot water at home for not doing the right thing, what evidence is there that they will have a cleansing effect on China.
Right Impulse. Wrong Reason.
Foreign participation in China's financial sectors will be a good thing for a lot of reasons - it will increase competition, diversify services, and force everyone to work harder for the customer's business. The institutional capital and investment mentality the foreigners bring with them should do much to stabilize the punter-driven technically-based markets, and possibly even bring some accountability to bear on listed companies.
Creating a cleaner market, however, is not one of those reasons.
The government knows all of this - there is a growing understanding among regulators that a well managed market requires an independent third-party overseer with prosecutorial powers in addition to whatever self-regulation can be put into place. (That's not radical, anti-free market thinking, by the way - that's the Securities Exchange Act of 1934.)
For that reason, anyone who suggests to a government official in China that foreign participation will have a cleansing effect on China's financial industry is merely flushing his own credibility down the toilet. Drop the argument already - it weakens a case that is strong enough on its own merits.
Nota Bene
The fact that The Great White Tornado Theory is specious and a lousy argument for open financial markets does not release financial institutions from the implicit obligation to do well and do good. Do not come to Rome and do as the Romans - come to Beijing with the full cognizance that the ability to know right from wrong - and to act on that knowledge - is a long-term competitive advantage.
Chinese companies and individuals are not going to be comfortable with placing their financial futures in the hands of institutions who engage in nefarious practices. All a foreign firm can offer today that a Chinese firm cannot is trust, the comfort that a customer is putting his faith in a professional whose ethics are above question. Lose that, and the Chinese financial industry will be a rat race and the foreign firms will be the first targets when the regulators grow new teeth.
I call this belief The Great White Tornado Theory.
The Great White Tornado Theory is used most often in China by advocates of foreign participation in China's financial industry. Listening to the tales of embezzlement, corruption, and malfeasance among China's banks, securities brokerages, and other sectors, executives of international firms shake their heads, tut-tut sadly, and remind media, policymakers, and each other that if ethically managed (read "foreign") companies were allowed to fully participate in the market, by competitive force and dint of example they would help eliminate unsavory practices.
It's an attractive theory, and as an advocate of greater competitiveness in China, I want to agree. A lot of my friends do, as do many people whom I respect deeply.
But both the theory and those who expound it have some credibility problems with Chinese audiences and impartial observers.
What're We Doing Here?
Let's say for a moment China were to allow open foreign participation in, say, the securities brokerage sector. Once we get past the rhetoric and the high-minded ideals, foreign firms are not coming to China to clean the place up - they're coming to make money. After making investments in staff, high-priced offices, and years of lobbying, headquarters in New York, London, or Tokyo are not going to be telling their China teams "okay, guys, go out there and help build an ethical market." No, the word from HQ is going to be "get out there and start making us a mint, or we'll fire you and find somebody who will."
The pressure to perform will be intense, and the competition - intensified by the arrival of foreigners - will make performing extremely difficult. The pressure to engage in common but unsavory practices to get business and drive results will be intense. In such a cauldron, the question of making the ethical choice and the profitable one will not come down to the name on the door or the pedigree of the firm - it will come down to the character of the individuals making those choices, and to how willing firms will be to sacrifice profits for ethics.
If the situation in other industries and places is anything to go by, the prognosis is not good.
Doing Like the Romans
The experience of other industries in China suggests the path that foreign securities firms might take.
There are those who believe that only a very limited number of foreign firms engage in unethical practices in China, and there are others who have confided with me that they believe it impossible to make a profit in China without bending your morality a bit - the system is simply rigged against that. In reality, China can be extremely hard on ethical corporate practices. As Peter Goodman wrote in The Washington Post last August:
"American business leaders often describe their China operations idealistically, suggesting that their presence here will compel Chinese competitors to adopt more ethical business practices. But in one key regard, the dynamic operates in reverse, with U.S. companies adopting Chinese-style tactics to secure sales, as they compete in a market in which Communist Party officials routinely control businesses, and purchasing agents consider kickbacks part of their salary.
Managers of U.S. companies say they are caught in a dilemna: They are answerable to shareholders on Wall Street and home offices that demand a piece of an increasingly lucrative Chinese market. Yet they are also held to account at home by the Department of Justice and the SEC."
In short, when in Rome, companies are not acting like the Greeks. Foreign firms in the telecommunications, medical equipment, airport security, software, and computer hardware industries have all been accused of, have admitted, and/or have been fined for practices that are not only unethical but are indeed illegal in the U.S.
For the finance industry, is there anything to suggest that the record would be different?
The Record Elsewhere
A scan over the checkered history of the financial industries in the U.S. over the past two decades does nothing to suggest that there is something about an international institution that inhibits impropriety. The savings-and-loan scandal from the late 1980s, the insider-trading convictions of people like Ivan Boesky, the tainting of research by investment bankers, the growing options pricing scandal, boiler rooms, pump-and-dump schemes...all evidence drawn from the front pages of America's largest newspapers, all representing ethical lapses in finance, and all taking place under the aegis of the toughest regulatory system in the world.
Taking the show on the road hasn't helped. Failures in ethics and systemic controls at places like Morgan Stanley Japan Securities and Goldman Sachs Japan make clear that financial firms are not above rolling around in the mud with the locals like Mitsubishi Securities and the Murakami Fund in the name of profits. Indeed, if Japan is any model, one could argue that it is not foreigners who will clean up a market, but local regulators with sufficient political air cover to do the right thing.
So again, I ask - if foreign financial firms can find themselves in hot water at home for not doing the right thing, what evidence is there that they will have a cleansing effect on China.
Right Impulse. Wrong Reason.
Foreign participation in China's financial sectors will be a good thing for a lot of reasons - it will increase competition, diversify services, and force everyone to work harder for the customer's business. The institutional capital and investment mentality the foreigners bring with them should do much to stabilize the punter-driven technically-based markets, and possibly even bring some accountability to bear on listed companies.
Creating a cleaner market, however, is not one of those reasons.
The government knows all of this - there is a growing understanding among regulators that a well managed market requires an independent third-party overseer with prosecutorial powers in addition to whatever self-regulation can be put into place. (That's not radical, anti-free market thinking, by the way - that's the Securities Exchange Act of 1934.)
For that reason, anyone who suggests to a government official in China that foreign participation will have a cleansing effect on China's financial industry is merely flushing his own credibility down the toilet. Drop the argument already - it weakens a case that is strong enough on its own merits.
Nota Bene
The fact that The Great White Tornado Theory is specious and a lousy argument for open financial markets does not release financial institutions from the implicit obligation to do well and do good. Do not come to Rome and do as the Romans - come to Beijing with the full cognizance that the ability to know right from wrong - and to act on that knowledge - is a long-term competitive advantage.
Chinese companies and individuals are not going to be comfortable with placing their financial futures in the hands of institutions who engage in nefarious practices. All a foreign firm can offer today that a Chinese firm cannot is trust, the comfort that a customer is putting his faith in a professional whose ethics are above question. Lose that, and the Chinese financial industry will be a rat race and the foreign firms will be the first targets when the regulators grow new teeth.
Posted at 02:31 PM
Thu - September 7, 2006
It's The People, Stupid
"Power not socialism is today's Chinese
ideology," by Richard McGregor,
The Financial
Times, July 25,
2006
Going back through the archives (going on
vacation with the family can be murder on your reading,) I picked up an article
written by Richard McGregor in the FT on July 25 in which he cogently argues
that China is about power, not about socialism.
By itself, that’s no stunning revelation - if anything China’s cadres, bureaucrats, and even soldiers seem daily to give greater credence to the belief that you needn’t scratch any Chinese very hard to find a capitalist. Richard’s suggestion is the suggestion that ideology in China is (cynically) little more than a convenient fig leaf to protect those in power is, similarly, an acknowledged truism.
Government v. Business?
But what really tickled my frontal lobes was his use of the recent rejection of the draft property law as an example of the kinds of decisions made to keep the party in power as opposed to keeping the economy moving forward.
The issue Richard really wants us to understand is this: the increasingly powerful economic forces in China, represented by Big Money (the global financial establishment, including the mandarins at the People’s Bank in China) and Big Enterprise (the leaders of the reformed SOEs and medium-large local and foreign companies whose success is driving the economy,) are not the constituency to whom the Party and the government play.
As befitting a publication like the FT, McGregor portrays this as a growing conflict between single-party rule and growing private interests in the PRC. That’s one way to look at it, certainly, especially if (as McGregor does) you reject the idea that any Marxist concepts have pervaded the thinking of the Party.
Power of the Pitchforks
I don’t see it in the same way. I think the point is that the implicit forces driving decision making in Beijing remain a concern for the perceptions of those who wield the latent power to end the Party’s rule - the workers, farmers, cadres, bureaucrats, taxi drivers and shopkeepers who make up what we all affectionately know as the lao bai xing.
And they should be afraid. Take a nation where popular upheaval to is a time-honored means of governmental transition, and add in an incomplete economic development process with mind-boggling and growing inequality, and things start to look very touchy indeed.
Strong, stable, pluralist societies are built on a foundation of ubiquitous property ownership - when your life is invested in an asset you cannot move, you have a pretty powerful compulsion to safeguard the system that assures its value.
But when you have a society in transition, where there remain tens of millions of people in abject poverty with little to lose in following mystics and demagogues, even the appearance of playing to Big Money and Big Enterprise is a dangerous proposition.
This is not about the Party vs. The Money. This is about recognizing that an ironic way, the power of China’s leaders actually does come from the people. Business and finance interests will have limited say in China until such a time as nearly everyone in the PRC is vested in the success of the system.
For Big Money and Big Enterprise in China - and for any group borne of commercial concerns - this means that when your agenda operates in opposition to the improvement of the lot of the Chinese people, your agenda has no hope, and that the best way to get your way in China is to make improving the lives of “the masses” an implicit part of what you do here.
By itself, that’s no stunning revelation - if anything China’s cadres, bureaucrats, and even soldiers seem daily to give greater credence to the belief that you needn’t scratch any Chinese very hard to find a capitalist. Richard’s suggestion is the suggestion that ideology in China is (cynically) little more than a convenient fig leaf to protect those in power is, similarly, an acknowledged truism.
Government v. Business?
But what really tickled my frontal lobes was his use of the recent rejection of the draft property law as an example of the kinds of decisions made to keep the party in power as opposed to keeping the economy moving forward.
The issue Richard really wants us to understand is this: the increasingly powerful economic forces in China, represented by Big Money (the global financial establishment, including the mandarins at the People’s Bank in China) and Big Enterprise (the leaders of the reformed SOEs and medium-large local and foreign companies whose success is driving the economy,) are not the constituency to whom the Party and the government play.
As befitting a publication like the FT, McGregor portrays this as a growing conflict between single-party rule and growing private interests in the PRC. That’s one way to look at it, certainly, especially if (as McGregor does) you reject the idea that any Marxist concepts have pervaded the thinking of the Party.
Power of the Pitchforks
I don’t see it in the same way. I think the point is that the implicit forces driving decision making in Beijing remain a concern for the perceptions of those who wield the latent power to end the Party’s rule - the workers, farmers, cadres, bureaucrats, taxi drivers and shopkeepers who make up what we all affectionately know as the lao bai xing.
And they should be afraid. Take a nation where popular upheaval to is a time-honored means of governmental transition, and add in an incomplete economic development process with mind-boggling and growing inequality, and things start to look very touchy indeed.
Strong, stable, pluralist societies are built on a foundation of ubiquitous property ownership - when your life is invested in an asset you cannot move, you have a pretty powerful compulsion to safeguard the system that assures its value.
But when you have a society in transition, where there remain tens of millions of people in abject poverty with little to lose in following mystics and demagogues, even the appearance of playing to Big Money and Big Enterprise is a dangerous proposition.
This is not about the Party vs. The Money. This is about recognizing that an ironic way, the power of China’s leaders actually does come from the people. Business and finance interests will have limited say in China until such a time as nearly everyone in the PRC is vested in the success of the system.
For Big Money and Big Enterprise in China - and for any group borne of commercial concerns - this means that when your agenda operates in opposition to the improvement of the lot of the Chinese people, your agenda has no hope, and that the best way to get your way in China is to make improving the lives of “the masses” an implicit part of what you do here.
Posted at 04:52 PM
Tue - September 5, 2006
Why China is Growing and GM is Shrinking
"The Risk Pool" by Malcolm Gladwell in
The New
Yorker, August 28, 2006
Every now and then an article or book comes along
that gently but insistently challenges your assumptions. Malcolm Gladwell, whose
thinking and work has been much maligned by the buzzwordification of his
brilliant book The Tipping
Point, pops up with this little beauty of an
article in last week's The New Yorker,
thankfully made available
online.
(NB - Speaking very late last night to The Village Grouch, we both agree that between The New Yorker, The Economist, Harvard Business Review and a handful of similarly insightful publications, we'd have to give up our jobs just to keep up with our reading. We also agreed, however, that it would be a worthy sacrifice.)
Gladwell uses the article to zoom in on a single demographic statistic called "the dependency ratio," which is essentially the ratio of people who aren't of working age (children and retirees) and those who are. Citing a range of examples, both national (Ireland, China, India and Japan) and corporate (GM and Bethlehem Steel, and Google), he convincingly makes the case that comparative advantage is in no small part dependent on demographics.
Clearly demographics are not the only issue - if dependency ratios told all, Africa would be an emerging economic superpower capable or rivaling Asia. Gladwell's point, however, does have broader implications:
> For U.S. companies, who in the face of GM's long slow meltdown must see pension and medical benefits as a time bomb;
> For the U.S. government and electorate, who now need to reassess the wisdom of allowing corporations to handle social benefits programs;
> For European and Japanese governments who now must revaluate the sustainability of their immigration and social policies; and
> For China, who needs to look beyond the current 11th Five Year Plan Guidelines and see that beginning in about 20 years they're going to have an immense mass or retirees to support.
Chewy stuff.
(NB - Speaking very late last night to The Village Grouch, we both agree that between The New Yorker, The Economist, Harvard Business Review and a handful of similarly insightful publications, we'd have to give up our jobs just to keep up with our reading. We also agreed, however, that it would be a worthy sacrifice.)
Gladwell uses the article to zoom in on a single demographic statistic called "the dependency ratio," which is essentially the ratio of people who aren't of working age (children and retirees) and those who are. Citing a range of examples, both national (Ireland, China, India and Japan) and corporate (GM and Bethlehem Steel, and Google), he convincingly makes the case that comparative advantage is in no small part dependent on demographics.
Clearly demographics are not the only issue - if dependency ratios told all, Africa would be an emerging economic superpower capable or rivaling Asia. Gladwell's point, however, does have broader implications:
> For U.S. companies, who in the face of GM's long slow meltdown must see pension and medical benefits as a time bomb;
> For the U.S. government and electorate, who now need to reassess the wisdom of allowing corporations to handle social benefits programs;
> For European and Japanese governments who now must revaluate the sustainability of their immigration and social policies; and
> For China, who needs to look beyond the current 11th Five Year Plan Guidelines and see that beginning in about 20 years they're going to have an immense mass or retirees to support.
Chewy stuff.
Posted at 05:54 PM
Mon - July 3, 2006
Bricklin's Waterloo
ARTICLE: "Death of a Salesman" by Todd
Lassa, Motor Trend,
November 2005, p.
80
(Okay, I'll admit, this is an 8 month
old article, but in my defense I just got it a couple of weeks ago via my mail
forwarding service, since I'm too cheap to pay for airmail, and I only read it
last weekend. Nonetheless, it's a superb feature and worth the read.)
I read Motor Trend because it manages to cover the car business from the horsepower-and-torque all the way up to the executive suite all without forgetting something that almost every other business publication probably never figured out: the automobile is as much recreation as transportation, and the business of designing, making, and selling cars belongs more squarely in the entertainment industry than lumped in along steel and other heavy industries. Also, unlike most of the other gearhead rags, Motor Trend occasionally remembers that there is, in fact, a whole big world out there south of Florida, east of Maine, north of Montana, and west of Hawaii.
Detroit editor Todd Lassa's interview with serial car entrepreneur Malcolm Bricklin did not disappoint. For those of you just joining us, Malcolm Bricklin is the gentleman who: built and crashed the Handyman Hardware chain just as the do-it-yourself craze was hitting a high point in suburban America; built and crashed a sports car company in the middle of the cocaine-fueled 1970s; and managed to build and bankrupt the infamous Yugo car company in the late 1980s.
So it is with a bit of skepticism that Lassa approaches his subject, but he gives Bricklin a more than adequate opportunity to hype his newest venture, Visionary Vehicles. You see, Bricklin believes that by working with Wuhu-based Chery Automobile Company he can import and sell Lexus-class vehicles for about half of a Lexus price. Which Chery is happy to do, providing Mr. Bricklin first hands over US$200 million in cash.
Is it me, or are there are so many interesting ways this train could wreck that you're not sure who to warn about whom?
• Do you warn Bricklin, who is about to spend his sunset years, a lot of investor money, and the livelihoods of his dealers doing the hard work to build a market for Chery in the U.S. that Chery could crush at will as soon as they figure out they don't need a middleman?
• Do you warn Chery president Yin Tongyao about how Mr. Bricklin has walked away from a procession of broken enterprises in the past, and that he may not be the safest guy upon whom to wager the company's future market in China?
• Or do you just sit back and watch as Mr. Bricklin gets squeezed between his investors, his dealers, his consumers, and Chery in a mashup that seems bound to go wrong?
Something about this tells me that somebody is going to get taken for a ride in this situation, and it's pretty clear Mr. Lassa, our writer, gets that, and he manages to inject just the right amount of skepticism at every turn. And it's pretty clear he's more worried about the Chinese than about ol' Malcolm, who always seems to land on his feet.
Frankly, I'm more worried about the little guys in this process - the investors putting up the $200 million serious-money, the dealers who will put their lives and their savings into Visionary Vehicles, and the American families who will put their hard-earned dollars into a VV because that's all they can afford.
Caveat emptor, y'all.
I read Motor Trend because it manages to cover the car business from the horsepower-and-torque all the way up to the executive suite all without forgetting something that almost every other business publication probably never figured out: the automobile is as much recreation as transportation, and the business of designing, making, and selling cars belongs more squarely in the entertainment industry than lumped in along steel and other heavy industries. Also, unlike most of the other gearhead rags, Motor Trend occasionally remembers that there is, in fact, a whole big world out there south of Florida, east of Maine, north of Montana, and west of Hawaii.
Detroit editor Todd Lassa's interview with serial car entrepreneur Malcolm Bricklin did not disappoint. For those of you just joining us, Malcolm Bricklin is the gentleman who: built and crashed the Handyman Hardware chain just as the do-it-yourself craze was hitting a high point in suburban America; built and crashed a sports car company in the middle of the cocaine-fueled 1970s; and managed to build and bankrupt the infamous Yugo car company in the late 1980s.
So it is with a bit of skepticism that Lassa approaches his subject, but he gives Bricklin a more than adequate opportunity to hype his newest venture, Visionary Vehicles. You see, Bricklin believes that by working with Wuhu-based Chery Automobile Company he can import and sell Lexus-class vehicles for about half of a Lexus price. Which Chery is happy to do, providing Mr. Bricklin first hands over US$200 million in cash.
Is it me, or are there are so many interesting ways this train could wreck that you're not sure who to warn about whom?
• Do you warn Bricklin, who is about to spend his sunset years, a lot of investor money, and the livelihoods of his dealers doing the hard work to build a market for Chery in the U.S. that Chery could crush at will as soon as they figure out they don't need a middleman?
• Do you warn Chery president Yin Tongyao about how Mr. Bricklin has walked away from a procession of broken enterprises in the past, and that he may not be the safest guy upon whom to wager the company's future market in China?
• Or do you just sit back and watch as Mr. Bricklin gets squeezed between his investors, his dealers, his consumers, and Chery in a mashup that seems bound to go wrong?
Something about this tells me that somebody is going to get taken for a ride in this situation, and it's pretty clear Mr. Lassa, our writer, gets that, and he manages to inject just the right amount of skepticism at every turn. And it's pretty clear he's more worried about the Chinese than about ol' Malcolm, who always seems to land on his feet.
Frankly, I'm more worried about the little guys in this process - the investors putting up the $200 million serious-money, the dealers who will put their lives and their savings into Visionary Vehicles, and the American families who will put their hard-earned dollars into a VV because that's all they can afford.
Caveat emptor, y'all.
Posted at 09:28 PM
Sun - July 2, 2006
Taking the High Road to T1b3t
ARTICLE: "Last Stop: Lhasa: Rail Link
Ties Remote T1bet to China," by Joseph Kahn,
The New York
Times, July 2, 2006
BOOK: Nothing Like It In The World: The Men Who Built the Transcontinental Railroad 1863-1869 by Stephen E. Ambrose, New York, Simon & Schuster, August 29, 2000.
BOOK: Empire Express: Building the First Transcontinental Railroad by David Haward Bain, New York, Viking, November 1, 1999
BOOK: Nothing Like It In The World: The Men Who Built the Transcontinental Railroad 1863-1869 by Stephen E. Ambrose, New York, Simon & Schuster, August 29, 2000.
BOOK: Empire Express: Building the First Transcontinental Railroad by David Haward Bain, New York, Viking, November 1, 1999
With no other intention than pure escapism, about
six weeks ago I finally pulled off of my shelves two unread books about the
building of the first transcontinental railroad across the United States. I've
finished Stephen Ambrose's highly readable work, and I'm now deep into David
Haward Bain's well-written, far more scholarly tome on the subject. In
retrospect, the timing could not have been better, as global coverage begins on
the opening of the final 712 mile section of the Beijing-Lhasa railroad.
The parallels are compelling:
• The Pacific Railroad (as the transcontinental railway was called in the 1860s) was a dream almost as old as the American Republic, having been a matter of discussion for nearly 50 years before it was realized. Similarly, the Lhasa railway has been on and off of the national agenda in China for over 50 years.
• The political reasons given to justify the expenditure in both cases was "to tie the nation together" by linking a remote region with the rest of the country.
• The Pacific Railroad could never have been completed without Chinese help (in particular, the effort to get through the Sierra Nevada mountains of California.) Similarly, the Lhasa railway relied on western help to address some critical challenges.
I could go on, but you get the point.
More important, perhaps, is contrasting foreign coverage of the Lhasa link with the coverage given the Pacific Railway some 140 years ago.
Perhaps in the age of air travel we've all grown a bit bored by railroads, but I think that's because in an age of air travel and truck transport, railroads seem a bit quaint. In regions like North America and Europe, with their wealthy economies and dense populations, freeways, autobahns, and discount airlines railroads seem relegated to hauling coal or commuters. (They aren't, but that's the subject of another post.)
What we lack, therefore, is an appreciation of two things: how hard this was to do, and what effect this will have on Xizang.
A Engineering Feat and a Human Achievement
Ambrose and Bain both make visceral the science, craft, and sheer physical effort it takes to build a railroad across a mountain range. You need to find an "alignment," a course for the road that does not rise more than about 100 feet every mile, but that is as straight as possible because every foot of railroad in terrain like this costs a small fortune.
You then need to dig, chip, and blast the grade through cuts and tunnels through mountains of solid granite. You need to fill or bridge rivers, canyons, gulches, and even little dips and do it in a way that won't be washed out by floods, avalanches, or made impassible by high mountain winds.
And if you think that's easy in the 21st century, remember that you need to do all of this in some of the most remote territory on earth, hauling men, machines, material, and the food, energy, and fuel to keep all of them working up a narrow artery of steel.
Oh, yeah, and one other thing. You've got to do all of this at an altitude considered too uncomfortable or indeed unhealthy for a sleeping airline passenger, much less a manual laborer.
But with few exceptions (notably Rui Xia's superb late-2005 Asia Times article) you'll see very little credit given to China's engineers and workers for accomplishing this task in the international media. That's a shame, not only because these hardy souls deserve it, but because the failure to give such credit causes the Chinese and foreign engineers who know how tough it was to build the Lhasa road causes all of them to question the balance of the international media on Chinese topics. In addition, it allows observers to underestimate the innate capabilities of Chinese engineering in spite of the kind of big-ticket-project related shenanigans we're used to hearing about in China.
The Great Wall Builders are back. All of us should be contemplating the implications.
Linking Lhasa
Joseph Kahn has put forth a yeoman's effort covering the story from his chair in Beijing, as much as I'm sure he'd have rather been covering it from the train itself. It's left him taking a more political take on the road, which is a shame. I won't go into what he wrote - you should give him a read yourself.
Given the sheer volume of hyperbole from both proponents and opponents of the line, it is impossible to capture with any justice the essence of either position, much less debate it. But a few thoughts to contemplate as you weather the barrage of coverage.
Expecting a single rail line passing through a small part of a province larger (and less accessible) than Alaska to bring fundamental economic change to the region stretches the bounds of credulity. Certainly, those living it Lhasa and its environs will experience some quality of life improvements based solely on the fall in the cost to schlep goods up the hill. It also opens the region up to a class of tourist or traveler who cannot afford an air ticket.
For the line to deliver any significant economic benefit (or harm, depending on your point-of-view,) its Lhasa terminus must become the hub of a transportation and communications infrastructure that links all of the cities and villages of the region. That's the sort of nitty-gritty investment that is difficult to justify when sitting in Beijing, but that will become necessary if the nation is truly serious about including the Xizang province on the benefits of the China's economic development.
As to whether the road will Sinicize the local culture, that is a far trickier question that in the end is determined more by one's political and ideological viewpoints than on anthropology. There are some who see Xizang as the Shangri-la of James Hilton's novel Lost Horizon and thus see any intrusion of modernity as the functional equivalent of genocide. Fair enough.
Yet in no small part, the matter remains in the hands of the locals themsleves. It is instructive to note that in the face of globalization we live in a world where a wide range of distinct cultures and ethnicities have survived or even flourished.
For what destroys cultures is not the coming of railroads, but the departure of relevance. History demonstrates that a culture that is deeply relevant to those who treasure it will survive. As long as a culture remains meaningful, assimilation will be held at bay.
(None of this, of course, is likely to mollify someone (like that deep political thinker Richard Gere) who maintains a canonical belief in the value of turning the Xizang province into an isolated mountain theocracy. For those folks, I'd suggest that a review of the histories and status of Nepal and Bhutan serve as good examples of the direction such an experiment might take. They invite pondering.)
On to India
One last thought about the railroad. Throughout history, railroads have also served to pierce and bridge borders between nations. In my view, the High Road to Lhasa is half a road that will accomplish its greatest historic purpose when it can form the bridge between Delhi and Beijing.
Contemplate that.
The parallels are compelling:
• The Pacific Railroad (as the transcontinental railway was called in the 1860s) was a dream almost as old as the American Republic, having been a matter of discussion for nearly 50 years before it was realized. Similarly, the Lhasa railway has been on and off of the national agenda in China for over 50 years.
• The political reasons given to justify the expenditure in both cases was "to tie the nation together" by linking a remote region with the rest of the country.
• The Pacific Railroad could never have been completed without Chinese help (in particular, the effort to get through the Sierra Nevada mountains of California.) Similarly, the Lhasa railway relied on western help to address some critical challenges.
I could go on, but you get the point.
More important, perhaps, is contrasting foreign coverage of the Lhasa link with the coverage given the Pacific Railway some 140 years ago.
Perhaps in the age of air travel we've all grown a bit bored by railroads, but I think that's because in an age of air travel and truck transport, railroads seem a bit quaint. In regions like North America and Europe, with their wealthy economies and dense populations, freeways, autobahns, and discount airlines railroads seem relegated to hauling coal or commuters. (They aren't, but that's the subject of another post.)
What we lack, therefore, is an appreciation of two things: how hard this was to do, and what effect this will have on Xizang.
A Engineering Feat and a Human Achievement
Ambrose and Bain both make visceral the science, craft, and sheer physical effort it takes to build a railroad across a mountain range. You need to find an "alignment," a course for the road that does not rise more than about 100 feet every mile, but that is as straight as possible because every foot of railroad in terrain like this costs a small fortune.
You then need to dig, chip, and blast the grade through cuts and tunnels through mountains of solid granite. You need to fill or bridge rivers, canyons, gulches, and even little dips and do it in a way that won't be washed out by floods, avalanches, or made impassible by high mountain winds.
And if you think that's easy in the 21st century, remember that you need to do all of this in some of the most remote territory on earth, hauling men, machines, material, and the food, energy, and fuel to keep all of them working up a narrow artery of steel.
Oh, yeah, and one other thing. You've got to do all of this at an altitude considered too uncomfortable or indeed unhealthy for a sleeping airline passenger, much less a manual laborer.
But with few exceptions (notably Rui Xia's superb late-2005 Asia Times article) you'll see very little credit given to China's engineers and workers for accomplishing this task in the international media. That's a shame, not only because these hardy souls deserve it, but because the failure to give such credit causes the Chinese and foreign engineers who know how tough it was to build the Lhasa road causes all of them to question the balance of the international media on Chinese topics. In addition, it allows observers to underestimate the innate capabilities of Chinese engineering in spite of the kind of big-ticket-project related shenanigans we're used to hearing about in China.
The Great Wall Builders are back. All of us should be contemplating the implications.
Linking Lhasa
Joseph Kahn has put forth a yeoman's effort covering the story from his chair in Beijing, as much as I'm sure he'd have rather been covering it from the train itself. It's left him taking a more political take on the road, which is a shame. I won't go into what he wrote - you should give him a read yourself.
Given the sheer volume of hyperbole from both proponents and opponents of the line, it is impossible to capture with any justice the essence of either position, much less debate it. But a few thoughts to contemplate as you weather the barrage of coverage.
Expecting a single rail line passing through a small part of a province larger (and less accessible) than Alaska to bring fundamental economic change to the region stretches the bounds of credulity. Certainly, those living it Lhasa and its environs will experience some quality of life improvements based solely on the fall in the cost to schlep goods up the hill. It also opens the region up to a class of tourist or traveler who cannot afford an air ticket.
For the line to deliver any significant economic benefit (or harm, depending on your point-of-view,) its Lhasa terminus must become the hub of a transportation and communications infrastructure that links all of the cities and villages of the region. That's the sort of nitty-gritty investment that is difficult to justify when sitting in Beijing, but that will become necessary if the nation is truly serious about including the Xizang province on the benefits of the China's economic development.
As to whether the road will Sinicize the local culture, that is a far trickier question that in the end is determined more by one's political and ideological viewpoints than on anthropology. There are some who see Xizang as the Shangri-la of James Hilton's novel Lost Horizon and thus see any intrusion of modernity as the functional equivalent of genocide. Fair enough.
Yet in no small part, the matter remains in the hands of the locals themsleves. It is instructive to note that in the face of globalization we live in a world where a wide range of distinct cultures and ethnicities have survived or even flourished.
For what destroys cultures is not the coming of railroads, but the departure of relevance. History demonstrates that a culture that is deeply relevant to those who treasure it will survive. As long as a culture remains meaningful, assimilation will be held at bay.
(None of this, of course, is likely to mollify someone (like that deep political thinker Richard Gere) who maintains a canonical belief in the value of turning the Xizang province into an isolated mountain theocracy. For those folks, I'd suggest that a review of the histories and status of Nepal and Bhutan serve as good examples of the direction such an experiment might take. They invite pondering.)
On to India
One last thought about the railroad. Throughout history, railroads have also served to pierce and bridge borders between nations. In my view, the High Road to Lhasa is half a road that will accomplish its greatest historic purpose when it can form the bridge between Delhi and Beijing.
Contemplate that.
Posted at 02:12 PM
Sun - May 7, 2006
Design that Sells, Please
"China Needs Design that Sells: As the
country changes from a manufacturer to a consumer nation, companies must learn
how to market to a diverse public" By Patrick Whitney,
BusinessWeek,
April 25, 2006
Professor Whitney from the Illinois Institute of
Technology makes some superb points in this op/ed piece. Among them he notes that
companies have to stop thinking about China as a single market; and that
standard tools of market research don't cut
it.
Right on, Dr. Whitney.
BTW, Whitney is the Steelcase/Robert C. Pew Professor and the director of the Institute of Design at Illinois Tech. Here's a guy who is not even focused on China, and he gets it.
Right on, Dr. Whitney.
BTW, Whitney is the Steelcase/Robert C. Pew Professor and the director of the Institute of Design at Illinois Tech. Here's a guy who is not even focused on China, and he gets it.
Posted at 06:51 PM