Review of famous poker hands::Who Is the Best Poker Player in the World
Review of famous poker hands::Who Is the Best Poker Player in the World
Day one of China's General Secretary Hu Jintao state visit to the United states today. Listening as painfully dry and frustrating as it was at times it really gave me the impression that we are playing Chinese checkers when we should be playing poker. I studied Asian history, Lived in Japan, been to most of the major Chinese cities, and have done business for years with Chinese companies (both state owned and private) before turning my attention to the markets full time. What so many doesn't understand is that China has an axe to grind (and maybe rightfully so) for all the transgressions that have happened by so many western countries. Granted England ranks most likely on the top of the list but United States doesn't have clean hands either. At one time China was the greatest country in terms of total GDP and if including India the GDP comprised of over half the total worlds GDP. Moving forward after more than one war was fought to maintain the sale of drugs (think Opium / British East India Company in the mid 1800s). This along with civil wars, Japanese invasion in the 1930s that didn't end until the end of world war II and we have a China that went from a position of high status to a country that has been beaten up and seriously embarrassed. For a culture that prides itself like most with a feeling of self respect (think saving face) it is understandable that they want to move along and take what they feel is their rightful place as the number one world economy and power. I feel that anything that gets in the way of that goal is going to be very quickly dismissed as getting in the way of the end game and not worthy of consideration. This is what so many business leaders in the west including political leaders in Washington fail to understand. A prime example is when Microsoft said they would be proactive in disabling counterfeit software products and the response from China was that they would boycott and attempt to punish the audacity of Microsoft for actually wanting to protect their intellectual property from outright wide scale theft. I feel this was a mistake on as large of scale as possible. What was missed is that China is working hard to find a replacement for the Microsoft product and replace it with a Chinese product to sell within China and undoubtedly to the world as well. Better to make a stand while you are in a position of power and influence than to try to appease a thief to not steal from you any more. As we heard many times today China continuously uses the term "respect" and yet laughs in our face as they show us none. At least no more than absolutely necessary in keeping the United States from giving China a major and real backlash. Walking the streets in Shanghai one can find stores that sell DVDs in major malls and shops and the majority of the product that is available that I witnessed was counterfeit. I found it very difficult to impossible to find anything that was genuine. How many jobs / export money is lost due to the sales that are lost from Hollywood losing what appears to be most of the Chinese market from competitors that simply steal the product and resell it? I am pretty sure that California could use the extra revenue. It goes on and on in ways that many may not understand. Rolex is another easy one to understand but how about fake drugs, fake aerospace products, fake musical instruments (I have been to a factory in China that produces Fender guitars and Fender does NOT have a factory in China), fake jeans, T-shits, and just about every other value added product made in the US. I have talked to Chinese businesses that actually do not want to sell US products because the counterfeit problem is so bad that they can not compete against it and the customers do not believe the good are the real thing. How bad is that? Products that are not sold because no one believes they are real???? I use Shanghai as my example because this is the same city that China uses as their example of how they are making progress in stopping illegal goods from being sold. Yes in all fairness their have been limited examples of people being arrested and sentenced to prison but I equate that to using a table spoon to drain a bathtub. I could make points about how the Chinese manipulate the Yuan against the dollar to keep it artificially low but I think that is not a problem. I know many will disagree but in my opinion a strong dollar raises the standard of living for the U.S. Also and very important I feel is that in order to maintain the current exchange rate China is buying our debt allowing us to keep the housing market from totally imploding along with perhaps the rest of the economy (one may be able to argue that the economy would be doing better in the long run otherwise and I would agree I do not care for the debt level we find the U.S. at). Lastly a lot of time is spent with the human rights issues. Lets face it, China gives little importance to human rights. But as I suggested this is because that perceived rightly or wrongly to be getting in the way of the end game of being seated at the head of the table. I also feel that the human rights / censorship hurts China more than it hurts us. China will loosen up censorship and at some point tear down the "Great Firewall of China" but not one minute before they want to. We can talk until we are blue in the face and they will simply nod, be polite, and tell us they will work harder in the future towards it. Like it or not that is the end of that story. What should the United States do then? Are we helpless to get anything done? No but we must act like we actually are in control of our own fate. I would suggest a 5-15% across the board increase in import duties (we actually allow many products in with ZERO import duty from China and as a former importer I know from experience). Yes China could file complaints to the WTO. China could also restrict imports of our products but we import more than they do so they have more to lose. In the end a trade war has proven more than once to only leave a wake of losers and no winners long term and it is that thinking and game theory that China is betting on to continue what they are doing. But this view while maybe correct in the short term and on a total GDP persepective right now fails to calculate what an absence of action will do. The United States was once faced with a export restriction of VHS cases for movies over an issue back in the 1990s. Hollywood cried and we were left without another source for the low cost product. Now we face possible short term shortages on rare earth products / metals. What will it be next week / month / year? What happens when the dependence shifts from China needing the United States more to one where the United States needs China more? You can count on China nodding a little bit less and offering a little bit less and demanding a lot more. Things like Taiwan are in the sights and within a few years at our current trend we will not have a say because we will be to vulnerable to a reaction by China if we do anything more than lip service (We may already be there now). We need to put business leaders of the caliber of Donald Trump, Jack Welch and others who are willing to take on some short term pain to get a brighter tomorrow. I highly doubt President Obama will do anything at this time that could possibly upset the apple cart and risk his chances for re-election. The Chinese know this and will play that to their advantage. The United States must stop thinking in terms of today and start looking at tomorrow and beyond. Perhaps a good start is to understand what the Chinese are doing, how they are doing it, and why. A good place to start for our leaders would be a reading of the famous Sun Tsu "The Art of War". |
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