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> Coupled with lack of global consumer brands, corruption, pollution, demographics issues, global slowdown, carry trade unwind, rising us interest rates... You

by exelius 11y ago

> Coupled with lack of global consumer brands, corruption, pollution, demographics issues, global slowdown, carry trade unwind, rising us interest rates... You don't need global consumer brands when your country is the size of China. They have 15% of the world's population and speak a language that few outside the country can speak and even fewer can read: nobody else is going to come in and take those customers except Chinese companies. Corruption is being cleaned up; but it's still a real problem at the local level. Again, pollution is a huge problem but China is betting the farm on "clean" energy tech and will be the energy leaders of the world in 20 years. If (or when) they figure it out, they're the only ones with the manufacturing skill and capacity to mass-produce. The truth is, we've never seen what happens when a large country "awakens" in the age of globalization. Macroeconomic theory is largely based on the import/export balance, which is increasingly less important as borders become less meaningful (and import/export controls become increasingly difficult to enforce). I have a feeling that China will surprise us - despite the fact that they will have negative population growth over the next few decades and an aging population, the fact that they are actively moving subsistence farmers to the cities may stall the effect of a shrinking population with the added consumption / demand from turning poor farmers into urban consumers. Their aging population is also accustomed to a lower standard of living than the up-and-coming generation. Population deflation has been especially damaging to Japan because it hit them after they had become a heavily industrialized country. Despite the huge progress China has made, hundreds of millions of people still live in poor farming villages. That's a source of potential growth that I expect the Chinese government to tap strategically.

theworstshill 11y ago
This is my feeling too, if anything China is about to breakout and become wealthier and more powerful than it already is. Good work ethic + common sense is a wonderful combination. The "west" largely lacks the later, while the rest of the world (except for a few countries, including China) lacks the former.
- coldpie 11y ago
  You are being downvoted because this is a really poor comment. "The West" lacks "common sense"? "The rest of the world except China" lacks "work ethic"? What?
sharetea 11y ago
good points. let's see... - Chinese companies are the only ones that can serve Chinese customers: Yum brands (KFC, McDonald) 7000 restaurants. Starbucks 1600 stores in China. 7-eleven 2000 stores in China. H&M. BMW. Mercedez. Apple. Microsoft. etc. All top brands, and command a higher price point/margin than local competitors if any. Meanwhile, none of the Chinese brands can even get a foothold outside China. - Clean energy in 20 years: in 20 years, most of the Chinese rich will have already left - large migration from rural to urban: there's no jobs waiting for these rural farmers. Therefore they cannot generate value; they're merely drags on the system. In year 2016, with manual jobs being automated, a body is no longer an asset but a liability. The person would need to have the knowledge/skills to compete for global job scarcity. And Chinese citizens aren't trained in English to compete for global knowledge worker jobs.
- exelius 11y ago
  > Chinese companies are the only ones that can serve Chinese customers I don't agree with this; but Chinese companies are in a much better position to do so, and China is where the growth is. > Clean energy in 20 years: in 20 years, most of the Chinese rich will have already left A bit hyperbolic; but we already have a global economy. Foreign companies will continue to invest in China (both in companies and in their own projects) regardless of what the Chinese wealthy do. There are 1.2 billion people in China. Most don't brush their teeth. Think how much more toothpaste P&G could sell there if people became even moderately wealthy and more concerned about dental hygiene. > large migration from rural to urban: there's no jobs waiting for these rural farmers. As long as the Chinese government is willing to sponsor public works projects, there will always be jobs. And China is not unique in the transition from a manual labor to a knowledge labor economy: they're actually probably in a better position than most because they can benefit from explosive growth whenever they choose to. And don't forget that the Chinese population is aging rapidly: there will be more people exiting the workforce through retirement and death than new entrants into the workforce. Ensuring need and training match up is a problem, but I don't think any government has solved that one; so I wouldn't call it a huge impediment to their growth.
  - sharetea 11y ago
mahranch 11y ago
> You don't need global consumer brands when your country is the size of China. Need? I guess not. But I think the point is that those things manifest themselves in a healthy market/economy/society, a healthy innovative market. If you're not advancing technologically, then you have no hope for your future. And that's what companies like Samsung, Toshiba, and Sony all do (in the electronics industry). They innovate. That innovation breeds more innovation and lays the groundwork/framework for future innovation. That's China's biggest problem right now; they relied so much on theft of IP that they lack the infrastructure to innovate on their own. They're stuck on a ledge and can't go any higher without either technological handouts or stealing more IPs. Unfortunately for China, companies are becoming much better at protecting themselves having learned from past mistakes. China is essentially the world's factory. That's all, nothing more, nothing less. That's all they will ever be until they climb down from their ledge and start climbing up again (starting over from scratch). > They have 15% of the world's population And? not sure how this is relevant. If anything, it's even more incriminating; they have that many people but so little to show for it. So little genius, so little innovation, so little advancement... It's proof that their current social, economic and political system has been a failure. They should be trouncing everyone. But they aren't. > Corruption is being cleaned up Their "corruption clean-up" has been just lip service. You'll note it was published first from China's own government-ran news agencies (Xinhua). If you look at transparency international's corruption index (here: https://www.transparency.org/cpi2014/results https://www.transparency.org/cpi2014/results) you'll see that they actually dropped 20 places from 2013 to 2014. Their corruption actually got worse, not better. > we've never seen what happens when a large country "awakens" in the age of globalization. Unfortunately, China's a long way from awakening.
- exelius 11y ago
  > Need? I guess not. But I think the point is that those things manifest themselves in a healthy market/economy/society, a healthy innovative market. If you're not advancing technologically, then you have no hope for your future. And that's what companies like Samsung, Toshiba, and Sony all do (in the electronics industry). They innovate. That innovation breeds more innovation and lays the groundwork/framework for future innovation. China has been quite innovative in the manufacturing arena. You know all those neat laser drills and 6 axis CNCs that mass-produce all the tech products we have? They were probably designed in the US; but the Chinese are the ones who know how to organize them to churn out 100 million iPhones. > They should be trouncing everyone. But they aren't. Look at your history; China was reeling from the collapse of its imperial government (largely as a result of the meddling of European powers) in the early 20th century. They were then invaded by Japan (which has always been a military-focused country, and thus had a very strong military when Western powers came calling and was able to resist colonialization). After its infrastructure was pillaged by a 15-year Japanese occupation, there was a power vacuum and a decade-long civil war. China was kept in the stone age until basically 1954 by the meddling of outsiders. For all the awful, misguided things Mao did, he and the subsequent leaders of China set the country on a path for rapid modernization - modernization at all costs. > Their "corruption clean-up" has been just lip service. I don't know about that. The Chinese government is acutely aware that they need foreign investment in China, and that becomes very difficult to do when there are "hidden taxes" in the form of corruption. > Unfortunately, China's a long way from awakening. If that's true, then that's pretty scary given where they are now vs. 20 years ago.

by exelius 11y ago

theworstshill 11y ago

This is my feeling too, if anything China is about to breakout and become wealthier and more powerful than it already is. Good work ethic + common sense is a wonderful combination. The "west" largely lacks the later, while the rest of the world (except for a few countries, including China) lacks the former.

coldpie 11y ago
You are being downvoted because this is a really poor comment. "The West" lacks "common sense"? "The rest of the world except China" lacks "work ethic"? What?

sharetea 11y ago

good points. let's see... - Chinese companies are the only ones that can serve Chinese customers: Yum brands (KFC, McDonald) 7000 restaurants. Starbucks 1600 stores in China. 7-eleven 2000 stores in China. H&M. BMW. Mercedez. Apple. Microsoft. etc. All top brands, and command a higher price point/margin than local competitors if any. Meanwhile, none of the Chinese brands can even get a foothold outside China. - Clean energy in 20 years: in 20 years, most of the Chinese rich will have already left - large migration from rural to urban: there's no jobs waiting for these rural farmers. Therefore they cannot generate value; they're merely drags on the system. In year 2016, with manual jobs being automated, a body is no longer an asset but a liability. The person would need to have the knowledge/skills to compete for global job scarcity. And Chinese citizens aren't trained in English to compete for global knowledge worker jobs.

exelius 11y ago
> Chinese companies are the only ones that can serve Chinese customers I don't agree with this; but Chinese companies are in a much better position to do so, and China is where the growth is. > Clean energy in 20 years: in 20 years, most of the Chinese rich will have already left A bit hyperbolic; but we already have a global economy. Foreign companies will continue to invest in China (both in companies and in their own projects) regardless of what the Chinese wealthy do. There are 1.2 billion people in China. Most don't brush their teeth. Think how much more toothpaste P&G could sell there if people became even moderately wealthy and more concerned about dental hygiene. > large migration from rural to urban: there's no jobs waiting for these rural farmers. As long as the Chinese government is willing to sponsor public works projects, there will always be jobs. And China is not unique in the transition from a manual labor to a knowledge labor economy: they're actually probably in a better position than most because they can benefit from explosive growth whenever they choose to. And don't forget that the Chinese population is aging rapidly: there will be more people exiting the workforce through retirement and death than new entrants into the workforce. Ensuring need and training match up is a problem, but I don't think any government has solved that one; so I wouldn't call it a huge impediment to their growth.
- sharetea 11y ago

mahranch 11y ago

> You don't need global consumer brands when your country is the size of China. Need? I guess not. But I think the point is that those things manifest themselves in a healthy market/economy/society, a healthy innovative market. If you're not advancing technologically, then you have no hope for your future. And that's what companies like Samsung, Toshiba, and Sony all do (in the electronics industry). They innovate. That innovation breeds more innovation and lays the groundwork/framework for future innovation. That's China's biggest problem right now; they relied so much on theft of IP that they lack the infrastructure to innovate on their own. They're stuck on a ledge and can't go any higher without either technological handouts or stealing more IPs. Unfortunately for China, companies are becoming much better at protecting themselves having learned from past mistakes. China is essentially the world's factory. That's all, nothing more, nothing less. That's all they will ever be until they climb down from their ledge and start climbing up again (starting over from scratch). > They have 15% of the world's population And? not sure how this is relevant. If anything, it's even more incriminating; they have that many people but so little to show for it. So little genius, so little innovation, so little advancement... It's proof that their current social, economic and political system has been a failure. They should be trouncing everyone. But they aren't. > Corruption is being cleaned up Their "corruption clean-up" has been just lip service. You'll note it was published first from China's own government-ran news agencies (Xinhua). If you look at transparency international's corruption index (here: https://www.transparency.org/cpi2014/results https://www.transparency.org/cpi2014/results) you'll see that they actually dropped 20 places from 2013 to 2014. Their corruption actually got worse, not better. > we've never seen what happens when a large country "awakens" in the age of globalization. Unfortunately, China's a long way from awakening.

exelius 11y ago
> Need? I guess not. But I think the point is that those things manifest themselves in a healthy market/economy/society, a healthy innovative market. If you're not advancing technologically, then you have no hope for your future. And that's what companies like Samsung, Toshiba, and Sony all do (in the electronics industry). They innovate. That innovation breeds more innovation and lays the groundwork/framework for future innovation. China has been quite innovative in the manufacturing arena. You know all those neat laser drills and 6 axis CNCs that mass-produce all the tech products we have? They were probably designed in the US; but the Chinese are the ones who know how to organize them to churn out 100 million iPhones. > They should be trouncing everyone. But they aren't. Look at your history; China was reeling from the collapse of its imperial government (largely as a result of the meddling of European powers) in the early 20th century. They were then invaded by Japan (which has always been a military-focused country, and thus had a very strong military when Western powers came calling and was able to resist colonialization). After its infrastructure was pillaged by a 15-year Japanese occupation, there was a power vacuum and a decade-long civil war. China was kept in the stone age until basically 1954 by the meddling of outsiders. For all the awful, misguided things Mao did, he and the subsequent leaders of China set the country on a path for rapid modernization - modernization at all costs. > Their "corruption clean-up" has been just lip service. I don't know about that. The Chinese government is acutely aware that they need foreign investment in China, and that becomes very difficult to do when there are "hidden taxes" in the form of corruption. > Unfortunately, China's a long way from awakening. If that's true, then that's pretty scary given where they are now vs. 20 years ago.