China

Offshoring Production to the USA

by

Chinese entrepreneur Liu Keli, who runs a company making copper cylinders for printing presses, decided to open a factory in South Carolina. He was motivated by a desire to improve his position in the U.S. market, and was surprised to find that substantial cost savings were also possible on some important aspects of his business. Specifically: electricity costs are 75% cheaper, and continuity of service is much better. Mr Liu also got 7 acres of land near Spartanburg for one fourth of what it would have cost him in Dongguan, a city in southeast China where he operates three plants.

Labor is, of course, significantly more expensive: about six times as much on a per-hour basis. But with the benefits from reduced power and land costs, and a $1500/employee tax credit from South Carolina, the overall cost picture is closer to that in China than he would have previously imagined.

I’m also kind of surprised by these wide differences in land and electricity costs.

(via Carpe Diem)

Just in Time for the Beijing Olympics

by

The United States Holocaust Memorial Museum has an online exhibition about the 1936 Nazi Olympics:

In August 1936, Adolf Hitler’s Nazi dictatorship scored a huge propaganda success as host of the Summer Olympics in Berlin. The Games were a brief, two-week interlude in Germany’s escalating campaign against its Jewish population and the country’s march toward war. This site explores the issues surrounding the 1936 Olympic Games—the Nazis’ use of propaganda, the intense boycott debate, the history of the torch run, the historic performance of Jesse Owens, and more.

Change a few names and nouns and the above description fits the 2008 Olympics rather closely, no? Congratulations to the USHMM on its fine sense of timing. Let’s hope that the Chinese government benefits less from the 2008 games than Hitler did from the ones in 1936.

China Markets

by

In recent years foreign equity markets have trounced US equity markets. While the US equity markets have stayed effectively flat since 2000, many foreign markets, such as China, scored robust gains.

To many people, myself included, any time stocks rise at this rate without “fundamental” positive changes to the environment, it smells of a bubble. Remember prior to 2000 when the dot-com stocks were going to remain at a “permanently high level”, or that the economic cycle had been tamed? These thoughts were shattered when the NASDAQ swooned 78% from peak to trough during its brutal fall.

I run some individual stocks for my nieces and nephews at this site and let them select from a list of stocks; in recent years there has been a strong emphasis on these well performing overseas issues. One stock that had a meteoric rise was China Mobile – the largest wireless firm in China (and the world) – whose stock went from under $40 / share to over $100 / share in about a year – remember this stock had an enormous market capitalization to begin with and anytime a large company has this type of stock performance it is extremely abnormal. We took our winnings and left; the stock has subsequently dropped significantly.

This chart from the WSJ article “China Stocks, Once Frothy, Fall by Half in Six Months” shows clearly the runup in the China index from 2006 (near 1000) to almost 6000 in late 2007, down to near 3000 today (April 2008).

Read more

This Work Could Get Dirty

by

Today on a Fox News live feed I saw some people littering up the Golden Gate bridge with some unreadable banners about Tibet.   In the same news cycle I read about protesters “for Tibet” in London and France mucking up the running of the Olympic torch.   In France it appears that they even decided to take it up with a person in a wheelchair who was probably living out some sort of dream by moving the torch.   Nice.

 To this very simple blogger it seems that all of the Beastie Boys front row seats, bridge scaling and Richard Gere speeches are doing exactly zero for the people of Tibet.

I would have to assume that the only real solution is a dirty one for those who want to “free Tibet”.   Two words:   Send Guns.

I suppose nobody who is doing all of this protesting, bridge scaling  and other nonsense is interested in the real solution, but  are more interested in making  a statement and feeling good.