Will China succeed in it’s attempt to move more from a manufacturing economy to a services economy? (My numbers could be off, here, and don’t hold me to this — but as I remember services currently make up roughly 80 percent of the US economy; while in China it is just over 40 percent.)

See what the following three pieces have to say on the issue:

• NY Times, The Dictatorship of Talent.

• James Fallows of the always good, Atlantic Magazine, has a great post titled,”‘The’ Way vs. ‘A’ Way (Japan v China dept),” comparing Japan’s way of doing things versus China’s (his post shows that yes, pictures are worth a thousand words).

• China Business Network podast, What If! Innovation

What is your current hypothesis on the issue of whether China can, will and when successfully transition to from a manufacturing economy to a services economy? On the trip will you be open to collecting evidence that only supports or refutes your hypothesis? And how will you reconcile the two bodies of evidence? And in a week or two, can you collect and observe enough evidence to reach a reliable statistical conclusion re: your business hypothesis?

One suggestion I can provide is while we are in China, step back and watch, and I mean really watch and observe, people crossing a busy intersection.

Hundreds of people, numerous cars, numerous bicycles, no rules, chaos (at least to us). Yet, it somehow works — everybody gets to the other side and on their way for the day. It is not easy, it is not pretty, and may not be how we would do it, and can be unbelievably frustrating (e.g., how they are handling the environment), but somehow, someway, sometime they get it done.  This metaphor is insignificant. And the Chinese have been moving forward, at certain times faster than others and even at times they have moved backward - e.g., the Cultural Revolution — for the better part of 3,700 years, so why would that change? And will this shift in their economy be a good or bad thing?

The answer is probably yes and no, and it also depends on who you ask and what stake they have to win or lose in the game, and whether they are a member of the optimist club or the doom and gloom club.

In China trade shows are a much, much more prominent marketing and promotion channel than in the US. And a number of the good, attractive and ‘higher caliber’ and higher visibility trade shows in China often take place in October and April.

One of the drawbacks of the timing of our annual MBA trip to China/India is that it takes place in June/July. Hey, we can’t see and do it all; yet perhaps this year we will get lucky while in the Shanghai area and be able to see one (but I can’t guarantee it as I don’t get to determine when the trade shows worth targeting do/do not take place in the Shanghai area).

When that day comes when you have the opportunity to attend a trade show in Asia, you MUST grab that opportunity, and the following articles are must watches and reads:

Marketing and Selling to Chinese Businesses - Part 1

YouTube Video on China Sourcing Fair

For a nice searchable examples for worldwide trade shows, click on Global Sources and Global Sources Trade Show Center

Five Tips for Getting the Most out of Exhibiting at Trade Shows

Visiting a China Trade Show

Getting the Most out of a Trade Show Visit in Asia

Selecting the Right Trade Show for Your Needs

What Happens After Your Trade Show Visit?

This video and these articles made me want to go into sales … almost.

I am struck by how little Americans at all levels know and understand the foundations of capitalism, how little or rarely they think deeply about them, and how little they have thought about the different types or shades of capitalism and their pros and cons (e.g., in what way is China more capitalist than the US?).

I am also struck by how they are also often so willing to readily accept the benefits of capitalism but are then unwilling to vigorously defend it (or are intellectually unable to do so) when it is attacked.  Not sure if this is driven by guilt, an unwillingness to be unpopular, or other.

This above observations are especially apropos given the current financial crisis. This post is also timely in that it ties into last week’s seminar by our Orfalea College economics faculty that a number of you attended.

So let’s take a minute or two to think more deeply and discuss the topic of capitalism.

To that end I recently came across this very interesting PBS short video that features the famous South American economist, Hernando de Soto, with an insightful take on the relationship between capitalism, the existence of contracts and property rights, and the development of societal and cultural trust and how such trust is formed (Francis Fukuyama, by the way, has written a very insightful book that is listed in your syllabus on this latter topic called Trust: The Social Virtues and The Creation of Prosperity).

Click HERE to watch this PBS segment. (You will need to scroll down and click on the “Chapter 19 - Capitalism Redfined” link. ) This segment has direct relevance to what you will witness in China and India.

And to dig deeper see also these recent WSJ articles, opinion pieces and letters to the editor:

A Capitalist Manifesto

Capitalism Encourages More Personal Responsibility

Is the Rescue Plan Socialism? The Far Left Says ‘No Way’ Comrade

Crisis Stirs Critics of Free Markets

And for a well received book that discusses the different types of capitalism and their tradeoffs, see Good Capitalism, Bad Capitalism: And the Economics of Growth and Prosperity by Baumol, et al.

Your thoughts, biases, beliefs, arguments, concerns?

Submitted by: Eric White

A small article in the back of the Wall Street Journal, Sites Battle for Chinese Web Users (found in section B4 of the Marketplace section October 9, 2008) tells of the competition between two Chinese on-line auction sites. At first I thought that the growth of on-line shopping, specifically auction sites, would be a great thing for the Chinese as this would provide access to a wide variety of products just as eBay has done for the US. Never mind the deficiencies and lack of reliability of mail in China, due in large part to the unsystematic street addresses, how will these sites govern the issue of counterfeit products?

Since counterfeiting is so prolific in China and regulations are weak at best, who will take responsibility in ensuring on-line buyers at auction sites that the products they are buying are really authentic? I am sure there is some protocol to which the on-line site has come up with in dealing with this issue, but I am very curious as to what it is. If auction sites are unable to ensure authenticity of products sold and lack the legal ability to prosecute would be counterfeit item sellers then the outlook for these new auction sites are bleak.

Thoughts? Comments on how these sites could effectively regulate counterfeit products?

Ah, guns. Nothing better to fuel passionate debates, politics, judicial appointments, family fights, litigation and plaintiff lawsuits than guns and the good ol’ US of A Second Amendment.

Guns, and all that relate to them are handled a bit differently in China.

See this Wall Street Journal article, Staring Down the Barrel: The Rise of Guns in China. Great article that touches on history, culture, wealth and leisure time, economics, government regulation, crime, etc. etc. etc.

What are your thoughts on this issue? Which model to you like, and why? Defend your answer.

One of our students from last year’s class and trip was able to leverage the trip and one of our firm visits into a post-graduation job at a Hong Kong owned company with factories in southern China (Shenzhen). Click HERE to check out and follow his journey from the blog he has started. Good job Matt! Keep us posted. (Matt did his MBA at the Orfalea College and his undergraduate degree at the University of Kansas and he is a rabid Jayhawk fan.) Follow his blog and posts. Encourage him. Learn from him and his experience.

Rock chalk … Jay-hawk … KU.

Nice piece in the 10/16/08 WSJ re Duke University, including its MBA program, trying to break into the heavy regulated and currently very protectionist educational market in India (Duke Expands India Offerings As U.S. Schools Seek Foothold).

Note their unconventional initial market entry strategy — lobby the Indian regulators to help them move India forward in the area of education and competition. This relates directly to your law, ethics and corporate governance, and strategy course. These guys, the Blue Devils, know more than just good basketball.

Note also the chart re: the dispersion of top universities in the world. The US, has lots. Japan and China, have a decent number. India, not yet many in terms of volume. But with as many bright, talented and English speaking young people that India has (unlike China whose demographics suggest it will grow old before it grows rich), such favorable demographics will create huge opportunities, winners, and yes, some losers in the educational sector in India.

Submitted by: Morgan O’Hara

Many of you probably know that the U.S. has vowed to protect Taiwan against Chinese aggression - and that China has vowed to re-establish Chinese rule on the island. Fortunately, China has pursued a ’soft’ approach, coaxing Taiwan towards the motherland with practical measures (and even pandas). A full scale conflict over Taiwan’s independence seems less and less likely. But I noticed this article tucked away in the back pages of the NY Times. Why do you think we are selling arms to Taiwan? Is it for the money, or are we trying to make a point? And more importantly, how will China react?

In “The Post-American World”, Fareed Zakaria talks of China’s ‘peaceful development’. They move cautiously on the world stage, trying to avoid conflict. While we might not stoke China’s nationalist fires, I think it’s likely that we do stir up some serious resentment. What comes to my mind is the ‘forgive but never forget’ adage. Should we be pursuing a more amenable approach towards China, and will any of this come back to haunt us?

Also, Zakaria states that “China needs the American market to sell its goods; the United States needs China to finance its debt.” And in financing our debt, China is losing a lot of money. Simply put, China’s been doing a poor job investing - they’ve given away hundreds of billions of dollars. Does something have to give? And if so, what? Will this financial crisis pull us closer together, or push us further apart?

At our orientation this year I commented on how, in light of the current financial debacle, this year’s class was fortunate from a timing standpoint in that they were embarking on their MBA, MS in Tax and/or MS in Industrial Technology degrees (whether it was by intentional design or blind luck) now rather than later.

The Wall Street Journal just published the following article on this very topic.

Escape Route: Seeking Refuge in an MBA Program

Check it out. Your thoughts?

I am curious to learn more about the reasons some of you are here. Pray tell.

Prof. Carr Oct. 15, 2008 addendum: And here is a local SLO Tribune article that appeared in today’s paper, Ethics and Responsibility Are Hot Topics for Students at Poly’s Orflea College of Business, that relates to this post and also features several of your classmates. Good job Nic, Amy and David!  And a good pic of the three of you as well.

Thanks to Dan Harris at the China Law Blog for this lead.

Last year we rode the maglev train in Shanghai to get to the airport. Students loved the whiz bang of the thing. Click HERE to see a post on The Little Red Blog and the the latest internet video on the maglev and its speed. We will try to ride it again this year (can’t guarantee it; always depends on schedule, time we have, routes we take, budget, etc.)

Question that relates to your coursework (e.g., economics), politics and infrastructure development:

Which came first in China, infrastructure development followed by foreign investment attracted by that development, or, more open/liberal economic policies (translation: “pro business policies”) which in turn attracted foreign investment and THEN followed by infrastructure development? Let’s see how deep your understanding of facts, history, business and economics go …