Submitted by: Matthew Eves

For the past two quarters the auto industry has been making the front page of the Wall Street Journal with bad news.  The big three have been sinking and it still is unclear who will make it through without having to file bankruptcy.  I am not a huge fan of American made automobiles and now doubt I’ll ever be, unless they REALLY restructure and start putting out some better products.

I have wondered for some time why China doesn’t have a significant presence in the automotive industry in the US.  I didn’t even know if they made cars until I did more research. Here is a list of over 20 auto manufacturers that clearly points out my ignorance: Click here

I have discovered one reason is that they have been hesitant to compete with big name auto companies who have been producing gasoline engines for many decades.  It would have been difficult for them to enter this market with their existing technologies and be competitive.

However…

An article in the Wall Street Journal on (01/12/09) (view here) sparked a lot of interest with news of BYD’s electric powered vehicles.  The hype of electric vehicles has brought a level playing field, since even the big auto manufacturers have minimal experience building them.  BYD’s vehicles are priced very competitively in relation to hybrid vehicles from Toyota and Honda and coming in about half the expected amount of the Chevy Volt.  Who is BYD?  BYD was established in 1999 as a rechargeable battery manufacturer.  Since their inception they have grown to the third largest producer of portable rechargeable batteries in the world.  They now make… cars.

I have found some negative buzz with regard to Chinese auto parts, but it is important to note that this is more focused on aftermarket replacement parts, not OEM parts outsourced in China.

With Ford, Chrysler, and GM mired in their respective troubles and European cars at a price point out of the league in discussion, China’s automobile companies may have an open door into the market and be able to compete in the US.  BYD has accomplished product differentiation and offers it at an extremely low price.  The average MPG on their vehicles is over 50, and they aren’t hideous!  It will be interesting to see the reception of these vehicles in the US.

I think at this point many are willing to try something new, and if they market the product well it could be a very successful business in the US.  Would you buy a Chinese automobile?

I’m not sold yet…  Warren Buffett is (one of the noted investors in BYD).  But hey what does he know?

Some of the safety issues have been reported at: http://www.autosafety.org/china

Submitted by: Jimmy Spann

I thought that this article was pretty interesting.  Just some food for thought.

http://www.msnbc.msn.com/id/30229507//

It basically gives a different look at global manufacturing compared to what I have been reading about through all of our Chindia readings.  They have said that pretty much everything made today is “Made in China.”  This leads me to believe that they would be the leading producer in quantity of goods made and exported.

However this article brought up a good point:

“For every $1 of value produced in China’s factories [in 2007], America generated $2.50.”

We are still producing the high-valued goods that China has not been trusted with yet.  We exported $1.377 trillion worth of goods last year. Nearly half of the exports were capital goods: aircraft, computers, electric power machinery, office machines, and telecommunications equipment.

I thought that this was very interesting and would not have guessed it for the life of me. And I do realize that next year it might be more even, and in the years to come these types of products might go to China.

But I say that some stuff has to stay here.  If we were to go War with China, or anyone that China supports, I believe that we would need to produce our own wartime supplies because I am sure that China would not be willing to keep servicing us during those times.  And I know that this is not likely, but you can bet that there are analysts in Washington thinking of every worst case scenario and how they can be avoided.

Submitted by: Andrew Welborn

I am excited as we travel to two very different countries to compare the many cultural differences. I thought a quick comparison of transit systems would be in order, as we will have the chance to experience some that outshine American systems and some that are downright scary. The U.S. is rapidly falling behind other countries in regards to a transit system and this has impacted our competitiveness in the manufacturing industry. The U.S. as a whole is a rather poor example of mass transit with the exception of a few localized areas around the country. China and India still require leaps and bounds to achieve effective transportation, but the decisions that they make now will affect the world in the near future. They have the opportunity to create truly efficient transport systems to connect the billions of people that make up each country. Here are two links for a quick rundown of the overall transportation systems in both China and India.

”China’s Transportation System”

“India’s Transportation System”

By now we should all know how involved the government in China is with infrastructure and growth. They have been building on a simply massive scale with little regard for the environment, but are now facing congestion in major cities due to the massive growth. They are continually implementing new projects for mass transportation that rival the technological prowess of the most advanced countries, but is this really what China needs to go forth as more and more people are increasing their disposable income and want the status symbol a car brings?

As Cece Reyes posted previously, India has a rapidly growing market in ultra low-priced cars. These vehicles would be a major upgrade to the scooters families use, but does India have the infrastructure necessary to accommodate another 500,000 vehicles per year from one manufacturer? Thomas Friedman doesn’t think so. Read link for his views on where India should be heading.

Other links about the future of India’s transportation system:

“A Smoother Passage Through India”

“Making Mass Transit a Priority in India”

“Video on Train Safety in India”

As both countries modernize their systems, a big question is where the capital will come from. In China the obvious answer will be from the government. However, in India that question is currently up for debate, and who pays for the system will have a big impact on what the system will be and how well it will function in the interest of the public.

Both countries are using a diverse mix of transportation systems, and both are seeing a growth in the ownership of cars. This may be all good and fine now, but in five years will this begin to stifle growth in urban areas as more and more cars travel in an already congested city? Not to mention the increased pollution and use of resources. On the flip side if the countries firmly embrace mass transit as they grow, will the populace begin to demand more personal vehicles and leave the mass transit systems unused? There is no easy answer, and a mix of systems would do the trick, but what mix would be best for each country?

My questions for you are: What are the complications that will need to be addressed in both countries to continue to progress their transit systems? What are the business implications of following the U.S. model versus mass transit? How do these major decisions on transportation systems affect the rest of the world from a resource view? There is the ideal solution from an environmental and conservationist perspective, but which direction do you see each country progressing in the near future and what role will business play?

Submitted by: Matthew Neal

With the overturning of the stem cell laws on Tuesday there is likely to be a renewed debate over the ethics and viability of embryonic stem cell research.  Obama was smart in how he dealt with this subject.  He reversed the laws allowing for the research to be funded by the US government, but left the moral debates to congress.  Although this law simply makes it legal for the federal government to use its money on embryonic stem cell research it does not reverse the policy that it is ethically wrong or send any specific funds to the research.  This will likely once again open a large debate in congress about whether or not it should allocate funds for this type of research and what moral obligations it may have in this.  After hearing about this revived issue I did some research on China.  In some ways, China seems to be far ahead of the US in this regard.  According to one source “The Chinese government is expected to funnel as much as $132 million annually into [stem cell] research over the next five years.”
 
I did some research into stem cell research in China and was amazed at some of the things I found.  According to stemcellschina.com it seems that many patients already go over to China to attain stem cell therapy.  I did some research on India but surprisingly could not find near as much information.  One of my questions is what does this state about the current affairs of American stem cell research and have we been hampered by the lack of funding for embryonic cell research? 
 
At first glance the answer to this may seem to be a resounding yes.  When one looks deeper however the issue becomes a little bit more unclear.  Take for example the fact that, “There have been no successful treatment trials in human beings using embryonic stem cells. Unlike embryonic stem cells and the recently discovered… “iPS cells”… adult stem cells do not create tumors.”  Adult stem cell research has been able to cure hundreds of patients.  All while using practices that are almost universally accepted as fair and ethical.  Does there really need to be such a push into embryonic stem cells if we are getting amazing results using other forms of stem cells?
 
What are your feelings on the ethics and moral obligations of scientists and researchers, if any? A can of worms I know, but that’s what I love about these type of debates : )  I am personally against any research done on embryonic stem cells harvested for the sole purpose of research. 
 
Should the government only fund and harvest adult stem cell research?
How about discarded umbilical cord stem cells?
What about the huge stock piles of embryonic cells that are sitting in warehouses?
What about aborted fetuses?
What about harvesting fertile eggs for the sole purpose of stem cell research? 
Where should the moral and ethical line be drawn?

Here are some very interesting sites on stem cell research.  I also realize that a lot of the “treatments” are suspect, so what do you think?
http://www.stemcellschina.com/
http://www.npr.org/templates/story/story.php?storyId=88123868
http://www.healingtherapies.info/India-Stem-Cell.htm

Submitted by: Justin Miller

It’s very easy as an American to assume that with all of our expendable income, we are the best place to sell consumer products. We are where the consumerist culture started. Everyone wants the newest cars, the biggest TVs and every exciting new gadget on the market. But with our current financial crisis, America may no longer be the best place to sell products. I’m not trying to say that Americans wont continue to buy things they don’t need, but they certainly aren’t going to be spending as much as they used to.

Our obsession with buying things that we can’t afford has lead to the current credit crisis as many Americans were not able to pay off the loans on their houses. We learned to buy the things we wanted with other people’s money, with the hopes that we could pay it off later. The following article is an example of how an “old” economy in rural India is functioning well despite the current global economic crisis.

Click here for the article in the Washington Post: Click here

In the article, it talks about a family who just bought a $10,000 brand new car. In cash. Yes, that’s right, they paid for it in cash. They don’t owe payments on it, it’s theirs. According to the article, the reason that the economy in rural India has been isolated from global economy is that most purchases are made in cash. People don’t have to worry about people being able to loan them the money they need because they are buying with the money that they have. Additionally, the Indian government has put a lot of money in investing in the infrastructure of it’s rural areas and the price for wheat has increased by 65% over the past four years. This has lead to an increase in disposable income for the rural farmers, which they are using to purchase new clothes, TVs, and cars.

The interesting thing about this rural economy is that companies are finding it much more profitable to market to the rural markets instead of the big cities. For example, 60% of car sales for General Motors India were from rural and small towns. This is an interesting contrast from the general tendency for companies to focus on the money to be made from big cities.

Awhile ago I read an article that said that Americans have been living lives that were outside of the their means, and that current market recession is the economy shifting back to where it would have been if we bought what we could afford. What do you think? What if Americans, like those in rural India, only bought everything cash? Would we have the current economic problems that we’re having? I’m not trying to say that all lending is bad, as some things, like buying a house, would be almost impossible without it, but how much lending does it take before it’s detrimental to our society?

Submitted by: Xiaofei Song

Last time when I visited home in Beijing, the most topics my friend talked about is “Shan Zhai”.  After come back to the states, I did some research on it and found that it is very interest phenomenon to share with the class.

Shan Zhai is the name of this type of product. There is not direct translation of this into English, but it basically means “Cloned”. This kind of cell phones are manufactured small factories in south of China. They copied the design and function of the newest branded cell phone without authorized and sold with very low price.

This phenomenon appeared several years ago. With more people desire to have the most up-dated cell phone, “Shan Zhai”  has become more and more popular and developed into a subculture in China.

Please check this video and blog: “Shan Zhai Ji” in Google.cn Most Searched List

Please also check this article: Decoding Shan Zhai Ji - the opposite side of brand chasing

Here are my questions:

What do you think about this phenomenon?

Why “Shan Zhai Ji” becomes so popular?

Are you going to buy one during your trip in China?

Submitted by: Scotty Hayes

For the many of us who do not have a job waiting for us upon graduation, unemployment is less than four months away. To me that is a very scary thought. I have held a job most of my life and when I don’t have steady employment something doesn’t sit right with me. I guess I attribute that to my hard working parents and grandparents who have continued to sacrifice and who have worked diligently to pave the way for future generations. The main reason I am in this program is to advance my career so I can succeed in today’s business world and to provide for my future family. Yes, sometimes school is overwhelming and life is tough, but there is no doubt that this is nowhere near as difficult as the times we will all be encountering in the very near future.

Jobs are created and destroyed by the state of the economy. The economy has been the number one thing on my mind for the last several months. I have been glued to the news channels and have been reading any article I can find related to the economy, through many different means. The other day I thought, I am making a huge mistake. I realized my search for information was not complete. All this time, I had not paid very much attention to what was going on in other parts of the world. So I decided to take a deeper look at another one of the most influential global economies and here is what I found (so far.)

I started my internet search with just a simple “Chinese Economy” in the search engine and the first site that peaked my interest was the investing section of MSN. In an article written in July of 2006, it was predicted that the Chinese economy was headed for a “train wreck” by 2009, by columnist Jim Jubak.
Click here

Mr. Jubak mentions cheap money as the major contributor. Interest rates were extremely low 5-6% with an after-inflation rate of 3-4%. All of this cheap money led to real estate booms especially in and around industrial cities with double digit growth and tremendous increases of prices. Sound familiar? Also, depositor rates were low ~2%, which gave companies no incentives to save cash. So this forced companies to reinvest in fixed assets that kept adding to capacity gluts in many industries. Capacity excess is detrimental to business, but more about that shortly. At this time the Chinese economy was becoming increasingly dependent on foreign investment and exports and less on internal consumption. So what happened?

Next stop was the World Bank. The World Bank has recently put out a quarterly update for China and the longest link I have ever seen is included below:
Click here

Take a look at the report that is in a PDF file in the upper right hand corner of this page. 

The World Bank recently cut its forecast of GDP growth from 7.5% to 6.5%, still very impressive by global standards. How come China has not been hit as hard as other countries? Well, their national savings rate is 51.2%. If you didn’t know, ours is negative. With this, their banking system does not rely on external financing. They also have a stimulus plan of 4 trillion Yuan or $586 billion in place that seems to be working. It includes tax cuts, infrastructure work, and social programs such as education and health care. What is also promising is the expanded enrollment in high quality and demand driven education and training programs (Their MBA programs included.)

However, as we all know there are still two China’s divided by wealth and the gap is continuing to widen. These educational programs just mentioned are expensive and very few can afford them, just like the basic education programs in China. With exports down ~25% major capacity excess is emerging, which ultimately contributes to unemployment and downward pricing and profits, which will likely turn to lower wages for the working class. One of the biggest problems I see is the fact that rural incomes continue to lag far behind urban incomes. There are many more factors to the equation, but these will definitely get your mind rolling. 

May you live in interesting times - an old Chinese proverb that rings true today.     

How do you see the future of the Chinese economy? How does it correlate with ours? What opportunities does it present? Business is built upon creating value. How can we learn from the Chinese and how can they learn from us?

Submitted by: Logan Travis

It seems like eons have passed since school began. Each of us has crammed our brains nearly full of business wisdom and is probably suffering from massive headaches. With so much knowledge, how many remember Lonnie Hodge? Here’s a link to Lonnie’s bio at Culture Fish Media with a hopefully memory jumpstarting picture. Mr. Hodge spoke to us about the significant marketing differences between the U.S. and China. He also mentioned a little website called Twitter and its role instantly spreading the news of China’s devastating earthquakes in May 2008.

I was thrilled at the power of this micro-blog (from Wikipedia: “Micro-blogging is a form of multimedia blogging that allows users to send brief text updates or micromedia such as photos or audio clips and publish them, either to be viewed by anyone or by a restricted group which can be chosen by the user.”) to bust through the heavily filtered Chinese media in mere moments. Lonnie so convinced me of its potential that I went home that night and signed up. However, the following morning reality set in – as it often does – as I discovered almost no one I knew had a Twitter account. How could this be? Most everyone I talked to hadn’t even heard of the site that singlehandedly announced a monstrous natural disaster to the world. Feeling unfulfilled, I resided Twitter to a decidedly non-SLO (and potentially non-American) phenomenon and let it slip into cobwebbed disarray.

Until The Wall Street Journal started talking about it.

Search “Twitter” on WSJ.com and you have to comb through thirteen pages of results to get see a 2008 date. Along the way you’ll find a How to Twitter, an article detailing (Not Quite) Earning a Living on Twitter, even a Brazilian telecommunication company advertising its new fiber optic services via a Twitter celebrity: Marcelo Tas? Not wanting to feel the utter dissatisfaction of advertising my daily activities to the void yet again, I did a little research. My search yielded information in support of two competing arguments: 1) Twitter is a populist juggernaut disseminating massive amounts if unbiased information to the world and 2) Twitter’s usage statistics don’t match its hype nor do the vast majority of users utilize its world-changing potential.

Facts Advancing Twitter as the Next Voice of the Public:

Lonnie brought Twitter to my attention with his story of the China earthquakes. He enthralled me with users spreading detailed information before most major news channels had even said word one the event. This was not a standalone event. An article in Hong Kong’s Media magazine wrote on Twitter’s role in the March 2008 Tibetan riots:

The aftermath of March’s protests in Tibet highlighted the growing importance of user-generated content in China. Netizens turned to online media to voice their opinions both of the riots, and of the Western media’s coverage of them … Similarly, microblogging services such as Twitter and Fanfou provided an outlet for the feelings of users in Tibet and elsewhere in China. Several blogs monitored these ‘Tweets’ to discover first what was happening in Tibet, then how others in China were reacting to events. (Davis, Anita. “Tibet Riots Spark Social Media Surge.” Media Apr. 2008: 10. Found via ABI/Inform.)

The author suggests “… these platforms are especially valued by Chinese citizens for whom this level of freedom of speech has not existed in the past.” If it is true, Twitter and sites like it may become a major media outlet in China and other Asian nations.

It certainly has the numbers. Twitter went from 600,000 users a year ago to over 6 million. That is a 1,000 fold increase in less than a year! Plus, this is only a measure of Twitter’s domestic web traffic; it does not include Tweets from cell-phones nor users overseas. The increased activity recently caught Business Week’s attention:

The microblogging service Twitter has caught on with everyone from celeb Ashton Kutcher to CEOs. Yet for all the buzz, Twitter has always seemed more novelty than business … It turns out there is. In fact, there’s growing evidence that Twitter, a company with no revenues today, could be worth several hundred million dollars. Two sources say social-networking service Facebook offered to acquire Twitter late last year for $500 million in cash and stock … What’s the big appeal? Twitter’s growth, for starters. Six million people use the service, up from 600,000 a year ago, according to Web traffic monitor Compete, and those numbers don’t include people who Twitter from cell phones or overseas. (Green, Heather, Robert Hof, and Spencer Ante. “Six Million Users: Nothing to Twitter At.” Business Week 16 Mar. 2009: 51. Found via ABI/Inform.)

Business Week’s point it less social-revolution and more economic profit. Yet, it is quite difficult to argue with the numbers.

So, Who are These 6 Million People and What do They Say?

It isn’t as difficult as it might seem to argue numbers. Only a month before the Tibet outcry and three months prior to the earthquakes, Twitter released a blog of its usage statistics. China is decidedly absent. Why? Reading through the comments I found one from an apparent Twitter employee: “Dear Australia, We love you. But we had to choose a cut-off point for this particular chart, which we hastily put at 10 — i.e., the top 10 countries outside the U.S. by twitter.com visits. Currently, Australia is number 12. Try harder! :)”

A little harsh. More recent statistics from the Alexa show China much higher in Tweets than the year before. It is ranked #5 (and India at a surprising #4) claiming approximately 3.2% of user visits. This is significantly less than the U.S. at 47.5% which begs the question, “Who Tweets?” I still know fewer than 10 people on Twitter and from asking classmates I don’t believe I’m alone. But the site has 6 million users meaning almost 3 million in the U.S. This gross discrepancy comes from defining potential world impact on users rather than usage. It seems like a minor issue. Yet as the Alexa numbers suggest, Twitter’s overall web traffic at 0.2176% of world usage (3 month average) means only a small fraction of its accounts are active.

Additionally, the question of what information is rushing across Twitter’s server raises concerns. For those of you without Twitter accounts, take a look at a site called Twistori. Clicking one of the six keywords on the left will cause the site to display – in real time – all posts containing that word. Anyone want to time how long it takes to see some profound insight into China’s media restrictions? Or even India’s upcoming elections? I hope you have several days to dedicate yourself.

I’m also sad to say that one Tweet that catches your attention may be a plant. Astroturfing has grown increasingly common on social sites. Sara Yin with Hong Kong’s Media reports:

In the pre-internet days, astroturfing was limited to politics. The phrase refers to the practice of paying people to create fake grassroots (hence the pun) sentiment … But in China’s online sector, astroturfing has become a media issue, with reports of students hired to feed messages on bulletin boards (BBS), social networks, blogs, even Twitter … One of the biggest astroturfers is the Chinese Government, which has built up an army of blogging students (known as 50 Centers, as the typical price for their services is 50 cents per post) to fend off what they see as hostile forces on the web. These pounce on online discussions that touch on sensitive issues and neutralise them, sometimes through on-message posts, other times by rendering the discussion meaningless through banal posts. (Yin, Sara. “Astroturfing.” Media 7 Aug. 2008: 9. Found via ABI/Inform).

Tweet Your Day Away

So, what do you think? Twitter certainly offers some amazing benefits, particularly in mass information dissemination. That information may prove utterly useless though if it only comes from a small group of active users especially if they Tweet with ulterior motives. Personally, I plan to keep my account active. I even started posting again primarily to break up some day-long study sessions. I don’t have any followers and only keep an eye on a few friends. It’s just strangely appealing to broadcast my actions and ideas onto the web. Maybe you’ll agree.

Submitted by: Mark Wegemer

Ever since I was old enough to eat, I was a picky eater.  I would pick out every single tomato, every single mushroom, or every single thing that did not even look kosher.  Recently, within the last few years, I have expanded my palette and I now enjoy many things I didn’t think I would ever taste or even try again.  For example, two years ago, I had the opportunity to enjoy a Mexican Cruise through Carnival.  What was the one advice that everyone told me?  Eat.  The food there is amazing.  It was the beginning of my newfound experiences of trying new things to eat.  I tried sushi for the first time and now it’s my favorite dish.  I tried escargot, duck, fried oysters, and squid.  Well, the squid was interesting and the escargot was saturated in butter and garlic, so that could have been the explanation of its heavenliness.  Nonetheless I never forgot that experience and I continue to try new things when it comes to edibility. 

With this in mind, I plan to try new things in China.  I want to try local dishes and exotic dishes (maybe).  However, problems in the Chinese market with food related illnesses always had me hesitant with making the decision to try new things.  There was a problem with melamine in an infant formula a few months back.  Click here

Now, don’t get me wrong I love food, and I am happy to say that there has been a new food safety law, “promising tougher regulations and severe punishment for makers of bad products” (Click here - Read for more detail) in China.  Hopefully the restrictions will change the way the food industry works in China. 

After seeing this article, I quickly searched the current food law of the Republic of China and I laughed at its brevity.  Take a look. Click here

Now, compared to the United States click here the food and drug administration topples the requirements that China’s current law states.  This new law for safer regulations is set to come out June 1.  Will this change my mind completely to be worry free and try everything?  Of course not, but I am more reluctant now than ever before. 

How do you think the new law to be set in June will be acknowledged by the companies over there?  Will production decrease?  What about the people?  What about the visitors?  Do you think we will see regulations in China when we visit?

If you asked me, I think this could be the beginning of a new China, a China that imposes and regulates laws similar to ones from the United States.  China is on their way.

Submitted by: Eric White

Dan’s post over at China Law Blog You Saw Me Do What? Privacy In China. is a very enlightening post about the lack of privacy and information security upon entering China. Dan and the articles he references especially the Forbes article Who Will Be Watching You In Beijing? make it clear that every space in China is public. From bugging hotel rooms to copying laptop data to hacking computer networks and login information, Chinese officials have access to much more of your “private” information than you may know. One suggestion in particular that was surprising to me is that it is prudent to have your laptop checked by a professional for bugs and to change your login information when you get back home.

Though, as business students, I don’t think we will be targeted like business leaders, executives, or scientists entering the country, reading these articles and realizing the level of privacy you and your information has in China is very important. Not only that, it is important as future business men and women to learn the precautions one should take when handling sensitive information when entering the country. When you are doing business in China in the future, remember to take the necessary steps to safeguard your company’s information.