Spook

Geithner: China's Not Manipulating Currency

And how does the American compete in terms of cost? US have a high living standard, which also translate that the wages is also high. Unless you are thinking about using the Latinos for your low wages manufacturing a.k.a. sweatshop, I don't see anything in the US manufacturing that can compete with the low cost manufacturer in Asia.


> America better start manufacturing again soon or it's going to be
> screwed.

Japan to the U.S.: 'We Don't Want to Exclude You, But...'

Given the militaristic culture of the country and want to have face, Japan will not probably appologize.


> Said another way, they must apologize for their legacy to those people
> that they previously disgraced.

Japan to the U.S.: 'We Don't Want to Exclude You, But...'

The word "Great East Asia Co-Prosperity" will bring back resentment from other Asian nation toward Japan past imperial ambition, China, Korea, India will resist to this idea.


> Oooo! I got a name for this! How about "Greater East Asia Co-Prosperity
> Sphere"?

China: Spreading the Sovereign Wealth to Buy Overseas Commodity Assets

Yep, dynasties overspent and overtaxed its subject, became paranoids and protectionist. But before the decline, there was this golden years, the rise of an empire that lasted at least 300 years on average, that's a long dynasties and lots of wealth.


> All through Chinese history, dynasties collapsed because the emperors
> overspent and the peasants were overtaxed.

China: Spreading the Sovereign Wealth to Buy Overseas Commodity Assets

Because trade and business has been in the Chinese culture since the time of Roman Empire, the silk road, the paper money, standardization of weight and so.

But a huge chunk of Chinese are still more intellectuals than business or scientific.


> chinese understand the nature of capitalism better than we do.

China Continues Its Long, Slow Climb to the Skies

But a large portion of your household electrical and electronic product were made in China, a portion of the electronic components in your car were also made in China, probably the shirt and pants you wear were either made in Mexico or made in China.

I had seen manufacturing companies in China that are sub-human and sub-standard, mostly family-owned-basement-... type of production, its sloppy work, but these are targeting disposal item like cheap electronic radio or alarm clock.

And there are also high quality manufacturing companies I had visited in China, that caters OEM business, the quality control applied is the same quality control dictates by American or Japanese companies.

I depends on what you buy and how much you paid for it. A $100 iPhone knockoff have better quality than a $50 iPhone knockoff.


> I avoid Chinese manufactured products whenever possible.
> Heaven help us!

China Should Be a Manufacturing Giant

If the history is correct, America came into becoming the world manufacturing giant during World War II and after World War II, US manufacturing lead and capacity remain unchallenged in all these year.

How did US with 5% of the world population responsible for 20% of global manufacturing? couple answer.

- purchasing power, after World War II, US per capita income became the world highest, this lead to US consumer to afford spending.
- As US consumer spend, manufacturing react with supplying more, this lead to the colonial mentality in the third world nation until mid 80's, that anything made in USA, is the best.
- unchallenged manufacturing, until 80's/90's, US manufacturing remain unchallenged until the Japanese catch up, which eventually lead to US start outsourcing in order to compete.
- the value of goods produce, even though the US outsource a lot of manufacturing to Asia, the most expensive item still remain in US for manufacturing. This value alone still stand above all manufacturing combine.

Of course, this advantage will remain until another country match it and surpass it.

How Much Are Apple's 45 Million Users Worth?

Good assumption, 4.1 billion mobile phone user, however, Apple store is only available in US, Europe, and well developed countries, total mobile phone user of these areas are less than a billion.

Unless Apple store open up in China, India, Indonesia and other emerging countries where piracy is rampant, 4 billion potential paying users is a huge market.

> but I re-check the link in the article and 4.1 billion is accurate--there
> are approximately 1.2 billion landlines. Sticking with 10% of 410
> million users forecast as Apple's share of the smart phone pie once
> the market reaches maturity.

China Losing Its Price Advantage

Did the report/analysis factor in the freight cost? as well as the materials price increase?

For the past 36-months, several price hikes for good manufacturer in China were attribute to rising metal price such as copper and iron, whereas cost of plastic, electronic parts both passive and active remain flat.

While wage increase did occurred in 2006 and 2007 due to change in labor law and minimum wage law, these increase were not sufficiently high enough to alter the pricing structure.

Overall, material and transport cost increased in 2007 to 2008 were sufficient enough for supplier to re-quote pricing to reflect cost increase, not due to uncompetitiveness.

Foxconn Causes Another PR Problem for Apple in China

Actually, this is a PR problem for both Apple and Foxconn. Why?

Take the case of Ever Ready case in India, the plant disaster happen long after Ever Ready cease their production in India, yet the disaster was tied to Ever Ready.

In this case, multinational companies like Apple, Microsoft, Cisco have limited choice but to continue working with Foxconn. Foxconn had grown from a small connect manufacturer in early 90's to a huge conglomerate by late 90's.

This goes back to the discussion of what the western company were preaching about CSR (Corporate Social Responsibility), did the excessive overtime improve from the initial report in 2007 until today?

So for Apple, this is PR problem like Nike, sweatshop for a higher profit product. But for Foxconn, no difference as people who really had worked for Foxconn Shenzen know the work condition they are in.

Barnes & Noble Goes on the Offensive with E-Reader

BN should start looking to develop their own brand of EBook reader, after all, most of the people do know who build the reader for Amazon and Sony, all you need is build it to your specs, leave the software development to the supplier.

Overall, it will be much more competitive than Plastic Logic and Amazon.

Barnes & Noble to Target Amazon's eBook Business

Barnes can have their own EBook reader in their own brand name, so why partner with Plastic Logic?

The logic behind OEM and outsourcing is for you to generate another product/business segment of your own with your brand, without being tied to a product that is own by another company.

Barnes can mimic the iPod/iTunes business model, sell tons of ebook title at affordable price, while generating as much revenue/margin with the hardware.

A Spy in the House of Iron?

With all the bits and pieces information coming out, Reuter reported that the department head of Shougang Iron Ore was also detained.

In light of all these information, the case is probably not spying, but unethical business practice, it looks like Stern bribe the iron ore department head of Shougang, to know whats the bottom line that the Chinese can take, instead of the steep cut (discount) that the Chinese want, the department head may had divulge the information, but not sure about the bribery.

This information was probably used by Rio to walk away from the price negotiation (40% cut asked by the Chinese) and stick with 33% only. It may have caught the Chinese negotiator by surprise, but if the charges above were true, I will bet that the department head will either go to prison or execute for treason.

If this is not about loosing face, I don't know what it is then.


> IMO, China had overdone this "spy" thing, and it is going to cost
> them in the future. I mean, come on, you think it is such a cosmic
> coincidence that this GM Hu of Rio Tinto just happened to be caught
> "spying" after less than 10 days away from the broken deal with Chinalco.
>
>
> Yeah sure, if Mr Hu is stealing and spying state secrets, wouldn't
> the Chinese "secret police" authorities would have discovered that
> already before authorizing Chinalco - Rin Tinto deal? Like all mega
> multi national deal, I would assume everything has to be investigated
> thoroughly before the states authorized any go-ahead meager deal.
> Now, if Mr Hu is actually a spy, then imo, the Chinese would have
> already found out. There is more towards this than meets the eye,
> and I think China is really angry because of losing "face".......
> yikes, you can never make China lose "face"

Rio Tinto's Chinese Mistake

As more news gets reported by different agencies, the clearer the picture becomes.

* February 12, Australian stimulus plan fail in senate,
* February 13 China announce a $19.5 billion bid, the same day Australian senate pass the stimulus plan,
* March 25th, Australian government approved Chinalco bid,
* June 5th, the Chinalco-Rio Tinto deal collapse,
* June 30, the iron ore price negotiation between China and Australia pass without a resolution
* one week later China announce it will stop stockpiling of iron ore
* following day, China arrest 4 Rio Tinto employees
* July 10, Reuter reported that China Shougang head of the iron ore department had been detained.
* over the weekend, news indicated that Rio employee bribe head of Shougang iron ore department to determine what's China bottom line.

Looks like Rio used this information to walk away from $19 billion deal and strong stance against China asking for iron ore discount. Wall Street Journal reported that Australian government is asking for more detail on the arrest, seems like the Aussie knew this will bite back.

Here we have Rio asking China financial help to repay their debt, entice them with a $19 billion deal, then decided that they probably can screw the Chinese by dealing with BHP, I don't think the Chinese will let it go easily.


> First, Rio rejected chinalco's bid, and a week later, Rio's employees
> were arrested for "spying".
>
> Let supposed these Rio employees were stealing state secrets for
> a long time, and China's "secret police" have been investigating
> for a long time. Then, China state officials will stop Chinalco's
> bid on Rio for the sake of state security since the deal started.
> But of course, we all know what happened. Chinalco had the full approval
> from the state government for the go ahead to buy Rio.
>
> Yeah, sure, of course we do not know what is going on behind that
> "closed door", so why should we all speculate? Because we like dramas!

'The Crash of 2008 and What It Means' by George Soros

The Alchemy of Finance (1994)


> As I recall, Soros's Theory of Reflexivity pre-dates this book. I
> recall him outlining it in the late 90's.