Posts Tagged ‘China’

Yesterday was proverbial d-day for the start of the great Trade War between China and America.

It’s about time… China is aggressively and overtly protectionist… and has been for decades.

I learned this first hand in the CAD business.  It was absolutely impossible for us to sell our product in China… even though we were successfully selling our product in other areas of Asia.

Why?  Because China mandated that Chinese businesses and consumers could only buy Chinese CAD…

… even though Chinese companies were happily selling their CAD — and we were competing against their CAD — unencumbered in the U.S.

But we were a small player, so maybe you can chalk up our failure to penetrate China on our size.

But what about Autodesk, makers of AutoCAD, the #1 CAD product in the world?

Nope, they’ve been shut out for years, too.

To make matters worse, Autodesk found out a Chinese CAD company had stolen their intellectual property.  The Chinese Company vehemently denied the allegations.  Autodesk had no choice but to sue the Chinese Company in the World Court where the Chinese Company continued to vehemently deny the charges… until, facing irrefutable evidence, they finally had to admit their wrong-doing.

But it gets even worse. 

While Autodesk could have collected major damages, they realized if they did, the Chinese government would have been EXTRA punitive… so Autodesk had to voluntarily give up any settlement value in the hopes of helping the Chinese “save face” so they could have any shot at selling in the country.

That is unfair governmental manipulation at its worse.

But that is the China I know about first hand:  Competitively rotten to the core.

So I don’t care about any short-term tariff pain.  When it comes to true capitalism, China is like a big but immature bully and I am so looking forward to a much more experienced fighter punching these guys in the face.  It is well deserved and long overdue.

 

Advertisements

China is trying to do an end-around and create some kind of “united partnership with Europe against the U.S.”

Despite a raging battle with the Trump administration, Europe flat out turned down the Chinese overture.

From ZeroHedge:

But why does Europe – which has so staunchly publicized its disagreement with Trump’s policies – refuse to align with China?  Simple: behind closed doors it admits that Trump’s complaints about Beijing are, drumroll, spot on.

And:

… perhaps because China’s veneer of the leader of the free trade world is so laughably shallow – China was and remains a pure mercantilist power, whose grand total of protectionist policies put both the US and Europe to shamethe European Union has outright rejected any idea of allying with Beijing against Washington ahead of a Sino-European summit in Beijing on July 16-17.

And:

Europe has absolutely no belief that Beijing will ever follow through with its promises.

China is so bad that not even the, “enemy of my enemy is my friend” maxim can hold water.

Everyone seems to HATE the fact that Trump is pulling the world into a tariff war.

I think it’s great… and long overdue.

The current tariff infrastructure has its roots after WWII when the U.S., the dominant economic might in the world, was magnanimous enough to give the war-torn countries in Europe and around the world economic advantages as a way to help them get back on their feet.

Similarly, the U.S. was magnanimous enough to give developing nations — like China — an economic leg-up in their quest to transform from rural to modern economies.

But come on people, all of that was decades ago!

Trump is absolutely correct:  It’s time to have a level playing field.  Why do we impose a skinny 2.5% tariff on cars imported from China, only to see China impose a stiff 25% tariff — 10 times larger! — on cars they import from the United States?

And why can Chinese companies own 100% of a factory in the U.S., but American companies can’t even own 50% of their factories in China?

I’m calling B.S. along with Trump and I have no clue why EVERYONE isn’t doing the same.  China is no longer a developing nation… it has the second largest economy in the world.  It’s time China stopped taking advantage of our good will.

While not as bad as the Chinese, there certainly can be more parity with the rest of the world, too.

Similarly, Trump is absolutely correct about stolen intellectual property… because in the modern world, economic might is not just measured in current service or manufacturing ability… but in the ability to use innovation and technology to dramatically improve old industries — or completely invent new ones — and reap the rewards that go along with that.

So who cares if China can manufacture complicated devices like iPhones better than the U.S. today?  Maybe the U.S. will invent a way to build an iPhone that doesn’t require any manufacturing?

After all, that’s what we Americans do… we innovate… that’s our strength.

Eliminating the complicated manufacturing process for iPhones would be unbelievable… and the rewards would be immense… unless, of course, China simply STEALS the new technology to do this.

And THAT’S the situation we have today… China stealing our intellectual property… and the Chinese government — literally — encouraging this.

Fuck that.  I’m all for taking our ball and going home if other countries won’t play fairly… because at the end of the day, WE’RE the world’s biggest market…

… and I think it’s awesome that Trump is reminding the world of this.

With that said, Trump does have one thing howlingly wrong about trade:  Who cares if there are trade deficits?

To me, a trade deficit benefits us… it means our costs are lower than they would have been… which means our profits will be higher… and our stocks will perform better… and that will enrich every American that does any investing or has a 401K plan or that even gets a paycheck.

That’s pretty much the vast majority of the country.

Trump, you’re a business person, you know artificially forcing a higher cost structure on businesses and consumers is exactly the opposite of how a free market should work.  Anything artificial always ends in disaster.

I know the counter-argument that Trump loves to tout:  If we “export” all of industries overseas, we can hurt ourselves strategically… maybe even get held over a barrel in the future.  Case in point, the decline of our steel industry.  If we can’t produce our own steel, we’ll be at the mercy of foreigners for such a strategic commodity.

Poppycock.

If the U.S. steel industry can’t compete with foreign competition, then go invent a way to make steel 10x faster and cheaper.  Don’t tell me this can’t be done, Britain did it with glass.  Stop crying and get inventing — go create new jobs in new and re-invented industries where the United States can once again be the de facto leader.

So…

… I WELCOME a trade war — short term pain and all — if the end result is a fair global playing field (especially with China!)… and a kick-in-the-butt for our industries at risk to GO RE-INVENT THEMSELVES.

That can only be good for U.S. workers and companies.  And, ultimately, for the stock market, too.

 

I just read something that had this quote in it:

But the government quickly mounted a propaganda push, blocking some articles and publishing pieces praising the party.

Is this a quote about the Trump Administration?

Nah, it’s just about, oh, CHINA TAKING A MASSIVE STEP BACKWARD AND ELIMINATING TERM LIMITS FOR THEIR DICTATOR, ER, I MEAN PRESIDENT.

But it’s telling — SCARY — that it’s exactly what the Trump Administration does.  EXACTLY.

 

P.S.  It’s also scary that Trump’s response was:

I think it’s great. Maybe we’ll give that a shot some day.”

People aren’t sure whether he was joking or not… it doesn’t matter… that’s something The President Of The United States — defender of the U.S. Constitution — doesn’t joke about in public… unless he wants to invite comparisons with a Chinese dictator!

Trump is getting blasted for — all of a sudden — unilaterally — announcing he’s levying a 25% tariff on steel and 10% on aluminium.  Outside of the steel and aluminium industries, you’d be hard pressed to find anyone supporting his actions.  Heck, there are even executives within those industries that don’t support his actions.

I disclaimed in my previous post on this topic that I’m no expert on trade, but the more I hear about how the rest of the world treats us in trade, the more I continue to agree with Trump that it’s time to create a more balance playing field.

But now, I’m even liking the way he’s doing it.

Apparently many of the trade structures in place had their origins in the 40’s… for example, helping a war-torn Japan and Germany get back on their feet (and not repeating the mistakes of the aftermath of WWI), helping an embryonic China move into the modern world, and so on.

Huh?  That’s was about 80 years ago!  For the last decade I’ve watched — first hand — tech companies tip-toe around China… either burdened with requirements that make us non-competitive… or, worse, getting blocked altogether.

I’ve been writing about Autodesk recently.  It occurs to me that they can be, in fact, the poster child for this entire topic!

AutoCAD is the de facto standard technology tool for construction all around the world — except China.

Want proof?  While China is always a big topic in many companies’ earnings call, the word “China” wasn’t even mentioned in Autodesk’s last two earnings transcripts (here and here).

Why?  Because there’s a Chinese company called ZWCAD that makes an AutoCAD-clone product and guess which product the Chinese government wants sold in China?

A Chinese company, by the way, that was caught red-handed stealing AutoCAD intellectual property.

So I continue to be with Trump on this issue… and upon further reflection am happy he’s playing the “mad man” card and throwing it directly in their grill.

America is, after all, the world’s biggest market.  If we’re really getting taken advantage of, then it’s time we stopped getting taken advantage of.

I’m very surprised I’m about to say this — but maybe this one is within Trump’s wheelhouse:  His juvenile, bullying, play-ground antics may be the most effective way — may be the only way — to get everyone on the playground to play fair.