Posts Tagged ‘Trade War’

Facebook has a lot going for it.  But one of its glaring weakness over the years is ZERO penetration into China.

Turns out dictatorships don’t like things like free speech.

Ironically, as much as FB gets slammed for privacy concerns, Facebook defiantly stood up to the Chinese government in 2009 when the Chinese demanded the release of private information from the company.

This was no small act:  For their privacy stance, the Chinese government blocked Facebook into the world’s most populous country… essentially halving their business opportunity.

THAT’S putting your money where your mouth is.

But, in a weird twist of fate, when many companies are getting slammed for the earnings impact of a US-China trade war, this isn’t an investment risk for Facebook… because they have no Chinese exposure.

And — it gets better — one of the expected outcomes of the trade war is a more level playing field, which (you guessed it) may mean Facebook becomes unblocked. 

If that happens, that could be a massive growth driver for FB earnings over the next few years.

Yet another reason why this trade war isn’t all bad.

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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.

 

This is the time where having atrophied social skills hurts.

No one wants a trade war.  That’s why there are a bunch of WTO (World Trade Organization) rules in place to make sure “free trade” doesn’t turn into “cheating trade.”

Now I’m no expert on trade, but we’ve all heard for years that other countries don’t play fair with the U.S.

I chalk up some of this to whinging.

Other countries processes may just be kicking our ass… that certainly happened in the auto industry… they just created a better product.

I always get a kick out of the subsidies debate, too.  We cry foul when other countries do it, yet didn’t the U.S. just bail out GM and a host of other “strategically important companies” just a few years ago?  Of course we did.

But some of it is real.

Other countries really do steal our intellectual property (i.e., our process and product inventions).  Tactically they’ll make it difficult for imports to enter their countries (i.e., port harassments and such).  And strategically they’ll artificially influence currency to be in their trade favor.

But, so what?

If Trump thinks rules are being broken, then why not use his formidable communications platform to expose these AND clearly articulate the ramifications — repercussions — for non-compliance?

That would be awesome… and something I’d be proud to support.

Instead, he went right to the “nuclear” option…

…and instead of inspiring productive, even patriotic “play fair or else” conversations, he just got everyone — even his supporters — all riled up, talking about trade wars, and running around like chaotic and contrasting chickens with their heads cut off.

That not only roiled the markets but, more importantly, DISTRACTED FROM HIS MAIN MESSAGE.  Which is a shame because it was a reasonable one.

Open mouth.  Insert foot.