Glenn Kelman, CEO of Redfin, has posted an excellent survival guide for bringing a business through the recession at TechCrunch. I'd highly recommend it for anyone being in business in China or in the US, the same principles apply.
Sunday, November 30, 2008
A bit belatedly, these are two must-read overviews of how the global financial crisis will affect China. The first from Elliott Ng (CNReviews) who also in part summarizes the second from Brad Setser summarizing the World Bank China Quarterly (also linked to by just about everyone in the China blogosphere already and also Paul Kedrosky who I also follow).
Mr. Ng provides a cogent argument of why China will suffer disproportionately than the US as a result of the crisis and the World Bank China Quarterly describes the almost overwhelming challenges ahead. Both are worth reading.
Update: Another good (and by comparison, short) read on the changes China needs to achieve in its institutions to continue fueling its long term growth (EastAsiaForum) via Richard Brubaker from AllRoadsLeadtoChina
Wednesday, November 26, 2008
Here (InstigatorBlog). Lots of good reference links as well. In looking back at the development of our business, if I could do one thing differently it would be to defer investments made in the hopes of winning more contracts, in favor of booking orders first, managing expectations and spending the money after.
Unless you've been under a rock for the past few weeks, you know that it's time to batten down the hatches and it would seem to be nearly consensus opinion that we are heading into 2 years of recession (or possibly worse, but I'm an optimist). This is probably a good time to also do some introspection (Datawocky). While Mr. Rajaraman prefaces his post with that his advice is for VC startups, I beg to differ. For startups there are three possible outcomes: success, failure or zombiehood - "If you are a company founder, and you are considering layoffs to extend the runway (perhaps on the advice of your venture investor), you should look at yourself in the mirror and ask whether you are cutting away your growth opportunity and just choosing a lingering death over a quick one."
Sunday, November 23, 2008
Did Second Life predict the current banking crisis? (MSNBC) It's a story possibly made more interesting because my brother in law works at Linden Labs. That said, I doubt the underlying argument made, that the crisis is because of the lack of regulation. There's quite a big difference between what was almost a ponzi scheme in Second Life, and the current financial crisis caused in no small part by government shenanigans (Time). Nevertheless the idea of using virtual communities as simulators is a cool idea. It's still on my list of to do's to build out a primer on the financial crisis to counter a small part of the ideologically driven journalistic idiocy out there.
Update: MSNBC link fixed.
General to teach aerobics
BANGKOK - A MAVERICK Thai general who has threatened to bomb anti-government protesters and drop snakes on them from helicopters has been reassigned as an aerobics teacher, the Bangkok Post said on Friday.
Major-general Khattiya Sawasdipol, a Rambo-esque anti-communist fighter more commonly known as Seh Daeng, reacted with disappointment to his new role as a military instructor promoting public fitness at marketplaces.
'It is ridiculous to send me, a warrior, to dance at markets,' he said, before launching an attack on his boss, army chief Anupong Paochinda.
'The army chief wants me to be a presenter leading aerobics dancers. I have prepared one dance. It's called the 'throwing-a-hand-grenade' dance', he said.
Saturday, November 22, 2008
Perhaps not so much overheard as seen on Pearl TV. According to some Hong Kong SME advocacy group, 40% of small and business enterprises have had their credit lines cut in the last month. This doesn't even account for companies who don't pursue or have credit like my own based in Hong Kong. During the same program however, it was also pointed out that China's new labor laws that force employers to offer permanent contracts have hurt companies even more particularly as demand slows down.
A big part of one of my businesses is aluminum extrusions (though I don't currently export too much to Canada). I hope it's not a signal towards increased protectionism but the Canadian government has imposed a (provisional) 119% duty on aluminum extrusions (under a series of select HS codes) being imported into Canada from China.
Let's set aside for a moment the basic arguments of why the idea of duties and dumping is flawed to begin with and how it ends up hurting the poorest. In this absurd decision completely bereft of intelligence, this cost falls directly on Canadian manufacturers and employers with the ultimately people who bear the cost being end consumers and employees particularly when Canadian companies find that they are no longer competitive in the world market because they are essentially forced to buy components at higher prices.
Aluminum extrusions are a secondary manufacturing process. This is to say, they are not usually used to make end products. Canadian manufacturers will buy aluminum extrusions to process it into final goods. Now let's say you are a large buyer of extrusions. You would normally buy the extrusions to turn them into such things as windows, buildings, auto parts, machinery, etc.. Let's say that you looked at buying offshore at one point and figured that a cost savings of 10-15, maybe even 20% wasn't worth the risk of all those China horror stories. Now you're faced with a cost increase of at least 20% if not more on a primary input while you are unable to pass that cost along to your clients. Why would you not consider shutting down your factory in favor of just importing it all from China?
In effect, the Canadian government has yielded to a select few in the short term while sacrificing the rest of Canadian industry, employers, employees and consumers at large. For those like me who would like to achieve a greater amount of value added processing, and who don't currently export as much into Canada, it makes my job that much easier.
I have been working ridiculous hours lately. The last time I ever did these hours was when I was in NYC. Waking up on this comfortable and lazy Saturday morning, it occurred to me that the one noticeable difference waking up there and here in Guangzhou is the lack of brake maintenance. That said, while I can appreciate the silence of living in the boondocks, I find something comforting about the cacophony of humming cars, trucks and the periodic impatient honks.
Saturday, November 15, 2008
I just got back to the office having seen Quantum of Solace. I figure if I have time to see movies again, I have time to post. Quantum of Solace was fantastic. With how it's described on imdb - what could possibly be wrong with the movie? And it's about time:
Seeking revenge for the death of his love, secret agent James Bond sets out to stop an environmentalist from taking control of a country's water supply.Perhaps someone should do one of those comparative charts between Dominic Greene and his investments and Al Gore and his.
Today is the first time I've gone to a movie theater in China and it was an interesting experience. Being a snob and a bit of an elitist, I got a ticket at a theater that only seats 20 people with fully reclining lazyboy type seats. Highly recommended. Before noon on Saturdays the cost is only 80 RMB/person though that includes a drink and caramel popcorn. My employee and I were the only ones in the theater at the time. Me thinks I will make this a monthly office experience.
Update: Ha. I'm far from the only one who has made the Al Gore vs Dominic Greene connection. A bit of defensively wishful thinking here. Though perhaps a bit more accurate depiction here.
Making the jumps across the Pacific is still somewhat disruptive to my rhythm of habits, not the least of which is my bowel movements (tmi?). Unfortunately blogging was a casualty this last time around and there really is no good reason aside from the fact time just got away from me (though quite frankly I let it).
I was hoping to post a basic primer on some of the details of the financial world falling apart from my somewhat jaded yet idealistically libertarian perspective and that's what I still hope to do. There's especially no reason now that it would seem that blogspot is happily unblocked from within China.