Red A's Spring Offensive

China: March 02 - March 15

Europe: March 20 - March 31

Any ideas for a second career for me?

Because I'm sort of bored and pissed off by my current job.

You know, I often feel bad when I fuck around on the internet at work. Shouldn't I be developing customers or something?

Then you have a day like today when I am essentially waiting around for quotations, replies, price increases, photos, etc. in order just to service my current dwindling amount of customers.

I am also beginning not to believe in the "Taiwanese factories are better" theory. They certainly seem to be better at having their managers fly back to Taiwan all the time and thus never can answer any pressing customer questions.

And one of the few that are still based in Taiwan told me on Friday to tell the customer to place as many orders as possible because steel prices are rising. Plus I told the customer price increases would be coming.

Today they told me they don't want any orders until the end of March because steel prices are "volatile." Okay, let's just tell all of the consumers that they can't buy any products until the end of March. If beer suppliers did this, or there would be riots.

I think I'll just raise prices now, as it seems to be the way the current is running and worry about late March prices in late March.

Hmmmm, maybe I'll completely depress myself by looking at my Chinese competitor's catalogs, you know, the ones where they have copied all of my products, plus developed a bunch of new one's faster than me, and they have even come up with the same selling points I used to use.

Okay, the good news is that they are hopefully screaming about the RenMinBi appreciating. It hurts me too, to some extent, but with my little hedge, I can at least get some Schadenfreude.

The style is called "Socialist Realism"

but shouldn't they be looking towards the sea if they want to get to Taiwan? Not very realistic. Plus it looks like the 7th fleet is blocking their way in the background.

Found among a bunch of interesting images. (nothing to do with China or Taiwan.)

No Child Left Behind

Apparently this is an unpopular policy. Bread, J-Hole, and Karl oppose it. Meanwhile Bush & Ted Kennedy passed it. That covers a fairly wide spectrum of people on both sides. I really don't know much about it, so I read the wiki.

I don't get why its a bad policy. I know AJ had discussed with me why "teaching to the test" is a bad idea, but after listening to this podcast, I think I no longer buy that criticism. Sure, we don't want a Taiwan style system of only rote testing, but certainly measuring basic abilities is not impossible.

Listen to the podcast and let me know if you find it compelling that the problem is not about money, class size, but about providing incentives to get better teachers and allow for more choice.

There is another podcast with the same gentleman about education and growth which was interesting as well.

And for all the teachers out there. Yes, I get it. You're important. You don't want to have the pressure of having your results measured. You don't like the idea of having your job security on the line. I really do get it. Because that's what happens every day at my office where I work, too, and I hate it. Keep up the good work and don't worry so much.

CORRECTION: Karl does not know if he opposes this policy. I mixed him up with Bread. Sorry Karl.

Jesus Wept

A post about beer and politics, but it really doesn't matter once you see this guy's beer fridge.

And remember, Canadians, you're not supposed to have a beer fridge.

Those are only for wasteful Americans who don't give a rat's ass about global warming.

Man am I jealous of Jim in Colorado.

Browsing through Amazon.com

You can do a search inside the book to find out such important information that Fireball is a very good spell for a wizard. It also tells you not to be a poor loser. Strangely, there are no references to Mountain Dew at all.

I wonder if the gold farming phenomena has hit D & D yet? Okay, here's my pitch. Basically you e-mail your character to my new company in China where we play your character during the week, helping you amass experience points, gold, and magic weapons. Then we e-mail him back to you in time for your Friday night game.

If your DM questions your sudden rise from level 2 to level 7 and that +4 Vorpal Sword you now have, our company will have documented every playing session that our three shifts of employees and certified DM's have played out, all using official D&D scenario packs, e.g. Keep on the Borderlands, Vault of the Drow, etc.

Castro Retires

"A charismatic leader famous for his long speeches delivered in his green military fatigues, Castro is admired in the Third World for standing up to the United States but considered by his opponents a tyrant who suppressed freedom."

1. Probably should read, "admired by some in the Third World for standing up to the United States." Heck, maybe even remove the words "in the Third World." You don't think some Europeans admired him for that as well?

2. So, its a clear fact he stood up to America (a not unreasonable statement) but only his opponents think he is a tyrant who oppressed freedom? Like that is not a fact? Perhaps some links to opposition parties operating in Cuba and election results where they ran candidates would persuade me that its only an opinion that he was a tyrant who suppressed freedom. Even communists, who explicitly talk about a dictatorship of the proletariat, might consider him a dictator who oppressed freedom for the common good.

It would be interesting to find some Pinochet stories to compare and contrast.

"Thousands were killed, tortured or exiled under Pinochet's rule."

Admittedly, Pinochet is dead, so if Castro dies perhaps the press will mention similar things.

I always thought that when Castro started appearing in those Adidas sweat suits that he was probably not running the show.

A funny blog

Stuff White People Like

Lying down on the job

Inspecting sofas, so its allowed, nay, encouraged.

Yahoo News

In that incident, a Russian Tupolev flew over the aircraft carrier USS Kitty Hawk in the Sea of Japan on Jan. 29, 2004. Since then, however, relations between the U.S. and Russia have deteriorated to their worst point since the Cold War, largely due to the United States' plans to put a radar system in the Czech Republic and 10 missile defense interceptors in Poland.

Really the worst point since the end of the Cold War? I'd argue maybe that occurred when Russian troops seized Pristina airport and surprised NATO troops who were almost ordered into conflict with them by Wesley Clark. I guess technically since that turned out okay, it doesn't count?

I also doubt that if we canceled missile defense plans that US-Russian relations would suddenly soar to the stratosphere with goodwill and love.

What's Going on in China & Vietnam?

China:

Raw material costs are going up, especially for wood and wood finishes.
Wages are going up. IIRC, Minimum wage is RMB 800 / month in Dongguan, but no one will work for less than 1200.
The RenMinBi is going up (appreciating.)
Real estate is flat.

Meanwhile business has supposedly slowed a lot as the US enters recession, though factories were still working hard to make shipments before CNY. Supposedly Target was canceling furniture orders if they were delayed even by a week past the shipping window. How long can prices increase while demand falls? Maybe longer than you'd think:

Migrant workers supposedly can now earn as much by farming as by working in the coastal factories. (Is that due to increased food prices?) Therefore, the cost of labor is bound to keep rising as factories compete to get workers back after Chinese New Year.

As factories go bankrupt, the remaining factories may increase their prices to add profitability, something that is often missing in China.

For you currency speculators, Chinese banks now offer 4.14% interest on a 12-month CD, but note they limit personal conversions into RenMinBi to US$ 50,000 annually.

Vietnam:

South Vietnam is now full of Taiwanese, Korean, Japanese, and western factories located in smart industrial parks ringing Ho Chi Minh City. This means land speculation has begun. We're looking at some land there as it looks like DongGuan Part II is beginning to develop around the Singapore Industrial Park in Binh Duong province. Land is still cheap, and best of all, once you have bought land, you can borrow against it at local banks, which makes development much easier.

Chinese factories are also investing in Vietnam. One manufacturer in southern China has only been in existence for 8 years, but already is planning to move production overseas to Vietnam! Its also interesting to see how many factories in Vietnam now export to Korea and Taiwan. How soon will shipments be made back to Shenzhen? Globalization does not only affect Americans!

The Taiwanese factories who invested in Vietnam in years past are full of Schadenfreude at China's problems, and expecting a lot of orders to come their way, but they also are having labor problems. Mostly they rely on migrant labor from North Vietnam, but because there are new industrial parks opening up north, these workers may not come back after the Lunar New year. (As with Guangdong, the locals mostly refuse work as factory labor, at least at prevailing wages.) They also face frequent strikes and labor unrest. The government of Vietnam tolerates these strikes, so they have become very common and workers will strike for absurd reasons like complaining that the rice in the lunch box isn't white enough. (The resolution of this complaint ended up revolving around wages, not better polished rice interestingly enough.)

Buyers are flocking to Vietnam, who they think will be their savior from China's rising prices. I have some doubts about this actually happening. First of all, it looks like Vietnam will "suffer" from rising labor costs as demand flows there. Secondly, Vietnam does not have the full industrial infrastructure, and thus many key parts have to be imported, increasing costs. Finally, factories have a keen eye on the China prices and will probably only undercut them by a few percentage points at best.

The opinion of a factory manager in Vietnam is that the costs are about the same as China despite cheaper labor. (Though they invested thinking they would have lower costs.)

The opinion of our European and American customers is that Vietnam has cheap labor so our costs should be super low. Something has to give there. I have to note that a German customer loved our pricing and assumed it was from Vietnam, even though that particular item is actually made right here in Taiwan.

Then again, at least in Vietnam people quote prices that are slightly more stable. In China we get quotes now valid for 30 days, often priced in RMB, and subject to vast increases - up to 20% at a time. Vietnam has the advantage that its currency right now is not relentlessly appreciating like the RMB.

Yahoo Headline

• Missouri school district must stop giving Bibles to 5th graders

JESUS H. CHRIST!

Airport Security Screening

Way back when, I had posted about how making airport screeners into unionized federal employees was a bad idea. There was some data that the privatized screeners at SFO actually did a better job.

Guess what?

Security screeners at two of the nation's busiest airports failed to find fake bombs hidden on undercover agents posing as passengers in more than 60% of tests last year, according to a classified report obtained by USA TODAY.

But at SFO,

San Francisco International Airport screeners, who work for a private company instead of the TSA, missed about 20% of the bombs, the report shows. The TSA ran about 70 tests at Los Angeles, 75 at Chicago and 145 at San Francisco.

Personally, I don't like being screened and wasting time, so if we have to do it, I'd like it to be as effective as possible.

Out of the Office Notice

I will be in China and Vietnam from January 13 - January 24th (or later, depending.)

I will be in China from Feb. 15 - 27th.

I will be in Europe sometime in March.

I will be in the USA in late April to early May.

I will be earning a lot of frequent flier miles. I will be eating a lot of restaurant food.

Let's hope I will be actually making some money from all of this effort.

Costco & Whirpool

I noticed Coscto in Taichung sells big American style fridges made in the USA by Whirlpool.

I already have one of those at home, and the wife originally was skeptical of the size which is larger than many Asian models. Well, so far our fridge has served us well. I especially like that its made of steel and has a door heavy enough to auto-close.

After visiting Costco a few times, my wife now understands why Americans would want bigger fridges. She also now understands why one of her friends who has kids in the States says that they need an extra freezer in their garage there.

Now, Whirlpool already sold their fridges in Taiwan, but I wonder if selling them in Costco has an effect whereby people buying things in Costco are suddenly more aware that they need a new, larger fridge?

I do know that Costco makes me wish I owned my own house. Then I could buy stuff like my own diesel generator, also sold at Costco.

Disclaimer: I just bought some Whirlpool stock today. My thinking is that its priced fairly low (P/E ratio of around 10) is profitable and has the export upside of a weak US dollar. It also pays a dividend. Yes, the tanking real estate market will impact, but that should be somewhat reflected in the price already, and according to the company, only 18% of their sales are related to new homes.

China Has the NSA For Lunch

December 26, 2007:

The U.S. recently revealed that China had done some major damage to the NSA (National Security Agency) via penetration of the NSA facility in Hawaii (which concentrates on monitoring China.) The Chinese effort was two-fold. First, the Chinese set up a Chinese translation service in Hawaii, and managed to make it appear as American owned (and able to pass a security check). Eventually, this translation company got NSA contracts to translate material obtained from China. The operators of the translation of the company were able to pass the NSA material back to China, letting the Chinese know what information the NSA was picking up, which helped the Chinese figure out how the NSA was getting certain information, and with what. This made it easier to prevent the NSA from getting certain information, or setting up a trap, to feed the NSA false information.

But there was more. Many of the NSA employees were Chinese-American. The Chinese set up a recruiting operation, that was so carefully established and run, that it was several years before U.S. counter-intelligence caught on, and shut it down.

Using a translation service? Maybe for open source intelligence like newspapers, but for real intel like intercepts? Yikes. You'd even imagine computer translation would be close enough and far safer than using an outside source.

I don't know what to do about Chinese-Americans in these situations, but I know if I was China, I'd fly a false flag operation and claim to be Taiwanese intelligence and ask the Taiwanese-Americans to help Taiwan (all the while actually passing this stuff back to China.)

For the ethnic Chinese, appeal to nationalism.

For non-Chinese, drop a honey pot or some money. I can see the cables back to Beijing "Will need two agents. Subject likes three-ways. Also, prefers C cup or larger. Must be willing to do girl on girl. Suggest hiring agents out to porn production company on the side to reduce our costs. p.s. don't forget to include two cartons of Pandas this time. We are dying here with only Marb Lights!"

By the way, this is why we only sell dumbed-down versions of stuff to Taiwan. Wayyyyy too many leaks back to China. One father-son team in the Taiwan navy were selling US equipment documentation on CDs to China for NTD 500 each.

Technology vs. China

China has been making low cost solar panels for a few years now. They mainly sell to sun-drenched Germany which has some crazy subsidy scheme for home owners installing solar panels.

This coupled with the rise of Green Technology as the new hot investment area has led to these companies in China absorbing massive amounts of capital. I believe one company raised US$ 2 billion in capital a year before they even produced a single product.

Obviously, China thinks it has some advantage for making solar panels, which I suspect probably involves the low cost of labor and perhaps some other factors. But we keep hearing how the Green economy is going to be GREAT for Western companies. Well, we shall see, because Nanosolar, a San Jose based company shipped their first commercial product. Their factories are in California and Germany.

Oh, and if I appear cynical about the West's chances, keep these figures in mind:

IPod - Where the money goes.

The retail value of the 30-gigabyte video iPod that the authors examined was $299. The most expensive component in it was the hard drive, which was manufactured by Toshiba and costs about $73. The next most costly components were the display module (about $20), the video/multimedia processor chip ($8) and the controller chip ($5). They estimated that the final assembly, done in China, cost only about $4 a unit.

This their analysis of the value added amounts, though:

The researchers estimated that $163 of the iPod’s $299 retail value in the United States was captured by American companies and workers, breaking it down to $75 for distribution and retail costs, $80 to Apple, and $8 to various domestic component makers. Japan contributed about $26 to the value added (mostly via the Toshiba disk drive), while Korea contributed less than $1.

Apparently China ends up just being the place where electronics are assembled, n0t where much of the value is added. (There are other stats that look at the huge dollar value of electronic components they import in order to achieve their exports of a value that is not too much higher.) What was the other fact I heard? That all of the wafer fabs in China that are so scary to Taiwan actually only handle 3% of China's demand? (This demand including chips needed to export products, not just local demand.)

But still, China was first out of the box with cheap solar panels. Let's see how the horse race shapes up. And let's hope Nanosolar has some good IP attorneys and has seriously vetted their work force.

Solar panel raw materials are from foreign sources.

Side Note: India is a major producer of commercial windmills, another green technology that is supposed to provide the new manufacturing opportunities for rich countries. Probably more like design and engineering jobs, with some forklift positions and installers.

South African Politics

Actually, I know little or nothing about South African politics, but the Economist informs me that there is politician in South Africa who's name is Tokyo Sexwale.

I wonder what happens when plugs his name into one of those "What's your porn name" programs? Does it melt down the machine?

Asymmetrical Warfare

If you can't beat your opponents at Axis & Allies the normal way, just drink them under the table. Or play people who have to get home early.

Karl and I drunkenly reviewed the board and thought we might have been able to win that last game. Looked like Japan could hold Anglo Egypt after its turn - I am thinking the effect of my third factory was finally reaching the front - and then Japanese tanks could have taken Africa, further reducing UK's ability to fund its dump. After I got home I also realized that once the Suez was taken, the Japanese Navy (which was fully combined) could have hunted down the British fleet. (Along with the 10+ aircraft I had on the board.)

Regardless, it was an interesting game.

Karl-Red A House 1:00 a.m. commute: two police check points avoided. wife check-point was not avoided, but she let me off with a verbal warning.

Dutch Housing Market:
The average cost of a house five years ago was EURO 137,000. Now, a single-family dwelling averages between EUR 240,000 and EUR 250,000.

This PDF has a whole lot of data to digest:

The house price-to-income ratio has stabilised in the past few years, although its level is still high from an international perspective. The effects of rising house prices on affordability have been mitigated by favourable financing conditions. While the average housing cost-to-income ratio for homeowners has been quite stable since 1995, there seems to be a dichotomy between movers, who profited from the earlier house price boom and have surplus value, and starters, who have no surplus value and fewer financial buffers.

One thing for sure about Taiwan, low interest rates, like 5% for mortgages, will surely lead to higher prices, as people can afford more.

More thinking later.