Saturday, April 28, 2012

ChiCom Press Roundup

The Chinese Communist Press can have some pretty useful articles...


Canton Fair Roundup


I was there in 1977 when there were maybe a few dozen Americans at a time... but now it is huge.

Competing on Design, in China...


They are catching on....

As part of the Clean Campaign, Chinese brands are being promoted


Speaking of Chinese brands,  here is a Chinese brand that may have trouble...  sunglasses, or as we once called dark glasses...


Now that is dark...

This is scary... these are real people...


Here are people training in USA to become experts in Chinese industry...




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Friday, April 27, 2012

CJ sent in a question:

On Apr 27, 2012, at 6:22 PM, C.J. wrote:

in your book you said that the factories will want to preserve their reputations and that will be the greatest guarantee that if the product is not well-made, they'll either fix or replace it.  I think you gave an example of some dishes that were warped and a factory rep came to the warehouse to check them personally.

***Yes, this check is organic.  Recall you checked their references, did they check out?  (If you did not check references, time to do so...)    If they have no references, I don't work with them.  If they have references, obviously they care.

The second part, say this is a $5000 shipment, there has been way too much work for them to rip you off for a mere $5000... by know you've demonstrated you are in for the long term, and they have no doubt invested considerable resources to this.  It should be clear that both sides want long term.  There is your security.***

 What I'm wondering is, should I rely on this to ensure quality or try to enter into some sort of written memo of understanding with them (I realize a contract is useless)?

***Right, your security is the above, not no stinkin' piece of paper...***

 I'm concerned both that the run be of high quality aesthetically but also that the toys pass both U.S. and European safety standards.  If they don't, I'm not going to sell them.
***I'd even say the above directly to them, just as you said.  You are not messing around, and you expect their very best work, or words to that effect.. face is very important to the best.  You'd be assuring them you are no flake.***

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Best Rentacar At SFO

So I had to fly into SFO for a quick meeting, and I needed a car for the day.  I checked out the rent-a-car companies at the airport, and best deal was some $45 for the day, with taxes and airport fees $90.   What a rip!

So I checked around...

Super Cheap Car Rental
10 Rollins Road Suite 106
Millbrae, CA
650-777-9993 (local)
http://www.supercheapcar.com

$32, all in.

Now, they do not have the convenience of being located at the airport, but Super Cheap turns out to be better. They pick you up.  To get to the airport rentacar location at SFO, you have to take the airtrans which is tedious.  I am sure I was just lucky, but I got picked by Super Cheap within about 3 minutes of getting to the curb.

Enterprise is great, but they will not let you drop a car outside of biz hours.  Super Cheap, no problem.

They do warn you about a problem, their location is near an intersection with red light cameras, and $400 fines.  Why cities want to ruin people with those car-wreck-guarantee systems I do not know.  It seemed to me driving through they have also shortened the yellow light time, a common trick to increase revenue.  Bad governance, I would say.  Just drive slow and deliberate as you leave and come in.  This in no way reflects on Super Cheap, if you rent at the airport you could just as easily get nailed by one of these cameras.

The crew is pure entrepreneur, they have experienced a problem and come up with a solution.  They have expanded to several cities, so check them out if you plan to fly and rent.  I am now their customer.  By charging too much to do too much, the government agencies have killed off airport rentacars, as far as I am concerned.

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DeMint Blows The Whistle On Shakedowns

The tariff system in USA is used by politicians to shake down businesses.

First, it is possible to get a waiver on duty for your imports, if you have enough money to hire a lobbyist.  Such waivers can mean a lot of money, and the lobbyist helps you share your "savings" with the politicians.

What a conflict of interest.  Congress cans set tariff rates on who it wants to, and then shake them down when the tariffs hurt.  And then claim to be helping when they shake down the victims.

When USA was established, the only money the Fed Govt could get would be on duties.  This would keep the government small, because, the theory went, we only import crucial things, and we could not afford to tax crucial things very high.  As late as 1860 95% of the federal government income came from tariffs.

After the civil war, there was no check on federal power, so the feds went crazy taxing everything, making wars, and adding income taxes as the years progressed.  Today about 1% of the fed income comes from duties, but it is a great way for politicians to get money.

People talk about jobs and level playing field and taxing and tariffs without understanding a simple point: the end user pays all taxes.  The consumer pays all taxes.  People get mad when GE pays no taxes.  GE is a legal fiction.  It cannot pay taxes.  If it writes checks to the government, the money comes from its customers, the end users.

When you eat a Hershey Bar, you pay all of Hershey's taxes.  So any tax on any company is a tax on consumers.  (If a company goes out of business because it cannot pay its taxes, then the investors in the company are in effect the consumers, since they were the last to touch the company).

If a state sets a tax, then consumers pay it one way or another.  And taxes are not the only way a state gets money. Sometimes the state representatives just take it.

Of course, any taxes are completely unnecessary.  There is nothing the state does that cannot be otherwise and better provided in a free market.  In fact, the longest running, largest government the world has ever known charges no taxes and is completely voluntary.

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Thursday, April 26, 2012

Diana, & Why the 60s Were So Boss

If nothing else, the hairstyles were engineering feats...


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College and Business Success

Unemployment is worse than reported, and college graduates face a grim prospect.  People are loading up on debt, and roofers are going back to school to learn to code java, and java coders are going back to school to learn to roof homes.

Coming from a family of academics, I was the black sheep who went into business.  I do teach on the side, so I guess I did get some on me...  but since I went into business I approached teaching as an entrepreneurial challenge which resulted in achievements most academics would kill for.

I do think an education is a good thing, and I do believe all kids are primarily "home schooled" for better or worse.  My expectations to my daughters was that they would all get at least a BA, and in no circumstances should it be in a "voc tech" program, like business, journalism, pre-med, law or some sort of waste of time and opportunity.  Also, under no circumstances were they to get student loans.

So starting with the eldest, who has a comparative religion degree, my middle is finishing up a classics degree with a concentration on Latin, and the youngest is going after a double major English and Humanities.  I could not be more proud.

I must confess the middle one did bang out an AA in apparel design, essentially before she finished high school, but that was just because she wants to go into fashion and was advised she better know how clothes are made.  Done.

The benefit of an liberal arts education is to have an alternative universe that you know about, into which you can escape and reflect when things are too tough, and where you can compare and contrast when you need to make decisions.  If you are in business and you have a business degree, where can you go in your mind to get some perspective?  We solve problems on a different plane that we experience them.  We have physical, mental (emotional) and metaphysical dimensions to our lives.  When we have a physical problem, say paralysis, it will not be physically dealt with, it is dealt with in philosophical or metaphysiscal level.  The paralytic may say "suffering has meaning" and is able to cope.  He is still paralytic, but he has dealt with his physical problem on a mental level.  A unfortunate spouse may be experiencing mental abuse, and the problem is solved by physically moving away, and so on.  If you have a business problem, and your education is business, where do you go when you have problems?  If you plan to be in business, get a degree in something you love, like botany.  Discussing botany with other botanists will give you separation and perspective on solving the business problems. That will be worthwhile.

My eldest is a producer at a rock solid media company, when her peers are unemployed.  Here comparative religion degree allows her to keep a perspective.  The middle has standing offers from the largest corp in the world and from some leading apparel people to come aboard.  Latin not only gives language roots connections, but cultural roots.  She meets people "where they come from" because she has toured their history and cultural roots.   My youngest loves to cook, and not out of her teens, when most culinary programs produce graduates who must work for no pay (they call it staging) she turns down paid work.

Personally I have the gift of ADD so my college transcript are a bit of a hash.  Since I had more than the required 180 credits to get a BA, the bewildered advisor came up with a unknown degree, "asian studies," whatever that is.  But most of business is discussion about the world around us, and because of my college degree I can carry my own in a conversation.

Now this is not to say you must have a college degree. Some of the smartest people I know have never graced a classroom above the grammar school level.  You do need to read, and if you cannot read, then there is endless free help with that. Get some.

But if for whatever reason, college is in your future, and you want to do well, get a liberal arts degree, and get one without going into debt. Coming from an academic family, I already knew about what Dr. North outlines in that link.  I would just stress, never waste an opportunity to get a liberal arts education, and never take college time to get a voc tech degree.  (Sure, get one if you want one, they are probably the best educational value around, but don't let it interfere with a liberal arts degree.)

So here is the acid test: are you pursuing a bachelors degree to be happy, or to make money?  if to be happy, go.  If to make money, don't do it.  College is not for you.  Go straight to business start up.

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Wednesday, April 25, 2012

Competing on Design

When we introduce a product, we do so at the specialty level, serving the wealthy who are in a position to be early adopters (and in effect guinea pigs).  It does not take much to be an innovator, our products are unique, not very well executed as ideas, terribly expensive as far as they go as products, and take a while to get.   


One of the reason for all of this is because we use what the Austrian call the roundabout means of production.  Just so... such means appear so to the academic, but in reality they are the most direct means of patch-working odds and ends of excess production capacity in order that the new item may be introduced.  It happens to be the most direct means given the resources available to the entrpreneur...  in time, through hegelian dialectical materialistic action, the innovation, once accepted, attracts the conservators to routinize and rationalize the production and distribution.  In time, in the measure there is lack of intellectual property rights, good things will happen:  what was once only for the rich becomes available to everyone, the item is available as it  we more better cheaper faster of the item.

von Mises says

"Luxury is the roadmaker of progress." 


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Tuesday, April 24, 2012

Case Study

Folks,
Here is a note from a fellow from whom I have obtained permission to quote
for you. This fellow was scheduled to take my class but got too busy with
starting his company. He was surprised to find me tell him his experience is
fairly common. Review his tale and feel free to advise him in "reply to all"
on how he ought to have proceeded. The products were existing items, not his
own designs.
***
A lot of things have happened since I decided to make a go of this course and
business. We went to a gift show and received a lukewarm response from our
products as did everyone else. A large amount of money was spent on
brochures,
a pop-up booth, importing using a broker, order forms, travel etc. The
products were priced incorrectly too cheap(not my decision) and our minimums
were
a little unreasonable...1st $1000, then $750, then $500, then ...

We got about 10 orders under our minimum. My partner, a relative, wanted to
fill
a container from this one show. I wasn't really thinking about it, but now
it
sounds outlandish.

The sources were Eastern European which I had a feeling were not the most
dependable or trustworthy either.

We have decided to cancel all but one order and close the company.
***
Our rules reveal our weaknesses...I stress the means I do in the course
because tales such as this are so common, yet so easily avoided. All that
creativity, enrgy, time and money wasted! This is probably the most common
story I hear about people who try import/export. What I laid out in the class
for you is the second most common story, the one that is told by anyone who
thrives in import/export at the small biz level. I'll quit teaching when
what I taught in the class becomes the most common story. Feel free to
question away...(but hit the "reply to all" button)
John


Monday, April 23, 2012

Brazil Moves To More Freedom

As Spain and USA do more and more to constrain trade and freedom, some countries are heading teh other way.  Brazil is making it ever easier to do business worldwide.

As I mentioned a few days ago, Hong Kong cut taxes.  Iceland told the bankers the taxpayers will not bail them out, and Iceland is already recovering as Greece and Spain suffer death by a thousand bailouts.

The bailouts save A banking system, not THE banking system.  We are caught in a false dilemma, bailout or die...  no bailout and recover.


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Sunday, April 22, 2012

Mish has a great article covering the free market in defense.  He takes apart the idea that any government is in a position to defend the state.  Indeed, the US Constitution presumes the state is not very good at protecting people & property, so it provides for private defense:  The Congress shall have Power ... To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water;

A private company, to name one problem, has come up with a solution to the Somali pirates.

Mish website

We've been here before, so this is nothing new.  Private individuals could act as privateers or corsairs and be given letters of marque to attack pirates.  They get paid on what they take away from pirates, and what bounty they can earn from steamship lines and insurers. This company would lease these monsters to privateers who,  given letters of marque, would go and sort out the pirates.  Talk about all-volunteer navy.  (A letter of marque is necessary to keep say a French Navy ship attacking the American corsairs and hanging them for piracy as well.)

Now this is not like those welfare queens at Blackwater and Xe, who depend on government handouts to exist.  Corsairs are on their own and get paid based on what they take from the pirates they attack.

Defending freighters is a problem.  The ships are huge.  They have a crew of maybe 12 total.  The have weapons aboard, but none of the crew signed up to fight, and are not really trained to do so.  If crews commonly fought the pirates, the pirates would simply kill first and there would never be any survivors of a ship take-over.

Here a Chinese sailor decides to take matters into his own hands...  yes those are molotov cocktails.


Further, to kill a Somali national, even in self defense,  makes the ship subject to impound while the death is investigated.  The cargo rots.  The ships do post watches when they have to slow down in pirate regions, like the Malacca straights, an turn non-lethal fire hoses on boarding pirates to repel them.
google images

But in most instances the captain turns around and sees a pirate with and AK 47 standing on his bridge.  Ship taken.

google images

Pirates tend to work off a mother ship where their loot is stored, and send out a boarding party to take a ship.





There is really no reason we have to put our sailors in harms way, and at such incredible expense,  here approaching a suspected pirate mother ship.



Whereas we must pay taxes to support a navy overseas who then capture, process, and then sink the mother ship, privateers would kill the pirates, or take them for ransom, seize the ship and sell it (privateers take title when they take a ship from pirates) all on their own dime.  Our sailors are predictable, so they cannot win this fight.  Privateers  would adapt daily to changes, and cost us nothing.

Privateers can meet the challenge of pirates on the high seas....


This should be in the Seychelles, not in New Hampshire... Saddle up, boys...




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