Breaking Into the China Market

Steinway pianos being made in China?!  No.  Not true.  I've heard the rumors too.  No, Steinway is breaking into the China market in the most effective way:  to export to China first you import from China.

Steinway is assisting the largest piano maker in the world, Pearl River Pianos, in design and distribution of the Chinese-made Essex brand in USA.  That is how you start.  At the same time, Steinway, unknown in China a decade ago, is finding their best growth in China.  And they are cross-promoting in China:

The piano, called the Steinway & Sons' Charm of The Dragon, is the company's first joint project with Tian Jiaqing, an antique expert, and the first commemorative Steinway piano in China. Made especially to commemorate the Year of the Dragon this year, it sold for 6.9 million yuan ($1.1 million) at the China Guardian 2012 Autumn Auction in Beijing last month.

What do you want to export to China?  Then import that, at any scale, scale does not matter, and give the Chinese USA market feedback.  That in essence is the easiest, fastest most profitable method.

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Experience Is The Best Unemployment Insurance

Mish Shedlock has a expose on the explosion of employment which is not covered by unemployment insurance.

133% of the jobs created since January 2009 are not covered. Employment rose by less than 5 million while uncovered employment rose by over 6.5 million.

An observation Mish does not make, but I will, is that is a whole lotta people who are working without unemployment insurance.  People are going to get used to that.

Mish notes that in his state he must pay for unemployment insurance but he is not covered since he is self-employed.  Here in Washington I am not covered by unemployment insurance but the self-employed are not taxed for it either.

Being self-employed, over the years, there are times I find I need to get some work to make some money, or at least not blow through savings.  Consulting and teaching are two means to that end.  Both depend on experience.

I've also worked on once-in-a-lifetime projects like a major Chinese art exhibition where again my experience recommended me.

The experience comes from work.

Look at your job right now.

1. Do you do something that others would pay you to do?

2. Are you passionate about what you do (suffer in that good way)?

3. Does your work give you joy?

If you answer no to any of the above, you need to get self-employed.  You probably are probably covered by unemployment insurance, but that will run out at some point if and when you need to draw on it.

Eligibility for unemployment insurance, and disability insurance, and social security is sure to be tightened in the next four years, one way or another, as sure as taxes will go up.   One way or another, hoping in the state will lead to unmet expectations.

Get something going now, anything, the opportunities are wide open, get passionate, find that joy, and develop the best unemployment insurance possible: experience.


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Italian Police Crush Gold Trading Ring

People go underground when the above ground is unworkable.  When enough business is underground, the underworld joins in, because unofficial is better than official.  In an effort to maintain control over the economy, the Italians have rather strict controls of currency and metals trade.

Police blocked 500 bank accounts, and carried out 259 raids in houses and cash-for-gold shops linked to the ring, which had allegedly dealt in 4,500 kilograms of gold and 11,000 kilograms of silver only during the last year.

But the underground economy is the symptom, not a cause.  It is the government control of the economy that makes it go bad, and forces people to go underground, or "escape to anarchy" in order to survive.

With the police harassing the anarchists, it sets up an opportunity for mobsters to protect people form the police.    No police, no mobsters.

The problem is democracy, in which people believe they have a vote, and it counts.  They believe they have the power and right to pick their leaders, who will in turn do as the people say.  This is a kind of lack of commitment, having "others fight your battles" which necessarily means, when you don't get what you voted for, well, you cheat.   Psych 101.

Psych 201: People want the impossible to work, and when it does not, they make an exception for themselves.  Why not? it is their choice.

So give us state currency that gives us only a little bit of constant price rise so we can have free medicine and education and all sorts of cool free stuff.  Ooooopsss.. impossible to do?  An inherent contradiction?  O well.  Go underground.

In late Roman times people who made it to the frontier were arrested and sent back to their shops and farms, where they were obliged to work.  And lose money, and rot.  The state controlled everything.  Eventually enough people escaped to anarchy to help bring down Rome.

Starting your own business is an escape to anarchy. It's legal although quite beset by the powers that be.  But it is easier and safer to escape by starting a business in USA than to immigrate and start over.

For now.

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Funny

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Get Back To Work: Exploit Cheap Management Overseas

The show is over, the entertainment is done, now the whip comes down.  In small business international trade one essential part is we exploit cheap management of product development and manufacturing.

We compete on design and not price. Since we are innovators, our products are necessarily of special design and solve a problem...  we are likely obliged to contract with a designer to get our product “right” (by customers’ estimation).  The most important thing in business is the customer, the hardest thing is getting the product right.

The system is set up as though it assumes your product will NOT sell, and you depend on market feedback to get the product (or service) right.

One might think that there is enough perceived value in off-the-shelf products coming from overseas to compare favorably to the domestic, and thus be advantaged. Unlikely, but if so, anyone can get it also, and they can simply compete on price.  But but but, I’ll get an exclusive.  No you won’t, because exclusives are a fantasy.

Our items probably take quite of bit of back and forth to get right all of the special design work on our behalf takes time and talent.  certainly that work is costly, and far more costly in USA than in most places overseas.  Think of the time sailboards were being introduced..and how a surfboard had to be modified and a sail attached... something so minor is actually a lot of engineering and testing.. and the first versions are never perfect... the people trading in sailboards keep improving the items..like an Apple computer. Try paying for that in USA. ouch.. 

Once we were excellent at being conservators in usa, that is mass production.  At the small biz level we send the expensive management of product development overseas.. and when that is worked out, we leave the expensive part of managing the production overseas as well. So we at the small business level are exploiting cheap management overseas.and cheap management overseas is exploiting us for cheap management of marketing (of what the overseas supplier makes) in usa.  We contract designers in USA market to tweak the product for USA.

The result is the consumer wins with newer and better of everything coming in...

 Your customers will only start with test amounts.  So if the is so far removed from what's out there that it does not sell for the customer...no big deal, since the retailer never took much risk in what they bought from you anyway.

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Hillary Did Not Win

Four years ago the Republicans were given a stunning rebuke for their wars, domestic spying, torture, bailouts and all the other evils of big government Republicanism.  Good on the American people for rejecting that.  Foolish to believe a democrat would be any different.  This time the choice was between Romeny's war and bailouts, or Obama's bailouts and war.  It was a very tight race. But it shows 94% of USA voters want bailouts and war, in some order.  They voted for no change, which is very irresponsible.

Do keep in mind that only some 60% or eligible voters voted, which is encouraging.  Whole lotta Ron Paul People stayed home.  So the 47% percent that want war and bailouts and the 47% that wants bailouts and war is really only about 56% of USA voters.  So I guess we can refer to the 44% who want to be free of war and bailouts.  Better then 6%.

The game plan in this election was divide and conquer.  Everyone who voted for either Romney or Obama voted for deep division (and over ephemeral differences.)  Hate comments are virulent and viral on the internet.  Since neither candidate had any plan that would possibly make a difference, we are going to get more of the same.  Good and hard.

Those who voted for Romney or Obama cannot complain about what happens next, because they made it happen with their votes.   We who voted for neither, or did not vote, can complain, because the only chance for a difference was if the voters joined us.  This won't go well, but being self-employed is the most revolutionary act you can make.  Let's go, 44%.

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Showrooming To Beat Amazon.com

Competition comes from the words 'to strive with" combat means fight with.  Outrunning is different than destroying. 

I was listening to Bloomberg on BestBuy and its problems, and the idea of showrooming, the term for making a selection in a brick and mortar and buying online...  This of course is something of a concern for many brick and mortar stores.  The analyst repeated the line "retail is theatre" something I believe to be true.

I went showrooming at Burberrys here in SF because I think my trench coat is one size too small.  I guess I am not alone.  The do not have the classic trenches on the floor, you have to go to the 3rd floor by elevator, and then have someone go get one.

The salesman acted very put out, as though I was showrooming.  For his attitude he missed me giving him feedback...  today's production of the classic trench runs too short in the length, the lining sucks, and the quality overall is down. And the black buttons look odd, they should go back to the tortoise shell.

I am not buying online because used is cheaper, but because used is a better coat.  The Burberry strategy is to make it as hard as possible to buy what Burberry you want, and they try to keep info from the customer, and in so doing, cut themselves off.  As I looked at what they had for sales, the quality was poor.  Obviously the plan is to milk the brand as they rip off customers on quality offering so-so style to the terminally insecure.  Doesn't sound sustainable.  London Fog should come roaring back.

When Barnes and Noble was my publisher, they would go out of stock, and their deal with Ingraham to never let Amazon go out of stock was not maintained.  I would see "out of stock" by amazon of my book, and someone else would have it available fot $200 "Ships now!"  

Turns out nobody else had the book, they could just get it as fast as amazon could, and claimed to have it in stock.  In time I also saw people selling my book used next to my amazon listing at 25% off, plus one penny less than the next guy.

When I fired B&N and began printing my own, it dawned on me, looking at the features amazon allows, that I could compete against the one penny less crowd by matching price on used books, but offering "signed by author."  Crushed everyone at the 25% off price point.  And funny thing, given the markups, I was making more money selling at this point, but running out of dinged books to sell at the price point.  ha!  I just shipped perfectly good books as dinged and made more money.  What do I care?

Google won by being the go to place for search, and getting people away as fast as possible, yahoo wanted them to search and stay.  Brick and mortars should encourage showrooming. Use our computers to search the entire world for exactly the product so and so wants.  (The world defined as everyone who pays an affiliate fee to the brick and mortar store.)  

Theatre:  People looking at big screens, considering various products, being advised by brick and mortar people (and perhaps a designer) as to what they are looking at, if the price is fair, all the kinds of concerns people have...  theatre pushing sales.  Whatever they buy, the brick and mortar gets an affiliate fee, massive amounts of information, plus the opportunity to cross sell.

Amazon brought brick and mortar onto Amazon to compete with Amazon.  Brick and mortar ought to bring Amazon into brick and mortar to compete with Amazon.

No idea if this would work, but I think it should be tested as a hypothesis...

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Anarchist's Voter Guide

Well, don't vote.  Or if you do, don't throw your vote away on Romney or Obama.  

If we want change, we must step away form the false dilemma presented in politics.

It is not either or, they truly are the same, at least to the 6% not depending on free stuff.

For the either 47%, the left or the right,  you will be again betrayed, abused, etc. no matter who wins.

It is not  ammtter of just getting the right guy in, because there is no such thing as the right guy.  No one becomes virtuous by election.  Not even King David.

We do not need a government to fight our battles for us. Whether you are right wing extremist or left wing extremist, , the extreme positions have proven fruitless.  The main middle 6% of self-reliance and coopertaion works.

The game in play is to pit each 47% against the other.  Rarely do emotions run so high. This serves the powers that be.  Instead of voting for either, best to stay home and warn the powers that be that they are losing the consent of the governed.

It is an alternative less considered.

If you withdraw your consent to be governed, the powers that be will do whatever it takes to regain your consent. They will change things, incrementally, until there is again a critical mass of those who clamor to be governed. 

Don’t be afraid, we will always be governed, because there will alwys be a critical mass of those who clamor to be governed in return for free stuff.

So don't vote, or vote for Ron Paul, or some other candidate.  Express your desire to withdraw your consent to be governed. Scare 'em good.  The more the better.

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Forty Thousand Shiver as Polticians Wonder What to Do

Mayor Bloomberg finds housing the homeless after a disaster as a government function daunting:

"I don't know that anybody has ever taken this number of people and found housing for them overnight," Bloomberg said. "We don't have a lot of empty housing in this city," he added. "We're not going to let anybody go sleeping in the streets. ... But it's a challenge, and we're working on it."

Hey, Mike, really? Private companies do it every single night in New York City, no problem at all.  Actually nearly twice that.  What is it about becoming a politician that makes a billionaire blind to business solutions?

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Apple Overpays Taxes Again

it is not possible to tax a corporation.  Ultimately, only consumers are taxed, for it is the ultimate consumer who covers the cost of all taxes all along the supply chain.  If the taxes levied happen to destroy any business anywhere along that chain, then the creditors to that failed company become the ultimate consumers, and the creditors in essence "pay the taxes."

So when Apple pays 1.9% in taxes, it is 1.9% too much, even more, because the cost of setting up the money laundering/tax avoidance regime is a heavy cost too.  When you buy a Apple product, you've paid all of Apple's taxes.  When you buy a Hershey chocolate bar, you've paid all of Hershey's taxes.

We can stop this nonsense, and the massive job-shifting avoidance work, if we were to 1. cut the size of government and taxes close to nil, or 2. get rid of taxes completely.

The problem is not so much the taxes, as it is what taxes buy.  There is the real problem.  Eliminate all business taxes.

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Supply Creates Its Own Demand

"If I can just get this home, I just know it will sell."

Big!Lots! thrives on this error.  So many people are so convinced this thing that delights them will sell so well the problem is reduced to logistics "just get it to the home market."

Always reform these impulses as a hypothesis and test it.

The error comes to us probably from human nature, but that "supply creates its own demand" is attributed to J.B. Say.  No record of that.  We only have Keynes word for its attribution to Say.  James and John Stuart Mill, delusional economists said it, but not Say.  And it does not even sound like Say. So it is a classic straw man argument.

What Say did say was:

In Say's language, "products are paid for with products" (1803: p. 153) or "a glut can take place only when there are too many means of production applied to one kind of product and not enough to another" (1803: p. 178-9). Explaining his point at length, he wrote that:

It is worthwhile to remark that a product is no sooner created than it, from that instant, affords a market for other products to the full extent of its own value. When the producer has put the finishing hand to his product, he is most anxious to sell it immediately, lest its value should diminish in his hands. Nor is he less anxious to dispose of the money he may get for it; for the value of money is also perishable. But the only way of getting rid of money is in the purchase of some product or other. Thus the mere circumstance of creation of one product immediately opens a vent for other products. (J. B. Say, 1803: pp.138–9)^[4]

He also wrote, that it is not the abundance of money but the abundance of other products in general that facilitates sales:

Money performs but a momentary function in this double exchange; and when the transaction is finally closed, it will always be found, that one kind of commodity has been exchanged for another.^[5]

To say supply creates its own demand does not reflect the above.  It says products are worth that which someone will trade another product. Not really controversial, that idea.  And what Say sets up is the division of labor required, and wealth reflected, in ever more options, ever more affordable.  But wealth comes from producers.  Keynes wanted to say wealth can come from government intervention.  Hence supply, of anything, will create demand.  Say would caution, supply of what, demand by whom, at what price?  Keynesian economics never addresses obvious problems.

When someone posits "If I can just get it here, it will sell" they are acting on a false premise, that their feelings accurately reflect market demand, and conforms with the erroneous Keynesian principle that supply creates its own demand.  Human frailty supported by government supported academic lunacy.

Head away from the voodoo-based economics department and take a lesson from the hard science philosophy department, specifically logic. Form a hypothesis and test it.

"All my friends like it."  All your friends are not your market.  That is the error of the narrow basis of comparison.  Your friends are too small of a sample to prove anything.  Make your implicit premise explicit.  Reform the premise as a hypothesis: since all my friends like this, so will everyone else.  Test that hypothesis.  Get a sample in front of "everyone else" or representatives thereof, such as retail store buyers.  See what they say.  When they say "are you kidding?!"  you will be glad you only have samples.

If you had already bought the goods, believing in Keynesian economics, that supply creates market, you would have a garage full of that which only Big!Lots! will buy at 5 cents on the dollar you paid for the garage full of supply.  Aren't you glad you only have samples?

And you also have feedback, so it is not a total loss.  From there you can build on what you learned.  and start up a company that actually supplies what people demand.

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Quick Fixes For Sandy Shortages

A few years ago a few dozen homes were cut off for twelve days after a windstorm, no heat, transportation, communications. Trees had blocked the roads each way. The first responders had all gone home to deal with their own problems. It was an inconvenient twelve days, and we were on our own, but we did just fine. And I might add some memorable community get-togethers. Now people in New York are suffering because they depend on Federal State country and city help. All of those agencies have one goal in mind: overtime.  People nearing retirement desire to rack up as much as possible to kick themselves up into a higher "last year base" retirement payment.

 Newly minted government workers just want a little extra Christmas money. Many are just picking up frequent flyer miles and hotel stay miles by being there, or punching GSA upgrade cards. Even if they had the means to offer any assistance, none have the slightest incentive to do so.

 The most ludicrous shortage is gasoline. Now, if all Government workers were simply to go back home, services would be restored and shortages alleviated within a few days. The gasoline shortage is obvious how to solve.

Yes, clean up is a problem.  When the windstorm of 2005 had shut down the Seattle area and trapped us, just about every new construction site was abandoned as workers picked up quickie, high paying insurance repair gigs for roofs opened by trees, decks crushed, building damaged.  An army of workers moved from new construction to repair construction, and pretty quick all was restored.

I have not bothered to view the news reports any more than I can avoid, because I am not interested in people's self-inflicted suffering.  Emma Goldman said society gets the criminals it deserves.  Indeed, and I would say especially when it votes them in.

The utilities took the longest to restore because they are politically managed.

FEMA was created in 1979.  Before then, people just died on the streets because there was no help. Of course I am kidding.  There was relief before FEMA.  FEMA's big competitor, the private Red Cross, has been savaged this disaster.  Expect it to fade away over time.  Too bad, people will forget relief was better before FEMA.

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Scotland And China

Scotland has been such a cradle of modern thought and practice, but under Britain it fell into a distant second class status.  Scotland is trying to re-assert independence, and China is interested in helping out.

Allan made the remarks at a reception at the Scottish Parliament held here for the two-week "Scotland in Conversation with China" under the theme of "Defining Scotland's Distinctive Identity in an Era of Globalization The Chinese Perspective".

Hmmmm... Is this an awkward translation?  I wonder if this means "how China views Scotland" or "Scotland in relation to China"?   Anyway, a big theme is education.

"The quality of Scottish education is internationally recognized and the school teachers are changing the student assessment models to encourage personality and innovation," she told Xinhua.

This is not encouraging.  Internationally recognized for what?  When we think of excellence in education, do we think of Scotland?  If recognized for excellence, then why change anything?  If personality and innovation quotients need changing, then how pray tell, does changing "assessments models" (eduspeek for testing) improve matters?  (I dinna ken, mayhaps we'll call cac bonnie and give de fairbairns a hug).

With an opening ceremony held on Monday in Glasgow, Scotland's largest city, the two-week event is expected to bring Chinese guests including professors and scholars to six cities and towns in Scotland to deliver speeches about Chinese perspectives on the EU and implications for policy, entrepreneurship education and entrepreneurship practice in China among others.

Entrepreneurship is a human activity, known in every culture.  Like many human activities the powers that be sometimes suppress that activity.  Scotland transmitted (from scholastic Spain to France to Scotland) laissez faire to Hong Kong where it incubated while the Qing fell and Communist struggle eventually yielded to a system that is more traditionally Chinese to day.

Donald Tsang says (note his first name):

 You need look no further than Hong Kong to see the truth of this statement. There has been Scottish influence in Hong Kong since the 1840s, and you will find Scottish connections all around our city.

     We have an Edinburgh Place right in the heart of town. You can go sightseeing in Aberdeen. Or you can walk along the scenic MacLehose Trail, which is named after one of a number of former Hong Kong governors from Scotland. And whenever there is an important celebration in Hong Kong, you are likely to find the Hong Kong Police Pipe Band in their splendid Mackintosh Tartan.

Jardine Matheson, South China Morning Post and Hong Kong & Shanghai Bank (HSBC) are all Scottish companies in Hong Kong, although each has grown to where "ownership" is a flexible term.

The part Scotland is playing in this is not encouraging.  The people who ran Scotland into the ground are still in power, in spite of a shift from UK hegemony to some self-rule. Their response to the opportunity is to change school testing.  I say Scotland needs to recall its roots and its days of glory and study what free markets can do.  No state involved.  Just look at the results they had in Hong Kong.

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Free Trade and Free Stuff

I was having a Basil Gimlet at the new bar in San Francisco called Rye with a continuing education director, with whom I shared the idea that a way to sell classroom seats would be to auction them off.  He replied the idea appalled him, that he believed education should be free.

I replied I thought that kind of free is far too expensive, and the auction idea had merit, for say we have 30 seats to auction off, and the dentist who badly wanted into the class bid $250 for the seat and won a place, and son on down to the last seat, which sells for $6 to the nurse's aide who badly wants to take the class. He asked what is all 30 seats went for $250, and the nurse's aide never got in.  I assured if I sold 30 at $250 I would add more seats until the $6 person got in.   It is a hypothesis that needs to be tested.

But in his sense "free" is where economy is ordered to where a basic good, education, is available to everyone, ability to pay of not.

This is a fine sentiment, and it reflects the reality that many worthy people find they cannot afford or otherwise access education.  But pause and ask "how come?"  We once had free trade in education, with people opening colleges as fast as a need was perceived.  We had that with parks, doctor offices and HMOs, housing, food, well, everything.  I remember this very well.

But I also remember the state finishing up on say, parks.  Once upon a time people would take a big piece of land next to a lake and turn it into a place for families to spend a day picnicing, baseball and swimming, for a fee.   The fee was cheap, it covered the overhead, the park owners had a good life, all was well.  but the state came along and starting making rules and regs that made it harder to turn a profit, and then started buying up these parks with taxpayer funded bonds, and made the parks "free."  Hence every city now has "parks and recreation" departments, which cost so much to run that the fed and state ones are all now fee based, and hefty fees at that, and city ones are not afraid of a fee either.

I think it was Aristotle said the thing that creates it sustains it. So it is with small business. One thing we could do to cut the deficits is to return those parks to their original condition, to people who start parks.

Community colleges has only been around about 50 years.  Before that there were some "junior colleges" and very many private voc tech schools.  Like parks, the squeezed these schools and then took them over.  And now, the cost/benefit is out of control.  Before, students could afford to pay cash at these schools and learn a trade, probably less than students pay now. What students paid covered 100% of schools cost, with a profit.  But what students pay now is less than 1/5th of the costs, because these schools have so featherbedded their operations.  Taxpayers are mulcted for the rest.

We can have free trade in education, well we have it.  This is an area where many good things are percolating up.  If you love education, it's time to come up with solutions to problems you experience.

The solution is not free stuff, a band aid over a gaping wound. The solution is free from force and fraud.  The state uses force to limit who can offer an education.  And they use fraud saying "this is what an education costs." The solution is an alternative in which you can afford what education you need, out of your own pocket.  Let that with the gaping wound bleed to death.  Grow something just instead.

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Hong Kong Wine Fair Preview

Some pretty sophisticated stuff going on at the Hong Kong wine fair (I expect someone would strain the gold about before drinking it, although gold is edible.)

The HKTDC Hong Kong International Wine and Spirits Fair gets underway next month. The fair’s fifth edition opens 8 November and continues through 10 November at the Hong Kong Convention and Exhibition Centre. Exhibitors from Azerbaijan and Russia are first-time participants, while France and Italy will feature the largest pavilions. Master of Wine Debra Meiburg previews wine from some of the 930 exhibitors taking part in this year's event. 

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