Sino View


Last August The Dila View about the potential purchase of Hummer by Tengzhong (a privately held heavy machinery company based in Sichuan province) was that the deal was a boon for China, who would get Hummer’s legacy technology at a bargain-basement price for application in the country-wide infrastructure projects China has on the go.

We said, “Chinese regulators, who must OK the deal before it is ratified, are about as likely to reject it as Americans are likely to spend their money right now.”

We were wrong: Government regulators were more conservative than we thought, on two counts:

First: “Industry experts and sources with knowledge of the situation told Reuters Tengzhong had faced questions in China over how a little-known heavy machinery maker with no international experience could buy and turn around a struggling foreign brand like Hummer,” according to a recent Reuters report.

Second: “Many also said that regulators might balk at letting a Chinese firm acquire a U.S. brand known for making gas-guzzling vehicles at a time when China was emphasizing the development of more environmentally friendly technologies.”

(If you voted in the poll about Hummer’s fate last August, you can see how you did by looking back at the survey results.)

The death of the sale will mean roughly 3000 Hummer employees will be out of work by summer 2010.

© 2009 John Dila

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Cool-Aid

One reason I often write about China is because of the lopsided coverage and criticism Western media routinely dishes out. And despite the obvious lack of rigor and balanced reporting, our country drinks the cool-aid. It’s like we’ve forgotten one of our important early childhood lessons—there are (at least) two sides to every story.

The West seems to suspect the worst about China around everything from China’s mercantilist practices, to human rights violations, to sullying the air, to standing in the way of climate change progress, and so on. We rarely take a more collaborative, or analytical approach to understanding things from China’s perspective.

When we read Western reports about China, why do we accept the Western characterization of China as villain, and not ask intelligent questions? And why do we accept that China is solely responsible for creating big problems, and not look for ways we can solve problems together?

Even at home, we polarize our views to our detriment. The results of the recent special election in Massachusetts ends the Democrat’s filibuster-proof supermajority. Why did we try to solve something as complex as healthcare unilaterally in the first place? Going forward, it is likely that the only way we’ll achieve meaningful health reform is “in smaller waves of bipartisan effort rather than a hyper-partisan big bang.”

With technology and the Internet lowering the barriers to entry in many businesses, industries, and sectors we have to expect a large, emerging, able, willing nation like China to seek to improve living conditions at home. That’s what every nation wants, after all, and China is certainly no different in that respect.

For example, economically, China needs mining resources in order to realize its national vision of raising standards and the overall quality-of-living conditions for hundreds of millions of its citizens. Its situation is in some ways analogous to the emerging nations of the 15th and 16th centuries, whose mercantilism enabled them to gain power and economic status. And it’s much like how the U.S. has sought to control as many oil reserves as it can in support of its national vision and strategies in the 20th century.

Mercantilism was how the world did business back when Britain had the biggest navy and empire in the world. Today it’s a bad word among the literate white-collar first-world nations of the Earth.

But we should not get hung up on individual words, like mercantilism, because their meanings change, especially as disruptive innovations in technology and business alter the contexts of our economies.

21st century mercantilism, mixed with some red-blooded market economics, and stirred with some culture- and education-exchange programs might be just the thing for a world that must contend with a community and emerging economy of China’s proportions and intentions.

Mirror, mirror

But we can’t leave it there—our economies are more interconnected than ever before, and it’s not only us contending with them, it is them contending with us.

We all might do well to think of us as we, not as us and them anymore.

But the West falls sadly short on providing leadership, insights, and collaboration best practices around how to partner with China. Indeed, on issues around solving poor air quality and global warming, it’s all about the we. And we in the West tend to forget that we produced about 90% of all the carbon perhaps since the Industrial Revolution.

Worse, our brand of capitalism nearly bankrupted the United States while simultaneously fueling what some term “China’s mercantilism” (which could as easily and as accurately be viewed as American greed and desire to buy more cheap goods than we could ever use in a lifetime) and which has caused such an internal backlash as to prompt our own government to bail out (i.e. take ownership of, to some extent) our banks and some of our major industries, too (autos, for example).

Our lack of fiscal restraint has been bolstered by the lack of structure in some of our key policies, which underscores either our leaders’ lack of insight into their own actions or their complicity in driving us to our current predicament, or both.

Our embarrassing bail-outs have brought us precariously close in practice to the protectionist mercantilism we so condescendingly denounce from our oversized couches as we watch our oversized plasma televisions (made in China, of course).

Some critics go so far as to dub America’s system, structural mercantilism, which describes “the institutional and ideational structures perceived to have been built by, and in the interests of, rich countries and corporations” (Gee, T, The World System is not Neo Liberal: The Emergence of Structural Mercantilism).

More resources and more control

China needs more resources, and it wants control over those resources when and where it can have control.

That’s why China’s state-owned PetroChina purchased a 60% stake in Alberta’s Athabasca Oil Sands Corporation for USD$1.7B at the end of 2009.

It’s also why Chinalco (the state-owned Aluminum Corporation of China) tried to purchase a stake in Australia’s mining assets for USD$19.5B from Rio Tinto. The deal would have given Chinalco an 18.5% stake in Rio, which would “have made the Chinese government Rio’s single biggest shareholder by far and given it an advisory role in the company’s operations. Chinalco would also have gained substantial stakes in individual mines in several countries.”

After months of negotiating during the first half of 2009, the UK-Australian-owned Rio Tinto Group ultimately rejected Chinalco’s offer, citing issues of “widespread political concern over control of the country’s natural resources.”

Patrick Mulloy (a member of the United States-China Economic and Security Review Commission) said of PetroChina’s Athabasca acquisition, “I don’t think we have fully understood that we’re dealing with state mercantilism.” Mulloy, stressing he was not speaking on behalf of the Commission, which reports to Congress, said, “We don’t have an overall policy to deal with this new direction in foreign policy.”

And although the Chinalco-Rio deal fell through, the PetroChina-Athabasca deal’s success might point a way toward the future. Mulloy’s comment, in the context of China’s natural resources shopping spree, suggests that non-traditional partnerships, unorthodox business arrangements, and more flexible, collaborative foreign policies might be required in our generation.

Are mega-partnerships a better place?

If China succeeds in owning more mining resources, it might also, for example, want to control where and how metals like steel and aluminum are processed for use in buildings, roads, rails, and other major strategic infrastructure projects in China.

For example, the whole world knows (from the steel industry’s experience with Nucor) that mini-mills are cheaper, cleaner, and more flexible to operate than traditional steel mills. Looking to the future, China might seek partners with mini-mill technologies, skills, and experience for their on-and off-shore operations. This could present a golden opportunity for a firm that wants to break away from its competitors.

China isn’t shy to acknowledge when someone else has a better product, and they’re willing to pay for such experience and expertise. China bought the Hummer brand for precisely this reason.

If the legacy economic models enabled integrated, publically traded firms to compete in and dominate industries, why can’t today’s model center on a new brand of mega-partnership—where the partners are firms, nations, and global markets? Of course, monopoly, conflict of interest, and anti-trust issues are hurdles in either model and, as Mulloy and other economists suggest, we will need to recast some of our policies to better align with today’s realities.

Higher-order partnerships that rely on each mega-partner bringing a specialization-suite or an entire market to the game are becoming more common, even when the partners include unseemly bedfellows (by traditional standards).

An example of a mega-partnership is one that evolved between Better Place (a Silicon Valley green tech firm founded and led by SAP’s former tech guru, Shai Agassi, who is the mega-partnership’s visionary), Renault (an innovative car company), and Israel (a republic, ranked 31st in GDP):

Better Place supplies an innovative (patented) green-engine technology; Renault supplies the car manufacturing expertise, skills, supply chain, and distribution; and the Israeli government supplies an able workforce, a willing market for the environmentally-friendly cars, and economic subsidies for Israelis who want to buy them (think of the potential analogous market in China if such a mega-partnership could be struck there).

In addition, all three partners can potentially “leap frog” ahead of their respective competition by being first-movers and/or market-leaders (they also shoulder the burden of first-mover risk).

A better way forward

It’s very tough to argue that we need anything short of radical policy change to move forward in any number of key industries and sectors at home and around the globe—health-care, automotive, banking, and exchange markets, not to mention all the corollary socio-cultural aspects of the flattening world.

We don’t yet have the right thinking (and policies) in place to deal with bids like Chinalco’s—either at the government or the business level.

The day when such policies and business strategies are put into place must not be far off, though.

Leaders—and their nations and companies—who see and embrace a mega-partner vision for the future will have an easier time getting there than those who do not.

© John Dila 2009

ting-ting-ting …

The remarkably understated tinkling of Christmas-candle-chimes triggers powerful memories of Christmas past if you had one of the candle-mobiles in your home when you were growing up. If you don’t know what I’m talking about, watch this.

“When we were children, the chimes were irresistible,” my friend Paul (an experienced product manager) told me: “The fascination of the open flame; the magical phenomena of angels slowly starting to move and then picking up speed until they struck the bells. Every Christmas, without knowing it, we were schooled in the laws of physics—Convection, aerodynamics, and centrifugal force converged in this elegant tiny tin invention.”

Yet while Paul and I—and hundreds of thousands of other Baby-Boomers and their children—lit the chimes at the end of last year, a trench-war was being waged around the commoditization of the very angels that tinkled in our Holiday living rooms.

Like the children who remember them from the ‘70s, the Christmas-candle-chimes industry matured and lost its innocence.

Now, with only a few players left and time on patents run out, prices and quality are plummeting—like Lucifer—a Morning Star burned out and falling to Earth.

No-one’s going public in the Christmas-candle-chimes industry this year.

Things have gotten so bad, as we’ll see, that one can imagine a Christmas Day not long from now when no new chimes tinkle.

In fact, the industry competition is extreme around quality and price, and not, for example, around today’s typical app-driven differentiation—no third bell, no improved angels, and no louder ting-ting’ing in this market.

One firm tried to differentiate its product by including a “Party-Chimes” kit at no additional charge—three horses and a clown which you could use instead of the angels for secular celebrations. The strategy was to catch the off-Christmas sales and bolt ahead of the competition in market share.

But judging from the lack of equine availability anywhere online today, the horses went the way of the Dodo.

Nay, Christmas-candle-chimes were perfected decades ago, and trademarked and patented—Angel Chimes™—the Kleenex® tissues of their industry, in pieces by various and sundry inventors spanning Europe and America as far back as the early twentieth century.

Their appeal to this day remains firmly rooted in archetypal elegance and steeped in legendary Scandinavian tradition.

For that reason, the Christmas-candle-chimes industry is all very doggy-dog, as they say.

For example, the most famous Swedish manufacturer—the original patent owner of Angel Chimes™—Andersson & Boberg (they sell the ones that come in the classic circa 1972 brown box featuring a blond Swedish girl in pig-tails lighting the Chimes with a wooden matchstick) quietly shuttered its operations at the end of last year (2009).

Historically, Andersson & Boberg made their original, highest-quality Chimes in Gefle, Sweden (on the Baltic Sea, across the way from the Gulf of Finland, Estonia, Latvia and all those wintry places).

But Globalization—Gefle’s personal Grinch—finally found the sleepy little northern town, and alit on Andersson & Boberg’s operations. The firm finally buckled under all that weight, and it made the tough decision to close forever because it could no longer compete on price with Chinese knock-offs, whose quality is “remarkably good…for the price,” according to a major U.S.-based online seller, Harlan Jacobsen.

Jacobsen’s been selling the Chimes (starting with the Swedish ones and adding quality Chinese offerings later, when the Swedish patents ran out) to Americans since the early ‘70s.

He sells the “Chinese Chimes” online for about $8 (including postage and handling). They’re more expensive if you actually go to a retail store and buy them off the shelf (for obvious reasons)—except if you luck out and get a set for $2 at Walgreens or some other big-box. But they’ll be knock-offs, you can be sure.

The Swedish product cost about $15.95 (including postage and handling) last year. “They were a very hard sell at roughly two-times the price as the very good Chinese substitute,” Jacobsen told me.

The Swedes—being Swedes—were unwilling to compromise quality, so they shut down their historic operations forever. They were simply unable to keep costs down given the relatively high value placed on labor in their country.

That’s where the story would have ended if the Swede’s were not competitive.

But it turns out they are, and Andersson & Boberg packed up and sold its equipment and Angel Chime trademark (the brand) to a firm in Turkey, which is setting up manufacturing operations it hopes will produce quality at least on par with the Chinese substitute product, in time for Yuletide 2010.

Since they couldn’t beat ‘em, Andersson & Boberg decided to join ‘em—‘em being the globally-distributed workforce that now influences our collective economies, trade policies, and immigration policies.

Jacobsen—a wholesale customer (not an end-consumer like Paul and I) from Sioux Falls, South Dakota—says he will carry the new Turkish-made Swedish product if, and only if, its quality is at least as good as—you guessed it—the Chinese version he stocks and sells to his bargain-hunting American customers.

Harlan Jacobsen notes there are at least three Chinese manufacturers and three corresponding levels of quality. “The bad ones,” Jacobsen reports, “are not worth the weight of the tin they’re made with.”

And he’s right. The cheap versions most likely do not incorporate the patented (and more expensive-to-manufacture) glass-bearing-pin (or similar technology) required in order to reduce the friction enough so the turbine spins freely and the angels can ting the bells smoothly and continuously year after year.

His best guess is the new Turkish product will run about $9.95—still a good 20% above the Chinese version Jacobsen carries.

So, not only was Andersson & Boberg competitive for a long time, they’ve gracefully exited the angel scene and aspire to breathe new life into their brand posthumously: They are betting the new Turkish operations can manufacture Angel Chimes™ at least as well as the Chinese (a tall order), and at a competitive price, while carrying their brand name forward into future Yuletide memories.

The Swedes even traveled to Istanbul to share all the manufacturing intelligence (aka, tricks of the trade) they’d garnered from decades of experience as the global leader of angel production and sales (this is known as “knowledge transfer” in organizational development- and learning-speak).

“Only people who had them growing up and brought them out every Christmas as a kid remember them fondly,” Jacobsen muses about the ritual of the chimes and their spell.

If the Swedes are right, our children may be able to buy Angel Chimes™—the one we all grew up with, whose box features the pretty Swedish blond girl—for decades to come.

On the other hand, if they are wrong, Andersson & Boberg will watch helplessly as their fallen angels succumb to cheaper, unoriginal, tawdry knock-offs made with pins that rust over time, grinding their angelic tinkling vision to an untimely halt.

One man’s misfortune might be another’s opportunity, though. Vintage Christmas-candle-chimes are likely to go through the roof either way. At the time of writing, for example, there were several sets on auction at eBay valued at more than four-times the going retail rate.

Happy New Year, 2010!

© John Dila & Paul Dyck 2009

You can purchase the Chinese and Turkish-Swedish (if they live up to expectations) Christmas-candle-chimes from Harlan Jacobsen online: http://angelchimes.com/

Here’s something fun to try at home with your family:

Over the next twenty-four hours, pick up some objects in and around your home and turn them over to see where they were made. Many of them will say they were “made in China.”

No surprise there, so why bother doing it?

Here’s a reason: You might learn something–about yourself, about China (especially if you’ve never been there), and about American businesses and some of the challenges they’re facing.

China is an emerging market economy, and “Chinese companies are, of course, aspiring to become global players,” says Salkat Chaudhuri, who is Assistant Professor of Management at Wharton.

A good example is Lenovo–the world’s 4th largest PC maker. If you read the business pages you’ll know this, but you might not if business isn’t your thing: Lenovo bought IBM’s PC business a few years ago.

One way of explaining why Lenovo purchased IBM’s PC arm has to do with the Smiley Curve we talked about a few weeks ago. The dimples of the Smiley Curve are where the lion’s share of the value is–the brand and the retail sales. In between the dimples is where China normally comes in, but in more and more cases, China gets one or two dimples, too.

Chaudhuri explains it this way:

“…beyond quick access to markets like the U.S. and Europe and so forth, they need high-end technologies and also established brands. Those are the elements that the Chinese firms have been missing. And so it fits very well to combine the strong and cost-efficient back end of Chinese firms with the branding, market access and technology that Western developed firms can offer them.”

If you own an IBM PC, not only was it likely made in China, but the profits from the sale that are attributed to the brand–i.e. you probably bought it because you knew the name IBM, rather than Lenovo–went to the parent company in China.

There are a few things to learn as you’re looking at the items you pick up in your home (you might have to infer the answers and insights):

  1. What would someone need to know about me and my needs in order to make this object?
  2. Do I know anything about the corollary needs of the person in China who made this object?
  3. How much did this object cost the Chinese manufacturer to make?
  4. How much did I buy it for?
  5. Is the brand name American-owned, or is it Chinese-owned?

It’s a good idea to know something about the object you’re cutting with, brushing your teeth with, playing with, and so on. And companies in the U.S. need to understand the answers to these questions if they are to better compete in the global marketplace.

We’d like to hear from you, so please take a brief survey after you’ve examined a few things at your house.

Leave a comment and tell us which item you found was “made in China” that surprised you the most.

© John Dila 2009

Alex Berenson, in his New York Times article a few weeks ago about writing thriller novels that center around fictitious conflicts between China and the United States (http://bit.ly/7qi2ZX), explains, “For novelists, China’s rise is pure gold. The Communist Party’s opacity and its passion to control China’s image…feed Western fears of China’s intentions, and dare Western thriller writers to invent disaster.”

Tavis Coburn

Tavis Coburn

Writing shortly after Obama held a Western-style Town Hall in Shanghai where, according to Berenson, ”the students were mainly members of the Communist Youth League, hand-picked by the Chinese Communist Party,” he rails tongue-in-cheek against the Chinese government condemning “the sort of stagecraft that the Chinese seem to specialize in — managed in a way that is so obvious as to be condescending, but still successful at stifling dissent.”

It’s an excellent point, and Berenson puts his finger right on a valid criticism of the Chinese government’s communications strategy and policies: If the Chinese were more transparent about issues at home, and how the government interprets and responds to them, the world would have a better understanding and more appreciation of China’s challenges, not to mention more patience and insight into the world’s largest nation and how we might fruitfully interact with her.

On the other hand, is it really much better elsewhere in the world, even here at home? Is the U.S. any less “staged?” Has the U.S. had any fewer cover-ups and scandals (the Iran-Contra Affair, just to name one, which involved nefarious dealings around conflicts such as those made up by novelists who exploit China’s current policy of opacity)?

Berenson concludes: “Bad for the world, I suppose. Lucky for us [novelists].”

Is Berenson’s acknowledgment enough? Is his conclusion acceptable?

© John Dila 2009

To be continued.

As someone with an interest in plans and data, I’m interested in the Smiley Curve. Ever heard of it?

Liam Casey—the 40-year-old Irishman who coined it—explained to me (and my EMBA cohorts) how it works. We met him in the Guangdong Province city of Shenzhen, which is about two hours northwest of Hong Kong.

Casey's Smiley Curve for a $1000 laptop.

Don’t let the proximity to Hong Kong fool you, though. Shenzhen is very much Mainland China, starting and ending with the can-do attitude of the most wild-west place you can imagine.

Casey—a red-faced man with a Chinese-size frame and explosive energy with lots of reserves—wanted a way to explain what he was seeing from inside China, where he’s spent twelve years building the company that supplies Apple—and many other global firms—with soup-to-nuts services around designing, sourcing, manufacturing, packaging, and distributing products made in China and being shipped and sold anywhere on the globe.

China’s not the cheapest place in the world for labor any more, but it is one of the best places to find a business-friendly environment, a highly developed supply chain, sophisticated infrastructure, and a network of companies that can design and make anything, rapidly, and at competitive cost.

Separately, these pieces are good, not great. Together, they become a formidable source of competitive advantage for China, and any business that chooses to leverage them. Just ask Apple (whose 2009 end-of-year revenue growth is over 12% and whose stock price increased by over 100%—this year!)—All their products state it clearly on the packaging: “Designed in the US. Made in China.”

Which brings us to the Smiley Curve.

As business people and economists, we want to understand where, why, and how value is created along the life-cycle of a product—“from the beginning to the end of [its] creation and sale.”

If we know this, we can plan any number of things: If you lead a company, you can figure out how to shift the value from one part of the curve to another to your advantage; if you’re head of a government agency in charge of distributing Stimulus Funds, you can use it to determine where to best distribute funds to stimulate growth in value-add skills and services; and if you lead a federal government, you can use it to craft your strategy of diplomacy with a country of interest.

Today the Smiley Curve shows that the biggest chunks of value/profits are generated in the brand, the concept and design, and at the retail counter back in the US—especially if it’s a high-end product, where a retailer might keep as much as half of the profits. This makes sense, because the consumer market (the U.S.) knows what it wants (U.S. tastes) and knows how to market (think Proctor and Gamble, Apple, or your favorite) to itself (think fast food, if you want a rather grotesque example).

The parts of the curve that produce less value/profits along the life-cycle are in the middle of the curve, toward the bottom, and are performed in China (in this example). These are activities like sourcing the parts and components, assembling the product, testing it, packing it, and shipping it.

Casey knows something about this, and he shared with us something revealing about how companies in China—his included—want to shift their activities to the curve’s “dimples”—toward the Design and Retail ends.

Chinese companies are building up expertise in design as they become exposed to Western designs and brands. So much so, in fact, that Casey’s firm now offers design services as an integrated value-add to his Western customers. All you have to bring is the idea—his firm will take it from there.

But companies are not the only organizations in China that are evolving. Universities are, too. For example, Hong Kong’s seven universities are all transitioning from their legacy 3-year curricula to Western-style 4-year programs. They have to be careful though, because a poorly implemented strategy can be worse than a bad strategy itself. They must ensure the 4-year programs have the right mix of courses, which result in graduates with the right set of skills to help lead their country forward at a pace the country can accommodate given its enormous size and proportions.

On the other side of the curve—the Retail dimple is being pinched as well.

Today, China runs a market economy, much like ours, but with some significant differences. For one thing, most Chinese are not consumers, and China certainly does not have a consumer economy and society, like we have here at home. Not yet. But that’s the idea—at least to some extent. It’s not difficult to imagine a day when Chinese develop the concept for a product (for Chinese), design it (for Chinese), manufacture it (for Chinese), and then consume it themselves. They might even off-shore the “manufacture it” part of the life-cycle to a smaller economy somewhere else in Asia.

Also, they’re still operating a centralized Communist government, but they’ve adapted that as well. Chinese “5-year plans,” now officially called “5-year guidelines” (to acknowledge the distancing from its Soviet-style roots), are in their 11th cycle since their inception in 1953 by Mao Zedong. The current 5-year guidelines provide insight into China’s goals and aspirations:

  1. Secure economic growth and economic structure
  2. Urbanize the population
  3. Conserve energy and national resources
  4. Encourage sound environmental practices
  5. Improve education
  6. Increase access to employment and medical care
  7. Improve pensions for the elderly

We should not fear these guidelines—we should strive to understand them, contribute to their development, and embrace ones that make sense for us.

If you listen at Thanksgiving next week, you might hear friends and family ask, Why does China still burn coal—don’t they know it contributes to global warming? And such things.

We need to understand that China does know, and that China and her people have a plan.

Do you know what our plans are?

Do they include universal health care (like Canada and most of the civilized world have, in one form or another, or are we going to continue to have the most expensive, least effective system in the civilized world?)?

Do they include a viable pension plan for our elderly (or will we just see what happens?)?

Do they include a plan to improve our education system (or are we leaving the plan for our children’s minds to a few high-net-worth individuals with good intentions?)?

A good strategy will fail if it is not implemented well, but failure to have a strategy will certainly meet a swift, predictable end.

Do we have a plan? Do we know how we’re going to implement it?

We can learn some things from our friends in China, if we’re willing to listen.

And we can also learn something right here at home. If we look at the Smiley Curve, maybe it will tell us something about where we want to go.

© 2009 John Dila

Why would Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd., a large privately held Chinese engineering firm that manufactures special-use vehicles for road and bridge construction, purchase GM‘s albatross brand, Hummer?

Why wouldn’t they? is the question.

China has large cash reserves, they own $1.3T in US T-Bills, and they are still growing GDP at close to double-digits, even as shares of GM have fallen 100% during the past 9 months.

China doesn’t yet have deep or wide skills and capabilities for manufacturing automobiles–the country hasn’t needed cars for its own markets until very recently, and it has imported what it needed until now.

And China is building. A lot. Everywhere. All the time.

In central China in May 2009, thousand-mile-long elevated rail and auto routes emerge like a mirage from the dry sands of the Gobe Desert, even as 16th Century-styled mud housing continue to be the norm for hundreds of millions of central and western Chinese.

Photo by John Dila

Back home, most Americans left their Q1/09 Stimulus Package gifts in the bank for fear they might lose their job (if they still have one) or for fear they might lose their house if they can’t generate enough income to pay the interest on the credit card bills and interest-only mortgage (20% of all houses for sale in the US are in foreclosure):

Much of the stimulus money that recently rolled into bank accounts stayed there, pushing up the savings rate to 6.9 percent, from 5.6 percent in April. (Washington Post, June 27, 2009).

But there are fantastic bargains to be had in the global marketplace and, unlike most Americans, the Chinese government and private businesses (like Sichuan Tengzhong) are spending on infrastructure projects that are paving the foundations to bring those who are stuck in the 16th Century into the 21st. Before, by the way, you can say, “General Motors.”

The purchase of Hummer is a savvy move, and Chinese regulators, who must OK the deal before it is ratified, are about as likely to reject it as Americans are likely to spend their money right now. And, Sichuan Tengzhong is positioned to lead the negotiation of the deal in which the seller is in Chapter 11, which should make Chinese regulators feel confident.

It’s very possible the Chinese will usher in a new golden era for the Hummer, wherein the vehicles are employed to perform tasks that they were actually designed and built for rather than to sit in the parking lots of up-scale US malls while their owners purchase faux para-military fashion accessories. The fashion accessories are made in China, BTW.

This is a move that helps one of America’s flagging auto firms and that makes sense for China.

The Humvee lives on. Go China!

© 2009 John Dila