Tag Archives: China

China: Bust or Boom?

sn_china_Travel Coffee Book

China is a country that captures imaginations and can fill the role of the exotic destination, land of adventure and opportunity, and in some cases, it can be painted as a villain.

As Americans, we bemoan the loss of manufacturing and scowl at the influx of affordable gadgets and exploding hover-boards that have flooded into our homes. We fret over Chinese businessmen coming into this country and snapping up all of the available real estate:

Between 2010 and 2015, Chinese buyers put more than $17bn into US commercial real estate, with half of that spent last year alone. Unlike many countries, there are very few restrictions on what foreigners can buy in the US.

But during the same period at least $93bn went into US homes. And in the 12 months to March 2015, the latest period for which relatively comprehensive data could be gathered, home purchases totaled $28.5bn.

China’s economic advancement has come at a cost to the country and its 1.35 billion people. This post highlight some of those issues to give my readers a better understanding of difficulties China will face in the coming years.

Population

Everyone knows that China has an enormous population, but you might not be aware that 194 million people in China are over the age of 60. That is close to 15% of their population.

You might say to yourself, 15% doesn’t sound too bad. From a percentage view, the United States has a similar age distribution.  However…

Until last year, China had a population control methodology in place that limited couples to only one child. The policy started in 1978 and impacted an entire generation of Chinese families.

Thanks to modern medicine, people are living longer. China is no different.  But the unintended consequence of the population control measures and people living longer is that China doesn’t have enough people to care for their elderly population (yes, that is ironic)

This dynamic is called the 4-2-1 problem: 4 grandparents, 2 parents, all being looked after by 1 child who is also the person who is expected to earn an income.

Another interesting wrinkle in the 4-2-1 problem is the lack of brides. Due to the one child policy and China’s cultural preference towards male children, there are almost 40 million men in the country that will remain bachelors:

Today, an estimated 35 to 40 million women are “missing” from China’s population. For years, demographic experts have predicted the huge surplus of young men would cause a rise in sexual violence and social instability. Now the first generation of children born since 1980 has reached marriageable age, and problems such as bride-kidnapping and forced prostitution are soaring.

The bachelors in areas like Da Xin are the least likely of all to find love. As the gap between rich and poor widens in China, uneducated rural men have little means of upward mobility. “I don’t have any money to move away to look for a wife,” says Jin. “I must stay here to work our land and support my elderly mother.”

Think about these 30-something men (basically men my age) who work all day, not to come home to a wife or child (and a reason to get up everyday and go to work), but to their aging parents and grandparents. Knowing that the only way to change things is to abandon their family.
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Working Conditions

Some people do leave their villages and their families in the hopes of finding better jobs and better romantic prospects.

Manufacturing represents 44% of China GDP and is supported by an estimated 100 million workers. In the video above, you can see hundreds of people waiting outside the factory every day with the hopes of finding work inside the plants.

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Once they do get jobs, employees might find themselves working 12 hour days, 6 or 7 days a week, and living in cramped dorm rooms.

The conditions became so bad at some factories that administrators had to put up nets to prevent employees from jumping off the buildings:

The Foxconn suicides occurred at the so-called “Foxconn City” industrial park in Shenzhen, China. The 18 attempted suicides by Foxconn employees resulted in 14 deaths—the company was the world’s largest contract electronics manufacturer at the time. The suicides drew media attention, and employment practices at Foxconn were investigated by several of its customers, including Apple and Hewlett-Packard (HP). Foxconn is a major manufacturer that serves high-profile consumer electronics firms such as Dell, Motorola, Nintendo, Nokia, and Sony.

Chinese workers are concluding that perhaps factory work is not for them and are shunning that life:

Finally, many first-generation migrant workers have worked in the cities for 10-15 years, yet they are still denied entitlement to any social benefits. While government policies now require employers to pay benefits for their employees, implementation is still at a primitive stage and differs vastly across the country. Naturally, migrant workers would prefer to work in regions where social-welfare policies are better implemented.

In addition to potentially poor and cramped working conditions, Chinese workers are also rejecting factory work due to the health issues…

Environmental Problems

Why has the rest of the world outsourced their manufacturing to China? Yes the labor is cheap and (mostly) abundant, but they are also very lax in their regulation of pollution.  Yes, our beloved gadgets are a result of some very toxic manufacturing processes.

So toxic in fact, that many employees have been poisoned:

In mid-July, Long found herself unable to move her legs. “I was just lying on my bed all day and needed help to eat,” she says. Long ended up in a hospital in Guangzhou with more than 30 other Fangtai Huawei workers. Doctors found they’d been exposed to n-hexane, presumably in the “banana oil.” It’s an industrial solvent that causes neurological damage at just 50 parts per million. Workers using it are supposed to wear respirators and operate in a ventilated area. As treatment, Long endured daily injections—she says they “hurt more than anything else in the world.”

Not only does making the stuff cause pollution, but keeping the lights on at all of these manufacturing cities takes energy… lots of it.  And like many other countries (including the United States), China’s primary sourcing of energy is burning coal

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Burning coal is dirty (as seen in the video above)

China’s apparent demand for crude oil will reach 550 million tonnes (11 million barrels per day) and apparent demand for natural gas will hit 205 billion cubic meters, Nur Bekri, head of the National Energy Administration (NEA), said, according to Xinhua.

Electricity consumption will rise to 5.7 trillion kilowatt-hours and coal consumption will be 3.96 billion tonnes.

Burning coal and running factories is such dirty business that China has a tendency to shut down production when visitors arrive. They shut down factories for the Beijing Olympics, and they are planning to do so again for the G20 Summit in September.

Since this is a supply chain focused webpage, I am curious to see how the supply chain will be impacted by this production shut down. If you think you could be impacted, check to see which of your suppliers (n-Tier) are receiving goods from the affected region (especially from chemical, electro mechanical, building material, and pharmaceutical industries).

Conclusion
This is not a condemnation of China. America has a long and horrible history of mistreating workers and our natural resources:
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Cuyahoga River Fire (Cleveland), 1952

In the coming years, Americans won’t be moaning about China taking their jobs, because the Chinese don’t want them. Those jobs will taken by automation and robots.

There is actually an opportunity for America to re-emerge as a manufacturing leader, but powered by the same robots and AI that will replace Chinese workers.

China is at a critical point in their own history: they have a massive population with needs that are going unmet and they don’t have the infrastructure in place to address those needs. Additionally, the poor treatment of their own natural environment is going to lead to even more medical and social distress.

As the country grows and becomes more connected with the rest of the world, the people who are making the stuff you love, are going to want stuff to love for themselves. It is already happening.

China is going to grow and evolve regardless of what I type here.  But will the country continue to be the hands and feet of the global economy or will they clean up their cities, open their borders (for workers and for brides), and create something new?

It is going to very interesting to see how this plays out.

Note: Here is the Fair Labor Report referenced in the video.

Photo: Travel Coffee Book

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News You Can Use: 5/25/2016

sn_conference_Benjamin Child

  • The Future Of HR And Why Startups Shouldn’t Reject It

    A recent Motherboard piece took a look at the impact of no HR on company culture. It found that women are more often than not the most vulnerable employees due to startups’ lack of HR and general anti-harassment procedures. The article states, “Ultimately, these structural issues contribute to one of the greatest systemic problems facing working women today: barriers to advancement, known to many as the glass ceiling.” And over the years some of the biggest tech startups have had accusations of harassment levied at them.

    http://www.fastcompany.com/3059673/the-future-of-hr-and-why-startups-shouldnt-reject-it

  • Go Deep and Go Wide with Procurement Analytics

    Data unification is a two-step process that catalogs all data sources and uses that information about data to build a global reference that shows how all of the data relates to the questions at hand. This resource is typically built through a combination of machine learning and smart sourcing of human experts, and provides three clear benefits: making exponentially more data available for analysis, eliminating the biggest contributor to analysis time overhead – data preparation, and building in repeatability so any analysis that has been done can be rerun at anytime with no repeat of the data preparation.

    http://www.procurementleaders.com/blog/my-blog–guest-blog/go-deep-and-go-wide-with-procurement-analytics-617110

  • A 40 Hour Work Week . . . Really?

    Of course, I’m being a fit facetious here but I don’t think it’s all that far from the truth. Here’s a shocking business statistic: if you or anybody on your team wastes just one hour per day — and please understand that I’m also guilty of this — it equates to six weeks of wasted time per year! Isn’t that incredible? That’s a lot of vacation time. My advice: just work hard when you are at work. Of course, we all need some down time to handle personal matters but do so sparingly because you can’t get those hours back.

    https://www.entrepreneur.com/article/272480

  • Call me crazy (regarding conference calls)

    A conference call is over when someone uses one of the many conversational gaps, false starts, or “No, you go” truces to suggest that perhaps for clarity we should put our ideas in writing. As if to say, “Yeah, I guess flip-flops weren’t a good choice for this 5K run.” Acknowledging that we’ve engaged in the discourse equivalent of a toddler’s squiggle drawing. Hinting that next time we play Marco Polo we could try a swimming pool instead of the Indian Ocean.

    http://www.newyorker.com/magazine/2016/05/16/hang-up-the-conference-call

  • Want to Improve Your Decision-Making? Shut up for 10 days.

    Insight meditation, also known as vipassana, is a method handed down by Gautama Buddha himself to his followers. Insight meditation focuses on maintaining a moment-by-moment awareness of our thoughts, feelings and bodily sensations, without judgment. Students first take a vow of silence. They then enter into a daily routine of sitting for as many as 11 hours per day, renouncing all other religious or ritualistic practices, eating only vegetarian fare and not speaking except during a short Q&A session with the teacher.

    https://www.entrepreneur.com/article/275536

  • How AI And Crowdsourcing Are Remaking The Legal Profession

    “If you were to download everything in the PACER system, it would cost you hundreds of millions, if not more,” says Lewis of Ravel Law, which has found an alternative by partnering with Harvard Law School to digitize its archive. “They’ve made an effort to collect every … court decision from every state and federal court over the last 200 years,” Lewis says. Ravel collects new information in real time. “The courts themselves are doing a much better job of pushing out today’s law,” he adds. Ravel has published the complete case law for California and New York. It aims to offer all U.S. federal and state law online by mid 2017, for free.

    http://www.fastcompany.com/3059725/how-ai-and-crowdsourcing-are-remaking-the-legal-profession

  • The Chinese Millennials

    We have heard the stories of changing and increasing wages. The migrant workforce in China’s eastern coastal cities is also changing. Today, young people coming to the factory towns from rural China are less open to the long working hours, constant overtime and poor working conditions. Today’s Chinese Millennials stand apart from their parents and grandparents. They have many new economic opportunities, they are focused on the present, they are interested in more work/life balance, and they have become conspicuous consumers.

    http://www.scmr.com/article/the_chinese_millennials

Photo: Benjamin Child

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News You Can Use: 1/27/2016

sn_fire_Tirza van Dijk

  • Outside-In Issues are Shaping Modern Procurement — Is Your Organization Ready?

    One has to remember that stagnant GDP growth, rising inflation, steady or increasing unemployment, rising inequality between the rich and poor and an increasing need for resources in greatly limited supply are creating a perfect economic storm that will sink any company not ready to compete in the global marketplace that has taken hold in most large economies. Value chains are becoming bifurcated and turned on their heads. Consumers want local and they want global on demand. Products need to come from everywhere and go to everywhere, be compliant with local and foreign regulations, be produced in a socially responsible fashion and be sold through the appropriate digital channels. And this all has to be done by Monday morning at 9 am.

    http://sourcinginnovation.com/wordpress/2016/01/20/outside-in-issues-are-shaping-modern-procurement-is-your-organization-ready/

  • The Most Damaging Thing an Employer Can Say to an Employee

    There’s one thing a manager should never say to an employee: you will not move up here.

    http://www.entrepreneur.com/video/254262

  • Better Intel Through Better Info: Why CPOs Should Focus on Information, Not Technology (Part 2)

    If you want to solve this problem of better intelligence through better information, you can’t just outsource it away. There is nothing wrong with setting up a center of excellence (CoE) for supply market intelligence and using it to parse out intelligence requests from stakeholders via category managers to low-cost third parties. But it’s only a temporary fix. You need to get your procurement information management capabilities understood and improved so that you’ll be able to take advantage of the massive and diverse forms of digital assets that are getting built out.

    http://spendmatters.com/cpo/better-intelligence-through-better-information-why-cpos-should-focus-on-information-not-technology-part-2/

  • I am just going to leave this one right here…
    DONALD TRUMP SAYS HE’D GET APPLE TO MAKE ITS PRODUCTS IN AMERICA

    Of course, even if Trump is elected president, it won’t happen. There are a number of reasons why Apple can’t or won’t bring its manufacturing jobs to the US:

    Legal reason: For starters, there is no U.S. law that can force an American company to make its products in America, notes Engadget. Any attempt at passing such a law would be vigorously opposed by virtually every U.S. company, Constitutional scholars, and likely, even most Republicans in Congress.

    China reason: Then there is China, which is increasingly becoming Apple’s most important sales territory in the world. No tech company wants to annoy China, the country with the largest amount of consumers on the globe. Can you imagine how China would react if Apple said it was moving Chinese manufacturing jobs out of the country? If it wouldn’t ban Apple’s products outright, it would almost certainly levy draconian import taxes on them, making them so expensive for consumers that Apple’s sales in China would nosedive.

    Cost reason: Another reason Apple would probably never move all of its manufacturing jobs to the U.S. is because it would increase the cost of its products all over the world. Wages are higher in the U.S. than in other countries where goods are manufactured and those wage hikes would almost certainly be passed on to the consumer in the form of more expensive iPhones and iPads.

    http://www.fastcompany.com/3055611/fast-feed/donald-trump-says-hed-get-apple-to-make-its-products-in-america

  • From chaos to control — The benefits of better contract management

    Rob Woodstock, Accenture managing director, operations strategy for UK and Ireland, says the same lesson is true for all organisations. And while procurement has been successful in creating savings during sourcing and tendering, better management of contracts represents an untapped opportunity to improve performance.

    Additionally:

    This fragmented, complex picture of contract management can mean organisations miss opportunities to save money and face increased legal risks, Woodstock says. It also leads to difficulties understanding the pricing schedules across multiple contracts. “Even for those that are available, a large number are out of date,” he says, adding that there is often no visibility as to when contracts come up for renewal.

    http://www.procurementleaders.com/blog/my-blog–guest-blog/from-chaos-to-control–the-benefits-of-better-contract-management-594920

  • For you procurement nerds out there… there very first purchasing manual ever:

    The Handling of Railroad Supplies — Their Purchase and Disposition, written way back in 1887 by Marshall M. Kirkman and printed by Chas, N. Trivess, has the basic definition of the requirements of a purchaser down flat…

    Google Books: Handling of Railroad Supplies

Photo: Tirza van Dijk

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News You Can Use: 11/4/2015

sn_terminal_Jordan Sanchez

  • Millennials: Death to the Cubicle!
    Open floor plans are not the answer, having worked in open spaces and cube farms – neither are good.  It is about the culture of the work place.  If the company has their people on the phone all day, you need enclosed places.  If you are developers that need to collaborate (and spent large portions of the day in quiet), open floor plans work nicely.  

    Millennials have grown up understanding that work is an activity, not something that happens in any predetermined time or space. Accordingly, they insist on having the freedom to choose where and when they work, and they want to be measured on performance — not face time or office politics. So how does that change the way our workplaces and workflows are designed?

    http://www.entrepreneur.com/article/252164

  • Federal IT outsourcing spend alarmingly poorly managed

    The GAO analyzed agency policies, procurement and contracting data, and interviewed agency and contractor officials. While leading companies strategically manage about 90 percent of the IT procurement spending, these government agencies strategically managed just a fraction of that. The U.S. Navy, for example, which spent $3.3 billion on IT services in 2013, awarded just 10 percent of that work via strategically managed outsourcing contracts, according to the GAO. The U.S. Air Force strategically managed 17 percent of its $1.4 million IT services spend, the U.S. Army did so with 27 percent of its $3.5 billion spend, and NASA did so with 35 percent of its smaller $855 million IT outsourcing investment. DHS was the best performer, sourcing 44 percent of its $2.2 billion IT procurement budget in strategic deals.

    http://www.cio.com/article/2999467/outsourcing/federal-it-outsourcing-spend-alarmingly-poorly-managed.html

  • 11 Tweaks to Your Daily Routine Will Make Your Day More Productive
    Listicles… there are some solid points in this post once you get around the trash:

    “Eating a frog” is the greatest antidote to procrastination, and the most productive people know the importance of biting into this delicacy first thing in the morning. In other words, spend your morning on something that requires a high level of concentration that you don’t want to do, and you’ll get it done in short order. Make a habit of eating three frogs before you check your e-mail because e-mail is a major distraction that enables procrastination and wastes precious mental energy.

    http://www.entrepreneur.com/article/251989

  • Software vendors – fear and loathing

    Why? Because the most successful software firms are masters at high-pressure, bullying sales tactics. Take Oracle. The company specializes in trying to convince potential new customers that its license terms and model are harmless and easy to use.

    Once the customer licenses the product, however, Oracle takes a new tack. The company launches software audits and then argues that there are license restrictions it did not talk about during the sales process but that the customer has now breached.

    How do Oracle and other vendors get away with these tactics? Path dependency. Software vendors know that once a large company has implemented an enterprise-wide or otherwise significant software tool it is hard to switch.

    http://www.cio.com/article/2997879/enterprise-software/software-vendors-fear-and-loathing.html#tk.rss_all

  • The Six Strategic Sourcing Samurai

    So who are these six strategic sourcing samurai? They are the six remaining companies that took the time and effort to not only research and build a solution, but take it to market and wait while the market caught up with the vision that a few pioneers had fifteen years ago — a vision of true best-cost global sourcing from a total cost of ownership (and, more recently, from a total value management) perspective.

    http://sourcinginnovation.com/wordpress/2015/10/30/the-six-strategic-sourcing-samurai/

  • 39% of L.A. millennials ‘chronically stressed’ about money, survey finds

    A new survey by Bank of America and USA Today found that L.A. millennials ages 18 to 34 say they have a clear understanding of their financial situation and 44% are prepared for a rainy day, with three months of living expenses saved up.

    But 75% say they worry about their finances “often” or at least “sometimes,” with 39% saying they are “chronically stressed” about money.

    http://www.latimes.com/business/la-fi-millennials-money-20151022-htmlstory.html

  • Are US tech giants harming national security by partnering with China’s firms?

    A report made public this week from a security firm with longstanding ties to the Defense Department, the Defense Group Inc., said IBM’s partnerships in China, which are part of a global initiative that the company calls Open Power, are already damaging US national security. “IBM is endangering the national and economic security of the United States, risking the cybersecurity of their customers globally, and undermining decades of US nonproliferation policies regarding high-performance ..

    http://economictimes.indiatimes.com/news/defence/are-us-tech-giants-harming-national-security-by-partnering-with-chinas-firms/articleshow/49606797.cms

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News You Can Use: 10/21/2015

sn_feather_CreativeVix

  • A FORMER GOOGLE RECRUITER REVEALS THE BIGGEST RESUME MISTAKES
    I will point out this one since I get into a disagreement almost every time I mention removing it…

    OBJECTIVE STATEMENTS ARE OBJECTIVELY BAD
    “These are a bit old school and are generally pretty generic,” Bacon explains. He believes they’re also typically too focused on what the candidate wants for themselves instead of what they can do for the company to which they’re applying.

    http://www.fastcompany.com/3052371/hit-the-ground-running/a-former-google-recruiter-reveals-the-biggest-resume-mistakes

  • Should Vendor Executives Be Held Personally Liable For Failed Implementations?

    What if company executives had to personally guarantee that they had performed a “capability audit” before entering into a contract, verifying that they could indeed deliver a working solution within the appointed time and for the agreed upon cost. This capability audit would then become the basis to hold not only the company, but the executives themselves, personally liable if said implementation did not occur has promised.

    https://procureinsights.wordpress.com/2015/10/13/should-vendor-executives-be-held-personally-liable-for-failed-implementations-by-jon-hansen/

  • China to consume nearly 30% of the world’s flash, 21% of DRAM

    “Increasing shipments of Chinese-branded PCs and smartphones in recent years have contributed to the overall DRAM demand,” said Avril Wu, assistant vice president at DRAMeXchange. “China’s top PC maker Lenovo and the global PC market leader HP are neck on neck on shipments, and this is an indication that the Chinese brand vendors’ purchasing power in the DRAM market is getting stronger every year.”

    http://www.cio.com/article/2994112/data-management/china-to-consume-nearly-30-of-the-worlds-flash-21-of-dram.html#tk.rss_all

  • Why You Might Want to Hold Your Next Business Meeting on a Boat
    Somebody needs to share this with the big boss… officially a trend setter.

    “It’s a perfect place to close a deal,” says Adrian Gradinaru, co-founder of Sailo, an online peer-to-peer boat rental marketplace where you can compare and book a boat for a day or even part of a day. “You tend to be a bit more open to things when you are really happy, so people tend to be happy on the water, looking at New York. You tend to be a little bit more cooperative when you are on the water.”

    http://www.entrepreneur.com/video/249693

  • 3 Tips to Develop a Balanced Supplier-Vendor Relationship

    While there is always room for caution, never approach a new partnership as if you are going to be cheated. Instead, remember that a bit of humility and humanity can go a long way. Even when negotiations do not go as well as expected, remaining positive can preserve partnerships for long-term success.

    http://www.entrepreneur.com/article/251578

  • Office “treehouses”…
    I am not big on the “resting places in the office” fad, be it a cocoon or a tree house or even a heavily pillowed area.  I don’t care how “cool” the work place environment is, if an owner or executive walks by and sees someone taking a powder… game over.  (But they are kinda cool)
    http://www.fastcoexist.com/3051747/open-office-getting-you-down-maybe-you-need-an-office-treehouse
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