Stop trade with China Now ?

Today’s news that the Chinese dissident Liu Xiaobo has been awarded the prestigious Nobel Peace Price for his peaceful resistance to Chinese oppresion and work for Human rights has raised the heat on the debate – “Should we stop trade with China now ?”

Most people are aware that the vast majority of Western companies outsource manufacturing operations to China for cost reasons and perhaps it is time we began to seriously question this strategy. Have a look at any company’s website and you will find a description of the company’s environmental policy but you will be hard pressed to find any information about the company’s attitude towards democracy or human rights.  If we are so concerned about Global Warming and it’s impact on the planet perhaps we should also be paying more attention to which regimes we do business with.

Of course the opposite argument is that by doing business with China we are helping to raise living standards which will inevitably lead to greater pressure for democracy and human rights.

However it would be nice to know that the debate had at least taken place and to see some kind of clear policy on company websites regarding human rights policy.

What do you think ?

Join the debate on Twitter now @projectsguru

chris@projectsguru.co.uk

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Stop corporate abuses - Amnesty International

A true story……

Customer Focus

Customer Focus

Back in 2006 Reflex Semiconductor was a medium sized electronics business with Sales Revenue around $200 million and a respectable Net Profit of around $5 million.

The company had several hundred customers and  a diverse and mixed product range.

Unsatisfied with performace the Board decided to appoint a new President of Marketing.

This guy was called Max Cutter (I kid you not) and he summed up his philosophy in his joining speech.

” Guys, I want to re-focus on our core business. 80% of our profits come from 20% of our customers but 80% of our efforts are in supplying the lowest contributing 20%”  (He was obviously familiar with the Pareto rule)

“I want to re-focus our business (hang on Max, how long have you been here) by eliminating the lowest earning 20% and refocussing our efforts on the highest grossing 20% and watch this business GROW!!!”

When the clapping and cheering had subsided Max set about his business. Gathering together a multifunctional team of career oriented individuals from all levels of the organization (well, engineer level up anyway)

Pursuing a mantra of ‘All Change is Good’ they set about trimming the companies customer database, removing anyone who contributed less than 0.5% of Total Sales.

This carried on  for several months.

The Quaterly results were due to be published when Max announced he was leaving the Company for a better position. Despite much persuassion and the offer of a 30% increase in salary Max left anyway. He did get a nice leaving present of  a Rolex watch presented by the CEO.

The Quaterly results indicated that Sales were down to $140 million (-30%) and Profit was now a loss of $1.2 million.

Naturally, a Consultant was brought in to assess the situation and, after one weeks analysis, She reported that NO ONE CUSTOMER REPRESENTED MORE THAN 0.7% OF SALES.

The companies customer base was so diverse and its product range so varied the Good Old Pareto Rule didn’t apply in this case and Max and the team had successfully exterminated 30% of a perfectly good business.

Unfortunately Reflex Semiconductor never recovered and went bust a year later.

Max went on to get a job in investment banking and invented something called the “Credit Default Swap”….

chris@projectsguru.co.uk

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United States of ChinAfrica…..

cinafricaRecent data from the IMF supports the view that China and Africa are becoming increasingly entwined as trading partners as China exploits the vast mineral and material wealth of the African continent in return for Capital Investment, machinery and technological know how.

The massive growth and change in China’s economy over the last decade have seen it increase in global power to the point where it begins to overshadow the U.S.A and Europe.

chinafrica2Whilst the U.S and Europe have been mired in recession the Chinese rescue package has ensured that growth in that country continues at a rate of around 10%.

This growth can only be sustained by the continued supply of mineral wealth and mined resources, hence the involvement in Africa.

So, should those of us in the Western democracies be concerned about China’s increasing involvement in this vast continent ?

As China has expanded and exported it’s own particular brand of State Capitalism it shows no signs whatsoever of either promoting or developing democracy.

If Democracy, free speech, tolerance and egalitariasm are to be encouraged as Africa develops as a continent perhaps the U.S.A and Europe need to be more proactive in developing and sustaining their economic development programs in Africa to ensure, by the end of the decade, we aren’t looking at the United States of ChinAfrica.

chris@projectsguru.co.uk

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We’re flying tonight…

BAplane2The planes are flying again over Europe as the restrictions imposed due to the Icelandic volcanic ash cloud have been lifted. But are the scenes experienced over the last few days a bleak glimpse into our collective futures ?

It is commonly acknowledged that oil reserves will not last forever but maybe less well known that the period of peak oil production is upon us and in the near future demand will begin to exceed supply. So what are the possible consequences:-

oilgraph1) Oil is like any other commodity and as demand exceeds supply price will increase. This was seen before the financial crash of 2008 when Oil peaked at $147 per barrell. It is current around $82 per barrell.

2) GDP growth is directly dependent on oil supply. China is currently growing at around 10% per annum – this cannot continue.

3) There is no readily available alternative. Biofuels represent a tiny percentage of total fuel volumes and use up valuable land resource which could be used to grow food.

4) We will experience increasing cost of food and other essentials.

5) Air travel will become the preserve of the rich. This can already be seen in the UK with vastly fewer people taking foreign holidays following the financial crash.

6) Our world will shrink; the global village we have experienced since the 1960’s will shrink as travel costs reduce our ability to roam.

7) There will probably be more conflict on a global scale as States compete for scarce resources.

This all sounds like bad news but there will be positive outcomes:-

1) Reduced consumption of Oil will reduce the amount of carbon generation and lessen the risk of global warming.

2) The crisis will force us to develop alternate energy strategies.

3) Being less dependent on “the black stuff” will enable us to take independent geo-political decisions less hindered by our current needs.

4) We will be more concious about re-use and less wasteful of resources.

We live in interesting times.

chris@projectsguru.co.uk

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Outsourcing at any cost ?…..

In July 2009 Sun Danyong comitted suicide by throwing himself from his 12th flloor apartment. Sun’s apartment had been ransacked and he claimed in a text, immediately before his death, that he had been badly beaten.

Sun worked for the massive Taiwanese CEM Foxconn (Turnover |$10 billion) which manufactures Apples iconic iphone. He was rumoured to have been suspected in the theft of an iphone prototype. The incident sparked an Audit by Apple but to date no visible action has been taken.

iphoneThis incident highlights the ethical dilemmas posed in Subcontracting. How do we deal with massive corporations which often dwarf our own ?  How do we balance the need to reduce manufacturing cost with the need to deal with undemocratic regimes with questionable human rights records ?

Do we do business at any price ?

Like most dilemmas the answer lies with the consumer. Western consumers are increasingly conscious of the ethical and environmental impact of their actions, where does that food come from, what is involved in it’s manufacture ? Who benefits and who gets hurt ?

This conciousness will extend to all areas of consumption including electronic products and it is those companies which pursue an active, ethical and evironmental policy which will ultimately benefit.

chris@projectsguru.co.uk

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Outsourcing trends point to further job losses…

SPA032The outsourcing market is a large, diversified and complex model but it is still possible to discern some notable trends:-

1) The manufacturing industry in the West looks likely to continue to shrink, according to Electronics Times the U.S semiconductor industry lost 107,000 jobs between 2001 to 2009 and some predictions estimate a further loss of 146,000 jobs from 2008 – 2018 – Scary stuff.

2) The latest Labour Market Outllook report from CIPD suggests that 10% of all UK companies intend to outsource some work in 2010 with 41% of I.T companies planning to outsource key activities.

3) According to the Bangkok Post the Outsourcing market was worth $24.9 billion at the end of Q4 2009 up 8% on the previous year.

4) An interesting observation is that Chinese & Indian companies are looking at Outsourcing within their own National boundaries. This is perfectly understandable given both countries vast size and untapped resource. We may see a gradual migration of economic activity from coastal areas inwards.

All of the above highlights the need for Western companies to accellerate Innovation to stay ahead of the value curve.

It also suggests that Western governments need to look very carefully at their strategy for Manufacturing and Innovation if they want to preserve what remains of the High Technology sector to provide skilled employment in the future.

As per usual Cash is King.

chris@projectsguru.co.uk

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Greedy greedy Cadbury, greedy Cadbury..

chocolateThat was the chant that went up around the U.K following the decision by the Cadbury board to recommend the latest offer from the American company Kraft for the U.K confectionary manufacturer.

Surely, however, the Cadbury board was only acting in its shareholders best interests – and what’s wrong with that ?

Perhaps objectors could answer the following simple questions:-

If you sold your house would you a) get the maximum price you could or b) sell it to the nicest person for a much lower figure ?

If your boss offered you a 20% pay rise would you decline in the better interests of the Company which employs you ?

Thought so.

Why are people who consistently act in their own material interests find objection when others do the same ?

There are genuine concerns that the Kraft takeover will have a negative impact on Cadbury workers jobs, but those workers do not own Cadbury’s they are employed by them and as a result receive generous financial reward; if they are not happy with the results of the takeover they are free to sell their skills and abilities elsewhere.

It may also be the case that Kraft should not be too surprised if their workforce seek and pursue a substantial pay claim, if neccessary employing industrial action to force their claim.

Maybe if we all acknowledged our own material instincts we could be more understanding of the actions of others.

chris@projectsguru.co.uk

www.projectsguru.co.uk

ap4

Now we’re Insourcing……………………

reengineeringFriday’s News that Automotive component supplier Bosch is closing its plant in South Wales and moving manufacturing to Hungary was grim news for employees.

However, this action is actually bucking the latest trend.

A recent survey by manufacturing group EEF revealed that one in seven companies had moved manufacturing back to the U.K in the last 2 years.

Nearly seven in ten agreed that the U.K was now a competitive place for manufacturing.

The falling price of sterling, increased cost of freight, repeated quality concerns and time to market issues have combined to make the U.K increasingly attractive.

The biggest issue is in obtaining personnel with the knowledge and skills required to establish successful manufacturing lines.

This is being addressed by hiring interims with the experience to deliver results by ‘hitting the ground running’

chris@projectsguru.co.uk

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Dubai gives the world the finger………….

Burj2Dubai has officially unveiled  “The Burj” –  now the worlds tallest building at 828m & visible from over 60 miles away !

It cost a staggering $1.5 Billion to construct over the last 5 years using thousands of migrant workers.

Indeed the building was originally to be called “Burj Dubai” but has now been named “Burj Khalifa” in honour of the ruler of Adu Dhabi who recently bailed out the troubled emirate to the tune of several billion dollars.

Many will see this building as a great feat of engineering, a wonder of the modern world, a tremendous edifice and monument to Capitalism, the latest and greatest in a long line of stupendous architectural magnificences.

Others may see it as the biggest ‘white elephant’ ever built, a monument to excess, an obscene symbol of wealth built by the labour of the poor (mainly Indian & Pakistani labourers paid a few dollars per day) slaves in all but name.

A fitting monument to the “Noughties” decade of excess which imploded in the Worlds greatest recession.

The greatest  example of construction built on sub-prime mortgage the world has ever see.

Dubais magnificent finger rising from the plains and screaming “Up Yours World !”

Whichever way you view it you certainly can’t ignore  it.

chris@projectsguru.co.uk

www.projectsguru.co.uk

Shifting sands of Globalization…….

dubai The recent events in Dubai, where the state owned fund “Dubai World” announced it needed an additional 6 months to repay some of its outstanding debt, caused shockwaves around the World echoing the problems of Lehmans 12 months ago. The impact was felt on stock exchanges from Hong Kong to Wall Street.

These issues illustrate just one of the impacts of increasing globalization. Undoubtedly there are many, many benefits – the ability to Outsource manufacture to cheaper locations brings down the price of consumer goods. Products once deemed exotic are readily and cheaply available in our Supermarkets.  Clothing is cheaper than ever before. International communication has allowed relationships to develop over all of the continents breaking down cultural barriers and suspicions.

However, like anything else, there are downsides.

Sovereign Wealth Funds, controlled by State Oligarchs, have immense wealth and power at their disposal. Their decisions made in conference rooms in Beijing or Dubai can have devestating and massive impacts on jobs and prosperity in the U.K or elsewhere in the globe. These insitutions are not democratic in nature and are not answerable to any electorate.

How we in the “liberal” democratic World control and resist their impact remains one of our greatest challenges.

chris@projectsguru.co.uk