There are a lot of things going on right now.
- Chinese Gov’t driving in wrong direction. China Bubble is getting ready to Pop!
- Broadcast Media, Physical Media and Middle men are being creatively destroyed!
- Global labor force is doubling (China, India and Brazil) so labor supply far outstrips demand for labor.
First, I expect that the Chinese economy is now in full “bubble mode” and will be popping sometime soon.
- Caijing Magazine, through government support has exposed some of the largest corruption cases in the country is going to stop covering corruption – so now who is watching?
- Urban China Real Estate prices have been increasing 20%/year for at least 5 years and even the new Shanghai World Financial Center is 70% empty.
- Wen Jiabao just went to the World Economic Forum summit in Dalian and announced that China’s GDP growth target “appears to be achievable“, which the US press will read as “9% AGAIN!” Perhaps they should read How China Cooks Its Books.
- Meanwhile, everywhere I go Taxi rides are down, the reported rail freight numbers for 2009 are 30% below last year, night clubs are empty, KTVs are closed. People are not consuming. Retail sales are down 12%.
- Factories in the south that closed have not yet reopened – perhaps 50,000,000 people are out of work, and the last 2 years worth of college graduates have been unable to find jobs.
- Yue Yuen, the Shoe Factory I visited here on my first trip to China has reported it’s biggest loss ever.
- The largest rail line in China reports freight loads down by 12%.
- Banks call my WOFE registered phone number on a regular basis explaining how it would be beneficial to take out a loan.
- When asking people “how’s the economy”, everyone says it’s doing great.
Second, What will happen next? I’ve set myself up to be a middle man, an intermediary between US producers and Chinese consumers. This is what I’ve been doing for movie cameras and this is what I can provide value doing long term. My value is largest for products that are more complicated (specialized technology products) since these are more difficult for local providers to support.
- MEDIA: Physical Media (Newspapers, Magazines, CDs, DVDs) and Broadcast Media (TV, Radio) is finally being “creatively destroyed” – being replaced by a more efficient (low distribution cost, large selection) medium – the Internet.
- DISTRIBUTION: Middle Men will become less and less relevant.
- POLITICS: The Internet makes voting extremely efficient. Not only can we reshape the way we elect our representatives, but we can reshape the purpose and power of our representatives, returning the power to the people.
- BANKING: We all bank online. We no longer need a bank branch on every corner. Banks can lease space in the Grocery Market and put their ATMs there. Remember, ATM is “Automated Teller Machine” – if the Teller can do it, we can surely make a machine that can do it.
- MOVIES: Movie Theatre (in terms of the box office) is a Retail Service (atmosphere, seating, timing, snacks) and not likely to be affected, however changing media consumption habits will impact the requirements for future feature films.
- RETAIL: The 25 and under generation downloads everything over the Internet. The iTunes Music Store is the largest Music Store on the planet (in annual revenue)
- MOBILE: The iPhone is the only smartphone that meets the definition of “a computer in your pocket”, but Apple is not going to be able to lock MSFT, DELL, etc out of this market. Google will try hard to get in too.
- COMPUTING: 10 years from now, the AVERAGE person will only use a desktop computer for the times that lots of research of lots of text input is required, but notebook/laptop computes will be like desktop computers. Laptop (R&D, Professional Content Creation, Finance & Accounting). Desktop (High End Media Creation. “Time Clock” office workers who shouldn’t bring devices home)
Third, in terms of creating products or services, be aware that long term the consumption market will not grow significantly, but the supply of labor for all forms of production markets will grow, driving labor prices down in nearly every sector. Going forward, anyone who is directly trading labor for income could find themselves in trouble, especially if their labor was at a premium due to their location.