Archive for January, 2011


China’s President Hu Jintao’s visit to Chicago

Friday 28 January, 2011

I, along with 1200 of my best friends, attended the U.S.-CHINA TRADE AND ECONOMIC COOPERATION FORUM in Chicago, which was organized by the Chicago Council on Global Affairs & China Chamber of Commerce for Import & Export of Machinery & Electronic Products (CCCME), sponsored by Caterpillar, ITW, Underwriters Laboratories, supported by Grainger, & Harley-Davidson, & co-organized by the Chicagoland Chamber of Commerce, State of Illinois Department of Commerce & Economic Opportunity, World Business Chicago, Chicago Sister Cities International China Committee, Chicago-China Economic Development Center, Midwest US-China Association.  Is everyone jumping on the China bandwagon?-it looks like it.  I wonder how much each paid for their promotion?  I was told the Chinese brought a delegation of 400, but I was misinformed:  they only brought 393;  see here. They sure do throw lots of people @ everything they do.

Rather than try to summarize all that was presented this day, I’ll simply make a comment about each speaker’s presentation where appropriate, & include links to their organizations, which should make a much better use of space here.

Opening remarks

  • David Speer, CEO ITW, welcome
  • Wang Chao, Vice Minister of Commerce, People’s Republic of China (PRC), more @ lunch
  • IL governor Pat Quinn, “hi”
  • Gary Locke, US Secretary of Commerce, China has invested $12B in the U.S., which has created 10K jobs:  China is America’s #3 export market, which were up 34% in 2010 over 2009 & support 245K jobs,  after Canada & Mexico.
  • Leocadia Zak, US Trade & Development Agency supported $3B in IL as a driver of export-led growth
  • Chen Deming, Minister of Commerce (PRC) signed contracts worth $25B, excluding Boeing plane orders & invested $3.2B in the US.  China is #3 in trade with $380B which will increase to $500B by 2015.  $100B of exports from the US to China will increase to $200B by then.  China’s trade balance with the US is $181B, but $183B with the rest of the world, so that needs to be rebalanced.
  • US-China contracts signing ceremony

Panel discussions

Panel 1-next 10 years of China-US business relationship

  • Tang Dengjie, Shanghai Vice-Mayor has population of 20M with GDP/ per capita of $13K & 500 MNC headquarters, 1/3 of which are from the US.  Services are a focal point with a goal of $100B in 2010.
  • Robert Holden, Chair-Midwest US-China Association: “howdy”
  • Michael Moskow, Senior Fellow, Chicago Council on Global Affairs China needs to develop a consumer credit culture that lends to more than just state-owned enterprises

panel 2-bilateral investment & economic development

  • Cheng Lixin, VP, ZTE is a partner of 59 of the top 100 telecom carriers, has been invested $300M in the US in 12 years with 8 offices, 5 R&D centers, 400 employees, 82% of which are American, & 5M subscribers, & signed commitments worth $10M
  • Richard Lavin, Group President-Caterpillar has 11 plants & R&D centers in China
  • William Spence, Chicago Sister Cities China Committee Chair “Hey…”

panel 3-clean energy & green economy

  • Liu Xiaoming, Deputy Chief Economist, China National Offshore Oil Corp.was the 1st in China with liquefied natural gas
  • Frederick Palmer, Senior VP-Government Relations, Peabody Energy signed an agreement for carbon capture plants with “green coal” near Tianjen
  • Chris Gangemi, Senior VP, General Counsel & Corporate Secretary-Underwriters Laboratories

panel 4-SME cooperation

  • Yu Ping, VP China Council for the promotion of International Trade (CCPIT) processes 140K inquiries & signed an Memorandum of Understanding with the US Foreign Commercial Service to help Chinese companies invest in the US
  • Suresh Kumar, Assistant Secretary for Trade Promotion & Director General of US & Foreign Commercial Service (FCS) -US Dept of Commerce-International Trade Administration.  The FCS has 100 employees in China working on 5 missions to 14 cities.  They’ve helped 5600 companies, 85% of which have been SME’s.  He is also on the global councils of the  Thunderbird School of Global Management. In 2004 Mr. Kumar was named Distinguished Executive-in-Residence by Thunderbird School of Global Management for his contributions to global trade.
  • Jerry Roper, President-Chicagoland Chamber of Commerce

Luncheon speakers

  • Yao Wenping, VP CCCME, “say what?…”
  • Wang Chao, Vice Minister of Commerce PRC-China & the US are 2nd largest trading partners with each other.  China has moved up from the #9 importer to #3 importer in the last 6 years.  The US has invested $65B in China while the Chinese have invested $4.7B in the US.

Materials distributed @ the event


owit & jetro on business in Japan

Tuesday 25 January, 2011

The Chicago chapter of the Organization of Women in Trade (OWIT) organized this event @ JETRO’s offices DOING BUSINESS IN JAPAN.  The Chief Executive Director of JETRO in Chicago, Tatsuhiro Shindo, who relocated from New York, welcomed us.

Next Kevin Kalb of the local JETRO office gave a tutorial on doing business in Japan:  jetro presentation – owit 1-19-11 kk Japan is about the size of California, but with little arable land.  Its population is declining so much that by 2030, 1/3 of the population will be 65 or older, which will put a burden on the health care system & workforce.  There is little immigration into Japan, but it is surmised that will have to change.  1/4 of all Japanese joint ventures & foreign direct investment in the US is in the midwest.  The Japanese are fascinated with robots & are even developing them to perform services these days.  However their services sectors are less developed, as is technology transfer, than in the U.S.  Japan is another land of engineers & their customer focus is very strong.  Japan was hit hard by the financial crisis, upping unemployment to 5% from it’s normal 3%.  Again re: the workforce, men boast an 80% employment rate, but women only a 60% employment rate because 2/3 of women leave the workforce after having their 1st child, which is double the rate in the US (1/3).    It’s important to establish trust & loyalty in long-term business relationships, which can take 7-8 years to get going.  It took 1 company 20 years to open a Japanese office.

Mark Mohr, EVP of DMG/Mori Sieki USA, the American subsidiary of a German/Japanese machine tool manufacturer, discussed cultural aspects of doing business in Japan.  Here’s his presentation:  Mohr – Culture of Doing Bus w Japan Mori Seiki came to the US in the 1980’s because at the time, US suppliers couldn’t deliver-some customers were expected to wait a year for delivery & customers didn’t accept that.  Now those US icons are gone.  Some Japanese companies have brought daily morning exercise to their subsidiaries in the US.  An advantage of the Japanese way of doing things is that people take responsibility for their actions & all workers are respcted. The Japanese “Never say die” attitude helps them “walk through walls.”  Don’t worry if you hear a lot of pregnant pauses when speaking with the Japanese-they’re just considering their response.

Tiffany Jespers, General Counsel of DMG/Mori Sieki USA, compared legal aspects of exporting from the U.S. & Japan.  Here’s her presentation:  Jaspers – Export Comparisons Additionally, METI has representatives in JETRO offices.  Internal controls are simply operating procedures, such as financial requirements, screening customers, acquiring customer information, & installing GPS to track locations of installed units as specified by METI for general licenses to export.  Sometimes rather then give a rejection, METI will just let an export license application hang in limbo & never be approved.


differences between the Japanese & the Germans:

  • in a meeting, the Japanese will listen, then meet & decide later while the Germans will expect a decision
  • both are perfectionists, but achieve perfectionism differently:  the Germans will tell you what’s perfect, while the Japanese will ask
  • the Germans are aggressive & expect their way to happen;  the Japanese will listen how to get to the same end & get buy-in.
  • Both always see what can be improved, but differ in format.  The Japanese require an approval process for all $100+ purchases from the company president.

world bank pres. on global financial crisis

Friday 21 January, 2011

James Wolfensohn, former president of the World Bank spoke about THE GLOBAL ECONOMY IN THE WAKE OF FINANCIAL CRISIS at the invitation of the Chicago Council on Global Affairs.  Growth has changed now, compared to 1960-2000.  Then the 5B in the developing world had 20 % of the world’s wealth.  Jacque Chirac invited representatives from less-developed countries to the G7 meetings for the 1st time in 1997 & they each had 12 minutes to make a presentation.  The G7 is no longer relevant & has become the G20-the next summit will be held in Brazil.  The world GDP has grown @ 4%/year, but the mature economies have grown 2% while the emerging economies grew 8%.  By 2050, the original G7’s 80% of world GDP will have shrunk to 25%.  At that time, 65% of world GDP will come from Asia, 50% from China & India, which is a historic change.  The specific accuracy of those projections is unimportant-there will be a tectonic shift regardless.  Much of the west refuses to look at the extent of this change.  350K Indians & Chinese are studying abroad to earn their PhD’s.  We are not responding adequately:  we only send 13K to China & 1300 to India.  Education is the 3rd largest industry in Australia, many teaching Indian & Chinese students.

Financially, coffers in emerging economies hold most of the world’s reserves.  Our orientation must change towards Asia in manufacturing & technology.  The US$ is still favored, but we have $1 1/2 TR out there & there are limits to debt levels.  This problem cannot go on, especially when health care & retirement benefits rise to become 30% of GDP.  Growth is required, but the American educational system is appalling & fallen to #18 in the world.  You can’t solve these problems in 2 year election cycles or this year’s budget.  We must think long-term & strategically with a 10 year view, but we haven’t shown the maturity to deal with it.  Neither side shows that thinking is necessary.  Our most serious challenges are not immediately visible & we’re not prepared for them.

Africa’s GDP will grow from $1200 to $4000 per person by 2050 when the same will grow to $30-40K in India & China & $80K in the US & Europe.  Cellphones have made Africa aware of the rest of the world.  Transportation & nasty people are a potent mix.  There is no social justice there now, but we need to create opportunities for peace.


  • interest rates are currently not a problem, but they inevitably will rise because they can’t go any lower
  • start by communicating with your governmental representatives
  • the World Bank’s role/challenge has changed.  It’s biggest clients used to be India & China, but is now focused on Africa.  They all still require technical assistance.
  • Latin America & Brazil are generally in good shape, but haven’t benefited as much as other regions.  Brazil is growing @ 1/2-2/3 the rate of China & India.  Hydrocarbons in Brazil are an opportunity, but they’re 6X as deep & will take 10 years to develop for export.  Mexico has had a tough time because it’s so closely allied with the US & the US hasn’t done well.
  • Today totalitarian regimes, such as China, are well-managed countries which have the short-term under control & develop leadership in advance of change.  There has even been some progress in corrupt Africa, but they must come up with African solutions, not those imposed by others.
  • European leadership says they must keep the Euro together, but can they afford it & how can they pay for it?  It’s a currency union, but there is no mechanism to coordinate economic development, so there could be a crack in the Euro.
  • Although India was poorly managed, it’s now well-managed, so expect India to overtake China by 205o because of China’s 1 child policy demographics.
  • As economies change, the issue of who is the world’s policeman will have to be addressed.  China is building a huge navy…

Chairman-Morgan Stanley/Asia on “from US excess to Chinese consumption”

Tuesday 18 January, 2011

Stephen Roach, non-Executive Chairman of Morgan Stanley Asia,  Sr. Fellow @ the Jackson Institute for Global Affairs @ Yale, & author of The Next Asia, recently talked about GLOBAL IMBALANCES: MOVING FROM U.S. EXCESS TO CHINESE CONSUMPTION which was hosted by the Chicago Council on Global Affairs.  Steve believes we really are in post-crisis mode in the US, but not yet in Europe because of their sovereign debt crisis, but there is no clear demarcation @ the beginning & end of a crisis, so this is all speculation.  There are 3 very basic interrelated issues about which we need to be concerned:

  1. global demand is dictated by American demand, but after 12 years of 4% annual growth & spending beyond our means with debt to fuel that, we’ll need years to rebuild those finances.  Europe is trying to be fiscally responsible, but no 1 country can replace that void.  The world is acutely unbalanced towards American consumers & needs to be rebalanced.
  2. China has taken over the supply side with 30 years of 10+% growth, but that’s unsustainable because even in the words of Premier Wen Jiabao, it’s “unstable, unbalanced, uncoordinated, & unsustainable.” (March 16, 2007).  Despite the export boom, 20M Chinese have lost their jobs, which makes them hostage to world demand.  Their social safety net is unfunded, so they have little security.  Income inequality is a problem & getting worse, so they are supporting rural policies & committed to changing programs to create jobs in services & consumption opportunities.  Their 12th 5 year plan is pro-consumption.
  3. US fiscal, monetary, & currency policies are imbalanced.  Policymakers are doing what consumers demand-throwing money @ the problem, but our tax cuts contribute to the fiscal deficit.  We have a currency problem with China.  US companies can combat a manipulated currency, but it requires huge bipartisan support.  A New York Times columnist estimates that issue costs America 1.5M jobs.  Our current approach is dead wrong.  It’s a multilateral problem, so there is no easy fix, but it is urgent.

Q&A with Michael Moskow

  • China’s goal is simply social stability, so consumption needs to be their own choice.   Europe & the US have convinced the Chinese they need a new source of demand.
  • If the US consumer comes flying back, there is no urgency to change.  But if not, can our value proposition as a consumer society come to fruition without a change in policy?
  • inflation is a tough problem in China.  Walmart must get permission from the government to raise prices.  Cyclical inflation, particularly in food, is a problem.  The Bank of China should be aggressive in changing interest rates, but doesn’t, so they have to play catch-up.
  • Roach worries about protectionism with a new US congress because of high unemployment
  • China is more aggressive on security issues regarding North Korea.  The last thing China wants is a unified Korea, which will move US military forces closer to the Chinese border.
  • There are 2 different views on how to solve our current economic problems:  be prudent like the European Central Bank or throw money @ the problem as the US is doing.  Both can’t be right.  The US must recognize it’s temporary, but they’re not hearing it.  Injecting liquidity without lending is just adding money on deposit.
  • Fiscal policy requires a framework that gives a long-term exit strategy.
  • Bernanke is trying to recreate an asset-backed growth strategy, but Roach is no fan of it & say’s it’s been a trainwreck.
  • Deflation is a bit of a worry, but there is no cumulative downward spiral.
  • Investments in China should be based on government structures.  A disproportionate share of companies will fail, but there is enthusiasm about consumer businesses.

Open Q&A

  • China saves 54% of its GDP, but has no social safety net, so paying $400 of lifetime health care benefits to 700M people is a problem.
  • We can learn to emphasize financial (labor, economic, social) stability from China, & although we can’t eliminate bubbles, move quickly with regulatory & policy tools to solve problems.  For example, in April, 2010 China raised down payment requirements & made them all cash to combat a property speculation bubble.
  • The Chinese are raising a lot of capital in international capital markets & attracting institutional investors, but they must present their accounting more transparently.  They have no understanding of a services culture.  They need education to scale that up.

railroad opportunities in Brazil

Friday 14 January, 2011

I was invited to attend this business briefing: Opportunities in Brazil’s Rail Sector: A Business Briefing for U.S. Companies, organized by TERA International Group & sponsored by the U.S. Trade and Development AgencyHere‘s a link to a similar earlier project on which they worked.  After Steve Winkates of TERA welcomed everyone, Gabrielle Mandel of the USTDA gave an overview of their services.  Next Martin Claessens of the US Commercial Service referred people to their website to see what they do & promoted Obama’s National Export Initiative goal of doubling exports in the next 5 years to create 2M jobs.

The meat of the presentations started Britto Rajkumar, of the Transportation Technology Center, Inc., who provided the results of a USTDA-funded Railway Integration Technical Assistance Project (RITAP).  Brazil’s railroad system grew 100% in the last 10 years & is expected to grow 100% again in the next 10 years.  The focus today is on track standards for certification & safety, & so that they can be integrated across the country.  There is a 2 year pilot project & 5 year comprehensive plan to guide privatized railways to meet growing demand.  They are building 60K km in Brazil, of which 700 km are in/around Sao Paulo.  For comparison, the US has 300km of track nationwide.

Brazil’s International Affairs Advisor to the Ministerio dos Transportes, Francisco Luis Da Costa, then described Brazil’s logistical infrastructure.  The 2008 financial crisis has had little impact on Brazil’s economy, & actually increased public investment.  Foreign direct investment is up, & foreign reserves are up.  Their focus is more on internal market growth than export.  They are trying to plot a sustainable growth path:  infrastructure investment has increased 20% in 2010.  Brazil has agreed with the IMF in that infrastructure requires different fiscal treatment than other investments.   Currently Brazil depends more on roads & highways than rail, especially compared with other countries.  Their Plan for Logistics & Transport plans to change the matrix of rail & waterways directly to production areas.  Their focus is on energy efficiency, & reducing fuel consumption & emissions.  Rail is a priority, emphasized by expansion to create a modern integrated high capacity system to optimize:

  • existing network capacity
  • multimodal
  • high speed
  • North-south backbone
  • connect production areas to ports which are served by trucks now

Brazil is converting from large 1.6m gauge to more narrow 1.0m gauge & creating urban bypasses & beltways.

Other association presentations were given by:

Other visiting Brazilian delegate presentations were made by:

  • Antonio Carlos Modesto de Oliveira, Legal & Corporate Affaris Director of Ferrovia Tereza Cristina (FTC)
  • Elvira M B Cavalcanti, CFO & Thiago Rosa Moraes, Procurement Specialist of MRS Logistica SA
  • Flaviana Crus Coelho, Director General of Innovation & Railway Development & Jose Osvaldo Cruz, Office of Institutional Relations for Vale
  • Marcello Barreto Marques, Commercial Executive Officer & Miguel Angelo Barroso Andrade, General Business Development Manager of Transnordestina

I had to leave this event early due to another commitment.  If you want more information, just let me know & I’ll see if I can go back to the sources.


The New Population Boom

Friday 7 January, 2011

I attended this presentation The New Population Boom organized by the CCGA.  Here’s the the presentation presented by Jack Goldstone, Virginia E. and John T. Hazel, Jr. Professor of Public PolicyGeorge Mason University School of Public Policy at the Chicago Council on Global Affairs, 2010  Goldstone @ Chicago Council.  Goldstone started his academic career @ Northwestern in 1981-1990.  This article The New Population Bomb was waiting for us on our seats as we sat down.  Here’s what’s not on his slides:

Historically, the increase in the quality of education has led to universal literacy, and as incomes have grown, the west has prospered.  But now India & China took off in the 2nd 1/2 of the 20th century & Africa is now industrializing.  The changes in the last 30 years have been amazing:  in 1980 Chinas’ GDP was 1/2 that of France & now it’s the 2nd biggest in the world.  75-80% of the growth in the world is now outside of the west.  Aging populations are leading to declining workforces, while because of medical advances leading to fewer health problems, if you make it to age 60, it’s increasingly likely you’ll make it to 90.  Declining fertility (1.5 & 1.3 children/couple in Germany & Italy respectively) & China’s 1 child policy don’t help.  The only population growth comes from immigration, but immigration is seen by many as a threat.  Migration is inevitable:  we just need to better register, regulate, & track immigrants.  There are 2 telling opposing signs in Texas:  “help wanted”  & “keep out.”  By 2050, 1/5 of the population will the 60+, & 1/4 of them will be in Europe.

Islam is the new face of youth, & 9/10 of them are in emerging economies.  You see children everywhere in Africa & they’re moving to the cities.  In 2008 urban population exceeded rural overall.  The State Fragility Index correlates with countries with a high % of youth.

By 2050, the rich will comprise only 10% of the world population:  the growth in the global labor force is in emerging economies.  Ours is the 1st generation where the succeeding generation will have fewer workers.  While the elderly population will grow 137% in the US & 60% in Europe, the worker populations will grow only 20% in the US & shrink 20% in Europe.  American social security is still easy to fix:  we just need to postpone retirement to reflect healthier workers, & reduce benefits to those who have high incomes & don’t need it.

Health care in America is a problem:  Americans pay twice as much as many others as a % of GDP (16%).  Your most expensive year of health care is your last.  Health care costs are expected to double in the next 15 years to 30-40% of GDP, so we need to cheapen our costs.  Some retirees are migrating to Latin America, but most are not comfortable relocating elsewhere.  Maine & the northeast have the highest % of the aged because the youth are all leaving.

Looking forward, the future will be very different from the past.  We need to remain flexible re: work & education, immigration, & encourage innovation/start-ups, etc..  Open trade & human exchange, i.e. more globalization, are leading to a new urbanism.  We need to have faith in European-liberal values:  Latin America & other fragile countries are moving towards democracy.  We can’t cut ourselves off from the rest of the world & age behind our own walls:  that would create too many angry young men.


  • Diseases such as AIDS & malaria are on the downswing, so their affect on populations is dwindling.
  • Sharing western values like democracy could be ethnocentric, but encouraging human rights & allowing people to pursue their own destiny offers dignity.
  • Economic growth is driven by education, but there will have to be some give & take to let people “flow.”
  • It used to be easier to keep the well-educated here, a benefit of the quality of American universities, because it was easier to start a business here, but the US has dropped to #314 in this category.  We need visa regimes which make it easier for smart immigrants to start businesses here.

intlalliances 2010 blog in review

Sunday 2 January, 2011

The stats helper monkeys at mulled over how this blog did in 2010, and here’s a high level summary of its overall blog health:

Healthy blog!

The Blog-Health-o-Meter™ reads This blog is doing awesome!.

Crunchy numbers

Featured image

A Boeing 747-400 passenger jet can hold 416 passengers. This blog was viewed about 10,000 times in 2010. That’s about 24 full 747s.


In 2010, there were 80 new posts, growing the total archive of this blog to 304 posts. There were 15 pictures uploaded, taking up a total of 45mb. That’s about a picture per month.

The busiest day of the year was March 4th with 124 views. The most popular post that day was the value of living & working abroad.

Where did they come from?

The top referring sites in 2010 were,,,, and

Some visitors came searching, mostly for poland, importance of public transportation, global midwest alliance, boeing competition, and the importance of public transportation.

Attractions in 2010

These are the posts and pages that got the most views in 2010.


the value of living & working abroad February 2010


restitution in Poland? February 2008


constructive criticism of Friedman’s The World is Flat February 2010


the importance of public transportation August 2008
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tax update on Mexico February 2010