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Saturday, February 24, 2024
CEOWORLD magazine - Latest - Success and Leadership - Let’s Talk China for a Minute

Success and Leadership

Let’s Talk China for a Minute

In America, July 4th is Independence Day. A time for celebratory fireworks and backyard BBQs with friends and family. It should also be a time for our collective reflection on our lives, the value of truly being a free nation, and on the blood sweat and tears of the honorable men and woman who gave their lives selflessly to make it all happen. 

But as time passes, we forget why celebrating our independence and freedoms from monarchial oppression 250 years ago is so critical to preserve today. We essentially take it for granted that things will forever stay the course here at home. But whose course is that?

I think we should become more patriotic. It’s just a feeling. But in that same two centuries’ time other nations and their citizens have not yet experienced the same good fortune embracing the founding principles of our western democracy. And yet every passing July it gets more fragile. 

As history teaches us no matter how free we are in between BBQs and ballgames we still have to put food on the table, and earn a living. That means making money. Probably the single best talent most Americans are good at. And when you motivate a crowd well, amazing what can happen.  

In 1956 the US Congress changed the words E Pluribus Unum which in Latin means “out of many, one,” to “In God We Trust” on the face of our US currency. President Eisenhower thought it was a good idea, a simple yet spirited motto all Americans could relate to as America kicked off the “Golden Age of American Capitalism.” How’s that for motivation. 

In the 15 years from 1945 to 1960, US gross national product grew from $200 billion to more than $500 billion. That growth came from infrastructure spending on highways, roads, bridges, tunnels, railways, telephone lines, new homes, autos and all the toys you can fit into your new 2-car garage. All of it made for a grand affair between Americans and their beloved country in the postwar era coast to coast. 

But then a hidden price to pay. 

Today the US GDP is 60 times larger than in 1960 topping a whopping $30 Trillion dollars! But in that time, we also grew to sacrifice our core principles of democracy and freedoms as international commerce became essential to our insatiable lifestyles. That’s when America in the process rebranded our currency from “In God We Trust” to “In Trade We Trust.” 

In 2022 America traded $7 trillion globally. Our largest trade partners for decades were Canada and Mexico. But today the US’ largest international trade partner is most notoriously The PRC (Peoples Republic of China). On the backs of millions of rural minions flocking to the cities there for better work, a better life was all the motivation they needed. And then up went the Open for Business signs to the west.

China is now Americas #1 trade partner. America imports ($530B) far more than it exports ($150B) to China. And that’s not fair. China restricts American businesses from selling in there unless you’re dug in deep with the system, and with the “Party.” 

It would have surprised Americans back in the 1950s that China would have become America’s #1 trade partner today. It would have also shocked them to see all we sacrificed for it. Once a great manufacturing country American business capital decided to look around. And when China stepped up, like a crack addict we grabbed the pipe.

Large western profit-hungry companies dove head-first into the pool spending billions to build and support hundreds of factories in China. All you needed besides mountains of cash was a narrow focus, always looking down and away from any un-business-like matters not of your concern there. 

In exchange American capitalism was the winner. We got access to China’s vast domestic markets. And given new markets, low costs of goods, cheap labor, and solid profit margins it was heaven on earth. 

And this apple was sweet. It put everything we could desire within reach of our pocketbooks. It doesn’t matter that China is a communist dictatorship, where liberty and justice human rights are nebulous interpretations. We’re hooked. Asleep at the switch. And it’s taking us down. Fast.

They say China’s oldest and longest river, the mighty Yangtze has changed course 18 times in its 4000-year history, devastating vast swaths of land in its wake. And translated into economic terms it’s at it again.  

When the PRC elected Xi Jinping the country’s new president in 2013 few had in mind anything as radical. But they were wrong. Now elected for an unprecedented 3rd 5-yr term in 2022 Xi Jinping like President Putin changed the rules allowing himself to be a de facto president for life. And if history is any guide what was a hopeful bridge to western democratic thinking through trade, suddenly collapsed under the historic weight of a new dictatorial autocracy. 

The new course is pure ideological. That means cracking down hard on political and cultural deviants like those in Hong Kong, and exercising more controls over civil and business conditions throughout the country with a real sense of urgency this time, or perhaps panic.

In his opening speech to the PRC Congress, Xi laid out the river’s new path. And it wasn’t to expand the Apple Foxconn plant, or a new Tesla facility or Nike shoe factory. 

It was the “reunification” with Taiwan. 

One word, and there it was on paper. The Yangtze was changing course. 

China has been infected by America, a moral-less consumption crazed country past its prime, on its way out. And he’s right. We are weaker than our fathers, and now the time has come for China to assert its intentions as the world’s 2nd largest economy by standing up to #1, and to our US military dominance in the Pacific by taking back the island nation, a murky 80 miles off its eastern coast. 

Make no mistake China understands the ramifications of an invasion or blockade of Taiwan. American diplomats have made the consequences abundantly clear, if anybody is listening. We are defending a cradle of democracy, a democratically free people, 24 million strong, and home to the world’s largest semiconductor chip house, Taiwan Semiconductor Manufacturing Company.

So now, not only has America “given away the store,” we also now have a choice — we either look the other way and allow business as usual or “just say no” step back and defend the seeds of liberty, the same ones we take for granted.

So, who’s to blame for this mess?

It’s no surprise that China has been good for business. For decades US-based businesses have benefited from manufacturing and selling directly to China’s 1.4 billion citizens. It pays profits to pander to the market-entry overlords for access, and that’s exactly what’s been happening.

largest US companies in China

Among the largest US companies in China are household names like Apple, Ford, Tesla, GM, Qualcomm, McDonald’s, KFC, Starbucks, Coca-Cola, Walmart, Procter & Gamble, GE, IBM and on and on. Each earns and burns billions in China. 

But if things get worse between our two countries, what then? 

As China reclaims its insular past dominion Xi Jinping could easily turn dozens of America’s industry-leading companies into chopped suey, starting with some of America’s biggest semiconductors, as you can see in the table.

The message is clear. China has its own Manifest Destiny now, it’s to become completely self-sufficient on the mainland, and reunify with Taiwan offshore, the West be damned.

But while Xi’s stated goal and rally cry makes perfect sense at home. Does he understand the ramifications? 

Any attempt by Xi to egregiously disrupt Taiwan will almost certainly trigger Russia-like sanctions and deeply disrupt global commerce. It would be like hitting an economic global thermal nuclear bomb button. 

But maybe it’s time for a sickly America to feel a hard slap to snap out of it, get back to our healthy roots and home cooking again.  

Why help ourselves to a precipitous demise at the mercy of a nation bent on seeing America financially and culturally crash and burn, along with our righteous freedoms and democracy our forefathers died to protect? Maybe it’s time to look in the mirror and recognize wherein lies the problem. 

Needless to say, China is doing what China does best, and the Chinese government under Xi Jinping is not here to help remind America why we celebrate the 4th of July. That’s our job.

I think it’s time to call out all Americans to wake up and stop manufacturing goods in China, and stop buying cheap products made in China, at least until we can right our ship. Our addiction to rock bottom prices and profuse gluttony for things we don’t need at the expense of our existential values in senseless self-destruction. Every dollar sent offshore is missing from the scales of our weighty problems here at home. 

Take a look around. Are you happy with business as usual in America? Should profits and economics be the greater force behind “In God We Trust?”

Listen. I get it. Making money is a fundamental part of our capitalist system, it’s part of our DNA, but nowhere does it say we need to compromise the higher moral ground for cheap toys, Tvs or tennis shoes. 

I say it’s time that we put “In God We Trust” back into the equation this 4th of July. Take this opportunity to wean ourselves off the online quick fix over-spending binge culture we created, and grab back from the brink our founding principles that birthed this awesome country, the beacon of freedom and human rights. What say you?


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CEOWORLD magazine - Latest - Success and Leadership - Let’s Talk China for a Minute
Rick Andrade
Rick Andrade is an investment banker at Janas Associates in Pasadena, CA, where he helps CEOs and business owners buy, sell, and finance middle-market companies.

Rick earned his BA and MBA from UCLA, along with his Series 7, 63, & 79 FINRA securities licenses. He is also a CA Real Estate Broker, a volunteer SBA/SCORE instructor, and blogs at RickAndrade.com on issues important to business owners. Please note this article is for informational purposes only and should not be considered in any way an offer to buy or sell a security. Securities are offered through JCC Capital Markets LLC, Member FINRA/SIPC.

Rick Andrade is an opinion columnist for the CEOWORLD magazine. You can follow him on LinkedIn.