Reactions to story from The New York Times

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  China’s and India’s Challenge to Italy, Detroit, Eric K. and ….

  http://calpolymbatrip.com/2008/china/chinas-and-indias-chall...
  87 days ago in Cal Poly MBA Trip · Authority: 27

  This is a follow-up to my previous post on getting a suit made in China — Baby, If You Look Good, You Play Good. Check out this recent March 29, 2008  WSJ article that points out that while high-end Chinese made suits may not yet fully be at the level of high-end Italian made suits, the gap has closed. This is an example of how Westerners can/will sit back with the status quo, “God, we are good. There is no way the Chinese (or Indians) can touch us or our products or processing.” And then they wake up one day, find that the Chinese are making high end suits that can compete, and the next day other high end items such as computers, cars and the like. If you have been monitoring recent moves by the CCP Government (e.g., click HERE and check out this recent China Law Blog post), the government has made it clear that they will make things easy for firms that seek to move up the manufacturing value chain, while for those who wish to continue to focus on low end goods such as textiles and rubber duckies things will only become more difficult in terms of tax breaks, allowed FDI investment, etc. Or, if you are a Brit, you might wake up one day and your former colonies, first the US (Ford Motor Co.) and then India, now own your once crown jewel known as Jaguar and Range Rover. Oh, wait, that already happened. Click HERE to read about what many thought was impossible for something like this to occur. Good for India. I am not saying will all happen tomorrow, but I am saying over time, it will happen more and more and more. The lesson is that those in business who rest on their laurels and own beliefs of infallibility and talent, will die. Eric K., you are right (for now) in your post, “Would Your Drive This?” … China now makes crappy cars and nobody here will touch them, but I think you would be remiss to assume that China will always be making crappy cars and/or components. For example, you may be too young to remember this, but not too long ago most Americans scoffed at goods coming from Hong Kong, South Korea, Japan and Taiwan (now they come from China; those other listed countries have moved up the production value chain and if/when you visit them you will see this immediately upon getting off the plane). Now, a number of firms in those listed countries make products that are quite good and people from those same American industries that scoffed are like boxers who have had their butts kicked in the ring and are standing around asking, “What just happened?” I see no reason why that pattern will not repeat itself in China. Another thing to think about — what business opportunities does a car market in its infancy in a country such as China present to foreign and domestic firms? For example, nobody can stop the Chinese from wanting their own car (materialism is by no means a foreign concept), and if anyone wants to sell cars in said market they will have to take their lower per capita income into account and be able to sell a car that is much cheaper than what is sold in the West. Further, with the CCP government leaning on said industry, the pressure will really be on to create and produce a lot of cars that are more “green” than the current SUVs and big trucks we see driving around the Cal Poly campus, in part because the government simply cannot import enough oil to keep its population driving cars that get only 16-18 MPG and if it wants to survive, it will need to find a way to foster the development of cars that can do better in this regard. In short, I predict we will therefore see some new and interesting and perhaps even incredible technologies coming out of China (or India) in the auto industry in the next 10 to 20 years that cannot take place in the west due to our lobbyists, unions, special interest groups needing their piece of the pie, the high cost of labor here, etc. I.e., per economic theory, are the rent seekers in the West just too powerful and establish to overcome and implement change and new technologies? I am not alone in asking this question. Jack Perkowski, an American in the auto parts business in China supplying parts to their domestic industry (not for export) and the author of the very good book that just came out, Managing the Dragon: How I’m Building a Billion-Dollar Business in China, makes this very same point. See also this NY Times piece that echoes a similar tune, A Chevy With an Engine from China. If you think the future I am describing is unlikely, I would love to here why you disagree. But please, give me a reason more substantive than the usual, “Man we are just that good” spiel. No reasonable global person buys that anymore. As Bob Dylan sang, “These Times Are A Changin” ….
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  A Chevy With an Engine From China

  http://automoby.blogspot.com/2008/03/chevy-with-engine-from-...
  114 days ago in AutoMoby · Authority: 9

  The company has since eliminated brand distinctions between engines, saddling them with names unlikely to inspire songwriters, like Ecotec, Vortec and Northstar. But some owners of the Chevrolet Equinox, a “compact” sport utility vehicle built in North America, might be surprised to learn the origin of the engine under their hoods — it’s made in China. Last year, China exported more than $12 billion in auto parts, up from less than $2 billion in 2002 — the majority to North America. The increase in exports has added to the problems plaguing North American suppliers. Most famously, Delphi, which is seeking to emerge from bankruptcy, has closed dozens of plants and moved some production overseas to become more competitive, including to China. Soon China will be exporting whole vehicles to North America. Last year, Chrysler signed a deal with China’s largest car company, Chery Automobile, to supply a Dodge subcompact. One of the most important steps on China’s long march to becoming an auto exporter was the little-noticed arrival of the humble engine inside the 2005 Chevy Equinox. “This is the first Chinese-made engine going into this market,” said Eric A. Fedewa, vice president for powertrain forecasts at CSM Worldwide, an automotive analysis firm. “It was an experiment to see if G.M. could use its facility in China to take costs out of a vehicle.” G.M. neither promoted nor hid the fact that the Equinox engine (and that of its twin, the Pontiac Torrent) is made in China. The car’s sticker notes 55 percent of its content is make in the United States and Canada, 20 percent in Japan, 15 percent in China and the rest from elsewhere. But no sticker tells consumers the engine is built at Shanghai General Motors, a joint venture of G.M. and the Shanghai Automotive Industry Corporation, a Chinese company. Originally intended to power Buick sedans built for the Chinese market, the engine is the only one available in the Equinox base model. Starting with the 2008 model, a larger American-made motor became an option in a higher-end version of the S.U.V. The same model of engine as the one made in China is produced at a G.M. engine plant in Tonawanda, N.Y., about a two-hour drive from the Canadian factory that builds the Equinox. G.M. does not break out internal costs, so it is not known how the Chinese engines compare in price with those from Tonawanda. Mr. Fedewa said an engine of this sort typically costs $800 to $900 to make. Even in an era of global manufacturing, the Equinox is exceptionally international. Its engineering was largely done here in Oshawa, headquarters of General Motors of Canada. It uses a five-speed automatic transmission made in Japan by Aisin Seiki, though G.M. is a leading manufacturer of automatic transmissions. And the parts are assembled at a factory in Ingersoll, Ontario, a joint venture between G.M. and Suzuki, another Japanese firm. Suzuki was a major driver in the decision to use the Chinese-made engine. Dick Kauling, a senior engineering manager at G.M. Canada who helped develop the Equinox, said his group had worked closely with engineers at Suzuki, as well as G.M. engineers in Germany, China and Warren, Mich. “The Suzuki guys said, ‘We have the global logistics that can make this happen,’ ” Mr. Fedewa said. Suzuki proposed loading a container ship in Shanghai with engines, then having it stop in Japan to pick up transmissions on its way to Canada. A 25-year G.M. veteran, Mr. Kauling, remembers when car buyers hotly debated the differences between the engines in G.M. brands, not to mention those from other automakers. But he said the old way of organizing production was less than efficient. Early in his career, the company was running short of engines for Chevrolets but had a surplus of Oldsmobile motors. He was assigned to find a way to modify the incompatible Oldsmobile engine — the two brands had not even been able to agree on common bolt sizes — to fit into a Chevy body. Now, Mr. Kauling said, “I don’t think we’re concerned where the parts come from,” adding, the Chinese-made engine “has got General Motors all over it.” The idea of using the Chinese engine did not sit well with the Canadian Auto Workers, the union that represents workers at the Equinox factory. Because of its complexity, engine assembly uses a higher proportion of skilled, well-paid workers. And Basil E. Hargrove, the union’s president, blames what he calls unfair trading practices by Asian manufacturers for much of the North American industry’s problems. “Today it’s South Korea and Japan, and tomorrow it’s going to be China,” he said. “It’s only a matter of time before G.M., Ford and Chrysler are going to deal with the crisis they face by going into these countries and shipping into here. Very few consumers ask: where is the engine built or where is the transmission made?” Assessing the quality of Chinese manufacturing is difficult, partly because of the design of this particular engine. Gabriel Shenhar, the senior engineer of Consumer Reports auto test division, said that in the Equinox the engine is coarse, noisy, uses more fuel than similar vehicles and produces relatively little horsepower for its size. He did not blame the Chinese for those shortcomings. “This engine’s blueprint did not originate in China,” Mr. Shenhar said. “The 3.4 liter, 185 horsepower has always been a lackluster engine.” He called flaws in the design “a reflection of G.M.’s lack of attention to detail and half-hearted effort on this car.” A spokeswoman for Chevrolet, Carolyn Normandin, said, “Our vehicle comes with a standard six-cylinder engine, while most of our competitors only offer standard four-cylinder engines.” She added that the company will offer improved fuel economy in the next-generation Equinox. She declined to say when that will be introduced. Some observers expect the new model will be out in about two years. Mr. Fedewa, the analyst from CSM, expects they will not be fitted with Chinese engines. “Sourcing from halfway around the world is very challenging,” he said, referring to the difficulties of fitting huge transmissions into shipping containers and the possibility of supply-chain disruption. See AlsoThe Naked Truth About Real Estate Investing-The Reality Of Buying Rental Property Fully ExposedMansion Built for British Billionaire Family Goes on Auction Block: Court Order Forces Sale of 12,000 Sq. Ft. Waterfront Villa in Jupiter, Florida Watch Sale, Bid On and Steal This Estate via Live Streaming Source: NYT | Automobiles
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  Global Economic News

  http://globalissuesweb.com/wp/?p=3885
  119 days ago in Global Issues Web News: News, Commentary, and Analysis on World Issues · Authority: 16

  IFC in India infrastructure push The International Finance Corporation is planning to double its investment in Indian infrastructure to about $1.1bn by the middle of this year as part of efforts to help sustain the country’s rapid economic growth As the Dollar Slides, Two Continents Feel the Side Effects in Divergent Ways The dollar?s declining value is a high-profile symptom of America?s economic slowdown, analysts say. It?s also a sure sign of tougher economic times ahead in Asia. Ofcom clears way for ‘I’m on the plane…’ One of the last refuges from annoying ringtones and anodyne phone conversations is likely to disappear Engaging India: Road to progress Changes afoot in the capital may well herald the beginning of the end of India’s long infrastructure nightmare, writes Jo Johnson Bond Insurer Says Its Risk Exceeded Legal Limits FGIC said its exposure to mortgage losses exceeded legal risk limits and that it might raise loss reserves because of litigation related to the stricken German bank IKB. HBOS Managers Purchase Shares Directors and senior managers at HBOS, Britain?s biggest mortgage lender, bought some 1.4 million shares at 446 pence, $8.87, a share using their bonus entitlements. Pressed Over Tibet, China Berates Foreign Media Chinese officials have sharply criticized foreign reporters over their coverage of the riots in Tibet, accusing them of biased reporting and preventing them from traveling to Tibet. A Chevy With an Engine From China Last year, China exported more than $12 billion in auto parts, adding to the problems plaguing North American suppliers, and soon, it will be exporting even more. Demand for wheat puts India at risk India is at risk of sustained food price inflation as domestic production of key staples such as wheat and edible oil fails to keep pace with rising demand, according to the country’s top official on commodities trading Volunteering Abroad to Climb at I.B.M. I.B.M.?s service program for fast-tracked employees helps raise the company?s profile in countries where it doesn?t have a strong presence.
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  How Big a Problem is Outsourcing?

  http://cupofcha.com/2008/03/27/how-big-a-problem-is-outsourc...
  119 days ago in Cup of Cha · Authority: 64

  It is great political fodder to talk about the horrors of outsourcing, and indeed it can be a major problem when there are no corresponding training programs to give workers skills they need to be competitive when their jobs go elsewhere. On the other hand, sometimes outsourcing part of the production line makes it possible to keep other jobs at home. Take for example, GM, which according to a NY Times article has been producing some of its engines for the US market in China. G.M. neither promoted nor hid the fact that the Equinox engine (and that of its twin, the Pontiac Torrent) is made in China. The car’s sticker notes 55 percent of its content is [made] in the United States and Canada, 20 percent in Japan, 15 percent in China and the rest from elsewhere. But no sticker tells consumers the engine is built at Shanghai General Motors, a joint venture of G.M. and the Shanghai Automotive Industry Corporation, a Chinese company. If the company had not built the engines in China, they would not be able to compete with companies like Toyota and Honda on price, and thus some of the jobs that compose the “55  percent” of US production would disappear with lower sales. Or so the argument goes. Of course the irony is that Toyota and Honda both plants in the US (although primarily for US market sales rather than re-importing to Japan). Of course, the unions see it differently as their jobs go abroad. The idea of using the Chinese engine did not sit well with the Canadian Auto Workers, the union that represents workers at the Equinox factory. Because of its complexity, engine assembly uses a higher proportion of skilled, well-paid workers. And Basil E. Hargrove, the union’s president, blames what he calls unfair trading practices by Asian manufacturers for much of the North American industry’s problems. “Today it’s South Korea and Japan, and tomorrow it’s going to be China,” he said. “It’s only a matter of time before G.M., Ford and Chrysler are going to deal with the crisis they face by going into these countries and shipping into here. Very few consumers ask: where is the engine built or where is the transmission made?”  So the question is, how big a problem is this? Share This
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  Citigroup settles last Enron bankruptcy claims for $1.7 billion

  http://blogs.chron.com/lorensteffy/2008/03/citigroup_settl.h...
  119 days ago in Loren Steffy | A business blog with Loren Steffy · Authority: 43

  Dave Rossman/Special to the ChronicleCitigroup, Enron's biggest creditor, finally threw in the towel rather than take its claims to court next month. The mega-bank, which has been slammed by credit losses in recent months, agreed to pay almost $1.7 billion...

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