Will China Experience a Prolonged Period of Slower Growth?

China's greatest asset to growth was its cheap manufacturing base that drew investment and interest in low cost alternatives. Globalization is stripping China of this advantage as other nations find their own competitive ground. China will need to adjust its economic strategy to help it find sustainable growth that doesn't rely heavily on foreign capital accumulation. Changing their investment policies and encouraging long-term solutions will be more helpful than short-term strategies in the next phase of China's economic life.

China has been known as a great place to produce products because of a business friendly government, lower labor costs, and less environmental restrictions. This cheaper cost alternatives encouraged foreign companies to outsource simple manufacturing of parts to Chinese companies. This create a net influx of foreign dollars that fuel growth over the past couple of decades.

The country's production capacity was based on its ability to partner with outside companies seeking to shave costs. As Chinese industries learned new skills and abilities they developed many of their own products based upon existing product models. A few industries developed advanced models of products but this is still not the mainstream much of China's manufacturing sector.

Now that countries like the U.S. have achieved cost parity due to high technology and productivity improvements the benefits of outsourcing to China have lessened. Therefore, there is downward investment pressure that limits the amount of capital available to Chinese companies. The percentage of companies that have developed independent income streams has improved.

Without the innovative process that comes from a highly skilled and educated workforce Chinese growth is likely to be muted as nations find alternative places to seek resources. This doesn't mean that there is a wholesale disinterest but that such contracts are not as lucrative as in the past and alternative opportunities such as India, U.S. and Eastern Europe are viable options for production.

Think of how the free market works on a macro scale. China went through major economic reforms in 1978 that liberalized and privatized a number of state businesses. Like a hole in the middle of the ocean the capital rushed in and sparked an era of growth capitalizing on a cheap labor supply. It was a nation hungry and ripe for investment. As that hole filled up and costs increased many of the advantages are muted.

China of tomorrow will not grow as fast as it did in the past as alternative investment locations are found and manufacturing parity occurs with other nations. Chinese labor productivity has gained but is running to its limit without mass educational investment that can improve on innovation and technological production. Poor policies that favored pro-Chinese knowledge accumulation at the expense of foreign companies have raised a skeptics eyes to alternative countries with better patent protections.

With an interest rate of around 5% they can reduce that rate to encourage internal growth and development. They may also consider additional infrastructure improvements that connect regions and lower transactional costs. Revamping education to ensure more scientific minds and skilled labor are created can further help in the long run. Changing government policy to open their economy, ensure free and fair transference of knowledge, and focus their investments in high development areas.

The Chinese Tiger has not been netted yet but will need to consider additional reforms that encourage higher levels of growth. Telecommunications, lower shipping costs, and cross-border partnerships are offering cost-quality alternatives to Chinese investment. By reaching out with partners in countries like the U.S. and finding collaborative methods of mutual development with American companies the Chinese companies can further extend their reach.  

Leadership and Moral Reasoning Set the Standards for Others

Moral reasoning is as important today as it was in the past. It could be argued that with the growth in society and the increase in the size of structures that moral reasoning is even more important today. Business and civic leaders that have obtained and support moral reasoning are at a higher level of development than others. It is these highly developed people that should be leading organizations to new levels of performance. A paper in the Journal Business Ethics: A European Review helps highlights how moral reasoning impacts intra-firm networks and the values others maintain (Kulkari & Sobodh, 2014).

Human development and moral reasoning move together hand-in-hand. People who are less developed have a harder time thinking beyond what is of benefit to themselves. The authors have used 6 stages or moral reasoning where the stages 1-4 are primarily concerned with fear, self-interest, and following the rules for personal gain. Only in stages 5 and 6 can one claim moral leadership that thinks beyond oneself and into the greater purpose of action.

Law helps us define what societal expectations are and provide guidelines for citizens to follow. Organizations are bound to follow these laws in employment practices, pollution, operations, etc.. to ensure that their practices do not damage society.  Most business leaders follow these rules based upon self-interest and the fear of punishment. This is necessary to keep everyone in good order and society moving forward.

Beyond self-interest are higher stages of development where moral-reasoning includes doing the right thing in difficult situations. Moral leaders have freed themselves from the constraints of fear to a place where they seek to exceed the standards of law. They understand a greater purpose of keeping society free from unfair actions and immoral decisions that infringe on others.

For example, at the lower levels of human development a CEO may put in place the minimum legal requirements to curb pollution while seeking to skirt as many rules as possible. In the mid levels of development the same CEO may wish to follow the rules strictly and proclaim their business is "Green" as a marketing tool. A highly developed CEO would seek to ensure their business is not damaging the environment based upon moral values while not ignoring the benefits that come from being a good corporate citizen.

Position doesn't necessarily determine morality of the person. A person could be in a position of authority and still stuck at lower levels of development. For example, a CEO may create predatory practices and justify that position as a benefit to stakeholders, a DA could raise their arrest numbers but violate more rights in an effort to "clean up" a city, or a politician could take a bribe and vote on a new project saying it is the best interest of everyone.  Authority and moral development are not tightly associated and often contradict each other.

The journal article highlights the importance of ensuring that those with solid moral reasoning rise to the top of the societal structure. Moral reasoning of the leader impacts the moral value systems of everyone else.  Their behavior and decisions prompt others to act in similar manners creating intra-firm transfers of moral expectations. Those expectations become embedded into the culture of the company (or organization) and become a method of approaching future problems.

Moral reasoning is one part of the assessment of leadership qualities. Those with higher levels of moral reasoning are also more developed as people. They create expectations on those around them who are likely to mirror their behavior and perception. Encouraging high quality people with leadership potential to make their way to the top of organizations helps to ensure that the right expectations of moral reasoning and ethical performance are standardized.

Kulkari, S. & Subodh, R. (2014). Intra-firm transfer of best practices in moral reasoning: a conceptual framework. Business Ethics: A European Review, 23 (1).

Peom: The Island of Axis Mundi

The Island of Axis Mundi

It is there just beyond the ocean waves,

An island of refuge from the sea.

An oasis of sun light stardust,

A clumping of lush green. 

Only a few sailors landed on this ocean oasis,

The Axis Mundi where no map can lead.

A place between heaven and earth,

Somewhere far in the sea but just beyond the ocean crest.

A point to see the world from new light,

 Upon the branches, trunks and roots that tie it together.

The Hawk

Tennis as the New Fitness and Social Sport

Having fun, getting in shape, and meeting interesting people makes for some of the best fitness routines that will keep you on track. Tennis is one sport that helps you stay motivated while expanding your social network.  

Doctors recommend that everyone gets a few hours of high intensity exercise in per week. That won’t be hard to obtain if you find a group that meets a couple of times a week.

Tennis is a highly cardiovascular sport that shreds pounds.  Constant running and stopping will put your heart rate into the target zone improving your blood flow and strengthening your heart.

As a social sport tennis will introduction to lots of new people quickly.  Players rotate to try out new teams and experience new challenges. It won’t take long before you gain some new friends.

There are plenty of places to find tennis activities. You can visit recreation centers and ask about tennis activities, search online for clubs,  or make a call to the city’s recreation department. Tennis groups love new players and helping them gain new skills.

How the Internet has Changed the 4 Ps of Marketing

The 4 P’s are  a big part of marketing and have not lost their luster  as a guide in the online world.  The basic principles of Product, Price, Place and Promotion fits as easily in the virtual world as it does in print media.  The changes have been subtle but profound as marketing experts went through a transition from thinking about physical space to virtual space.

On the Internet time and space no longer have same meaning as in the physical world. Products can be sent across the world, the business borders between nations are reduced, and the world is more integrated. Marketing changes to meet those new demands.

Product: There is no substitute for a solid product.  In the online world how that product is displayed and described can have a large impact on customers abilities to understand it.  Using an easy to understand description and pictures can make a big difference in helping customers visualize how the product will help them.

Price:  The price of products is more competitive online due to easy comparisons at the click of a mouse. Physical locations have the ability to create price differentials but online products are compared instantly. Shipping costs are no longer a major expense with services like Amazon Prime.

Place: Even though the office may have a physical place the webpage has no place in particular. This means that someone can access the information and purchase products from almost anyplace on the globe. Where the business ranks on search engines will determine who and how many people frequent the site.

Promotion: In the online world promotion is about finding ways to draw in and connect to customers. Social media marketing, content creation, and pay-per-click ads are common methods. Businesses either purchase displays or create organic traffic through consumer comment and interest.

San Diego Pension Funds at Risk

Pension funds are increasingly risky and placing greater liability on cities throughout the country. On a national level, the risks to cities is large and this creates problems for cities that want to ensure they are fiscally sound. On a $10 billion fund San Diego has exposure of more than $20 billion that could subject taxpayers to an additional $10 billion in losses (McDonald, 2015).

People rely on these pension funds for their retirement and it is important to ensure that decisions are being made in the best interest of the city, state, and pension beneficiaries. Pension funds that take on excessive risk or who are increasingly exposed year after year need additional attention to get them back on track.

San Diego is not alone in its predicament. The Pew Center reviewed 2009 data and found that most cities are under risk with their pensions (Bradford, 2013). Not enough was done to ensure that these pensions are running at their optimal level and were adequately protecting the money.

Too much risk in investing can cause significant problems if things go wrong. In San Diego’s case, the pension funds could lead up to $10 billion in additional losses not only bankrupting the fund but also forcing taxpayer or state bailouts. For example, in Philadelphia a 1% sales tax was implemented to cover the cost of pension obligations, (Coen, 2014).

The risks of pension funds should be a concern for cities across the nation. At a time when the country is finally making positive economic growth pension funds are a relevant risk. States do not, in general, have the money to support busted pension systems. It is necessary to get on top of these issues now and make the painstaking adjustments that lead to solid retirements tomorrow.

Bradford, H. (2013). Pew study finds dismal funded status for most U.S. city plans. Pensions & Investments, 41 (2).

Coen, A. (2014). Treasurer: sales tax extension to aid philadelphia pensions. Bond Buyer, F347 (1).

McDonald, J. (March 19th, 2015). County pension system parts with CEO. UT San Diego. Retrieved http://www.utsandiego.com/news/2015/mar/19/brian-white-severance-sdcera-ceo/

Entrepreneurship Requires the Eyes and Ears of a Wolf

Entrepreneurship is a popular occupational choice for Generation X and Y who desire more freedom to determine their own fate. When conversing with young people you will hear their stories of how they would like to someday be a business owner, work in an industry they have a passion for and keep their freedom. If you want to be an entrepreneur than having the eyes and ears of a wolf will help you discover opportunities.

Opportunities abound but seeing potential opportunities can be a more difficult process. It takes considerable experience to see and understand where price differences occur and how to capitalize on these differences. Sometimes these opportunities are easy to discern while at other times considerable research must be conducted before it can be realized

Consider the years and efforts it takes to successfully run a small business. Most businesses fail within the first five years as wishful thinking meets market realities. As entrepreneurs stick with their efforts they begin to learn the differences between success and failure. Learning can lead to big successes in the future if practically applied.

If you read books on entrepreneurship you will find that the process is failure is very similar for each person. They tried and failed a number of times before becoming successful. At the end of this long battle with themselves and the market they eventually figured out what works. It takes time to forge an approach through trial and error.

Being an entrepreneurial wolf requires the ability to see opportunities and find ways to turn those opportunities into realized profit. Keeping your eyes and ears open throughout your daily activities will help you realize how things work. Sometimes the best businesses are built off of simple ideas and concepts. Perceiving a single profitable action can lead to the repeating of that action.