Today, my memories of September 11, 2001, when the world froze and I stood paralyzed as images of people jumping from the Towers repeated and repeated and repeated, are mixed up with memories of other days when time stopped — the deaths of each of my parents, my brother, selling off my dad’s cattle, days that closed one chapter of my life and initiated another, whether I knew it or not.
In the past, I watched landscaping crews saw limbs off of trees where birds were nesting in the spring and early summer. I thought I knew how those hysterical creatures felt as their homes and offspring tumbled to the ground. But 2020 has shown me I didn’t, I couldn’t, watching safely from the ground.
Today, I see images of cataclysm on a Biblical scale — the California fires and melting ice caps, human-induced tragedies, unintended consequences of — let’s call a spade a spade — our greed and ambition. I think of the lives destroyed and the unimaginable suffering of those beautiful lands and the wildlife trapped by fast-moving flames and melting ice.
None of us knows what will follow. Have we learned from our mistakes? I wish I could say, “Yes, absolutely!” But that’s yet to be seen.
So here, on this day, I’m offering a prayer that we rise above our prejudice, greed and hate to preserve what we love and somehow figure out how to move together into a future that honors our best selves.
China welcomed Tesla’s EV manufacturing innovation and used it to build an EV supply chain. Where is America investing?
Del Valle, Texas, has made a bid for Tesla’s $1 billion electric truck Gigafactory, waiving some $46 million in property taxes over 10 years, with the county kicking in an additional $14 million.
Can you help us get an HEB?
Question from a Del Valle resident to Tesla representatives
The thing about economic development is that, in Texas at least, communities bid with the property taxes that pay for public health and kids’ educations. Del Valle, a stone’s throw from Austin and its Bergstrom International Airport, is chronically underserved. It has neither a permanent medical clinic nor a hospital. At a recent community meeting, a school board official’s question to Tesla representatives was, “Can you help us get an HEB?,” HEB being the the state’s flagship grocery store.
Innovation, riding the crest of Chinese investment
Any relationship is a risk. Not too long ago Tesla, in need of cash, made a similar gamble with China. Tesla agreed to pay $323 million a year in taxes, accept a $1.6 billion state loan, and source 30% of its parts locally (100% by the end 2020) to open a Gigafactory in Shanghai, the first foreign automobile company not required to share profits and technology with a local company.
The deal paid off handsomely. Tesla’s second-quarter earnings moved into the black, the stock’s value quadrupled to $1,790 per share, and Elon Musk’s personal wealth pushed past Warren Buffet’s.
But then Tesla fit neatly into the guiding principle of China’s “Made in China 2025” strategy: “innovation-driven, quality first, green development, structural optimization, and talent-based.” And since Tesla sources parts locally, China builds an in-country supply chain for manufacturing electric vehicles.
Looking for a mask? All roads lead to China
That’s EVs, now consider medical supplies. If you’re wondering why American doctors are re-using their masks, read Keith Bradsher’s reporting in The New York Times. In three years’ time, China has dominated the market in medical devices and supplies by investing heavily in companies that make those things and requiring hospitals to source locally. Bradsher, chief of the Times‘ Shanghai bureau, quotes an LA-based entrepreneur who decided to manufacture masks and hand sanitizer, only to discover the machines that make masks and the plastic bottles that dispense hand sanitizer are only made in China.
Investing in the future, locally
In the next 10 years, Deloitte and the Manufacturing Institute estimate U.S. manufacturers will be short some 2 million skilled manufacturing workers. The starting salary for an entry level Del Valle Gigafactory worker with a high school diploma would be $36,000, about 55% of a living wage in Austin. But those jobs could conceivably propel workers into more skilled, advanced manufacturing roles with double the salary, in a market market hungry for those skills.
To fill the pipeline, local Austin-based manufacturers and the Army Future Command are collaborating with the Austin Community College to build an advanced manufacturing incubator that would offer hands-on experience and apprenticeships. As an EV manufacturer, Tesla could play a major role in mentoring the community in those very sectors that matter so much to the Chinese government: “innovation-driven, quality first, green development, structural optimization, talent-based” manufacturing.
Some signs of investment at the federal level
These are important but local initiatives. The larger question is whether we as a country are learning anything from China’s passion for investing in the technologies that will shape the future — advanced manufacturing, artificial intelligence, 5G, semiconductors.
Take semiconductors, technology that beats at the heart of all things digital. The U.S. semiconductor supply chain is complex and global. Fabrication and assembly are mostly off shored. A bipartisan bill proposed this month would offer matching grants to chip manufacturers willing to build domestic fabs, a line item of some 20 billion for a state-of-the-art facility. Two of the bill’s sponsors are incumbent Texas’ politicians, both ranking members in their respective chambers and both up for re-election this year. In the Senate, John Cornyn (R-TX) is working with Mark Warner (D-VA), vice chair of the Senate Intelligence Committee; in the House, Michael McCaul (R-TX) is working with Doris Matsui (D-CA). China meanwhile, seeing the writing on the wall, is investing huge sums in building domestic semiconductor manufacturing capabilities. The jury is out on the feasiblity of such an initiative but then again, China is a country with a history of moving mountains.
Texas and Austin, of course, were once the site of the semiconductor consortium SEMATECH at a time when Japan threatened American dominance in that seminal industry. In the end, the state withdrew funding, SEMATECH moved north and is no more. So much for long-term vision.
In this mercurial world, it pays to pay attention, particularly to our own hubris. Texas has always been a destination for risk-takers. Hopefully we’ll take the right risks, and Del Valle will finally get its HEB.
Everyone is talking about how things will be. How will they be? I have no idea. What I do know is that people are afraid, which makes them very hungry. Some also feel the need to explain why they’re not following the usual courtesies. Some observations made today, Day 7 of the pandemic:
A man scanning the empty aisles of our largest neighborhood grocery store, “I guess I better come early in the morning. They clear the shelves by afternoon.” Indeed, all the raisins are gone. Ditto the Goya beans, my favorite. Ah! I snag a box of golden raisins, pushed to the back of the bottom shelf. Who are “they,” I wonder, and where are “they” putting all of this food?
Pet food, fully stocked. Should I worry about the cats and dogs? My staple Earl Grey tea, all brands. Gone. And I thought I was surrounded by coffee drinkers.
The checker at the same grocery store. He’s about 18. I try to make him laugh by asking where all the groceries were going. I get a smile as he shakes his head. “I don’t know. Don’t they know things go bad?” Together we wonder when we’ll all settle down, perhaps to a very large shared meal with lots of beans and raisins.
A woman opening the door of the UPS Store with her elbow as I approach sheltered behind a 36-in by 36-in box (the lamp my sister has rejected which I couldn’t return to the store which had closed overnight from the day I called to see if they were open): “I’d open the door for you except for this coronavirus thing.” The door closes just as I reach it. I’m impressed that she explains her actions to me.
Is it time to shop online? Should I worry about the environmental implications of paying Amazon Prime $13/month to bring me tea and raisins instantaneously? What about all those young delivery people who have no health insurance? Perhaps a victory garden in the flower pots on my balcony would work.
Like Scarlet O’Hara, I vow to think about it, not tomorrow, but next week when I run out of greens.
Take care. Be safe, and yes, if at all possible, stay home.
Are you getting the most out of the time you’re spending in meetings? Try Liberating Structures, a set of tools that cultivates a focused purpose and broad participation.
I thrive on early mornings but shun early-morning meetings. For me, morning is thinking time. Even summoning the power of speech before 9 am takes an effort. Nevertheless on Valentine’s Day, I led a group from the Women Communicators of Austin in dismantling their usual way of doing things to try a different approach.
Juggling bowls of oatmeal and cinnamon rolls, we took the bull by the horns and experimented with Liberating Structures, a set of collaborative tools that focuses shared participation on an articulated purpose. In this experiment, the purpose of the meeting was the answer to a question: “What is keeping you from doing what you want to do?”
Harnessing the collective problem solver
Most people approach meetings the way they do weddings and funerals: This is how we do it, making the results predictable. According to the Harvard Business Review, 90% of the people at your last meeting are daydreaming. Seventy-three percent are doing other work. If you care about your time and productivity, it’s a problem.
But we are social creatures; shared ideas and approaches are our secret sauce, the can of spinach Popeye pops open to defeat his arch-nemesis, Brutus. When we harness the meeting format, those shared ideas are transformed into what the New York Times columnist David Brooks recently described as “gatherings” where:
“…traits (like): open-mindedness, flexibility, listening skills, team-building skills and basic human warmth. In this saga, leaders are measured by their ability to expand relationships, not wall them off.”
Too blue sky? Maybe not.
Too much control or too little structure?
The answer to the meeting conundrum lies somewhere between fluidity and control, neither so tightly orchestrated the meeting’s structure sucks the spontaneity out of the discussion, nor so loose it degenerates into interminable chaos. Liberating Structures uses simple exercises based on 10 basic principles:
Never start without a clear purpose
Practice deep respect for people and local solutions
Include and unleash everyone (each person is given equal time)
Build trust as you go
Learn by failing forward
Practice self-discovery within a group
Amplify freedom and responsibility
Emphasize possibilities: believe before you see
Invite creative destruction to make space for innovation
Engage in seriously playful curiosity
What we did: an early-morning example, with oatmeal:
The session began by establishing its purpose, why each of use was there. Because we were a diverse group with different roles and backgrounds, I made it a personal challenge, the answer to my question, “What is keeping you from doing what you want to do?
What followed was a series of linked exercises, each prompted by a question related to their challenge. Participants moved randomly around the room, sharing their challenge with others, deepening their understanding of its nature and sharing commonalities.
To rediscover forgotten resources and insights, each person worked alone, then sequentially with one and then three others, to share a personal success. Finally, we explored, individually and in small groups, what actions can be now to address the challenge. To respect everyone’s time, each exercise was timed.
Monique Carreon, the meeting coordinator, a marketing manager at EOS, a tech startup that uses Agile methodology. Agile is terrific for software development, but it doesn’t solve the problem is giving each participant the opportunity to engage. Monique was completely engaged from our first conversation. We debriefed afterwards here’s what we’ll do differently next time:
Arrange the space for movement and flexibility: This was my biggest oversight. Open space encourages engagement. Finding the room already set up with a single long table, I opted against dismantling it. More space would have made it easier to reconfigure the groups and maximize networking. As a result, although the small groups were active, there was minimal overall group contribution.
Engage everyone equally: I timed the small groups, but I did not time individual contributions. Had I done so, it would have equalized each person’s talk time and more fully encouraged listeners to talk.
Clarify and reinforce the meeting’s purpose: To be valuable, the discussion must tie back to the reason for the meeting. I didn’t brief latecomers and as a result, they were unable to participate fully.
Nothing Ventured …
As WCA member, mentor and attention management expert Maura Nevel Thomas advises, “If you’re a leader, I encourage you to collaborate with other managers to take a fresh look at how you handle meetings.”
Liberating Structures is a living online collaborative. Over 30 structures are posted on the website, ready for application. If you have a virtual team, try using it with Zoom! for team meetings. Questions? There is a dedicated Slack channel. LS is used by the Gates Foundation, the World Bank, the U.S. Army, IBM, many nonprofits, and just maybe — you. Meetups and collaboratives are alive worldwide, so check it out:
Giving up a habit, even such a small one as that morning cup of tea, can lead to a re-evaluation of our very habits of being. It’s a process that requires deciding who you want to be, paying attention, and getting help.
I had no idea I could learn so much from a cup of tea.
For decades, I’ve started my day with several cups of black tea so strong my friends consider it coffee. The tea, doused with creamy local milk, has been my kick start. I’ve also had, unpredictably and without any direct relationship to the tea, chest pains, vertigo and diminished energy. I blamed it on allergies (allergists outnumber mosquitoes in this town). But in December a test result prompted a call from my doctor who received a dose of reality: I inherited my father’s heart condition.
“Remember, getting sick is the first step in getting well.”
My friend Jessica Buckley
The fatty milk I loved to put in my tea had to go; in fact, the entire dairy section had to go. I dithered. I rationalized. I delayed. It took hours in waiting rooms full of people with their next-of-kin and a litany of tests costing as much as a Tesla, to convince me my morning tea habit was not worth the price.
One habit leads to another, and pretty soon you have yourself
Which got me thinking: If I don’t need the milk in my tea, what else do I no longer need? Why do I have a storage unit full of the past? Social obligations that are a duty, not a boost? Why have I let misunderstandings fester with siblings, friends and colleagues?
The easy fix would be to reduce the milk and clear out the storage unit, but the point is much bigger. If this collection of habits define me, which ones do I actually need to move forward? Is this the me I want to be? And do I have the guts to change?
The rule is to start small. I’m starting with — and I know it sounds silly — my fear of not getting my morning tea and milk. If I can give up my milky tea, will it give me the courage to examine those other habits crouching behind fortresses of defensiveness, vanity and just plain ole fear.
To be undone by fear is a sad thing. Why not try something different?
Pay attention and re-evaluate
We don’t pay attention, particularly to ourselves.
Again, the rule is start small. The first step is to pay attention to our bodies, so that when they falter, as the will, we can take corrective action. Consider my friend Sherida. We met for an early dinner, in the late afternoon when the blue-hairs gather. I asked her how she was able to leave work so early, and she told me she was taking iron infusions for severe iron anemia. She’d missed her annual check up for “two or three years,” which required her body to steadily adjust to lower and lower levels of iron.
“I didn’t notice anything,” she explained. But then there was that daily nap, constant nibbling and those shadows under her eyes. She didn’t have the time to pay attention until she was pulled up short by her doctor. “You’re a go-go woman,” she reported, “all go and no pause.” No quibble there. Sherida works a full-time job, takes care of a bi-polar son, is active socially and sings in her church choir.
But if we aren’t paying attention to the bodies we live in, how can we pay attention to our habitual reactions to angry colleagues or, heaven forbid, family members. Absent facts collected through observation, we can’t draw conclusions. We can’t get help, and we can’t change.
“Paying attention …makes room for the views of others. It allows us to begin to trust them — and more important, to hear them. It makes us willing to experiment, and it makes it safe to try something that may fail. It encourages us to work on our own awareness …It requires us to understand that to advance creatively, we must let go of something.”
Ed Catmull, Creativity Inc.
If you take care of someone else, as almost every woman I know does in some capacity, you are in the danger zone. Caregiving is the gold standard of absenting oneself from oneself. It is a selfless act and a necessary one. But unmonitored, it also extols a high price. Caregivers, particularly family members who care for elderly relatives, can find their own lives diminished financially, socially and physically.
The typical family caregiver is a 49-year-old woman caring for her widowed 69-year-old mother who does not live with her. She is married and employed. Approximately 66% of family caregivers are women. More than 37% have children or grandchildren under 18 years old living with them.
I learned this the hard way. I put my life on hold for over a decade to take care of first my dad and then my mom. When my mom died and it was time to return to the job market, I was paralyzed. The habits and routines I’d built around caregiving left me unprepared to resume my own life. I didn’t know who I was anymore. I hadn’t been paying attention.
I’m a big fan of Reboot’s Jerry Colonna. I met Jerry when he was an editor of one of the leading technology magazines in New York. He later became a successful venture capitalist, burned out and is now an executive coach who helps the CEOS of start ups chart their path through “radical self inquiry.” His message is foundational to anyone who wants to lead a successful life: “Who have I been all my life? Who do I want to become?”
“The notion is to recognize that if things are not okay, if you’re struggling, you stop pretending and allow yourself to get help. Even more, it’s the process by which you work hard to know yourself — your strengths, your struggles, your true intentions, your true motivations, the characteristics of the character known as ‘you’.”
“How do we get the things out of the way that are barriers to being productive?”
Which takes me back to my friend Sherida. Sherida was raised her grandmother in Mississippi, and she laughs as she tells the story of how her grandmother taught her to make her own decisions. When she was about 10, Sherida decided to fake an illness to get her grandmother’s attention. The only pills she could find in the house were in a bottle of Midol. She poured them onto the table and waited for her grandmother to come home. When the door opened, Sherida grabbed a handful of pills and pretended she was going to swallow them.
“Go ahead, child, take those pills. They’ll either kill you or leave you deformed.” With that, her grandmother walked away. Sherida put the pills away.
So here I am, sitting with my cup of morning tea which today is black tea with soy milk. Tomorrow? Who knows. But this I know: the future is staring me in the face, and I better be prepared.
“Send them back” is an echo from the first Americans, the Native Americans , whose Ghost Dances were the inspiration for Jeffrey Gibson’s stunning “This Is the Day” exhibit which challenges us to rethink our culture and traditions for a new time.
Walking through Jeffrey Gibson’s extraordinary installation, “This Is the Day,” you hear an echo: “Send them Back.”
Gibson, a gay Native American artist, draws inspiration from the Ghost Dance Movement of the 1890’s, a religious movement that united the Plains Indians in the hope their rituals would banish the white settlers and the U.S. government from their lands.
In one of America’s blackest moments, the tribes’ community terrified the U.S. Army. Fear trumped any better angels, and we are left with the massacre at Wounded Knee.
But this is not the story Gibson tells. He invites everyone to the party, mixing old trading post blankets with Biblical verses and lines from pop tunes. He moves us forward.
“Somehow the past has to situate itself within the present.”
“This Is the Day” asks us to come up with a better ending to a story riddled with fear and racism.
Stories can conquer fear, you know. They can make the heart bigger.
“This Is the Day” is at the Blanton Museum of Art in Austin, Texas through September, courtesy of Hamilton College’s Wellin Museum of Art. All the photographs are courtesy of Jeffrey Gibson and the Wellin Museum.
Five business leaders walked onto the stage of the Texas-EU Summit to talk about managing transatlantic businesses. Two run European units based in the United States; two developed European units of U.S. practices; and one has done it all. Four wore stilettos.They didn’t have much time, and they had something to say. Not one wanted to be called out for her gender, and not one considered that remarkable.
The hardest thing: Finding and keeping talent
Without question, the biggest challenge confronting a European company in the United States is finding and retaining talent. “Americans’ resumes look great, but you have to train them,” said Belen Marcos, president of Cintra US, one of the world’s largest private developers of infrastructure. Marcos, an engineer by training, noted that in Europe educational credentials are paramount. Americans job-hop more than European hires. They tend to specialize and resist working in areas outside their specialty.
“Europeans are generalists. They expect to do many different jobs.”
Belen Marcos, president, Cintra US
Navigating European statutory regulations
Disruptive business models challenge both business and cultural norms. Consider the vacation rentals that have turned many traditional neighborhoods into latchkey hotels. Cristina Silingardi, a Brazilian with deep finance experience, helped Austin-based HomeAway successfully navigate the sticky process of integrating acquisitions in both Spain and Brazil.
“Understand the statutory regulations before you do business … It went off without a hitch.”
“Contracts are part of the law in Europe,” said Liz Wiley, an attorney and partner, Grable Martin Fulton PLLC. who specializes in intellectual property.
“Very little if anything can be negotiated (in Europe). Expect negotiations to take much longer.”
Belen Marcos, president, Cintra US
Marcos knows a thing or two about the subject. Her company Cintra is part of the Spanish infrastructure provider Ferrovial. She and her team negotiate the construction and long-term management of roads, airports and concessions, many of which are public-private partnerships.
Codes vs. negotiation. Consider privacy.
Europe is not a monolith. Both EU and country-specific regulations come into play when determining who owns what. For example, “the EU has the General Data Protection Regulation (GDPR), but France has its own data protection authority, the CNIL, which handles GDPR complains and defends the French position with GDPR-related issues,” said Wiley
“The United States is not a code country,” commented Wiley, “We make our own deals.”
Liz Wiley, partner, Grable Martin Fulton PLLC
Wiley, whose practice includes both French and American startups, recommends first filing for U.S. patent protection, then filing in other countries to ward off infringements.
Soft skills matter
“When in doubt, err on the side of formality,” advises Wiley. And in the hurley-burley world of entrepreneurs, she recommends oral presentation training for cautious French startups that compete in the winner-take-all American pitch culture.
Sharon Schweitzer’s company, Access to Culture, cross trains business people to be effective in other cultures. Recounting an incident where two older Czechs silenced their giggling younger colleagues with a steely glare, Schweitzer said the significance of a seemingly minor incident caught her by surprise.
But do high heels also matter?
The specter of political change is everywhere. Here too, dress is brand. This year’s Yellow Vest protests revealed the deep divide between France’s privileged class and rest of their country. As I’m writing this, on the other side of the world, young people in Hong Kong wear black and mourn a man in a yellow raincoat.
Remember Mark Zuckerberg’s testifying before Congress, stripped of his signature t-shirt and uncomfortable in a blue suit? Melania Trump in a white pussy-bow blouse and sky-high heels? Dress is political, and high heels stand unrivaled as a symbol of gender and power. Flip flops may reign in U.S. youth and tech enclaves, but search “business women” and you’ll find women in power in wearing heels — because they choose to.
In another culture where talent and a diverse work force weigh heavily on its future competitiveness, Japanese women unsuccessfully petitioned their government to ban gender-based dress codes (#KuToo), and specifically high heels. My guess is there’s another shoe to drop there.
In 1869, men in the Wyoming Territory needed wives. Politicians in Washington needed more voters in the Western territories. So Wyoming gave women the vote. John Morris wrote to a national magazine promoting women’s suffrage:
It is a fact that all great reforms take place, not where they are most needed, but in places where opposition is weakest; and then they spread.
John Morris, following the Wyoming Territory’s decision to give women the vote
“To be sustainable, change takes time,” Wiley noted. Would this panel have happened 30 years ago? 20? Maybe.
With that thought, I’m pulling out my high heels to wear sometime soon.
Hats off to Ana-Barbara Llorente and Pendas International, for sponsoring the panel, and the World Affairs Council of Austin for hosting.
When is fear a valid reason for protectionism? At what point does openness become bad business and a national security concern? David Firestein, the executive director of the China Public Policy Center, stopped by the “World Spins” to remind us that relationships make the world go round, and punitive tariffs don’t win trade wars.
David Firestein dropped by last week’s “World Spins” session to reassure us that at about $1 trillion, give or take a few million, the U.S.-China trade relationship is too big to fail. But he had some thoughts on where we’re taking it.
Firestein‘s credentials in U.S.-China relations are wide and deep — the State Department, EastWest Institute, and now, president and CEO of the George H.W. Bush Foundation for U.S.-China Relations — in addition to his role in academia launching the LBJ School of Public Affairs’ China Public Policy Center.
Perceptions of growing authoritarianism
“China’s rising authoritarianism colors U.S. views in a profound way.”
The Uighur minority and the telecom giant Huawei are the poster children of American perceptions of China, prompting national security concerns that have underpinned both the administration’s trade narrative and domestic regulatory actions. On the heels of watching China use facial recognition software to persecute the Uighur and other Muslim minorities, San Francisco banned the technology. Last week those same concerns spread to Washington, bubbling up at the House Committee on Oversight and Reform.
Blacklisted by the administration, Huawei typifies China’s state-supported hybrid economy. The telecom giant sits on a deepening Maginot Line between the Internet of the East and that of the West, drawing a line between American interests and increasingly, everyone else’s.
“In public and private statements, American intelligence officials and telecommunications executives and experts have begun to concede that the United Sates will be operating in a world where Huawei and other Chinese telecom companies most likely control 40 percent to 60 percent of the networks over which business, diplomats, spies and citizens do business.”
There’s a silver lining for Big Tech. Nothing unites like a common enemy, and China has provided Qualcomm, Facebook, Google et. al. with a new “America First” narrative to relieve regulatory threats.
The missing quid pro quo
“China is vastly more closed to us than we are to them,” Firestein said. “When someone from China gets off a plane in San Francisco, they have immediate access to their email through WhatsApp. But an American landing in Beijing can’t access their Gmail.”
For an administration determined to deliver on its “America First” campaign promises, protecting America from China is a top priority. Vice President Mike Pence’s watermark speech at the Hudson Institute frames the U.S. response to Chinese “economic aggression.”
With China, all silk roads lead to intellectual property. In the absence of any Chinese quid pro quo to American openness, in 2018 the administration has expanded its powers to protect domestic technology from foreign investment. The Treasury Department’s Committee on Foreign Investment in the United States (CFIUS) began to block mergers and acquisitions considered a threat to national security. The Export Control Reform Act (ECRA) and the Foreign Investment Risk Review Modernization Act (FIRRMA) are charged with protecting tech sectors that map with its “Made in China 2025” strategy — advanced manufacturing, artificial intelligence, self-driving vehicles, semiconductors and telecommunications.
Applying worst-of-breed practices
Unintended consequences abound. The ban on Huawei network technology hits rural areas the hardest because the small network providers have to swap out cheaper Huawei equipment for more expensive offerings. And faced with its American supply chain being cut off, China will accelerate its build-your-own strategy, a trend that is already impacting U.S. tech companies’ stock prices.
Which brings us to where Firestein breaks rank. A trade strategy based almost exclusively on punitive tariffs has penalized American producers by eliminating lucrative markets, disrupted supply chains and cost consumers at check out.
“The United States is adopting “worst of breed” practices that are destructive to the economy … Our trade deficit with China is the largest good and services deficit dating back to 1776.”
Nowhere is the cost of the trade war more obvious than in the agricultural sector. Last week at a “hats on” event, President Trump announced a $16 billion farm aid package in a robbing Peter to pay Paul strategy to offset farmers’ losses with taxpayers’ dollars.
In fact, tariffs can make industries less competitive.
It breeds a kind of laziness here,” said Simon Lester, director of the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute. Tariffs are taxes on outside goods, so they inherently protect some U.S. businesses from foreign competition. “You don’t have to compete with the best in the world you can just relax you don’t have to work that hard and face any competition,” he says.
Despite the national security narrative, the relationship between China and the United States is not about military might. Certainly, the U.S. technology industry is rooted in federal defense funding, and the Department of Defense continues to fund innovation. But this is a 21st century struggle not a 20th century one. China’s goals are economic.
“Military interests are a function of power. China is building its military to define its power … But let me assure you, China has no interest in becoming the world’s policeman.”
Relationships make the world go round
The conversation closed with a reminder that relationships grease the wheels that make the world go round. Firestein brought up a flash point from his first few weeks in Austin when two U.S. Congressmen, a U.S. Senator, numerous professors and the University of Texas student newspaper protested an offer from the Confucius Institute to make a donation to the CPPC. Firestein noted, however, that the United States has similar practices, and that in the end:
“Relationship matters. We have to get it in sync.”
What does the future look like?
A year ago, Firestein cautioned that competing with China was like a no-holds barred cage fight in wrestling. China knows what it wants its future to look like. State control provides a longterm planning horizon. It has a clearly written industrial strategy, state funding and a non-interference strategy with its people. The United States operates from tweet to tweet. As for a strategy?
In the end, we’re going to have to step up and compete. China is not our enemy but it is our fiercest competitor.
David Firestein, in a May 2018 talk at the “World Spins”
In the not too distant future artificial intelligence, autonomous vehicles, advanced manufacturing, semiconductors, telecommunications will shape not just American competitiveness but what our world will become. Even the current administration, loathe to cooperate on much of anything, went so far as to endorse a set of international AI guidelines sketched out by the Organization for Economic Cooperation and Development. To echo a comment made by Senator Richard Burr at the University of Texas’ Fifth Annual Texas National Security Forum:
If we don’t create a framework for this technology, who will?
Senator Richard Burr, chairman, Senate Select Committee on Intelligence, Nov. 2018
Titanic trade clashes, Chimerica, Huawei,’s blacklisting, theft of intellectual property — oh my! As the trade war with China intensifies, Tyler Johnson’s “The Way of the “Laowai” reminds us that international business is an art; opportunity, a matter of perspective.
In the titanic trade clash between China and the United States, Tyler Johnson’s is a calm, sane voice. But then he is a businessman, and businessmen get things done. Johnson spent the go-go years between 2005 and 2015 growing Dell’s Asia-Pacific business. He saw the blossoming of Chimerica and now, on the cusp of what is starting to look like a nasty separation, reminds us there is an art to conducting business with another culture.
What he learned is the subject of a new book, The Way of the Laowai, a testimonial to taking a global perspective. (Laowai means outsider or alien in Mandarin.)
Take note, America: The self-selected attendees at Johnson’s “World Spins” talk were almost all Chinese. As one explained, “I want to learn how you think American companies should compete in China, from your perspective.
The scale of the trade clash is enormous, and the stakes are high.
China is the world’s most populous country. Its breakneck development over recent decades has added hundreds of millions of consumers to the global marketplace while supplying a vast assemblage of low-cost goods… It is the source of roughly one-third of the world’s economic growth.
Separating business from policy is a sticky wicket, especially when two radically-different cultures have bound themselves so tightly together economically. As Li Yuan, the New York Times New New World correspondent wrote :
The two sides have plenty of reasons to distrust each other. The United States blames China for heavy job losses, theft of corporate secrets and cheating at the rules of global trade. China credits the hard work and sacrifices of its people for its success and sees the trade war as driven by American fears of a prosperous Chinese nation. (Photo/Doug Mills, The New York Times)
But in the end, business is business, and sometimes getting things done requires a “whatever it takes” approach.
In China, government initiatives drive almost everything. It’s important to understand those initiatives and analyze how they figure into your business model. The more you understand what the government wants, the more likely you’ll be aligned …
A laboratory for future innovation
Over the past 25 years, China has become what Oppenheimer Funds calls a “laboratory for future innovation” for U.S. companies. Big Tech-funded R&D centers place scientists from both countries side-by-side to crack breakthroughs in pivotal data-intensive areas including artificial intelligence and cloud computing. Microsoft Research Asia (MSRA) funds basic research in AI. Google opened an AI lab in Beijing and has a research alliance with Tencent on cloud services. Jeff Ding, a graduate student at Oxford and the force behind the China AI newsletter, is well worth following for a deeper understanding of cooperation between the two countries in R&D and technology (AI) commercialization.
But there are concerns. M.D. Anderson Cancer Center in Houston recently severed ties with three scientists over their ties to China and policy violations with research grants from the National Institute of Health. Writing in The New York Times, Mihir Zaveri noted that a report commissioned by the N.I.H. also mentioned that 39 percent of the Nobel Prizes in physics, chemistry and medicine won by Americans have gone to foreign-born scientists.
Data, ethics and national security
Research spawns innovation and ethical (cultural) concerns. The facial recognition technology that San Francisco banned out of fear it would be abused by the city’s police, is being used in some form by companies in China to save pigs from the devastating spread of untreatable African swine fever — and allegedly to suppress minority populations.
“Today’s battles are all about data, how you get it, who has access to it, and who you can share it … With 1.4 billion people (and limited enforcement of privacy laws), there is plenty of data in China.”
Then there’s national security. At an intelligence forum sponsored by the University of Texas earlier this year, Sue Gordon, the principal deputy director of National Intelligence, acknowledged the reality of concerns over “dirty networks.”
“We have to figure out a world with diverse technology we can’t control.”
Sue Gordon, Principal Deputy Director of National Intelligence
Huawei, the subject of Gordon’s reference to “dirty networks,” is a stunning case study in whether a Chinese company, genetically bound to its government, can thrive as a global technology company. Huawei has made it a point to develop an entrepreneurial culture based on best-of-breed Western business processes.
“Only by learning from them with all our humility can we defeat them one day.”
But its blacklisting by the Trump administration is having a trickle-down impact. Just yesterday, Reuters announced Google restrictions on Huawei customers’ purchases of its proprietary offerings, a move analysts expect will hit Huawei’s European business hard.
A big world full of opportunity
At the eye of this hurricane, The Way of the Laowai is a reminder that opportunity is a matter of perspective.
There are roughly 196 countries in the world and close to 800 billion people. That’s a lot to wrap your brain around. Each of these countries is complex in its own way … In every location you want to do business in, you need a grasp of these particulars. In each place, business needs to be conducted differently… The world is big and full of opportunities if you can keep your perceptions in place.
As proof, Johnson proudly brought along his smart, confident 13-year old, Mandarin-speaking daughter Reese, a living demonstration of all there is to be gained from learning the ways of another country. Indeed, she corrected him several times.
The March 29 deadline for a Brexit go now/go later/no go (unlikely) is around the corner. Despite some defections, especially in fintech, many U.S. companies are opting to stay. The tragedy has spotlighted two leadership flaws: the hubris in calling for a referendum and the inflexibility in dealing with it.
As I made my way to the Capital Factory, that go-go hive of entrepreneurial-ism in the center of Austin, to hear what the U.K. Dept. of International Trade had to say about Brexit, I thought about a University of London marketing class I took years ago. The professor, a Scot, turned to a world map. He drew a line between Europe and the United Kingdom. Then he drew an arrow across the Atlantic pointing toward the United States and made a prediction: At some point, the British will break away from Europe and join the United States in an economic block. Prescient fellow.
Borders, walls and disagreements
It takes guts to tell your story when the facts aren’t clear, but the U.K. team did an admiral job. Representatives from the British Consulate’s Department for International Trade, law firm Taylor Wessing and accountancy Blick Rotherberg were optimistic that even the Irish border conundrum could be resolved — at the last minute (“That’s the way Europeans do things.”).
It was one day after Parliament sent Prime Minister Theresa May once more into the breach of negotiations with the European Union, and less than a week after Congress reached an agreement to pause the longest government shutdown in U.S. history so our elected officials could settle a disagreement about a wall between neighbors.
Do we stay or do we go?
Ross Allen, the New York City-based director at the U.K. Department for International Trade led the discussion, reminding us that the United Kingdom has a special relationship with the United States. The two countries are genetically linked — in language, history, laws and culture — and those commonalities matter a great deal.
Data Privacy: Privacy continues is a hot button for the U.S. GDPR is in place in the U.K., as is Privacy Shield. Regulation is a moving target, but there is a common foundation.
Business Headquarters: “Pragmatism” is the operative word. Considerations such as degree of industry regulation, the need to move people around Europe, the size of the organization, labor laws and tax rates all factor into a decision.
Regional Differences: London will continue to be its own country, as are all great cities. But other regions, particularly the north, where businesses that rely on international supply chains will be hit hard – Leeds, Northern Ireland, Wales. I read this morning that U.K. automotive production declined 8% in 2018, as investment plummets and jobs disappear.
Trade: Separate trade agreements are in the works with Israel and talks are underway with South Korean and Japan.
Defense: NATO, an intelligence community that’s joined at the hip.
Worst case scenario? On March 29, Parliament decides not to decide. A second referendum to stay in the E.U.? Too late and too expensive. Unlikely.
“I am England”
Every muddle has its heroes, and I asked Vice Consul Haileigh Meyers and her Silicon Valley-based colleague David what they thought about Prime Minister Theresa May.
She (Mrs. May) is a true public servant, and she realizes she needs to get this done. She’s driven by a commitment to public service.
UK International Trade and Investment British Consulate-General
Imagine taking a job that no one else wants, a job that brings you defeat and humiliation by even your closest allies. Imagine sticking with that job as other opportunities more to your liking and skill set pass you by. If you haven’t read the New Yorker piece on Mrs. May, do. Here’s hoping Queen Elizabeth, another woman who knows a great deal about sacrifice in the name of public service, can offer guidance from her own long tenure as leader of a nation that faced and dealt with dwindling political and economic power.
Closing the session, Allen tossed out a provocative idea: “What if it’s just like Y2K, and we wake up and nothing happens?” Some of us remember the panic that preceded the turn of the century hysteria about whether networks and data centers could tolerate the transition between “1999” and “2000.”
After the session, I rode down in the elevator with Drew Haas, who is moving to London next week to open the U.K. office of San Saba Pecan. They have a warehouse outside of York, and Drew will be growing the business in Europe, where almonds are vulnerable to some stiff Texas competition.
POSTSCRIPT: Inflexibility: The flip side of determined leadership?
UPDATE March 18, 2019: The BBC reports Mrs. May will try to get her proposal passed after two rejections, something the now-famous House of Commons Speaker John Bercow has ruled as a no-go unless there are “substantive changes” to the proposal. Will Mrs. May charge into the same brick wall once again?