Uncategorized – Chrysanthemum Marketing

Semiconductors, China and Us

A friend observed that Elon Musk is remaking Central Texas with companies that bore (rock), move (electric trucks), launch (space ships), and link (your brain). And yes, it seems that the South African native opted for this most business-friendly of states over progressive California.

He’s not alone.

South Korea’s Samsung is negotiating a $17 billion expansion of its existing fabrication plant, or fab, Samsung Austin Semiconductor. The new fab will make logic chips, a more profitable product than the memory chips its made here for the past 25 years, and expand the company’s foundry business. Perhaps most important, it will do all of this closer to its U.S. customers.

With a national unemployment rate flirting with 8%, semiconductor manufacturing jobs pay about twice those in the rest of the manufacturing sector, feeding those middle rungs of the pay scale ladder where the middle class lives (or would like to live). Samsung’s new fab, for example, is expected create 1,900 jobs that pay an initial average annual wage of $66,254.

Semiconductors: Technology’s anchor store

Semiconductors, or microchips, are the technology food chain’s anchor store, the building blocks for advanced technologies that will run our factories, manage our cities, develop and deliver our medicine, re-shape education and the workplace, and keep us safe.

Semiconductors are the tiny chips that serve as the brains behind your toaster, your smartphone, all the way to fighter jets and in the very near future, they will serve as the brains behind the innovations of tomorrow such as 5G, quantum computing and artificial intelligence.
U.S. Representative Michael McCaul, ranking member, Foreign Affairs Commitee and Chair, China Task Force

Today about 90% of high-volume, leading-edge integrated circuit production in this made-in-America industry takes place in East Asia –Taiwan, South Korea and the People’s Republic of China. Although the United States remains the market leader in worldwide sales, the pandemic and a testy relationship with China have shaken both U.S. dominance and its confidence in the complicated, globalized supply chain and foreign markets those sales rely on.

There’s always a bit of machismo in dominating an industry, but also a real recognition that the ready availability of semiconductors is essential to both to national security and the future of America’s role in technology. Like sensible parents, microchip companies and policy makers want to bring some of that production closer to home. Of course there is a price to pay. According to the Boston Consulting Group, it will take $50 billion provided over 20 years to raise the United States from its #4 slot to #2 in domestic manufacturing production. Twenty billion will keep us at #4. By way of comparison, China is investing $170 billion in semiconductor independence.

About that global supply chain

The federal government has nurtured the semiconductor industry since its inception. The last time a foreign threat to U.S. dominance appeared, it bankrolled an industry consortium called SEMATECH right here in Austin. To underscore the importance of its mission, members installed no one less than the co-inventor of the microchip as chief executive.

There are those that ague against adopting anything akin to an industrial policy, but consider how integral semiconductors are to the drones, weapon systems and monitoring devices central to our national defense. Then consider the panicked workarounds that would be needed should supplies be disrupted. As if those risk scenarios aren’t enough, the biggest hack in U.S. history, also made here in Austin, was discovered in late December after months of burrowing undetected into the workings of both the public or private sectors. The 2020 Solar Winds Breach was a supply chain hack, perhaps through software maintained in Eastern Europe.

A time for enlightened partnerships

The semiconductor industry has shown a remarkable ability to develop ways to collaborate on common problems. SEMATECH skirted proprietary intellectual property issues and settled on a strategy of solving common manufacturing problems that would result in more efficient, effective manufacturing processes.

Not that supply chain concerns are restricted to the United States. Europe doesn’t want to depend on the United States or Asia. China doesn’t want to depend on the United States, and South Korea doesn’t want to depend on Japan, which doesn’t want to depend on South Korea. So depending on how you look at it, the field is ripe for geopolitical gamesmanship – and enlightened alliances.

As Samsung negotiates its plans in Austin, Taiwan-based TSMC is breaking ground on a $12 billion fab in Phoenix. Both Taiwan and South Korea are U.S. allies; both live in dangerous neighborhoods; both are manufacturing powerhouses, hosting respectively 36 and 24 operating fabs. In addition to its Austin fab, Samsung has six fabs in China and is reportedly repatriating its semiconductor supply chain. It closed its China-based smartphone factories in 2019 over intellectual property concerns.

Semiconductors are the tip of the iceberg.

The federal government is doing its part in maintaining a robust tech sector, its battles with Big Tech aside, passing the 2021 National Defense Authorization Act, thanks to the efforts of Congressman McCaul (R-Tx) and Doris Matsui (D-Ca) in the House, working with Senators John Cornyn (R-Tx) and Mark Warner (D-Va). The NDAA, which still needs to funded by Congress, provides incentives, grants and credits research and development and domestic fab construction.

But semiconductors are only the first rung of a technology food chain that creates industries that in turn create jobs, opportunities and living wages for real people and their kids. With geopolitical gamesmanship the name of the game these days, it’s a good time to look ahead, learn from not only the past and “our most serious competitor.”

Allies and immigrants: We get the job done

Which brings us back to Elon Musk.

Musk’s relationship with China transformed Tesla into a stock market darling and Musk into the world’s richest man. Tesla is a case study in using the anchor store concept to build supply chains. The all-important batteries that power Tesla EVs are made locally by Chinese manufacturers not the Tesla battery factory in Reno, Nevada. The romance may not last, but there’s a lot to learn from it.

Does Elon Musk answer to anyone? Turns out, the answer is yes. Take a look at the language Tesla used in response to the Chinese regulators inquiring about quality issues. In a filing, the company “sincerely accepted the guidance of government departments,” and “deeply reflected on shortcomings.” That’s a far cry from Musk’s belittling the SEC as the “Shortseller Enrichment Commission,” or telling U.S. auto regulators its rules are “anachronistic,” or attacking California health care officials as “unelected and ignorant.” Pretty clear where the power lies these days.
Alan Murray, CEO Daily, Fortune

Tesla’s Gigafactory in Shanghai, built in record time with $1.4 billion low-cost Chinese loan and a $1.6 billion infusion when Covid-19 hit. The factory uses locally-made batteries rather than those from its U.S. plant, building and strengthening the Chinese supply chain for EVs. (photo/dw.com)

The Pandemic, Jobs and Human Dignity

Magical thinking gets us through what seems unendurable — grief, pandemics, subjugation, airplane flights. But now is not the time for it. We need to be sharp and practical to build the future we want for our ourselves and our country.

When the shelter-in-place-order hit, lacking medical skills, I pitched in to help with the collateral damage — an avalanche of unemployment applications. The experience has given me a catbird’s seat on the future of the job market here in Texas, home of the Texas Miracle, and it is not a rosy picture.

In Texas, jobless claims top 2.3 million

I’ve been without work more than once, and I can assure you it is no fun. Take away the job, the income, the camaraderie (even when it drives you nuts) and what’s left? Those of us lucky enough to have an education, skillset and professional network will probably be okay. Otherwise, we’re in trouble.

I’ve sorted applications from oil workers in south and west Texas, Louisiana, and New Mexico; substitute teachers, restaurant and fast food workers, millwrights, puppeteers, musicians, pipeline consultants and business process engineers, cosmetologists, travel agents, dentists and their hygienists, retailers, financial planners and anesthesiologists. Their names have the ring of Africa, China, Vietnam, Japan, the Middle East, Mexico, Latin America, rural Texas, the Ukraine and Poland.

“I work for pennies, not hours”

Early on, I opened an application with a handwritten note. Written in block letters by a deck hand on a shrimp boat, it said,”I work for pennies, not hours.” There was no self-pity, just the facts from a man with four kids and a third-grade education. A laborer from Donna, Texas, was out of work because he unloads onions from Mexico. Take away the trucks, and there is no job. The pandemic anticipates his future. As autonomous driving and robotic technology develops there will be no need for him.

Consider a 30-year old former Lyft driver with a wife and a four-year old son. When we met in April, he was taking three classes towards a career in cyber security without really understanding what working in the field would entail. He worked 10-hour days, six days a week while taking three classes, found he couldn’t pay his rent, became discouraged and dropped out of school.

Accessible, hands-on approaches with a global outlook

Disasters crack open change, and the pandemic may very well re-shape education to address reality. Instead of competing to get into a high-cost university to realize her dream to become a veterinarian, my friend Cherie’s daughter enrolled at Blinn College where after a couple of years, she’ll be able to transfer seamlessly into Texas A&M University and enroll in one of the best veterinarian training programs in the country.

Austin Community College will soon have four incubators where students get hands-on experience in their future careers. Bioscience, gives students access to a wet lab, which until recently was hard to find in Central Texas. The Fashion incubator features a huge 3D printer for designers and makers, and Entrepreneurship jump starts budding small businesses, something we’ll need in coming months.

A fourth, advanced manufacturing, will train students to use the sophisticated design equipment and processes that produce semiconductors for the factory and consumer of the future, chips that will take advantage of 5G and the Internet of Things. Graduates will be qualified to fill well-paying, high-demand openings at local employers Samsung, Advanced Micro and AMD.

Widening the lens to see the world

Even more remarkable may be an award-winning project at Del Valle High School, a chronically underserved community in the shadow of the Austin Bergstrom Airport.

Using Zoom and a partnership with the World Affairs Council of Austin, the Global Scholars Diploma program connects students with policy experts around the world to explore racism, immigration, climate change, global infections — issues that will shape their future. At left, these young women welcomed me when I visited to watch a regularly-scheduled moot court session with University of Texas law students.

Del Valle and Mike Cunningham are not taking a traditional approach to education. Working on a shoestring budget and leveraging local resources, the program teaches its students to think. It encourages debate, tests opinions, builds confidence and the patience to listen to other views. It nurtures participation, an understanding that the world is bigger than our own backyard, and a sense of a human responsibility that transcends the day-to-day.

Nurturing human dignity

Among Yuval Harari’s many provocative writings is a statement that humans have evolved too quickly to develop the dignity shown by the large predators of the past, who both ruled and served.

Needless to say, we’re not doing a very good job on the dignity front. We murder one another in the name of law enforcement. We brutalize the wildlife that shares the planet with us in the name of “sport.” We deport sick young immigrants who have contracted Covid-19 while in federal detention, transmitting the virus to their home countries.

Dignity is a big concept on which everything we call civilization turns. Our sense of human dignity determines our self respect, which in turn determines how we treat one another, the planet we rely on, and the beings we share it with. It’s difficult if not impossible to maintain our dignity if we lack the training or education to get a job that supports our children, if we’re too sick or obese to endure a full day’s work, or if other people look down on us because we can’t communicate effectively.

Education will not address all of our problems. But it is part of the baseline. Our world is trending in a direction that reflects more of the East and less of the West that defined the last century. If we are going to change direction, this is a moment of full of possibility. Just recognizing the opportunity and working towards a better future would be a fine thing. Because if we don’t do it, who will?

Never Waste a Good Crisis

The word crisis has its roots in the Latin krisis, to separate, a reminder to step back and take a more objective look at our habits, expectations and momentum. Our world is shifting on its axis: Covid-19, an price war between oil giants, Meghan and Harry. It’s a time to reevaluate.

The Duke and Duchess of Windsor head to Vancouver, striding off one stage and onto another, uncharted one. Frank Augstein/Associated Press

We’re being nudged, gently and not so gently. It’s quiet here in Austin, Texas. Typically at this time of year, the city is buzzing with SXSW. Residents rent their houses and pack up for Paris or Rome. Austin becomes a mini-Las Vegas, full of celebrities, adrenal rushes, music, deals and futurist thinking. Not so in 2020. This year we’ll take a different, as yet unknown approach.

Yesterday I had a phone interview with a prospective client looking for someone to plug in for a team member out on leave. Her questions were smart and focused: what value do you bring? But it wasn’t until afterwards that I acknowledged her critical thinking. Okay, so you’re different. How will you improve what we do and how we do it? Think more about us, and less about you. Hmm, a timely reminder.

Chatting with my neighbor Mohamed, the conversation turned to — the stock market. I asked him how old he was in 2008 when the Great Recession unfolded. He was 18, a freshman at Rice University in Houston. He’s morphed from a statistician (oil), to a sales analyst (software), to an entrepreneur. Now he tells me he’s where he wants to be, in technical sales. So far, the unknown doesn’t phase him. He’s unashamedly optimistic.

Off and on for the past month, The New York Times has advised practicing optimism. Yes, optimism, like abs, can be toned. And similarly, there’s value there. When we’re optimistic, more possibilities bubble to the surface.

Experimentation is risky. But at a certain point, remember, we are a very lucky in many, many ways. What have we got to lose by smiling and taking a new approach?

Trading the Eagle for a $ Sign

The eagle is America’s canary in a coal mine: As global warming accelerates, the agencies in charge of managing its impacts on our health will no longer issue clear-cut guidelines to protect Americans from life-threatening pollution and habitat loss. Rather, the government has decided to take a case-by-case approach to protecting us, our land and the animals we share it with.

When you reach the mezzanine of the LBJ Presidential Library as I did recently, turn, and you find yourself dwarfed by an immense presidential seal. At its center is the bald eagle, the symbol of both the United States of America and the office of its president. The scale and power of that symbol take your breath away.

But the eagle, tagged as the Endangered Species Act’s greatest success story, has fallen out of favor. Our government has decided to measure its value on the open market and reward the highest bidder.

Monetizing the environment

Bald eagles live in trees along waterways where they can nest and fish. Wetlands, prized by developers and vulnerable to hurricanes, droughts, floods, effluence and all manner of disruptions, are rich, bio-diverse ecosystems the EPA compares to coral reefs and rain forests noting, “More than one-third of the United States’ threatened and endangered species live only in wetlands, and nearly half use wetlands at some point in their lives.”

Like global financial markets, habitats are finely balanced. We tip the balance when we just don’t know any better, which is why clear-cut rules are so important. Water transmutes from rain to groundwater, to wetlands, to streams, each vulnerable in itself and as part of an interdependent ecosystem. Like the DDT which decimated eagle populations 50 years ago, contaminants flow into streams, rivers and seep into wetlands, poisoning fish, animals and humans.

Declaring war against ourselves

The Environmental Protection Agency and the Department of the Interior, charged with protecting our air, water and eagles, have been busy. Among their tsunami of actions is the “modernization” of the 1973 Environmental Species Act. New rules replace the Act’s clear-cut guidelines with a case-by-case approach, inserting subjectivity into legal determinations of whether protection is warranted. If the agencies’ track record is any indication, the government has refused to act even when the science is clear, and its own scientists recommend protection.

Consider the pesticide chlorpyrifos, cited by the EPA as the “most used conventional insecticide” and its own staff scientists as “dangerous.” Chlorpyrifos is sprayed on 50 of the crops we eat (broccoli, anyone), animal feed. Plan to call Mosquito Sam to get rid of those mosquitos in your yard or on the golf course? Chances are Sam will use chlorpyrifos. The ear tags used to identify cattle in feed lots are treated with it, as are wooden fences. It travels into our homes via indoor bait traps and the produce we eat. It’s been found in carpets and on children’s toys. If studies on rats are any indication, it attacks the nervous system and can cause attention-deficit disorders and hyperactivity in children. It kills birds, bees and is absorbed into the tissues of fish and whatever eats them, just as the DDT decimated our eagles decades ago.

What is an eagle worth?

The government will use a mathematical model to weigh the value of monetizing its habitat by say, calculating projected logging revenue against preserving the trees where the eagles nest. The problem? Subjectivity. A July 2019 analysis by Jim Damicis of the economic development consultancy Camoin Assoc., predicts the logging industry will decline over the next five years “driven by a slowdown of housing construction from recent peaks and from increased foreign competition.” Where’s the money? More environmentally sustainable alternatives.

As for wetlands, critical to flood protection as well as wildlife preservation? How does our eagle compare with a new resort?

There will be a reckoning

Outside, the temperature tops 99 degrees. The creek outside my window has been dry for over two months. Maps of the American West are the color of dried blood from drought. Our children are suing our government for its refusal to take positive action on global warming, emboldened by a 16-year with the audacity to sail across the Atlantic and tell Congress to pay attention to the science, and act.

Stacks displaying LBJ’s presidential papers occupy one vast wall of the LBJ Presidential Library.
Photo: New York Times

Standing there on the mezzanine of the LBJ Presidential Library, turn away from the eagle and face the opposite direction. Now you face President Johnson’s papers, bound in red. It’s the reckoning of one man’s efforts to fill what’s been called the most powerful office in the world. Johnson passed the Civil Rights Bill and passed Medicare and Medicaid into law. But he forfeited his legacy fighting a war against a perceived foreign threat.

The current administration is fighting a war against the air, land and water we depend on. There will be a reckoning.

Building the 5G Wall: What Do We Want to Become?

The Defense Innovation Board report on 5G is a warning that the U.S. is headed down a path of isolation that with disastrous economic and moral implications.

A super-fast national Internet exclusively for urban America? That’s the scenario that comes to mind in reading the Defense Innovation Board‘s report on 5G, the next generation of super-fast wireless communication. Written by technology’s A-List, it outlines a trajectory that separates cities from rural areas, the have’s from the have-not’s and the United States from the rest of the world in a “post-Western wireless ecosystem.”

“The leader in 5G stands to gain hundreds of billions of dollars in revenue over the next decade, with widespread job creation across the wireless technology sector. 5G has the potential to revolutionize other industries as well … The country that owns 5G will own many of these innovations and set standards for the rest of the world…
That country is currently not likely to be the United States.”
“The 5G Ecosystem: Risks & Opportunities for DoD,” Defense Innovation Board

(L to R) Mark Sirangelo, Milo Medin, Jennifer Pahlka, Eric Lander, Marne Levine, Eric Schmidt, J. Michael McQuade, Missy Cummings, Richard Murray, and Adam Grant. (DOD/Lisa Ferdinando)

Chaired by former Alphabet Chairman Eric Schmidt, the Board was commissioned by former Secretary of Defense Ash Carter to make recommendations to the Dept. of Defense on the next wave of innovation.

I recommend the 30-page document itself, but if you’re pressed for time, try Dr. Lee, Physic Genius’ more entertaining version though, disclosure, despite some inquiries, I have no idea who Dr. Lee is.

A technical approach that deepens divisions

In the United States, the Federal Communications Commission allocates the electromagnetic spectrum. Most current 5G development is in the “sub-6” range. But in the United States, the military owns that portion of the spectrum. So the FCC made a higher-band width known as “mmWave” available for commercial development, which is where Verizon and AT&T are developing their 5G offerings.

Only two other countries currently support mmWave for 5G. Both of these countries are now U.S. allies — Japan and South Korea — and both are using a dual strategy, developing both the sub-6 and mmWave ranges.

U.S. policy makers and suppliers hope mmWave will eventually become the global standard, but as the Defense Innovation Board report makes clear, it’s not a strategy to hang your hat on. MmWave transmissions are more powerful but shorter and blocked by solid barriers — walls, trees, even people. Providing comprehensive service will require what the report labels a “massive infrastructure build-out” ($$$). If and when that is successful, mmWave service may not be viable for rural areas, where reliable connectivity is a literally a lifeline.

Consider that despite diplomatic tensions with China, Canada recently signed a contract with Huawei to deliver 4G LTE to rural communities in the Arctic, remote areas of north-eastern Quebec and Newfoundland and Labrador and according to Huawei, some 25 communities in the largely Inuit areas of the Nunavut territory.

Own the IP; own the industry

No American company makes the base station equipment to transmit 5G signals. The United States owned the majority of 4G-related standards-essential patents. But today over one-third, (34%) of worldwide standards-essential patents for 5G technology are owned by Chinese companies, 15% by Huawei alone, according to Asia Nikkei News. South Korea is second, with over 25% of standard-essential patents.

That will make building the network infrastructure for autonomous cars or next generation factories more expensive for U.S. companies. But owning the intellectual property will reduce costs and accelerate China’s building the infrastructure of the future.

Huawei has signed 50 contracts to provide next-generation 5G networks to 30 countries including Italy and the United Kingdom.

We damn the consequences at our peril

Were the United States to decide to compete with the rest of the world, the Board’s report provides a timeline. Sharing the sub-6 spectrum will take five years, and the Board considers a sharing spectrum a viable alternative. Clearing the spectrum would take 10 years. This would get us to the starting gate — if the federal government were to open up the sub-6 range. And that’s a big “if” in this political environment.

“Damn the consequences!”
General George Patton

The consequences of isolation are immeasurable. Beyond the obvious — American competitiveness, jobs, standard of life, education, opportunity — connectivity is the root capability for solving every over-arching problem we face — climate change, income inequality, immigration, human rights.

I just finished reading Hyeonseo Lee‘s remarkable story of escaping from North Korea with her family. She’s paid a broker to get her mother and brother to South Korea when they are imprisoned in Laos. Here, she’s waiting to enter Laos to rescue them:

“About 20 people were waiting in line to have their passwords stamped. A few were backpacking white Westerners in high spirits. I looked at them with envy. They were inhabitants of that other universe, governed by laws, human rights and welcoming tourist boards. It was oblivious to the one I inhabited, of secret police, assumed IDs and low-life brokers.”
Hyeonseo Lee, The Girl with Seven Names

Laws, human rights and a high standard of living are part of a vulnerable legal and moral infrastructure. Protecting its integrity and viability requires an actionable connectivity policy and a cogent strategy. The Defense Innovation Board report is a warning salvo. We must make sure that it is heard.

The First Americans’ “Send Them Back,” Retold

“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.”
Jeffrey Gibson

“This Is the Day” asks us to come up with a better ending to a story riddled with fear and racism.

A screenshot from Gibson’s video “I Was Here,” which follows Marcy, a trans Native American woman living on a reservation in Mississippi. Gibson follows her as she gets ready to go to work as a waitress in a casino. This still is a ties together a story of courage in the face of racism and prejudice.

Stories can conquer fear, you know. They can make the heart bigger.
Ben Okri

“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.

Business and Culture: Transatlantic Business Leaders Offer Advice, Wearing High Heels

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.

This image has an empty alt attribute; its file name is 0.jpg — (L to R) Ana-Barbara Llorente, partner, Pendas International, moderator; Belen Marcos, president, Cintra US; Cristina Silingardi, Austin managing director, VCFO; Sharon Schweitzer, founder and principal, Access to Culture; and Liz Wiley, partner, Grable Martin Fulton PLLC and honorary consul of France

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.”
Cristina Silingardi, Austin managing director, VCFO

“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.

Belen Marcos (holding microphone), president of Cintra US, negotiates infrastructure contracts in Europe and the U.S.: “It takes longer in Europe because of statutory regulations.”

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, principal, Access to 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.

Austin, Texas: A Case Study in Managing Competitive Crises

Austin, Texas, the site of the June 2019 CULCON Symposium on U.S.-Japan Collaboration was also the site of SEMATECH, a public-private partnership that modeled how to manage an international competitive crisis.

Three things are clear about the future: technology will determine competitiveness; talent comes in all colors, nationalities and genders; and the problems are too big, too complex to solve in isolation.

The annual CULCON Symposium on U.S.-Japan Collaboration was held in Austin last week, the site where 30 years ago a rallying cry of “make America great again,” created SEMATECH, now a model of how government, industry and academic institutions can work together to manage competitive crises.

Today Japan, nestled precariously between North Korea and China, is doing something similar, boosting its competitiveness in science and technology by expanding university-industry partnerships and building a more inclusive work force.

Who owns the future? The electromagnetic spectrum and 5G

Bursts of “make Japan great again” thinking punctuated the session. In what was apparently a last minute change to his presentation, cybersecurity expert Dr. Motohiro Tsuchiya, pointed out that the United States owns Japan’s electromagnetic spectrum, the highway for next-generation 5G mobile technology, the internet of things (IoT), as well as x-rays, gamma rays and radio waves.

The electromagnetic spectrum hosts 5G technology, which will improve the reliability and reach of mobile internet communication. Illustration/ Children’s Health Defense

Thirty years ago, who would have thought something called the “electromagnetic spectrum” would become so essential to a single country’s competitiveness? But 5G technology has vast implications for not just cellphone upgrades, but but for medicine, business and national security. Case in point: Russia recently signed an agreement to allow Huawei, a lightening rod in the U.S.-China trade war, to develop the country’s next-generation wireless network, but since the Russian military owns their electromagnetic spectrum, there could be blips in its implementation.

This world and then the next

Dr. Takashi Tanaka, an expert in machine learning at the University of Texas and like the other panelists a product of international collaboration, pointed out that rocket technology can also be applied to missiles, a critical capability for an island nation with testy neighbors.

Space technology extends scientific inquiry to national security. Illustration/Nikkei-Asian Review

Proprietary rights in space? Dr. Moriba Jah, an expert on Space Domain Awareness, brought up the ever-controversial Elon Musk’s launch of 60 Starlink satellites into the crowded night sky, the first of a proposed fleet of 12,000 designated to provide global internet coverage.

Funding and talent

Innovation is all about funding and talent, which implies a partnership between the public and private sectors. The U.S. Department of Defense’s Defense Advanced Research Projects Agency (DARPA) provided the seed money for SEMATECH. The National Science Foundation funds emerging sectors like artificial intelligence where American leadership is increasingly challenged. Japan, a global leader in robotics, is stepping up its investment in other sectors as well.

“Last year (2018), the Council for Science, Technology and Innovation, the government’s science advisory body, announced a 7% rise in spending on science and technology (to 3.84 trillion yen), after years of stagnant funding. The government is considering another 100 billion yen for the upcoming fiscal year to pay for exploratory research aimed at achieving what The Mainichi newspaper calls “moonshot” results. The government is on track to hit a goal of spending 1% of GDP on science and technology in higher education by 2020.”
David Swinbanks, Nature, Nature 567, S9-S11 (2019)

Talent is increasingly collaborative. The CULCON panelists referenced cultural barriers in Japanese universities that inhibit the collaboration, from silo-ed departments to paying research assistants. But then again, perhaps the group’s of Austin as a meeting site was significant. The city is a case history in how a single successful experiment in public-private collaboration, SEMATECH, spawned a vital tech hub that continues to attract jobs and talent.

Stumbling from failure to failure with no loss of enthusiasm

I shared Churchill’s quote with my seatmate, Mr. Naoyuki Agawa, who asked a bedrock question of Austin’s assistant city manager, Ray Arellano: What do you say to people who have failed? Mr. Agawa teaches American constitutional law at Doshisha University in Kyoto, following a long career practicing law in New York and Washington and a stint as Japan’s Minister for Public Affairs.

His point was well taken. Without role models, without examples, without encouragement and social and financial support, failure is a hopeless quagmire.

I said I could do it, and I did it

Mykaela Dunn, Brooke Owns Fellow, University of Texas at Austin. Photo/The Daily Texan

Eureka! Beamed into the panel discussion on space technology was a Texas success story. Mykaela Dunn, a native of tiny Stafford, Texas and a recent aerospace engineering graduate from the University of Texas, has just started her internship in the California-based Stealth Space Company, courtesy of a Brooke Owens fellowship. Dunn encouraged the audience to consider more than grade point averages (GPAs) in evaluating talent, mentioning that she had to remind herself to do the same.

Well done, Mykaela!

Do Tariffs Make Us More Competitive?

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.”
David Firestein

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.”
David Sanger, The New York Times

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.”
David Firestein

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.”
David Firestein

https://www.marketwatch.com/story/heres-all-the-stuff-the-us-imports-from-china-thats-causing-a-huge-trade-deficit-2018-03-23

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.

Trump rolls out $16 billion in farm aid amid Democratic outrage over $64M meat bailout to ‘corrupt’ Brazilians — https://www.nydailynews.com/news/politics/ny-democrat-answers-trump-bailout-meatpacker-brazilian-20190523-ocqbh2tvb5eltlch47ulfykcxa-story.html

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.
Marketplace, May 27, 2019

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.”
David Firestein

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.”
David Firestein

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

Brexit in the Bardo

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.

Two countries with a lot in common. Map courtesy of the mls.co

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.

Almost three years ago, on the heels of a political gambit by then-Prime Minister David Cameron, British voters opted to leave the European Union. The questions are when and how. Photo courtesy of the Associated Press

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

After negotiation Brexit, Theresa May will not run again for prime minister. Photo courtesy of euractiv.com

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.

Y2K.2 ?

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?

UPDATE March 21, 2019: The meltdown.