Showing posts with label Taiwan. Show all posts
Showing posts with label Taiwan. Show all posts
Sunday, 31 July 2022
Sunday, 6 January 2019
Apple and China’s problems show that today’s titans may not rule the world tomorrow
Even superpowers and trillion-dollar tech giants are at risk in a fast-changing society writes Will Hutton in The Guardian
An Apple Store in Beijing, where the company’s sales figures have slumped. Photograph: Wu Hong/EPA
Our mental geography is bounded by what has gone before. What has happened in the recently remembered past is most likely to continue. Inflection points, when trends decisively change, are more infrequent than the many instances when things go on as they have done.
Two of today’s trends seem unstoppable. China’s astounding growth will continue, so the story runs, underwriting its arrival as the second economic superpower. To get a share in that China action, underpinning the entire growth of Asia, is one of the prime economic arguments for Brexit. Abandon sclerotic Europe, embrace the prosperity of Asia – even if it is a world of semi-democracy at best, authoritarian government at worst. It can be guaranteed to grow.
Second, the west coast big tech companies, from Facebook to Apple, are the new wonders of the universe. They are the bewilderingly successful face of the informational, data-driven economy whose value continues to soar. Apple, then Amazon, became the first trillion-dollar corporations last year, both exemplars of how first movers in innovation with their transformative technologies have become 21st-century titans, driving stock market growth and changing society alike.
However, last week, both trends were decisively challenged in what looks like a world-changing inflection moment, one where consensus assumptions start to unravel. Apple announced that for the first time in 17 years it would not meet its forecasts for revenue growth – and by a big margin. Its CEO, Tim Cook, explained to investors and staff that apart from the problems facing all makers of mobile phones – it is becoming a mature market – there was unexpected sales weakness in China. This was not just down to intense competition, but because China’s consumers were spending much less. Apple’s share price plunged – cumulatively, its value has fallen by a stunning $400bn in a couple of months.
China’s total debt, even on distrusted official figures, is approaching three times its GDP
But surely China, landing its robotic satellite on the far side of the moon, is suffering no more than a typical cyclical setback, intensified by Donald Trump’s trade war? Perhaps, but look more closely and it is ever clearer that long-standing problems are starting to envelop this continental economy.
It was only eight years ago that China registered 12% growth as the government turbo-boosted its economy with a massive stimulus in the wake of the financial crisis, growth that staved off a world slump. But since then its official growth rate has been consistently sliding, now halved at 6%, and China’s consumers have started to notice what last year’s 25% fall in China’s stock market is also signalling. Alongside Apple’s statement, last week’s surveys showing China’s famed manufacturing sector is set to decline in 2019 and further weakness in retail sales were more evidence that all is not well. China’s consumers are reading the runes.
Part of the issue for both Apple and China is the law of large numbers. Three-fifths of Apple’s sales are iPhones and there just aren’t enough global consumers with pockets deep enough to keep up the growth momentum. China’s issues are even more profound. There comes a limit, even in a state-controlled economy, to manipulating growth through debt and exports when the numbers reach astronomic levels. China’s total debt, even on distrusted official figures, is approaching three times its GDP, a flashpoint ratio for every economy when bank balance sheets, and their borrowers, just become too overstretched.
This was the trigger for Japan’s economic depression 30 years ago. Moreover, if China’s exports carried on growing as fast as they had, they would crowd out every other export from every country in the world by the mid-2020s. This was never likely, economically or politically. If Trump had not launched his trade offensive, another US leader would have done so. Apple and China, bluntly, are in a fix.
The Chinese Communist party is in a gathering crisis of legitimacy. If the growth rate sinks below 6% (unofficial figures now place growth at under 2% in 2018), its job-generating capacity starts to falter and questions will be asked about the competence of the party. Past leaders have responded to crises by intensifying the pace of transition towards a capitalist economy and boosting infrastructure spending as a quick fix.
These are not options for Xi Jinping. So high has infrastructure spending been for so long that the financial returns to justify further debt are nonexistent. Nor can he free the economy further without endangering the party’s control. His options are a combination of hoping hi-tech, driven by extravagant R&D spending, will offer a stronger economy (along with more repression as a safety fallback and finding enemies around which the country can unite).
The speech last week warning China might go to war to end Taiwan’s independence was the most bellicose of any Chinese leader since Mao. Be in no doubt – if economic difficulties worsen, Xi may be compelled to rally his restive population around a limited conflict just to stay in power.
In a mirror image, Apple is spending as aggressively on R&D as China, hoping that will solve its problems too. Apple is indubitably innovative and the scale of its research should throw up new products; it is already developing a great service business. For China, the message is even starker. A one-party state can’t risk any bumps – and there are more than bumps ahead. Nothing, not even the wondrous success of the iPhone, lasts for ever. And that is especially true for a dysfunctional Chinese economy, and the party that runs it.
Our mental geography is bounded by what has gone before. What has happened in the recently remembered past is most likely to continue. Inflection points, when trends decisively change, are more infrequent than the many instances when things go on as they have done.
Two of today’s trends seem unstoppable. China’s astounding growth will continue, so the story runs, underwriting its arrival as the second economic superpower. To get a share in that China action, underpinning the entire growth of Asia, is one of the prime economic arguments for Brexit. Abandon sclerotic Europe, embrace the prosperity of Asia – even if it is a world of semi-democracy at best, authoritarian government at worst. It can be guaranteed to grow.
Second, the west coast big tech companies, from Facebook to Apple, are the new wonders of the universe. They are the bewilderingly successful face of the informational, data-driven economy whose value continues to soar. Apple, then Amazon, became the first trillion-dollar corporations last year, both exemplars of how first movers in innovation with their transformative technologies have become 21st-century titans, driving stock market growth and changing society alike.
However, last week, both trends were decisively challenged in what looks like a world-changing inflection moment, one where consensus assumptions start to unravel. Apple announced that for the first time in 17 years it would not meet its forecasts for revenue growth – and by a big margin. Its CEO, Tim Cook, explained to investors and staff that apart from the problems facing all makers of mobile phones – it is becoming a mature market – there was unexpected sales weakness in China. This was not just down to intense competition, but because China’s consumers were spending much less. Apple’s share price plunged – cumulatively, its value has fallen by a stunning $400bn in a couple of months.
China’s total debt, even on distrusted official figures, is approaching three times its GDP
But surely China, landing its robotic satellite on the far side of the moon, is suffering no more than a typical cyclical setback, intensified by Donald Trump’s trade war? Perhaps, but look more closely and it is ever clearer that long-standing problems are starting to envelop this continental economy.
It was only eight years ago that China registered 12% growth as the government turbo-boosted its economy with a massive stimulus in the wake of the financial crisis, growth that staved off a world slump. But since then its official growth rate has been consistently sliding, now halved at 6%, and China’s consumers have started to notice what last year’s 25% fall in China’s stock market is also signalling. Alongside Apple’s statement, last week’s surveys showing China’s famed manufacturing sector is set to decline in 2019 and further weakness in retail sales were more evidence that all is not well. China’s consumers are reading the runes.
Part of the issue for both Apple and China is the law of large numbers. Three-fifths of Apple’s sales are iPhones and there just aren’t enough global consumers with pockets deep enough to keep up the growth momentum. China’s issues are even more profound. There comes a limit, even in a state-controlled economy, to manipulating growth through debt and exports when the numbers reach astronomic levels. China’s total debt, even on distrusted official figures, is approaching three times its GDP, a flashpoint ratio for every economy when bank balance sheets, and their borrowers, just become too overstretched.
This was the trigger for Japan’s economic depression 30 years ago. Moreover, if China’s exports carried on growing as fast as they had, they would crowd out every other export from every country in the world by the mid-2020s. This was never likely, economically or politically. If Trump had not launched his trade offensive, another US leader would have done so. Apple and China, bluntly, are in a fix.
The Chinese Communist party is in a gathering crisis of legitimacy. If the growth rate sinks below 6% (unofficial figures now place growth at under 2% in 2018), its job-generating capacity starts to falter and questions will be asked about the competence of the party. Past leaders have responded to crises by intensifying the pace of transition towards a capitalist economy and boosting infrastructure spending as a quick fix.
These are not options for Xi Jinping. So high has infrastructure spending been for so long that the financial returns to justify further debt are nonexistent. Nor can he free the economy further without endangering the party’s control. His options are a combination of hoping hi-tech, driven by extravagant R&D spending, will offer a stronger economy (along with more repression as a safety fallback and finding enemies around which the country can unite).
The speech last week warning China might go to war to end Taiwan’s independence was the most bellicose of any Chinese leader since Mao. Be in no doubt – if economic difficulties worsen, Xi may be compelled to rally his restive population around a limited conflict just to stay in power.
In a mirror image, Apple is spending as aggressively on R&D as China, hoping that will solve its problems too. Apple is indubitably innovative and the scale of its research should throw up new products; it is already developing a great service business. For China, the message is even starker. A one-party state can’t risk any bumps – and there are more than bumps ahead. Nothing, not even the wondrous success of the iPhone, lasts for ever. And that is especially true for a dysfunctional Chinese economy, and the party that runs it.
Wednesday, 3 January 2018
Court orders Taiwan dentist to pay his own mother for raising him
The Guardian
Taiwan’s top court has ordered a dentist to pay his mother around £554,000 as reimbursement for the money she spent raising and educating him.
The supreme court upheld a previous ruling that the 41-year-old, identified by his family name, Chu, should honour a contract he signed with his mother 20 years ago promising to repay her.
The plaintiff, surnamed Lo, divorced her husband in 1990 and raised their two sons on her own.
Worried that nobody would look after her when she got old, Lo signed the contracts with her sons after they both turned 20, stipulating that they must pay her 60% of the net profit from their incomes.
The supreme court said the contract was valid as Chu was an adult when he signed it, and that as a dentist he was capable of repaying his mother. It ordered him to pay Tw$22.33m ($744,000).
Lo accused her sons of ignoring her after they both started relationships, saying their girlfriends even sent her letters through their lawyers demanding her not to “bother” her sons, according to local reports.
She filed the lawsuit eight years ago when they refused to honour the contracts. The older son eventually paid her Tw$5m to settle the case.
Her younger son claimed that the contract violated “good customs” as raising a child should not be measured in financial terms, and went to court against his mother.
Lo appealed all the way to the supreme court after lower courts ruled in favour of her son.
Cases of abuse and abandonment of senior citizens have been on the rise in Taiwan in recent years, prompting calls for a law to jail adults who fail to look after their elderly parents although it is yet to pass.
Taiwan’s top court has ordered a dentist to pay his mother around £554,000 as reimbursement for the money she spent raising and educating him.
The supreme court upheld a previous ruling that the 41-year-old, identified by his family name, Chu, should honour a contract he signed with his mother 20 years ago promising to repay her.
The plaintiff, surnamed Lo, divorced her husband in 1990 and raised their two sons on her own.
Worried that nobody would look after her when she got old, Lo signed the contracts with her sons after they both turned 20, stipulating that they must pay her 60% of the net profit from their incomes.
The supreme court said the contract was valid as Chu was an adult when he signed it, and that as a dentist he was capable of repaying his mother. It ordered him to pay Tw$22.33m ($744,000).
Lo accused her sons of ignoring her after they both started relationships, saying their girlfriends even sent her letters through their lawyers demanding her not to “bother” her sons, according to local reports.
She filed the lawsuit eight years ago when they refused to honour the contracts. The older son eventually paid her Tw$5m to settle the case.
Her younger son claimed that the contract violated “good customs” as raising a child should not be measured in financial terms, and went to court against his mother.
Lo appealed all the way to the supreme court after lower courts ruled in favour of her son.
Cases of abuse and abandonment of senior citizens have been on the rise in Taiwan in recent years, prompting calls for a law to jail adults who fail to look after their elderly parents although it is yet to pass.
Friday, 1 August 2014
To fight Britain’s privatisation dogma, Labour should look to the US military, Singapore, Taiwan...
State-owned enterprises can be successful, as some unlikely global examples prove
Since Margaret Thatcher came to power in 1979 the UK has led the world in privatisation. The Conservative government sold off state-owned enterprises throughout the 1980s and the 1990s – electricity, oil, gas, rail, airline, airports, telecommunications, water, steel, coal, you name it. In the worldwide fever for selling off state assets that gripped those decades, the rest of the world looked up to Britain as the guiding example.
Privatisation was halted under Labour. However, the belief in the superiority of the private sector was such that, when it brought the rail infrastructure back under state control in 2002 following a series of rail disasters, Labour made sure it did not take the form of re-nationalisation – at least in legal terms. Network Rail, the owner and operator of the rail infrastructure, was set up as a private company, although on a not-for-profit basis and without shareholders.
When the coalition came to power in 2010, it resumed the privatisation drive with gusto. It privatised Royal Mail – the “crown jewels” that even Thatcher balked at selling. However, in recent months the tide has started to turn, albeit slowly.
Even while planning to sell off almost every remaining state-owned enterprise, from plasma supply to helicopter search and rescue, the coalition has had to make an embarrassing climbdown over its plan to privatise student loans. More importantly, in the past few months the Royal Mail sell-off has been fiercely criticised. Moya Greene, its chief executive, has questioned the viability of its universal service obligation. Abandoning this would mean that customers who live in less accessible or sparsely populated – and thus less profitable – areas wouldn’t get their letters delivered, or would have to pay more for them: the end of the postal service as we know it.
In the meantime, the Labour party has made the lack of competition and the suspected collusion in the privatised energy industry a key issue in its promise to “fix broken markets”, and has caught voters’ attention by announcing its intention to partially reverse rail privatisation. Although its fear of being branded anti-business has prevented it from proposing outright renationalisation of the railways – despite the support for such a move from most of the electorate – it has declared that if it wins the 2015 general election it will “reverse the presumption against the public sector”, and let state operators bid for rail franchises.
However, if it is really to overturn the privatisation dogma, Labour should do more than reverse the presumption against the public sector: it should tell people that the public sector is often more efficient than the private sector.
Even while there are many examples of inefficient state enterprises from all over the world, including the UK, there have been many successful such businesses throughout the history of capitalism. In the early days of their industrialisation, 19th-century Germany and Japan set up state-run “model factories” in order to kickstart new industries such as steel and shipbuilding, which the private sector considered too risky to invest in. For half a century after the second world war, several European countries used state businesses to develop technologically advanced industries: France is the best-known example, with household names like Thomson (now Thales), Alcatel, Renault and Saint-Gobain. Austria, Finland and Norway also had technologically dynamic state-run enterprises.
The most dramatic example, however, is Singapore. The country is usually known for its free trade policy and welcoming attitude towards foreign investments, but it has the most heavily state-owned economy, except for some oil states. State-owned enterprises produce 22% of Singapore’s national output, operating in a whole range of industries – not just the “usual suspects” of airline, telecommunications and electricity, but also semiconductors, engineering and shipping; and its housing and development board supplies 85% of the country’s homes. Taiwan, another east Asian “miracle” economy, also has a very large state-run sector, accounting for 16% of national output.
Posco, the state-owned steel company in my native South Korea, was initially set up against World Bank advice but is now one of the biggest steel companies in the world. (It was privatised in 2001, but for political reasons rather than poor performance.) In Brazil, Embraer – the third largest civilian aircraft manufacturer in the world – was initially developed under state control; and the country’s state-owned oil company, Petrobras, is the world leader in deep-sea drilling.
Arguably the most successful state enterprise in human history, however, is the United States military, which has almost single-handedly established the modern information economy. The development of the computer was initially funded by the US army; the country’s navy financed the research that created the semiconductor; and the US Defense Advanced Research Projects Agency developed the Arpanet, the precursor of the internet.
When people realise that the history of capitalism is full of highly successful state enterprises, the rush for ever more privatisation can be halted. If the Labour party puts forward this case, it will not only gain popularity in the run-up to next year’s general election – it would also be doing something of lasting benefit for Britain.
Subscribe to:
Posts (Atom)