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Remember, The Entire Country (China) Is An Infant With Respect To Capitalism

When I first met with Uniview in Hangzhou and toured their facility I was given the grand tour and spent the next several hours being presented with their history to date. Bear in mind, Bain Capital owned them at this juncture and I felt at least somewhat calm knowing that an American firm had control now.

Huawei/Hisilcon FOUNDED Uniview. UNV management sales pitch to the four company members with me on this trip went above and beyond highlighting this advantage to persuade us to leave Dahua. 

Impressive presentation frankly.
Chief engineers present and they explained that since we designed the Hisilicon DSP used in nearly all NVR and DVR in CCTV globally, we have the upper hand. In fact Gerald, many of the senior leadership from Huawei/Hisilicon moved over to the Uniview division when Uniview first launched. Many senior engineers are still with the Uniview design team.

My point is at the time Huawei/Hisilicon founded and launched Uniview, they were selling to Dahua and Hikvision, and seemingly every other China maker.
The "conflict of interest" and potential loss of revenue from the majors wasn't a concern.
THey'd still own Uniview but the quick cash from Bain Capital too enticing it appears.
Now that Bain Capital sold off Uniview to a Chinese operator, all bets are off in my opinion.
I see these responses and many opine it doesnt make sense for Huawei to compete with their customers so no way Huawei enters our market directly. This is China. It never makes sense. Remember, the entire country is an infant with respect to Capitalism.
Apple has been in business LONGER than the entirety of China has been adopting a more liberal approach to capitalism. They are simply in their infancy. 

China Blocking IPVM.
Could you imagine if Apple, Bose, or Porsche, whomever, convinced Congress to block Consumer Reports because it hurt sales of a deficient product? China in my view admitted guilt, admitted no defense to our observations when they blocked our views. That's immaturity and inexperience reacting. They'll figure it out. 200 years from now.

 

 

 

NOTICE: This comment was moved from an existing discussion: Huawei To Be “Top Three Global Position” In Video Surveillance

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I made this its own post since I think it is an interesting topic/ perspective.

This is one of the central debates / questions. No doubt Chinese companies have grown extremely fast and many are now extraordinary large. Does this mean that they have found a better way of capitalism or does this reflect an unstable (say infant) form of capatalism?

When I see the Hikua approach of both cutting costs and pouring on sales and marketing, that reminds of the most dangerous and unsustainable forms of American capitalism (e.g., the dot.com bubble).

To the contrary, a lot of dealers praise Hikvision and criticize Western manufacturers for being greedy.

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When I see the Hikua approach of both cutting costs and pouring on sales and marketing, that reminds of the most dangerous and unsustainable forms of American capitalism (e.g., the dot.com bubble).

There are many bubbles in China right now - housing, technology (AI is big beyond just surveillance), and so on.    I believe at one point you pointed out the Japanese bubble in the 80s that eventually burst.  Based upon what I've read this is very similar to that - a lot of debt spending, a large labor pool that is shrinking, a developing middle class, and outside economic pressures attempting to pop the bubble.

I'm impressed they have held on this long.  China's strong control of the economy and ability to manipulate perceptions may have enabled this to survive longer than normal.

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John, an Apple Iphone now has a cost of 900-1200 depending on memory.
Nokia? 50 bucks. Huawei phones banned from majors like ATT and Verizon due to security concerns. Starbucks charges 4.00 for a coffee and everyone else selling at 50 cents a cup went bust. Point is, consumers will pay a premium for truth, for integrity, for superior performance, Hisilicon offers none of the above.

Cut and pasted.
To the contrary, a lot of dealers praise Hikvision and criticize Western manufacturers for being greedy. Apple and Starbucks disagrees.

If the mainstream had access to IPVM, as in purchasing managers, including small business, I believe veracity overcomes modest price premiums and they largely look beyond Dahua and Hikvision. My apologies, Hikua. The majors are incredulous, are indeed tied to Hisilicon, and in time veracity wins this debate. Keep up the good work regardless of the monumental struggle.

 

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You either embrace capitalism fully or you fail. China is a communist country that uses capitalism as a weapon to against rival capitalist countries. This strategy will fail long term, just like almost all communist economies have historical.

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Not sure of your age, I am closer to 60 than I am 50.
But i'll say this, YOU ARE WISE beyond your years, regardless of your age.
You are correct, insightful, and it is so dangerous how China uses their version of capitalism.

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China because of its size and long history of communism cannot just quickly change to capitalism. Yes the big cities are prospering but the outlying areas are still very poor and backwards. 

I used to debate this with the police chief of Shanghai every time I saw him, he spoke perfect English and understood both our system and mentality. In his view because of China’s size and all the issues from being poor for so long that they need to move toward capitalism in a way that fits with their social economic situation across the whole country. In other words a blend of two systems. The discussions I had were with him in the late 90’s and I think this is what we see today. The old adage a elephant cannot turn quickly certainly applies and I don’t think you will ever see China’s system look exactly like our form of capitalism. 

The countries of the world were more than happy to use China’s low cost labor, low cost of doing business along with tax incentives. We along with other countries  helped China get out of the Mao era. So who is to blame today for what we see as the current situation with China and its vendors? I suggest you ask Jimmy Carter he started all this by setting very low duty rates on China made goods to help the country progress economically.

China could have never progressed economically so quickly without the help of Hong Kong and its people who had Western management skills thanks to the British. The close proximity of Hong Kong made a major difference along with a similar culture and languages. 

We should have tried for a soft landing and begun to control the tariff/fair trade situation long ago, at least before it got to the point we are have such huge trade  deficits. Then of course you have the major problem of intellectual theft of trade secrets.

So now we don’t like the student outsmarted the teacher. 

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"So now we don’t like the student outsmarted the teacher."

The student did not outsmart the teacher.

The student simply figured out how to cheat and has expressed no moral qualms whatsoever in doing just that to benefit themselves the most in the fastest possible time frame.

 

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Capitalism, in its purest form, is like a recreational drug. It can kill you and it can and will kill any country who practices it or, in the case of the US, abuses it the same way you abuse any drug.

Socialism, in its purest form, can and will also kill any country who practices it exclusively, or to the extreme.

It is not unusual, and many global examples can be pointed out, that a country can and do practice both, in varying degrees of either moderation or not, when and where called for, to sustain itself and its people.  Those are the countries that will survive in the long term.

The others, the US included, will destroy themselves from within, from socialist extremism, or capitalist extremism.  The answer lies, as is the case in many things, with the understanding and practice of both approaches, depending on specific needs at specific times, with a practical balance in use.

Example:  The American people and the US itself, will never survive if the government provides for all of their needs anytime they need or want it.  Conversely, America will never survive if its entire population risks full loss of all assets and complete bankruptcy every time they go to the doctor or hospital for a diagnosis.

No rational person who is paying attention can deny that China is waging economic war against the US and that they are practicing intellectual thievery in the process.  But like Russia, China is gonna do what China has to do to make it through the next 2000 years. And its government recognizes that vacillation in principles is sometimes required.  They are not embarrassed and will not apologize for it.  I know these people and especially their businessmen very very well.  They function day to day with a much higher level of maturity and discipline than US businesses and business people do.  And they absolutely are capable and willing to sacrifice short term profit strategy in executing a long term game.

 

 

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"And they absolutely are capable and willing to sacrifice short term profit strategy in executing a long term game."

i hear this kind of thing all the time... as if simply being Chinese gives you a better understanding of long-term benefits (and what is required to achieve these) over the detriment of short-term gains.

I say this is hogwash.

Comparing disparate things is easy only if you completely discount the ability of one side to comprehend what you grant weight to on the other side (their ability to plan long-term, for example).

While there are certainly societal differences between the U.S. and China - I think it is a mistake to assign intellectual capabilities to either side based on these societal differences.

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Your position of "Hogwash" is noted with respect.

I'm not sure I was assigning a higher degree of intellectual capability.  If you got that impression, I did a poor job of identifying my intent.  I was assigning a higher tolerance for not making money for longer periods of time in order to achieve economic dominance.

As someone who has worked in Sales internationally, and having attained the title of National Sales Manager of a foreign country (many years ago) I was charged with "breaking into and establishing a foothold" in a foreign market where my American made product had no presence to speak of. I prepared for my role by doing a number of things, only one of which included reading numerous historical accounts of how nations do this type of thing in each others markets.  There were many differences and, as you mentioned, differences in culture was cited as one of the bigger influences on how the markets interact with each other.  But overall, the predominant underlying theme of how other countries achieve success (and eventual dominance) in the US is, for lack of a shorter description, simply taking advantage of the all-consuming greed and relative short attention spans of the American business man and the American consumer.   

The Japanese did this years ago with auto's and electronics.  Our industry is also a perfect example. The Chinese have taken it to an art form.  Intellectualism has nothing to do with it. American businessmen think about money the same way they think about beautiful women.  And they act accordingly, which is to say they act emotionally and irrationally and without consideration for the long term consequences of their short term actions.  The analogy is not meant to offend, it is a extremely close representation of what is actually happening when these foreign nations start throwing money around.  This has become the easiest point of leverage for any country attempting to take advantage of us economically. They simply have more patience, not more brains.  And as as long as we continue to lack the character as a nation, to set aside the omnipresent thirst for profits at any and all cost  we will continue to sell out our national assets, our national heritage, and our national dignity to the highest bidder or the lowest cost producer or price.  We will continue to be taken advantage of by foreign nations who may not be intellectually superior,  just more patient and more observant of the American flavor of the human condition. 

 

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as I read your response, I alternated between wanting to refute specific points and nodding in agreement with you... so thanks for these words.  My reply to your original comment was harsher than I intended in retrospect.

However, I will point out to you that just as the Chinese can understand (and exploit?) the nature and tendencies of Americans, so too are there many Americans (and American companies) which regularly seek to do the same in reverse - based on their own understanding of Chinese culture/nature. 

 

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There was absolutely no offense taken.  Its just not every day someone uses the word "hogwash" in a sentence.

I have one biological daughter, born in the US.  I have another adopted daughter who was was born in China.  In addition to those two, I have another "daughter" who has been staying with our family on and off for over 10 years (since she was an exchange student here in high school) She has been staying with us all through high school and college and is currently employed as a graphics designer for a major advertising firm. I want to be clear here, I would take a bullet for this kid, just like one of my own.

We are incredibly close to her family (who live in mainland China) Her father is a very successful, wealthy Chinese businessman who speaks 7 languages fluently and who travels the world for his work.  He works for and is part owner of a major manufacturing company in China.  (Not electronics) And over the years he has become one of my closest friends.  Our two families have traveled and even vacationed together.

I wish I could have video-taped the hundreds and hundreds of conversations (and debates) that he and I have had over the past decade about this and other related topics.   It could have been published as a docu-thesis on the relationship between our two countries.  He is a brilliant and capable debate opponent.  He is also a brilliant and capable businessman who as made alot of money capitalizing on that which I described earlier.  And I will admit, that while I remain firmly entrenched in my views on some points between he and I, my views on others have evolved over the years.  And I dont have the time or the space here to write the book I intend to write in my retirement to cover the ground that really should be covered. But suffice to say, there is nuance here.  

There is no one-size-fits-all solution to the incredibly complicated relationship between our two countries.  But being an American history buff, and having enjoyed a valuable friendship with the family I described above, I can tell you unequivocally two things - - 

#1 - America is 241 years young.  China's history (written/documented) goes back 3000-4000 years.   The infant in the relationship is us.  

#2 - Integrator #2 (below) is correct.  Kids aren't cheap.

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America is 241 years young. China's history (written/documented) goes back 3000-4000 years.

The PRC (aka People's Republic of China, aka the Chinese Communist Party government) was only established in 1949, making it not even 70 years old.

Btw, when you use that propaganda, you are supposed to say 5,000+ years, not 3 to 4.

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I agree. The government of China is less than 70 years old.  In a striking similarity to the United States, that government was created by fiat and a couple of pieces of paper.  (And a war)  But you infer by your response that the Chinese people only use or do that which they have learned or adapted in the last 70 years and the remaining thousands of years were found to be of no practical value and thus abandoned,  post - communism. This is not true.

I don't believe the social or cultural system of the colonists remained the same after leaving England.  I believe the social and cultural system of the Chinese has remained, by and large, the same in spite of becoming a Communist political entity 70 years ago and that is what I was referring to in my comments.

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I believe the social and cultural system of the Chinese has remained, by and large, the same

Evidence for this? Presumably, you are not a Chinese scholar yourself so feel free to cite sources that back this up.

And, the logical conclusion of this whole thousands years of history approach means the hunters and gathers deep inside the Amazon rainforest have an advantage over the Chinese since their social and cultural system have remained the same for far longer than the Chinese. To be clear, I am not advocating this. I am using this example to question the value of judging societies based on their historical duration.

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I cite (humbly) only my limited experience identified earlier.  I am more knowledgeable than some and less than others.  I can say that I spend more time observing and reading and educating myself on Chinese culture than the average guy.  We were not discussing the differences between any two cultures other than that of the US and that of the Chinese. Lets not get into the weeds on this.  This whole thing started with me stating that I felt that Chinese businessmen (and women)  have more maturity and discipline in controlling their impulses than American businessmen.  The response I got indicated that someone felt I said they were smarter. (Not what I said) I also readily acknowledged that they are thieves and, like it or not, thieves can be both mature and disciplined. 

In your case, You took me down a path that started with a business conversation and ended with a debate about an entirely different subject.

My original intent, which remains the same, is that the Chinese culture, which is older than that of the US, impacts the behavior of Chinese businessmen in a (much) more favorable way, and American Culture impacts the behavior of American businessmen in a more unfavorable way.

The above is true.  The first step in solving a problem is to admit you have a problem.  And for the reasons I articulated above, America's approach to business and profits has a problem.  It remains to be seen as to whether or not we posses the maturity and discipline to recognize the problem and take steps to remedy them. I dont believe we do.

 

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I let your last comment sit on my brain to percolate for a bit... and I see (and completely validate) your position.

My use of the word 'intellect' was unfortunate - because, not only did you not mean that, but neither (really) did I.

While your position is valid, it still discounts what I call the 'flip-flop principle' - which I have described above...

The Chinese virtue of 'patience' - while not necessarily a 'natural' trait of western thinking (maybe) does not mean that westerners are not aware of this very same thing... allowing them to mitigate (in many other ways) this 'natural' western tendency.

...meaning: the efforts of neither side are completely dictated by their 'nature'.

If westerners can comprehend - and scheme against - the 'nature' of the patient Chinese, then this 'nature' can be exploited on other levels - employed simply to overcome the 'western' approach of impatience (in comparison to the patient Chinese tendencies).

 

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We (US), owe that "infant" lots of money, let's not forget...

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We (US), owe that "infant" lots of money, let's not forget...

Kids aren't cheap.

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Sam, that's a myth.

For example, the PRC (China) and Japan own similar amounts of US treasuries. They do so for their own self-interest, not because they are bailing out the US government. It's the same fundamental reason the US dollar is by far the most widely used currency for international trade. Other countries are not doing the US a favor, they use the USD because of the value it provides.

There are many articles talking about the issues involved with China's US Treasury debt and the risks that China would have if they stopped 'loaning' the US money:

China's $1.2 trillion weapon that could be used in a trade war with the US

Here’s why China selling U.S. Treasurys “might be the least effective retaliatory measure,” says SocGen

What Would Happen if China Started Selling Off Its Treasury Portfolio?

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