It’s me, Johnnie Bosch, It has been a while. I have been busy. There is a lot to talk about. Let the Trade War begin! China has backtracked on its key critical commitments. Don’t be surprised. Between being part of their tactics, more importantly, there are internal rumblings going on within the power structure & players in China. Xi was forced to back out and save face on the homefront. My last article Xi for Life is starting to make a lot of sense! If you haven’t read it, you should. He is not as strong and as in control as you would think! The bottom line is China is very concerned about having to compete on a level & honest playing field!
It is very typical during Chinese negotiations, especially face to face where the Chinese will say Yes but really mean No! It is part of their culture not to have direct face to face confrontation. Many times, a Westerner will leave the negotiations thinking something is settled only to find out the complete opposite. Via an email, fax communication. Very rarely will they discuss openly on the phone. Only if forced. In saying that, this should not happen at this level. It shows the real underlying instability at the highest levels of the Chinese government. Predicated on this, China cannot be trusted short and long term. They must be treated that way. We must force the best deal we can or No Deal at all. We now start creating a new future with China on the outside looking in! Let’s keep the Tariffs very high on China until they submit! There is going to be a lot of short term pain. For all of us. We must deal with it, NOW! Now is the time to make the sacrifices, do it now for our children and their children.
China’s biggest strength and its advantage is the internal supply chain they built within the country. These key parts, components, materials, etc being located within the same regions where their factory customers are located. This creates a fast, smooth and very reactionary supply chain. Hard to compete against. It keeps costs low and production flowing. Very difficult to compete against.
Below is a reply I made on the issue from a post from Jill Schlesinger on Linkedin yesterday regarding the impact of new tariffs and the trade conflict.
“Jill, of course, there will be an impact. In some cases, it will hurt more than others. We have no choice, we must stay the course and not deviate from our current position. As far as the impact of the tariffs, I am projecting on short margin items such as TVs as an example, no more than a 10% increase on current retail pricing, if that much. Higher margin items will take the hit on gross margin so as not to affect sales. The supply chain will absorb much of these increases. China will also subsidize exports with additional tax credits to Chinese exporters. The China side will absorb more of the impact than we will. This is much more painful for them than in the USA. ” There will be PAIN!
Moving forward, the wars of tomorrow will not be fought on the battlefields as we know it. The new battlefields are being fought with Economic and Technology factors and situations. Those who control that will control most everything. There is so much good we can create. There is also so much bad and evil that can be created as well. That is one of the reasons Huewai is now banned from building 5G infrastructure projects in the US and other Western countries. It is about espionage, the ability to not an only spy but to inflict major shutdowns and control of key infrastructure, etc.
What should be done? What can we do? With American Exceptionalism, Vision, Innovation, and grit, we help create the ToP ( Triangle of Prosperity) & HaS ( Hope and Stability) Initiative. Together, they will create an economic and human stabilization zone across Asia & South America. This will create thriving and competitive manufacturing, innovation and supply chain hubs. This will include large international investments. It will also upset and reset the current Geo-Political footprints across those regions.
From the Koreas in the North, down to India in South of Asia. Central and South America. Each region can focus and create their strong points as their foundations and launching pads for infrastructure, products, global supply chain, and services. We build and create the infrastructure within the infrastructure. This will supply and support the industries while also building communities in the region.
We Can Do It! It won’t be easy. It will be a long term commitment from all the countries involved. We need to start with a 25-year commitment at a minimum. Create, Free Trade and Manufacturing & Innovation zones, create STEM and Vocational regional educational centers. Create a rolling 25 – 50-year vision & forecasts for the regions. With updates and adjustments every 5-10 years to stay on course and up to date.
The impact that this could have in Central and South America. It would stabilize the region as well as the geopolitical footprint. It would create a real future for the people. Think about the impact of creating a North and South American Free Trade Zone. Goods and Services flowing freely across both continents. In regards to Asia, we are already seeing companies leaving China for other countries such as Vietnam. Companies want and need a place to move to. It is just a matter of time. Let’s amplify it. Create the same concept and safeguards across Asia. Ramp up in Asia will be much smoother and a little quicker. India will be a large factor in the success and impact. India does create a counterweight to China in the region in many ways. Singapore is the perfect Banking and Technology hub for the region.
In closing, we have no choice but to move on from China as a key trading partner. Simply said, if China was your spouse. They cheated on you every day since your wedding, some days with your best friend. They stole from you and never respected you. They are planning on destroying you and taking everything from you. They are spying on your every move. How would you handle at your house? I know how I would handle it at mine!
Thank you and Good Evening.
