England ruled global trade for more than 200 years.
The U.S. ruled for about 90 years and still carries a big stick. China, which arguably was to be the next victor, may already be on the way out. And we thought high school went by fast. That’s right, China is no longer the world’s factory. It is being replaced right before our eyes by the ASEAN nations of Thailand, the Philippines, Vietnam, Indonesia, Laos, Cambodia and Myanmar. Case in point: in 2000, Nike produced 40 percent of its shoes sold globally in China versus 13 percent in Vietnam. Today, it’s down to 32 percent in China and up to 41 percent in Vietnam.
It’s said that if you owe someone $1,000, he owns you. But if you owe someone $10,000, you own him. This past election, a lot was made of the fact that China owns so much U.S. debt. So what? Would you rather owe $1 trillion or be owed $1 trillion? Who really owns whom?
North Korea’s Kim Jong-eun reminds me of a little boy who misbehaves at his own birthday party. He is no more a threat to the stability of Asia than a toy poodle, unless one of his rockets veers off course and hits a civilian area, which is why something needs to be done about this guy. Yes, he can build poorly made rockets that go boom, but that’s about it. Lots of kids can do that. And every time he makes one, he sends out a press release saying that he’s serious this time and “you better send more aid or I’m going to point it at you.” Really? It’s like you want to give the guy a “head noogie” and tell him to grow up. And while he’s at it, he really needs to cut back on the jelly donuts.
Will GDP flatline in 2013?
Damn the paddles, full speed ahead! As the saying goes, when life gives you lemons, make lemonade. Or in this case, if diminished GDP won’t allow you to increase your pricing, then increase your global market share. That’s why you export … so that your company’s growth is not dependent on what happens in the U.S. economy. Why not aim for the U.S. market to only be 50 percent of your sales? There are very knowledgeable carriers, 3PLs, banks and ports advertising in this issue that are ready to help you grow your exports in 2013. Check out our Global Logistics Planning Guide for C-Level Execs and see how other CEOs are using logistics as a tool to increase their global market share.
Free For All
If Obama is serious about his pledge to double exports, then can a Trans-Atlantic Free Trade Agreement (FTA) be far behind? And what will that mean for your business? The U.S. and the E.U. account for almost half the world’s GDP, and it is estimated that one-third of all global trade is transacted between these two powerhouses. Currently tariffs are pretty reasonable between the U.S. and the E.U., running between 5 percent to 7 percent on average. So it’s not like there would be a huge windfall if a deal were struck. And quite frankly, a 5 percent to 7 percent tariff spread is within the give and take that results from nations imposing their “standards” on one another within the context of a FTA anyway. For example, say the U.S. wants to export its beef duty-free to the E.U., but for political reasons the E.U. wants to give a bit of protection to European beef producers. So the E.U. says that the standards used by U.S. feed yards fall short of E.U. feed yard standards and therefore it feels compelled to charge a “penalty” to U.S. beef exports. And so the game plays out amongst dozens and dozens of products. Still, a FTA between the U.S. and the E.U. could have a positive psychological effect, giving confidence to businesses on both sides of the pond, and that is reason enough to proceed post haste.
Relax. China Isn’t Taking Over!