Category: politics

Facebook and the Fax Machine

What manufacturing was to the Chinese economy of the 1980s, information is today. How will the country’s leadership handle this?

The South China Morning Post reports the Chinese government is allowing access to otherwise restricted sites like Facebook to those in the Shanghai free trade zone.

In many ways this parallels the original Special Economic Zones set up by the People’s Republic of China at the beginning of the 1980s – these areas’ separate legal, immigration and economic status attracted foreign investment and trigged the economic boom that’s seen China become one of the world’s biggest economic powers.

Just as manufactured goods were the key to the nation’s development 30 years ago, today it’s information as the PRC leadership works on moving China up the global value chain.

For a nation of knowledge workers to succeed, the workers have to have access to knowledge.

It’s claimed the humble fax machine was responsible for the fall of the Soviet Union, how true that is open to debate but an open flow of information is never good for those who rule without the support of their citizens.

With the explosion of Chinese social networking sites, it’s become harder for the government to control the flow of information between citizens and the opening of the internet in parts of Shanghai is another small change.

How the Chinese Communist Party manages to keep the support of its increasingly affluent and better informed citizens will define the course of 21st Century history.

As China shifts from being a low cost manufactured goods supplier to a more sophisticated, diverse and expensive economy the government has no choice to face these challenges.

Beijing’s cadres would be hoping our children aren’t talking about Facebook in 2012 Shanghai in the same way that we talk of fax machines in 1982 Leningrad.

Image of a fax machine courtesy of Kix through sxc.hu

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We came, we saw, we were ripped off.

What a greasy schnitzel tells us about Australia’s economy in the 21st Century.

One bad schnitzel on Queensland’s Gold Coast illustrates the biggest economic problem facing Australia.

As we approach the 2013 Australian election, it’s notable how the debate – if it can be described as that – hasn’t touched on the biggest issue facing the country, the hollowing out of the nation’s economy.

In the 1980s the Gold Coast was going to be the centre of a Japanese led tourism boom.

That boom petered through a combination of greed and incompetence on the part of Australian tourism and hotel operators, a process being repeated with Chinese tourists twenty years later.

Like the rest of the Australian economy, in the 1990s the Gold Coast looked inwards with a focus on property speculation and construction that kept the workforce employed pouring concrete and fitting out kitchens.

In the meantime, the Gold Coast’s tourist assets were left to rot through under investment. Jupiter’s Casino is a good example of this, a building stranded in the 1980s and in desperate need of a capital injection.

The Gold Coast was not alone in this, a review of Perth’s Rendezvous Grand Hotel — built by Alan Bond in the 1980s — illustrates exactly the same problem at the other end of the country.

A lack of investment plagues all of Australia’s hospitality industry, a dinner at the Bavarian Bier Cafe on the Gold Coast’s Broadbeach* was a disaster as poorly trained staff were overwhelmed by a half full establishment and let down by poor business systems.

That shocking meal — which saw the staff struggle to get out a salad and two beers in over two hours with the greasy, overcooked mains arriving nearly three hours after the diners arrived — is not untypical in Australia.

Soviet style service is fine when beer and a poorly cooked, mostly breadcrumbs, schnitzel costs fifty kopecks, however at modern Australian prices the service, food and cooking should be world’s best.

That high prices rarely translate to superior standards in Australian establishments shows how poorly the nation has adapted to being a high cost nation.

While it’s fashionable to blame the mining industry for the down under manifestation of the Dutch disease, the answer to what has driven Australia’s under investment in tourism, agriculture and manufacturing lies in the cities and suburbs.

On the same day as the disastrous Bier Cafe meal, the Gold Coast media was reporting that relaxed zoning restrictions would allow unrestricted high rise building heights.

While the real estate industry welcomed this, the reality for local property speculators hasn’t been pretty with buyers in the twin tower Gold Coast Hilton development being hit with forty percent losses.

Part of the reason for the poor performance in property speculation is that Gold Coast industry has been hollowed out with local office vacancy rates varying between 27 and 14% percent.

While much of the rest of Australia’s property markets have been spared similar declines to date, the emphasis on real estate speculation over investment in industry has been similar across the nation.

That lack of investment in productive industries, whether in tourism or manufacturing is already hurting Australia,  more critically it’s preventing Australian businesses’ from dealing with the transition to being a high cost economy more akin to Switzerland, Japan or Germany than the United States.

One bad schnitzel on the Gold Coast might not tell us much in itself, but the under investment in systems, training and staff is a bad omen for Australia’s economy.

Regardless of who wins Australia’s federal election on Saturday, it’s unlikely the group of pampered apparatchiks occupying the Treasury benches will have any idea of helping business or society transition to the realities of the Twenty-first Century.

*Paul travelled to the Gold Coast and ‘dined’ at the Broadbeach Bavarian Bier Cafe as a guest of Microsoft Australia

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Can Australia continue the mining employment boom?

Assuming the mining industry will drive Australian employment may turn out to be risky.

The Prime Minister’s comments at the ADC China Forum last week raised an important question about Australia’s mining boom – can the industry sustain employment as the construction of mines, ports and railways are completed?

After her keynote speech at the event’s gala dinner the Prime Minister was interviewed by Busines Spectator’s KGB – Alan Kohler, Robert Gottliebsen and Stephen Bartholomeusz – about the country’s relations with China.

In that interview, the Prime Minister was upbeat about the continued employment bonanza from the resources boom.

I think overwhelmingly the prospects are good for resources. There is nothing to fear here. The absolute peak of the price cycle has probably passed, but we will still be doing good business in resources. It will be supporting jobs.

A few days earlier Fortescue Mining Group’s CEO, Nev Power, spoke to Alan Kohler on Inside Business.

Nev was a little more circumspect about the prospects for continued booming employment in the mining sector.

our capital expenditure program and expansion is coming to an end around mid-year. And then we’re into a very high volume phase and it’ll be a matter of driving the maximum efficiency out of the business through that phase.

So even if the iron price and export volumes do hold up, it looks like the resources employment boom may be reaching its end as mining projects move from the labour intensive construction phase to being relatively hands off production mines.

If Nev gets his way with ‘maximum inefficiencies there may be fewer jobs to go around.

The Prime Minister – along with all of Australia’s political leaders – remains hopeful, as she said in her speech.

So we are not, indeed we have never been, simply a quarry or a beach; ours is a diverse and sophisticated economy and a valued trading partner with the biggest global economies.

As the expansion phase of the mining boom tails off, that economic diversity is going to be tested. Hopefully there is a Plan B.

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Doing social media right

Whoever runs your social media feed is an official spokesman, it’s important to choose the right person and give them authority.

After last week’s Associated Press hack and the stock exchange fallout, regulators are struggling with implications of social media and informed markets.

In a speech delivered last week the Australian Securities and Investments Commission’s Deputy Chair Belinda Gibson and Commissioner John Price gave some refreshing commonsense views on how businesses should handle public information.

The continuous disclosure advice given by Price and Gibson is aimed at meeting the requirements of Australian corporate law, but it’s actually good social media advice.

  • Having delegations in place for who has authority to speak on behalf of the company – whether in response to an ASX ‘price query’ or ‘aware’ letter, or when they become aware of information that needs to be released to the market, perhaps in response to speculation.
  • Ensuring that there is a designated contact person to liaise with the ASX, who has the requisite organisational knowledge and is contactable by ASX.
  • Have a clear rapid response plan and ensure all board members and senior executives are fully appraised of it. Give it a practice run every so often – a stress test of sorts.
  • Have a plan for when you will consider a trading halt appropriate.
  • Have a ‘Request for trading halt’ letter template ready for use.
  • Have guidelines for determining what is ‘material’ information for disclosure, tailored to your company.
  • Prepare a draft announcement where you are doing a deal that will
  • likely require an announcement at some time, and a stop-gap one in case of a leak

Having a nominated contact person with requisite organisational knowledge is possibly the most important point for any organisation.

Even if you think social media is just people posting what they had for lunch or sharing cute cat pictures, it isn’t going away and those Twitter feeds and Facebook pages are now considered official communications channels.

The intern running your social media is now your company’s official spokesperson. Are you comfortable with this?

A good example of where this can go wrong is the Australian Prime Minister’s Press Office where an immature staff member has been put in charge of posting messages. The results aren’t pretty.

prime-ministers-office-twitter-feed

The funny thing is the Prime Minister’s office would never dream of some dill getting up and saying this sort of thing on her behalf, yet allows an inexperienced, loose cannon put this sort of material in writing on the public internet.

Here’s Twenty Rules for Politicians using the Internet.

On a more mature level, the ASIC executives also have some good advice on writing for social media.

Don’t assume that the reader is sophisticated or leave readers to read between the lines. Companies need to highlight key information and tell it plainly.
While the ASIC speech is aimed at the specific problems of complying with company law and listing requirements, it’s a worthwhile guide for any organisation needing to manage its online presence.
Don’t be like the Prime Minister’s office, understand that an organisation’s social media presence is an official channel and treat it with the respect it deserves.

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There is no China Inc

The ADC China forum asked how foreigners view China as a nation.

“There is no China Inc” was the message from the first day of the Australian Davos Connection’s 2013 Future Summit in Melbourne last week.

For 2013, the annual two day ADC Future Summit was themed “China – where to from here?” with both international and Australian speakers discussing the Peoples’ Republic of China’s future and it’s effects on the world, particularly Australia.

Opening the speakers was Martin Jacques, Senior Visiting Research Fellow at the London School of Economics and Author of ‘When China Rules The World.’

Martin Jacques has been on the wrong side of history before, having been the last editor of Marxism Today before its closure in 1991, giving his overview of China’s development an interesting flavour.

Returning to the historical norm

History has never seen a country so big grow, so fast in Jacques view. The US and British economic revolutions featured lower growth rates and much smaller populations compared to the modern Chinese experience.

Jacques quotes leading Chinese economist Hu Angang’s belief that China is returning to its global position of two hundred years ago where the nation made up a third of the world’s global economy – double today’s share.

The resilience of China’s society in Jacques’ view is driven by four factors; its two thousand year old culture, the legitimacy of its government, the competence of the civil service and its lack of desire to build colonies.

Despite China’s historical reluctance to build overseas empires the nation’s rise is still going to dramatically change regional politics.

Australia’s Challenge

Jacques raises the question of Australia making the jump from being in the US political camp to engaging with China and America on an equal basis.

“Australia has an important role to play in the region but only if it chooses to express its own views and interests,” says Jacques. The nation’s interests are not necessarily those of the United States.

The US is uncomfortable with China’s rise and Jacques believes the Obama administration’s policies in the Pacific are destined to fail because the United State’s Asian Pivot is essentially a military response while the PRC’s rise is due to economic dynamism.

Jacques main point was that the west misunderstands China by viewing the country as a nation-state when in fact it is a civilisation. This was a question that troubled the following panel.

Culture or nation?

Dr John Lee of the University of Sydney thought the idea of China as a civilisation would worry its neighbours were that view taken to the logical end point, “would that mean that China views the region in fundamentally hierarchical terms?”

“Australia is in a strategic holding pattern,” says Lee. “Australia like every other country in the region is hedging closer to America and each other just in case China doesn’t turn out benign.”

For Hugh White, Australian National University Professor of Strategic Studies, this insecurity surrounding China comes down to choices.

“China wants to be healthy and strong,” says White. “To do so, China has to face choices, but so too does America.”

“For Australia the choice is are we prepared to be a spectator in the process.”

Maintaining growth

How China can continue its economic dynamism was the biggest question facing the panel.

Patrick Chovanec, Chief Global Strategist of Silvercrest Asset Management, thinks China cannot sustain its current level of economic growth and points out that prior to the Global Financial Crisis in 2008, China’s exports made up 8% of the country’s economy.

With the collapse in international trade following the 2008 crisis, that proportion dropped to 2%.

China made up that drop in demand by stimulating the economy and triggering the investment boom that sent global commodity prices – particularly iron ore and coal – soaring.

This infrastructure splurge is what Chovanec sees as unsustainable, and he challenges the view that Chinese urbanisation will drive the economy and imports.

“If you look around the world,” Chavonec says, “urbanisation has not driven economic growth.”

The problem with China’s infrastructure funded growth model is that building rates have to grow to maintain growth rates – if you build 100 high rises this year, you have to build 108 next year just to maintain the 8% growth rates.

Balancing sectional interests

Shifting from an export to a consumption based economy means a different China. “it creates a different set of winners and losers,” says Chovanec.

Balancing those interests of winners and losers is one of the key tasks for the Chinese leadership, “Various competing interests groups – the Party has to juggle the interests of those groups” says Linda Jackobson of the Lowy Institute for International Policy.

“We shouldn’t talk about China if it’s ‘China Inc.’” Jackobson says, “I don’t think China has a grand strategic plan. It has strategic goals but not a grand strategy.”

Jackobson sees there being three key objectives for the Chinese leadership; political stability, protecting territorial integrity and economic stability.

The role of the Communist Party

That political stability is an important factor when considering China’s leadership as stability is seen as maintaining the power of the Communist Party.

“We tend to assume an identity between the current communist government and the people.” Says Chovanec, “raising this issue is forbidden in many forums.”

Chovanec agrees with Jackobson that thinking about ‘China Inc’ and the assumption, or myth, of long term strategic thinking.

“When we look at Chinese companies going abroad we talk about the long term game plan.” Chovanec points out, “in fact if you look at the haphazard movements of Chinese companies moving abroad it’s been in fits and starts.”

The common factor from the first session’s speakers at the ADC’s China Forum was that the People’s Republic can’t be seen as a monolithic entity.

Should we accept Jacques’ view that China is a civilization and not a nation state, then understanding the relationships that underpin the cultural identity are key to working with the PRC.

On the other hand the panellists see China as a modern nation state with the government, like any other attempting to balance competing interests within society.

Both are more nuanced view of Chinese politics and the nation’s economy than what’s presented by the media and politicians.

Which was fitting as the Prime Minister gave the gala dinner keynote that evening which will be the subject of another post.

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A question of relevance – why the PM welcomes bloggers

The Prime Minister’s courting of bloggers in the run up to the Australian Federal election later this year shows how credibility and relevance are most important asset of any media outlet

The Prime Minister’s courting of bloggers in the run up to the Australian Federal election later this year shows how credibility and relevance are most important assets for any media outlet.

Late last year the Prime Minister invited bloggers to Kirribilli House for lunch then to dinner during her Rooty Hill adventure a few weeks ago.

The press gallery grumbled and wrote patronising articles about North Shore mummy bloggers but failed to recognise the real threat to the established media outlets – these writers are more relevant to people’s lives than the machinations of ‘anonymous political sources’, sports stars or Hollywood celebrities.

Now the Prime Minister is giving one on one exclusive interviews to some of those bloggers, something that will irritate the nation’s political journalists even further.

Old media’s loss of relevance

The press galleries’ problem though is relevance, which lies at the heart of any successful media outlet.

In 1831 when The Sydney Herald’s first edition was published, the front page was made up of advertisements and shipping notices as it was with all newspapers of the time.

That was relevant to the readers, they paid 7d – not an insubstantial amount in 1831 – to find out the latest in shipping movements, real estate sales and livestock prices which were essential to life and business in the colony.

It wasn’t until 1944 that the now Sydney Morning Herald moved news to the front page, the London Times held out until 1966. What was now relevant to readers were photos and wire stories from around the world.

Papers continued to do well despite the introduction of radio in the 1930s and TV in the 1950s because they were continued to be relevant to their readers. If you were looking a job, a house or where to take your mum for her 60th birthday then the local newspaper was the place to look.

The shift to sensationalism

In the 1980s all the media – newspapers, TV and radio stations – started a shift to sensationalism and infotainment and steadily all became less relevant to the populations they served.

At the time media outlets got away with it as there was no-where else for people to get news. If you didn’t like stories about Princess Di’s wedding dress then you had to curl up in the corner with a good book.

Then the web came along.

All of a sudden engaged readers could get relevant information from all over the world.

With social media and blogs, reporting Kim Kardishian’s latest wardrobe malfunction raised a ‘so what’ from an audience that learned about it two days ago on TMZ, the Huffington Post or Facebook.

Making matters much, much worse were the advertising rivers of gold moved to specialist websites and Google.

Newspaper executives found their revenues were evaporating and they worked their way deeper into the quicksand by cutting costs in the areas where their editorial strengths lay, making them even less relevant to the readerships they want to serve.

Relevant lifestyles

Today the mummy bloggers – along with the food bloggers, travel bloggers and political bloggers – are attracting  audiences with relevant, useful content that the audience can engage with.

Last week’s embarrassing circus in Canberra was an example of how irrelevant the media, and much of politics, has become to the average Australian.

Indeed it’s interesting to contrast the self important Canberra press gallery pushing non-stories while fawning over their discredited ‘anonymous party sources’ with the genuinely questioning tone of the some of the bloggers.

So the mainstream, established media can kiss the mummy bloggers’ backsides; if they can’t find relevance in today’s society then they may as well shut up shop.

For politicians relevance is important too – political parties that pitch themselves to 19th Century class struggles or 1980s corporatist ideologies are as irrelevant to today’s society as the Soviet Communist Party.

It would serve the Prime Minister and her staff well to listen closely to what the mummy bloggers and their readers are saying.

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More National Broadband woes

Australia’s National Broadband Network project hits a hiccup with installation contracts.

This is not good for the National Broadband Network project; contractor Service Stream announced it was handing back the Northern Territory rollout contracts to the Australian Security Exchange this morning.

It raises serious questions about the timetable of the project.

Service Stream advises that Syntheo, a 50/50 joint venture with Lend Lease, has reached agreement with
NBN Co to hand back the remainder of its design and construction activities in the Northern Territory. Syntheo is committed to working with NBN Co to complete its work in Western Australia and South Australia.
Given NBNCo abandoned its construction tender in April 2011 amidst hints of price fixing by contractors, this is a worrying development that indicates those ‘overpriced quotes’ may have been closer to the money after all.
I’ll be writing something up later today for IT News.

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