gmtPLUS09 | live from Seoul

Happy lunar new year! For those celebrating

Some “wow” statistics to consider:

• China has an official 1.3 billion people—that’s 1/5th of all people
on the planet. Unofficially, it has 1.5 billion people—the 200 million
that aren’t counted is larger than the United Kingdom, France, and
Germany combined!

• China has 100 cities with 1 million or more people—and to put this in
perspective, the United States has nine. Shanghai, the financial hub
that buzzes with the optimism of Silicon Valley, has 17 million people.
Beijing has 14 million.

• China is the #1 market for mobile phones (350 million users), #1
steel maker, #1 coal producer, #1 in foreign direct investment ($500
billion), #1 auto market by 2010, and #2 market for PCs.

• There are expected to be 10,000 IPOs of Chinese companies in the next 20 years.

• There is $1 trillion in money market funds or twice the value of the
entire Chinese market. The Chinese save 42% of their income.

• 350,000 engineers will graduate from Chinese universities this year, far more than in the United States.

• 300+ biotech companies exist unencumbered by much of the regulation and bureaucracy that U.S. biotech companies face.

• 320 million people under the age of 14—more than the entire United
States population. There are 300 million Chinese moving from rural
communities to cities.

• The Chinese government and the World Bank project that for China to
meet its education goal of increasing the percentage of 18 to 22 year
olds with a college education from 4% to 20% in the next 20 years, it
would have to build 10,000 universities the size of Indiana University.
Very bullish for online education companies!

Key trends that will impact China are the growing middle class, urbanization, and growth in inter-Asia trade.

As we look at China today, it reminds us of the two largest waves of opportunity we have seen in the past 50 years.

• Post World War II Japan
• 1990s U.S. technology

China offers three upside scenarios:

1) Rapid earnings growth propelled by economic Megatrends
2) Price-to-earnings multiple expansion
3) Likely currency revaluation (the Yuan traded freely for 20 minutes on Friday!)

All that said, to portray China as a “bed of roses” would be misleading
as numerous thorns abound. It’s truly a “buyer beware” market where the
attitude of the Chinese entrepreneur seems to be that it’s up to the
investor to figure it out what truth is. Financial transparency is a
murky concept.

Capitalism is only 27 years old and accordingly, the talent needed to
accompany world-class businesses is lean. China has massive bad bank
loans it needs to account for. Moreover, issues like brutal traffic and
horrific pollution do not have simple fixes and will only get worse
with the urbanization and growth of the economy.

The bottom line, China presents both danger and opportunity, but looking ahead, it’s clearly the Pacific Century.

“In a few years, you’ll be driving your Google to the Google to buy some Google for your Google.”

The Wired 40. Nicely put by the Creative Generalist.

A NY Times article covering the near-Osaka train accident puts blame on Japan’s punctuality culture. As a foreigner looking in, I have always seemed to be amazed with the extent of this mindset. Any activity - no matter how miniscule or large - became a practiced zen-like art form. The final product of this art form represents optimum efficiency and punctuality.

When citizens come to fashion their daily lives around the systematic schedules of mass transit, I can see with my own eyes the destructive path this type of mindset and culture can lead. It’s ridiculous to blame this accident solely on the Japanese culture. Sure they may be widely recognized as the world’s most punctual and efficient but any human who is subjected to an environment with tight schedules and pressure to perform would falter just the same. Look at what happened in Sri Lanka yesterday. A bus driver attempting to make up for lost time, attempted to out gun an on-coming train and 35 lives were lost.

These type of accidents unfortunately happen regularly. It’s a society flaw, not just a Japanese thing.

Link: Gen Kanai weblog: Japanese punctuality culture.

I’m in a thinking mood.

I read a CNN article reporting increased ridership for many public transit authorities across the nation. With gas prices hovering in and around $2/gallon, this has influenced how drivers commute to and from work, school and home.

With no clear signs of let up anytime soon. Blame it on the continued instability in the Middle East, global terrorism, and the oil-hungry, emerging economies of China and India.

Over an extended period of years with gas prices nowhere where they used to be, I’m thinking a good portion of the US population will change their views on lifestyles that are directly based to driving and/or gas prices. The American “right” to drive a car and take extended roadtrips could be threatened. But what else out there could change? When will automakers fully intervene and endorse alternative fuel resources and collaborate to deliver affordable infrastructure to the consumers? Which lifestyles will adapt and evolve or be replaced?

Sorry for my rambling.

My train of thought is this: by connecting seemingly indirect ‘dots’, it can result in something that can ‘tip’ and radically change human habit. The premise is similar to that of the book, Tipping Point.

Here is an example:
In 2004, Korea opened its French-made high-speed rail bullet trains. The year before the National Assembly passed a law that mandated 5-day work weeks. Companies (with more than 300 employees) put this into practice. These may not sound like a such a big deal, but here is how it can be explosive.

Also in 2004, there was a so-called Well-being trend sweeping the nation, this meant eating healthy and exercising, recreation and travel. When you add the context of 5-day work weeks (that allowed salary men to spend more time with family) and the high-speed railways…

The resulting chain of implications:
1. Families will take advantage of having a true weekend, which allows increased interest and higher adoption rates for leisure and recreation activities, therefore more cash flows into the tourism industry and becomes a growth engine for rural yet scenic areas.
2. People moving away from the capital city for the affordable rural areas. Salary men could commute using the bullet trains. Therefore, lowered stress on public infrastructure because there are less citizens to support. And, minimizes traffic congestion and its product: airborne pollution/smog. Another point: it distributed wealth away from Seoul, to the surrounding suburbs and exburbs. And it could lower Seoul’s outrageous housing prices in the long term.