Saturday, February 11, 2006
The intriguing rise of Shanghai Tang
When I was in Hong Kong in December, the one store I was told I had to go to was a place called Shanghai Tang; other bloggers have apparently received a similar message.. The people telling me to do this were right -- I'm not much into clothes stores, but even I was impressed by the quality and style of their merchandise. I wound up buying lots of nice things for my wife, which almost -- but not quite -- made up for me leaving her alone with the kids for nine days. Rest assured, Americans do not need to jet to Hong Kong to sample the store -- there's both an online catalog, and a store in Manhattan.
I bring this up because Shanghai Tang is the topic of Linda Tischler's cover story in this week's Fast Company. The story strongly suggests that China will be moving up the global supply chain to luxury goods very soon:
If, as global market watchers from Wall Street to Tokyo have claimed, this is the China Century, then Shanghai Tang may just turn out to be that century's banner--China's first global, upscale brand.As you read a bit more into the story, however, you begin to wonder just how you would categorize the nationality of the firm. First, you discover that Shanghai Tang is majority-owned by Richemont, a Swiss-based luxury-brands holding company. Then you discover the background of the top people at the firm:
It's no surprise, says le Masne de Chermont, that the company's principals have been recruited from the carpetbagging global creative class. The brand's founder, British-educated David Tang, is from Hong Kong, that most Western of Chinese cities. [creative director Joanne] Ooi is American; Camilla Hammar, the marketing director, is Swedish. [CEO Raphael] Le Masne de Chermont, who is French, honed his luxury branding skills at Piaget before being deployed by Richemont, whose portfolio also includes Mont Blanc, Chloe, Dunhill, and Cartier, to fix its ailing Shanghai Tang brand.What's most interesting are the firm's expansion plans:
While the privately held Richemont is cagey about divulging numbers, le Masne de Chermont says that the Madison Avenue's store's revenue is up 50% in 2005. Overall, Tang grew 40% last year, mostly in Asia, home to 70% of its stores. And it's profitable, though not quite yet in the United States.So even though Tischler's story is titled, "The Gucci Killers," this is less about the rise of a global competitor than the mergence of a Gucci-type brand -- created by Asians, Europeans, and Americans -- that can penetrate the Asian market.
A final note: I'm genuinely surprised the New York store is not yet profitable -- to my admittedly uncouth eye, the clothes and accessories are world-class and, compared to other luxury brands, very reasonably priced.
UPDATE: Reena Jana did a story on Shanghai Tang for Business Week last December that's worth checking out as well.
Thursday, February 9, 2006
"the biggest winners are consumers in the United States"
This is David Barboza's conclusion in the New York Times after looking at shifts in the global supply chain:
Hundreds of workers at a sprawling Japanese-owned Hitachi factory here are fashioning plates of glass and aluminum into shiny computer disks, wrapping them in foil. The products are destined for the United States, where they will arrive like billions of other items, labeled "made in China."Read the whole thing. One fact genuinely surprised me:
Asian exports to the United States have actually slipped over the last 15 years....
United States 2, Terrorists with shoe bombs, 0
So apparently an Al Qaeda plot to use shoe bombs to hijack a plane and fly it into LA's Library tower was thwarted in 2002. A few things are interesting about this:
1) Using shoe bombs are apparently the terrorist equivalent of walking under a ladder.This brings us to the elements of the Time story that are much more disturbing -- the escape of the Al Qaeda terrorists from Yemen:
But at the same time the Administration was chest-thumping about this victory in the war on terror, [counter-terrorism czar Frances Fragos] Townsend had to acknowledge that it is grappling with one of the worst examples of non-cooperation. Over the weekend, 13 convicted Al Qaeda members being held in a Yemeni jail escaped, including the reputed mastermind of the October 2000 attack on the U.S.S. Cole. Townsend acknowledged that the jailbreak is "of enormous concern to us, especially given the capabilities and the expertise of the people who were there." All 13 had been housed together, she said, and "we are disappointed that their restrictions in prison weren't more stringent." When asked why the U.S. wasn't keeping closer tabs on how the Al Qaeda prisoners were being incarcerated in Yemen, a U.S. law enforcement official said, "that assumes the Yemenis care what we think."
The good news about cancer
Denise Grady has one of those stories in the New York Times that's worth emphasizing because the news is so good:
The number of cancer deaths in the United States has dropped slightly, the first decline in more than 70 years, the American Cancer Society is reporting today.Here's a link to the American Cancer Society's press release. Among other things, they open with, "The American Cancer Society's annual estimate of cancer deaths says 2006 will see a slight decline in the projected number of cancer deaths compared to estimates made for 2005."
Tuesday, February 7, 2006
Open cartoon thread
Readers may have noticed that I haven't posted on the whole cartoon business. To be honest, I didn't think it was that big a deal. Clearly, some Muslims disagree.
A lot of blogs have posted deep, deep thoughts about the state of Islam and the perceptions of Muslims in the world. I'm afraid I can't muster anything beyond two quick, cryptic observations: a) there's a difference between a democracy and a liberal democracy, and it's clear that the Muslims exercised by this cartoon do not distinguish between the two at all, and b) this is neither the first or the last time we're going to see protests of this nature.
UPDATE: This Andrew Sullivan post seems pretty powerful to me.
What is the future of GMOs?
Edward Alden, Jeremy Grant and Raphael Minder report in the Financial Times that the WTO has just issued a ruling on genetically modified foods:
The World Trade Organisation ruled yesterday that European restrictions on the introduction of genetically-modified foods violated international trade rules, finding there was no scientific justification for Europe’s failure to allow use of new varieties of corn, soybeans and cotton.I cut and paste from the FT a fair amount, so et me help them out and post what the practical effect will be on the various players:
1) The effect on the EU is pretty much nil. They'll appeal, and probably lose their appeal, and then face punitive sanctions from the US, Canada, and Argentina. Just as with hormone-treated beef, the EU will suffer the sanctions rather than comply, given public attitudes about GM foods in Europe.[Sounds like you support the EU position--ed. Oh, no, I think the EU approach to GMOs is daft -- that, however, doesn't matter when you control a $11 trillion economy.]
Just how unpopular is Iran?
A major BBC World Service poll exploring how people in 33 countries view various countries found not a single country where a majority has a positive view of Iran’s role in the world (with the exception of Iranians themselves).Here's a link to the full questionnaire and methodology.
Of course, if you look at the table below, the U.S. doesn't have a lot to crow about either:
There is one interesting tidbit from the individual country results -- the U.S. does extraordinarily well among African countries, better than the EU. I have no explanation for why this is true.
UPDATE: Just to clear up one confusion in the comments thread -- Europe did not earn a more favorable rating because Europeans were included in that measure. If you read the methodology document, you'll see that they were excluded from their own rating, just like the USA.
Monday, February 6, 2006
An FTA that makes economic and political sense
Most of the free-trade agreements put forward by the Bush administration over the past five years have made a lot of foreign policy sense, but have been pretty marginal in terms of their economic impact.
Last week, however, the U.S. and South Korea announced that they intended to negotiate an FTA over the course of this year. USTR representative Rob Portman said, "This is the most commercially significant free trade negotiation we have embarked on in 15 years," and he's not lying -- you'd have to go back to the start of NAFTA for an FTA that would have as big an economic impact.
Kudos to Portman for finally taking up the ROK's offer to negotiate. I'm also intrigued whether this was timed to prod the EU, India, and Brazil into moving forward on Doha.
Would the Scandinavian model fit the United States?
Milton Friedman gave a wide-ranging interview with New Perspectives Quarterly editor Nathan Gardels last November. One of Friedman's answers intrigued me:
NPQ | Perhaps the Scandinavian countries are a model to look at. They are high-tax but also high-employment societies. And they have freed up their labor markets much more than in Italy, France or Germany.I suspect that Amy Chua would have some issues with Friedman' last assertion, but it is an interesting hypothesis. Could it be that the liberal market economy's primary advantage over the coordinated market economy is not it's better efficiency or productivity, but the fact that it works better over a wider variation of societies?
Check out the rest of the Friedman interview as well -- the dark matter controversy comes up.
Super Dud XL
Yesterday afternoon, I was thinking that the Super Bowl had recently been on a decent run of gripping games. Between 2000 and 2005, three of the contests (St. Louis/Tennessee, New England/St. Louis, New England/Carolina) had been pretty gripping games, a vast improvement over the Super Bowls I remembered from childhood.
So much for the nice run -- this one was a stinker punctuated by the occasional nifty play. How much of a stinker? The lead Chicago Tribune sports columnist wrote an entire article about a play that wound up not affecting the final outcome.
As for the ads -- well, to quote Kieran Healy, "I hope next year Burger King Corporation just make a pile of 2 million dollar bills and set it on fire, rather than taking the roundabout method of pointlessly wasting money they opted for this year." On the upside, I did win $100 from a friend who was convinced that Karl Malden had appeared in one of the NFL Mobile ads.
How strong is the U.S. economy?
I've got an advanced degree in economics, and I'm here to tell you that the official numbers on the U.S. economy are just plain strange.
On the one hand, in the fourth quarter of 2005, GDP growth slowed to a crawl. On the other hand, that had little effect on U.S. labor markets, since the Bureau of Labor Statistics reported on Friday that the economy has generated more than 200,000 net new jobs a month, and that unemployment is now down to 4.7%.
On the one hand, the U.S. trade deficit shows no sign of reversing itself; on the other hand, some economists insist that dark matter is not being counted.
On the one hand, European work fewer hours than Americans. On the other hand, it's possible that Americans have more leisure time than Europeans.
The latest: Time frets on it's cover that we may be losing our edge.
Except that Michael Mandel says on the cover of Business Week that the economy is stronger than conventional statistics indicate (link via longtime reader Don Stadler):
[W]hat if we told you that the doomsayers, while not definitively wrong, aren't seeing the whole picture? What if we told you that businesses are investing about $1 trillion a year more than the official numbers show? Or that the savings rate, far from being negative, is actually positive? Or, for that matter, that our deficit with the rest of the world is much smaller than advertised, and that gross domestic product may be growing faster than the latest gloomy numbers show? You'd be pretty surprised, wouldn't you?Read the whole thing, which gets around to the "dark matter" question as well (also click here to see the Boston Fed paper upon which Mandel got most of his info).
Mandel's story does offer an explanation about the fourth quarter numbers:
[T]he conventional numbers may be understating the strength of the economy today. The BEA announced on Jan. 27 that growth in the fourth quarter of 2005 was only 1.1%. In part that was because of a smaller-than-expected increase in business capital spending. However, employment at design and management-consulting firms is up sharply in the quarter, suggesting that businesses may be spending on intangibles instead. Indeed, the consumer confidence number for January zoomed to the highest level since 2002, as Americans became more optimistic about finding jobs.In fairness, as Stadler pointed out in the e-mail that triggered this post, it is possible that redefining investment would also make the 2001 downturn look more serious that conventional GDP data suggested -- because there was such a fall-off in R&D spending at the time.
So, maybe the economy is much more robust than commonly thought. But there are three caveats to this that I can't quite shake. First, I very much want this to be true, which means that I might be accepting Mandel's suppositions too quickly.
Second, I still remember this Stephen Roach op-ed from 2003, which also pointed out the screwiness with existing data -- except that Roach thought the metrics under discussion were being too optimistic about labor productivity gains. Roach and Mandel are focusing on the same productivity figures -- but Mandel thinks it shows that other numbers are screwy, while Roach thinks the productivity figure is inflated. I'm not sure Roach is right either -- but it's worth bearing in mind that inaccuate data can cut both ways in trying to figure out the current economy.
Third, even if we're exporting knowledge capital in the form of FDI, we're also importing significant amounts of knowledge capital -- in the form of science and engineering Ph.D. students. What happens when those figures are thrown into the mix?
Sunday, February 5, 2006
A correction and apology to Tom Friedman
Several elements of this Davos Diary were picked up and run in other places, which is gratifying. However, in one instance, it is embarassing. In the item on the panel on Middle East nuclear proliferation chaired by Tom Friedman of the New York Times, it suggests that Friedman made a statement that suggested that none of the nations in the area should have nuclear weapons and that this was a source of embarassment re: Pakistan's Pervez Musharraf, who was on the panel and whose nation does. Had the entry stated that it was Afghanistan's President Karzai who made the statement, it would have been accurate. That is what I intended to write and what my brain actually recalls having written. Being as how it was the truth and all. If it came out of my head otherwise or was somehow altered along the way, I apologize. Readers of the blog may recall I sustained several blows to the head along the way and anything is possible. Suffice it to say, Friedman ran the panel wonderfully with a light and informed touch and Karzai's misstatement was humorous and even he responded to his error with somewhat more grace than I have responded to this one.Apologies to Friedman for propagating the original error.