Opinion: Can Sears Be Revived After Eddie Lampert Won Auction Bid, Saving Sears From Liquidation?

Can Sears be revived after Chairman Eddie Lampert won $5.2 billion auction bid to save Sears from liquidation?

When thinking of Sears I got nothing to be excited about! On the top of my head, I don’t even know what I care to want to buy at Sears. Whenever I need new clothes I think about stores like Kohls. Whenever I need new gadgets I think about stores like Amazon. Sometimes, Best Buy and Micro Center make to the top of my head for buying computer related items. Video gaming stuff I would just usually get from an online store like Valve’s Steam. Something needs to be improved for the home, I usually go to Home Depot. I usually go to Home Depot or Best Buy for big items such as the refrigerator. If I need everyday cheap, items I just go to Walmart. I still don’t see what I would need so much that I would rush to Sears to get it.

I think Sears will have a very tough uphill battle even it got itself out of liquidation. In order for Sears to be relevant, I think Sears got very few options. The first option is to find out what makes Sears unique in today competitive online/offline retailers such as Amazon and Walmart. If Sears cannot compete against Best Buy, Amazon, and so forth, then I think Sears needs to go with the second option which is to cater to luxury stuff only. Nonetheless, this would be like completely changing the business model of Sears inside-out. This would mean Sears would not even try to be competitive against brands like Amazon and Best Buy. Instead, Sears would just cater to the rich.

Let’s fantasize how Sears would just cater to the rich would be like OK? Let’s imagine instead of selling a normal refrigerator Sears now sells a gold plated refrigerator. This gold plated refrigerator is one of a kind since very few of them were made. The price is around $25,000. The refrigerator is not only gold plated, but it is also a tech hub center for the kitchen where the large glassy part of the refrigerator door could go translucent so you can interact with it like a smart TV or a computer. It also got a smart AI assistant to help stock up the refrigerator when something is about to run out. In this scenario, normal people wouldn’t buy this refrigerator since it’s too expensive and luxurious. Wealthy people though, they could buy this refrigerator without blinking twice.

If Sears targets the rich, then its business model would be completely different than before! The stuff Sears needs to carry in the store are going to be totally different than before. Furthermore, when targeting the rich Sears may not even need to care about being competitive against other players at all. How come? I think buying luxurious stuff is an experience! A few clicks of the mouse through online stores won’t get you the experience! Instead, I can see rich people would drive their supercar or Rolls Royce to Sears, get greeted by super friendly and helpful staff — feeling like a king when buying something — and feeling like a king when leaving Sears store afterward. Such an experience you would never get from online stores or from the stores that cater to the middle-income class. Sears can go this route to stay profitable even though Sears won’t be competitive against players such as Amazon.

Of course, there is always a third route which is to use the old model but providing better customer service. Nonetheless, I don’t see how Sears can stay competitive and relevant when people don’t have the need to go to Sears. Sears could learn from Kohls even though Kohls is just a retailer for clothing. Why? I think Kohls is really good at attracting me to buy clothes from its online store! Kohls got discount programs such as Kohls Cash, and these programs somehow encourage me to spend more. Although Kohls doesn’t provide free shipping unless you buy more than $75 worth of items (if I’m remembering this correctly), but this somehow encourages me to spend more than $75. Kohls always announces a new clearance sale, and so it’s like Christmas all over again. If Sears can learn how to give out discount like Kohls does, I think Sears can begin to become relevant in no time. Nonetheless, Sears must carry the stuff that when giving out discounts it does make sense for people to care to buy. Yep, even on discount, unwanted stuff won’t get sold.

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Could Trade War Be A Blessing In Disguise For China?

What I’m about to write could be controversial for the time we’re living in now.  As we all know president Trump’s tariffs on China are the means to push China to negotiate a fairer trade — at least this is how the president promotes to the public.  So far China isn’t willing to be a pushover and so they decide to retaliate pound for pound.  This means whoever blinks first would lose a lot more in the long run, but in the end, both the United States and China would lose in short-term — well, at least this is how the news programs promote this.

I’m thinking that could tariff be a blessing in disguise for China?  How come?  China has been known as the factory for the world since they opened up their market and joined the World Trade Organization.  This means China can ramp up production of almost anything!  As Trump’s tariffs hit China, companies that want to avoid tariffs from the United States and still want to export to the United States would move their operations out of China.  Nonetheless, there are Chinese and foreign companies in China that produce the same stuff but have yet to export their products to the United States would find the vacuum suddenly is a lot more pleasant to navigate and do business.

The Chinese government could also be more lenient toward companies that decide to keep their operation within China, thus allowing these companies to prosper while China’s internal consumer market ought to grow bigger in time.  Remember Google?  Google left the Chinese market a long time ago but now Google has shown signs that it wants to grab a chunk of the Chinese’s huge consumer market.  Unfortunately, Google isn’t making much progress in this front and allowing similar Chinese homegrown companies to grow unchallenged within China.

Since Chinese companies that are going to stay in China could ramp up their production unchallenged as the trade war between the United States and China heats up, these companies ought to grow bigger in a more empty but lucrative Chinese consumer market.  Perhaps some European companies may want to open up their operations in China to give the Chinese companies some competitions.  Anyway, I think Chinese companies could grow unchallenged in their home market and mass produce even cheaper products to saturate the world market even more.  In the end, I think trade war could only harm a weaker foe who got no means to fight back and could not ramp up production.  In the case of China, I think trade war could be a blessing in disguise for the reasons I surmised thus far.

 

Asia’s First, If Not The World’s First, Fully Automated Container Terminal In Port Of Qingdao, China

As of late, people all over the world are taking notice how China has become a leader in the port industry.  For an example, in 2016, August 10th, if I got the date right, Chinese shipping group, China Ocean Shipping Company (Cosco), completed the majority purchase of Greece’s Piraeus port.  Since then, Cosco has turned Piraeus into one of the leading ports in the world.  Just now, China is taking its port business into the next level by turning a terminal at Port of Qingdao into a fully automated container terminal.  This means no human involvement is needed on most of the port container activities at this terminal.  Well, you get a better idea if you watch the video right after the break.

As China is continuing to automate its industries, I wonder how will they cope with more unemployment.  On business level though, things will be a lot more efficient in productivities and costs, but at what costs to the traditional social values such as full employment?  Of course, certain traditional social values can always be updated or let go, but employment is one of the things that help put foods on the table for a modern fellow.  Without employment, one would go hungry pretty fast or whatever a bad case that would be.

With roughly 1.4 billion plus population, if I’m not off on the number, China would be in big trouble if so many people won’t be able to find jobs.  Automation will definitely create unemployment problem to be even more acute than ever before.  Right now though, opportunities seem to be abundant in China still, because even some foreigners are leaving their home countries to travel to China for job opportunities.  Nonetheless, once automation becomes evermore prevalent in China, I wonder how the opportunity picture in China would form.  I can see the applications of automation will make China be evermore competitive in many global industries.  In this case it would be all about the port/shipping industry.

China’s Banking Transformation: The Untold Story – How Chinese Banks Operate Under Chinese Government

If you’re listening to Gordon Chang, he could convince you China would collapse tomorrow.  Now, if you want to be convinced why China, at least in its banking industry, is doing rather well and sound, you should read Jim Stent’s book “China’s Banking Transformation: The Untold Story.”  To tell the truth, I haven’t read his book, but I have seen his YouTube video, and I think he sounds truthfully and on points in regarding to China’s current banking industry.  Without further ado, check out the video right after the break and enjoy!

Crocodile in the Yangtze – How Jack Ma Built Alibaba From Nothing

Real life stories about famous people like Steve Jobs are inspiring.  In China, Jack Ma’s real life story is too also inspiring.  Nobody knows what will the future hold for Jack Ma, but it’s already truly inspiring and amazing to see how Jack Ma has built his Alibaba company in his apartment to the size of Alibaba today which has tens of thousands of employees.  I got to know about Jack Ma’s amazing real life story thus far through Crocodile in the Yangtze documentary which was written and directed by Porter Erisman — a man who once worked for Jack Ma’s Alibaba company.  How Jack Ma from nothing built a company that went to war against Ebay, a truly super large company, in his own country, China, to bringing the competition to Ebay’s doorstep in America is definitely not something everyone can just wake up one day and say I can do that too.  So, check out how Jack Ma had done such an amazing feat through the video right after the break.  Enjoy!

Should Minimum Wage Be Raised Or Not?

For pure intellectual reason, I got interested in the debate of should we raise or not raise the minimum wage.  After watching Walter Block and Bill Quigley debate on minimum wage, my interest in this topic can only be enhanced.  The video of this debate is right after the break.

In my opinion, minimum wage is good when you apply it in good time.  The key is good time.  What is good time?  Good time is when the economy is doing good, low inflation on basic need prices (e.g., food, clothes, education, etc…), strong purchasing power at home and abroad (i.e., high living standard in term of strong currency value without the need of devaluing the currency for strong export market), and whatnot.  Minimum wage is effective in good time as it can apply some justice on punishing greedy corporations that just only want to maximize profitability rather than pay livable wage to their employees; punishing them to pay appropriate wage for their employees.  In good time, higher minimum wage encourages poor people to save less and spend more, but this is a redundant effort since good time doesn’t need the spending of the poor to elevate the economy.

In my opinion, minimum wage is bad when you apply it in bad time.  The key is bad time.  What is bad time?  Bad time is when high inflation prices into everything to raise the prices of foods, everyday needs, rents, housing, and whatnot.  Even high inflation in currency would be a bad thing too as it devalues the currency power (i.e., purchasing power), leading to a lower standard of living, comparing to a normal standard living of course.  As the weaker the currency the more you have to slave away for money to just get what you need.  An example would be high inflation of $1 would require $2 or $3 to buy one lollipop instead of $1 a lollipop.  You probably think I have digressed with the inflation talk, but I just want to emphasize that raising minimum wage in bad time can encourage the inflation to go on steroid.

Why raising minimum wage in bad time could supersize inflation?  Let’s assume that you are an employer of a small shop.  You cannot really afford to hire too many workers.  Thus, you want to make sure each worker you hire does have high productivity rate even though you may not be able to measure such a thing in real number.  Nonetheless, you want to have a feeling that a specific worker you hire is doing a good job for your business.  You know each worker would cost you a lot in term of wage if you have to pay the worker a higher minimum wage.  When a government mandates that you need to pay higher minimum wage, it makes the choice of firing a worker easier for you since you have to think about sustaining the profitability, minimizing the cost of doing business and whatnot.  Furthermore, you would probably include the cost of higher minimum wage for an employee in the products that you are producing, servicing, selling, and trading.  The employees who work for you got higher minimum wage, but they don’t have more money since the purchasing power of their wage hasn’t changed much for the prices of the products they may buy would go up.  Not only the employees but the employers themselves are customers, thus the costs of doing business such as buying materials for business would go up.  Simply put, raising minimum wage in bad time invites inflation to become hyper inflated.  It would be bad for the whole economy.

Big corporations love to have a good public relation image, because they think good public relation image will popularize their brand even more.  Furthermore, corporations believe that the more popular a brand is in image, the better the brand would perform in selling whatever.  It’s common sense really!  Thus in bad time, big corporations won’t mind raising minimum wage for their employees, because their profit margin is already high.  At the same time, their brand’s image gets a boost by paying higher wage for their employees in bad time.  Smaller businesses will have harder time in playing the PR game of raising wage, because their profit margin isn’t high enough to comfortably raise wage for their employees.  Thus, minimum wage encourages big corporations play PR game without taking the inflationary effect into the account.

Should we abandon minimum wage altogether?  Once minimum wage got raised, it’s really hard to undo the minimum wage’s level.  Don’t you think it’s really ugly for a government to tell her people to work for less than yesterday minimum wage?  Lowering the minimum wage isn’t going to be popular at all.  Abandoning it isn’t the solution either.  I think many things are relative, and minimum wage is definitely relative to changing time (i.e., good or bad time).  This is why I think raising minimum wage in good time would look good, and lowering the minimum wage in bad time invites protests.  I think since minimum wage is already in effect, the best thing to do is to not messing with it at all.  This means you better have a really good reason to raise the minimum wage.  Instead of messing with minimum wage to help the poor out, why not aiming for low inflation prices of foods, clothes, and whatnot.  Lower inflation would help out the poor in term of purchasing power as long the currency of a country isn’t already devalued to the point of near worthless.  After all, cheaper foods and whatnot would be a good thing for the poor and everybody else!

In conclusion, I don’t think minimum wage is the same thing as high productive wage.  I think individual company can do good by paying high productive wage (i.e., paying more) for employee who has done a stellar job in his/her role, because retaining a good employee from leaving the company for a competitor would be a good thing, in the consideration of having good, long term, business prospect.  When raising minimum wage without thinking about the consequence in having inflation on steroid would be extremely irresponsible thing to do.  In my opinion, instead of messing with the minimum wage, the government should worry about controlling the high inflation in everyday needs for the poor.  I don’t think the argument of minimum wage encourages productivity makes any sense, because productivity is a self-fulfilling-prophecy kind of thing.  Higher productivity will always be in demand in the business world, thus the competition for higher productivity will be abundant.  Higher minimum wage may encourage employers to fire employees easier and hire employees with better productivity rate.  Without raising minimum wage, the employers may give the employees with low productivity rate a second chance in retaining their jobs.  After all, retraining new employees would disrupt the flow of productivity anyway!  In general, the less poor people out there on the street, the better the economy and the society will be more stable.  If raising minimum wage can make inflation goes on steroid, then raising minimum wage is just an illusion for having done something good.