Will More Companies Seek Bankruptcy As Opening Up Continues?

Before the COVID-19 pandemic hit and the U.S. vs China trade war, JIT (Just in Time) or also known as the Lean Manufacturing method was the way to finish up production of a product line that is fast to bring the products to the market. JIT was made popular by Toyota in the 1930’s “The Toyota Way” production method. This method allows any company not to stock up raw materials and be overburdened with materials and parts in the production chain inventory, but instead, any company that uses JIT can just rely on an overseas or local third party to quickly deliver whatever stuff that a company needs to finish up production of a product line. JIT saves time, cost, and improves the efficiency of manufacturing. Unfortunately, the pandemic hit in early 2020 led to the shutdown of most parts of the world, and JIT isn’t viable as before. Shipping became more difficult, and shipping costs were rising tremendously. Furthermore, companies rather cut costs and shored up cash to protect the business during the uncertainty of the pandemic COVID-19. This pushed the JIT supply chain to the brink of collapse since companies weren’t ordered raw materials and whatever parts so freely as before.

The U.S. vs China trade war is still an ongoing thing, and JIT won’t be taken up favorably by the United States. The United States doesn’t want to be overly dependent on China for crucial and mission-critical materials and parts. One perfect example of this is rare earth minerals. China has cornered the rare earth mineral market, and with such influence, China could always use its power to subdue the United States to China’s demand by not selling rare earth minerals to the United States. Rare earth minerals, although the market isn’t big, these minerals are the absolute must for most electronic stuff that every country needs. To produce an electronic vehicle, smart TV, or just about any other electronic thing — rare earth materials must be present for such a thing to be successfully made. JIT is all about relying on a third partner/country to provide the raw materials and parts, but this could become a security nightmare for the United States in the rare earth mineral example. The pandemic has had only increased the divide between the United States and China in regards to how a global supply chain should be reformed onward.

As the United States and China try to promote different supply chain routes and methods for the globe, locally located companies aren’t yet weaning off the crisis of shortage of materials and parts such as microchip shortage — due to shipping difficulty and countries’ shutdowns across the globe — due to the pandemic is still an ongoing thing since many countries have yet to adequately allow the populations to be vaccinated with COVID-19 vaccines. While the shortages of everything are on the menu, companies are trying to alleviate many shortages as possible by hoarding raw materials and parts. Some companies are trying to overproduce the finished products as these companies have seen the demands of goods rising to an unseen level since the pandemic hit. Thus, rising demands produce rising inflationary prices of finished goods. Shortages of raw materials also push the prices of raw materials to be more expensive such as lumbers. As raw materials get expensive, the expense would pass on to the customers in the finished goods. In general, finished goods are more costly as the demands are high and raw materials’ shortage. With high demands come shrewd business sense, and so companies would go overdrive in producing more finished goods, The question is then when the COVID-19 pandemic slowly goes away and the world is opening up again just like how it was in 2019, services will come back to life, and customers would spend less on goods but more on services — how are the demand bubbles of physical goods would fare in such a scenario?

I think as the opening up roaring back, the inflation would collapse into deflation in how physical goods are being priced — while innovation would continue to drive the costs down of stuff such as electronic — and so many companies that overly produce the finished goods will face the glut of inventory. This could be so inefficient that these companies may wish JIT would become fashionable again. Thus, I think the future earnings of such companies will be way less impressive than most investors would have liked to see. The service sector may pick up again, but companies that are in this sector may still have to face bankruptcy since these companies borrowed a lot of debts during the pandemic COVID-19 service shutdown across the globe. Thus, I don’t think we will see the normal as how we had gotten used to before 2020. Companies with heavy debts should be valued less even if these companies fall into the value investing category. This could be an opportunity or a value trap kind of thing. We could not know an overly burdened indebted company is a bargain or a value trap since such a company could file bankruptcy easily.

Can China’s CBDC Replace The Dollar?

As the United States and China continue to develop a more hostile relationship since both countries are trying to out-compete against one another on the global stage. The United States is the current superpower, and China is the upcoming (emergent) superpower. Both countries can spend a lot of money to improve their military strength in terms of troops, hardware, and technology. Both countries are worrying that the opponent would do so well in terms of global trade, influence, and everything else that it would outstrip the home country’s advantage on the global scale! Imagine that one day China could be so influential that it would prevent most countries around the world speak up and side with the United States to prevent China from invading Taiwan out of fear that China would stop trading and even worse will start a military campaign against the outspoken country in a near future. In reverse, China wouldn’t want the United States to continue to dominate the globe since China is now stronger and would become a huge boulder that could block the United States’ global domination.

We all know that the United States Dollar is the dominant reserve currency in which even China itself is holding a large number of dollars just to allow home companies and home local governments to transact with countries that are only wanting to trade in dollars on a global scale. As the United States is getting more hostile toward China for obvious reasons such as wanting to prevent China from dominating the world with its technical standards and influence and whatever else, China knows that it could not rely on the United States’ goodwill in the long run. As the United States sanctions Iran and North Korea and few other countries from conducting dollars on the global scale, China knows that it could be sanctioned by the United States if both countries are going to get even more hostile toward each other shortly. This is why China has been creating a different global transactional path known as CIPS which allows China to conduct trades on a global stage without relying on the SWIFT system in which the Dollar is dominated.

Instead of just being satisfied with what CIPS has to offer for China in terms of conducting trades with countries that are friendly to China on the global stage such as Iran, China is taking one step further by pushing for CBDC (Central Bank Digital Currency). As we speak, it’s estimated that roughly 83% of the world’s central banks are looking at creating their own CBDC version. China’s CBDC is the only digital currency in which has already being pushed to use by its citizens, and this means China’s CBDC has progressed the most out of all CBDC projects out there in the world. As we speak, Canada, Sweden, and few other countries are further along but behind China in terms of making progress in creating a CBDC system. The United States is unfortunately way behind many other countries in creating its CBDC system.

As China makes progress in creating and promoting and updating its CBDC system, the unintentional or intentional, depending on who you’re asking the question, advantage that comes with the creation of this CBDC system is that many countries who are signed up to be a member of BRI (Belt and Road Initiative) may adopt China’s CBDC sooner than we could have imagined for trades on the global stage. How come? Perhaps, using China’s CBDC for conducting trades could cut down the costs of transactional fees, and the digitalization of the logistic application such as clearing customs and so on could be done on the blockchain (which underpins China’s CBDC) smoothly. For example, country A bought huge containers of China’s export for its own import need could just open up an app and with a few clicks here and there — the logistical digitalization through the usage of CBDC — and can order many huge containers of products to be imported without needing to file paper works online or offline for clearing customs and paying huge currency conversion fee and whatnot — meanwhile, the app would show when and where the products have been moved and when will the product arrive on the doorstep of country A.

After watching the video right after the break, you might as well be as educated on the topic of digital currency as I am since the information I’ve shared in the post was learned from the video itself. I have no affiliation with the people in the video right after the break, and I’m sharing the video since it got so much important information about our future. For example, the speakers in the video mention that through Alipay and Wechat, Chinese people become cashless society but China’s CBDC won’t replace Alipay and Wechat but rely on these two platforms to get popular. Another example is that the speakers mention how the digitalization of currency could do away with overdraft protection fees in which the poor are most likely being affected — as we speak 30 billion dollars of overdraft protection fees could have been conducted annually if my understanding of what the speakers have conveyed is correct.

In summary, I think China’s CBDC may displace the dollars on the global stage but won’t replace the dollars on the global stage. To the best of my understanding from watching the video, I could understand that China’s CBDC will allow countries to use CBDC to cut costs and time in conducting trades with China on the global stage. Since China has been pushing for closer ties with BRI members, I could see BRI members will rather use China’s CBDC over the dollars in the longer term. This means China’s CBDC will displace the dollars on global trade but the Dollar will still be a reserve currency for some countries that want to do trade in dollars on the global stage. The dollar won’t go away but the Dollar may lose influence to China’s CBDC over a longer period. This is why the United States too may have to push hard on creating its CBDC system to compete against China’s more progressive and developed CBDC system as we speak. If the United States doesn’t do so, I fear the United States will be way behind in competing against China in terms of trades and currency influence on the global stage.

GZERO’s Discussion on The Presidential Election of 2020 While The Whole Thing Is Actually Happening And Underway

No one who is under the sun, a citizen of the United States or not, could ignore the United States’ presidential election of 2020 because it’s so polarized and contentious. Check out GZERO video right after the break on the discussion of what is going on while the presidential election (2020) is still underway.

Can the United States Invasion of Iraq in 2003 Be A Good Model for China’s Possible Invasion of Taiwan?

I’m no strategic kind of person since I’m rather a straightforward chap. Nonetheless, I do have my own opinions in the matter of whatever could be happening in the next decades or so. I don’t think I’m prophetic, but I guess if you keep guessing, something ought to turn out just like the way you’ve had imagined. Thus, if the experts are correct on how China would want to invade Taiwan soon, then I think China will do it in a similar fashion to how the United States had done Iraq in 2003. A complete overwhelming show of force.

By showing an overwhelmed show of force in Iraq, the United States has made China eagerly to update and upgrade its military structure, tech strategy, and weapon knowhows. China would not want to be the next Iraq. So, it is logical for China to think like the United States if China has to invade Taiwan. I think China will try to overwhelm Taiwan in an invasion of Taiwan to the point that, perhaps, could shame the one that the United States had done in Iraq in 2003. Why? By overwhelming an enemy force rather easily, China sends a message to unfriendly countries that it’s not to be trifled with.

I think the invasion of Iraq by the United States and the fall of Saddam Hussein had pushed China to be even more cautious and paranoid of the United States. This event may have had pushed China into going all out in upgrading its military and related capabilities. Furthermore, China is now eager to advance in other tech industry sectors such as quantum computer/satellite and space techs. This way, China could use these advances during peacetime for economic purposes — but the dual usage of these capabilities will be a tremendous, helpful kind of force in wartime for China.

An Honest Opinion: Can the West Decouple from China?

I have a feeling that even though the West is trying to decouple from China, with job loss increases during an ongoing pandemic, I don’t see how a country like the United States can bring jobs home since unemployment is going to be high still. By this, I feel that with more people are relying on the government to create jobs and whatnot, bring jobs home mean companies in the United States have to hire more and spend more to produce anything. Meanwhile, China is once again increasing the output of their manufacturing, albeit that wages are increasing in China, the living costs in China are still way cheaper than the West, and so I think their wages won’t be rising to a point that foreign companies want to shift their manufacturing bases away from China faster. After all, producing in China does save on the costs of shipping and exporting.

Producing at home means that local companies have to be able to produce things cheaper than their foreign imports. Usually, import stuff should be more expensive than locally made since there are import costs and shipping costs that would add on to the top of the costs of the goods that are being made elsewhere. Unfortunately, it’s also depending on how productive a local manufacturing base is and other variables such as how cheap are the local wages and whatnot. Furthermore, we also have to worry about how is the local economy is doing. To add salt to the already infected wound, the COVID 19 pandemic is still an ongoing thing. So, I don’t see how decoupling from China is easy at all.

When we are trying to decouple from China, we should be prepared for China’s backlash such as how China would ramp up their distaste for foreign products even though most of these products are being produced in China. For an instance, China could ramp up the investigation into foreign companies that are actively opened for business in China, and by doing this China could persuade its people to trust less on foreign imports. By doing this China could also support their local economy through local made, and so in the long run China would be less exposed to foreign imports. I also see that China is producing much more stuff for foreign countries than foreign countries produce stuff for them — in a way why would China import more stuff when they could make everything at home?

As the United States tries to ramp up the pace of decoupling with China, China could see itself ramp up the pace of relying less on foreign imports. Meanwhile, China could also make it a lot harder for foreign companies to operate in China. At home, Western companies are facing the uglier local economy, and so these companies may not be able to produce higher revenues from local markets. Now, through geopolitical conflicts between China and the United States, it would make a lot harder for Western companies to make profits in China. Of course, Asia is a big place, and so Western companies should be able to ramp up their marketing elsewhere! The question is can other places replace the loss of the Chinese market?

Foldable Phones Don’t Matter, 5G Does!

What do I think about foldable phones? I think foldable phones don’t matter! Foldable phones remind me of flip phones back in time, but now instead of flipping a phone in style, we can unfold a phone into a tablet. Since foldable phones are so expensive, I guess using the tablet and unfoldable phone I already have will be just fine!

Although foldable phones are not that important, the 5G technology that gets to debut on these foldable phones is really important! Since 5G allows communication over the air almost instantaneously, and so this could allow innovations in the Internet of Things sector to thrive big time.

One company right now is leading the pack in term of 5G is of course none other than the Chinese giant, Huawei. Right now, Huawei is getting a lot of heat from the United States. Huawei’s CFO Meng Wanzhou, the daughter of the founder of Huawei, is being under house arrest in Canada in the behest of the United States’ extradition agreement with Canada. Furthermore, the United States is increasingly persuading other countries to not use Huawei’s 5G technology.

5G can be really useful for whatever purposes that demand faster wireless communication. I may not know what purposes would demand 5G the most, but I do know that 5G will be great for commercial purposes such as the Internet of Things devices. Furthermore, 5G will accelerate the use of driverless cars and other automated vehicles.

5G can allow driverless cars to see each other instantaneously and also communicate with smart roads and highways instantaneously. 4G technology is definitely too slow and less reliable than 5G when it comes to deploying the technology on a massive scale to allow crucial transit system to work in a smarter way. So I think 5G will definitely be a game changer in wireless communication.

Anyhow, I guess it’s going to be expensive to build a massive backbone system that could support the 5G wireless system. It seems though, this isn’t the problem for Huawei. Huawei seems to be able to deploy 5G network for various platforms in China already! For an example, a 5G network is now already up and running for Qingdao Port in Eastern China.

China is leading the way to deploy 5G network not only in China but across the world. Huawei is at the forefront of this 5G expansion from China. I’m not sure why the United States is really scared about how China is leading in 5G, but my guess is that whoever leads the 5G network deployment across the world gets to call the shot for making a standard for 5G chipsets and much more. This means big money and market cornering.

Since 5G technology will change how wireless communication permeates throughout the global economy, new and old markets could churn out a lot of new money for the global economy. For an example, driverless cars will become more reliable, encouraging people to spend more money on driverless cars. Dumb cars without the support of 5G technology might get left behind, collecting dust somewhere while driverless cars sell like hotcakes.