The Future of Your Business Could Be International Shipping

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Recently we have seen China come out and say that they will  "further reform the RMB exchange rate regime and enhance the RMB exchange rate flexibility"

We all know that CHINA has undervalued their currency for the greater part of the past decade where they have been the hub of manufacturing for all developed countries in the world. The Chinese government  has had the goal of their  export manufacturing being the engine for economic growth and job creation in China for the past 25 years. The strategy has largely worked, with China putting up better than 10% annual GDP growth for the past 30 years.  By announcing their plans to reform their fixed-rate system, China is finally signaling a willingness to allow supply and demand to determine the value of its currency.  They are following in the vision implemented by Deng Xiao Peng over 20 years ago when they opened up Shenzen and Guangzhou as their “experiment” with FREE ENTERPRISE.   Interesting that it came about the time the Berlin wall was coming down and the whole world had seen not only  that communism doesn’t work, it is a destructive force with Tsunami power in demolishing societies, as it tragically did with China from 1949 until the early ‘90’s when China started to wake up and smell the coffee brewing over in West.

So now if you walk down a major street in Shanghai, you will see at least 3 Starbucks within one block radius.  You first have to pass  a KFC, McDonalds and a few Malls the size of a small town (underground up to 5 floors high) and you would swear you were in Manhattan.

 Given China's trade surplus and all of that foreign investment cash  flowing into China, the consensus is that China's currency should appreciate quite a bit -- with some experts suggesting that their exchange rate will strengthen  to 4 or 5 RMB to the dollar rather than the current 6.8 RMB to the dollar , 25% increase, coming soon !!!

So if you are an average American that has a home filled with about 75% of goods made in China, or worse yet, your business is directly related to imports from China; Importer, Wholesaler, Logistics, Transportation, retail, etc, you have to see the writing on the wall that the U.S. dollar is only going to get weaker.   Besides the China factor, history has proven that recessions always follow with inflation.  

So money will continue to be tight, consumer costs will continue to rise, and let’s not forget about the hidden inflations ; TAXES,( thank you Democrats) ILLEGAL IMMIGRATION (Thank you Ted Kennedy ’64), INTEREST on our National debt, soon 40% of tax revenue to the U.S, Treasury will go towards servicing the debt, and who really pays for this ? (Thank you Progressive movement), the U.S. Bogus system of calculating actual inflation, cooked books (Thank you past Administrations going back 20 years) and then we have the brand new one courtesy of Mr. Obama, the HEALTH CARE BILL.  Health insurance will go up dramatically, forcing employers to pay more in premiums and taxes which will be passed on in the rising costs of goods and services to the public and further increased unemployment.

What we are left with in the coming decade is among other more dire circumstances, which I will not delve into, but one of great significance. That is the U.S. will have to become an economy dependent upon exports.  Not just of Cotton, Lumber, Scrap, waste paper, Agriculture, Rawhide, etc, but actual consumer manufactured goods.

Most people don’t realize that with all the ballyhoo about our trade deficit with China being so huge, is that the U.S. economy is still at least 4- 5 times larger than China’s and our exports still outnumber those of China.  It is mind boggling I know, but now that you see our dollar destined for another WEIMAR REPUBLIC, together with CHINA’s growing middle class (more than the population of the U.S.) with an RMB at 4 or 5 per USD, it doesn’t take a Rocket Scientist to deduce that China as well as other healthy economies (wherever they are) can afford to buy goods made in the Good old YOO ESS OF AYE.

So if you are wondering “ where is the future of my business”….now is a good time to seriously evaluate how manufacturing and exports can fit into the picture.

I would also like to add that it has become “In” and trendy in China to buy goods made in the USA now.  In fact the “Yuppies” of China are willing to pay higher prices for higher end merchandise and anything that reflects the American way of life.   The real truth is that people in China are in love with America and want to emulate our lifestyles.  This is the future. (that and our children better start learning mandarin)