US Competitiveness and Global Competition John N. Doggett, JD, MBA, Senior Lecturer Global Management, Entrepreneurship & Sustainable Energy McCombs Faculty International Alumni Liaison McCombs School of Business @ The University of Texas at Austin john.doggett@mccombs.utexas.edu www.jndoggett.com
Strategic Inflection Points Are Scary A strategic inflection point is a time in the life of a business [or a country] when its fundamentals are about to change. That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end. Andy Grove, Only the Paranoid Survive
Everyone Needs Ugly Baby Glasses
This Is A Matter of Concern
Deficits Are a Non-Partisan Addiction
The President s Budget
What Happens If...? *Expected future yields on 3-month U.S. dollar deposits held in banks outside of the United States
If the Yield Curve Inverts...
German 5-year Bonds Yield -0.086%
America is Addicted to Debt 1980 = $ 0.91 Trillion 1990 = $ 3.17 Trillion 2000 = $ 5.67 Trillion 2004 = $ 7.54 Trillion 2008 = $10.57 Trillion Today = $18.14 Trillion 2019 = $20.47 Trillion www.usdebtclock.org
China is A Savings Machine
Follow the Money
USA Owes China, Inc. $1.59 Trillion May 2008 (Billion $) Japan= $575.3 China = $506.8 UK = $271.2 Oil Exporters = $164.2 Brazil = $151.4 Caribbean Banking Centers = $104.5 Luxembourg = $75.2 Russia = $63.7 Hong Kong = $61.4 Taiwan = $38.9 Dec. 2014 (Billion $) China = $1,244.3 Japan = $1,230.9 Belgium = $355.4 Carib Banks = $333.2 Oil Exporters = $285.9 Brazil = $255.8 Switzerland = $190.1 U.K. = $189.2 Taiwan = $174.4 Hong Kong = $172.6 Luxembourg = $171.8 http://www.treas.gov/tic/mfh.txt
China Will Soon Pass The US
Look At The White Circle
Each Color = 1 Billion People
National GDP in 2013 (purchasing power parity) Country GDP Real Growth % 1. United States $ 16,720,000,000,000 1.6% 2. China $13,390,000,000,000 7.7% 3. India $ 4,990,000,000,000 3.2% 4. Japan $ 4,729,000,000,000 2.0% 5. Germany $ 3,227,000,000,000 0.5% 6. Russia $ 2,553,000,000,000 1.3% 7. Brazil $ 2,416,000,000,000 2.3% 8. United Kingdom $ 2,387,000,000,000 1.8% 9. France $ 2,276,000,000,000 0.3% 10. Mexico $ 1,845,000,000,000 1.2% 11. Italy $ 1,805,000,000,000-1.8% 12. South Korea $ 1,666,000,000,000 2.8% 13. Canada $ 1,518,000,000,000 1.6% 14. Spain $ 1,389,000,000,000-1.3% CIA World Factbook January 30, 2015
China s Growth is Slowing
Can India Make This Happen?
A Swarm of Inflection Points Japan - Total Trade China - Total Trade $300 $350 $250 $300 $ Billion $200 $150 $100 1964-70 $ Billion $250 $200 $150 $100 1989-94 $50 $50 $0 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 $0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Billions $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 India - Total Trade 2000-2005 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Dr. P. Konana, McCombs Business School, University of Texas at Austin
This is a Brazilian Super Tanker
An Orange Juice Super Tanker
Competing With Innovation
Inside Air Canada s Embraer 190
Bangalore, India
Tata Motors People s Car
Tata Motors Newest Ride
Tata Motors Newest Ride
Welcome to the New China copyright - John N. Doggett, 2008
Growth at Warp Speed 30
China has 6 of the 15 Tallest Buildings
The People s Republic of Communist China?
Shenzhen in 1979 www.lenbracken.com/images/ china31
30,000 people lived here in 1983 Source: http://en.w ikipedia.org/w iki/image:57440.jpg
China s Nicaraguan Canal
Ghost Towns Built With Debt
Extend and Pretend Between 2000 and 2010, China added 28,000 square kilometers of urban space, the equivalent of 322 Manhattans, much of which was devoted to industrial development and housing. To keep the projects going, developers often took out new loans to cover old borrowings, a practice Chinese banking critics call "extend and pretend."
America s EB-5 Visa Program
Let s Talk About Real Estate Chinese are #1 foreign investors in US, UK and Aussie residential real estate. US - $22 billion in 2014 vs/ $12.8 in 2013 In London, Chinese bought 11% of all properties over 1 million pounds in. Chinese developers are building high end apartments for Chinese buyers in NYC, London, Sydney, etc. Australia and UK are raising taxes on foreign real estate buyers. Financial Times 2/26/2015
Is Another Bubble Brewing? Foreign investors purchased $45 billion of commercial real estate in 2014 2 nd only to $47 billion in 2007. Mitsui Fudosan Co. (Japan) $1.4 billion office tower on Manhattan s far West Side $259 million for 92% stake in 55 Hudson Yards Greenland Holding Company (China) Funding most of a $5 billion apartment development in Brooklyn $1.4 billion development in Los Angeles WSJ 1/20/2015
The Chinese People Hate Dirty Air
Worse than Horrible
They Want Clean Water
The Clock is Ticking
Applied s New Xi an R&D Plant
Will This Be China s Century? When Xie Lina, a 26-year-old Applied Materials engineer here, was asked recently whether China would play a big role in clean energy in the future, she was surprised by the question. Most of the graduate students in China are chasing this area, she said. Of course, China will lead everything. New York Times, March 17, 2010
THE GROWING IMPORTANCE OF CHINA S ECONOMY
The Downside of Stimulus Spending China's leaders turned to credit-fueled investment to drive growth after export demand faded in the wake of the 2008 crisis That activity no doubt buoyed growth. But by rushing what normally would be a decade's worth of investment into a few years, China hastened an end of its era of rapid growth
China s Economy is Slowing Down
Say Hello to the New Players
Enter Alibaba
Accurate or Over the Top?
They Have No Choice
Tidal Power
Very Straight Forward Technology
French 240 MW Tidal Power Plant - 1967 http://en.wikipedia.org/wiki/image:rance_tidal_power_plant.jpg
If The French Can Do It...
Under Construction Today 1,320 MW Incheon Tidal Power Station built around islands west of Incheon. Plant will be completed in June 2017. Will generate 2.41 TWh annually.
Chinese Tide-Driven Turbine Farm
Chinese Dynamic Tidal-Power Wall
Another Take on Hydro
NASA/JPL/Cal Tech Prototype
Ocean Thermal Energy Conversion
Chinese Ocean Thermal Energy Conversion
Ocean Energy for Fresh Water
This is the Holy Grail