Part III: China textile and apparel 2023: The Party’s Over and China needs to invite a Deming to the next party--What needs to change in China to rebuild China’s reputation, respect and business?

 Article Abstract: Textile and Apparel business in China is suffering badly. Some or all of the following factors can be held responsible: 1. Political relations and the continuing Tariffs; 2. China’s reputation for cheap and poor quality product which is, at least partially, justified by evidence; 3. Sluggish domestic demand due to the lockdown and poor economy in China; 4. Due to some or all of the above, significant resourcing to alternative countries such as Vietnam.

In this article, we suggest that the only long-term solution for China is to rebuild its reputation for quality product and fashion innovation, just as Japan did in the 1950’s using the lessons of W. Edwards Deming’s teachings as a platform. Combined with this, China factories need to build their own brands which a. don’t scream Cheap and b. stand up to other international brands in style and quality.

But, China factory owners are resisting change, starting to panic and are lost for any solution except to find someone who may sell their product for commission. But, what would they be selling other than “Cheap China?”

Finally, we predict that, if some factories don’t lead the way to a new direction for China, the Chinese textile industry will crash and burn or, at best, be relegated to the mass market in such outlets as TJ Maxx and Walmart. Part of this is due to the bifurcation and consolidation of the US retail economy: The middle level department store base is disappearing, leaving only either competition for the mass market at rock-bottom prices or premium and luxury brands sold DTC or on platforms like Net-A-Porter and FarFetch. In addition, many new and innovative brands are appearing almost daily. The only Chinese online alternatives to those platforms are SHEIN and TEMU, which are by nature cheap and poor quality, and the innovative Chinese brands are rarely seen by overseas customers.

The Chinese textile industry will have to have a Reckoning, just as the American auto industry did in the 1970s and 1980s (as described by David Halberstam in his Pulitzer Prize-winning 1986 book): The world has changed; the way you did things and the things you got away with in the past are gone. If you don’t face the reality of the world today, you will also be gone.

III. What needs to change in China to rebuild China’s reputation, respect and business?

Let’s do two things first: 1. Look at the situation in China now 2. Look at the cultural foundation and see if there is a strong tradition/basis to fall back on or are we stuck with the now.

Where are we now in China? As I wrote in 2017 on my blog www.isourcerer.com in the article, “China Quality- Good Enough is Not Good Enough”, there is no internally-generated quality standard for most factories (I have visited many hundreds), except for that which is generated by customers. Passing inspection and shipping the product only requires “good enough.”

So what is the problem with that? Mainly, it serves the evaluation of “cheap china.” And secondarily, it discourages investment in something better which is internally generated. Factory owners think, “Why should I spend money to improve if the buyers accept what I am shipping now?” Here’s the answer to that question with another question: IF your buyers ACCEPT shit because they EXPECT shit, is that good enough for you? Buyers don’t pay premium prices for shit, and when some factory or country comes along with cheaper shit, you lose. Some companies, like Temu and Shein, have correctly diagnosed that the American consumer WILL accept shit as long as they pay shit prices. This perpetuates the story. So cheap china ACCEPTS the title of chief purveyor of shit, because It is the only way they know of to compete with other countries with lower labor costs AND it is what they have been doing all along during the time you could ship any form of shit and be successful.

That philosophy may get some orders, as long as there isn’t another factory or country with CHEAPER shit.

Price is a race to the bottom.

Was China always the world’s leading provider of shit? Does it have a tradition of craftmanship and quality to fall back on as Japan does?

Japan was able to instititutionalize Deming’s teaching because it aligned with an ancient tradition which is called Monozokuri. “ Literally translated, it means to make (zukuri) things (mono). Yet, there is so much meaning lost in translation. A better translation would be “manufacturing; craftsmanship; or making things by hand.” 

There are so many stories in our lives to see and understand Monozokuri. It is stamped on every Japanese product we buy. For example, a 750L bottle of 12 year old Yamazaki Malt Whiskey sells for $210.99; a decent Scottish Single Malt like Balvenie Double Wood can be had for 1/3 of the price of the Yamazaki. So why do people purchase the Yamazaki? Is it three times as good as the Balvenie? From personal experience, I can say that it is because: 1. It is, in fact better, as near to perfection as single malt gets and 2. The aspirational dimension of drinking something that special.

So is China, one of the world’s oldest recognized cultures, devoid of a quality tradition like Monozokuri? OR has it been swallowed up in today’s race to make shit?

When you serve dinner on plates made by Royal Copenhagen, Wedgwood, Villeroy & Boch etc. it is sold to you as “fine china.” IN fact, this dinnerware has nothing to do with China except the origin of that product was China—during the Tang, Qing, dynasty etc. where they made bone china (partially from cow bone) like blood red, Jihong or blue and white porcelain antiques from those eras. But, as my wife Yuting Zhang bemoaned in her 2018 article published on the I, sourcerer (www.isourcerer.com) blog, “The Name is Fine China; so Why is there no Chinese Brand?” none of the premium China on the market today is actually FROM China.

The answer behind this is sad, but points us in the right direction for solving this problem. There is, in fact, a tradition in China called "造物" (zào wù) which translates to “creation.” It was this tradition which was responsible for much of what we take for granted in today’s world. ChatGPT describes this tradition as compared to Monozokuri:

“It's worth noting that while the term "Monozukuri" is often associated with Japanese manufacturing philosophy and culture, China's own tradition of craftsmanship and manufacturing aligns with similar principles of precision, attention to detail, and the pursuit of excellence. The Chinese term "造物" captures the essence of this tradition, emphasizing the act of creation and skilled craftsmanship that has been valued throughout China's history.”

When did that history take place? As early as the Han Dynasty (206 BCE- 220 CE, innovations like the compass, gunpowder and papermaking took place; The Song Dynasty (960-1279) created advancements like movable type printing were created; the Ming Dynasty (1368-1644) saw a great fleet and the Great Wall built; the Qing Dynasty (1644-1912) saw the first use of vaccines, improvement in agricultural tools and advance mathematical knowledge. 

So what happened? These developments were overshadowed by an antiquated and fractured political system which isolated itself from the world and lost its control to the Western powers whose only achievement was the deployment of seagoing ships and advance weaponry. Japan, on the other hand, united the country during the Meiji Restoration in 1868.

Then, Deng Xiao Ping, with all good intentions and rather than fall back on China’s unique tradition, encouraged people to be practical and do what worked for other countries. “The cat that catches mice is a good cat.” Too much, too fast. Many Chinese, who had been mired in poverty and anonymity, saw an opportunity to move out of their class, at least financially, quicker than ever. And it was easy, with the US and Europe as willing customers. So it was damn the torpedoes, full speed ahead and quality was crushed under the need for speed and greed.

So here we are, with Temu and Shein gaining huge international popularity through their seemingly endless pocketbooks and becoming the flagship of Cheap China. And thousands of factories (Probably including those that sell on Temu and Shein) suffering precipitous drops in business or profit or both.

What has to happen? From this end, our position is something needs to change (what will happen if nothing does will be discussed in the next section). Since labor costs are increasing in China and the working population is aging and shrinking, there is no chance to revive the naïve history of the last twenty years. But China can be two important things to the international marketplace: 1. The JIT (Just In Time) resource with still huge capacity for materials and production and 2. The location for growth of artisanal production in the spirit of zao wu.

It is the last one that we believe is what needs to be the focus of all, but especially textile and apparel manufacturers in China: Create their own brands that stand up to international competition, yet fully utilize the resources that are still strong in China: skilled labor, quality materials, coupled with fast and efficient production, short transportation leadtimes.

The how and why of this strategy depends on the industry but, as strange as it may seem in the red ocean of digital players, there are still huge holes and opportunities because most of the products online are echoes of each other, ho-hum and not worthy of customers’ attention. So the factories will ask, what can I do? The answer:

1. First, STOP. Put your ego away for a while. 

2. Understand and accept the fact that the situation has changed; the days of easy money and good-enough quality are gone; 

3. Adopt a quality standard that is great, not just “good enough,” based on your pride as an artisan, not a wholesaler of cheap goods; something you can be personally proud of.

4. Don’t expect to pay someone commission to sell what you made; make what your customer wants to buy;

5. Accept the fact that you need to spend some of the money you made so easily on future growth;

6. Don’t be in a hurry; it will definitely happen, but not tomorrow or the next day;

7. Call on the spirit of zao wu and the team efforts of talented people (not just in China, especially in the target market countries like US) to create a Unicorn;

8. Understand that you should be making a product whose price is determined by its value, not the other way around;

9. Let the product speak first so the fact whether it was made in China or not becomes invisible, as is the case with Samsung and LG made in Korea or Kia or Toyota etc.

10. Operate under the main goal of Blue Ocean Strategy: Make the Competition Irrelevant

11. Remember that your brain is your moat; even if competitors want to copy you (Good! Sun Tzu—Shape Your Opponent), they can’t copy your creativity.

12. Obey the (Chinese) strategy of Salami Slicing or The Frog in Warm Water- By the time the competition realizes that you are a threat, it is too late.

13. Read the next section for the consequences if you don’t heed the above.

This is not just a paradigm change, but a game changer, for Chinese entrepreneurs and manufacturers. There is a unique history,  tradition and an infrastructure to support this change. If you were a manufacturer in say, Bangladesh, you wouldn’t have any of this to lean on, so your road to success with this strategy would be that much harder. 

Most important, as the Japanese did, there has to be an emerging national spirit of pride in Chinese Manufacture as the site of the world’s oldest tradition of creativity and innovation. This has to be an initiative of the people, not Beijing. This is people, not government.

Further, these changes require investment and patience. They will not happen overnight and they will not happen if the only thing in the manufacturers’ mind is to sell what they make and pay some poor soul commission to try to peddle it. They need paid apostles: those who are also passionate about the goals but who are fairly paid for their work; no risk, no reward.

What will happen if nobody pays attention and nothing changes? There will be a Reckoning.

(Chinese translation of this article available on this blog)

(请使用英语语言写作)

Part II: 中国纺织服装业2023年：派对结束了，中国需要邀请一个戴明来参加下一个派对 莲花与迈克尔的观点2023年：四个部分的改变者

 II. W. Edwards Deming是谁，他在1950年告诉了日本人什么？

（有关Deming及其遗产发展的更多细节，请观看此视频。）

在第二次世界大战期间，Deming向美军讲授了关于质量控制的战时课程后，他应日本科学家与工程师联合会（JUSE）的邀请，前往日本讲授统计质量控制课程。他的讲座促进了日本有效的基于统计的质量过程体系的发展，也为现在被称为PDCA（计划-执行-检查-行动）的创新框架奠定了基础。

Deming进行了一系列六次讲座，其中包含了许多改变了日本的概念和理解，并且至今仍在遵循的内容。同样是JUSE从1951年开始授予“Deming奖”给杰出的企业。

以下是该系列讲座的一些亮点：

他的开场白：“我们正处于一个由统计原理和技术主导的新工业时代。我将尝试解释这些原理和技术如何帮助日本增加出口贸易。”

非常重要且简单的观点：“质量必须在生产的每个环节中发生。” 这意味着，将质量控制基于最终检验，等到产品已经存在问题且不符合要求后再进行价值增加的环节，是一种浪费时间和金钱的做法。

Deming的著名的14个观点之一是“改善竞争地位”，赋予客户在质量管理和改进中的关键角色。

Deming改变了旧有的“设计-制造-尝试销售”的方式，采用了PDCA的方法：

设计产品（包括适当的测试）。

在生产线和实验室中进行制造和测试。

把产品投放市场。

通过市场调研在服务中测试产品。了解用户对产品的看法，以及为什么非用户没有购买。

根据消费者对质量和价格的反应，重新设计产品。

不断重复以上循环。

我将这个概念称之为“生产可销售的产品，而不是试图销售已经生产的产品”。这也是亚马逊的模式，并对其成功做出了巨大贡献。

以下是Koiesar的文章中的两个图表，对此具有重要意义：

请注意，这里的质量过程是基于过程而不是结果的。这意味着在产品完成并准备好发货之前，已经对材料进行了测试，并在制造过程中的不同阶段进行了测试。因此，最终检验在很大程度上只是一个形式上的步骤。

为什么这样更好？因为问题可以在更多材料和人力投入之前被识别出来，并且可以隔离问题流程或工人。（请注意，绝大多数服装供应商和买家使用的是AQL，这是一个在80％产品准备好发货时进行的基于统计的最终检验过程。）

我尝试在90年代初从中国进口汽车报警器时实施了Deming的控制方式，并且在作为GoldToe Moretz公司采购副总裁时与每家工厂合作时也是如此。这就像试图教一只鸡跳芭蕾舞一样困难。最后，我访问了一家在编织后进行完整检验的印度工厂。袜子的制作过程中，90%的生产集中在编织上，之后只需完成封口、整理和包装。当然！为什么要花费金钱、时间和人力来加工袜子，然后只在整个过程完成后进行检查呢？这就是Deming质量哲学的核心。

接下来是PDCA循环或“设计循环”的图形表示：

这是我之前提到的区别的核心，即制造可销售的产品，而不是销售您能制造的（或已经制造的）产品。

还请注意，这是一个持续循环，所以为了使该过程成功，必须长期致力于这个过程。

那么为什么不是每个人都这样做呢？这么简单并且有很大道理。主要原因是：a. 它需要更多时间，b. 它成本更高，c. 它需要对这个过程有耐心和承诺。大多数工厂（不仅仅是中国的）和买家都不愿意遵循这个过程，或者管理层不会推动它，而是选择随意尝试并发货。

Deming在1950年的第一次讲座中指出，应该“将供应商融入到生产系统中，并共同对其质量负责，而不是将他们视为外部人员和对立者。” 这是一个重大问题，不仅局限于中国，而且是买家普遍存在的一种态度，他们把“工厂”看作是一种非生命的物体。

当工厂生产出品质无可争议、无可指责的产品，并且不为了订单而妥协时，这种态度才会停止。

Deming的系统逻辑而且有效，因此他仍然被研究。那些从未听说过Deming，只听过“统计质量控制”和“全面质量管理”这些词，却对Deming本人和他的原则一无所知的人会错误地将其误解为一种依赖于统计数据的方法论；这是非常错误的。是的，Deming相信统计在质量和改进管理中起着重要作用，但他决不是数字的盲目追随者；相反，他强调“控制图不能替代大脑”，并且“在制造厂进行质量控制时，结合接受抽样是最好的保护措施。检查很多并只挑选最好的产品是不经济的。”

我有幸在20世纪70年代中期在纽约大学斯特恩商学院（NYU Stern）上过Deming的一门课。尽管现在我后悔没有更多地吸收他的言论，但我清楚地记得他的教学和他的信息之所以引人注目，是因为你实际上并不需要记笔记，因为他的教学都是那么通俗易懂。

日本制造商吸收并融入Deming的教训的结果就是历史。今天，日本产品不再代表廉价产品，在许多领域都有资格竞争“世界最佳”的称号。材料和制造产品无疑是优秀的，并且能够取得较高的价格。顾客愿意为质量付费，这增加了产品的价值，并且对提供质量的品牌充满热忱。我可以根据自己的经验列出一份清单，但我相信你知道我的意思。

对于中国是否也是如此？它是否应该如此？它能否如此？如果应该并且能够，为了使其成功，需要进行哪些改变？

Part II- China textile and apparel 2023: The Party’s Over and China needs to invite a Deming to the next party

 II. Who is W. Edwards Deming and what did he tell the Japanese in 1950?

(For more details about Deming and the development of his legacy, watch the video here.

After teaching wartime courses to US forces on quality control during WWII, Deming was invited to lecture on Statistical Quality Control in Japan by the Union of Japanese Scientists and Engineers (JUSE). His lectures gave rise to development of effective statistically-based quality process systems in Japan and the framework for innovation now known as PDCA (Plan- Do- Check- Act).

Deming gave a six-part lecture series which contains many of the concepts and understandings that changed Japan and are still followed today. The same JUSE started awarding a “Deming Prize” to the outstanding firms in 1951.

Here are some highlights of the series:

 His opening- "We are in a new industrial age created largely by statistical principles and techniques. I shall try to explain how these principles and techniques are helping Japan to increase her export trade.” 

Super important and super simple: “Quality had to happen at all stages in the "chain

of production.””  This means, quite simply, that basing quality control on final inspections after the damage has already been done and value added to an unacceptable product is a waste of time and money.

What later became part of Deming’s famous 14 points was “improved competition position,” giving the customer a key role in quality management and improvement. 

Deming changed the old way of Design it-Make It-Try to sell it to what is known as PDCA:

1. Design the product (with appropriate tests).

2. Make it, test it in the production line and in the laboratory.

3. Put it on the market

4. Test it in service through market research. Find out what the user thinks of it, and why the nonuser has not bought it.

5. Redesign the product, in light of consumer reactions to quality and price.

6. Continue around and around the cycle.

I would refer to this concept as “make what you can sell, don’t try to sell what you make.” This has been and is Amazon’s paradigm and is a big contributor to their success.

Two illustrations from Koiesar’s article are material here:

  

Note that the quality process here is process-based not result-based. What this means is that by the time the product is finished and ready for shipping, it has already been tested- materials, and at various times during the manufacturing process. So final inspection is, for the most part, a formality.

Why is this better? Because problems can be identified before more material and labor is put into them, and problem processes or workers isolated. (Note that the overwhelming majority of apparel suppliers and buyers use AQL, which is a statistically-based FINAL inspection process that takes place when 80% of the product is ready for shipment).

I tried to implement Deming’s style of control when I was importing car alarms from China in the early 90’s, and in every factory that I worked with as the VP of Sourcing for GoldToe Moretz, a socks company. It was like trying to teach a chicken to dance ballet. Finally, I visited one factory in India that was conducting a full inspection after knitting. The way socks are made, 90% of the production is focused on knitting; all there is after that is closing the toe, boarding (shaping) and packing. Of course! Why spend money, time and labor to process the sock and only inspect after the entire process is finished? This is the essence of Deming’s quality philosophy.

Next is graphic representation of the PDCA cycle or “Design Cycle”:

This is the essence of the difference I mentioned before, making what you can sell as opposed to selling what you can make (or have made).

Also note that this is a continuous loop, so for this process to be successful, it must be something that is committed to for the long term.

So why doesn’t everyone do this? It’s so simple and makes great sense. The main reasons are because a. it takes more time, b. it costs more, and c. It requires patience and commitment to this process. Most factories, not just in China, and buyers are not willing to follow this process, or management won’t facilitate it, opting for throwing shit against the wall and shipping what sticks.

Deming’s first lecture in 1950 stated that there should be: “The integration of the suppliers into the production system and the need to take a shared responsibility for their quality, instead of treating them as outsiders and antagonists.”   This is a big issue that is not relegated to China, but is a prevalent attitude of buyers who refer to “the factory” as if it were an inanimate object. 

When this stops is when the factory produces something whose quality is undeniable and unimpeachable and where they don’t compromise anything for an order. 

Deming continues to be studied because his system is logical and it works. Those who never heard of Deming and heard the words “Statistical Quality Control” and “Total Quality Management” without knowledge of Deming himself and his principles will mistake it for a statistics-dependent methodology; that would be very wrong. Yes, Deming believed that statistics play and important role in Quality and Improvement management, but he by no means was a blind follower of numbers; conversely, he emphasized that “the control chart is no substitute for the brain”  and that "The best protection is afforded by acceptance sampling

done in conjunction with quality control at the manufacturing plant. It is not economical to try to get a good product by inspecting a lot and taking up only the best ones." 

I was lucky enough to have Deming as a professor for a course at NYU Stern in the mid-1970’s. While I now regret not absorbing more of what he said, it is clear to me that the striking aspect of his teaching and his message is that you didn’t really need to take notes because it all made such common sense.

The result of Japanese manufacturers absorbing and incorporating Deming’s lessons is history. Today, rather than representing cheap product, Japanese products justifiably compete for the title of “world’s best” in many areas. Material and manufactured product are unquestionably superior, and command a superior price. Customers pay for quality, which builds value, and are passionately loyal to brands that provide it for them. I could make a list from my own experience, but I believe you know what I mean..

Is that the case for China? Should it be? Can it ever be? If it should and can, what changes need to be made for it to be successful?

(Questions to be answered in next part)

中国纺织服装业2023年：派对结束了，中国需要邀请一个戴明来参加下一个派对 莲花与迈克尔的观点2023年：四个部分的改变者

中国纺织服装业2023年：派对结束了，中国需要邀请一个戴明来参加下一个派对

莲花与迈克尔的观点2023年：四个部分的改变者

（另附的文章已翻译成简体中文）

I. 2023年中国纺织/服装出口商的情况以及原因。中国目前的纺织和服装情况如何？

II. 谁是W. Edwards Deming，他在1950年告诉了日本人什么？

III. 为了重建中国的声誉、尊重和业务，需要做出哪些改变？

IV. 如果不这样做，中国纺织和服装业会像美国汽车业一样面临清算吗？

文章摘要：中国的纺织和服装业正面临严重困境。以下一些或全部因素可能负有责任：1. 政治关系和持续的关税；2. 中国以廉价和劣质产品的声誉，这在一定程度上是有事实依据的；3. 中国国内需求低迷，受到封锁和经济疲软的影响；4. 由于上述一些或全部原因，大量资源转向越南等其他国家。

在本文中，我们建议中国唯一的长期解决方案是重建其优质产品和时尚创新的声誉，就像日本在20世纪50年代使用W. Edwards Deming的教导所做的那样。除此之外，中国工厂需要建立自己的品牌，既不是“廉价”品牌，也能与其他国际品牌在款式和质量上媲美。

但是，中国工厂的所有者对改变持抵制态度，开始恐慌，并且除了寻找可能为他们销售产品的人之外，他们对任何解决方案都感到迷茫。但是，他们能销售的又是什么，除了“廉价中国”？

最后，我们预测，如果一些工厂不引领中国朝着新的方向发展，中国的纺织业将会崩溃或者被降级为如TJ Maxx和沃尔玛等大众市场的销售对象。这部分原因是由于美国零售经济的分化和整合：中档百货商店正在消失，只剩下与大众市场以极低价格竞争或高端和奢侈品牌在直销渠道或者Net-A-Porter和FarFetch等平台销售。此外，几乎每天都会出现许多新的创新品牌。中国在线销售平台的替代选择只有SHEIN和TEMU，这两者都是以廉价和劣质为特点，而创新的中国品牌很少被海外客户看到。

中国纺织业将不得不面临一个清算，就像美国汽车业在20世纪70年代和80年代所经历的那样（正如大卫·哈尔伯斯塔姆在他获得普利策奖的1986年著作中所描述的）：世界已经发生了变化，过去的做事方式和过去能够逃脱的事情已经不存在了。如果你不面对当今世界的现实，你也将消失无踪。

I. 2023年中国纺织/服装出口商的情况以及原因。中国目前的纺织和服装情况如何？

中国的纺织和服装业陷入了困境。自中国加入世贸组织并取消配额制度以来的20多年里，再也没有容纳更多的制造商与美国客户做生意并出口产品，并在此过程中获得财富（无论是相对的还是真实的）。这是一个农业经济，几乎一夜之间转变为全球强国，位居世界工厂的第一位。只要开个工厂，卖点东西（不必太好），你就会有很多客户。

在沃尔玛的带领下，他们从中国购买了70-80%的产品，大量廉价商品充斥在美国的商店和网站上。梅西百货等百货公司也跑去中国，参与到比价格更低的游戏中，而不是坚守中产阶级的本源。因此，似乎转眼间，每个人都想从中国购买东西（这里的“shit”是以质量为评判标准）。消费者们面对到处都是廉价商品的海洋时，他们将价值定位从价格决定价值转变为价值由价格决定。

让我们来看看数据，但需要事先说明：这些数据有误导性。

根据美国商务部报告，2021年的数据如下：

“2021年，中国仍然是美国纺织品进口的主要来源。2021年，美国从中国进口了503亿美元的纺织品，占美国纺织品进口总额的32.6%。”

还有2022年的数据：

“2022年，中国仍然是美国纺织品进口的主要来源。美国进口额从2021年的503亿美元增长了6.7%（34亿美元），达到537亿美元，占美国纺织品进口总额的29.7%。”

看起来一切都好，对吧？但我们发现了几个问题：1. 2022年是非疫情年，进口额应该增加（2018年为5380亿美元，因此总体上才刚刚达到疫情前的水平）；2. 如果中国在2022年保持了相同的美国进口额，那么它本应多做11亿美元的生意；3. 根据给出的数据，美国对这些商品的进口额从2021年增长了18.2%，所以中国的增长确实是占比较小的一部分；4. 这些数据反映的是2022年实际收到的货物，因此根据4-6个月的计划周期，很大一部分商品是在2021年订购的。

无论如何看待这些数据，尽管进口额有所增加，但从2021年到2022年，中国纺织和服装进口明显减少。在2022年收到的订单并在2023年交付的情况下，进口量将进一步减少。

更糟糕的是，很明显中国的工厂正在牺牲价格和利润，只是为了发货。看一下这个数据：

中国的服装进口量占了35%，但只有22.2%的价值。另一方面，越南的进口量占15.9%，但价值却占了18.4%。这对你来说意味着什么？廉价中国正在变得更便宜，而越南则在要求更高的价格。

现在，我们应该对中国纺织和服装行业的情况有了一定了解，以及为什么中国制造商感到迷失和绝望。情况只会变得更糟。

所以，如果你是中国制造商，你会问自己：“我该怎么办？”很明显，这里适用于“疯狂定义是做同样的事情两次，却期望不同的结果”。中国和中国的经济需要不同的结果。纺织和服装所占中国进口的10%，如果有所减少，将对经济和就业产生重大影响。我们可以肯定的是，基于该行业（不仅仅是中国）已经确立的模式，工人将承受减少的冲击，而所有者并不会从自己的银行账户中拿出任何东西。

最后，中国经济增长疲软和不稳定对世界经济产生重大影响。

本文中我们提到了W. Edwards Deming，一个20世纪50年代的美国统计学家和质量控制专家，对日本工业的发展产生了重大影响。在接下来的部分中，我们将探讨他在日本所做的事情，以及中国是否能够借鉴他的经验来重建纺织和服装业。

China textile and apparel 2023: The Party’s Over and China needs to invite a Deming to the next party Lotus & Michael Perspective 5-2023: A Game Changer in four parts

This is part 1 of 4 parts, as outlined below. Each subsequent part will be released separately at a later date. IF you wish to inquire about the next release, email mserwetz@gmail.com

(The article under separate cover is translated into Simplified Chinese) Link to Chinese Translation

I. The situation for Chinese textile/apparel exporters in 2023 and why it is what it is. What is the current textile and apparel situation in China?

II. Who is W. Edwards Deming and what did he tell the Japanese in 1950?

III. What needs to change in China to rebuild China’s reputation, respect and business?

IV. If not, will there be a Reckoning for China textile and apparel like there was for the US Auto Industry?

Article Abstract: Textile and Apparel business in China is suffering badly. Some or all of the following factors can be held responsible: 1. Political relations and the continuing Tariffs; 2. China’s reputation for cheap and poor quality product which is, at least partially, justified by evidence; 3. Sluggish domestic demand due to the lockdown and poor economy in China; 4. Due to some or all of the above, significant resourcing to alternative countries such as Vietnam.

In this article, we suggest that the only long-term solution for China is to rebuild its reputation for quality product and fashion innovation, just as Japan did in the 1950’s using the lessons of W. Edwards Deming’s teachings as a platform. Combined with this, China factories need to build their own brands which a. don’t scream Cheap and b. stand up to other international brands in style and quality.

But, China factory owners are resisting change, starting to panic and are lost for any solution except to find someone who may sell their product for commission. But, what would they be selling other than “Cheap China?”

Finally, we predict that, if some factories don’t lead the way to a new direction for China, the Chinese textile industry will crash and burn or, at best, be relegated to the mass market in such outlets as TJ Maxx and Walmart. Part of this is due to the bifurcation and consolidation of the US retail economy: The middle level department store base is disappearing, leaving only either competition for the mass market at rock-bottom prices or premium and luxury brands sold DTC or on platforms like Net-A-Porter and FarFetch. In addition, many new and innovative brands are appearing almost daily. The only Chinese online alternatives to those platforms are SHEIN and TEMU, which are by nature cheap and poor quality, and the innovative Chinese brands are rarely seen by overseas customers.

The Chinese textile industry will have to have a Reckoning, just as the American auto industry did in the 1970s and 1980s (as described by David Halberstam in his Pulitzer Prize-winning 1986 book): The world has changed; the way you did things and the things you got away with in the past are gone. If you don’t face the reality of the world today, you will also be gone.

I. The situation for Chinese textile/apparel exporters in 2023 and why it is what it is. What is the current textile and apparel situation in China?

The China textile and apparel business is in trouble. After more than 20 years, since China was admitted into the WTO and quotas were abolished, there isn’t room for one more manufacturer to do business with US customers and export their product, getting rich (comparatively or really) in the process. Here is a peasant economy that was transformed almost overnight into a global powerhouse, ascending to the #1 position as the world’s factory. Just open a factory, sell something (it doesn’t have to be great), and you will have lots of customers. 

Led by Walmart, who buys 70-80% of their product from China, immense volumes of cheap goods filled American stores and sold on websites. Department stores like Macy’s ran to China to get into the cheaper-than-thou game, rather than stick to their middle-class roots. So, in what seemed like the blink of an eye, everybody wanted to buy shit from China (that word used qualitatively). What happened on the consumer side was, confronted by a sea of cheap shit everywhere, the average consumer (not just the struggling ones who needed to buy cheap) flipped their value proposition from price is determined by value to value is determined by price.

Let’s look at the numbers, which we will say up front are deceiving:

For 2021, according to the US Department of Commerce report:

“In 2021, China remained the major source of U.S. imports of Textile Products. In 2021, U.S. imports of $50.3 billion of Textile Products from China constituted 32.6% of the total U.S. imports of Textile products.” 

And 2022:

“In 2022, China remained a major source of U.S. imports of Textile Products. U.S. imports increased by 6.7% ($3.4 billion) from $50.3 billion in 2021 to $53.7 billion, constituting 29.7% of the total U.S. imports of those commodities.” 

All good, right? We see several issues: 1. 2022 was the first non-pandemic year so it stands to reason imports should go up (they were $538 billion in 2018 so overall they were just reaching pre-pandemic levels; 2. Had China had the same piece of US imports in 2022, it would have had $1.1 billion more business; 3. Based on the numbers given, US imports of those commodities increased 18.2 percent from 2021 to 2022, so China’s increase was indeed a smaller piece of the pie; 4. These numbers reflect what was received in 2022, so based on the planning cycle of 4-6 months, much of the goods were ordered in 2021.

Any way you look at it, despite the increase, there is a clear erosion of textile and apparel imports from 2021 to 2022. Orders received in 2022 and delivered in 2023 will show a further erosion. 

Here’s the worst part: Clearly China factories are shipping goods just to ship goods and are sacrificing price and profit. Take a look at this:

 

 Apparel Imports from China were 35% of the quantity but only 22.2% of the value. On the other hand, imports from Vietnam were 15.9% of the quantity and 18.4% of the value. What does that mean to you? Cheap China  is getting cheaper while Vietnam is commanding higher prices.

Now, we should have an idea of what is happening in the textile and apparel sector from China and why Chinese manufacturers feel lost and desperate. This will only get worse.

So the question if you are Chinese manufacturer is (or should be), “What should I do?” It is clear that the definition of insanity applies here: trying to do something the same way twice and expecting different results. China and China’s economy needs different results, especially in the textile and apparel industry. The 10% of imports from China that apparel and textile represents cannot erode without significant effect on the economy and employment. We can guarantee that, based on clearly established patterns of the industry (not just in China) that the workers will bear the brunt of any reduction; the owners are not giving back anything from their bank accounts.

Finally, weak economic growth and disruption in China has a significant effect on the world economy.

The rest of this article will build a case for a sea change in China’s apparel and textile industry, the same sea change that Japan made to transform the tagline of “Made in Japan” from cheap to one of the world’s best. 

Those who read this and know China will wonder whether the culture and experience since Deng Xiao Ping declared that some people should get rich first is so embedded at this point that it minimizes or eliminates the possibility of positive change. We believe it can happen, led by the younger generation, the sons and daughters of the people who got rich first and the easy way. But it won’t happen until the older generation steps aside AND the government lets it happen.

Next, we take a look at what happened starting in 1950 Japan, led by W. Edwards Deming, which led to Japan’s current position on the world’s quality product scale. THIS is the example China should follow.

AI for Dummies? Are we all dummies now? What do we do about generative AI?

 

Here’s my take on AI:

It is positively Darwinian- The WSJ Opinion that inspired this article (by three distinguished fellows, including Henry Kissinger) compared it to the technology that printed the Gutenberg Bible in 1455. I would go a step further and compare it to the meteor that hit Chicxulub in the Yucatan 65 million years ago which left a crater 150 miles wide and changed the civilization of the earth.  (This is a great metaphor- the dinosaurs who had ruled the earth became extinct and what we know as birds survived)(i)

It is Darwinian because only those that adapt will survive. Many will become extinct.

Of course, our natural System 1(ii) reaction is to fear that which we don’t know. Images of The Terminator and 50+ years of Doctor Who scare the snot out of us. Dinosaurs in our society and particularly in Government will try to squash it. Too late. It ain’t going away. The cat is out of the bag.

Bottom line for me: It is a blessing of technology which, if handled well, can reposition our relationship with technology with unknowable positive effects.

AI is not human; it will never be. Its “brain” is more powerful than ours—and it isn’t. The parts of our brain which have developed to handle insight, creativity, empathy, etc. have not been duplicated. If you ask ChatGPT, it will tell you the same.

So how do we dummies deal with generative AI and what will be the result? Answer-as always-depends.

One great result of the advent of generative AI is that we have the opportunity to rethink our relationship with technology. We all know people and companies that accept technology as superior to human effort because it is technology. Countless billions has been spent on Canned Vegetable software (Canned vegetable are already cooked; you can’t change them), with the result often ranging from disappointing to disastrous (I knew a CFO who committed suicide after realizing that he had led the way to an expenditure of millions for a software that just didn’t work). 

Now we have the opportunity to reassess our relationship with technology, understanding that it can’t totally replace us, then figuring out how and what we can gain from this remarkable advance in technology so it serves us without enslaving us.

The authors of the WSJ Opinion offer some remarkable insights regarding humans (they refer to us as Homo Technicus:

First, will we be able to recognize what the technology can and cannot do? This is critical to produce the result of maximizing the software without minimizing ourselves:

“Will we be able to recognize its biases and flaws for what they are? Can we develop an interrogatory mode capable of questioning the veracity and limitations of a model’s answers, even when we do not know the answers ahead of time?” (iii)

Second, what must we do to create and maintain this relationship?

“It is important that humans develop the confidence and ability to challenge the outputs of AI systems.”

“It is urgent that we develop a sophisticated dialectic that empowers people to challenge the interactivity of generative AI, not merely to justify or explain AI’s answers but to interrogate them.”

We will have to learn new behaviors, and shitcan the automation bias:

“Humans will have to learn new restraint. Problems we pose to an AI system need to be understood at a responsible level of generality and conclusiveness. Strong cultural norms, rather than legal enforcement, will be necessary to contain our societal reliance on machines as arbiters of reality. We will reassert our humanity by ensuring that machines remain objects.”

The problem with this, in my opinion, is that there are far too many selfish and even evil dumbasses in positions of authority, both in business and government. There is a huge risk of pollution of what could be a great leap for mankind. (I am willing to bet that most of us can name names if asked—I can)

One of the areas most directly impacted by generative AI is education. So how do we as educators incorporate this powerful tool into our curricula without squashing human insight and creativity?

The authors offer their recommendation:

“Teachers should teach new skills, including responsible modes of human-machine interlocution. Fundamentally, our educational and professional systems must preserve a vision of humans as moral, psychological and strategic creatures uniquely capable of rendering holistic judgments.”

I agree with this. So far, and I know we are only at the beginning of this journey, what has been successful for me as an instructor (NYU SPS, Division of Programs in Business, Integrated Marketing & Communication) is to encourage students to use ChatGPT. Ask it questions (which I phrase so they all get the same answer), then 1. Assess the validity and completeness of the answer and 2. Critique the response by acknowledging what is workable and what is missing.

Up to now the students’ responses to this method are two: 1. A healthy respect for the capabilities of generative AI and 2. An equally healthy skepticism and caution not to accept the responses at face value. ChatGPT is a team member; it does not replace either the professor or the students’ intellect AND emotion (important AND). Our brains can be a healthy combination of System 1 and System 2 which I believe generative AI will have hard road to duplicate, if it ever can.

Of course, as always we have to be wary of bad actors and incapables advertising themselves as saviors of the world of AI and offering to triple quadruple etc. as has been the case with Ecommerce up to now. Even in a short time, there are countless web sites that promise to help you understand and use AI; my reaction to the ones I checked is, other than take my money, what can you do that I can’t? My question is, if so many people can come out of nowhere to build your Ecommerce business or your SEO shouldn’t it be easy enough for you to do yourself? Same goes for generative AI. With some effort, we dummies can learn what needs to be learned to maximize our relationship with this technological tool.

So the answer is that we who question and adapt AI to our needs are NOT dummies; those that enslave themselves to it OR seek to control how we use it are the dummies—and the enemy.

  i New Scientist, “Chickxulub: A Massive Asteroid that hit Earth 65 million years ago” https://www.newscientist.com/definition/chicxulub/#:~:text=asteroid%20the%20size%20of%20a,The%20impact%20was%20devastating.

  ii Decision Lab, “System 1 and System 2 Thinking,” https://thedecisionlab.com/reference-guide/philosophy/system-1-and-system-2-thinking

  iii Henry Kissinger, Eric Schmidt and Daniel Huttenlocher, WSJ Opinion 2/24/2023, “ChatGPT Heralds an Intellectual Revolution,” https://www.wsj.com/articles/chatgpt-heralds-an-intellectual-revolution-enlightenment-artificial-intelligence-homo-technicus-technology-cognition-morality-philosophy-774331c6

(All following quotes from this source)

The Helmsman- an original poem dedication

 The Helmsman

To my precious passenger

He stands tall against the wind

Grey-bearded, hand on the helm;

His skiff has survived storms,

Sharks, and the boiling sun.

At the bow sits a small young girl

With only a bucket hat

To protect her from the spray.

She looks anxious, afraid

they will never reach their destination.

Then she comforts herself

With the knowledge that she is not alone;

The Helmsman has made it many times

And is courageous, fearless,

Committed unconditionally to the journey.

He stands tall against the wind

Grey-bearded, hand on the rudder;

And he understands

The importance

Of arriving.

Fuck the rest.

Essential tools for marketers 2022- Introduction to Behavioral Economics and Neuromarketing

 

I know- you think this is above your pay grade and taking things a bit too far, right?

Not really. These are the tools of the future. Why do you need them?

1. With online being the default shopping medium now and forever, customers are more anonymous and competition for their acquisition, retention and development is ever tougher. The goal is their loyalty so you won’t have to woo them away from the competition every time.

2. There is no such thing as “customers” anymore. The days of the “market” are over. Now we have COHORTS of customers. Like Gen X Asians, Millennial Latins, HENRYs and so forth. Each of them has a different mentality, concerns, issues, and culture.

So, the challenge takes us beyond databases and CRM software. Those and their avatars are useful to tell you what customers did, but not why they did it and they are not adequate predicters of what they will do next. Think about Google Analytics: you can learn a lot about what happened on your web site—which pages were most visited, how long customers stayed on a page or your site, etc. But why? And who are they? Broad strokes.

Then what can we do? Let’s start with what we cannot do. Let’s be honest, many (most?) brands targeting efforts, if not with their brands themselves, then with categories and products, amount to throwing s**t against the wall and seeing what sticks. This is both expensive and time consuming.

How can we get better and faster, while producing efficiently and fulfilling the third part of the “cheaper better faster” formula? What I discovered, which I believe is the answer that we need in the post-Pandemic world, is: Get inside your customer’s mind (or minds). Just as Sun Tzu teaches us in the Art of War and his other writings, the goal is to see them and be them. Think like them. Understand what moves them and what doesn’t. Learn their fears and their aspirations.

This is not new. IN the past, brands have understood that they need to hit the customer’s pain points and desires. A great example of this is the Marlboro Man campaign, which lasted from 1954 to 1999. The difference is that this campaign was targeted at the mass market in the US and globally to those who admire the cowboy macho ethic. Today we can aim campaigns like this at the cohorts we want to target and, if we understand their environment and mentality, be specifically successful.

Where do we start? Where do we begin to learn about the human mind and its decision-making process? There are lots of places, but here’s my epiphany: Thinking Fast and Slow by the Nobel-Prize-winning behavioral economist Daniel Kahneman.  

The book is based on the premise that human minds house two sectors, which Kahneman calls System 1 and System 2. System 1 is our unevolved “lizard brain” (see below for more): affective, reactive, intuitive, the center of fight or flight and always fires first; System 2 is our cognitive, rational brain which is in charge of thinking through what System 1 has sent and making rational decisions. Here are some examples of this phenomenon:

The picture above is from the first chapter of Kahneman’s book. Think about your reaction and how it occurred when you saw it.

Did you have to think through your reaction? No, you didn’t. Your System 1 was firing, and your System 2 had no answers as to why she appeared so angry.

Another example: Answer this equation- 24 x 17. Your System 1 could not help with the answer except for feeling anxiety and referring the job to System 2.

One more. Answer this with your first thought: 

A bat and ball cost $1.10

The bat costs $1.00 more than the ball.

How much does the ball cost?

(Answer at end of article)

Based on what I have told you up to know, what percentage of your thought process do you think comes from System 1 and how much from System 2? (Next footnote for answer)  Shocked? Reason 1 for behavioral based marketing: We don’t know about how we ourselves think, so how can we accurately predict the behavior of others?

Neuroendocrinologist (jeez!! Neuroendocrinology and marketing? Read on) Robert Sapolsky teaches us, which he summarizes in the video, “3 Brain Systems that Control your Behavior”  teaches us that our brains are composed of 3 distinct sections: Reptilian, Limbic and Neo-Cortex. Briefly, their main function is-

1. Reptilian- The Regulator. At the base of the brain. Controls how we react to stimuli. This is the unevolved part of our brain, which does things like control your body temperature and glucose levels.

2. The Limbic Brain- A mammalian specialty which controls emotions- fear, anxiety, arousal, longing. Fight or flight.

3. The Neo Cortex- “Neo’ in that it is the newest part of the brain, and developed more highly in mammals, then apes, then us. This is where actual “thought” takes place.

So, the Reptilian and Limbic parts of our brain are what Kahneman describes as System 1, and the Neo Cortex is System 2. Sapolsky points out that signals do not go one way only, but are in constant flow back and forth, which is what makes us more complicated.

What does all this have to do with marketing? Neuromarketing, which Dr. Terry Wu describes as the “Science of Consumer Decisions”  allows us to use this knowledge to elicit known reactions from our customers. Marketing from this standpoint will allow us to make more effective decisions.

Roger Dooley, on the website neurosciencemarketing.com, suggest 7 Ways to engage our customer’s reptilian brain. The goal is captivation. What does that involve?

“These include tapping into your audience’s pain points, appeal to their innate selfishness, demonstrate importance through contrast, emphasize value tangibility, focus on beginning and end, use a visual metaphor, and strike an emotional chord.” 

Does this mean we can seduce the customer into purchasing strictly based on their fears? Maybe, but in humans eventually System 2 will intervene. For example, if we want to sell something expensive to our customer and we are successful, we are in danger of being negated by Post-Purchase Dissonance from System 2- “Why did I spend all that money?” and a subsequent return and customer alienation.

What should we do? For one, we need to understand that, after captivating the customers reptilian brain, we need to satisfy their Neo Cortex with good reasons for the expenditure- quality, longevity, etc. so their Biofeedback will calm the reptile.

More, we need to pay attention to the Thrill Factor, as described by the Japanese researcher Noriaki Kano his Kano Model:

 

Higher satisfaction, the unexpected that exceeds expectations, delight will soothe both the reptilian brain and the Neo Cortex.

If we as marketers want to measure these impulses specifically, we have tools like MRI, EEG, Facial profiling which can quantify the information we seek.

There is so much more to know and learn about Neuromarketing (I hope this introduction piques your interest!) but if I wrote more, you probably wouldn’t read it (another System 1 triumph specifically developed by our addiction to online-based information- severely limited attention span to details- give me the bottom line-fast!).

For more information and insight, contact me (sourcerer1@me.com) or Google.

All this being said, there is one goal of Customer Relationship Management that is unchanged from when Gerhard Raab wrote about it in 1998: Our goal is Customer Lifetime Value-keeping customers around for as long as possible by securing their loyalty and commitment and having the ability to segment those customers that make our business happen. 

Neuromarketing is an opportunity to apply technology to marketing on the front end which is possible in 2022 and essential in the post-Pandemic world- not to identify and understand the ubiquitous “market” but for targeted cohorts that are right for our value proposition.

Here’s looking at you. Really looking at you. 

© 2022 Michael Serwetz

Dilbert Transforming Organizations- what not to do

 

What is Culture? Chapter from my book- FREE READ

 CHAPTER 1- WHAT IS CULTURE?

What is Culture? Culture is everything we are. Everything we think, feel, love, hate, eat and do is Culture. When we are born, our slate is empty; Culture fills in the blanks. You are a product of your culture; then, as you mature, you make judgements based on what has been shared, shown and taught to you. You yourself can’t change culture; you can only change how you feel about it and what you do about it. Culture is the bedrock; you and the rest of society can only change what the structures on top of the bedrock look, feel and act like. Ronald Inglehart (the guru of modernization and cultural change) and Wayne E. Baker, In an article entitled, Modernization, Cultural Change and the Persistence of Traditional Values” in American Sociological Review of February 2000 state it clearly:

“The broad cultural heritage of a society-Protestant, Roman Catholic, Orthodox, Confucian, or Communist-leaves an imprint on values that endures despite modernization.” 

Culture is learned and shared from generation to generation. 

Culture affects what we eat, where we shop, what we buy and don’t buy.

It is important to note and remember that the cultural influence that makes us who we are is not singular such as national or ethnic. It is almost always multifaceted, depending on our influences and environment. For example: Ray Mazzili was born and raised in Brooklyn, New York. How many cultures influence him (answer at bottom, don’t peek before you guess). *

Most important, our culture affects how we perceive other cultures. Therefore, our own culture and the perception of others’ can be manipulated to bad ends if misunderstanding, ignorance and hate is applied. This can affect political outcomes and the stability of a society.

Everyone’s culture is most important to them; to understand someone, you must first understand their culture. Misunderstandings lead to bad relations and bad decisions; the bottom rung of misunderstanding is ignorance, and ignorance leads to fear. Fear leads to bad relations, missed opportunities, and, at its worst, can lead to hostility, violence and death on a singular or mass scale.

Let’s go with what is probably the worst and best-known example of the consequences of cultural manipulation, causing ignorance and fear: Hitler’s persecution and mass murder of the Jews in WWII. Hitler knew more about the Jews than most people gave him credit for; he may have even had some Jewish in his ancestry. But, feeling inadequate to control the Jews as they stuck together and showed better acumen than most, he milked the German culture by inciting the German people’s burnt pride and anger from WWI by focusing it on hate of the Jews with lies and misunderstandings (something like the “China Virus”). The result was catastrophic on any scale.

We have already seen the consequences of prejudice, fear, and consequent exclusion of the Chinese population in the US from the mid-nineteenth century until 1965 (legislatively) and until today (mentally). After the presence of COVID-19 In the US was revealed to the public in March 2020 (the government knew in January), racist incidents against Asians spiked and continue unabated. Supported by official rhetoric, some people adopted the idea of the “China Virus.” Even if the virus started in China, what exactly did Chinese and Chinese Americans who lived in the US have to do with the pandemic? Wouldn’t they be equally vulnerable to its effects? 

Regarding the Pandemic, NBC News reported on April 28, 2020, in an online article entitled, “Over 30 percent of Americans have witnessed COVID-19 bias against Asians, poll says”:

“The National Republican Senatorial Committee sent a memo directing campaigns to blame China when asked about failures in the Trump administration's response to the pandemic. "Don't defend Trump, other than the China Travel Ban — attack China," says the memo, first reported by Politico.

President Donald Trump and other Republican politicians have repeatedly referred to COVID-19 as the "Chinese virus."

"I think the Republican strategy is to deflect blame and scapegoat and rile up their base," said Russell Jeung, a professor of Asian American studies at San Francisco State University who is also involved in the Stop AAPI Hate tracker. "A clear consequence of using terms like 'Chinese virus,' of making China the central campaign strategy, is putting Asian American lives at risk." 

So, tell me, how is this different from what Hitler did in 1930’s Germany? Culture can bring people together, but it also can be a convenient target for politicians and other bad actors. Better yet, how does this public display of Nativism and Xenophobia help US-China relations? As stated before, and make no mistake about it, it is not a subject we can disregard.

Let’s review:

Culture is learned, through active teaching and passive habits;

Culture is shared, meaning that it defines a group and maps its needs;

Culture is symbolic, meaning that simple and arbitrary signs define the group;

Culture is patterned, meaning that the cultural norms and symbols show up in every walk of life for that group;

Culture is adaptive, which helps people in that cultural group to explain their everyday lives and those of their friends, family and nation;

Culture is passed from generation to generation. 

As I said earlier, the bedrock culture doesn’t change much; what occurs are adaptations of the bedrock culture to meet current situations and environments. For example, as we will examine in the next chapters, China culture is significantly based on a 2000-year-old Confucian ethic. Confucianism still guides the patterns of behavior in China and always will. Even Mao, try as he might, could not unseat the Confucian culture and replace it with Communism; the fact is, he himself and his own thought process was inescapably a product of Confucian culture. Today, as China emerges in a tailored economic solution entitled, “Socialism with Chinese Characteristics,” we will see that the Confucian culture still rules the peoples’ thought process, but new rules and behaviors have been grafted on top of it to justify and facilitate actions in today’s environment. Confucian culture also guided the success of countries like Singapore, Korea, Hong Kong and Taiwan; there will be more on this later in this section based on my work in graduate school (my master’s thesis).

As it applies to policy and propaganda, the power of culture is such that it can be applied to create “historical memory” which rallies people to nationalism or nativism or xenophobia based on cultural bias. One writer asks, “How do we explain the rapid conversion of China's popular social movements from the internal-oriented, anti-corruption, and anti-dictatorship democratic movements in the 1980s to the rise of external-oriented, anti-Western nationalism in the 1990s?”  

The policymakers in Beijing well understand the power of culture to create collective misinformation leading to prejudice and worse: 

“powerful collective memories, whether real or concocted, can be at the root of conflicts, prejudice, nationalism, and cultural identities. Smith (1986) believes that ethnic, national, or religious identities are built on historical myths that define who is a group member, what it means to be a group member, and, typically, who are the group's enemies. Smith (1996, 383) also argues that "one might almost say: no memory, no identity, no identity, no nation.” 

These myths attempt to create “chosen trauma” which succeeds by "transferring it from generation to generation; history and memory issues tell grandparents and grandchildren who they are, give countries national identity, and channel the values and purposes that chart the future in the name of the past." 

What such stories, tales or myths, despite their veracity, hope to accomplish, and it looks like they are very successful at, is historical enmity. A group's "chosen trauma" consists of experiences that come "to symbolize this group's deepest threats and fears through feelings of hopelessness and victimization." The word chosen fittingly reflects a large group's unconsciously defining its identity by the trans-generational transmission of injured selves infused with the memory of ancestors' trauma.” 

What is the political aim of these efforts? “political leaders as well as many citizens have a vested interest in retaining simple narratives that flatter their own group and promote group unity by emphasizing sharp divergences between themselves and other groups. They are highly resistant to histories that include the presentation of the other side’s point of view.”  This has happened during the entire history of the US and China, as well as almost any nation’s relations with any other at some time.

This historical enmity and local chosen trauma finds itself into the children’s minds through textbooks, and thus passes to the next generation without dispute or verification. One writer says,

 

“Many studies have demonstrated that ethnocentric views, myths, stereotypes, and prejudices often pervade history textbooks.”  So children grow up prejudiced based on intentional misdirection and ignorance. I remember clearly that my students in Wuxi showed me their textbooks, which were intentionally constructed to provide the wrong information. As an example, the supply/demand curve in economics was positioned upside down to show that supply influenced demand, not the other way around. To their credit, they were happy to accept an alternative point of view once it was clearly proven; this is the hope we should retain, that cultural myths can be declawed once people open their minds.

Because culture is so embedded in the population, it is vulnerable to manipulation; but it also is the key to success in relationships if it is done from a benevolent and honest mindset.

But what about economic growth? Does the process of economic growth and modernization change culture? My answer and the consensus of the minds who have studied this throughout their career is no. This is not to say that economic growth does not change people’s attitudes toward the environment and government, but it does not change the basic culture of the nation or group (religious groups can have their own culture as well).

As such, if culture is the bedrock of how people see the world, it will be culture, not economics or politics, that will determine the course of history and nations, friendship, alliance or conflict; all of those are a result of the culture of the people and the influencers. The late Samuel Huntington, who is remembered for his 1993 groundbreaking work entitled, “The Clash of Civilizations?” wrote presciently in that piece, 

“It is my hypothesis that the fundamental source of conflict in this new world will not be primarily ideological or primarily economic. The great divisions among humankind and the dominating source conflict will be cultural.” 

It is important for a student of culture, and for us on this journey, to understand Huntington’s viewpoint. Why? Because it will help us understand and define the problems and challenges facing US-China relationships—as well as international relationships be they US, China or other, throughout the globe.

Let’s understand how Huntington defines global groups, which may or may not be countries. He says that it is no longer relevant to divide countries by their stage of development, nor in terms of their political or economic systems. Rather, he says, countries should be grouped in terms of their “culture and civilization.”

What does he mean by a “civilization?” A civilization is a group that may or may not transcend national or international borders, such as Muslim, Jewish, or Chinese civilization. The cultural entity to which a civilization belongs “is thus the highest cultural grouping of people and the broadest level of cultural identity people have short of that which distinguishes humans from other species.”  This thesis gives a higher meaning to culture than a national identity and strengthens my thesis that culture is the highest indicator and driver of personal and international relations.

It also means that a diaspora does not erase culture; in time cultural influences may be mixed, but never erased. The Chinese diaspora does not make the wanderers and immigrants un-Chinese because they are no longer in China; in some cases there may be mixing of cultures, as we saw in The Joy Luck Club, but the native culture is always at the core. The same with the Jewish diaspora (we saw this in Peony), Lebanese diaspora (more Lebanese live outside of Lebanon than inside), etc.

Huntington goes so far as to quote Lucian Pye (a leading political scientist and Sinologist)  as saying that China is “a civilization pretending to be a state.”  He groups the globe into the following civilizations: “Western, Confucian, Japanese, Islamic, Hindu, Slavic-Orthodox, Latin American and possibly African.”  He goes on to say that, despite and because of the world becoming a smaller place, despite economic and political changes, that civilizations stand tall regardless of national boundaries. Specifically, with regard to China and Chinese, he asserts that culture underpins the trading relationships in Chinese Asia more so than economics, certainly more so than politics. When we consider the success of China, Taiwan, Hong Kong, Singapore and the Chinese minorities in Thailand and Indonesia, this becomes clear. And the love-hate relationship between China and Vietnam has everything to do with their shared Confucian culture. 

It should be plain and clear now that if culture drives a civilization, a people and a nation, rather than economics or politics, this is where we need to start in building policy. But before we start, we need to learn and understand. 

So how do countries and leaders make policy? They may think that they are doing so for ideological reasons, but they are obeying their civilization’s cultural imperative—and trying to position it with others for mutual benefit. OR, in the case of bad actors, to manipulate the culture in order to reach their own political goals, regardless of the national good. All policy is rooted in culture. You should already believe that; read on for more evidence.

• FOUR- Italian, American, New York and Catholic

Studying the Stones: Learning a Centuries-old Chinese Grand Strategy from the Game of Go

 

 

The two oldest games in the world are Chess (about 800 years) and Go or Weiqi (about 4000 years). Why study the oldest game in the world (other than if you want to play it)? Here are several reasons:

1. The differences in the game objective and effective tactics between the two gives us a keen insight into the differences in strategic philosophy between China and most of the Western powers;

2. As with any business or political environment, learning your competitor or opponent’s thinking gives you a leg up on winning and protects your Moat from invasion;

3. If Weiqi is the core Chinese Grand Strategy, or one of them, learning it will give us more insight that can be used in negotiations;

4. The strategy upon which Weiqi is based can be very effective in general, not just with China;

5. Learning something new that your opponent may know that you don’t makes you stronger (if you do it without prejudice).

So what is this game about and what does it have to do with Grand Strategy? The strategy of the game is based on the teachings of Sun Tzu, who is recognized globally as a master strategist whose principles are equally as important and effective as they were 2500 years ago.

Quick summary of the game: The game is played on a board with gridlines forming a space of 19 x 19, 13 x 13 or 9 x 9 (the more spaces, the more the level of difficulty). The pieces are black and white stones, all of which are exactly the same. Once the pieces are placed on the board, they do not move. The play space looks something like what is pictured above.

The objective of the game is to capture more territory than your opponent; also, when they are properly surrounded, opponent’s pieces may be captured, in which case they are removed from the board by the capturer. The game ends when either no more moves are possible or one player resigns. The player with the most territory plus captured stones is the winner.

What, then, does the game have to do with Grand Strategy?

Before we explore that, let’s look at the main difference between Chess and Go. In chess, the pieces can be moved on the board; they have defined movement patterns, and the winner is determined by who captures the opponent’s king first;

In Weiqi, all the pieces are the same and they are placed on the board and then not moved unless they are captured. The goal, as stated before, is to capture the most territory and, in order to succeed, surrounding the opponent so their movements are limited.

In chess, while there are many strategies available, the choices are limited and strategies can be named or defined based on the situation; in Go, there are literally unlimited strategies available. Each game, depending on the situation, requires a different strategy.

While both games require that one player’s strategy is better than the other, Weiqi requires a more deliberate strategy which may develop slowly and include many sub-strategies, such as diversion or distraction. In general, success at the game is generally known to be based on two things: balance and judgment. To that I would add patience; an impulsive or aggressive strategy may work in chess, but it has very little chance of success in Go.

When I taught in China in 1990, my students introduced me to the game. Needless to say, I didn’t have the patience to play it well; when I restarted playing online recently, it was clear that patience was a virtue that I still did not have enough of (although more than in 1990). The American spirit of git er done does not equip the player to win at Weiqi. There is no doubt that, in the game of Go or business or life, sometimes patience is the best strategy. So what is the strategic basis of the game of Go and how does China apply it in their Grand Strategy?

To begin, the game is based on the teachings and principles of Sun Tzu. For example, his principle of “Win All Without Fighting” encourages a diversionary or stealthful strategy that the opponent may not recognize or understand until it is too late. “Deception and Foreknowledge” encourages the player to learn as much about the player as she can and never let the opponent know what your plans are; this may dictate some moves that are specifically designed to mislead or confuse the opponent as to the real plan (if there is one- in Go, very rarely does what you thought in the beginning of the game lead to success, because your opponent is also thinking). “Shape Your Opponent” would encourage the player to induce the opponent to follow, rather than lead—and they may be following in the wrong direction. 

At times, Western strategists have used this type of maneuver in battle. The most famous one happened before D-Day in WWII, where the Allies created an elaborate ruse to convince Hitler that the landing would take place at Calais. So this type of strategy has been used in the West, but in China it forms the core. 

This type of strategic thinking not only forms the core of Chinese military and geopolitical strategy; it is embedded in the culture. In Amy Tan’s The Joy Luck Club Waverly says,

"we're two-faced," explaining, that means "we're looking one way, while following another. We're for one side and also the other. We mean what we say, but our intentions are different" (266). And having twice the faces can, in turn, mean twice the number of possible advantages. 

The game of Weiqi and the principles upon which it is based will create knowledge and understanding (experience if you try the game) in every facet of interaction with Chinese: Geopolitical, business, personal.

A more in-depth study of the game reveals a main Sun Tzu principle upon which it is based called Shi. 

David Lai, a faculty at the US Air War College, wrote an article in 2004 entitled, “Learning From the Stones: A Go Approach to Mastering China’s Strategic Concept, SHI” in which he demonstrates with the use of pictures of Weiqi games in progress how this concept originated and how it is played out on the board (and in reality).

Lai describes shi as ““the alignment of forces,” the “propensity of things,” or the “potential born of disposition,” that only a skilled strategist can exploit to ensure victory over a superior force. Similarly, only a sophisticated assessment by an adversary can recognize the potential exploitation of “shi.” 

He further explains that Shi, which constitutes a chapter in Sun Tzu’s famous The Art of War, consists of four key aspects:

1. The idea of qi and zheng- Zheng is the given; the known knowns that can be revealed by position, overt action, history, geography etc. Qi, on the other hand is a hopefully ingenious variation whose variety and possibilities are endless, as in the board game. (all six Sun Tzu principles—see footnote-- put together in an ingenious and irresistible way)

2. The second aspect is about unleashing an irresistible power which would not have been expected by the foe (he uses the example of a hawk striking its prey- a decisive strike). (Win all without fighting)

3. The third aspect is about creating a favorable situation with which to gain one’s objectives. (deception and foreknowledge)

4. The fourth aspect is about taking and maintaining the initiative (shape your opponent)

How does China put this into practice in its geopolitical strategy? In the Game of Go App Blog, Matthew Chalifant has written an article entitled, “Surround and Conquer: Geopolitical Strategies Influenced by Weiqi (Go)” He points out that the Western world perceives strategy as a game of chess, and that China is playing an entirely different game.

He says about the psyche and principle behind Weiqi: “Originating from China, Weiqi has infused itself into the Chinese psyche. Nearly every aspect of Chinese strategic thinking is deeply influenced by Weiqi. The principle (sic) strategy in Weiqi is to surround your opponent with overwhelming control over territory. The ancient wisdom in Weiqi, is in how to do that well. Secretly the true battle is not against the opponent, but within yourself as a participant.” 

Hearkening back to Sun Tzu, the author characterizes the patient strategy as akin to “a frog in boiling water.” By the time the frog realizes what is happening, he is boiled frog. He characterizes this strategy as Salami Slicing. “Salami slicing places an emphasis on incremental gain over time rather than total immediate gain. Take a little now and have a little more later. It is a slow boil type game as with the frog in hot water. Perform it too fast and become noticed, move too slow and the gain is hardly profitable, but take at just the right rate and your opponents will be none-the-wiser.” 

The strategy China used to grow to its current power lies in expertly and sometimes unnoticeably slicing the salami. While American Presidents like Bush, Clinton, Obama and Trump were in arrogant ignorance of what the ramifications of what was happening in China, or arrogant denial, China is at the top of the heap globally now. Not totally their fault- neither they nor anyone who worked for them was trained to recognize the strategy of our key trading partner, later competitor. President Biden, forced to recognize this, is out to prove that the US is not the boiled frog. Does he have the horses?

What can the US do about it now? The article recommends, “The single thing we can do is learn how to play Weiqi. As China grows in influence and eminence, it will become all the more necessary for the West to comprehend how China, and the East in general, processes geopolitical variables.”

This is the main theme of my book, “The Culture Factor: Understanding the Plain Truth About US-China Relations:” The US cannot win the competition for geopolitical dominance without truly understanding what’s in the heart of China’s culture and how it plays out in strategy. Weiqi is it, can be understood all rolled into a simple game. That said, there is little chance of President Biden or Mitch McConnell or Charles Schumer etc. sitting down to learn the game. 

So who will help? Those of us who have been ignored or, like my book, not PC enough to be taken seriously, but who understand the game. Again, what is the chance of that? 

In academia and in business, gamification has become a popular vehicle for learning and creating scenarios and strategies. Over and above their role in understanding China, the strategies taught by Sun Tzu are very effective on their own.

Will you start playing the game?

China, Russia, Ukraine and the World-The Plain Truth As I See It

 

The news these days is full of stories about Russia’s invasion of Ukraine. Companies are trying to look good (or not look bad or complicit) by making statements and, in many cases, taking actions to separate their businesses from Russia.

And, of course, there are the sanctions. Many of Russia’s assets frozen, Russian Ruble and banks crashing. Yet that seems not to stop Putin’s war. So what will stop it without mass destruction? I think the world agrees that Putin will never say, “oops I made a mistake” and quit. Sanctions will make things worse and worse for Russia, which will likely piss off Putin more and more.

Even if Putin realizes this was all a big miscalculation, and even if more and more Russians and Ukrainians die, this war will only end when Putin gets to save face.

What complicates the situation more, yet is presented as a possible solution, is the show of alliance between China and Russia, which was timed to coincide with the Olympics and predate the war by a short time.

Recently, columnists and writers commenting on the situation have said that a. China realizes it may have made a faux pas and b. China is the best hope of a solution in the near term. 

So what’s the Plain Truth of the situation for China? Let’s put ourselves in Xi Jinping’s place for a couple of minutes and think it through. We can look at it in terms of Good News and Bad News:

a. The Good News is that people will reduce their rhetoric about demonizing China and Xinjiang, etc. because next to Putin, China looks angelic. 

b. More Good News is that It might have a positive long-term effect in cutting the bullshit between the US and China because both sides will realize that cooperation and collaboration without the political posturing is good for them and good for the world, especially if it groups Russia with the North Koreas of the world.

c. Some Bad News is that if China continues to sit on the sidelines and say nothing about the situation, it will be put into the same political corner as Russia.

d. More Bad News is that China, which had hoped to divide and conquer during the Trump Administration when he alienated everybody, has seen the West, NATO and the World come together as has not been seen since WWII. This is a major deterrent to thoughts about invading Taiwan.

e. Even More Bad News is that, as China’s economy slows down due to the crash of real estate and the negative effects of China’s Zero Covid policy on small businesses, it needs to be more export-driven than ever. Never good to alienate your customers is pretty much a given in the global business world.

Thomas L. Friedman, the New York Times columnist, in his opinion piece, “The Cancellation of Mother Russia is Underway,” suggests that China could join the rest of the civilized world (other than India) in the Boycott and even Sanctions on Russia because Russia’s action is undermining China’s mantra of stability (and for the reasons above); this, he suggests, would be too much for Putin and he would back off. Sorry, Mr. Friedman, my opinion is (and I so hope I am wrong) this is never gonna happen. I will explain why later.

Friedman does make one excellent point which can be our f. Much more Bad News is that the boycott is not just coming from nations, but from private actors as powerful as BP and Airbus. That is not a good prospect for China, which still depends on Western companies for equipment, grain and employment of its citizens, to say the least.

Shuli Ren, writing in Bloomberg Opinion, in her article “Why China Won’t Help Russia Around Sanctions,” also suggests that the fragility in China’s economy would prevent any bold actions that would endanger its export business and economically damage its population. That is true, but knowing China, I can say that is only true for the Known Knowns; the Known Unknowns part tells me that, if China wants to help Russia, we all may never find out.

Andreas Kluth, also writing for Bloomberg, mentions China’s “unsustainable doublespeak” regarding Russia (there was a source article for this but gated content got me and I refuse to open any such business model) and suggests that intervention would get China off the hook.

From my vantage point, if I were Xi Jinping, the signs would read as a problem and opportunity at the same time. Doing nothing might do nothing, depending on the course of events without China’s involvement, and doing something would ingratiate me to nations like the U.S. who are my biggest customers and with whom my relationship has suffered, to say the least. The best part of that is the economic and political squabbles that China has with the US and others are easily solved—much easier than solving Putin.

But the problem goes much deeper for Xi and it, as always, is a fundamental cultural problem:  After appearing in world headlines as Putin’s Buddy, condemning him and his actions, while clearly explainable from a political standpoint, would cause Xi Jinping to lose face. It has been clearly established by historians that one of the reasons Mao sent Chinese troops into Korea in October 1950 is because he was afraid that, after just taking over the country a year earlier, that he would lose face as a leader and appear to be weak.

This, by the way, is also Putin’s problem. Even if he fully recognizes his mistake, he won’t quit until the rat in him saves face.

Double problem, and probably one of the most difficult to solve. Am I the first one to mention this as a key factor? I hope not.

That, my friends, is the Plain Truth as I see it.

©Michael Serwetz 2022