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Bluster and bullying don’t work

Our president believes bullying works. That’s why he’s ramping up tariffs on the Chinese.

Bullying doesn’t work in the U.S. and certainly not in China, where people are motivated less by “The Deal” and more by “saving face.”

I’m not thrilled at our “progress” in confronting the Chinese. I believe it’s hurting us far more than it’s hurting them.

Tariffs are an increasingly hefty tax on American consumers, including me. Later this summer I’ll buy a new ThinkPad laptop. I’m guessing it will cost me more. Drat!

Do I think our escalating China Trade War could tank our economy and our stockmarket?



+ Higher prices dampen demand. Many public companies are already reporting lower margins because of the tariffs.

+ The uncertainty. Item: Many friends have started companies based on design in the U.S. and manufacture in China, where they’re already secured supply deals. Now they’re scrambling to figure what to do. Some worry they’ll be cut off from China completely, as the War escalates. Uncertainty is ruinous to business.

Today Morgan Stanley  said the trade war could cause the stock market could fall 16% over the next six to 12 months.


Trump says he is the one who’s holding up a trade deal with China. “China wants to make a deal very badly,” President Donald Trump told reporters outside the White House on Tuesday. “It is me right now that is holding up the deal. And we’re going to either do a great deal with China or we’re not going to do a deal.”

This is nonsense. Who negotiates next to a whirling helicopter? is site for Q and A. This is interesting:

At what point will we know if Trump is winning his tariff battle with China?

Answered by David J. Wong, Co-founder of a start-up in Asia

Let me share a personal anecdote. I used to work for a US multinational. We were meeting with a Chinese company to negotiate a joint-venture, and expected negotiations to be quick. The Chinese side had different ideas; they weren’t acceding to certain key concessions we wanted. This frustrated my American boss, who proceeded to berate and bully them. At the end of the meeting, he walked away, satisfied that he had won the day – only for the Chinese side to snap back to their original negotiating position. This happened several times, causing my boss to get more strident and angry at every meeting. Each time, he walked away thinking he had an agreement. Each time, the Chinese would return to their original negotiating position.

The heart of the problem is a cultural chasm between the way the US and China negotiate. For China, it’s about relationships and publicly “saving face.” Let’s do the tough negotiations behind closed doors and when we come to an agreement we’ll go public. It shows unity and everyone looks good.

The US on the other hand has publicly scolded China and accused them of bad faith negotiations, partly to play to the domestic audience, partly because the US system is more transparent, but also because for Americans, this is a transaction. Friends are friends and business is business.

You can see the problem here, right? How can President Trump talk up his great relationship with President Xi on the one hand while slapping China with tariffs with the other? How can both leaders have a “great meeting” at the G20 summit while the US is simultaneously arresting Meng Wanzhou?[1] To someone from China, it looks like the US isn’t being sincere.

Maybe this is a deliberate ploy by the US to keep China off balance. But taken together, the net effect is that Chinese leaders have lost face, making it difficult – if not impossible – for China to accede to any US demands at this point in time. Meantime, the US continues to turn up the heat, trying to back China into a corner by increasing tariffs and threatening even more.

For the record, I’ve done M&A deals in many Asian markets. My negotiations with Mainland Chinese parties are top of the list as the most profoundly frustrating. So I absolutely feel the pain of American trade negotiators in dealing with China. But if the US is serious about getting trade concessions, publicly berating China and backing its leaders into a corner isn’t the way to do it. There needs to be an exit path for them to save face.

So at what point will we know if Trump is winning his tariff battle with China? Well, I believe the best-case scenario is a return to the pre-trade war status quo along with the following additions so both sides can claim “victory”:

China commits to buy much more from the US;

+ China agrees to strengthen their intellectual property laws and enforcement;

+ China agrees to relax technology transfer requirements for foreign companies setting up in China;

+ The US reduces tariffs on Chinese products to pre-trade war levels; and

+ The US rescinds the arrest warrant for Meng Wanzhou and (conditionally) reverses the ban on American suppliers of Huawei. Heated rhetoric on both sides notwithstanding, I do think a deal is still possible once cooler heads prevail.

But the “win” for President Trump at this point is for China to return to the negotiating table.

Mary Meeker’s annual report on the Internet

The lady is brilliant. This deck is a massive 334 pages:

Lots of opportunities spelled out. A few:

+ Global Internet Users 3.8B Internet users in the world now: now comprise more than half the world’s population (~51%, up from 49% in 2017)

+ Asia Pacific has 53% of global internet users, Europe + Africa have 28%, Latin America & Caribbean has 10%, North America has 9%

+ E-Commerce is now 15% of retail sales. E-commerce continues to gain share (+12.4% YoY growth) vs physical retail (+2% YoY growth) but growth has slowed

+ Innovation outside the U.S. is robust, with popular areas including data-driven direct to consumer services, fulfillment, delivery and payments.

+ China: group discovery & buying connecting consumers directly to manufacturers.  Pinduoduo integrates social + commerce to unlock team purchase models. Consumers can share Pinduoduo’s products on social networks like WeChat, invite their contacts to form a shopping team to then unlock a lower price for their purchase. By encouraging bulk sales, Pingduoduo enables huge orders for their sellers and low prices and deals for consumers.

+ Internet ad spend was up +22% in 2018, driven from Better Targeting (audience customization)

+ Daily Hours Spent Online with Digital Media up to 6.3 hours per day on average in 2018, up from 5.9 in 2017 (USA). We are expecting to see time spent on mobile. More time spent on TV for the first time in 2019 in the U.S. YouTube and Instagram have seen the most gains in usage globally

+ Data is the new Application – Winning in the 2000s is about building and using data plumbing tools to improve customer experiences. (This is critical — Harry)

+ Healthcare is digitizing, with telemedicine, on-demand consultations, and democratization of health data becoming hot areas for disruption (Lots of serious opportunities here — Harry).

Download the entire report here. Careful. It’s 11 meg and may strain your dial-up. (Joke.)

Mary Meeker_Internet_Trends_2019

Buy this book for your kid

Or yourself. Good advice on starting and succeeding.

Buy it here.

Amazing highlights from the final


The worst hay fever season

My doctor forecasts it will all be over by June.

Meantime I’m suffering and Claritin ain’t doing much good.

Anyone got any better ideas?

Harry Newton.

Researchers gave money to people to go buy shoes for themselves. Researchers measured the group’s happiness. It spiked hugely after buying the shoes, but cratered the following day.

The key to maintaining happiness?

Clearly, buy shoes every day.

That’s not the answer. I’ll tell you the answer tomorrow. See if you can guess it.

No one got the right answer. You have one more day to figure out the key to happiness.