I did a spot on CNBC Squawk Box this morning to discuss the impact of the recent unrest in China. Much of the news surrounds stories about migrant worker protests. As I wrote yesterday, the drivers for the protests making the news is not ideology–it is practical life issues like pay, jobs, work practices, discrimination, and corrupt local government officials. Wen Jiabao recently said that corrupt officials is China’s greatest crisis. Last year more than 146,000 corrupt officials were arrested in China; 97% of them were at the county, city, or village level.
Our discussion this morning turned on the impact on the US. The biggest US risk is supply chain interruptions, much like the Japanese earthquake. Just under half the manufacturing capacity in the world is in China. Much of it is in southern China, especially Guangdong, where the factories are operated by migrant workers from Sichuan, Hunan, and Xinjiang. Recent job losses in Guangdong caused by “hollowing out,” (businesses moving to cheaper locations in Vietnam and other Asian countries) are a real problem. Migrant workers are often the only source of income for their families in poor villages in western provinces. Rising food prices has also put the squeeze on migrant worker incomes, even though the incomes are rising at 10% per year.
All this is interesting, but what I care about are the people. It is easy to lump groups of people together and call them “migrant workers” if you have never met them. Not so easy when you know their names.
I thought I would just take a minute to inject a little humanity into the story by posting a few pictures of the kids I work with in the migrant worker schools in China. For several years, my partner Fred and I have organized teams of university students to work in primary schools in poor villages, often migrant worker schools. We have done projects in Tibet, Yunnan, northern China, and tried to do one in North Korea that failed to happen. In each case, we supply the students with books and materials to build libraries and kitchens, plant gardens, pay student fees, and give the children pencils and paper. The students spend a month or more in the schools teaching and working with the children.
Here are a few pictures from one of our recent projects in a migrant worker school in northern China.
The photo above is our team for a migrant worker school project. Fred (white t-shirt just in front of me) is my partner in all the projects we do. Ethan (black Rutledge capital shirt in front of me) was team leader for this project. The other team members are students at China Agriculture University.
Below are a few of the children, including an unforgettable kindergarten student showing me her very beautiful graduation dress.
Finally, the picture below is a very special one for me. We were able to arrange for 15 of the students graduating from the migrant worker school to go to the official public school nearby, which will allow them to later go to university. They needed clothes, school supplies, and the like to fir into the new school. This is a picture we took on their first day of class. I keep this photo on my desk.
I hope you get to meet some of these wonderful children one day for yourself.
I did an interview the other day with Andy Roth at the Club for Growth about my recent visit to North Korea. You can listen to the Podcast by clicking here.
I made this video last week in Pyongyang, North Korea. Visited the middle school for gifted students. They have 2 floors of physics labs, and one each of chemistry and biology labs as well as an extensive mathematics program. This is a video of my visit to a physics classroom where the teacher is showing his (6th grade) students that vibrating a spring creates a standing sine wave.
Students are selected for the gifted student program when they are 6 years old and receive intensive training in mathematics and the sciences. How extensive? I visited a 6th grade biology class where the students had recently cloned a rabbit in the lab.
Tell your kids to study their math.
I have just returned from the most amazing trip–5 days in Pyongyang, North Korea. Over the next few days I will post a number of notes, photos and videos from the trip. Hope you enjoy. First, why did I make the trip? Because I love a good adventure. North Korea it is one of the hot spots that, if it were to change, could affect the prosperity of the entire region, including China, Japan, S. Korea, and Taiwan. The 6 party talks over the denuclearization of the Korean peninsula have not been going well. We have a new administration. I think this is the perfect time. And then, of course, I was invited to visit.
Last summer I had the chance to spend 3 days with one of the senior members of the NK government. He told me he had a serious interest in improving communications, completing the agreements and opening NK for economic development. As you may know, NK has been having a punishing food shortage which has taken the lives of a large number of children and old people. I wanted to be there first when it opened.
First, a small disclaimer. I am not going to use this piece to whine about North Korean government policies or behavior. There are plenty of other forums to do that. I am just going to tell you what it was like to be there. There are also some people’s names I can’t talk about. Sorry.
So, after making our live call-in show for entrepreneurs on Fox Business (1-2PM SAturdays. Be There!) I hopped an Air China flight for Beijing to catch one of the 3 weekly flights to Pyongyang. It turned out to be interesting timing because the day I arrived the country was celebrating the birthday of Kim Jong Il.
In Beijing I stopped by the NK Embassy in Beijing to get my visa. ($100). Then booked a flight to Pyongyang and back. ($700). It’s only a 90 minute flight, which makes the airfare about 3x the prices in the US. That was my consistent observation. Everything in NK had a higher price tag (at least for me) than the equivalent prices in either China or New York. Strange, I thought, prices are always lower in countries with low per capita incomes. But that’s because we always see prices in low income countries that are open to trade with the rest of the world. North Korea has been closed to trade with most of the world by the U.S. embargo. There just aren’t many things to buy there at all–similar to Moscow pre 1989. More on prices later.
Arrived at Pyongyang Airport. It’s about the size of Long Beach airport but with a lot less planes. I counted 10 total aircraft including military aircraft. Ours was the only commercial flight at the airport. When we landed I got to pretend to be a big shot and got whisked off on a private bus to the VIP entrance where bags are not inspected and formalities are waived. Good thing too. I had an armload of cartons of Marlboros–the accepted form of currency–and boxes of macadamia nut chocolates to give to all the people who helped organize the trip.
We drove from the airport into the city on the immaculate airport expressway. We very rarely saw a car on the expressway but we saw lots of people walking into and out of the city alongside the road. One of the sites entering the city is the Arch of Triumph, above. The arch commemorates the end of North Korea’s 4 decade occupation by Japan and the birth of the new NK state, known as the DPRK. This photo also shows how few cars there are in North Korea. You can see a total of 2 cars on the highway.
I took the picture above at 4PM last Tuesday of the main street in downtown Pyongyang. You can see that during “Rush Hour” there are lots of people walking down the road but only 2 cars and 1 bus on the road. The temperature was 15 degrees F. Everyone I saw wore a ski jacket or overcoat in good condition but very few had gloves.
I will write more about my visits to the schools tomorrow and add some photos I took of the kids. Great kids, a very heavy culture of nationalism/patriotism, pictures of Kim Il Sung (the father who led the guerrilla army against the Japanese) and his son Kim Song Il who has governed the country since the father died at age 84. But again, no heat in the schools or classrooms, with kids and teachers wearing heavy coats.
All of Pyongyang is this way. Lots of people, perfect roads but no vehicles. After dark, looking out the hotel window, the city is almost completely dark.
Needless to say, North Korea did not fit neatly into any of my previous experiences. I will try to make sense of it in my next post, which will include pictures of my school visits as well as my meetings with senior officials.
Every time I travel to a foreign land I kiss the ground when I return to America. This time I kissed it twice.
Almost forgot to tell you the best part. When the North Koreans learned they would be allowed to live in the US they told my friend at the consulate that they thought it was important for them to learn the national anthem before they got there. So, being a good sport, Bill gave Star Spangled Banner classes in the cafeteria. On the day then left for the US he took all 6 of them out into the parking lot and they sang the Star Spangled Banner at the top of their lungs so the people in all the other diplomatic compounds could hear them.
I love this job.
I am in Shenyang tonight. Gave a lecture to 700 students and faculty at Liaoning University here today. It is the 60th anniversary of the founding of the university celebration, which is appropriate since I just had the 60th anniversary of my personal founding last month.
After the conference I had dinner with some great State Dept. guys here. They told me a wonderful story about some North Koreans I’d like to pass along to you. Next week I am going to North Korea myself–tell you all about it when I return.
Year before last a group of North Korean people sneaked across the border by swimming across the Yalu River at night. The next day they showed up at the South Korean Embassy in Shenyang asking for political asylum. While the South Koreans were talking it over the North Koreans went outside and climbed over the wall to gain entry to the US Consulate which is just next door. Now what?
The US guys allowed them to stay at the Consulate while our government tried to figure out how to handle it. They ended up living in the cafeteria for more than a year. During this time two of the people, a 21 year old boy and a 23 year old girl, fell in love. Finally, the US government made an arrangement with the Chinese government to fly them all to the US as political refugees. The 2 sweethearts wanted to go together so my friend Bill found a host family in Louisville, Kentucky who would take them both in.
They are still in Louisville today. They are still in love.
Maybe there is hope for the world after all.
OK, it has finally become apparent to me that when I travel the blog lies there gathering dust. So, I have installed a widget on my iPhone that allows me to post to the blog from anywhere. Cool.
Travel has been a bear but have seem some very interesting things I will tell you about along the way including a trip to discuss an agreement with a group of North Korean leaders, another to meet 562 students at a primary school for the children of migrant workers (have some great photos to post) and a third to the Beijimg olympics.
On Friday, I will climb on another airplane–ugh–for a buffet of lectures and meetings in 6 Asian cities including the 50th anniversary of Liaoning University, a venture capital and private equity forum, a Roundtable at Tsinghua University and another at the University of International Business and Economics, an interview with China’s leading website, meetings to help a large U.S. Company decide where to locate it’s Asian headquarters, a side trip to North Korea, some time with CEOs of 2 potential private equity deals and a visit with 15 children we have arranged to transfer to a better school this year. Makes me tired just to write of down.
Meanwhile, here in the U.S., the Fed and the Treasury are doing their best to accelerate the demise of the capital markets and undermine growth and campaigning politicians are strewing $100 billion promises like rose petals along the campaign trail. And I’m tired of losing money in the stock market just like you are.
I will take up these topics in the coming days.