A film about urban sprawl and peak oil might seem a bit off topic for a business ethics and corporate social responsibility blog, but if you see the connection and/or have an interest in either subject, I highly recommend you check out a fantastic documentary, The End of Suburbia.

If you need some help finding the bridge between this blog and the focus of the film, look no further than the endless forced expansion of the consumer’s appetite for more consumption (homes, cars, clothes, decorations, kitchen gadgets, high-tech gadgets, and so much more) by companies in the pursuit of increasing shareholder return. What’s a homebuilder to do when money is pouring in and competitors are continuing to put up ostentatious and resource-binging skyscraper homes (a.k.a. “McMansions”) at a frantic rate 100 miles out from city centers and lining up 0% down ARMs for the self-delusional nouveau-rich (a.k.a. the negative net-worth and heavily debt-laden soon-to-be or currently former middle class), even if they know deep inside that their business plan is not sustainable long-term (say, when the right crop of inflation and credit turmoil pops up…)? Build more houses of course!

Why not? they ask. Their competitor over at ABC CrazyBig Homes is churning them out like cans of tasty and completely nutritious meat on an assembly line earning a fat bonus each period, and watching their company’s stock price skyrocket. Who cares if the system comes crumbling down later as long as I get mine, they rationalize.

In the off chance that you are not paying attention to what is happening in the US right now, and increasingly around the world, the party is over folks. For those of you who have little adjustment to make when living standards and life styles see a reversion to the mean similar to what is likely to happen in the US housing market, I commend you. For those of you who face a much larger delta, I’d get started on making some adjustments right now.

Even if you are not slightly interested, I say bite the bullet and watch it anyway. Here’s an overview of the film to whet your appetite:

“Since World War II North Americans have invested much of their newfound wealth in suburbia. It has promised a sense of space, affordability, family life and upward mobility. As the population of suburban sprawl has exploded in the past 50 years, so too has the suburban way of life become embedded in the American consciousness.

“Suburbia, and all it promises, has become the American Dream.

“But as we enter the 21st century, serious questions are beginning to emerge about the sustainability of this way of life. With brutal honesty and a touch of irony, The End of Suburbia explores the American Way of Life and its prospects as the planet approaches a critical era, as global demand for fossil fuels begins to outstrip supply. World Oil Peak and the inevitable decline of fossil fuels are upon us now, some scientists and policy makers argue in this documentary.

“The consequences of inaction in the face of this global crisis are enormous. What does Oil Peak mean for North America? As energy prices skyrocket in the coming years, how will the populations of suburbia react to the collapse of their dream? Are today’s suburbs destined to become the slums of tomorrow? And what can be done NOW, individually and collectively, to avoid The End of Suburbia?“

Just a quick post to direct your attention to the current print or online edition of the Economist. The leading article, though covering a somewhat stale topic, is well written and insightful (big surprise there…). Take a gander at the online version: Globalisation and the Rise of Inequality: Rich Man, Poor Man. A few passages I found interesting are noted below.

On wage disparity:

“Since 2001 the pay of the typical worker in the United States has been stuck, with real wages growing less than half as fast as productivity… If you look back 20 years, the total pay of the typical top American manager has increased from roughly 40 times the average—the level for four decades—to 110 times the average now.”

On globalization:

“When the jobs going abroad are not whole assembly lines, but bits of departments, how exactly do you pick out the person who has lost his job to globalisation from the millions of people changing jobs for other reasons? And, hardhearted though it may sound, most of the gains from trade and technology alike come from the way they redeploy investment and labour to activities that create more wealth. That, like all change, can be painful; but it is what makes a country richer. A policy locking people into jobs that could be better done elsewhere is self-defeating.”

A suggested solution:

“Instead, the way to ease globalisation is the same as the way to ease other sorts of economic change, including the impact of technology. The aim is to help people to move jobs as comparative advantage shifts rapidly from one activity to the next.”

TAGS: Globalization | Economy | GDP | Economist | Compensation | Wealth

Though it appeared below the fold in the Boston Globe’s business section this morning, I feel the recent news that China has unblocked Wikipedia to be very important. In case you missed the details, here are a few articles that provide relevant background:

• China Allows Full Access to Wikipedia [Boston Globe]
• China “Unblocks” Wikipedia Site [BBC]

The news is significant for a number of reasons. The lowering of information control, in a country where specific politically-charged content is monitored and accordingly suppressed, is certainly a compelling story on its own merits. However, there is something larger that cropped up as a result of this event: validity that holding a firm line on ethics can actually work.

“The news appears to vindicate [Wikipedia founder] Wales’s tough stand against Internet censorship. He has said that Wikipedia will not remove articles about subjects regarded as controversial by the Chinese government, such as the 1989 Tiananmen Square massacre.” [Boston Globe]

While the profit-focused decision makers at Google, Yahoo!, Microsoft, Cisco, and other notable multinationals, chose to bend to the Chinese government’s censorship initiatives, Wikipedia held its ground. Executives from the noted companies that chose to prioritize profits, over aiding the control of information access and personal freedom, frequently made the argument that it would be better to have some presence in China rather than none at all. In other words, at least the citizens can search for information using Google, albeit censored, than not with Google at all.

“But major American Internet companies like Yahoo Inc., Google Inc., and Microsoft Corp. have voluntarily censored the Internet content they offer in China, in exchange for the right to do business there. The censorship has been denounced by politicians and human rights groups. The companies reply that it’s better to provide some Internet services to China’s 1.3 billion people than to be frozen out of China altogether.” [Boston Globe]

Curiously, Wikipedia didn’t seem to come to the same conclusion. Censorship of its content was not an option. Whether from a relaxation in control, changing censorship policies, or perhaps a sinister plot to alter entries in China’s favor (as the Boston Globe article sensationally hypothesizes), the country has decided to allow its citizens unfettered access to the Free Encyclopedia.

Corporate executives and shareholders take note…

TAGS: China | Wikipedia | Censorship | Freedom | Google | Yahoo | Microsoft

Just a quick pointer to one of Michael Standaert’s recent posts: Is CSR Really Taking Shape in China?

Via ARS Technica: Libel Case Over iPod Factory Labor Abuses Dropped

A good friend of mine from my MBA program just emailed me a link to a Goldman Sachs report that was quite compelling. The report covers the economic growth potential, over the next 50 years, of Brazil, Russia, India and China (the “BRICs economies”), and should be viewed by anyone interested in investing.

I personally found the report quite powerful for several reasons. First, I enjoy following markets and economic trends (not enough to be good at it), particularly ones that I am invested in. Second, the report paints a fairly good picture of what the world economic makeup will look like over the next 50 years, which could potentially impact (positively or negatively) the environment, business norms, consumption habits, and more.

For instance, as the BRICs economies continue to grow and consume sources of energy, prices will rise (great for investors but not so optimal for consumers) and resources will become more scarce. In such a scenario there is just as much opportunity to capitalize on the scarcity as there is to develop alternatives. It is the development of alternatives that I am most interested in watching over the next fifty years.

Here are a few additional observations I had while viewing the report:

• BRICs, if the report is correct, will define the future of business far more than they do now. Doesn’t mean US, Japan and current other economic powerhouses will fade away or dramatically lose influence, but that more players will be present at the table. This could be equally positive and negative.
• The car purchasing statistics were quite interesting in that they showed a massive percentage of ownership sitting in the BRICs economies. Since such high growth in ownership is expected, there is a huge opportunity to create a more sustainable and environmentally friendly auto footprint. At the same time, there is also the potential for the growth to go in the other direction, adding to the already large environmental and natural resource issues we are experiencing.
• The energy and oil demand does not seem that extreme but still raises many important questions about the future of our environment in direct correlation to increased growth.
• From an investing standpoint, pay particular attention to the information on energy and commodities, as well as the potential appreciation of the BRICs economies’ currencies.

TAGS: SRI | BRICs Economies | Brazil | Russia | India | China

It occurred to me that friends, colleagues, and visitors, whom may wish to read my China trip posts in chronological order, may find the reverse date structure (most recent date first) quite frustrating. Accordingly, I have listed the daily entries below in a more user-friendly structure:

• China Journal [China no. 1]
• China Trip: Businesses & Organizations We Will Visit
• China-Bound
• Home From China
• China Daily Re-cap
• Days 1 & 2: LAX to Shenzhen [China no. 2]
• Day 3: Shenzhen [China no. 3]
• Day 4: Shenzhen [China no. 4]
• Day 5: Shenzhen to Shanghai [China no. 5]
• Day 6: Shanghai [China no. 6]
• Day 7: Shanghai [China no. 7]
• Day 8: Shanghai [China no. 8]
• Quick Clarification [China no. 9]
• Day 9: Shanghai [China no. 10]
• Day 10: Shanghai, Wuzhen & Hangzhou [China no. 11]
• Day 11: Hangzhou & Grand Canal [China no. 12]
• Image Captions [China no. 13]
• Day 12: Suzhou [China no. 14]
• Day 13: Suzhou to Beijing [China no. 15]
• Day 14: Beijing [China no. 16]
• FTP Photos Posted [China no. 17]
• Day 15: Beijing [China no. 18]
• Day 16: Beijing [China no. 19]
• Day 17: Beijing [China no. 20]
• Final Thoughts [China no. 21]

In a bit of a personal circular journey (I’ll explain in a minute) the Inspired Protagonist reports on Cargill and other soy purchasers agreeing to a 2-year halt to purchases from growers occupying newly deforested land.

I mentioned the personal part of the story as I had a recent experience regarding Cargill that struck me as rather odd (and never made it into a blog post). As noted earlier, I had the pleasure of listening to a presentation by a representative of NatureWorks (a Cargill subsidiary) while in China during June of this year. The presentation was fantastic and the potential of the technology is inspiring.

Upon my return to the US, however, I did some more research about Cargill and learned of the company’s role (the preceding link is one of the several sources I came across) in the deforestation of the Amazon. At the time, I was a bit disturbed by the contradiction (the NatureWorks presentation touted the low environmental impact of the process, from creation to decomposition, yet its parent company doesn’t seem to exercise the same concern when trading soy beans) and had trouble working through my feelings about both Cargill and NatureWorks.

My personal questions aside, I think it is great that activism made a difference and that Cargill and the other soy traders are making an effort to improve.

TAGS: Cargill | NatureWorks | Soy | Soybeans | Amazon | Deforestation

Cereplast recently issued a press release via CSRwire.com that is worth checking out. Its product is a bio-based plastic (from such sources as corn or potato starch) that is competitive with petroleum-based plastics.

I mentioned a few weeks ago that I attended a presentation, while in China, of a representative of NatureWorks and found the technology and the company to be fascinating. Cereplast appears to offer a viable alternative and should give NatureWorks and other entrants to this less-of-a-niche market a run for their money.

TAGS: Cereplast | Bio-plastics | NatureWorks | Petroleum | Plastic | Social Enterprise

I have been back in California for about 20 days now, yet somehow have lingering feelings that I am still in China. I don’t know if it was the travel coupled with a general lack of time to unwind upon my return, or some other factor, but I have yet to feel settled. I think by the time the trip was most of the way through, I stopped thinking I was in a foreign country and became comfortable with my then familiar surroundings.

Perhaps a more logical explanation is that there was some consistency and structure to the trip, despite the million and one things we did and saw. I woke up every day and had breakfast in a hotel. The coffee, when served, was always sure to arrive just before I had to leave for the bus, and an egg, my main source of protein on the trip, could continually be counted on as part of the meal. I saw the same people on the bus, day in and day out, and with them, struggled through the same heat discomfort (save the ever temperate Mr. Beaton), cramped leg space, and mysterious stomach happenings. Seated naps and malfunctioning microphones became expected occurrences during almost every bus travel, and very late night attempts to contact my wife by IM or video conference bore a regularity that helped me cope with the ever shrinking amount of sleep I would manage to enjoy.

But all of these things simply helped me feel more comfortable, and helped tone down the reality that I was traveling through such an amazing country, each day seeing and experiencing more than my senses could absorb. The real symbolism of the trip, and perhaps what I am struggling with the most, is that it represents the closing of a major chapter in my life and the beginning of a new one.
. . .

The two and a half week trip was simply the capstone to the last ten months I had spent learning, growing, and laughing with the same individuals. Would an unforgettable business-oriented trip to China help me learn about international business and culture? Most certainly. But during my compacted time in the MBA program, as well as on the intense trip overseas, I learned more about life, myself, other people, and how much I don’t know — all lessons and experiences that will help shape me many, many, many years after I forget why it is that guanxi is important.

So I don’t really have any final thoughts about my time in China, just a mass of memories, some greater clarity about issues I am passionate about, and perhaps greater fuzziness about a few issues as well. If I were to have some organized, outlined, and well-prepared synopsis of what I learned, it is almost certain that the business climate would change fast enough to make my summation look outdated and visionless. What I am certain about, however, is that I was blessed to have been surrounded by such an awesome and powerful group of people, and that I will be forever changed (hopefully for the better) as a result.
. . .

Despite my feelings that it doesn’t make sense for me to attempt to put in writing my “final thoughts” on China, or on doing business in China, I am able to speak to several experiences or subjects which greatly impacted me during the trip. I don’t want to be redundant and make the same comments that I have in my “daily” posts regarding the trip (primarily in the image captions), so I will keep these topics brief.

Life.

The daily structure of life in China continually fascinated me during the trip. I met some very poor individuals as well as a few extremely wealth ones, and their respective daily realities couldn’t be more different. That observation could be made about any “wealth divide,” but the one in China is more pronounced and extreme than I have seen previously.

I didn’t struggle as much as I expected with the pollution we witnessed, but I also have never seen a situation quite as bad. The ugly days in Los Angeles where you are afraid to open your mouth, lest it get dirty, are actually pleasant days in some of the cities we visited. I am sure the state of China’s environment will improve with time, but I doubt it will be anytime soon.

At first, the seemingly lawless driving habits as well as the curious need to pretend that a line hadn’t been formed yet continually surprised me. By the end of the trip, however, I found that it was quite a bit more efficient to make yourself big and push to the very front of wherever you wanted to be. …I have been wasting much of my life waiting in lines indeed…

Money.

I didn’t expect to see Capitalism in full swing, but I saw that and much more. From the factories where human beings are “cheap” resources, to the blossoming debt-friendliness of China’s savvy teen demographic (well, the middle class coastal ones at least), money rules and consumerism is on the rise.

Investments from foreign sources, as well as increasingly from within China, have fueled a massive “growth” in real estate. I personally think the country’s growth is going to slow down abruptly, and when it does, I worry that the less fortunate Chinese citizens (which I think will most likely be about 3/4 of the population) will get hit very hard.

Happiness.

Similar to many of my trip-mates, I noticed that most of the people I came into contact with were very pleasant. Most smiled brightly and were quite friendly. However, I don’t remember seeing too many people really happy. I think you could say the same about most places, including the US, but for some reason, I noticed that most of the people I saw and interacted with had a kind of quietness about them, as if they were constantly in thought or preparation. I didn’t see much joy or passion — just politeness, determination, discipline, and routine.
. . .

I hope to return to China someday soon, ideally in the company of my wife and children, and imagine that my experiences there will stick with me for the rest of my life. To the individuals I had the pleasure of traveling with, as well as the strangers I didn’t have a chance to get to know better, Thank You.

TAGS: China | Cal Poly