Shanzai Vs. Patents: Future Stock

Tip of the hat to Adam Minter of Bloomberg/Shanghaiscrap.com, who gave an even-toned but illuminating presentation on Chinese "E-waste" recycling at the EScrap Conference here in Orlando.   I hope he will put it online, though it would be missing his verbal critique.

Adam listened to my theory of patents...  That the USA and Europe have been so important a market to sell INTO that it was relatively safe, ten years ago, to let Taiwanese and Chinese subcontractors and contract manufacturers, such as Foxconn and Wistron, make everything you sell.   An American gadget company, like Dell or HP or Apple, is in many more ways a retailer - selling "shelf space" inside a box with their logo - than a traditional "manufacturer".     Even Japanese companies, like Sony, are letting China's contract manufacturing giants make the TVs.

My theory goes, that as the "Dell" box contains a Frankenstein of Corsair, Seagate, Intel, etc. parts, sewn together by Foxconn assemblers, that they increasingly rely on the patent to remain part of the equation.  The patent enforcement was access to American and European buyers.  If you violate our patent, we can stop letting you make our products, and without Dollar and Euro holding customers to sell to, mutually assured destruction would ensue.    My theory then says that an important milestone has been reached - China is buying more new products than America is.   While the USA market remains important, the leverage of a major OEM brand is declining.   Selling copyright-infringed or knockoff products solely in Shanghai, Beijing, Mumbai, etc. is not the "desert niche" it was a decade ago.

My question to Adam was whether the CCP (Chinese Communist Party) would step in, and wield their own power of patent enforcement.  How would that power be used?  Would CCP become a member of AGMA, or a power broker?   Recalling how HP gave $6M to the Chinese EPA in 2002, and how it resulted in seizures of printer cartridges, ink cartridges, printer repair shops, and repairmen, could a CCP-AGMA bond become a future sci-fi villain?  Or would the CCP "forget how to speak English" and ignore western patents, letting their own private companies wield the free market power once enjoyed by USA brands?

PPV - Shanzai Mona Lisa
Adam taught me an important word - Shanzai.

This isn't an exact translation, but my understanding is that in the same way Westerners have a "soft spot" for underdogs, that Chinese culture has an applauding respect for "one-upmanship" in "improving" a great product made by another.    If I could improve on da Vinci's Mona Lisa, I might share a space at the Chinese Louvre.   If the "knock off" is an improvement - like the "Iphone V" discovered in Shanghai (an unauthorized copy which actually improves on any Apple Iphone sold before it), that the reaction among the Chinese public is like a rock audience to a guitar riff.

Future of Stock:   If the public in China do not hold corporate stock in the OEMs, they are unlikely to care whether a contract manufacturers "forgets english" and marches off to its own drum.   Even the CCP would find it hard to enforce against Shanzai.  That ultimately means that America needs to stay rich in order to leverage China's manufacturer sector.   And the more America outsources its manufacturing, the more difficult that will be.

I for one welcome the new Shanzai overlords.  If taking "cores" and used product to refurbish to like-new and better-than-original, it means using fewer natural resources, and producing less carbon, to make life better for more people.  The more we shred product to prevent "gray markets" the more America shreds its wealth.   A less wealthy America is less important a market to lose over a patent pissing match.

Cheap, reused goods, open new markets.  Ford Motor Company had the best reply to Vance Packard - people learn to drive on used cars, and the more people learn to drive, the bigger the car market.   Internet access in places that earn $3k per year is important to the future of American producers.    Let Africa, India, China, Indonesia and South America have cheap used goods - we should sell ours to them.  That is how the neighbors improve their houses, and the property values of my own house will go up with the neighborhood.


Perspective at EScrap 2011

In the 1990s, I learned from a mentor, Sheldon Appel, of Perkit Folding Box Company (a small paper mill, incredibly still operating in inner city Boston in the 1990s) that in the recycling industry, we think we are recycling paper, plastic and metals.   Actually, he told me, we are recycling people, by creating jobs and patiently working with people desperate enough to work for us.  He said he had stopped making money running the paper mill years earlier, but still ran it in Mattapan, because the people who worked for him would have serious trouble finding blue collar work if they ever closed.


Shelly, Baynard Paul, Jim Harvey, Milty Shaeffer, the Golds... a generation of recyclers who had been around as the Massachusetts paper mill industry survived by recycling.  The larger and larger scale paper mills were moving closer and closer to the trees, up in Maine and Canada, and proximity to the urban areas which needed the paper was now easy to do with Eisenhower's system of interstate highways, undercutting the advantage of having paper mills close to cities.  While the recycling mills like Perkit and Newark Paperboard and American Tissue were indeed "saving trees", they didn't do it on purpose...   They were accidental environmental companies, turning to a feedstock that came from the city, in order to survive and compete with a maturing market.

WR3A Is Fair Trade Recycling


This morning, at the Resource Recycling "EScrap 2011" show in Orlando, the World Reuse, Repair and Recycling Association will disappear.  In its place will be a new name, //FairTradeRecycling//

Like Kiva, Peace Corps, and Fair Trade Coffee, WR3A members will be people who see other people in other countries for what they can do, not just for what they cannot do.

Logo will be in the shape of a heart, drawn in chasing arrows, with patterns of continents on the heart.

CRT Glass to Glass Recycling: Down For the Count?

Since the 1990s, environmentalists have had a strong preference for CRT glass to be remelted into new CRTs.  It preserves the value added by the barium and lead which is vitrified into the solid glass, and avoids mining of new lead and silica.  Given a choice between making a CRT television out of mined material, and making one out of recycled glass, it's no contest.

But word is that China is pulling the plug on its 20 year obsessive CRT manufacturing campaign.   They are sufficiently entrenched in LCD and LED display production, that they are turning off CRT glass furnaces.  "Time to move on."  We never really had access to export to those CRT glass to glass operations, and so China never really developed phosphor washing (at least, that they allowed anyone to use).   Now those markets have gone away, having never done anything but make CRTs out of mined material from Kunming and Mongolia.

The USA of course lost its last CRT furnaces a decade ago.  Europe lost CRT glass manufacturing 6 years ago.  Samsung Corning in Klang Malaysia did not retool and is giving out their purchase orders for cullet on a month to month basis.  That would leave India - which still sold as many new CRT units as flat panels this year - as the sold CRT glass to glass option in the world.

We Could Help... Praise Us, Praise You

About a year ago, Jim Puckett and I spoke about how upset I was over his organization's accusation, and subsequent closure of, a perfectly respectable CRT refurbishing factory in Indonesia.  He said he wanted me to calm down and ease the criticism over the closure of this reputable factory.

Jim offered that he could help.  A letter from him, he said, would go a long way to helping the factory.  But that I would first have to lighten up on my criticism in my blog.  I stop criticizing - he puts in a good word to the government closing the factory.  Quid. Pro. Quo.

That means either:

A) It's a bad, illegal, polluting operation, which BAN is willing to spare in return for my being nicer in my blog, or...

B)  It's a good, reputable, Basel Convention Annex IX B1110 operation, legal... but he refuses to correct the false accusation unless I'm nicer in my blog.

Either way... A or B.... You are not a good person.  I choose to help the factory buy what it needs elsewhere, USA be damned.

Praise or damn the factories for what they are, not for what I say.  I got to praise you like I should.