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What the Asian flu means for you
Two major if unrelated hot topics running through the business/investment sphere are Asia and the entrepreneur. Asia, first seen as an alternative economic model that threatened America's global dominance, now seems a millstone weighing on the planet's growth prospects. Meanwhile, the American entrepreneur has been elevated to star status, made the embodiment of our can-do spirit and the purported engine of endless opportunity.
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REVIEWS BY NEAL LIPSCHUTZ
So far, for the most part, China has stayed out of the doom and gloom headlines. It is, of course, a nation whose sheer size makes it of a different order. Its currency is still not convertible on world markets, its government is still officially Communist with a capital C, and yet this massive nation (population 1.3 billion and growing) has the most realistic chance of reordering the world's economic hierarchy in the 21st century. Big Dragon: China's Future: What It Means for Business, the Economy and the Global Order, by Daniel Burstein and Arnehde Keijzer is everything you want to know about the place where such a large percentage of the world's people reside. It's also a well-informed, comprehensive, moderate, and cautiously optimistic treatise on the implications of China's growing economic liberalization and power. The wild swings in even informed American views toward China bespeak a nation still essentially a mystery to us. From euphoria at the first signs of economic opening in China (a billion-plus drinkers of Coca-Cola), the pendulum has swung to a decidedly dark view of U.S.China relations. There's talk of the need to contain a growing military power that threatens Taiwan, suppresses the rights of its own people, and tends not to play by accepted rules of international commerce. The authors, who traveled extensively in China and are quite knowledgeable, wisely steer a middle course through the extremes. They urge "dynamic engagement" with China, not isolation or an American attempt to dictate internal Chinese conditions. Sometimes, in their very reasonableness, the authors steer close to becoming apologists for China's wrongs. They do make a strong case for the inevitable rise in the next century of China to the status of true superpower, though for the near future America remains comfortably ahead militarily as well as economically. Some have written that the very opening of China to foreign influences will inevitably lead to democratization, as economic freedom somehow naturally begets political freedom. The authors are not so sanguine. They write: "China will become neither fully democratic nor fully capitalistic at any time in the foreseeable future. Its economic, political, and military relations with other countries will be driven by a political economy, a cultural history, and a belief system sometimes at odds with our own." This is a broad, useful look at a nation of growing importance to Americans.
By Daniel Burstein and Arnehde Keijzer Simon & Schuster, $25 ISBN 068480316X
If you're wondering what happened, The Ministry: How Japan's Most Powerful Institution Endangers World Markets will help. It's an outright indictment of Japan's powerful Ministry of Finance (called Okurasho in Japan), which influences all the key components of the Japanese economy. Author Peter Hartcher is an Australian journalist who lived in Japan for six years. He provides a detailed look at the inner workings of the Ministry of Finance. In fact, there is probably too much detail for many general readers. Hartcher opens a window on cronyism, wrongheaded policy, and a general distrust of market forces at the agency, all of which, he argues, have mightily helped Japan dig itself into a hole. This is a broad critique of Japan's once much heralded bureaucracy, though much of the reporting stops after 1995. There has been some further deregulation since then, but the nation still has many structural inefficiencies. A decade ago, Japan seemed unstoppable. Now it seems unstartable.
By Peter Hartcher Harvard Business School Press, $24.95 ISBN 0875847854
Journalist Michael Wolff was an early believer in the Internet and started a company. It was the mid-1990s, and the American financial machine was getting awfully excited about the Internet. (It still is.) That doesn't mean that every entrepreneurial dream is a happy one, especially in an Internet world where the rules are being made up as the companies exponentially grow. Profits don't exist, and the almighty "burn rate" (the money a company spends each month that exceeds revenues) forms an ever-present cloud ready to rain on the entrepreneur's parade. Wolff is a strong, self-deprecating, and often humorous writer. He relates his own experiences with financial backers, venture capitalists, investment bankers, and some well-known Internet names. This is interspersed with some hyperhistory of the "net," circa 1994 through 1997. The book reads like a novel (a good thing), but in that sense the conclusion of Wolff's story is a bit of an anti-climax. (I won't reveal details.) Still, you won't often find a first-person account of starting a business in the fast lane that so provocatively reveals the voraciousness, duplicity, and plain old hardball tactics that are the province of the financial types who keep capitalism humming. When the sky is the limit and a company's financial reserves will only last a matter of weeks, it makes for some hectic action.
By Michael Wolff Simon & Schuster, $24 ISBN 0684848813
Easy-to-read chapters help you assess the skills and personality traits you'll bring to your business venture. Other chapters discuss how to obtain financing and how to choose a legal form for your business, among other basic needs. Chapters are consistently broken up by useful sidebars that often tell you where to find further information. Short "Try It His Way" and "Try It Her Way" anecdotes provide real-life examples relevant to the topic at hand. Becoming your own boss is an increasingly traveled road to the American dream. But the failure rate is high, and it can be all consuming. Before you embark, certainly get the practical knowledge you'll need. But also read about Michael Wolff's wild ride in Burn Rate. It might be enough to knock the dollar signs from your line of vision.
By Seth Godin Upstart Publishing, $15.95 ISBN 1574100939
Neal Lipschutz is managing editor of Dow Jones News Service.
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Let's start with Asia. The informed American investor or export-oriented corporate executive now knows more about the doings in Malaysia, Indonesia, and South Korea than he or she imagined possible a year ago. It's all due to the "Asian Contagion" or "Asian Flu," those snappy oversimplifications used to describe the various currency and macroeconomic woes afflicting these heretofore fast-growing Asian economies. What the problems of Asian nations ultimately mean for American businesses and financial markets remains to be seen. What is certain is that in an ever more tightly bound global economy (for better times and downturns), it's important to know what's going on on the other side of the globe.
If China is the potential economic power in Asia, then Japan is the current and long-standing champion. But this champion has been on the ropes for a number of years. The Japanese economy is stagnant, and its blend of government-industrial cooperation is under fire. It was only a decade ago that Japan's economy was the envy of the world. Many Americans openly lamented then that our system was only second best.
Back in America, economic tidings have been a lot brighter. For one thing, a whole previously unknown venue for commerce seems about to blossom on the Internet. How did things change so quickly on a medium that a few short years ago seemed to have no commercial potential? You'll find some answers in the richly entertaining Burn Rate: How I Survived the Gold Rush Years on the Internet, a first-person account of an unwitting entrepreneurial journey through the first phase of the Internet's commercialization.
You won't find much about mezzanine financing or business dinners in hip "Eurotrash" restaurants, but if you want a practical guide to self-employment, seriously consider If You're Clueless about Starting Your Own Business and Want to Know More. This is a good first book to read about going out on your own, even if it's not the last one you'll need. This straightforward workbook by Seth Godin is part of the Clueless series of primers on stocks, insurance, and other topics. If You're Clueless about Getting a Great Job and Want to Know More, released this past April, is the most recent addition to the series.