This guest article was written by William Laraque who is the Managing Director of US-International Trade Services.
“In a yellow wood, two roads diverged…” ~ Robert Frost
With One Belt, One Road or OBOR, China’s Xi Jinping spells out China’s avenue (pardon the pun) for continued economic prosperity. The belt of OBOR runs through Uzbekistan, Turkmenistan, Iran, Turkey, Greece and Russia.
The road, which counterintuitively runs along China’s traditional sea routes to Asian, African and Western markets, proceeds through the pirate-infested areas of the Strait of Malacca, the Horn of Africa, off of Somalia, to Kenya, Sudan, Eritrea, past Yemen and Egypt on its way to the Mediterranean and finally to Greece, Italy and Germany. Before reaching the Strait of Malacca, China’s One Road enters contested waters in the South China Sea, where the Philippines, Taiwan, Indonesia contest Chinese claims under the International Law of the Sea.
There is already trouble along the belt where terrorism in Central Asia is on the rise. A gunman recently killed 5 at a police station in Almaty. In June, security forces killed two dozen attackers described as Islamist state sympathizers in the Central Asian town of Aktba.
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The Internet and Economic Diversification
How the internet is used now figures largely in the fortunes of very large enterprises. Yahoo lost $439 million in the second quarter of this year while Microsoft saw strong revenues from Office 365, a subscription version of the old Office software. Revenues rose 54% from commercial use and 19% from consumers. Connecting people over the internet to software hosted in big data centers is profitable business. These profits come before any enterprise has provided an all-encompassing platform for the conduct of global trade. McKinsey & Co. has estimated that global trade flows in goods, services and FDI will total $85 trillion by 2025.
Along The Road
China has tried the e-commerce road to global trade. Alibaba is fraught with counterfeit and intellectual property violation issues. In addition, misrepresentation by Chinese companies on Alibaba is rife. Ant Financial uses credit-worthiness processes that are the most intrusive of personal privacy. What democracy will permit such a degree of intrusion into personal lives?
China has tried economic development before. Angola and Venezuela are abject failures by any measure of quality of life and this is after billions of barrels of oil were extracted from both Angola and Venezuela by China. China has lent Venezuela well over $50 billion.
The Road Not Taken
From Rwanda to Germany and Saudi Arabia, it is now recognized that the internet is an instrument of liberation and that its use is integral to mutually-beneficial global trade and the critical diversification of economies.
Crown Prince Salman of Saudi Arabia invested $3.5 billion in Uber and invited Silicon Valley entrepreneurs to consider Saudi Arabia as fallow ground for innovation and investment.
The experience of Uber, in which the Saudis are ‘all in’, is educational. In Singapore, Grab Taxi, the local version of Uber, is growing much faster than Uber within the 600 million person market in East Asia. This is because Grab is more culturally appropriate and as Peter Drucker said: “Culture eats strategy for breakfast.”