north america bathroom news january 2010 previe amer… · 4 december 2009 -- nearly four of five...

USA Manufacturing Index Rises to Nearly 4-year HighUSA Construction Down Seven Straight MonthsUSA Economists Expect Recovery to Stick, See Slow, Steady GDP RiseUSA US Reports Upturn in Home BuildingUSA Temporary Workers and the 21st Century EconomyUSA Working Two Jobs and Still UnderemployedUSA GERBER PLUMBING FIXTURES LLC Is Recognized For A SuccessfulUSA India's GDP Growth Pressures Central Bank to Raise RatesUSA & World Yes, China Has Fully Arrived As A Superpower

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International strategic market research and consultancy on building product and related markets

North America Bathroom News January 2010

4 January 2010, WASHINGTON -- The US manufacturing sector expanded in December for the fifthstraight month, the Institute for Supply Management reported Monday, further evidence that therecession is receding.

The ISM manufacturing index rose to 55.9% from 53.6% in November. It was the highest since April2006.

Economists surveyed by MarketWatch were expecting a modest gain to 54.2%.

Readings over 50% indicate that more manufacturing firms said business was improving than said itwas worsening.

"Overall, this was a very strong report, and it suggests that the recovery in the US manufacturingsector is gaining further traction," wrote Millan Mulraine, an economist for TD Securities. "Given thefairly good historical performance of this indicator in tracking US economic activity, the bigimprovement in the headline index is pointing to further pick-up in US GDP."

In December, nine of 18 industrial sectors were growing, led by apparel, petroleum, electronics andmachinery, ISM said. Manufacturing is benefiting from the need to restock inventories, said NorbertOre, chairman of the ISM's survey committee.

"Overall, the recovery in manufacturing is continuing, but there are still some industries mired in thedownturn as evidenced by the seven industries still in decline," Ore said. Construction materials,chemicals and plastics are declining.

In spite of the solid performance in the ISM data this month, we believe the mixed signals emanatingfrom the entire manufacturing sector suggests that the sector is vulnerable to a sharp slowdown in thefirst half of 2010," wrote Ken Kim, an economist for Stone & McCarthy Research.

The new orders index rose to 65.5% in December from 60.3% in November. It was the highest sinceDecember 2004.

The employment index rose to 52% from 50.8% in November. The production index rose to 61.8%from 59.9% in November. The supplier delivery index rose to 56.6% from 55.7%.

The prices paid index rose to 61.5% from 55% on higher prices for metals such as steel, aluminumand copper.

In a separate report, the Commerce Department said construction outlays fell 0.6% in November aftera downwardly revised 0.5% decline in October. It was the seventh straight decline in constructionspending.

Source: www.marketwatch.com

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4 January 2010, WASHINGTON -- Spending on US construction projects fell in November, markingthe seventh straight monthly decline, the government reported Monday.

Overall, spending on construction projects fell 0.6% in November, the Commerce Department said.This was close to consensus forecasts of Wall Street economists.

Adding to the sense of weakness in the report, there was another large downward revision to the priormonth's data.

The government said spending fell 0.5% in October, compared with the initial estimate of no change.

The trend of large revisions to the construction data in this recession has irked economists.

Year over year, construction spending is down by 13.2% in November.

One area of strength in recent months -- spending on private housing -- fell 1.6% in November. Thesector had been bolstered by the tax credit for first-time home buyers that sparked some home buyingthis fall. The tax credit has been extended until next June and broadened to include almost all homebuyers.

Spending on private commercial construction projects fell slightly in November for the eighthconsecutive monthly decline. Non-residential construction is down 20.6% in the past year.

Economists said that tight credit and the weak job market are two factors in a grim outlook for privatenonresidential construction in 2010.

Overall private construction spending fell 0.7% in November after falling 0.8% in the previous month.Year-over-year private spending is down 20.0%.

Government public construction spending fell 0.4% after remaining flat in October. Governmentspending is up 2.7% over the past year as the government has been spending money trying tostimulate demand.

Source: www.marketwatch.com

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4 December 2009 -- Nearly four of five economists surveyed by USA TODAY say the stock marketrally since March is heralding a sustainable recovery.

If they're right, the nation won't slip back into recession nor will the Dow Jones industrial averageplunge anywhere near its March low of 6547.05. The Dow sank nearly 3% Friday to close at 9713after the government reported consumer spending fell 0.5% in September.

"The first thing to recognize is the March low was a wild overreaction," says Joel Naroff of NAROFFECONOMIC ADVISORS. Still, he looks for the market to rise or fall 10% in the months aheadbecause of uncertainty about the recovery's strength. Although the economy grew at a healthy 3.5%annual rate in the third quarter, a wide majority of the 46 economists surveyed say the rebound will beslow, or U-shaped, as the expansion decelerates.

Many economists attribute the surge to one-time sparks such as the cash-for-clunkers program, whichended in August; low inventories that are forcing businesses to boost production to restock; and an$8,000 tax credit for first-time home buyers that's set to expire Nov. 30.

Without sustained demand, economists surveyed see growth slipping to 3% or less through 2010.Consumers don't have the (stock market or housing wealth) … to get extra money to do all the big-ticket purchasing," Naroff says.

About 60% of the economists expect unemployment to peak in the first quarter. The jobless rate —which hit a 26-year high of 9.8% in September — could climb to 10.2%, based on the median surveyestimate.

Despite some recent improvement in housing prices, nearly half the economists don't see homevalues bottoming until the first half of 2010 or later as more foreclosed homes flood the market.

Sung Won Sohn, economics professor at California State University, was the lone economistsurveyed who believes the economy will dip back into recession by early 2011 before mountingpersistent growth. Among other things, he cites depletion of the $787 billion economic stimulusfunding late next year.

Yet most economists don't favor additional government aid. Three-quarters don't think the economyneeds a second stimulus, and almost 60% don't support an extension of the tax credit for first-timehome buyers. Most, however, favor a fourth extension of unemployment benefits.

Some are more upbeat. Dean Maki of BARCLAYS CAPITAL predicts a sharp V-shaped recovery.He says the production boost needed to offset a record drop in inventories will lift incomes andconsumption while a rising stock market next year prompts consumers to open their wallets.

Source: USA Today

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16 December 2009 -- Builders broke ground on homes at a faster rate in November, the governmentsaid Wednesday, offering some hope that construction would continue to grow modestly and helpstimulate the broader economy.

Home construction increased to a seasonally adjusted annual rate of 574,000, the CommerceDepartment said, up 8.9% from October. Analysts attributed the increase to unexpectedly warm anddry weather in November after an unusually cold and wet October.

The number of building permits, an indicator of future construction that is not influenced by weather,rose 6 percent in November, reaching the highest level in a year after declining in October.Apartment construction, which remains in a deep slump, backed off slightly from a 40-year low,reaching an annual rate of 92,000. Single-family home construction grew 2.1%.

Thomas A. Lawler, founder of LAWLER ECONOMIC AND HOUSING CONSULTING in Virginia, saidconstruction was still proceeding at a relatively slow pace, which he said was encouraging because itwould allow vacant homes already on the market to be sold.

“Everyone still agrees that there is a disturbingly high level of vacant homes still on the market,” Mr.Lawler said. “The best thing that can happen would be a continued subdued pace of construction.”

Economists expect demand for homes to remain at modest levels through the spring, propped up by agovernment tax credit of up to $8,000 for first-time buyers, which expires in April.

Home construction has a powerful ricochet effect through the economy. After a house is sold,consumers typically need refrigerators, appliances and furniture. Some economists estimate thatconstruction alone will add 0.5% to gross domestic product in the fourth quarter.

A separate report released Wednesday showed that inflation appeared to be largely under control:consumer prices, excluding volatile food and energy costs, remained virtually unchanged inNovember. Declining rents helped offset an increase in the price of cars, tobacco and airline tickets.

When food and energy were added, the Consumer Price Index rose 0.4% in November, largelybecause of a 6.4% jump in gasoline prices and a 7.3% rise in oil prices. On Tuesday, a report onproducer prices showed unexpected gains in wholesale prices because of high energy costs, whicheconomists expect to subside in the months ahead.

Compared with a year ago, consumer prices were up 1.8%.

Even as prices show small increases, the Federal Reserve, the nation’s central bank, remainsunconcerned about inflation. On Wednesday, the Fed reiterated its promise to keep interest rates lowfor an “extended period,” saying inflation would “remain subdued for some time.”

Still, companies are finding it difficult to pass along higher prices to consumers, given highunemployment and idle production capability. On Tuesday, BEST BUY, for instance, said its profitmargins would fall during the holiday season because of deeply discounted computers andtelevisions.

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“When you’ve got wild unemployment around the world, and very low capacity utilization, it’s a realcompetition to get people to buy your products and you compete for lower prices,” said Robert J.Barbera, chief economist for ITG. “It’s hard to tell an inflation story with that kind of excess capacity.”

A third report released Wednesday showed the current-account deficit rising in the United Statesbecause of an increase in oil imports and industrial goods in the third quarter. The deficit widened to$108 billion in the third quarter, an increase of 10.3% from the previous quarter, the CommerceDepartment said.

Source: The New York Times

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30 November 2009 -- The White House is turning its nose up at last month's spurt in temporary work—the one bright spot in an otherwise grim jobs report. It claims that such work is proof that theeconomy is still malfunctioning. The truth is that this surge in temporary workers is not only goodnews for the economy, it's the future of the 21st century labor market. If Washington wants to jumpstart job growth for the 3.5 million white-collar workers who have lost jobs in this recession, it shouldstart by scrapping the outdated legal and regulatory hurdles to temporary work.

I know something about this because I run a business that places talented individuals into temporaryconsulting and interim executive assignments. Amid the worst recession in decades, our business isup 70%. Yet there would be much more growth in this sector if Americans—from the White Housedown to the personnel department—stopped discriminating against temporary work as inferior oranomalous.

Today, demand for high-end temporary business talent is not focused on cost-cutting projects, assome might suspect. Instead, firms use temporary executives to drive innovation. In uncertain times,firms are simply more comfortable with deploying talent on a flexible basis.

Temporary work also boosts economic efficiency because not all executive roles require permanentstaff. For example, one pharmaceutical company client took on a temporary marketing executive tohelp launch a new drug. The old way of doing this was to make a new permanent hire (or a smallteam) who would have been under-utilized after the launch. The availability of temporary staff whocan get the job done quickly means that firms can rethink how work is organized.

Which brings us to another case for temporary work: Top business talent increasingly wants to workthis way. In one situation, a VP-level executive we placed was developing his own new business. Hevalued the way a part-time senior role allowed him to support his family while he worked on his ownproject. For others, working in a series of temporary assignments may be their preferred full-timeoccupation.

Given the contribution that temporary work makes to the economy, it's time Washington embraced it.Here are three things the feds could do immediately to make it easier for firms and executives to workthis way:

First, the Obama administration should create a two-year "safe harbor" for independent professionalsdoing temporary work. Currently, the rules governing independent contractors are determined on acase-by-case basis and are subject to state law variations. This leaves risk-averse personneldepartments wary of hiring temporary executives for fear that they could be reclassified asemployees, saddling employers with liabilities. The solution is to create a two-year safe harborprovision that lays out a clear test for being classified as an independent contractor. The WhiteHouse could streamline these rules, beginning with the IRS, if it made it a priority.

Second, Washington should apply any new employment tax subsidy to temporary jobs. There ismuch talk of a new jobs tax subsidy, but as it currently stands it would exclude temporary work. Thisis 20th century thinking. Any new subsidy should seek to boost temporary roles as well.

Third, the feds should let independent workers buy into the congressional health plan. A huge barrierto temporary employment for professionals who prefer to work this way is their inability to access

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group health coverage outside the permanent employment setting. Though Congress may passhealth reform this year, the new insurance exchanges that would remedy this problem won't comeinto play until at least 2013. Congress should allow temporary workers to buy into the congressionalhealth plan until then.

As we reboot the great American jobs machine, it's time to shelve outdated assumptions and acceptthat a portfolio of multiple assignments is what growing legions of companies and executives want.This new relationship between talent and firms isn't a failure to be stigmatized, but the latest sign ofour economy's endless capacity for renewal and innovation.

By JODY GREENSTONE MILLER

Ms. Miller is the founder and CEO of the BUSINESS TALENT GROUP. She served as a specialassistant to President Bill Clinton from 1993 to 1995.

Source: The Wall Street Journal

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1 December 2009 -- For Richard Crane, the "new normal" in the labor market began when he was laidoff from a New Jersey battery plant in the summer of 2006.

Mr. Crane had been earning more than $100,000 a year operating heavy machinery at DELCO, aformer unit of GENERAL MOTORS. He worked there for 23 years, since graduating from highschool. But when he lost his job he was thrust into a netherworld of part-time gigs: working theregisters at TACO BELL, organizing orders at MCDONALD'S, whatever he could find.

"I thought it would be temporary," says Mr. Crane, 49 years old. Three years later, he is sellingoutdoor furniture by day and pumping gas by night, while worrying about his skills atrophying andspending scant time with his teenage son. He makes about a third of his former pay.

Mr. Crane is part of a growing group of underemployed -- people in part-time jobs who want full-timework or people in jobs that don't employ their skills. Since the recession began two years ago, thenumber of people involuntarily working part-time jobs has more than doubled to 9.3 million, accordingto the federal Bureau of Labor Statistics, the highest number on record.

The proliferation of underemployed could represent a profound reordering of the employmentstructure. Many people who had comfortable full-time jobs with benefits and advancementopportunities now are cobbling together smaller jobs often at lower pay, in a shift that economists saycould become permanent for many individuals stuck in the cycle. Underemployment, along withunemployment, is widely seen as a force slowing the economic recovery.

The trend has been building for years, says Robert Reich, who served as labor secretary underPresident Bill Clinton and now is a professor of public policy at the University of California, Berkeley."For decades, workers have been watching their salaries and benefits erode," says Mr. Reich, whotook an 8% pay cut last week, along with the rest of the Berkeley faculty.

"We are subjecting millions of people to a standard of living below that which they could achieve if theeconomy were at full capacity," he says. "Underemployment means that many more people whocan't spend as much as they otherwise would."

Federal Reserve Chairman Ben Bernanke last week lamented in a speech to the Economic Club ofNew York that the number of underemployed is rising much faster than during previous recessions.And the average workweek has fallen to 33 hours, the lowest level in the post-World War II period.

"These data suggest that the excess supply of labor is even greater than indicated by theunemployment rate alone," Mr. Bernanke said. The unemployment rate is now 10.2%.Among the underemployed is Marty Rasmussen of Walnut Creek, Calif., who was a bankingexecutive for more than 15 years. He and his wife earned a combined income of more than $250,000a year. As a hobby, he built cabinets and furniture.

Two years ago, he was laid off by a big bank in San Francisco. While job-hunting, he volunteered tobuild cabinets for a local Lutheran church, and some fellow parishioners hired him to do work. Hisonetime hobby became his sole source of income. In the last year, he earned more than $10,000replacing windows and installing crown molding. He just finished a pair of nightstands commissionedby a friend paying $700. His wife also lost her job this year and is collecting unemployment benefits.

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"It is hard transitioning from hobbyist, because I'm used to giving my work as gifts," he says.

State labor officials and economists generally label the underemployed as those who are workingpart-time when they would prefer full-time work, as well as people who are working beneath their skilllevel.

Federal figures on the underemployed, however, don't count that second group -- those who areoverqualified for their jobs. Still, the government's broadest measure of labor underutilization --known as the U6 -- has more than doubled in the two years since the recession began to 17.5%, andit is up from 12% just a year ago, according to the Bureau of Labor Statistics. This means that nearlyone in five people are either unemployed, involuntarily working part-time or "marginally attached" --they want jobs but haven't searched in at least a month. It also counts "discouraged workers" whohave stopped searching.

"The number would be much higher if we included the mechanical engineers working at 7-Eleven,"says Heidi Shierholz, who studies underemployment at the Economic Policy Institute, a left-leaningWashington think tank.

Melanie Donahoe might be one of them. The 56-year-old mother of three who lives in Stuyvesant, N.Y, has watched her gross income as a self-employed jeweler shrink from a peak of $55,000 to$40,000 when the recession set in, to perhaps $25,000 this year. "Between the recession and thehigh price of gold, it just keeps slipping and slipping," she says. This summer, she signed on for workas a government census taker, which paid $15 an hour and tided her over for a few months. Then,she joined a local LOWE'S as a part-time cashier, earning $9 an hour. She hopes it leads to full-timework.

After being laid off by the New Jersey battery plant in 2006, Mr. Crane took a job stocking shelves atCOSTCO in the fall of 2006. His pay was $10.76 an hour -- the same money he earned when he washired by DELCO in 1983, just out of high school. "It's sad," says Mr. Crane, who had been earningabout $28 per hour at DELCO, before overtime.

In late 2007, he took a job at LOWE'S while working at a series of fast-food jobs on the side, as wellas a stint at PATHMARK supermarket. He still works at LOWE'S, earning $15.96 an hour sellinglawnmowers, outdoor furniture and Christmas ornaments. At night, he pumps gas at a QUICKCHECK for $13.70 an hour.

Typically, he works between 61 and 63 hours per week. It wouldn't be so bad, he says, if the hourswere consecutive. But with the gap between jobs, he can only sleep a few hours a night now --sometimes just an hour. Last week, he managed to clock 87 hours and barely saw his son.

"That's all I do -- every day -- I just keep working," he says. "I've got to. I'm not going to loseeverything I have."

His wife, who had been a stay-at-home-mother, also took a job. She earns about $20,000 working ata nursing home.

Last year, they collectively earned of about $42,000. This year, they expect between $48,000 and$50,000.

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Mr. Crane has applied for hundreds of jobs, among them sanitation worker, bridge painter, tree cutterand transit worker. There were some factory openings, he says, but they pay less than LOWE'S.

Over the summer, Mr. Crane's electricity was shut off, he says. He paid the bill and had it restored.But he didn't pay the gas, which is about $175 per month. Instead, all summer, they cooked on thegrill outside. Mr. Crane bought an electric hot water heater for baths and laundry. They lived that wayfor three months before finally turning the gas back on.

Ultimately, many economists expect the underemployment situation to improve, but not for a fewyears. Companies are cutting back hours, so as they pick up, they are likely to return hours to currentstaff before hiring new people. "This whole pool of people with reduced hours means recovery ofemployment is that much farther off," says Ms. Shierholz of the Economic Policy Institute.

Eventually, employment will pick up. But for people like Mr. Crane, the current situation couldbecome permanent.

As they work part-time, they have less time to look for work. Their résumés, meanwhile, becomespotty. "If you have a string of jobs beneath your skills, it erodes your resume and marketability,"says Ms. Shierholz.

Mr. Crane no longer sees his new life as temporary. He no longer dreams of going and fixingequipment at the factory and operating big machines.

"My new goal is to become a manager at LOWE'S," he says. "That will pay $17 an hour. I'm hopingthis happens in the next couple of years, by the time my son is in high school."


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21 October 2009 -- GERBER PLUMBING FIXTURES LLC is pleased to be the recipient of the 2009National “Turnaround of the Year Award” for a mid-size company as honored by the TurnaroundManagement Association (TMA), an international non-profit organization with over 9,000 membersdedicated to corporate renewal.

Based in Chicago, GERBER was selected by TMA for the mid-size company turnaround, a categoryfor companies with revenue between 50 million and 300 million dollars. GERBER was selected inhonor of its strategic revival from near bankruptcy in 2002, prior to the acquisition of its assets byGLOBE UNION, to profitable growth in the current global recession. GERBER’s corporaterestructuring was led by CEO and President, Michael Werner, who in 2003 took over the family-run 70+ year old company and modernized the business while maintaining its loyalty to the professionaltrade.

“After globalizing our manufacturing, introducing hundreds of new products and strengthening ourprofessional heritage, we are proud that GERBER is now one of the strongest suppliers in theplumbing wholesale channel. GERBER is truly honored to accept this award by TMA,” said Werner.

During GERBER’s re-building, which took five years to complete, the company’s manufacturingprocesses, supply chain and quality systems were significantly enhanced, hundreds of new productswere created, including many award winning green and high performance toilets and faucets, anddelighting customers became the company’s number one priority. Further, GERBER has continued togrow its sales by maintaining its loyalty to the professional channel and by working on behalf of itsplumbing wholesaler customer base.

In October 2009, TMA publicly recognized GERBER’s corporate re-structuring and turnaroundsuccess with increased profits in spite of the economic downturn. Werner accepted the “Turnaroundof the Year” award during the October 8th keynote luncheon at the TMA Annual Convention inPhoenix, Arizona.

Source: Kleber & Associates - Atlanta

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1 December 2009 -- India's surging economy expanded at its fastest pace in more than a year, asurprising performance that increases the chances the central bank will raise interest rates in Januaryto contain rising inflation.

Gross domestic product grew 7.9% from a year earlier in the July-September period, notching theswiftest pace of growth since the January-March quarter of 2008, the Central Statistical Organizationsaid Monday. That translates into a 13.9% annualized pace from the previous quarter, according toHSBC calculations.

"This is better news than we sort of expected," the Reserve Bank of India's new deputy governor,Subir Gokarn, told reporters.

Officials at the Reserve Bank of India and the Planning Commission, the country's economic-advisorybody, said they were likely to increase growth forecasts in response to the data, suggesting the strongperformance surprised authorities.

The expansion put India's central bank on notice that inflation, spurred largely by food prices, bearswatching. October's inflation rate was 1.34%. The central bank expects inflation to hit 6.5% by theend of the current fiscal year in March. Food costs have climbed amid drought in many areas; pricesof manufactured goods have inched up as the global economy has regained its footing.

The GDP data underscore India's rebound from last year's global downturn, and provide moreevidence that Asia is leading the recovery. Growth was led by the manufacturing and mining sectorsas well as public spending, which rose amid government stimulus measures and pay increases forcivil servants.

Monetary policy also played a significant role. In the past year, India's central bank has cut rates by4.25 percentage points to 4.75%.

India's factories and mines have been busy as stimulus measures and lower interest rates havestirred demand for automobiles, steel and cement. Exports have pulled out of their slump andoverseas investors -- drawn by India's strong economic fundamentals -- have poured billions into thecountry's stock market.

The agriculture sector, which employs nearly 60% of India's work force, posted a modest increase.Many economists noted that it is too soon for GDP data to reflect the effects of the drought.

The RBI's Mr. Gokarn said the agricultural sector could shrink, year over year, in the coming quarter,but any contraction is likely to be offset by manufacturing gains.

"The GDP numbers indicate response to initiatives taken by government in various policy measuresincluding injecting stimulus, which we did in three doses over the last 11 months," Finance MinisterPranab Mukherjee said.

Mr. Mukherjee said he thinks growth will top the ministry's current 7% forecast for the fiscal yearending March 31. The RBI now expects the economy to grow by around 6% this fiscal year while thePlanning Commission forecasts a 6.5% expansion.

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The data sent Indian stock prices higher, helping recoup some of last week's declines after Dubai'sgovernment said it was seeking a freeze on Dubai World's debt repayments. Government bonds fell.Montek Singh Ahluwalia, the Planning Commission's deputy chairman, played down the effect of theDubai crisis on India's economy.

The GDP growth may mean an earlier rate increase by the Reserve Bank of India, which manyeconomists had expected to wait until March or so before withdrawing some monetary stimulus.

"Today's data strengthens the case for the Reserve Bank of India to exit from its very easy policysettings," said Sonal Varma, an economist with Nomura Financial Advisory & Securities.


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15 December 2009 -- A remarkable 44% of Americans believe China is the world's leading economicpower and only 27% think the U.S. is, according to a recent survey by the Pew Center. JamesFallows, the Atlantic Monthly journalist, thinks that is proof that Americans have lost their minds. Heargues that China can't be the world's leading economic power. Too many of its people live withoutindoor plumbing, no mainland science researcher has won a Nobel Prize and the country has noglobal brands. How can a place like that be an economic superpower?

The normally adroit Fallows surprisingly misses the real point. China already is a superpower inmany regards. Despite its poverty, no matter what industry you're in or where in the world youoperate, you can no longer ignore China's economic might. That is power.

Here are three trends to look for in 2010 that demonstrate China's superpower status:

First, China is wielding national influence in places it never affected before. Over the last severaldecades it provided an ideological counterpoint to the United States, doing business in its push for oilwith unsavory regimes like Iran and Sudan that democracies traditionally wouldn't work with. NowChina is gaining influence with America's closest allies, too. During the financial crisis it doled outbillions in contracts in Great Britain and France. This year it surpassed the U.S. to become thelargest trading partner of both Japan and Brazil. It conducts more than $100 billion a year in tradewith both the Middle East and Africa. In Africa it is laying down highways and other infrastructureprojects. Already 750,000 Chinese workers have moved there.

Premier Wen Jiabao and the World Bank are even discussing ways to move textile factories fromsouthern China to Africa. China's factories just might lift up Africa as no Western aid money has everbeen able to do.

Look for Chinese companies to buy not just access to commodities but also Western brands, likeVOLVO and HUMMER. Building brands takes decades. That's why so few Chinese brands haveemerged globally. Chinese firms have traditionally focused on competing on price, but that'schanging fast as they learn about marketing. Aggressive, impatient Chinese businesses don't want totake decades to build brands the way TOYOTA and SONY did, so they're looking to buy them fromthe West instead.

My firm, the CHINA MARKET RESEARCH GROUP, interviewed 500 senior executives at 100Chinese companies in 10 industries. Seventy percent of them told us they planned to use thedownturn to speed up their international expansion, using both acquisitions and organic growth. Theyspecifically aimed to tap into the U.S. and Western Europe with their cash wealth.

The second trend that shows that China is an established superpower, not just a rising one, is itsemergence as a hotbed of innovation. Many analysts believe that Chinese are good at copying butnot at innovating. That's just not true anymore.

The country has become the main recipient of venture capital money in clean technology. Thegovernment is trying to address soaring health care costs by reducing pollution and is activelyencouraging foreign investment to do so, as I wrote in "China Is Pulling Ahead On The Environment."It is spending $9 billion a month on clean energy research, and within five years it will become theworld's largest producer of solar and wind energy. Most rural homes already heat water using solar

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panels on their roofs, and China is now exporting its wind power technology to the U.S. Its technologyis being used to build a 36,000-acre wind farm in Texas.

At the same time, Chinese in the U.S. have been increasingly moving back to China, driven by thebad economy and visa hassles that arose from Bush administration policies. More than 1.5 millionChinese have studied abroad. Those who went to the U.S. in the 1980s and mid-1990s tended tostay, and they helped drive Silicon Valley's growth. Now most are moving back to China, and manyare taking their companies public on NASDAQ. Robin Li, the founder of BAIDU, and JamesJianzhang Liang and Neil Shen, the co-founders of CTRIP, which is listed on NASDAQ, all studiedabroad before returning to China.

The third trend: Not only is China becoming ever more powerful economically; it is also starting toexert its political power more responsibly. Although it has been a bit combative on climate and carbonemissions at the Copenhagen conference, it has taken a leading role among the G-20 group ofnations in helping push for effective responses to the world financial crisis. Partly because China iscrucial to the world economy, G-20 is formally replacing G-8 as the main economic meeting ofwealthy nations. Also China has become the key broker with North Korea in attempts to make thatcountry less belligerent, and it will bring greater influence to bear in political discussions in the yearsahead.

China is certainly not altogether as wealthy as the U.S. or Japan, as Fallows correctly observes. Butit is emerging confident and relatively unscathed from the financial crisis. Some 80% of Chinese toldus they were optimistic about their futures. At the same time, the unemployment rate in the U.S. isstill far too high, and Japan has not only one of the world's highest per capita gross domestic productsbut also one of the highest suicide rates, with more than 30,000 citizens killing themselves in each ofthe past 10 years. The traditional powers aren't the dominant forces they once were, economically orotherwise.

People have been talking for years about China as an emerging global power. The reality is that inmany ways it is now fully emerged. Growing economic strength begets power.

Shaun Rein is the founder and managing director of the CHINA MARKET RESEARCH GROUP, astrategic market intelligence firm. He writes for Forbes on leadership, marketing and China.

Source: Forbes

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