I recently read a reporter’s coverage of Foxconn and thought the major financial press might want to consider also covering the much bigger picture, which is a movement that one sees only once in a lifetime…..and in this case that movement is a quiet and under the radar trend of Chinese companies moving their senior management and facilities over to the United States. What I mean by that is quite simple: the movement of their intellectual property, brainpower and boatloads of working capital……you heard right, everything but the average Chinese factory worker that was in higher demand over the past 40 years than a Stanford graduate. Could you EVER possibly even fathom such a thing happening? Now, I don’t want to get ahead of myself here by making such a bold projection, but yes a few have made the move and the rationale is the same reason we packed our bags and headed to China over 40 years ago - - to maximize corporate earnings, enhance shareholder value and meet the insatiable demands of the growing American middle class. (Rings a bell?- - “According to a study by consulting firm McKinsey & Company, 76 percent of China's urban population will be considered middle class by 2022. That's defined as urban households that earn US$9,000 – US$34,000 a year. ... In 2000, just 4 percent of the urban population was considered middle class.”*

So what we are seeing is a select few companies heading to the United States due to increasing manufacturing costs in China, huge subsidies given by President Trump - let’s not forget $10 billion just to Foxconn for their move to Wisconsin - - access to some of the smartest minds in the world for development of the next generation technologies and, most importantly, the ability to be closer to the end client, thereby copying exactly our model of cutting out the middle man and boosting margins significantly. 

 As a result of management’s decision to move one of our Chinese client’s headquarters to Los Angeles, they have almost overnight picked up clients that include two of the Fortune 100’s and are close to finalizing almost a dozen additional blue-chip customers that are aggressively diversifying their supplier relationships in an effort to ensure they are receiving the highest quality product at the lowest cost - - you know, Business 101. 

 Let’s take this client as an example. If they were not as fast thinking as some of their Western competitors, they probably would not be here this time next year. Instead, due to a strategic plan that was literally orchestrated by two of the smartest men I have ever met, a little technology company out of Taiwan in less than 12 months is now trading on a public exchange in the United States, has five quarters of double-digit revenue and earnings growth under its belt, has paid off all of its debt so it is sitting quite pretty with probably the strongest balance sheet amongst our peer group give our pile of cash, zero debt and increasing profits, access to the who’s who of the multinational blue-chip companies and, you won’t believe how the tables have turned, busier today filing patents on new technologies and outsourcing its manufacturing to a few local factories in Downtown Los Angeles as well as Mainland China. 

This my friend is the new era that we are about step into and truly one of the most exciting times in the business world as those who have grasped this concept will not only survive but thrive. And as usual, you’ll have the ones fighting the trend who will simply just make more room for forward looking companies like our clients to pick-up the pieces they have dropped and further increase their market share.