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InterChina Partners and Wottrich Form Affiliation

InterChina Partners and Wottrich Form Affiliation, Atlanta USA

Richard L. Wottrich, CEO and Senior Consultant, International Services, at DSI Global View (Atlanta), has agreed to affiliate with InterChina Partners and InterChina Consultants (Shanghai, Beijing) as a Senior Advisor representing the interests of InterChina in the United States. This affiliation provides a unique ability for DSI to refer new business and clients for applications and solutions in China. Wottrich has consulted with InterChina for several years and is  well positioned to evaluate and implement U.S. client strategic plans in China.

InterChina Partners

InterChina Partners and InterChina Consulting are specialists in China. Their team of 50 professionals has conducted over 600 strategy projects and closed over 185 transactions since inception. Through its unique combination of capabilities, InterChina has delivered the highest quality of services to clients for over 20 years. InterChina is one of the leading advisory firms in China, and the number one alternative to the global consultancies and investment banks. Based in Beijing and Shanghai, InterChina has a sustainable backbone of local and western professionals who have both experience working in China and overseas and have offices and professionals throughout China, the US and Europe. InterChina joined with Clearwater International in 2014, along with three leading European corporate finance firms (UK based Clearwater Corporate Finance, Scandinavian firm Advizer and IMAPLynx based in Spain and Portugal), creating Clearwater International.

Richard L. Wottrich

Richard L. Wottrich, CEO and Senior Consultant, International Services, formed DSI Global View 25 years ago as an international consultancy. DSI assists businesses in researching, analyzing and implementing cross-border entry into new markets via IT, Joint Ventures and M&A. The DSI cloud-based virtual Global Networking Platform is composed of over 225 investment banking firms, consulting firms and university and technology centers in 35 countries.

Richard L. WottrichInterChina Curriculum Vitae

 

 

‘Gimme Shelter’ for Refugees

Housing Technology Start-Up, New Story – 3D Printed House

[This article was originally published on September 28, 2015. DSI updates and republishes this article annually to draw attention to the plight of refugees worldwide.]

Oh, a storm is threat’ning, My very life today, If I don’t get some shelter, Oh yeah, I’m gonna fade away

War, children, it’s just a shot away, It’s just a shot away, War, children, it’s just a shot away, It’s just a shot away 

1969, Rolling Stones, ‘Gimme Shelter’, Mick Jagger, Keith Richards, ‘Let it Bleed’ album

This is now.

Over 30,000 Palestinians gathered along Gaza’s border with Israel on Friday, March 30th, to vent their pent-up frustration in a protest that quickly turned violent. Israeli forces reportedly killing 15 at the border fence. In the course of Israel’s creation in 1948 and its occupation of the West Bank and Gaza in 1967, more than half the Arabs living in pre-1948 Palestine are thought to have been forcibly displaced. Today, some 5 million Palestine refugees are registered with the United Nations Relief and Works Agency (UNRWA). Palestinians represent one of the oldest refugee populations on earth.

South Sudan has suffered years of civil war in the process of becoming a nation in 2011, leaving it one of the poorest countries in the world. South Sudan cannot provide its people the basics of adequate healthcare, education, and income opportunities. Children are paying the price with their lives. More than 5.7 million South Sudanese cannot feed themselves, and food insecurity continues to rise, poised to reach six million in 2018. Nearly four million people are displaced because of conflict and hunger, including two million who have fled to neighboring countries since December 2013. Uganda hosts more than one million refugees from South Sudan; 60 percent of the displaced are children.

The numbers blur.

According to the UN Refugee Agency (UNHCR), there are over 65 million “refugees, asylum-seekers and internally displaced people around the world” (forcibly displaced people). Of these people over 50 percent originate in Afghanistan, Somalia and Syria. The top refugee hosting countries are Turkey at 2.9 million, Pakistan at 1.4 million, Lebanon at 1 million, Iran at 1 million, and Ethiopia at .8 million. Over 1.3 million asylum-seekers made claims in the European Union in 2015, with perhaps another 1 million claims in 2016.

Additionally, the United Nations Food and Agriculture Organization estimates that about 795 million people of the 7.3 billion people in the world, or one in nine, were suffering from chronic undernourishment in 2014-2016.

“It is argued that a safely built environment, including adequate housing conditions, is one of the most elemental human needs. Nonetheless, around one billion (one-sixth) of the world’s population currently live in slums and squatters and a large proportion of refugees reside in inadequate shelters.” This statement was made in “Harboring illnesses: On the association between disease and living conditions in a Palestinian refugee camp in Lebanon” in the International Journal of Environmental Health Research.

Forcibly displaced people are but the tip of the iceberg. A most important first step in helping forcibly refugees worldwide is providing shelter – a sense of place, a roof over their heads, a floor under their feet, privacy, and ultimately human dignity. This is not complicated. This is where the rubber meets the road.

These truths are self evident.

7.4 billion people : 2 billion without clean water : 1 billion living in slums : 800 million starving : 65.5 million forcibly displaced : 22.5 million refugees

These are a few ‘Gimme Shelter’ creative resources meeting this need worldwide:

New Story, a construction technologies startup, and a housing nonprofit ICON have recently launched a 3D printed house. Their structure is 650 square feet and includes a living room, kitchen, bedroom, bathroom, and shaded porch. This house can be assembled in less than 24 hours and initial versions cost less than $10,000. Equivalent homes built in developing countries could cost as little as $4,000 each. Similar 3D printing housing structures have been demonstrated in Russia, Dubai, and Amsterdam, and elsewhere, but New Story is the first permitted 3D printed home to go up in the US.

ICON’s large overhead armature printer, Vulcan, pours a concrete-based slurry into a 3D software-directed pattern. Put down one layer at a time, the entire structure “grows” from the ground up. The printer consists of an axis set on tracks, giving it a flexible and virtually unlimited 3D print area.

IKEA A/S has employed its extensive flat-pack logistics skill sets to designing a comfortable, solar-powered shelter that can provide emergency housing for natural disaster victims and refugees. The IKEA flat-pack homes were developed in coordination with the IKEA Foundation and the UNHCHR.

IKEA’s flat-packed, lightweight plastic shelters are easily assembled on any flat site. The 188 square foot hut is twice the size of a ‘regulation’ refugee tent and can be assembled in four hours. Five people can sleep comfortably inside. These homes have solar paneled roofing, providing on-site electricity. The roof also helps to deflect solar energy by 70%, keeping the interior cooler during the day and warmer at night. UNHCR has already ordered thousands of these shelters to house refugee families in Greece, Iraq, Serbia, Chad and Djibouti. IKEA shelters cost between $1,150 and $1,500 depending upon configuration.

IKEA Flat-Pack Refugee Shelters

The Pritzker Prize 2014 winner Shigeru Ban has been focusing on shelters for twenty years via his Voluntary Architects’ Network. Ban is known for his innovative work with paper; particularly recycled cardboard tubes used to quickly and efficiently house disaster victims. They developed temporary shelters after the April 2015 Nepal earthquake (Gorkha earthquake) killed more than 9,000 people, injured more than 23,000, and destroyed 500,000 homes. Their work has evolved further into shelters that utilize reclaimed rubble and fiberglass panels.

Global Village Shelter, LLC, has deployed thousands of its flat-packed, durable housing units to Pakistan, Honduras, Guatemala, Grenada, and New Orleans – as well as to MoMA’s permanent collection. Its architects, Dan and Mia Ferrara, also created an innovative modular factory that can be shipped anywhere for on-site production, lowering each unit’s $2,500 price tag down to roughly $1000.

Ferrara said, “Our system is the only system that is low cost, meets all international standards, can be easily shipped in containers, provides jobs for set up and manufacturing and works with local entrepreneurs”. The company has factories in Los Angeles and Mexico and is seeking funding to produce their shelters on a broad scale.

Highly respected architect, designer, and artist Abeer Seikaly has created unique ecological weaved tents to provide homes for refugees in war-torn areas and victims of natural disasters. Seikaly’s eloquent design won the Lexus Design Award in 2013, but the tent is still at a prototype stage.

Artist Abeer Seikaly unique ecological weaved tents

More than a tent, his creation combines mobility and comfort (heat, storage, running water and electricity) using nature as a guide. The double-layer fabric allows the tent to be closed against the cold and rain when needed while draining or collecting rain water. When the weather is hot, the tent opens up to let cool air in and hot air out. A water tank at the peak can be used to shower and the energy from the sun is stored in a battery providing renewable electricity.

Seikaly said of his shelter, “In this space, the refugees find a place to pause from their turbulent worlds, a place to weave the tapestry of their new lives. They weave their shelter into home.”

By definition most refugee camps use various tent shelters. Tents lack proper flooring. Sleeping on cold ground can cause serious health problems, and worst, flash-flooding can cause further displacement. This issue inspired Scott Austin Key and Sam Brisendine, co-founders of Houston-based Good Works Studio, to create Emergency Floor, a sustainable, affordable solution that can deployed to camps across the globe. Having such a quick-fix during the initial camp set-up phase may reduce flooding issues and illnesses.

Turkey has taken the brunt of the Syrian refugee crisis, coping with 2.9 million displaced Syrians. They have built one of the most orderly and efficient refugee camps in the world, known as the Republic of Turkey Prime Ministry Disaster and Emergency Management Presidency’s Kilis Oncupinar Accommodation Facility.

The camp is composed of 2,053 identical shipping containers adapted into living quarters spread out in neat rows housing over 14,000 people. There are paved passageways. There are schools and stores. There is a hospital. There are police and metal detectors. The camp is relatively safe.

Turkey has built at least six identical camps along its border with Syria. There are no tents or few of the problems typical for such temporary facilities – garbage, raw sewage, and muddy narrow passageways. The Turks have undertaken this approach in part for for political reasons of course, as other nations contribute billions to fund these camps. But what country would not have political and economic problems dealing with two million refugees?

By contrast the world’s largest refugee camps are at Dadaab, near the Somalia border. Kenya and Somalia have tolerated the UNHCR base housing 350,000 people in five camps that cover 20 square miles. The Dadaab camps were constructed in the early 1990s; first settled by refugees of the civil war in Somalia. As the population expanded, UNHCR contacted German architect Werner Shellenberg who drew the original design for Dagahaley Camp and Swedish architect Per Iwansson who designed and initiated the creation of Hagadera camp.

Refugee shelters can be plastic tarps, tents, shipping containers or innovative low-cost design solutions. But shelter solutions of necessity simply highlight the reality of providing security to forcibly displaced people across the world.

A camp is still a camp. Shelters are temporary. Nobody wants to stay there. Nobody wants to leave their home. Nobody wants their family split up. Everyone wants to go home. No one knows when. But the immediate need is to shelter your fellow human beings. As the Rolling Stones rocked long ago, ‘Gimme Shelter.’

Richard L. Wottrich, CEO & Senior Consultant, International Services

Cascading Black Swans – 2018

Space Shuttle Discovery LI-900 silica tiles – Hold on! It’s going to be a bumpy ride.

December 30, 2017

By Richard L. Wottrich, Senior Consultant, International Services 

There are shadows in 2018 that are contradictory.

Central banks are turning off the stimulus spigots at an excruciatingly slow pace. Yet the entire U.S. yield curve is flattening and a steep credit market correction is in the cards. A Danish energy company just issued a 1,000-year bond with a maturity date of 3017, and some corporations are selling negative interest rate bonds. Global stock markets are at record highs, yet extraordinarily low volatility across most asset classes belies investor worries.

Total global debt has topped 325 percent of total GDP as government sovereign debt jumps past $63 trillion [Pew Research Center analysis of International Monetary Fund data]. China’s shadow banking assets grew more than 20 percent in 2016 to 64 trillion yuan ($9.8 trillion), equivalent to 86.5 percent of GDP. The U.S. unemployment rate has fallen to a 50-year low, yet wages have hardly budged.  And Congress just passed a corporate tax bill that blows a hole in the U.S. budget.

Yet no one seems to be concerned. As Alfred E. Neuman said, “What me worry?”

What are the “Black Swan” risks and events that could cause this ‘Alice in Wonderland’ world to collapse. Or is that just foolish worry. Has exploding technology taken the risk out of humanity’s endeavors? This is our take on plausible Black Swan risks on the horizon.

Electromagnetic Pulse (EMP) Event 

Governments are concerned about North Korea’s burgeoning nuclear weapons program. We however are far more concerned about their ability to create an EMP event, which would detonate a nuclear device in the atmosphere over the United States. This would cause catastrophic damage to the nation’s electricity grid and server farms, resulting in long-term, national power and Internet outages.

You will note that North Korea’s recent intercontinental missile tests go far higher than necessary to deliver a conventional nuclear weapon. But they are just right to deliver an EMP device. North Korea famously has an almost nonexistent electrical grid, which means they are somewhat impervious to an EMP counter attack.

But such an EMP device need not reach the U.S. South Korea is the twelfth largest GDP in the world at $1.5 trillion. Exploding an EMP over Seoul would throw its economy into chaos and rock markets worldwide. Or detonating an EMP over Tokyo would throw the third largest GDP in the world into a tailspin that would demand an immediate counterattack by the U.S. We would be in world war three.

2018 Probability – .37%

Nano Drone Terrorism

The proximate cause of modern terrorism was the coupling of international commercial airlines and smart phones. Suddenly anything was reachable and possible.

Today we are facing the development of inexpensive Nano drones, posing the question, “How can military or security forces cope with swarms of tiny intelligent Nano drones skimming but inches above land or a body of water?”

Imagine if you will a barge loaded with ubiquitous yellow rubbish containers moving slowly up the River Thames through London. One of these containers could be filled with 500,000 Nano insect drones. At an appointed time, a terrorist utilizing a GPS controller and a cell phone could remotely activate aerosols that fill the container with Anthrax spores. The container top could then be opened remotely as the Nano insect drones are activated. With a light wind blowing the Nano cloud of drones could be widely dispersed across London. Even if just five percent of the drones find human targets the potential for 25,000 drone disease agents making contact in a densely populated city is quite high. This is the unknown danger of drone technology in the wrong hands.

2018 Probability – .50%

Tactical Nuclear Weapon Detonation

Pakistan today has the world’s fastest growing nuclear stockpile with over 100 nuclear weapons, according to a report published in 2015. The production of its nuclear stockpile has been associated with an unusual feature: most nuclear warheads produced by Pakistan in the last decade are thought to be low-yield tactical weapons.

It has been speculated for years that small tactical nuclear weapons could fall into the hands of terrorists. Pakistan has faced some devastating attacks on its defense apparatus by jihadists in the past decade or so. This internal chaos, coupled with perpetual tensions with its eastern neighbor, India, makes Pakistan the most dangerous Black Swan in the world.

A tactical low yield nuclear weapon could, for example, be smuggled aboard a freighter and then detonated five miles offshore of Tel Aviv. Estimated casualties could be as high as 10,000, plus the dynamic effects of a tsunami battering 50 miles of coastline. What could we expect Israel to do in retaliation?

2018 Probability – .75%

These examples are just riffs on the theme of terrorism. The fact is, most Black Swan events are unimagined, or as Donald Rumsfeld famously said, “Unknown unknowns.” And more disturbingly, most Black Swan events are the culmination of an unimagined series of unrelated events that cascade into catastrophe.

Cascading Black Swan Events

Imagine a unique electrical vault failure under Manhattan that shuts down electronic trading on Wall Street. North Korea, sensing an opening, triggers an EMP event over Tokyo that shuts down Japan’s electrical grid for 48-hours. While losses cascade across global markets, credit markets freeze up, causing most trading floors to shut down. Now enters the unknown unknown – Iran decides this is a good time to drop a nuclear weapon on Israel. Armageddon.

Farfetched? Perhaps. But in order to plan for unforeseen Black Swan events we need to first imagine them:

  1. Include rather than exclude.
  2. Accept that the improbable will occur, and that the effects may be wide-reaching and not now fully understood.
  3. Understand as much as possible about the conditions under which these improbable effects will become visible.
  4. Define those conditions where cascading effects will occur – trace these linkages through the social fabric to know where the breaks will occur – especially when the impact seems minor at first, so that you can identify it as early as possible
  5. Be alert to gathering evidence that the situation is growing much worse very quickly in multiple areas.

Our Prediction 

Our prediction regarding possible cascading Black Swan events in 2018 is quite simple:

FED overshoots – ECB runs out of ammunition – China’s Shadow Debt crashes 

There you have it – Global Financial Meltdown.

2018 Probability – 5.00%

As Alice said in Alice in Wonderland, “I see nobody on the road.” The King replies, “I only wish I had such eyes; to be able to see Nobody! And at that distance too! Why, it’s as much as I can do to see real people,”

Richard Wottrich, Blog Author – richard.wottrich@gmail.com 

 

 

Six Mega Trends – 2018

“Existentially all the water on earth is all the water we have.” – Lower Tennessee Watershed, Henry County, Tennessee USA – Photo: R. Wottrich

“If you think in terms of a year, plant a seed; if in terms of ten years, plant trees; if in terms of 100 years, teach the people.” – Confucius

Charting global mega-trends is perhaps a fool’s errand, but there is order in the fractal universe – if you know where to look. Certain historical currents run strongly and are perhaps not immediately apparent, but nevertheless their impact will be felt in 2018 and beyond.

1. Insurance and Climate Change

Zillow recently reported that $400 billion in Florida real estate values could be at risk from climate change by 2100. Property insurers will not be willing to insure real estate unless rates are substantially raised. Homeowners will naturally lower coverages to fit their budgets. Many will move away. Behaviors will change.

Meanwhile many homeowners whose homes were flooded by Hurricane Harvey have no flood insurance – they cannot afford it. But a wealthy owner of a $2 million home on Bird Key in Florida gladly pays $25,000 a year for that same flood insurance. That owner knows their claim will likely be in the hundreds of thousands, so the federal flood ‘insurance’ subsidy is a bargain.

Right now insurance rates are set on arbitrary vectors, such as zip codes. But risk analysis and big data will fine tune these methodologies and homeowners at the greatest risk from climate change will face enormous insurance rates – many will move.

These mismatches in insurance coverage and uneven federal flood insurance subsidies will ultimately be reflected at the ballot box, changing political behavior in favor of working to control and plan for climate change.

2. The Energy Revolution

The United States has become the largest energy producer in the world. This is nothing less than a tsunami in the world political order, as the ripples of surging U.S. fracking production of oil and gas reach across the globe. Venezuela, Russia, and other oil producers are struggling with oil under $50 bbl. Saudi Arabia has been forced to sell more oil than seems logical, just to defend its market share. Economies the world over are benefiting from the drop in energy costs, which ultimately will spur their GDPs.

This American shale oil revolution is occurring primarily on private land, as America is perhaps the only nation on earth to allow private citizen ownership of energy assets. When the U.S. federal government loosens antiquated bans on exporting oil, coal to liquid (CTL) and liquefied natural gas (LNG), this revolution will take on even greater importance. The dropping price of oil is a reflection of lackluster global economies, but it will not stop the tide of U.S. energy independence and all that means to the world order.

3. Robotics and the Great Decoupling

The unrelenting convergence of robotics and ‘cloud’ systems integration is putting irresistible pressure on employment opportunities across the globe. Make no mistake, digital convergence is a jobs shredder – it leaves behind a wake of disenfranchised workers ill equipped to jump the cloud-based divide.

This is not a new concept. Erik Brynjolfsson, a professor at the MIT Sloan School of Management, and his colleague Andrew McAfee have been making the case that Moore’s Law advances in computer technology is the proximate cause of anemic jobs growth over the past several years.

To Brynjolfsson the pattern is apparent: “As businesses generated more value from their workers, the country [USA] as a whole became richer, which fueled more economic activity and created even more jobs. Then, beginning in 2000, the lines diverge; productivity continues to rise robustly, but employment suddenly wilts. By 2011, a significant gap appears between the two lines, showing economic growth with no parallel increase in job creation.” Brynjolfsson and McAfee call this the ‘great decoupling.’

4. Water Wars

Water resources are dwindling across America. The Ogallala Aquifer, which sprawls across eight Western states, is the largest and most important agricultural aquifer in America. Estimates are that it will be exhausted in 20 years.

According to the WHO/UNICEF Joint Monitoring Programme for Water Supply and Sanitation (JMP), 37 percent per cent of the world’s population – over 2.5 billion people – lack adequate clean water for bathing and cleaning, and nearly 1 billion people still use unsafe drinking water sources.

Aquifers the world over are being drained by inefficient agricultural irrigation methods. Over 70 percent of the water in the US is used for agriculture. In California almonds account for $11 billion of the state’s GDP and represent 80 percent of the world’s almond production. But it takes over 1,900 gallons of water to produce one pound of almonds, which cost under $7 a pound at Costco. Water rationing is in America’s future and it will not be pretty.

Existentially all the water on earth is all the water we have. But in 1950 our world population was a bit over 2.5 billion, while today it is roughly 7.5 billion. When an advanced civilization visits our earth one billion years from now they will ask, “What were they thinking?”

5. Deconstructing Education

Higher education is still modeled after a centuries-old monastic tradition of exclusionary practices that myopically shower enormous benefits on an exceptionally privileged few. Available data suggests that 50 million students worldwide attend traditional colleges and universities; constituting just .7 percent of the world’s population.

Higher education resources are mismatched. In 2010 only 44 percent of U.S. professors reported that they spent more than 9 hours a week teaching in the classroom. Meanwhile college students have amassed over $1.3 trillion in student-debt, granting universities and colleges what amounts to a stealth taxpayer subsidy and carte blanche to raise tuitions across the board. Higher education tuition has increased 1,000 percent since 1989, as exemplified by a Harvard Professor’s average 9-month salary today of over $225,000.

Meanwhile in New York City, Department of Education (DOE) high school teachers removed ‘for cause’ and other severed tenured staffers remain in limbo. Sources estimate 200 to 400 of these folks sit in ‘rubber rooms’ and are paid for years while awaiting disciplinary hearings. Their salaries total $15 million to $20 million a year; money that could go to teaching children.

But help is on the way. On-line e-learning resources have increased exponentially across the globe, driven by Internet connectivity. You can watch any course taught at M.I.T for free on iTunes U. Major universities are putting substantial education content on-line for minimal or no cost, begging the comparison to matriculation costs of $50,000 a year and higher for ‘in residence’ students.

There are many nuances that collectively define the on-campus higher education experience. There will always be a place for the few who can afford that experience, or for fields such as medicine requiring extensive hands-on real time instruction. But do not for a moment underestimate the enormously disruptive influence of technologies that can educate the hundreds of millions of people across the globe who desperately want an education, which now can be viewed on a smart phone app.

6. Jobs for Young People

Just a few years ago China had a 12.5 percent GDP growth rate versus a U.S. rate of less than one percent. Today China struggled to hit 6.7 percent in 2016, while the U.S. second quarter GDP growth rate was 3 percent. Such volatility should be considered a harbinger of the future.

U.S. workers “not in the labor force” exceeds 94 million; a labor participation rate of 62.7 percent in August of 2017. Yet its unemployment rate for 18-25 workers is 8.8 percent, versus the general unemployment rate of 4.3 percent.

In China over 7 million college graduates poured into its economy in 2016, yet available jobs came with lower income expectations – resulting in 77.2 percent of graduates ‘showing an interest in entrepreneurship.’

Both the U.S. and Chinese economies suffer from mismatched labor markets – critical skilled labor shortages in key industries – as educational institutions struggle to match accelerating employment trends.

The unemployment rate across the European Union remains above 10 percent, but the larger problem is the EU’s inability to employ its young people. In Italy real unemployment is roughly 15 percent, but exceeds 45 percent for its young people! Unions and governments protect employed union workers, who represent a ‘set-in-place’ aging workforce. Young workers are left out in the cold.

A recent EU Higher Education Authority (HEA) survey shows that one in four EU graduates who found employment last year were working overseas, compared to one in ten in 2008. This represents an EU brain drain that it can hardly afford.

Perhaps the overriding question facing economies across the globe is, “How can we employ our own young people?”

Richard L. Wottrich, CEO & Senior Consultant, DSI Global View LLC