On January 16, 2006, a Chinese company named Baxy Ice Cream set the world record in Beijing for the largest ice cream cake ever made - the cake weighed several tons and was put together by a score of Chinese ice cream technicians working for less than one hour to complete their task. The record was previously held by a US company named Carvel. I saw an announcement of the new record on network TV causing me to reflect upon a childhood guilt trip - "You have to eat everything on your plate because there are children starving in China."My knowledge of Chinese culture, industrialization, and politics is inadequate and slanted. Even today while I sift through statistics and video that crisply measure the commercial march of China I hear the echoing refrain that prompted me to eat my vegetables. This lingering verse haunts many of us cerebral minions to "push the last pea" that we may free ourselves from our imposed anxiety disorder.
After doing some research I have come to learn that China is generally viewed as the largest growth market on the planet for all things dairy. I did this research trying to form an opinion as to whether the new record was a cultural signal or a government-designed publicity postcard (see "The Rapid Rise of China's Dairy Sector", Iowa State University, May 2005:
http://www.card.iastate.edu/publications/DBS/PDFFiles/05wp394.pdf). The research suggests to me that the record was a cultural signal.
The ratio of US-to-Chinese per capita ice cream consumption is currently about 10-to-1. However, Chinese consumption of ice cream is growing at a rate of 10% per year. All other things held equal the Chinese will equal our per capita consumption in a little over 7 years. I am now getting nervous. I am starting to feel smothered.
Had it been the world's largest military tank or an ICBM I would not have felt as negatively impacted. I can understand these things, I have a better sense of how to measure them...I have lived with them longer. They protect our freedom to design and build the world's largest ice cream cake. However....China holds the record now....how do I measure the meaning of this?
I am thinking about this because in my judgment there are few examples of cultural and industrial redirect so poignant as Baxy's ascension to the planetary ice cream throne. I believe there is a high degree of correlation between current ice cream consumption trends and prospective energy consumption trends (this has some statistical validity based on a sample of twelve countries where I could obtain good data).
I am now shocked into an irreversible belief that China's industrial needs are going to push the entire energy industry to unprecedented performance and output requirements. I also believe these factors are going to push the industry to unprecedented capital spending levels and that IT will benefit enormously from this push. While the investor in me is excited by this prospect I have an unresolved nervousness that my children's adult lives will be remarkably different than my own.
1 comment:
First, China and ice cream: my daughter graduated from Georgetown 2 years ago. She's been in DC since, working for a K street lobbying firm, and is about to head back to B School, if she gets accepted where she wants... Anyway, I have been telling her: the wars of the 21st century that "matter" won't be fought on the battlefield, they'll be fought contractually, and the battlegrounds will be S. America and eastern Europe, for oil.
By 2050, I predict, America will be the 3rd largest importer of oil, behind China and India. Unless we acknowledge this fundamental demand equation, we are screwed. We have the ability to innovate our way out of it: why hasn't Bush placated his business friends by creating a "moon race for green energy"? There is so much money in this, and we are so far behind. Some people think we can simply explore our way out of it... unfortunately, those people exist almost exclusively in government... the companies are way ahead on this, but incentives are needed to make them go faster. The cultural shift - as you found in the ice cream cake story - is massive. I would recommend 2 books to you: Friedman's latest (you've probably already read it)... it's easy but still though provoking. The second is "The Pentagon's New Map" where Barnett says flatly that large-scale military wars amongst the connected world becomes scarcer and scarcer... it's a good read.
Which leads, oddly, to the next to last post. Along with innovating our way out of so much reliance on oil, we will need to become much more efficient in the acquisition, transport and delivery (last mile) of same oil. I am not in the business, so I am talking out my ass, but I can see the size of the indistry, and I know that money has always flowed freely in the industry (my uncle's been a geologist in Midland since 1946... I have been to those parties!). These 2 characteristics have historically played determinative factors in leading to waste on a massive scale. "If I can make enough it doesn't matter what it costs (i.e. "wastes"), then I'll just go ahead and waste. It's easier."
But now it turns out that margins aren't the issue but it will be lost revenue (and national security - patriotism does exist to a degree) that will lead companies to get lean. Margins will still be high, but waste no longer means a hit to profits, it will mean a hit to serious revenues (because demand will outpace supply). As prices rise, the cost of waste rises, too - especially when the waste is the product itself (as opposed to wasting, say, a call center person's time).
In such a world, your idea of the intelligence moving to the edge is absolutely correct. In addition, due to the ABILITY to host applications now ("the internet as infrastructure") and the DESIRE to host ("app vendors' costs go WAY down to google-like margin levels"), combined with the first SECURE DATA standards ("in the form of the WS-* standards")... well, the network turns into a huge hosted application, tracking devices on the edge in real time, and reporting to the customer where their assets are. As search was the most recent killer app, and provides the first real basis for scaling distributed computing; so "intelligence" is the killer app for scaling distributed business (globally), in a world of scarce resources.
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