TMBA 541: An American Based in China Shares His Perspective on the Coronavirus Outbreak
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One of the things we love about our online community of entrepreneurs, the Dynamite Circle, is that the members are not only globalized but oftentimes deeply ingrained in the cultures and economics of the places they live.
Brian Miller is the founder of Easy China Warehouse, a third-party logistics company that helps entrepreneurs who sell online consolidate the shipping of products manufactured in China.
Living in Shenzhen, China, he was in a position to see the Coronavirus unfolding from the onset of the outbreak.
Brian joins us today to talk about his experience on the ground in China as the virus began to spread, the trajectory that country has been on since January, and what the future 'new normal' could possibly look like for the rest of the world, based on his experiences.
Listen to this week's show and learn:
When and how Brian first heard about the Coronavirus. (3:44)
What the situation in China looked like when he returned. (19:40)
What Brian believes the future looks like for Western countries that are struggling right now. (31:02)
How the current political climate has affected foreigners living in China. (35:27)
Why he believes China has handled the social and economic fallout from the virus better than the United States. (43:09)
Mentioned in the episode:
Before the Exit - Our New Book
TMBA Masterminds
Partner With Us
The Dynamite Circle
Dynamite Jobs
Dynamite Deals
Tropical MBA on YouTube
Brian Miller
Easy China Warehouse
Enjoyed this podcast? Check out these:
TMBA477: China From the Inside
TMBA537: How Will Coronavirus Affect Your Business?
TMBA539: Weathering the Storm
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Cheers,
Dan & Ian
Full Transcript
Brian: Things started to turn very, very badly very quickly. I'd say during the first week of February, they started closing off borders. And so at that time, I started to think wow, this is like, getting really bad. And maybe I should consider leaving the country.
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Dan: Happy Thursday morning. I love that music. Getting me groovin. I'm here at the podshop with the Bossman. How are you doing man?
Ian: Hey man, what is the podshop?
Dan: The podshop is where we're locked in. We've got the beginnings of a bookshelf, we got some microphones, we've got some cameras and every day at 12pm, New York City time, me and you are sharing our thoughts to the YouTubes and to listeners of the TMBA podcast who want to hear day to day TMBA.
Ian: We have a livestream over at YouTube dot com. Search for TropicalMBA and you will see us there.
Dan: Cool so in today's episode prepare to warp to the future Bossman. One of the things I love about the DC, the Dynamite Circle, our online community, is that members are super globalized. People live in crazy places, beautiful places, old places, new places. One of the things I love about the Dynamite Circle, our online community, is that you know members are super globalised. There's no question as to whether or not it makes sense to explore our world. They are out there doing it.
And you know our members aren't out there just surfing or riding their bikes or whatever, they are doing business and often deeply ingrained in the culture and economics of the places they live. So it wasn't a surprise when earlier this year DC-er Brian Miller, who runs ‘Easy China Warehouse’, which is basically a third party logistics company or a 3PL. What he does is he helps entrepreneurs who sell on Amazon and have Ecommerce stores consolidate less than container loads and ship them on to wherever they need to end up, so he's sort of an expert in logistics. He also has an Ecommerce shop in his own right.
So Brian weighed in, in the DC, about what was happening in his adopted home of Shenzhen, just over the border from Hong Kong. And his posts were super memorable. He had just one photo of him preparing to go out shopping dressed in what looked like a homemade hazmat suit, complete with his hoodie up and everything. And at the time, people in the forum were like, it was January, we were just like, ‘What's up with Brian wearing the hazmat suit?’, you know, and it was a weird mix of like surreal and scary.
He was in a rare position to see this Coronavirus pandemic unfolding from its origins in Wuhan, China. And I thought this is a story worth sharing. So just just yesterday, Ian, I gave him a call and here it is for y'all on the podcast this week.
Coming up a fascinating insight into our future as we follow the trajectory China has been on and has already lived through. Brian also shares his thoughts about how he sees this global event possibly nudging a shift in the power balance between the US and Asia. So stick around for this one, I promise you'll walk with something useful.
So let's get to it. I started out by asking Brian when he first heard of the term ‘Coronavirus’, and apologies for the slight crackle that starts on my line towards the very end of the interview.
Music
Brian: I was, you know, just in my daily life, basically in China. And I heard some friends tell me that there was some kind of weird virus going around. At the time, they said oh, it might be something similar to SARS.
Dan: What was SARS?
Brian: SARS was back in 2003, there was an outbreak mainly in Guangdong Province, which is a southern province in China close to Hong Kong. And that was relatively contained to China and Hong Kong at the time. But it was also kind of a health pandemic scare where people, you know, were wearing masks here. And there was a concern that it might become something bigger.
You know, you want to relate it to something you know, and that was something that people knew. But in the beginning, the reports here were that we shouldn't be concerned, I mean, internally in China, and that it doesn't seem like human to human transmission is a big thing. We kind of heard about it, but no one really spiked any interest in it in the beginning.
Dan: What dates are we talking about here just as a ballpark?
Brian: We heard some things in December that something was happening. I know, at least for the Chinese government, they made an official announcement that there was this thing on December 31st but no one was worried about it.
Dan: And when was your first memory of it in your neighbourhood or near your factory or your business or something like that?
Brian: So in January, we started to see some kind of uptick in the amount of, let's say, cases in China. And what really stood out to me was the speed at which everyone started wearing masks. Within a week I think half the population had a mask on. This is in January the first week.
Dan: And for reference, would you mind giving us the geography like what is the distance between where you live and the centre of the outbreak?
Brian: Yeah, so the centre of the outbreak was about 1000 miles from where I am north of me, so I’m due south of the outbreak. It was really very, very far from us. I don't even think they could trace the virus in Shenzhen at that time yet, because it was very early. We didn't know how to trace it. And within one or two weeks, we went from half the population to wearing masks to basically everyone. And that was the first feeling of like, ‘Whoa, this is like people are worried’, you know, people are scared.
Dan: What kind of official instructions did you guys receive any from the government?
Brian: Yeah. So there was a, I mean, along with the government recommending to wear a mask, they started recommending it. And then actually, by the end of January, they required it. So they made it a law in China that everyone has to wear a mask when they go out in public. If you didn't wear a mask, they just wouldn't let you into a supermarket, so you had to do it.
And also they were starting to do temperature checks at that time. Every public place that we went into required a temperature check. They would lock all the doors and malls, and only allow one entrance and do temperature checks and as well as roadblocks so they would like cordon off roads or also toll booths. And they would require everyone passing through including the drivers, like if you're in a taxi, to get your temperature checked. So this is like, in January within a month.
Dan: It's incredible given how far away you were from the centre of the outbreak. As we're going along the timeline here. You wrote in the Dynamite Circle on January 27th a really powerful post that I feel like everybody in the group read. Can you describe that post and what inspired you to write it and the photo of you standing there?
Brian: Yeah, someone had written a thread like, ‘Coronavirus, is it a problem?’ or something like that. I forget the name of the thread. And people were kind of writing a few things and then I jumped in. And because I was like there and that was right when we were scared, I'll be honest, I was scared, it was getting close to me.
First of all it was hard to buy masks probably like it is in the US now. And you had to like put on a mask and you know, try to cover your body as much as you could, and run out to get supplies, mainly food and water and things like that so that you could stay inside during that time.
The government told people not to leave, it was Chinese New Year, which is usually one of the largest travel times in China. And they said, ‘Don't, don't go out’. All events are cancelled. And so I feel like that type of response during one of the most important times of the year was scary for most people. And it was for me as well.
Dan: So when do you start to think about leaving China at this point?
Brian: So in the beginning, I was thinking, I'm not going to leave China. My business is here. This is everything I've built for the last 10 years of my life, it was just unfathomable for me to leave everything I built. And so that was my mentality in the beginning.I was going to my warehouse every day during this time, because during Chinese New Year, none of our workers are around so we have like a skeleton crew. We're one of the only warehouses in China that still run during Chinese New Year because I'm an American guy, and I don't follow the holiday. That's one of our things that we tell our customers we never shut down, right. And so, during this time, people were home, the virus was going out and I was still like going to the warehouse and making sure and making sure our customers stuff was shipped, right? That was like my only concern. I was like, ‘We're not leaving, we can't shut down. There's no one that's gonna shut us down’. I need to stay here and make sure my customer’s stuff gets out. Right? That was like my main focus.But things started to turn very, very badly very quickly I'd say during the first week of February, they started closing off borders. So the Shenzhen-Hong Kong border, which is a critical border for people to go in and out of China, and to do business, they closed like all the borders, except one of them.
And at that time, that's really concerning, because of all the commerce that happens between those places. So at that time, I started to think, ‘Wow, this is like, getting really bad. And maybe I should consider, like leaving the country if things get worse’. It was just one day I woke up and I had this really bad feeling in my body.
Dan: What was the worst case scenario you were thinking of?
Brian: I was thinking, you know, during that time that I would have to shut down my business for an extended period of time. And that, for me, was kind of really tough to consider. Maybe I would have had to fire all my employees. And maybe I would have lost a lot of trust within my customers, even though they knew it was the virus, they might say, ‘Hey, it's not safe to keep our stuff in China anymore. It's not reasonable to, let's get it out and not leave it with Brian’.And I thought anytime I might be shut down, like the government might just say, ‘Hey, we need to shut this down. And you need to wait X amount of days before you can reopen’. I was literally waking up every day thinking, is this the day? So it was like it was very mentally painful and straining every day that I had to wake up and worry about whether or not my business was going to be shut down without my choice. You know, I had no choice in the matter.
Dan: You did make a choice, though. Can you help me understand how you arrived at it?
Brian: Yeah, I left in the first week once the border shut and I saw everyone rushing to the border. That was too scary for me. I set up with my employees, I told them that we were all going remote, except for the people in the warehouse. So that means anyone in the office, they would work from home indefinitely, until we made another decision in the future. I was also going remote, and only critical employees that needed to ship things would be in the warehouse, and we would stagger all their shifts, so only one person would work at a time there to protect ourselves because we were such a small company, if one of us got it and passed it to everyone. I also saw a scenario where because of the virus it shut us down, like we were all sick with it. So that was a risk that I wanted to mitigate as well.
So I set that up before I left. And then I literally went home in one hour, I packed all my things. And I just took a taxi to the, to the border of Hong Kong. And I got through the border, I booked a hotel there, and then I had a ticket for two days later to go to Thailand. And instead, I just forgot that ticket and bought a ticket the next day and left. So I just wanted to leave as fast as I could just to get out.
Dan: Was it hard to get through that border? Did you take full luggage or just sort of your bathing suit?
Brian: The only way I packed is that I can live for at least you know three months without needing anything. So I took everything essential that I could, maybe not even three months just indefinitely without you needing anything else. So obviously the computer and just a few clothes.And the environment between Hong Kong and China was completely different, like people were more relaxed, just the approaches of each government is very different in the way that they go about controlling the virus. I felt like China was more quarantine, more scaring the population with some of the news, you know, ‘It's gonna, you know, spread across the whole population’, and Hong Kong was more relaxed, they were allowed to go out. They were told to take precautions, but people were more chill about it in general than in mainland China.
So once I got to Hong Kong, it almost felt like I had a breath of fresh air because I felt like there was less tension in general throughout the whole population. And it was a different feeling. It was like, whenever I met Hong Kongers I felt like they had the feeling that they were like, ‘We're all in this together’. We're all going to get through this. And there was some tension, but there was kind of some human connection. So I liked that feeling once I got to Hong Kong.
Dan: So what was it like watching the situation in China from abroad?
Brian: It was bad. My employees were calling me every day. So all companies needed to abide by new safety rules. And these safety rules required us to take the temperature of our employees every day, register them with the government and the address that we're at, disinfect the facility every day and a few other things. We had to have them wear protective equipment, so masks and gloves, and things like that. And we couldn't start operation until we had a safety inspector come to our facility.So I was scared like, ‘Okay, when are we going to get a safety Inspector? Are we going to get one? Are we going to be able to open?’ And there was a lot of uncertainty in the beginning because, in China, there's a lot of grey areas for everything. Like, do they follow the rules? Do they not? Are we in the middle? Are we not right? Can we get around this? Or can we not, you don't know. And a lot of times basically China put the power in the building managers. So there's like a building manager at each place, whether it's an apartment or a commercial building, they're the owners of the building, but they also manage the building, and they put it in the power of those people to enforce the rules. So those people were really the decision makers of whether you could start your business are not and technically, if you didn't get a safety inspection, they wouldn't let you start.
But as we know, if you have a good relationship they might look the other way. Right? So we saw a lot of variation in China about who got the start and who didn't depending on how strict those people were, how good of a relationship you had, maybe you gave them some traditional hui luo, which is like the money in China, and they, you know, kind of ‘help you out’.There was a lot of, you know, people trying to figure out, ‘How do I get my business going?’ And we were the same way. I was worried that any day a health inspector could come to my facility and shut me down. And so that was the risk I had to wake up to every day. And every day that we ran the company another day, I felt like we were ahead one more day. So that was my whole mentality the whole time, basically, and I would get a report of the new things that happened from my employees like every day what was going on.
Dan: And were you just sitting on a beach in Thailand or what was your abode like at this time?
Brian: Well, I went to Chiang Mai because I think it's an easy place to get situated, get a place to work at, find a coworking space, easily rent an apartment. And I basically went right to work. I didn't actually go to any beach. I went right to the office, I joined CrossFit and I started my life there. And it was more just to escape and try to live a relatively normal life as opposed to living the quarantine life that China was putting the population through. So that was my goal, just basically to escape the quarantine as long as I could.
But yeah, every day I was only an hour away in the time zone to China. So I was able to work as though I was still there because everyone was remote. Some of my warehouse workers, to be honest, had no idea that I was gone. Just because the communication still was the same as it would have been in China.
Dan: What was the moment when you're like, ‘Man, I got to go back’?
Brian: Yeah, one very clear decision, which was Donald Trump, closed the border between the US and Europe. So he basically said that date. I think it was in the beginning of March, that all travel between the US and Europe would be shut down. And at that point, I realised that if the US did that, it would kind of give the okay for other countries to follow.
Still, a lot of people follow the US, including China. So since China started the outbreak and they gave a lot of people a lot of heat for closing their borders, I felt it was going to be hard for them to start closing it unless some other people started as well. And that was the trigger. I figured that China would soon follow, and so many other countries. So the next day I booked a ticket back to China, like that fast.
I told the apartment that I was in, ‘I'm leaving’. I just left whatever I rented to them and the next day, I flew back to China. And when I got back within a few days, well, first I had to do a 14 day quarantine but I could do it at home. So when I came back, I had to do it at home. But within a few days, they required anyone coming into China that they had to do it in a government mandated hotel. So I kind of like, was lucky that I just didn't have to stay in a hotel for 14 days.
Dan: So wait a second, back me up here, Brian, you fly back into the eye of the storm because you don't want to be shut out of your home country, the country where your business is. And then when you show up at the border, they're like, ‘Hey, dude, you need to quarantine’. They take you to a room? How does it work?
Brian: Yeah, so I thought when I got back to the border that no one would be entering China, right? Like who wants to go back into China? So I was with one of my buddies, and we're like, ‘Alright, we're gonna get through this border in like 10 minutes’. We're good, right?And we get to the border and it's just packed. And the reason it's packed is because they're doing some really intense scrutiny of the people coming in. That means your medical declaration. Where have you been? What have you been doing? And they have people at the border, if you can imagine it, in full hazmat suits, like everyone's in full hazmat suits, it's like you're walking back into kind of a war zone.They segregated the countries. So if you came from a high risk country, you were sat down for questioning, ‘Where have you been? What have you been doing?’ They actually had tables set up where they would interview you. And if you came from a low risk country, luckily, Thailand at the time was low risk. You just needed to fill in a form that declared your health.And so after we went through this, we had temperature checks, of course, which is still common today. Every day I got like five to 10 temperature checks still today. But yeah, we went through that process. And then once I got out, surprisingly, I was like, I was free. So they didn't do anything until I got to my apartment complex because as I said before they enforce it at the building level. So the building management basically had to enforce my quarantine.One interesting thing they do is they use technology to figure out whether or not you're lying. So a lot of people obviously, knowing the rules, they're gonna say, ‘Hey, I was in China the whole time’t. And so in order to avoid that, they've cooperated with the cell phone companies in China. And your cell phone is always pinging your phone wherever you are. So you scan a QR code. And it tells the people whether or not you've been in China for the last 14 days.
So there's no getting around the quarantine because they know. And then basically what they do is they send you up to your room or your apartment, and you have to stay there for 14 days. You can't leave. You can order food online, which is very easy in China. And during that time, you get two Coronavirus tests. So on day 10 I got tested for Coronavirus. So a doctor actually came to my door in a hazmat suit and stuck a swab down my throat and tested. And then on day 14, they also test it again. So that's the process that China has in place now to ensure that they don't have any incoming infections.
Dan: What happened to your staff, Brian?
Brian: My staff have still been ... I've kept everyone on since the beginning. And I still have a ‘work from home’ policy. And I make it up to them whether or not they want to come into the office. So we still, as a company, are elective if you want to stay at home, you can if you want to come in the office, you can. But the people in the warehouse, they have to come in. But I gave those people a raise of 25% during the virus time for kind of like hazard pay. They didn't ask for it, but I felt like it was kind of the right thing to do to support them during that time.
Dan: Have you noticed any trends in what your clients are putting in your warehouses?
Brian: Well, yeah, now the big trend is definitely PPE equipment, so personal protective equipment for hospitals. And even in our logistics centre the whole parking lot doesn't even have cars anymore because we can't fit it all in the building. So because of this air freight rates have gone up a lot over the past month or two. And it's as a result of a lot of passenger flights being cancelled. So we don't realise that a lot of freight goes actually into the belly of passenger aircraft.And so there's been a huge squeeze in supply and an increase in demand through all the medical equipment that we've needed to send to the US or other countries. And so our air freight rates have gone up, they go up every week, like it's insane, I can't keep up. We don't even quote anyone anymore. Like, we used to have a rate sheet that we quote, like every month. And now we just have to quote every day because it changes so fast that today's rate compared to tomorrow's rate is going to be different.
Dan: Now, China's many months ahead of the United States and the rest of the world in terms of the virus being there. And obviously, they're quite aggressive about how they're trying to contain it. What's a snapshot of like this week for you as we record this, we're going to put this podcast out this week. You mention, for example, that you're getting your temperature checked all day long, like where?
Brian: Yeah, so, temperature checks still happen everywhere in my building. Every time I walk into my apartment, I need a temperature check. Every time we go to the supermarket, I need a temperature check. If I go into a mall, so when you enter that facility, they give you a temperature check on the road to my warehouse, they have a roadblock, but you can't get by the roadblock. And they check everyone's temperature in the cars driving into the area. So they've literally shut down the whole space.Not only that we have an app on our phone that they can check our whole travel and health history. So if there's anyone in question, they can open up my … well I can open up my phone for them. They can scan a QR code and they could figure out where I've been, whether I'm high risk or low risk, and they can evaluate whether or not they want to let you into, like a building. So this is still happening today.
And I don't see it ending until we get a vaccine. I think the hardest part that countries are going to have now to figure out is how to actually open the economy, because it's not easy. And I think people are too worried about bending the curve when in fact, the hardest part is yet to come. The hardest part is opening the economy, you know. And so that's the challenge that we have ahead, I think.
Dan: Why is it so hard to open the economy?
Brian: So I think there's a few things that we see like in China, for sure. And the first thing is just general consumer fear. What we've been through is a relatively traumatic experience and people are still worried to just go out in general. The news in China is also kind of concerned about a second wave of virus spread. And so I'd say consumers in general are really, really cautious. And I would say, you know, 40 to 50% of traffic, we're seeing just people walking around that. It's only 40 or 50% there.My friend who owns a couple restaurants in China, he’s an American guy. His sales are down 60% still, and he says they're just not rebounding, so they're not moving up. You'd think like week to week, they would improve, but he sees no ramp up of the sales.
Dan: What has reopened in China and what's still closed?
Brian: A lot of shops on the street are just closed and they're closed not because they don’t have people. They just went bankrupt. So there's a significant amount of bankruptcies throughout China. But generally most stores have opened, restaurants have opened again. And all malls have opened, movie theatres have not, any big event, any sporting event has not started yet. And anywhere where there's a large gathering of people has yet to begin.But for me, I see that it's going to get worse because, as my friend told me, a lot of the places within these malls are just not paying their rent. So a lot of places are opened and they're bankrupt already. But we just don't realise it because they haven't been flushed through the system. It's going it's pretty bad now, and in general, I think it's going to get worse in China before it gets better.
Dan: One of the interesting perspectives you have is you're able to like look at the news coverage in the West over this timeframe. It's probably a bit of a surreal experience for you because you've like lived the future. And you sort of like, look back on us, and we're kind of in your wake. What are some of the things that you see the American populace and news media talking about that you think are utterly off track or maybe misguided?
Brian: Yeah, I think one of the biggest ones is the speed of recovery. So throughout the whole time, everyone looked at China and said, ‘Okay, China's recovered in X amount of months’. So therefore we are. And I fundamentally disagree with this because China's actions are completely different to the way that the US went about it and since China took such a strong and stringent approach to kind of stomp out the virus, they were able to get rid of the virus relatively quickly. Whereas I think the US has not taken such a strong approach. And we still see it spreading and there's still a lot of problems in the US like testing and lots of things that are not as ramped up as fast as China did.So China was able to very quickly ramp up industrial testing, quarantine its population, and check everyone that had it and very rapidly put those people in isolation away from the rest of the population. And you just don't see that happening as effectively in the US. And therefore you're not going to see the US come back to normal as quickly as you did with us with China
.Dan: That's interesting. You are ahead of us. I mean, what are our lives going to look like, I realise I'm asking you to speculate here and to be opinionated. I'm not saying you're some kind of expert or something. You're just like an entrepreneur like the rest of us. But if you're willing to speculate a little bit, I'd love to hear some of your opinions.
Brian: Yeah, I have very strong opinions about this one.
Dan: Why do you have strong opinions?
Brian: I was lucky in the position not that I'm smarter than anyone. I just saw it in my own life before everyone got to see it. So I've been able to predict what's happened just because we're ahead of everyone else, in terms of the trajectory of the whole virus. And I'm also able to see on the ground here in China and not only what's happening with stores, but our warehouse is basically the final step where we see demand flow in and out of the economy.
So when I see demand pick up in the world, I'm going to see a lot more volume going through my warehouse, right? And if demand doesn't pick up, I'm going to see like nothing going through it. So I feel like I'm just in a really good position to see on the ground what's happening. And I just don't think that the world gets out of this in 2020. I know that sounds really pessimistic. And I don't mean not getting out of it by the virus will not slow down because it will, but I'm just saying economically. Economically, I don't see a scenario where we can, as a lot of people are saying, have a V recovery.
Dan: What's the V recovery? I don't understand what those things are.
Brian: So in I mean, this is what a lot of Wall Street is saying. But a lot of people are saying V would mean that we have a very sudden slowdown in the economy and a very quick recovery. So like a kind of like in that V shape.
And a U would be like a very deep recession type movement. And then we'd be down there for a little while, and then we'd move out very quickly. So the V and U is kind of emblematic of the way that they think that the economy will go down and up. But I just don't see a scenario where we can fix the economy without a vaccine, or some type of medical treatment that cures people.
Because the fundamental issue after you fix the curve, which the hospitals are overloaded at the moment. And by bending the curve, you basically allow them breathing room, but it's not to say that consumers are not going to go out and spend money. They're just not because the virus is still there, people are still scared. And there's still a very hard balance of being able to restart the economy without getting a second outbreak.
Now China has done it relatively successfully. But you see other countries like Hong Kong and Singapore recently they've had spikes in their cases. And they've actually had to squeeze the economy to tighten things, and kind of go back into that quarantine type state.
And so I think this is what you're going to have around the world. We haven't seen any successful Western democracy do it yet. You're seeing Spain try to do it. I think they're doing it too early. And you're going to get a case where cases will flare up again, and then you're going to have to bring the economy back down to quarantine again.
So you're going to have this constant battle of expansion in cases and contraction until you can find a way to solve the virus problem. And whether the amount of deaths go down or they go up it doesn't matter, people still don't go out and spend money when they're scared of the virus. If I look at it very very objectively, I can't see any way out. I'm sorry to be so gloomy but I don't see any way that we get out of it in a reasonable amount of time that people are thinking about.
Dan: There's been a lot of talk in the blogosphere. I don't know how serious it is. And certainly some personal contacts have mentioned that the experience of being a foreigner in China has changed significantly over the past five years, especially them saying things like it's a less friendly place to live than maybe it was in five years previous the last five years.
Brian: Yeah, I would agree with that for sure. It's definitely become less friendly for foreigners in general, especially with the ramp up of the trade war.
Dan: So you're not talking about the Coronavirus right now let's talk about the trade war. So what is that? And how is it ramped up?
Brian: So over the past few years, the US has basically slapped tariffs on China and China's slapped tariffs on the US in response. And this kind of started this escalation in what people call the trade war, which was the US came to China wanting more fair trade trade practices, according to the World Trade Organisation. And because China is a part of that, and they basically say that China is not following its obligations as part of that group. And that's the very basic gripe that the US has.
This has escalated into a trade war where each side has put increasing tariffs on either side. And during this time, I think the anti, you know, whether it's from the US side kind of anti China and from China anti the US has escalated over time. And this has kind of increased a lot since I've been here. I think the Coronavirus will actually amplify that.
So you already see like, in the US, we had some, people that were Asian in the beginning were kind of discriminated against, you saw some isolated cases here. And you're seeing that now in China, like I have a good American friend. Last week, he was not allowed into a restaurant. So this has definitely increased tensions. And I think after it's all over there's going to be even more animosity between both sides. So, is this good for global trade? I'd say no. And I think it brings the world farther apart than it does to bring us closer. So yeah, I think the negative impacts will get worse as we go forward.
Dan: A lot of people have speculated that perhaps, you know, our supply chain will be reevaluated because of this. That seems like a far fetched thing. Do you think so?
Brian: Yes, I think as far as the medical supply chain, I think people are already questioning that, like, ‘How do we secure, you know, medical supplies for our own country in times of pandemic?’ And you could argue that maybe, you know, this is part of almost the US defence, right? Because we need to defend ourselves when this happens. It's amazing how many aircraft carriers we have, but we can't get masks to hospital workers. sounds absurd. But yeah, that's happening.
So I think people will start to think, ‘Hey, can we get this supply in the US? Is it a matter of national security?’ That's probably a question that the US is going to have. And maybe some of that production will move back to the US. Overall, though, I'm less optimistic about it, that it will move a lot from China to the US. If it leaves China, I think it will go to other low cost countries, just because that's the way that the US system kind of works.
I think China because of its infrastructure will luckily still be the place to manufacture after the virus just simply because other places don't have the infrastructure that China has, and the US simply doesn't have the supply chain that it needs in order to do that. So if the US were to do that it would be a really long term thing that I find it hard to believe that we would do because generally the US is so short, short thinking in general in its planning right, we'll probably forget about it and then everyone will start buying from China again.
Dan: One of the things that is sort of a strange left field question, but this is kind of a thought I've always had as being an expatriate that ‘Oh, man, when shit really hits the fan. I might have to go home, like I always end up back home if like shit hits the fan’, but you're an expatriate who, you didn't even get close to home when shit hits the fan? Was that an active consideration for you?
Brian: Yeah, I mean, the consideration was more like I wanted to work and be in the same time zone and be close enough to China that at a moment's notice I can fly back within a day and be there. So I more made the decision based on that rather than should I go home. I just felt like home was .. it's nice to be home. But the flight and the time zone just brings me too far away from my business. And I didn't feel comfortable making that leap.But, I do feel concerned as an expat in a country that definitely, tensions are souring between the US and China. I have thought about this, like, ‘Will there be a time where I have to leave?’, and I have to leave not because my business is not doing well, it's because the political climate has become so toxic that it forces me to do so.Now, I don't think that likelihood is high. And I hope it's not. But it's definitely something that I've absolutely thought about. And it's definitely on expats minds here more and more like, I actually have conversations with other experts here about that now, and we would not have that discussion a few years ago.
Dan: What's something based on your experience, like a belief that you have now, that might be surprising to the rest of us back in America?
Brian: This is a good one. I've been having this belief recently that China is actually more capitalistic than the US. I say that because during this whole crisis the Chinese have not given any stimulus or any rescue package to anyone in the economy.
What they've done is done the very, very, very core capitalistic theory, which is the weak die, the strong survive, and you rebuild the system from that premise, right? And so you don't prop up bad run companies. You don't incentivize people to over leverage themselves, or make bad judgments in business and then give them money so that they can survive. You let those people be wiped out.I think that type of approach is better for the country in the long term, it incentivizes good business behaviour, it wipes out the weak, it restarts the economy and I assume that from this approach the Chinese economy will have a much stronger, healthier and more vibrant rebound than the US will have because of the stimulus that they've given companies that you know should should die.
Dan: I save in dollars, I earn in dollars, I sell in dollars, all this kind of stuff. I live in America right now. But, I think there's an active question as to whether this virus might call it a question whether the US dollar ought to be the world's reserve currency or whether the US preeminence will continue. Having lived in China, do you have a perspective on how things might proceed? Obviously, China's seems to be, you know, performing better than America through this crisis.
Brian: Yeah, I mean, I'm scared to make such a bold claim.
Dan: Don't make a claim, you know, just share with me how you feel.
Brian: I feel like this could be an inflection point for world power. I'm not saying it is. But you can very clearly see China handling the virus a bit better, in my opinion, getting the economy started quite quickly. And also managing the kind of economic fallout from this, in my opinion, is a better approach than, you know, handing out free money.
So I think these three things might allow China to become a stronger force from this. How strong will it be? I'm not sure but it puts into question how long the US will maintain that world leading power? And is this a time where the Chinese catch up much faster than we ever imagined? So that's definitely what I'm thinking about now. I think it's a little scary for people to think like the US not being the number one power in the world but it is this type of scenario that makes me question it for sure.
Dan: Are there any parting shots you have to give? You know, a lot of people that listen to this podcast, so we're all entrepreneurs trying to figure out the best way forward.
Brian: I would say that, as business owners, I think we should be a little bit more conservative in the next few months, I think it's going to get worse. And it's going to be worse than people expect, economic wise. And so therefore, I mean, as you've guys have been saying, you know, keep your cash, don't invest too heavily going forward. Wait a bit. It doesn't cost much, like when I think about my business, it doesn't cost us a lot to just wait a month or two, and see how things transpire. And I know it's painful for entrepreneurs to do that because we always want to just go 100 miles an hour, and like, you know, start the next sales thing.
You know, thing or hire the next person. But I think it's prudent for people to take a deep breath and be patient and wait a month or two and just see how it unfolds. That's what I'm doing. Even as I see things unfold negatively, we're just waiting.
Dan: That's awesome. Brian, maybe the hardest question, which I always say the last question is the hardest, but this is a new one for me. Could you give me a sales pitch for your three PL company? Who right now is good for you guys and who's bad for you guys?
Brian: So our company is very good at helping relatively small sellers consolidate their freight and save money shipping into Amazon if you ship less than container loads, so if you ship less than container loads from China to Amazon anywhere in the world, I'm very confident that we can provide a better solution to get your products to Amazon then your current setup. So that would be my pitch - talk to us and we can see if we can help optimise your supply chain and help you save and increase your margins a bit during these really tough times.
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Dan: Shout out to Brian Miller. Again, he runs a business called ‘Easy China Warehouse’. Let me just say a few things. We covered Brian's origins story in an earlier episode, which we're going to link up to in the show notes and if you give it if you give that episode a listen, you're going to get a sense for how deep Brian's understanding of China, and the language, and the culture, he worked for a state run company and all that.
It was really, really interesting getting his perspective on this. And I got to give an enormous shout out to how generous he's been with his time to DC members. Recently he posted a forum thread, one of the most popular over the past month, offering to ship face masks to members and their families at cost. And one of the reasons, you know, he was trying to express to me is how much fear he felt like, ‘Look, this is really, really scary’. He was right there at the beginning of it.And I hope this one proved as insightful for you all as it did for me. It was really fascinating just yesterday to talk to Brian about all this and just try to get a sense for day to day, week to week, month to month it feels like we're just trying to figure out where this thing is going.
Ian: Talking about scary Dan, for me Brian is like ahead of us because he’s within China and that’s where this outbreak started.
Dan: He's like living the future.
Ian: It’s so crazy that you can talk to somebody like Brian Miller that's essentially in the future. And then you can also watch mainstream media totally contradict what somebody like Brian is saying, which is basically like the economy in China, businesses are failing, things are not going well. And then to turn on NBC and whatever else and have them say like, “Oh, it's fine”, and then to look over at the stock market and say like, ‘Oh, it's only down, the Dow Jones is only down 4000 points’”.No, I don't think so. I'm going to go on record right now. Maybe I will die on this sword, but I don't think it's gonna be fine. I think this is gonna be months, if not years of downturn. There is going to be massive downstream effects. And I think talking to somebody like Brian has just given me more insight into how massive this pandemic really is in terms of its economic footprint and also the devastation in lives that it has brought.
Dan: One of the things that sticks out to me is this approach that the Chinese government seems to have is like, ‘Hey, this is how things go. Strong businesses should be able to weather a storm like this. Whereas when you look at the message sent out by politicians in America, it's like, ‘Man, we basically need things to bounce back. Because like, our whole economy kind of depends on it’.
And China just sort of has a different posture, which is like, ‘Yeah, this is how things go’. And like, why would you demand everybody bounce back? Because then people are gonna die? And like, why wouldn't you just like, ride it out for a few months or a year, and then things are gonna come back? You know, maybe, maybe that is the difference between having thousands of years of history versus hundreds. Maybe that is the difference between having a society that values savings versus one that values leverage. And we're going to see the proof will be in the pudding.
You guys know what we value around here. That's running a responsible lifestyle business, that's owning your time. And we're glad that you shared it with us here today. Me and the Bossman, we'll be back as always, next Thursday morning at 8am Eastern Standard Time or if you want to catch us on the YouTubes in the podshop everyday check us out.
Go to YouTube search for TropicalMBA. Join us and a bunch join us and other listeners on the livestream, passing the quarantine together. That's it. We'll be back next Thursday morning. Thanks for joining us.
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