The buzz around China set to dominate the world sounds similar to previous predictions viewing Japan as the next superpower, in the not so distant past. China got a couple of things right, and all the others wrong. There is an insightful article in Washington Post by John Pomfret, who spent there 28 years. He highlights the most important issues facing the future growth.

Demographic trends will undermine China’s main competitive advantage:

No country is aging faster than the People’s Republic, which is on track to become the first nation in the world to get old before it gets rich. Because of the Communist Party’s notorious one-child-per-family policy, the average number of children born to a Chinese woman has dropped from 5.8 in the 1970s to 1.8 today — below the rate of 2.1 that would keep the population stable. Meanwhile, life expectancy has shot up, from just 35 in 1949 to more than 73 today. Economists worry that as the working-age population shrinks, labor costs will rise, significantly eroding one of China’s key competitive advantages.

China’s economy is going to be big by the virtue of size of its population, but living standards are low:

One important nuance we keep forgetting is the sheer size of China’s population: about 1.3 billion, more than four times that of the United States. China should have a big economy. But on a per capita basis, the country isn’t a dragon; it’s a medium-size lizard, sitting in 109th place on the International Monetary Fund’s World Economic Outlook Database, squarely between Swaziland and Morocco.

Environmental issues are out of hand:

By 2030, the nation will face a water shortage equal to the amount it consumes today; factories in the northwest have already been forced out of business because there just isn’t any water. Even Chinese government economists estimate that environmental troubles shave 10 percent off the country’s gross domestic product each year.

The environment is not innovation-friendly:

The place remains an authoritarian state run by a party that limits the free flow of information, stifles ingenuity and doesn’t understand how to self-correct. Blockbusters don’t grow out of the barrel of a gun. Neither do superpowers in the age of globalization.

These rather serious challenges should give everyone a pause before extrapolating China’s past growth to the infinite future.

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I just followed Google Reader’s recommendation to Lost Garden. It’s a blog about game development. Some time ago I was interested in the topic, but I consider it frozen for a while, so I didn’t expect to find anything of immediate interest on this blog.

But this article proved I was wrong:

In every project, there are issues that that frighten the bejesus out of the team. They are so frightening that no one wants to talk about them publicly. The schedule might be impossible. There might be the lurking suspicion that Management does not believe in the project. More commonly, there is a major technical flaw that no one is handling.

The article relates to game development, but the issue is relevant for any other project. The urge to keep sensitive issues under the carpet is familiar enough.

Here are some steps I recall from the latest consulting project that helped in management of the “scary” stuff:

• Carefully store and process remarks sent by the client (there is good chance that sensitive issues are among them): store all remarks in one document, color-code them to distinguish difficult ones, dedicate a meeting with a client for walking through the remarks to ensure that they are understood properly and agree the solution
• When sensitive issue is identified, create dedicated approach to solve/mitigate it: brainstorm possible solutions, create issue tree to structure the thinking, identify constraints related to the issue (e.g. define most pessimistic scenario and start from there)
• Dedicate resources to follow the agreed approach to resolve/mitigate the issue

Some issues may really seem scary, but it turned out that solving them (or at least addressing them and mitigating related risk as far as it was possible) raised client’s confidence in the overall direction and justified all the effort that went into sorting them out.

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At last, I bid farewell to Kiev (for a while). I already had a Lonely Planet guide for India shipped, but in the end I am going to Cuba.

Plane ticket to Cuba was not as straightforward as usual. I will fly charter for the first time, because there were no acceptable regular flights available.

But first, I will have an opportunity to revisit Moscow (I wish the opportunity were not in the heat season..)

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Report from our research on social lending in Poland is now publicly available.

You can download it from Gemius webpage:

English version of the report

Polish version of the report

The research was an idea I had after February Bootstrap meeting devoted to social lending. Initially I thought of writing a simple article, but then decided that it would be cool to have some original primary data. So I asked Gemius (leading Internet research agency in Poland) to participate, and then involved Accenture as well.

Below a couple of comments and slides from the report. (read more…)

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