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Article summaries for Exam #3:
A. Twitter Hits Tweenhood
1. Twitter was started in 2006 by Evan Williams and Biz Stone, both of whom are on Fortune's 40 Under 40 list of up and coming business tycoons under the age of 40.
2. Twitter is a cultural sensation, allowing members to send tweets (messages with a limit of 140 characters or less) to followers. There are currently 55 million visitors a month to the Twitter Web site.
3. It is not yet, however, a business; rather it is a pre-revenue company; unlike Google, which generated cash almost from its start.
4. It has raised almost $150 Million in venture capital cash (Google only took $25 Million).
5. Despite these facts, the founders and the backers are not particularly concerned. They are more interested in improving the technology and growing the site to 100 million users.
6. Do they need a business plan?
B. Why Obama Fired a Shot.
1. Presiden Obama recently ordered a 35% tax on imported Chinese tires under a provision of the WTO that allows nations to impose tariffs when imports disrupt local markets.
2. Needless to say, the Chinese were not happy and retaliated by threatening to raise taxes on auto parts and chickens from the U.S.
3. Some are concerned that this signals a coming trade war, but Fortune suggests this is an overblown concern.
4. First, the tire business is not that big a deal, amounting to mere millions, not billions.
5. Second, the U.S. tire retailers will be hurt, as well as U.S. consumers, who are already struggling.
6. We need Chinese support in many ways: buying our debt, working toward climate change regulations, nuclear nonproliferation, etc.
7. Arguably, this is just a token to placate unions who were among the President's biggest supporters (to the tune of about $50 Million).
8. The likely upshot, says Fortune, is that instead of the two countries acting like competitors, they will more likely end up being self-interested cooperators.
C. It's China's World.
1. China is on a worldwide spending spree, buying oil leases in Nigeria, natural gas in Iran, and iron ore in Australia.
2. Since 2000, China has spent $115 Billion on foreign acquisitions, but that is a drop in the bucket considering that they have over $2.1 Trillion to invest thanks to its accumulated trade surpluses.
3. They are tired of only investing in U.S. Treasury bonds.
4. While China invested $50 Billion abroad last year, the U.S. invested $318 Billion.
5. Besides investing in natural resources, China is investing in foreign companies such as banks, utilities, and semiconductor companies.
6. China also has to remake its economy because it saves too much, consumes too little, and relies on exports too much; and it will have to let its currency rise in value.
7. Instead of making products for name brand companies, China needs to own and run them.
8. Buying established companies is one way for China to navigate the strange and foreign laws and cultures of the U.S. and Europe.
9. They learned a lot when Lenovo bought IBM's "Think Pad" laptop computer business. Lenovo became an instant global player.
10. China calls this their "going out" strategy.
11. Besides companies, they are putting money into U.S. real estate and financial assets and related companies.
12. They want to avoid the Japanese precedent from the 1980s, when the Japanese got burned because they overspent on assets like Pebble Beach Golf Course and Rocekefeller Center.
13. Some countries and some U.S. critics want to make it harder on China to buy our companies, because we can't go over there and buy their companies.
14, Fortune, however, thinks it is a smart thing to let them spend on and buy whatever they want in our country.
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