There’s been a lot of hullabaloo about how the Chinese economy is a major threat for the American economy. As more American jobs go to China daily, people have begun seeing this as a warning signal of things to come. China, obviously, has the production capabilities to give any country in the world a run for their money. Their government is organized in such a manner that allows very quick change of public policies, the renminbi is being carefully floated by the Chinese central bank to control inflation, and high-tech factories are being built in industrial parks at an alarming rate. But that is no guarantee this growth will continue into the next 3 or 4 decades, here are a few reasons why:

1. Supply and demand. As the demand for workers increase, the supply grows short. Companies must fight for their laborers, and if one factory isn’t willing to pay the newer, higher wages the workers are demanding, they will walk down the street and work at another factory. As these wages continue to rise, the benefits of American companies moving to China will soon be diminished. Remember when people thought America was sending too many jobs to India? Far less of that is happening now there for this exact reason.

2. Chinese companies could soon see their own revolution, overtaking American companies in China and developing great brands of their own for the world stage. If they are building durable goods, which tend to be very heavy, then shipping charges will diminish any price advantage of making them in China. If they are to sell these durable goods in China, then the average wage must increase by a significant amount, so the average consumer is able to afford them. The local major economies of Japan, Russia, and Korea are already building their own durable goods, thereby making them less desirable in those countries, as well as unaffordable in local markets.

3. Chinese people just aren’t creative. (This is an extraordinarily wide-cast net and could even be considered a stereotype. But if we’re going to discuss the intricacies of one of the world’s largest economies in a blog post, I hope you will allow it.) The strengths of the Chinese economy and their political policies has to do with putting the desires of the state over their own individual desires. As such, collectivism is a part of the Chinese DNA, of sorts. The Chinese economy more or less values engineers over artists; lawmakers over playwrights; mid-level salarymen over entrepreneurs. That is the critical key difference between the American and Chinese economies. The American economy is driven by innovation, whereas the Chinese economy is driven by production capacity, and it is through this innovation that true wealth is created.

I believe if the Chinese economy can raise the middle class to such a level that people can be free to pursue the arts and individual pursuits and learn to be innovative, China would be an incredible economy to behold. People to create radical new things, and people to buy them… China has neither at the moment, and it may take several generations of thought and philosophy change until they do.

There’s been a lot of noise about the new release of Final Cut Pro. Apple call’s it a “revolution in creative editing,” whereas actual professionals in the industry have been less than welcoming. The reviews for the App Store sit at about 3 stars, which is amazingly rating for an Apple product in Apple’s own App Store…

But Apple had to know this was coming. It’s rare, and surely infuriating to users, that a company puts out a newer version of something that doesn’t support files from the older version. But this is Apple… they didn’t get where they are by asking customers what they want, insomuch as telling them what they want.

Lacking all kinds of “standard” and “critical” features in your application does something really smart – it creates space for entrepreneurial thinkers and developers to fill these holes in your program. And whenever someone comes up with a plugin (or a standalone add-on) for FCPX, it gets sold through Apple’s own App Store, ensuring Apple gets a hefty chunk of the proceeds without having to do any of the work themselves. It’s becoming very obvious why Apple will only sell FCPX through the App Store now…

This is also saving Apple a lot of money on things like software development, R&D and pushing up their bottom line. Crafty move, Apple… you’re the only company with enough cred to pull the wool over your own consumers like this.

Has anyone successfully built and sold a social network / advertising model that grew in value 2-3 years after it was sold? All sources point to “no.”

Remember Hot or Not? Friendster? Or even myspace? Yea, I kinda do, but more for the serious valuations they received, much more than the actual services it provided. Youtube was a great sale for Steve Chen and co, but google’s still trying to figure out how to make money from it. Rupert Murdoch banked big on myspace, and sold it recently for little more than $35 million bucks, losing hundreds of millions of dollars.

All in all, it was a big payday for the founders of these companies, and they were savvy enough businessmen to sell them before the S hit the F. They were even savvier to sell these companies off before going the IPO route, as they don’t have to deal with fickle investors, nor more importantly, have fiduciary duty to shareholders. In other words, they could legally milk the cow dry before selling it to greedy billionaires, and let them clean up afterward.

The founders were smart though, as they saw market saturation, while the investors saw a large, ready, and captive audience (which, market research points to as being false). The founders sold their audience for a bag full of cash and made out like bandits… but that’s another story for another day.

And where have all these companies gone? My friends look on people who still use their myspace accounts with contempt. OKCupid has replaced Hot or Not. And youtube… is still not making money. All that money spent, and for what? Every one of these companies have become loss leaders for all of the investors that have bought them, and every single one of these companies have lost their status as critical successes and the darling of the masses.

So, why is Google spending so much money to create their own social network with Google+? Let’s suppose Google+ can overthrow the 800-pound gorilla in facebook. But so what? Every company that has gone before it has failed to turn their social networking venture profitable after finding mass market penetration. Why spend the millions (and hopefully not billions) to compete for a business model that has yet to prove that it’s profitable? Google, you’ve already gone IPO, you don’t have anyone to sell Google+ to for a hefty bag of cash… what will you do with it afterward?

I suggest waiting a few years, and buying facebook on the Nasdaq for $50M…