China, Trump, and the Future

Estimated reading time: 23 minutes

Matties: The automotive industry in general is just changing so dramatically and the amount of onboard electronics is just incredible.

El-Abd: You're going to see more and more of that. The car is 30% electronic today. A couple more years, it will be 50% electronics and you'll be able to do so much more.

Matties: Is there anything we should know about this industry that we haven't talked about?

El-Abd: I think we've covered everything about this industry. It's still the best industry to be in. It's unique. It's growing. It's changing. It morphs every few years into a whole bunch of new technology. We're going to see so many new things happening in the coming few years. It's going to be exciting. If you go over here to the ABB booth and look at the robots that they have, those robots were all designed and built in China, in Shanghai. They're amazing because the robot arms can move in 14 directions. It’s very clever stuff. Honestly, I don't think they're that expensive. Each one of these things is $70,000. For Europe and America, that's a bargain. For China, it's a little bit pricey, but they'll come down.

Matties: That's the kind of simple automation that we could see in America, where you take a robotic arm, bolt it on a table and it starts right away.

El-Abd: You get rid of the people. It doesn't get tired. It doesn't have to take a break. It doesn't get a lunch. It doesn't get pregnant, all these things.

Matties: What do you think Chinese manufacturers struggle the most with?

El-Abd: It’s a combination of people and government. With government, they're always changing things, changing rules and regulations, especially in the area of labor laws. They are making it very, very difficult to get rid of people.

Matties: Kind of the European philosophy.

El-Abd: Yeah, German. They copied a lot of the German regulations. It's very hard to get rid of people. What you do is you hire somebody and then they sign a contract. When their contract is up, they sign a second contract. After the third contract, you can't get rid of them. They're there. I'm not saying you can't get rid of them. You can, but you have to pay out the whole contract, the entire value of the contract plus two. It gets very, very expensive for you. You have to be very careful who you hire. It's like the NFL, if you get a player and he doesn't produce, you cut the player. Here, you can't. You're stuck with the guy. That's a big issue and a big, big problem.

As a businessman, I think that whole concept, that you can't get rid of somebody, is not good. That is equal also if the person does something wrong. There should be a mechanism that you can fire them without paying them off. Under the current labor situation, if somebody in your company steals from you, you have to pay them out. I said, ‘I'll be damned if I'm going to pay somebody who did something wrong, a year and a half.’ What happens is you have to go to court and it ends up costing a lot of money. To me, it's simple. If I can prove that you've stolen or if I can prove you've done something to harm the company, then I should be able to fire you on the spot; get out of here.

Matties: There's inherent risk in this because it opens the door for lazy, non-performing workers.

El-Abd: We had a person who was caught doing something wrong, and I couldn't fire him. They said, "You can fire him, but you have to pay him out." I said, "Wait. Wait. Wait. I will not pay somebody out that has done something wrong to harm the company. It's not me. I won't do it." It's like rewarding somebody. I wouldn't do it.

The government hasn't figured that out yet and they have to do that. I asked them, "What can I do?" They said, "Well, you can do anything but fire him unless you pay him out." What do I do? I put him in a corner, took his phone away, took his computer away, took everything away and just left him in the corner where everybody could watch him. It was like a dunce corner. Then I figured he's going to go sooner or later but he lasted nine months, which is more than I wanted but I didn't have to pay two years. If they quit, that's it.

Matties: That really creates an atmosphere of adversaries.

El-Abd: There are young people, unfortunately, who take advantage of these regulations.

Matties: That's one of the things I've noticed. Obviously, you've been in China many more years than me, but I can see there's a new generation that's coming into the work force, with new thinking. It feels like a completely different China in many respects.

El-Abd: They're learning a lot. How can I manipulate the system in my favor? The other thing is the scamming. You ask somebody, "Where did you go to school?" They say, “I went to school here." They buy all these degrees online. They can buy degrees. One guy told me he worked for Philips, for this company and that company. We went and checked. He didn't go to school there but he's got a diploma and a degree. He shows it to you but he didn't go to school there. We have to be careful because we're hiring technical people who didn't go to school.

Matties: That's a tough climate to do business in.

El-Abd: Tough climate. T-I-C: This is China.

Matties: This is China. If you want to hone your business skills, come do business in China. Hamed, thank so much for spending time with me. It's always appreciated.

El-Abd: Thanks a lot.

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