Making wine is California looks like an easy and enjoyable business. The owners of the small Sonoma winery called Rebel Coast Winery drive a yellow van, party on the beach and drink their own wine out of plastic cups. At least that is what they do in the pictures they post on social media and on their website.
The founder of Marketta Winery in Napa is a middle-aged Finnish lady, and her website offers a glimpse to the owner’s rustic and elegant home where she matures and blends her wines wearing a cotton apron. With an endearing smile at her face, she invites customers to come over.

Easy and enjoyable images are well calculated attempts to stand out as winemakers.
The number of wineries in California doubled in past ten years. In 2005, there were 2,275 of them. Now, the number is 4,400.
More wine brands mean more enjoy for wine lovers, but for the winery owners, it means more competition.

In statistics, Californian winemaking is blossoming.
From 1994 through 2014, the volume of the total wine production of the U.S. went up from 35.2 million gallons to 116.9 million gallons. The same time revenues to wineries went up from $196 million to $1,494 million.
This has brought wealth mainly to California, as 90 percent of the U.S wine is made in the sunny and mountainous west coast state.
From the year 2005, the U.S. wine exports have grown as much as 122 percent in value. Exports to Asia have doubled. Although China’s ongoing austerity campaign has a negative impact on sales, the emerging Asian markets are still very promising. The wine industry lobbied strongly for the Trans-Pacific Trade Agreement and expects it to enforce the exports to Asia further.
Japanese buy less Californian bulk wine but more premium California wine.
And the Americans themselves show more and more interest in wine – and in the quality of wine.
“The premium wine segment – $10 and above – is strong and with excellent prospects for continued growth over the next few years,” estimated wine industry consultant Jon Fredrikson of Gomberg, Fredrikson & Associates in his report of year 2014.
The U.S. is now number four in wine production and number two in wine consumption in the world. In consumption, the U.S. seems to be bypassing France – the world’s biggest wine producer and consumer – any time soon.
In per capita consumption, the U.S. is, however, still only 23rd in the world, while France is the second, after tiny Luxembourg. This means it should be possible to sell much more wine to the Americans than what wineries are now selling.
That’s good news for aspiring wine makers. Now wonder the number of Californian wineries doubled in ten years.

“In California, you have to to market aggressively,” says Marketta Fourmeaux, the owner of Marketta Winery.
She worked for French wine industry for decades before moving to California and knows the differences between the old and new world of wine. In France, you need to have prestigious history. In California, you have to make your brand known.
The sales of alcohol beverages are strictly regulated, and if a Californian winemaker wants to sell her wine outside the state, she needs a distributor. In that case, she needs to make an impression on distributors.
Fourmeaux did not feel comfortable in marketing her wines to the professionals.
Earlier her wine was sold to her home country Finland, but the weakening Euro along with trade barriers made the trade all the time less profitable.
”Cheap dollar helped the exports for many years”, says Fourmeaux.
She withdrew from the interstate and international markets and decided to keep the volume of her production very small. She now matures and blends only about 100 cases per season and sells her wine straight through her website.
She is testing and marketing – mouth to mouth and on her website – a new service related to wine. Groups can book an event at her home to taste wines, blend their own wine and design the etiquette.
As a board member of Wine Institute and as a president of Alliance Francaises in Napa, Fourmeaux has excellent networks in California. Good connections are a big advantage when bringing a new product into the market.

The prohibition law of the 1920s and 1930s had a long lasting and depressing effect on the wine culture of the United States. It swept away many old vineyards, and quality grapevines were replaced by lower-quality vines that grew thicker-skinned grapes. These thick-skinned grapes were suitable for gigantic industrial wineries.
Even today, seventy-five percent of Californian wine is produced in the Central Valley where bulk, box and jug wine producers like Gallo, Franzia and Bronco Wine Company operate.
But with the revival of premium wine production and all the new entrepreneurs, the majority of wineries of California are again family-owned businesses, reports Wine Institute, the largest advocacy and public policy association for California wine.

The “family” behind Rebel Coast Winery are three friends – aged 26, 27 and 30 – who studied winemaking together.
They wanted to get rid of the last effect of the prohibition law and make wine associated with “laughing, loving and friendship”, as one of the founders, Kate Seiberlich, puts it.
“We started out in 2012 and decided to target our wines to millennials”, she explains.
They put up the winery with the help of investors. After three years, they earn “as much as interns earn”, says Seiberlich, but they are determined to grow.
“Every single dollar is dumbed back to the company.”
They now produce up to 18 000 cases of wine per year in their Sonoma winery and sell and market it from their office in Palos Verdes.
They expect growth of 300 percent next year thanks to change in their supply chain. They have a new deal with a distributor, who presents their wines in 25 U.S. states and in Canada.
The Rebel Coast winemakers market their wines themselves in social media – they have accounts in Instragram, Twitter and Facebook – and they do a lot grass root and querilla marketing.
“We have to be mean with every penny so we have found our own ways of advertising.”
They have 17 people promoting their wines mostly without formal contracts. They are friends and friends of friends who appreciate wine.
The owners’ personas are key element in advertising. They appear in the promotional photos and videos, and they also attend parties and events in distinctive outfits. The two guys of the company, Chip Forsythe and Doug Burkett, have huge mustache – which are also pictured in their bottles.
“We want to draw natural attention. Our wines are expressions of myself and my business partners.”

As a joke, they started to put their cell phone numbers on the corks of their wines so that people could call and give feedback. This became a permanent practice.
Seiberlich says that wine distributors are “notorious of being slimy and greedy”, but they managed to make a deal with one “who has extremely good reputation” and only quality wines in his portfolio. “He appreciated three kids who started their own company.”

The Rebel Coast Winery has managed to sell their wines, but not quite to those who they thought.
Instead of millennials, women aged 25 to 45 are eager to buy Rebel Coast’s wines.
“There are lot’s of moms. Kind of soccer moms,” says Seiberlich.
These moms have money in their pocket to buy medium price wines. Seiberlich is happy.
“We sell to people who are young at heart. We offer them wild and even inappropriate experience in a form of quality wine. We say that ‘let’s not take it so seriously’.”

Sources: The Wine Institute, statista.com, Alcohol and Tobacco Tax and Trade Bureau, Wine America, GFA Wine

After a three-week marathon in Vienna (July, 2015), the Islamic Republic of Iran signed a nuclear deal with six economic giants: Britain, US, France, Germany, Russia and China. The agreement was targeted towards controlling Iran’s nuclear enrichment program in return for lifting economic sanctions that have isolated the country and hobbled its economy. So what did the nuclear deal state? The deal requires Iran to reduce its current stockpile of low-enriched uranium by 98 percent, and limits it’s enrichment capacity and research and development for 15 years. Additionally, the nuclear watchdog, the International Atomic Energy Agency (IAEA) will take responsibility in monitoring the country’s nuclear facilities. Once initiated, the accord between the two parties will serve to revitalize Iran’s growth through access to foreign investment, technology and goods. Most importantly, the country will have the opportunity to renter into the global oil markets, attracting foreign interests that will increase production and exports of oil to drive the depressed Iranian economy.

Since the Iranian Revolution of 1979, Iran has been in a state of near constant unrest. The country’s political and economic instability has resulted in several accusations made against it. From entities accused of supporting terrorism, to nuclear proliferation, to officials in the government responsible for serious human rights abuse, Iran has consistently been considered a rogue nation. As a result of several violations, the US, in 1995, targeted the Iranian government through economic sanctions on companies dealing with Iran. Companies that violated the conditions were denied export licenses for exports and access to credit. In 2006, the UN levied further economic sanctions against resulting from the country’s refusal to suspend its uranium enrichment program. The new set of sanctions placed restrictions on the Bank of Iran and Iranian financial institutions, curbing access to foreign capital. However, the nail in the coffin was when the Congress issued the Accountability and Human Rights Act, 2012, targeting companies conducting business with Iran’s national oil company. “These sanctions have significantly hurt the exports of oil, which contribute to 80% of the country’s export revenue,” said Wayne Sandolhtz, Professor of International Relations at University of Southern California.

Economic sanctions have reduced Iran’s reach to products needed for the oil and energy sectors, prompting many oil companies to withdraw from the country. “Iran is annually losing $60 billion of energy investment, limiting its access to foreign technology”, said Wayene Sandolhtz. A fall in effeciency from reduced access to technology has significantly dropped production of oil by 23.08% from 2010 figures of 4.2 million barrels a day. Post 2012 sanctions, Iran’s oil exports reduced by almost half from 2.6 million barrels per day (2011) to 1.4 million barrels per day (2014). Fall in oil exports, which contribute to 80% of Iran’s export revenue, has severly damaged Iran’s flow of revenue. Additionally, sanctions levied against Iranian financial institutions have further reduced the flow of capital into the country. The fear of losing access to Western markets has also convinced international investors to avoid the Iranian economy. The resulting withdrawal from Iranian assets has devalued the rial (Iranian currency) by 80% since 2011. Consequently, Iranian’s have had to pay significantly more rials to purchase global consumer products. The cumulative impact has damaged the economy through reduced growth, increasing prices and rising levels of unemployment. Inflation is at 40%, with prices of basic food and fuel expected to further soar. Unemployment lurks at 10.3%, with unofficial figures rising to 35%. Recent sanctions (2012) have taken a heavy toll on Iran’s growth, with the GDP figures estimating a drop by 20% from 2012. However, with Iran agreeing to restrict its nuclear program, an opportunity for future economic growth has presented itself.

A recent conference in Tehran supplanted the nuclear deal agreed between Iran and the economic powers. New contracts were launched, with Iran expected to initiate 50 new oil projects in the coming year. These contracts, subject to the nuclear deal being passed (in the Congress), serve to provide a pathway for foreign investment in Iranian oil production. “The deal will increase production by 500,000 barrels per day,” said Syed Mehdi Hosseini, head of the country’s oil contracts. The deal and resulting contracts have major implications for Iran, as it opens the door for reentry into the global oil market. The country can now attract foreign investors who will supply capital to the economy. This will serve to bolster growth, primarily through rise in production and exports of oil.

According to the BP Statistical Review of World Energy, Iran leads the world in natural gas reserves and is fourth in oil. Influx of Western and European investment and technology could revive an industry that in a decade of sanctions has lost much ground to its rivals. “Since the sanctions in 2012, Iran’s oil production has dropped more than 20%. Meanwhile, Iraq has increased its production by 70%, where as Saudi Arabia has been pumping at near record levels,” said Mr. Gaurav Mukherjee, Professor of Applied Statistics at University of Southern California. “The country is currently producing 2.9 million barrels a day, and has a capacity to produce 4 million barrels a day. To fulfill this potential, Iran will require more investment than what the National Iranian Oil Company can muster. This opens the door to increased foreign investment.” The deal provides the perfect platform for influx of investment to aid Iran to step back into the oil markets, and challenge its competitors to gain back the lost share. The new contracts will increase daily production by 500,000 – 800,000 barrels per day (by end of 2016), significantly boosting the countries exports.

Iran will now become the largest country to rejoin the global marketplace since the breakup of the Soviet Union. Energy sector companies and business from other sectors have already travelled to Iran to seek market opportunities since the agreement to lift sanctions. “Iran holds potentially interesting promises and perspectives. We have to see how the market will develop,” said Shell Chief Executive Ben Van Beurden. Iran is already in contact with former oil buyers in the European Union – traders such as Vitol Group and big oil producers such as Royal Dutch Shell PLC, Total SA – as well as existing importers in Asia. Although Iran will welcome foreign capital, it will be careful on the manner of negotiations. Having just gained access to foreign markets, it will want to attract investment but not relinquish control of its assets. “Iranians are likely to seek deals in which they pay a fee per barrel for the output increases achieved by Western companies’ technology and investment,” Professor Sandolhtz. However, with the assured backing of foreign investors, Iran is likely to make a strong statement in the global oil market. In addition to increasing supply to 3.5 millions barrels per day, Iran will experience an influx of foreign technology and ideas. This combined effect is predicted to raise Iran’s economy by 2 percentage points, to more than 5 percent GDP growth within a year. After an additional 18 months, GDP growth could reach 8 percent. With new channels to trade, easier access to raw materials and technology will improve efficiency and reduce cost of operations. This will help combat rising prices. Additionally, investment and consequent growth will also provide more jobs in the economy, hence chipping off on the high levels of unemployment.

In the global oil markets, Iran will benefit from increasing leverage. The sanctions restricted Iran’s exports of oil to limited countries. Currently, Iran heavily relies on China as a consumer for its oil supply. More than 15% of Iran’s oil is shipped to China. Additionally, due to limited access to global markets, Iran imports 35% of its gasoline from China. Hence Iran is significantly dependent on China for the functioning of its economy. Entry into international trade will increase Iran’s export options for oil and the number of suppliers it has access to.

Apart from increased international leverage, Iran will benefit from domestic success. Scaling back sanctions will help Iran keep its best and brightest at home. From 2009 to 2013, more than 300,000 Iranians left the country in search for better job opportunities. Today, 25% of Iranians with postgraduate live in developed OECD countries outside Iran. This is a significantly high rate of “brain drain”. According to the World Bank, Iranian economy loses out on $50 billion annually as local talent look elsewhere for work. Iran’s GDP last year was US $368.9 billion. Hence, retaining its talented workforce will have a substantial impact on Iran’s growth. With access to high levels of investment and technology, the Iranians will regain confidence in their economy, willing to take their chances at home.

Although the Iranian economy will be brimming with optimism, lifting sanctions does not mean all players will invest in the economy. American oil companies, in particular, are subject to tighter restrictions than their European counterparts. They are likely to be far more cautious in their activities. Furthermore, oil experts predict that it may be some time before major oil and gas projects get underway. The lack of foreign investment has reduced Iran’s capacity to produce oil. Increase in investments will be directed towards facilitating improvements in capacity, which will eventually serve to raise production levels. “The level of interest in Iran will be high, but actual investment will be slow,” said Professor Mukherjee. Additionally, Iran cannot immediately increase its production to its predicted capacity of 3.5 million barrels per day. This will create an oversupply of oil in the market, dropping the price of oil, and hurting several economies in the Middle East. Hence, Iran must slowly work towards its target, which means realizing slow and steady growth.

The nuclear deal has raised interest elsewhere in the Middle East, with Iraq and Saudi Arabia keeping a watchful eye. The reentry of Iranian oil onto the global market could lower 2016 forecasts for world crude oil prices by $5-$15 per barrel. With the current price already as low as $49 per barrel, Iran’s activities will trouble its fellow members of the OPEC. “Iran, through its contracts and potential investment, will take away a major share of oil exports from Iraq,” said Professor Sandolhtz. Nearby, Saudi Arabia will also be dealt a significant blow. The leader of the OPEC has already increased the supply of oil, dropping the prices to where they are today. The country is heavily reliant on oil for its revenues, and will stand to lose market share to Iran. The tensed Saudis will have to look to diversify away from deep dependence on the US for markets for Saudi oil exports.

Fashion sometimes can be a relentless cycle in which the trends of earlier generations are set to return with both their original charm accompanied with a modern twist. However, just as we are now seeing the billowing bellbottoms of the 70s reemerge back on our fashion runways so is another forgotten treasure belonging to a different trade: vinyl records.

Vinyl records and turntables can be spotted at retailers such as Target or Best Buy to Urban Outfitters. No longer do vinyl enthusiasts have to search far and wide for an indie music retailer to purchase a copy of their favorite record.

The cyclical path that fashion takes may seem rational for the respective industry because there are only a limited number of ways a pair of denim jeans can be redesigned. However, technological advancements within this past decade alone that has in turn revolutionized the music industry.

Vinyl records pioneered the at-home listening experience and remained on top for nearly 50 years after being introduced in 1898 by RCA Victor. Yet, it was assumed that vinyl was a long forgotten medium by mainstream consumers as it fell from cultural popularity in the 1960s alongside the introduction of cassettes. But it was MP3s and MP3 players, such as Apple’s IPod and Microsoft’s Zune, which ultimately superseded CDs.

Undoubtedly; MP3s transformed the music industry and drove the business towards the digital realm, whereas vinyl became an ancient relic that remained exclusive to only a small niche of individuals whom were deemed vinyl collectors.

MP3s paved the way for sites and services that provide digital downloads and streaming like Apple Music and Spotify. The music industry’s growth rate would depict a steady growth pattern up until the turn of century when services such as Napsters’ peer-to-peer online file sharing service were launched in 1999. Services such as Napster hit the music industry hard as it made it easy to obtain music illegally.

But digital media has produced both positive and negative outcomes for the music industry. Digital tracks and streaming have allowed artists to expand and grow by easing the ability for music to be shared at a greater volume and speed than ever before. However, digital media sharing services have also facilitated piracy within the music industry and have subsequently caused an excessive loss of revenue for the business. The institute for Policy Innovations, which utilizes the RIMS II mathematical model maintained by the U.S. Bureau of Economic Analysis (BEA) to obtain statistics of the total amount of losses generated by piracy, has reported that universal music piracy causes approximately $12.5 billion of financial losses every year.

While piracy remains a looming issue that artists and record companies continue to combat, it has also affected the U.S. job market. The institute for Policy Innovations has also reported that piracy cuts 71,060 U.S. domestic jobs and creates a loss of $2.7 billion in workers’ total earnings. The illegal act also causes a loss of $422 million dollars in tax revenues annually.

Unfortunately, the digital age has made purchasing music less than necessary. Digital and physical album sales have declined tremendously in recent years. After selling approximately 165 million CDs in 2013, the total number of album sales has dropped 14 percent to 140 million by the end of 2014 according to Rolling Stone. Furthermore, digital sales through platforms, such as ITunes, have fallen 9.4 percent as reported by its 2014 sales figures (Kreps, Rolling Stone)

Audience measurement company Nielsen Music, which records album and song sales and streams, has disclosed that mass market and chain music stores, such as FYE, have reported that their total music sales have declined roughly 20 percent by the end of 2014.

But piracy and physical music sales have not been the only reason why the music industry is experiencing a decline. Business Insider has reported that the recording industry and artists make the majority of their income from album sales. Therefore, with services such ITunes, listeners can pick and choose which songs from an album they want instead of purchasing the entire album.

Another factor that would contribute to the weakening music industry would be the consumer’s shift in mentality of music ownership. Many listeners would rather access songs through sites such as YouTube or subscription services like Spotify than actually owning the file. Access to music has become more significant than owning the actual song (Blabbermouth.net).

“Music fans continue to consume music through on-demand streaming services at record levels, helping to offset some of the weakness that we see in sales,” said David Bakula, Nielsen’s Senior Vice President of Industry Insights (Kreps, Rolling Stone). “The continued expansion of digital music consumption is encouraging, as is the continued record setting growth that we are seeing in vinyl LP sales.”

The demand and popularity of vinyl has become an exciting music industry trend for artists and record companies. The 12-inch record sold roughly 9.2 million units in 2014, the highest amount of units sold in decades. Vinyl’s 2014 sales figure is over a 50 percent increase above its 2013 numbers, a trend in the vinyl market for nearly the past four years (Kreps, Rolling Stone). A decade ago vinyl sales accounted for only 0.2 percent of the total number of albums sold, but record sales now make up roughly six percent of all physical music sales.

Traditional record stores are quickly reemerging in the United States in response to the demand of vinyl, and vinyl record pressing plants have seen a significant spike in record orders and production overall. New vinyl pressing factories have also began appearing alongside the few plants that have sustained business since golden age of the vinyl era. It is estimated that smaller sized pressing plants are producing and receiving orders for at least 450,000 units per year, whereas larger factories are turning out around 7 million annually reported the New York Times.

The owner of Quality Record Pressings in Salina, Kansas, Chad Kassem, launched his own vinyl record-pressing factory in 2011 after he grew tired of waiting for his primary supplier to receive and complete his orders. Kassem’s business utilizes four presses in total and manufactures approximately 900,000 discs annually (NY Times).

“We’ve always had more work than we could do,” Mr. Kassem said. “When we had one press, we had enough orders for two. When we had two, we had enough orders for four. We never spent a dollar on advertising, but we’ve been busy from the day we opened” (NY Times).

Musicians have also recognized the new opportunities that the vinyl industry provides. The number of vinyl reissues, such as albums by the Beatles and the Rolling Stones, has grown in recent years. And many new musicians have begun providing vinyl discs as an alternative option alongside digital albums and CDs.

Jack White of the White Stripes released a solo album in 2014 entitled Lazaretto, which set a vinyl sales record. White’s latest album sold 40,000 vinyl units its first week and 87,000 by the end of the year.

In total, 2014 emerged as the greatest sales year for vinyl records in decades. While vinyl may not pose to be the savior of the music industry, the resurgence of vinyl could not have come at a better time. While the music industry has been on a continuing decline as as a result of piracy, album sales and the shift ownership mentality, it will be interesting to see how the new vinyl wave impacts the music industry and sales overall.

Sources:

http://www.nytimes.com/2013/06/10/arts/music/vinyl-records-are-making-a-comeback.html?_r=0

http://www.businessinsider.com/these-charts-explain-the-real-death-of-the-music-industry-2011-2

http://www.wsj.com/articles/pay-tvs-new-worry-shaving-the-cord-1412899121

http://www.experian.com/blogs/marketing-forward/2015/03/06/one-million-households-became-cord-cutters-last-year/

Born and raised in Boyle Heights, Robert Campos, 69, has seen the unpaved dirt street in front of his house transformed into solid concrete and then asphalt. But the neighborhood where he knows every corner and turn has never been so costly and unfamiliar to him.

Gentrification has undoubtedly become a heated controversy looming over Boyle Heights in the past few years. As home value recovered from 2008 financial crisis, an increasing number of home owners, mostly those who have lived in the area for more than 15 years, are leaving the neighborhood and selling their properties.

“If it gets above $350,000, I’m going to insist we sell the property,” said Campos, who inherited his four-bedroom house from his mother and is now retired. He vividly described a Korean investor canvassing the neighborhood, eager to buy houses with $400,000 cash in hand, just before the housing collapse in 2008.

When Sergio Ramos, a real estate broker, opened his business in 1992 on the E. First St., he would have never imagined a monthly sales of 60 to 70 residential houses. Before the housing bubble busted, some houses were even sold at $500,000, the highest in Boyle Heights’ history. “After that everything just died down,” said Ramos, “but prices have gone up recently in 2015. Compared to last year, they increased about 10 to 15 percent. That’s a lot.”

Due to its Latino culture and vicinity to the downtown area, Boyle Heights has attracted a lot of young Mexican-Americans who work in downtown area and Arts District. Most of them are first-time home buyers and working-class population, according to Luis Negrete, the manager of a real estate agency located close to the Metro Indiana station.

On one hand, there is a constant demand for housing pushing up the prices; on the other hand, however, the ongoing gentrification process has made living cost higher than ever before.

(Robert Campos sits beside the door, reading newspaper. By Zihao Yang)

“It’s getting more expensive [to live here]. The taxes have gone up a lot. And utilities have gone up a lot,” said Campos, considering moving to Costa Rica or Mexico where his parents originally came from, “I might have to go into a small one-bedroom apartment because I can’t even afford to live here in this neighborhood.”

Moving out of the country doesn’t seem to be a realistic plan, but Campos and his sister have been seriously considering the option of putting his house up for sale, taking the cash, and renting a single-bedroom apartment for himself.

A former technician of a telecommunication company, Campos fell off the pole during his routine shift in 1990, injuring both of his legs. In the past 15 years, he has been relying solely on pensions and past savings for a living.

However, if someone puts all his money in a savings account and makes no other investments, the balance would have probably looked the same since the Federal Reserve set the Federal funds rate at near-zero level in 2008.

“Somebody is paying the price for low interest rates. It’s you and me who have money-market accounts which are earning 0.27 per cent,” said Raghuram Rajan, a former IMF chief economist, in an interview of the documentary Money for Nothing, “[The super-low rate] punishes the elderly and people on a fixed salary. They worked to save that money but get nothing for it.”

Strange enough, when food expense, property tax and utility bills stack up, getting rid of your own house and renting one instead suddenly become a realistic option for older generations with no children to bestow their properties on.

The demand for housing in Boyle Heights has remained fairly strong after the Metro Gold line was put in use in 2003, even if home prices have fluctuated tremendously during the past decade. The influx of new immigrants inevitably stimulated the cost of living to increase. New theme restaurants, bars, and fancy coffee shops were opened recently and scattered in the neighborhood, according to a New York Times article.

A newly-opened Starbucks in 2013 was big news for many community residents. Some old residents saw it as a sign of ongoing gentrification or even an intrusion of the well-preserved historic community while others hailed the coffee shop because it helped boost the value of their properties.

It has been seven years since the bust of housing bubble, and home prices almost climbed back to its pre-2008 level. Whether there is any bubble in this round of housing boom is still open to debate, potential home buyers and investors are keeping a close eye on the market trend.

“It’s still affordable and location is one thing that’s undeniable,” said Ramos, as he compared the median home selling and leasing prices of Boyle Heights to those of downtown Los Angeles. Downtown area has gone through a considerable increase in property value and rent prices after major revitalization plans were put into effect.

“As years has gone by, there has been more old owners moving out. It’s little by little, but increasing,” said Ofelia Zamora, a small business owner who emigrated from Mexico to Los Angeles and has settled in Boyle Heights since 1987.

Zamora owns a shop that features birthday and party supplies on the E. Third. St. Filled with balloons, ribbons, and handmade Mexican piñata fiesta drums, her tiny business has seen a noticeable shift of consumers in the past few years.

According to Zamora, some owners sold their houses and moved to Texas in pursuit of comparatively better living standard and lower cost of living. Others with immigrant background moved back to either Guatemala or Colombia as their children settled well in the U.S.

As the interest rates remain around 0.25 per cent, getting a mortgage and borrowing from banks come with fairly low costs, making it easier for home buyers to obtain loans.

(Boyle Heights has become a new destination for people working in downtown Los Angeles. By Zihao Yang)

But for Manuel Honorato, owner of a car repair company, whose parents currently own a house in Boyle Heights and are thinking of moving to Mexico after retirement, increasing cost of living doesn’t seem to be the only reason why his parents might consider selling the property. Gentrification has not only brought higher prices, but also many newcomers to the neighborhood.

“That forces people to move out because new immigrants don’t have that sense of community norm,” said Honorato, “The neighborhood is becoming broken down because of the prices. All of a sudden you don’t have friends because all your friends are moving out.”

The economic gap, along with the generation gap, has made Boyle Heights more divided than ever before. “On this block alone, there are probably only ten property owners,” said Campos, “my mother was the oldest person of the original owners on the block. The rest of people have just bought property in the last 20 years. I’m probably the last person who has been here for as long as I’ve lived.”

How does it feel like to live in China?

If someone asks different generations the same question, he would probably get completely different answers. Trade, a concept that only seems relevant to multinational corporations and business owners, has shaped almost every aspect of people’s life. The trade between the U.S. and China has grown exponentially in the past two decades, partly due to China’s economic integration into the global market and increasing needs and wants of Chinese consumers. In this blog post, I’m going to share a two family stories and shed some light on how trade has profoundly influence some Chinese families.

Military Factory, Xi’an, China 1954-2004

Prior to the Chinese economic reform in 1978, living standards has virtually remained at the same level for most of urban Chinese citizens.

When my grandparents moved to the city of Xi’an in 1958, they landed their first jobs as assembly worker and technician in a factory producing ordnance for Chinese military. Xi’an North Qinchuan Group, a state-owned military defense factory founded in 1954, was one of many military manufactures in the city at the time. Just like other state-owned industries such as oil, construction, telecommunication, and railways back in the 50s, getting a job in military industry is equivalent to getting a job for life. Responsible for testing parts that were ready to deliver and assemble for aircrafts, my grandparents worked at the same place for more than 30 years. In the late 70s, the factory was said to have more than 10,000 employees.

(Historical data of Chinese exports since 1986. Source: Tradingeconomics.com)

As China steered from planned economy to market economy, and opened its border to global trade, many state-owned enterprises suddenly found themselves obsolete and totally unable to compete with foreign companies. In the past twenty years, China has witnessed many traditional state-owned industries went to bankruptcy or protracted restructuring, and Qinchuan Group was no exception. In the late 1990s, the company attempted to switch its production from military defense to car parts. Unfortunately, as a state-owned company for almost half a century, its economy car model Flyer was in no way as competitive as cars manufactured in Taiwan, South Korea and Japan. It filed for bankruptcy in 2004 eventually, and was incapable of paying pensions from time to time.

According to the National Bureau of Statistics of China, the total trade volume of goods in China, including both imports and exports, skyrocketed to 2.97 trillion U.S. dollars in 2010 from 20.6 billion dollars in 1978. Opening up the border line to international trade came with a cost. Internally, outdated industries would face fierce competition from the global market and lose its domestic market share. At the same time, domestic goods and services industries would have to upgrade and renovate itself in order to export their products to foreign countries.

Baby Formula, Shenzhen, China 1993

When the 2008 Chinese milk scandal made global headlines, foreign-made baby formulas were almost sold out overnight in China. Some even started panic buying in Hong Kong and subsequently caused intense friction between Hong Kong residents and mainlanders. But my father told me it was nothing new to him. When Wyeth, Mead Johnson and Abbott, all American infant formula manufacturers, entered mainland China in 1986, 1993, and 1996 respectively, they probably had never imagined how popular and desirable their S-26 and Enfamil baby formulas became among Chinese parents.

Because the product was so highly priced and it came in shortage occasionally in the 90s, some parents (my father was one of them) would even buy contraband foreign baby formula from smugglers at the border of Hong Kong and Shenzhen, a city bordering Hong Kong. It seems ridiculous in retrospect, but at the time when American brands first made its way to the Chinese market, they meant quality and safety to many consumers. Even today, a 900-gram standard packet of infant formula that sells for 25 U.S. dollars outside China is priced at 50-70 dollars in China, simply because the demand far exceeds the supply. High quality baby milk has become a scarcity in mainland China. Distributors can basically set a price that is three times higher than its customs declaration price, and there are still parents lining up to buy the product.

(Smugglers of baby formula waited outside Shenzhen/Hong Kong checkpoint, 2013. Source: News.163.com)

There is no doubt that market penetration of foreign companies in China stroke a huge blow against domestic milk producers. They basically have driven local infant formula companies out of business. It was since when no one was confident enough to trust domestic milk that series of laws and regulations came into effect to regulate the industry. The success of foreign baby formula brands in China implicitly reflects the fact that trade can have a huge effect on the market composition of importing countries.

This week’s field trip to the Port of Los Angeles definitely impressed me with the visualization of data. By visualization I mean seeing how trades take place in person instead of just reading numbers from economic reports. In fact, foreign trade is never something that is far away from our daily life. It’s what you eat on your lunch tables, what you see on the shelves of supermarkets, or even what you feel when you lose your jobs.

The Trans-Pacific Partnership (TPP) is a trade agreement signed by twelve Pacific Rim countries. The deal seeks to serve a path of entry of American goods into Asian markets, and is lately discussed in the context of President Obama’s administration’s “pivot to Asia.” Although the agreement primarily represents elimination of barriers between the United States and Asian countries the contract states 3 Latin American countries: Mexico, Peru and Chile.

An invitation into the TPP signifies these countries entrance to a large trading bloc, which makes up about 40 percent of the world GDP. The counties have decided that their path forward is to embrace he the growing practice of globalisation and free trade agreements. Membership within TPP would facilitate I created integration with one another and offer a more coordinated approach to expanding trade with Asia.

The British economic authorities aim to push for closer trade relationship with China, as Chinese President Xi Jinping arrives in London for a four-day visit. London is seeking stronger economic ties between the U.K. and China, despite the recent economic slowdown in China. This effort to enhance trading cooperation with China signifies that the U.K. has more options outside of the EU.

Currently, China is the 7^th largest export market that the U.K. trades with, total export to China worth approximately 30 billion dollars last year. The major products that the UK exports to China are automobiles, telecommunications equipment and electronic components. Although the EU and US still take up most of the UK’s exports, the number of UK’s export goods and services to China will be riding on a rising trend, especially after Xi’s recent visit.

Chinese President Xi also states his intention to strengthen trade relationship between the two countries during his visit. China is the UK’s second largest source of imports, right after Germany but ahead of United States, according to Quartz (Quartz). Investments on British real estate coming from China has been increasing over the past five years; in the meantime, the increase of Chinese tourists’ purchasing power boosts local economy in the U.K.. According to the Reuters, “the People’s Republic has picked London as the host city for its first foreign-issued, yuan-denominated bond” (Reuters). Additionally, wealthy Chinese individuals are sending their children to the UK for schools. Reportedly, every one out of seven students on a British University campus is Chinese.

On the other hand, many remain suspicious of this newly established close relationship between the UK and China. One of the arguments against this relationship maintains that China’s economy is at an unstable place right now and that its growth will not skyrocket like it used to in the past ten years. Chinese stock market’s recent crash has hit not only the U.K., but also the world’s confidence in Chinese economy. As a result, critics comment that the timing might not be a perfect one for the two countries to strengthen trading partnerships.

Secondly, the U.K. has been known to the rest of the world for its criticism on Chinese refrain of human rights, represented by Prime Minister David Cameron’s meeting with the Dalai Lama in 2012, which resulted in great diplomatic tension between the two countries. In September 2015, however, British Chancellor of the Exchequer, George Osborne indicated that the U.K. would no longer engage in “megaphone diplomacy” and will avoid its criticism on Chinese human right issues during his visit to China (Bloomberg). Unfortunately, the two countries’ difference in cultural values might still pose as a barrier before the two countries manage to pull each other closer.

http://www.bloomberg.com/news/articles/2015-10-18/u-k-in-economic-kowtow-to-xi-seeks-golden-era-of-china-trade

http://exportbritain.org.uk/market-snapshots/china.html

http://www.ibtimes.com/china-uk-trade-relations-despite-chinese-economic-slowdown-british-authorities-push-2146891

http://qz.com/526977/what-china-really-wants-from-the-uk-charted-private-education-bank-loans-and-real-estate/

http://blogs.reuters.com/breakingviews/2015/10/19/china-is-unreliable-new-best-friend-for-britain/