China
M Alger has a good piece up about China and the chinese manufacturing complex.
What he says,in the main, is quite true. I am intimate with a half dozen companies doing business in China, as well as a few private individuals, and my company has been involved in several projects that took us to China’s mainland.
A product proudly emblazoned with “made in China” is, as often as not, made well, and dramatically less expensive than the comparable USA made product. No, I don’t need to be told to buy American, and i do whenever possible- but it’s impossible to go through life without a housefull of “made in china”.
Here’s the thing that makes me less concerned about the chinese than I used to be. When “Made in Japan” was an epithet, it was because japanese labor was filthy cheap, postwar japan was full of people willing to do anything to get by. And now, the japanese are among the highest paid workers in the world. We gave them W Edwards Deming, we gave them the tools to build an industrial complex, and they used those tools. Did they ever!
Now, China is emerging on the industrial marketplace, and they are doing so with a force that carries the weight of a huge population. And they are doing it with our help. THe unions and threat of unionization, the government interference in Minimum wage, are driving companies I know (Mr Blogojevitch, call your office) to go to China to get their products made. We look at chinese kids laboring in sweatshops, and think, how awful, how horrible, and we don’t know that if not for those sweatshops, those kids would be laboring in the fields, or a lot worse, for a lot less. Those sweatshops are the beginning of the way we will defeat the Chinese.
What I mean is this: those kids will grow up better than the ones who don’t have the extra food, money. THey will want their kids to do better as well. THey will have had a taste of a better life, and will develop an appetite for it. And the opportunities will be there. As will the notion that they deserve more, and are entitled to those opportunities.
They will develop unions. They already are, according to my colleagues who spend time there. THey will demand their share, and they will rise up and get it, by force of numbers. It may take another hundred years, and we have no idea what their impact on the world will be uintil then, but they already want to be us, and they have the impetus to become us. And the very flaws we have, that they admire, will be their downfall.
China is diseased because we have infected them, and the cure may be worse than the disease, but in the meantime it will bear watching.
I disagree that the reason for the Made in Japan canard was that Japanese labor was cheap.
I think rather it’s that it was low value, not able to produce high-quality goods to compete in the world market, so all Japan could sell were cheap gimcrack and gewgaws.
As the Japanese labor force became more sophisticated and productive, Japanese manufacturers were able to gain entry into the world market.
BUT… they had the manufacturers. They were native companies of long lineage — albeit slight capacity compared to their competitors in the West.
I submit that China suffers under a double-whammy.
Not only is their workforce low-value, but they don’t have the native manufacturies. What they have are American (and Japanese and British and…) offshore units. Until they get native industry, they will remain en large a Third World sweat shop.
By the same token, I’d disagree with those who say the offshoring of certain types of labor by American enterprise is a bad thing.
If it were linked with widespread unemployment, it would be one thing (though I’d hasten to add, probably a case of post hoc, ergo propter hoc fallacy). But it is not.
And, I submit, this is because American labor is high value. We have some of the highest productivity in the world. It is therefore, in the wisdom of the marketplace, better for American labor to be engaged where its high level of sophistication and productivity can be best (most profitably) employed — for the greatest return on investment.
M
Um, no. While their industry is not what ours is, it’s there, and it’s busy. Busy making cars, trucks, trains, buses, manufactured housing, ag equipment. Those industries were there before mao, and have survived him. A small portion of that industry is from without, but for every comapany that comes to manufacture ball bearings in China, there are already thirty Chinese ball bearing manufacturers.
Case in point:We have forty machines, in one small specific region. Sixteen are from companies that are based in the USA (like Caterpillar- don’t ask) but the balance were purchased by companies that have been in china for ages, and are now producing more and more every day, and marketing those goods everywhere. At the machine tool show in 06, there were easily forty people trying to import chinese goods. IN 02, I found one.
the Chinese native manufacturing base is there, and has been there all along. It’s just an extraordinarily well-kept secret.
Right you are Og. Long term, things look good for us all. Short term…I dunno.
Some of their products are a little rough but quality control on others is going straight up.
They will be the new superpower in short order.
Like I said, we have to watch them closely.
Mark, you’re dead on about the quality of American labor, too. While we don’t like to think of that, it’s true- we are, as a country, a people with an incredible work ethic, because we come to work every day, and work, despite not being in the condition of need- as they are in china- a day without work might mean starvation. Here, there are safety nets up the wazoo- it’s actually remarkable that ANYONE stays at work.
What do you mean when you say “safety nets?”
There is no unemployment insurance or welfare in CHina, Broad. If you don’t work, you die.
Exactly, OG. The vision of China as hard core Communist nation does not fit. Sure the Government is autocratic, because it fears the eventual uptrising. China is changing daily because there is now a growing middle class. Those who work at the German, Italian, British and American companies enjoy pay at a scale that is immense compared to those who work at the “Chinese” Plants. A higher level of skill and sophistication is required for that job, and they are rewarded accordingly. The Chinese manufacting plants are learning, like the Japanese, that the “parts” must have the required quality if they want the business to grow.
One major problem with China’s manufacturing that has assembly plants looking to “local” manufacturing more (if not in the US, probably in Mexico) is the QC issue. If you need 10,000 parts of a particular geegaw to keep your assembly line rolling, and you get a batch from China that’s out of spec (which happens quite a bit) it takes a minimum of eight freakin’ weeks on a ship to get replacements, or hideously expensive air transport.
If the parts are large and heavy, water transport is pretty much the only option.
With a “local” plant, they can replace the bad parts and drive them to the plant in a couple days or less.
Sometimes it’s not even a QC issue, many plants would like a turnaround on prototype parts fatsre than 3 months for every revision. That’s way too damn slow in todays global marketplace.
Also, as far as I’m concerned, until the Chicoms stop artificially pegging their currency low, they can FOAD.