China Aims To Move Up the Food Chain 257
krou notes reporting in the Christian Science Monitor that the current economic crisis is helping China's push into higher-end manufacturing by shaking out low-profit companies. The hope is that, instead of just assembling iPods, Chinese companies will be able to invent the next big thing instead. In this move China is following the well-worn path taken by Japan and the Asian tigers before it. "Last month, the National Development and Reform Commission announced revised plans to transform Guangdong and neighboring Hong Kong and Macau into a 'significant innovation center' by 2020. One hundred R&D labs will be set up over the next three years. By 2012, per-capita output in the region should jump 50 percent from 2007, to 80,000 yuan ($11,700). And by 2020, the study predicts, 30 percent of all industrial output should come from high-tech manufacturing."
Re:Hong Kong (Score:1, Interesting)
It depends on where you live. Your grandparents probably live in an older building, possibly one the subsidized low income housing developments.
On the other hand, my parents' place in Hong Kong is about the same size as the apartment I have in Canada, has the same type of toilet and has an instantaneous (tankless) water heater for the shower.
Hong Kong is more advanced than North American cities in many ways: the public transit system, for example, actually works. A far cry from the likes of Toronto.
And up comes Vietnam, Indonesia, Cambodia, ... (Score:4, Interesting)
My wife is a fashion designer, and it's quite obvious that the trends in manufacturing have been shifting for quite a number of years now. Clothes at Walmart (socks, underwear, t-shirts, etc.) used to be made in China. Now these low-value items are being made in Vietnam, India, Bangladesh, etc. At that time, the mid-to-high-end fashions were made in Korea, Taiwan, or Hong Kong. Now China has largely overtaken this mid-to-high-end market (dresses that go for up to $1,000 are frequently from China now).
Clothes today. Cars and planes in 25 years. Or is that Toyota still funny Japanese engineering that falls apart?
Also - with our recent peanut/salmonella/spinach/drugs health scares, it's not like we can point fingers at others anymore for having shabby food quality standards. I know we're still lightyears ahead of many countries, but the gap is certainly closing quite quickly.
Re:MP4 Players (Score:3, Interesting)
Ebay will likely be the leader at the forefront of this revolution. I, for one, can't wait.
As much as I don't like ebay, you have to admit they match the little guy from China DIRECTLY with the buyer (you and me). I just bought 12 screen protectors for my PDA for $3 free shipping. I bought a replacement 1200mAh same--physical-size-battery-as-the-Dell-900mAh battery for $8 free shipping. 33% extra battery capacity! I could have gotten the 2200mAh version for $10 free shipping but I didn't want it sticking out the back of the PDA. I hate to imagine how much the replacement battery would have cost from Dell.
My 4GB of Crucial DDR2-800 2.2v ram was $20 AR thanks to China.
That 1.5TB WD harddrive Frys had for $106 +$7 shipping one day last week was thanks to Chinafacturing.
My 24" 1920x1200 M-PVA (true 8-bit/color display) LCD monitor was $299 a year ago thanks to China. Now, a TN 24" panel is $220 at Costco this week, and there is a 42" Vizio 1080P LCD TV for $600, too.
In some market segments we don't benefit, but in many, we do. If I bought it the PDA battery from Dell they probably would have charged $25 for the 900mAh replacement, and maybe $40 for the extended 2200mAh battery. They would have paid maybe $6 to the China guys for being a bulk buyer, and would have pocketed the other $19/$34. But since I went through Ebay, the China guys got to charge a little bit more, I get the same product, and still came away paying 20% what I would have had to pay through Dell.
It wasn't until recently that we started seeing the benefits of this with laptops-- before the companies pocketed all the cash, but now there are so many suppliers over there it's trivial to produce yet-another-version of laptop. Now you can catch a dual core laptop with 3GB of RAM, Vista, and 160-250GB HDD for $400 if you keep your eyes open. Or you could get a netbook with 1GB of RAM and an 8GB fast SSD with 32GB slower SSD (for documents and stuff) for $300.
I, for one, welcome our new Chinese manufacturing Overlords.
Re:Culture (Score:1, Interesting)
Re:None of the Asian Tigers Replaced US innovation (Score:4, Interesting)
None of the Asian tigers has replaced the US as a center of innovation.
They don't have to. Our own intellectual property laws have strangled innovation in this country.
At least we have some. In China, forget about R&D unless you're willing to pay the police to go raid the counterfeiters for you. In Hong Kong, Shenzhen, etc. you can buy real North Face and -insert-favorite-brand-here- clothing. The manufacturers are told to produce a certain number of goods, but it's _so cheap_ to make stuff over there they still produce more of it, and sell it to street vendors, who then sell it to you for 90% less what you'd pay over here, and the street guys STILL make a profit on it.
North Face, for example, pays this fee to keep the street vendors at bay. Friend was telling me about his trip there a few months ago-- "Do you have any NorthFace" "No, no no, no NorthFace. Here look at these instead, see this nice backpack? $5." "No but we want NorthFace" "No NorthFace, I don't have it" "Surely you've got something NorthFace." The guy looks at my friend, decides he's legit and not an undercover cop, looks left and right up and down the street, and the proceeds to climb up his shelves into a compartment above his shop and begins throwing down North Face sweatshirts, fleeces, backpacks, etc.
They won't be able to move up the food chain until they get _some form_ of copyright/trademark/IP protection. There is no "code of law" there, anything they can replicate is fair game. Better make sure anything you produce can't be replicated or they'll undercut you fast.
Re:Culture (Score:5, Interesting)
China has changed a lot since Nixon. The current generation of young Chinese are more self-centered than previous generations. It is called the Little Emperor Syndrome [wikipedia.org]. It comes as a byproduct of the one-child policy in urban areas. Since couples can now have one child, they tend to lavish their attention on one child. More often than not these children are spoiled and filled with self-entitlement as they are their parents only hope for prosperity in the future. Coupled with China's mixed economy of communism and capitalism, ambition is rewarded these days.
China... (Score:1, Interesting)
I just got back from China 2 weeks ago. If you still think China is a 3rd world country you are right. But that only applies to the rural area. If you were in major metropolitans like Shanghai, and Beijing they are no different from any other US cities. Only thing is that there are 10-20x more people in these major cities.
Think of things this way. If US gets 1 genius per 100000 person and China gets 1/10th of that(due to substandard living). Well China would have 5.2 times more geniuses than the US.
Re:Culture (Score:4, Interesting)
I think the point he is trying to make is that free markets and free speech tend to promote innovation, while government oppression tends to do the opposite.
He overstates his case--of course China could innovate, even under its current dictatorship. But all other things being equal, the advantage will remain with the West in the innovation department.
Re:Culture (Score:3, Interesting)
The U.S. leads the world in safety mandates for cars, which I very much appreciate.
Although fuel efficiency standards are a whole another matter. In China, it was a 38MPG requirement in 2005 and 43MPG in 2008.
Re:Protectionism pays off (Score:3, Interesting)
The Chinese have been engaging in protectionism for years now, by keeping their currency artificially low.
You accuse the Chinese of manipulating the currency. Yet, look at what our wonderful FED is doing to our own currency [stlouisfed.org]. That chart represents how much money the FED has printed (fisically, electronically or otherwise). If you really think we are at risk of "deflation", you have been drinking too much kool-aid.
Also, look at history, we (the US) conned the world by telling them that dollars where redeemable for gold. And once the dollar became the world currency, we went off of the gold standard (1971) and started printing it like crazy.
One ounce of gold was worth $35-$36 beginning 1971, it is worth $914 at close today. That means that the dollar lost 96% of its value in 38 years.
The Chinese may not be free of sin, but we are certainly not the country to throw the first stone.
What do you think will happen if the Chinese let their currency gain value? Every product that comes from China will become more expensive, or simply unavailable. This "protectionism" is letting you buy cheap products. In the short run, yes, China's exporting companies will suffer, but in the long run, products in China will become cheap (relative to the US and the rest of the world), and they will enjoy consumption like we have here.
Re:Good (Score:3, Interesting)
Scarcity is an interesting word.
Is it better to have a scarcity of HDTVs or scarcity of food 'driving' you to work? (Need: a want that your neighbor already has.) I've got a scarcity of Ariel Atom 500s myself.
You are correct about the implausibility of completely eliminating scarcity.
That said we have in the developed world effectively eliminated scarcity of staple foods. If you are not eating in America it is not because there is no food you can afford (you can get free food at the bottom). We have done this by producing mass quantities of basic food. We spend billions on obesity related free health care for 'poor' people. Hint: In Africa you can be poor or fat, not both. If you starve in America it's because you are batshit nuts and won't take free food.
You are incorrect about capitalism only setting price. High prices produce increased supply and decreased demand.
If you don't get the point about high prices producing more of a commodity you end up sounding like a Malthusian.
Capitalism's great strength is in automatically allocating resources efficiently threw the mechanism of price/supply/demand.
Capitalism doesn't fall flat when a supply curve is very flat (lots of stuff available for cheep). It just uses a lot of the stuff, but you can only eat so many potatoes.
No matter what level we bring 'standard of living' there will always be scarcity of things like land, quality artistic objects etc. Capitalism has no expiration date. It is wired into human nature, it was not invented it was discovered, just like physics.
Re:Culture (Score:5, Interesting)
Western civilization is so successful
Western civilisation (a nebulous and misleading term, but let's run with it) has been successful over the same sort of period (say 3 centuries) as the Assyrian, Persian , Song, Ming or Roman empires, or possibly less in the case of the Romans - it is not the pinnacle of civilisation, it is not the final word in empire building, and it is not the apotheosis of innovation or even pragmatism. It will soon fade away like other empires before it.
That's taking 'Western civilisation' to mean the current hegemony of the West in world affairs, since perhaps the time of the colonies, culminating in the dominance of one of those colonies - The United States. There has been no even tenuous perception of unbroken world hegemony of western interests before then, so I assume that's what you mean. I suspect history will see the period in a more fragmented way, with a dominance of European powers giving way to that of the US, which lasted for perhaps a century. The centres of wealth have clearly been moving east in the last few decades, and that is not going to slow down.
Many empires before the US one have made the mistake of telling themselves that they are something new in the history of the world, something more civilised and refined than those around them, and will change everything due to unique trait 'x'.
PS It's interesting that empires often use 'the civilised world' to mean the world under their dominion, and barbarians to refer to those who live beyond the pale. The phrase Western civilisation is presumably born of that impulse.