Outsourcing to China
The ambition of China to become the world's leading exporter of manufactured trade goods has pulled the manufacturing carpet out from under the European Union, the United States and Canada, as well as other countries of the world. Where China focuses on skilled factory work produced at low cost, sometimes taking short cuts and too often using questionable material, there is also India whose human capital excels both at creative artistry and cerebral functioning.Post-war Japan became an economic juggernaut when it cleverly took to emulating and slightly altering the technologies of other more advanced countries, like the United States, producing less expensive market goods that, unlike the pre-war years of cheap production, gained it a reputation for quality goods production, aided by its meticulous attention to detail and quality control. Quality control is not something that China is known for.
But China, infamous for its disregard for patent protection and famous for its knock-off goods is now looking to the formula that proved so successful for post-war Japan and later Korea, where for a prolonged period reliance was not on authentic home-produced formulas in technical advances, but closely examining products made elsewhere and shamelessly replicating those advances with little twists of their own.
Both the world's most powerful political and manufacturing giants - China and the United States - are engaged in a long-term struggle for dominance in trade and marketable products, with India breathing hard behind. Both have seen a downturn in their growth potential related to the financial crash that beset the international community, and later complicated by the EU's very slow recovery.
"There's a huge productivity gap between China and the U.S. Both manufacture $1-trillion of goods, but 100 million are employed doing this in China and only 10 million in the United States", according to New York Times columnist Tom Friedman. And both, coincidentally, are in the throes of political change in the offing, with an American presidential election looming close on the horizon, and a change in the Chinese leadership undergoing a power struggle.
China has now arrived at the realization that for it to remain in the powerhouse-manufacturing ascendancy it has to look for cheaper manufacturing sites. Wages are no longer as low in China as they once were, with the steady growth of an emerging middle class. Outsourcing to sites located in Bangladesh and Africa appear to be one solution. Yet when that occurs, China will be where the U.S. has been; waving reluctant farewells to its production centres.
Chinese capitalism is in the throes of change. Chinese factories are beginning the trek from China to low-wage countries anxious for employment. On the other hand the reality is that China must create 300,000 new jobs a week - 15-million annually to retain low unemployment and to prevent a furious peoples' revolution from erupting. America's total unemployed stands now at 16-million-strong.
To further complicate the Asian giant's problems it lacks the scope of natural resources it requires to grow its industries. State agencies go on shopping expeditions to invest huge amounts in countries with abundant natural resources, like Africa, Australia and Canada. And this is where a bid for control of Calgary-based Nexen by CNOOC to the value of $15.7-billion comes in.
And which the Government of Canada, mindful of sovereign immunity and reciprocity, let alone the problems of huge energy enterprises being controlled by any foreign government with their own very different political agendas, must impose safeguards. Leading them to firmly turn down that bid, while taking care to encourage other, lesser-fraught interests in Canadian legacy resources.
Labels: Canada, China, Economy, Finance, Natural Resources, Security, Technology, Traditions, United States, Values
posted by Pieface @ Tuesday, September 18, 2012
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