måndag 29 oktober 2007

The Rise of China

I wrote this post over 1½ years ago. Within 20 years China will have the world's largest economy. Unlike the Japanese, Latin Americans and the Europeans, China appeared to be a society with unprecedented resources.

China seeks to restore its imperial glory by infusing modern technology and market economics into its political system.

  • International strategical alliances
  • The impact on geopolitics
  • Comparison with Japan in the 1980's
  • The remarkable geopolitical and economical force
  • They have the capital
  • Chinese businessmen are traveling all over the world
In every major cities and even in the backwaters and you find a Chinese restaurant or small business. There is also a strong entrepreneurial spirit in China.

They have also made major inventions:
  • The compass
  • The printing press
  • The gun powder
How they climb on the economical ladder:
  • China starts to implement a new strategy for innovation
  • Innovation of command didn't work during the communist area
  • They started to buy whole production lines
  • And learned that this is not enough
Knowledge transfer and cooperation:
  • Joint-ventures for transforming real knowledge
  • Tacit knowledge through people working together side by side
  • International strategic alliances
  • The balance of power and our jobs
Intellectual property rights:
  • A very important issue
  • Almots anything will be copied if it can be copied (Has anything changed since 2006?)
  • It is becoming a global threat (some think so)
  • The profit margins are so tremendous (what business did I mean?)
  • The margins are better than in the drug trade
India doesn't have the capital:
  • A lot of internal problems with Infrastructure
  • For every dollars invested in India there are ten dollars invested in China
  • The scope of change there is very limited
  • The Indian infrastructure is very weak
  • China is now 20 years ahead of India
  • They have a lot of catch-up to do
  • China has opened its borders for more investors
  • They agreed to lower tariffs
  • They made a lot of concessions
  • They got much better access to local markets
  • With joint-ventures and technology transfer you train your future competitor (auto)
Hard-wirening the entire country:
  • Broadcasting is going over the boundaries
  • Information is a great issue
  • Tourism is important
  • People travel much more
  • Issuing a passport isn't a big deal anymore
Corporations need to think about this:
  • One out of five people live in China
  • One out of six people live in India
  • China is talking about restoring the position of economic leadership
  • There is a long history of humiliation of a very proud nation
  • The Chinese leaders have to deliver prosperity
  • The mandate to heaven
The bottom line:
  • You have to perform
  • We are not the only innovators on the world map
The Chinese, while aspiring to economic growth, have no desire to emulate the American / European way of life. They have their own values and will not sacrifice them for the sake of economic growth.

They appear to be willing to maintain their dominance in low-tech industries, using its cash-flow to internally finance their entry into high-tech.

The presence of an unprecedented human resource pool. Not only is it the world's largest, but it includes an unusually large number of scientists, engineers and seasoned executives. It possesses an advanced and rapidly improving technological infrastructure.

Anyone that is in a labor intensive industry is going to loose. How are we going to compete? Average employee costs are 0,65 dollars per hour. You don't need to be a rocket scientist to figure that out what is going to happen to our manufacturing industries.

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