| If you are in business for yourself or run a company, | | | | be the good for America in the long term, and even |
| shouldn't you be reading more about China? After all it | | | | American farmers will benefit as Chinese eating more |
| is now the second-largest economy in the world now, | | | | and more besides just fish and rice. One serious issue |
| and it seems to be growing and it should keep on | | | | is how China is also taking factory jobs in Mexico, and |
| growing for quite a while. There are far too many | | | | when Mexicans lose their job in the factories in Mexico, |
| people who are too willing to label China in a single | | | | they come to America to work, and they send back |
| sentence, and think they understand what China is all | | | | remains to Mexico exacerbating the deficit in money |
| about - can you imagine trying to describe the USA in | | | | flows. In the end America loses all the way around. |
| one-sentence? It is for this reason that I like to | | | | Australia on the other hand wants China to keep |
| recommend a very good book that I think you should | | | | growing because they sell them lots of resources. |
| read, the name of the book is; | | | | Australia has lots of resources to sell, and China |
| "China * INC - How the Rise of the Next Super Power | | | | doesn't seem to be able to quench its thirst for these |
| Challenges America and the World," by Ted C. | | | | resources. Automakers in the US are forcing their |
| Fishman, Scribner Publishing, a Simon Schuster | | | | suppliers into China, telling their suppliers that they need |
| Company - MacMillian Licensed, New York, NY, 2005. | | | | the "China price" for the car parts, and therefore, small |
| (pp 342), ISBN: 0-743-5752-9. | | | | manufacturing companies cannot possibly survive the |
| This book is extremely eye-opening and very well | | | | United States in states like IN, OH, MI, IL, KY, TN, etc. |
| written, the author writes for the New York Times | | | | and still supply the auto industry. This will eventually |
| Magazine, Money, Worth, USA Today, Business 2.0, | | | | hollow out world manufacturing. |
| and also was a trader at the Chicago Mercantile | | | | Between 2002 and 2003 one and eight jobs in US |
| Exchange. His book takes us from Communist China | | | | manufacturing went to China. In North Carolina it was |
| to Capitalist Super Power, and talks about how it is | | | | one in five jobs. China does buy quite a bit from other |
| expanding at roughly three-times the US growth rate, | | | | countries, unfortunately they are buying more |
| (approximately 10% year-over-year), and how 300 | | | | manufacturing machines from places like Germany, |
| million peasant farmers left their work in agriculture to | | | | which are also replacing the German workers. It's good |
| work in factories. This was the largest migration in | | | | to export to China but each machine kills more jobs in |
| human history from rural China to the Guangdong | | | | the US and other industrialized nations where once |
| Province and other factory areas. | | | | healthy companies were paying high wages, thus now |
| It is estimated that this cost 2.9 million jobs in | | | | getting out of the business which means there will be |
| manufacturing in the United States. Speaking of which I | | | | no one left to buy expensive products, therefore |
| don't want to cut into Mr. Fishman's excellent book | | | | everyone will have to buy cheap Chinese goods. |
| here, but I would like to recommend another very good | | | | Although the argument is circular it is not ending now. |
| reading; | | | | One prediction is that 10% or 14 million jobs will be |
| "How the Farmers Brought Change to China," by Kate | | | | transferred overseas in the next decade alone, we |
| Xaio Zhou, 1996. | | | | are half way through since this author wrote this book, |
| He suggests that China is dangerously competitive. It is | | | | he's more than right on so far. Before the global |
| now getting into computers, auto industry, airlines, | | | | economic crisis one third of the automotive growth in |
| aircraft manufacturing, and even big pharma. In this | | | | the world came from China. China is known for |
| book the author tells all about it, along with the harsh | | | | stealing designs of popular automobiles and will not |
| reality that follows. China is already the largest maker | | | | enforce international patents, and the Chinese |
| of computer electronics and China has over 100 cities | | | | government says; "companies are liberally influenced |
| with over 1 million in population while the United States | | | | by competitors," and that's why the cars tend to look |
| only has nine. The American Chinese moving back to | | | | the same, as if that is an excuse for stealing the |
| China to join in the prosperity is causing a brain drain, | | | | designs. |
| meanwhile as their economy increases that 10% | | | | There are some Chinese automakers who are |
| year-over-year many of the best and brightest with | | | | exporting Chinese cars with Toyota logos on them to |
| advanced degrees and the ability to research who | | | | the Middle East, selling them throughout Asia, and even |
| have been US educated are also leaving. Worse, the | | | | trying to peddle their wares in Australia. Auto imports |
| brain drain is accelerating. | | | | into China require huge cost cuts and even with the |
| Today, China is considered the world's factory floor, it | | | | price is very high comparatively speaking, US quality |
| is our greatest economic threat, actually also for the | | | | automobiles are still very much in demand in China. |
| entire developed world and it is also paradoxically the | | | | In fact, in the Middle East, Jeep Cherokee's for only |
| greatest opportunity. China's real GDP including its illegal | | | | $10,000 are being sold, and they are nearly identical in |
| underground economy is at least 15% higher say some | | | | looks, but the Chinese quality isn't there, in five years it |
| economists. China has a huge underground economy | | | | might be able to compete to comparable models from |
| that is often overlooked. The book also lets us realize | | | | the US and Japan, but that's not happening right now, |
| that 40% of all the furniture that was made in the | | | | many people the industry say that the cars made in |
| United States, some of what went to NAFTA | | | | China are junk and not comparable. Of course that's |
| countries is now all basically made in China. | | | | what they said about Honda Toyota and Dotsun once |
| China also makes ships, submarines, heavy equipment, | | | | upon a time. |
| trucks, cars, airplanes, satellites, rockets, and can build | | | | Will safety standards in the US be able to keep |
| just about anything; just look at the Great Wall of | | | | Chinese cars out of US markets? It is doubtful, as |
| China, or the World's Largest Dam (Three Gorges | | | | Warren Buffett already owns a good chunk of one of |
| Dam) so that's nothing new. It is difficult to keep China | | | | the Chinese hybrid companies, which makes electric |
| as a customer and supplier at the same time as keep | | | | cars, and surely he has the influence to get them here. |
| them at bay as a competitor, it's almost a no win | | | | In other words, we will all be driving Chinese cars |
| situation states the author. The United States is not the | | | | eventually it's only a matter of time. |
| only one with problems - also consider China's effect | | | | What happens when high-tech Chinese factory |
| on Canada, Brazil, Australia, Germany, Japan and | | | | workers make cheap manufacturing robots, what |
| Mexico. China has unbalanced trade with the good | | | | happens after that? That is one question that the book |
| number of first world countries. | | | | hints at. Today China is producing five times as many |
| Of course, China is not without its own problems and | | | | engineers each year as US colleges are. 40% of |
| there are many problems in the banking sector, the | | | | Chinese college students are on an engineering track. |
| potential for a peasant revolt, huge pollution issues, and | | | | China makes MRI software now, and many of the US |
| currency valuations, and worst of all if they have a | | | | big pharma companies are exporting their |
| bubble burst it can make any recession that has ever | | | | manufacturing jobs to China and outsourcing the |
| occurred in the United States look like a child's game. In | | | | making of products. |
| fact, it would also hurt the United States, if something | | | | From an investment standpoint it's an interesting |
| like that happen in China. | | | | market, although it sets the United States companies |
| Another problem would be China's Mao resurgence, | | | | up for pirating of patents and counterfeiting. The |
| which could cause a revolution and a nightmare, and | | | | Chinese are producing counterfeit beer, counterfeit |
| China has not yet had their industrial revolution. By | | | | wine, and often put them in shoddy bottles, and when |
| 2050 China could be two thirds larger than the current | | | | someone cuts their hand they only remember the logo, |
| US economy at the present growth rate, which many | | | | not the fact that that company never produced in the |
| believe is completely unsustainable; stating that China is | | | | first place. China produces fake Starbucks, Coke, |
| overheating, and can produce enough to supply five | | | | counterfeit cheese, ice cream, shampoo and even |
| times what the US could buy. And that's a real | | | | Cisco and 3Com computer cards. They counterfeit |
| problem because there are not five markets the size | | | | cigarettes, tires, batteries, clothes with name brands, |
| of the United States. In fact, there may only be 2 1/2 | | | | shoes, car parks, and even Nintendo. |
| or three, if you consider the European Union, all the | | | | They also counterfeit Swiss watches, and Gucci |
| Asian countries combined. Meaning that as China | | | | watches, which makes it almost impossible to tell that it |
| increases it faces severe overcapacity problems. | | | | isn't real. They produce $2 billion worth of Ford car |
| In the mid-1950s China copied the USSR's form of | | | | parts each year that are actually for, not to mention all |
| Stalin collectivism with regard to animals, farms, land, | | | | the DVDs, movies, songs, books and is one reason |
| etc. The collectives were required to meet production | | | | analysts said; "you can't sue them all," and perhaps I |
| goals, and they couldn't migrate to the cities or buy | | | | should suggest and propose a counterfeit stimulus |
| food there when passing through. In fact, the farmers | | | | package for US companies. MP3 players, Harry Potter, |
| who were producing the food were first to go hungry | | | | fake vaccines, Viagra, and even Yamaha mopeds. |
| if production was not met. Farmers were essentially | | | | Toyota vehicles with the logos on them which have |
| turned into slaves in the 1960s and 70s. The Farmers | | | | been made by Greeley auto in China have been found. |
| secretly plotting to subvert this system for themselves, | | | | 90% of Microsoft products sold in China are |
| created small collectivism local farms and co-ops and | | | | counterfeit. Many of the counterfeit factories are |
| they work much better than the forced collectivism, | | | | actually financed by foreigners to top it all off. |
| then trading amongst themselves as well as supplying | | | | Chinese entrepreneurs are reading about Carnegie, |
| the excess. When they were found out the | | | | Ziglar, Dell, Ford, and they are learning all about |
| Communist leaders decided to use that in their favor | | | | American management and they are beating us at our |
| and adopt those principles so that production | | | | own game, using our technology, and counterfeit |
| increased. | | | | products. Text messaging software most of it is |
| In the year 2000 40% of Chinese made less than two | | | | counterfeited. They say that the Adobe software |
| dollars a day - today there are 470 million Chinese in | | | | which is counterfeit in China works actually better than |
| the middle class, which makes over three dollars per | | | | the original. Since 90% of all the software sold in China |
| day or about $1200 per year. Eventually, the farmers | | | | is bootleg, and since the citizens can afford the real |
| create cash networks and private banking and once | | | | software, somehow they feel they are justified. |
| rural farmers were allowed to go into business | | | | The author also explains the interdependency |
| entrepreneurialism accelerated. Things started to work | | | | between the US and China. China consumes half of |
| pretty good and yet, they weren't so good for | | | | the world pork. In one quarter in (2000) 58 US |
| American manufacturers. For instance just as one belt | | | | companies, 55 European companies, and 33 Asian |
| factory closed in Massachusetts, 1000 new belt | | | | companies all announced moving jobs to China. Delphi |
| factories opened in China, stated the author. | | | | is moving jobs to Mexico and to China also, the unions |
| Nevertheless, it's hard to beat the wage as many | | | | are very upset that the company is allowing the jobs |
| Chinese factories pay only $.40 per hour. | | | | to migrate at such a rapid pace. And they believe that |
| Shenzhen-Hong Kongers financed and run 30,000 | | | | this pushes costs down causing nonunion jobs to also |
| factories attracting some 6 million rural workers. Beijing | | | | migrate to compete, also asserts the author. And the |
| wants to out modernize Shanghai meaning they also | | | | author asks the dubious question; is relentless |
| want to out Modernize New York City, Tokyo, London, | | | | innovation really the key, is it really? |
| and all the rest as well. But in all this modernization in | | | | I believe it isn't because, if they steal the innovations as |
| the factories China still uses low-grade sulfur coal for | | | | fast as we create them how did we help ourselves |
| power, they have lots of it and it burns very dirty, | | | | by spending all that money in R&D. If we attempt to |
| meanwhile they must build new power plants | | | | make the US the leader in innovation again, we will |
| constantly to keep up with the demand. China will need | | | | have to consider that question very closely. Meanwhile, |
| at minimum the same amount of energy as the USA, | | | | all of China's trade with all the Asian nations just barely |
| and in the end probably two times as much. | | | | equals the amount of trade China has with the United |
| The Chinese week pollution standards for cars is even | | | | States, which begins to show you the problem. |
| worse, they have no standards at all (at the time of | | | | If the Chinese citizens doubled their income, they would |
| the publishing of this book, some things have now | | | | be the same size GDP is the United States. If they |
| changed), not to mention China does not have enough | | | | doubled it again and realize that this would only be $12 |
| roads for all the cars they are selling now. Many | | | | a day, their economy would be 2.5 times as large the |
| Chinese consider pet ownership a sign of decadence, | | | | United States. The writing is on the wall, it should be |
| but it is a growing past time to have a pet. Personal | | | | obvious where China is going. |
| Tech is also becoming the thing to have, as a sign of | | | | This book was a scary book to read, but one that I |
| wealth, status, and arrival. | | | | think every American should read, so they know |
| China's entry into the World Trade Organization in 2001 | | | | exactly what's going on in the world, and then I think |
| changed everything forever, and still, Chinese trade | | | | they should vote accordingly for elected |
| barriers seem to come and go without warning, often | | | | representatives who will demand accountability and |
| claiming American jobs. China's industrial might | | | | better trade policies in the future. Please consider all |
| obviously is causing a stir in nearby Asian countries like | | | | this. |
| Thailand and Malaysia. The decentralizing of China will | | | | |