Friday, November 02, 2007

James Fallows on Chinese Manufacturing (More...)

This post is related to the one before about "non-pecuniary perks." I heard this incredible interview of James Fallows three days ago and have been thinking about it ever since. His description of Chinese factories should be a wake-up call for America. Mathematically there are probably more factory workers in a single province in China than the entire work force of the US! And no, they aren't all rice farmers and ignorant peasants. Pay attention, wake up and smell the coffee.

I am adding a clip from the Atlantic article to illustrate the point.

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Yesterday I heard an interview on Fresh Air that made me glad to die when my time comes. I would rather not live in a world dominated by China. The picture of China that James Fallows paints is radically different from, and more ominous than what most Americans imagine.

I fancy myself having a global view of the world, but the China that I heard about yesterday was not in my imagination, so far out in front of the rest of the world in manufacturing that there is no close second, the Walmart of global factories.

Fallows opens with a description of the Foxconn China location, probably the world's largest manufacturing facility. A quarter million people work there every day. They also live there and have three meals a day. Caterers butcher 3.000 hogs daily to feed them. I have no idea how many tons of rice and other products might be needed.

Conditions are truly bad by US standards, but the circumstances are not comparable. The millions of mostly young women who work in Chinese manufacturing facilities come from areas where family income is the equivalent of about $100 a year. In the factory they can earn from $100 to $125 monthly. After a few years they can return to their villages with a lifetime of assets. In other words, they are putting up with tough conditions but looking toward a better future.

At the core of the discussion is this:

...Communist China is less a welfare state than the United States is or any part of Europe because there's no retirement program, no health insurance program for most people. The actual ownership of the means of production in the most productive parts of China is mainly through small business people, often Taiwanese, and a typical factory in Southern China where goods Americans buys every day will come from, its a small probably a family-owned enterprise, more likely than not a family that has some ties with Taiwan, and come across the Straits to Southern China to operate, or some small business from the area. But they are small enterprises in really cut-throat competition with each other to take this next half percent out of their bidding's a competitive model of small-scale capitalism.

Part of the big picture is a network of brokers who connect the factories with their global customers. Fallows met and wrote about a man called "Mr. China" who must be king of that hill. Get this: He apparently keeps up with the location of various factories using GPS coordinates because maps are obsolete as soon as they are printed. Roads in China are being constructed and eliminated faster than the maps can be made!

Can you imagine that kind of construction activity anywhere in the USA? I can't. Whether or not you like the politics or anything else is very much beside the point. Complaining about Chinese politics is like complaining about the weather. Get over it and start figuring out what to do about the reality of the results.

Listen to his description of how a customer in New Jersey orders a computer on line, and the machine is assembled and shipped to his door in thirty-six hours. This kind of efficiency is unheard-of in North America except for the most expensive products and services.

There is a link to the Atlantic article by James Fallows, but it prints out to about twenty pages of 12-point type. Listen instead to this twenty-five minute interview and see if you are as blown away as I was at what you hear.

Here is a wonderful description of breakfast at the Sheraton.

The Sheraton Four Points is part of the process that keeps Shenzhen growing. It is one of the places foreigners go when they are ready to buy from China.

The foreigners in their 30s through 50s who come to Shanghai are often financiers, consultants, or lawyers. They tend to be lean, with good suits and haircuts. Those in Beijing are often diplomats, academics, or from foundations or NGOs. They look a little less polished. The scene in and around Shenzhen is different. It is an international group—Americans, Taiwanese, Europeans, Japanese—of a single class. Virtually all of them are designers, engineers, or buyers from foreign companies who have come to meet with Chinese factory owners. The Americans in the group tend to be beefier than the Shanghai-Beijing crowd, and more Midwestern-looking. Some wear company shirts or nylon jackets with their company’s logo on the pocket.

When the Four Points restaurant opens at 6:30 in the morning, foreigners begin assembling for breakfast, the meal when people most crave their native cuisine. It is laid out for all comers on a huge buffet: for the Europeans, sliced meats and cheese, good breads, strong coffee, muesli and yogurt. For the Japanese, pickles, sushi, cold noodles, smoked eel over rice. For the Taiwanese and other Chinese, steamed buns, dim sum, hot congee cereal. For the Americans, the makings of a Denny’s-style “Slam” breakfast: thick waffles, eggs, hash-brown potatoes, sausage and bacon and ham. My wife finally accused me of spending so much time in Shenzhen just for the breakfasts.

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