Chinese Factories Moving On Up

from the adding-value dept

Yesterday we discussed the surprising story that many Indian outsourcing firms were rejecting call center work in favor of higher-value activities. Now China's industry, which is more known for its manufacturing prowess, is taking a similar path. Faced with higher labor costs, Chinese factories are ramping up their investments in software and other technologies in the pursuit of advanced manufacturing. They're realizing, as the Indian firms have, that lower labor costs are not a sustainable competitive advantage. Some may worry that this only means more American workers and companies will be threatened by China, but the trend should be viewed the other way: if Chinese factories aren't competing on the basis of lower costs, there's little they can do that American companies can't either. Put another way, if American industry, with access to a very skilled workforce and the latest in high technology, can't be competitive, then there's something wrong that's bigger than just high labor costs.

Reader Comments

Subscribe: RSS

View by: Time | Thread


  • identicon
    Anonymous Coward, 1 Aug 2006 @ 10:59am

    Outsourcing for food

    So if we (the first world leaders) were to outsource all of our "dirty work" to those starving third world nations... they would all earn enough money to become second world nations that arent starving.

    An interesting effect of outsourcing. We are helping to improve their impoverished lives by having them perform HARD WORK to move up in life.

    And we do that without dropping bombs on them? Besides the fact that the first world nations will go broke in the process, what's wrong with this?

    reply to this | link to this | view in chronology ]

    • identicon
      Abbey Normal, 1 Aug 2006 @ 12:26pm

      Re: Outsourcing for food

      First world nations won't necessarily go broke. If you consider the money multiplier effect on a global, instead of national, basis you can see that by generating a larger middle class of citizens, their demands for your own products will also go up.

      For example, Chinese consumers don't just buy chinese goods. In fact, rampant consumerism has given them the desire for many American products because they think our stuff is better.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 1 Aug 2006 @ 12:23pm

    "... they would all earn enough money to become second world nations that arent starving. "


    Umm... you do know that "second world" doesn't necessarily mean better than "third world", right?

    These terms came out of the Cold War. "First World" was essentially the U.S. and it's allies.

    "Second World" referred to the Soviet Bloc and it's allies, (basically all the Communist countries).

    "Third World" were all the countries not allied with either group. So China's already "second world".

    Whoops.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 1 Aug 2006 @ 12:28pm

      Re:

      Yes, but the world has moved on and those terms are no longer used in that context.

      Thanks tho.

      You got a better term for impoverished nations? (well.. er... besides impoverished nations....)

      reply to this | link to this | view in chronology ]

  • identicon
    Dan, 1 Aug 2006 @ 12:28pm

    Good job techdirt

    Alright, you guys get a gold star from me today.

    You are right on target. Fact is companies want things done. Cheaply? Yes. But above all they want them done.

    That usually means they're willing to pay for it. If us high-skilled first world types can supervise the up and coming second world types (I personally think the description is valid... we are talking about India, China, and Russia here), we all win.

    Those with inflexible economies and rigid labor laws lose. Period.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 1 Aug 2006 @ 12:28pm

    re: outsourcing for food

    Many of these "third world" countries are poor because they lack many of the natural resources that make first and second world countries rich.. water, land, minerals, etc..

    outsourcing work to those countries would definately improve the local economy which would then begin demanding goods and services from all over the world so I highly doubt in the long term that your projections of the first world becoming poor because they provide for the 3rd world would stand up.

    In fact it seems more plausible that by investing money in poor areas, and by helping them build a sustaining local economy the entire world would benefit....

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 1 Aug 2006 @ 1:27pm

      Re: re: outsourcing for food

      I have to call BS on this. Most third world countries are RICH in natural resources. Just look at Mexico for example, lots of oil, rich farm land and fantastic tourist-y locations. So why are they poor. Their government, pure and simple.

      reply to this | link to this | view in chronology ]

      • identicon
        Dan, 1 Aug 2006 @ 1:52pm

        Re: Re: re: outsourcing for food

        #11 I agree.

        Poor countries are not poor in natural resources, generally speaking. In fact, because they have been poor for so long, and their resources remain completely untapped, the opposite is actually true.

        The problem is the government... exactly right. The gov't holds onto power and places restrictions on economic forces.

        Whole markets understand what any one person cannot. Flexible economies always win.

        reply to this | link to this | view in chronology ]

  • identicon
    Dan, 1 Aug 2006 @ 12:30pm

    All hail Bill Gates, the WTO and the one-world government!

    reply to this | link to this | view in chronology ]

  • identicon
    Whatever he said, 1 Aug 2006 @ 1:00pm

    Odd -- I expected nasty posts here, instead it looks like most posters get it. How does it go.... Novus Ordum Seclorum!

    reply to this | link to this | view in chronology ]

  • identicon
    Xcetron, 1 Aug 2006 @ 1:07pm

    Once they earn enough money to become better than what they are now who would do the work for us then?

    Just wondering.

    reply to this | link to this | view in chronology ]

  • identicon
    Lay Person, 1 Aug 2006 @ 1:15pm

    Sighhhhh...

    #8, I think you mean "Novus Ordo Seclorum" loosely translated as "new world order" a more accurate translation: "A new order for the ages." Anyway, why am I writing this or why am I even concerned about correcting this?

    Sorry, OCD I guess...

    China as well as India cannot afford to employ low wages forever because these workers still require natural resources that would otherwise be used for people is now used for industry. Which is more important the people or the industry. This is the very beginning of the haves and have-nots and this is what causes the beginnings of all divisions within society.

    reply to this | link to this | view in chronology ]

  • identicon
    Whatever he said, 1 Aug 2006 @ 1:32pm

    Well Xcetron, here in the US we have lots of underacheivers on welfare and other folk who would rather do a monotonous days work for a low wage, than use their reason to reach greater heights, but those jobs are all currently outsourced. We have the workforce right here.

    Let's suppose the United States of Planet Earth comes one day -- would it be so bad? That everyone has a chance to succeed or fail by their own effort?

    There will always be the unambitious to work in the factories, regardless of the country, but if the entire globe practiced capitalism the advances in techology would make everything to date look like we are still in the industrial age.

    reply to this | link to this | view in chronology ]

  • identicon
    UniBoy, 1 Aug 2006 @ 1:37pm

    Divisions within society...

    Is that bad?

    Humans are naturally competitive. I have met few young men whose goal was to date the ugliest gal, have the least amount of money, or wind up the least educated. But, ultimately, someone has to fill those holes.

    It's in our genes to compete. If it were not, would we somehow all be better???

    reply to this | link to this | view in chronology ]

  • identicon
    Whatever he said, 1 Aug 2006 @ 1:42pm

    sorry #10

    Okay, I got the quote wrong, but you got the idea.

    As far as the 'haves' and 'have nots' are concerned, the latter wants what the former has mostly because they don't have it, yet aren't willing to work for it.

    I have, and F ANYONE who wants it without working for it, and F ANYONE else who thinks I should share with the 'have nots' simply because they don't have.

    Divisions in soceity happen because too many lazy @$$ people think the world owes them something for nothing.

    Choose your side; Capitalism or Communism.

    reply to this | link to this | view in chronology ]

  • identicon
    Lay Person, 1 Aug 2006 @ 2:06pm

    Competition, no...Population, yes

    What we need to do is step on the brakes of population growth.

    It can all work out if we limit our birth rates well below our death rates.

    If we carefully control our resources just as a business would, we may have a future worth living for. Problem is alot of egos need to be on the same page.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 1 Aug 2006 @ 2:11pm

      Re: Competition, no...Population, yes

      I say we need the rebirth of Darwinism.

      Who needs freedom when instead we can control who has kids and how many??

      Good genes, Have as many as you like!

      Bad genes, I'm sorry, but you may only have one child (but we're messing with your food to make it hard for you to concieve). And we won't provide for anything but he most basic of education for your child.

      Why have freedom if we need to save the future?

      reply to this | link to this | view in chronology ]

    • identicon
      Whatever he said, 1 Aug 2006 @ 2:14pm

      Re: Competition, no...Population, yes

      .... and you chose Capitalism? Controlling birth rates? All the egos on the same page? Wholly crap are you upside down -- that is the antithesis of Capitalism, in fact that's the most Chinese thing I've read today.

      reply to this | link to this | view in chronology ]

      • identicon
        Lay Person, 1 Aug 2006 @ 2:26pm

        Re: Re: Competition, no...Population, yes

        Uhhh YEAH!

        This is capitalism in it's truest sense!

        "The function of regulating the economy is then achieved mainly through the operation of market forces where prices and profit dictate where and how resources are used and allocated."

        See, we have the problem of allocating resources. If we follow the true form of capitalism we wouldn't even be discussing this because it wouldn't be a problem. We have a problem because we aren't allocating properly.

        Got it?

        reply to this | link to this | view in chronology ]

        • identicon
          Whatever he said, 1 Aug 2006 @ 2:47pm

          Re: Re: Re: Competition, no...Population, yes

          I get it -- you are nuts. The basis of Capitalism is liberty and freedom. Restricting the ego and the right of anyone to bear children is the opposite -- we would generally call you a facist, socialist, or communist, but never a capitalist.

          reply to this | link to this | view in chronology ]

  • identicon
    Whatever he said, 1 Aug 2006 @ 2:33pm

    Atttention Comrade Lay Person

    The Peoples State of Ridiculous would like to commend you for your fine contributions to our society.

    As you know, we need all egos on the same page -- no one should strive to be better than another.

    We would like to reward you: you are hereby permitted to have a child, but no more than one, and it must be a male.
    Furthermore, said child will not be allowed an ego greater than anyone else's.

    That is all Comrade.

    reply to this | link to this | view in chronology ]

  • identicon
    Lay Person, 1 Aug 2006 @ 2:39pm

    Funny

    Actually, "The Peoples Republic of Rediculousness" is more fitting...and funnier.

    reply to this | link to this | view in chronology ]

  • identicon
    Lay Person, 1 Aug 2006 @ 2:51pm

    Now you bore me...

    Liberty?...Freedom?


    Where in hell did you go to school?


    Anyway, now you bore me...enough!

    Back to school with you!

    reply to this | link to this | view in chronology ]

    • identicon
      Whatever he said, 1 Aug 2006 @ 3:12pm

      Re: Now you bore me...

      My professors were all like you -- facists at heart, and able to quote dogmatic verse without any abilty to apply it.

      That's why most of them teach, because they can't earn a plug nickel in the real world.

      My ego is free to acheive what I want -- yours is shackled by limiting it to go no further than your neighbors.

      reply to this | link to this | view in chronology ]

  • identicon
    Name, 1 Aug 2006 @ 8:11pm

    The realities and rewards of globalism

    Copy and paste into web browser: http://www.nam.org/s_nam/bin.asp?CID=69&DID=236628&DOC=FILE.PDF Quite possibly the best speech I've heard about globalism and the U.S.

    reply to this | link to this | view in chronology ]

  • identicon
    Name, 1 Aug 2006 @ 8:13pm

    The realities and rewards of globalism

    Copy and paste into web browser:

    http://www.nam.org/s_nam/bin.asp?CID=69&DID=236628&DOC=FILE.PDF

    Quite possibly the best speech I've heard about globalism and the U.S.

    reply to this | link to this | view in chronology ]

  • identicon
    Swatch Hustler, 2 Aug 2006 @ 10:21pm

    how to get ahead of China

    There is one thing that is universally NOT UNDERSTOOD by the Chinese, and its CUSTOMER SERVICE.

    If all things are equal in terms of costs, North American companies need to differentiate through customer service. It will take the Chinese YEARS to figure it out. Its not in their blood.

    reply to this | link to this | view in chronology ]


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here



Subscribe to the Techdirt Daily newsletter




Comment Options:

  • Use markdown. Use plain text.
  • Remember name/email/url (set a cookie)

Close

Add A Reply

Have a Techdirt Account? Sign in now. Want one? Register here



Subscribe to the Techdirt Daily newsletter




Comment Options:

  • Use markdown. Use plain text.
  • Remember name/email/url (set a cookie)

Follow Techdirt
Insider Shop - Show Your Support!

Advertisement
Report this ad  |  Hide Techdirt ads
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Advertisement
Report this ad  |  Hide Techdirt ads
Recent Stories
Advertisement
Report this ad  |  Hide Techdirt ads

Close

Email This

This feature is only available to registered users. Register or sign in to use it.