Toloken

There’s the image that dominates our attention right now: the factory closings, workers losing jobs and unrest as a result of the global economic crisis and the poor business decisions of some Chinese firms.

But there’s another, paradoxical, image that I’ve also been thinking about, that of the country’s Shenzhou 7 spacecraft.

In September, the craft carried three taikonauts, as they’re called in China, into space, where they performed a manned space walk, making China the third country to do that, after the United States and Russia.

China is not breaking any new ground in the technology of spaceflight, from what I read anyway. But as a symbol of the future of technology development, to me it’s very interesting for what it suggests -- a country can’t have the capability of putting people into orbit, doing a spacewalk and bringing them back, if all it can do is build simple plastic toys based on cheap wages.

Consider a 2007 report on global innovation patterns. The World Intellectual Property Organization (WIPO) said 2006 was a record year for patent applications, and it pointed to the third year in a row of strong growth in northeast Asia, singling out South Korea and China.

WIPO had this to say: “Innovation has been traditionally dominated by Europe and North America. New centers of innovation -- in particular in northeast Asia -- are emerging.”

That’s not to understate the obstacles facing Chinese manufacturers, or manufacturers anywhere.

Some Chinese leaders are acutely aware of their challenges.

My colleague Nina Ying Sun reported very interesting comments in the Plastics News China blog recently from Long Yongtu, who led China’s trade negotiations to join the World Trade Organization.

Long said China’s lack of a transparent, rule-based legal system was actually holding back Chinese companies from pushing into global markets, because it left them less able to compete in the global legal environment.

Chinese government leaders in Guangdong province, as well, have been trying to move their industrial base into more technology-intensive industries, although the collapse of some industries in that province will make that more difficult.

I talk to plenty of Chinese factory managers who are trying to move their companies up the value chain, and my sense is that those companies that are better at using technology, employing design or developing their own brands are less affected by the economic situation.

I spoke earlier this month with an executive at one Hong Kong injection molding company, Yu Hing Mfg. Co., who said his technology-focused company had gained mold making work in the crisis, as competitors folded.

All of these changes in China remind me of a book I’d read recently by South Korean economist Ha Joon Chang, with the rather provocative title, Bad Samaritans: The Guilty Secrets of Rich Nations and the Threat to Global Prosperity.

His main point deals with trade policy, but Chang also wrote about how much the South Korean economy changed in the last 50 years, and how today it is considered one of the “most inventive countries” in the world.

But even up to the mid-1980s, it was anything but. The nation’s manufacturers lived on copying products, and the country had a reputation as one of the world’s capitals of counterfeit goods manufacturing, he said.

His point: Things can change quickly. Here’s my point: The pace of change today means that trying to figure out a place like China means looking not only at the factory closings and the troubles, but also at the potential shown by things like the Shenzhou 7.

Steve Toloken is Plastics News’ Asia bureau chief, based in Guangzhou.