(April 5, 2003) — You and I might not yet know it, but we are at war. And globalization has created it.
The enemy is not some underhanded terrorist group plotting to blow up buildings. It is not some world aggressor threatening to march down the main streets of the world's great capitals.
It is much worse. For we are at war with China. We have already been engaged. But we have not yet mounted a counterattack. Heck, we don't even know we're supposed to fight back.
And if the Chinese are not enough, it's also our own greedy natures we are battling. This agitator goes by the code name Wal-Mart Stores Inc. It threatens to ravage us from within these borders, like a hungry parasite.
Maybe it is a sign of the new, unsettling world order we are living in. At Packaging Strategies 2004 in Atlanta, speaker after speaker warned of the dangers from within (Wal-Mart) and without (China). The rhetoric went behind the usual admonitions. It was much more threatening, much darker in hue.
Take the dinner speaker on March 23, global consultant Thomas Faranda. The man has credentials. Faranda, president of Phoenix-based Faranda & Associates Inc., has given business advice to IBM Corp. and Intel Corp., has written two books on corporate leadership, owns hotels and a software firm and once ran for U.S. Senate.
Nothing has changed the world more than globalization, and China is on the front lines of that change, Faranda said. We all know of China's size. Half of the world's construction cranes are in downtown Shanghai right now. It is a country of at least 1.3 billion people and probably more who are uncounted, Faranda said. When China sneezes, the world catches a cold.
Yet, the illness could be permanent with China. The Chinese have a game plan that would make Machiavelli jealous, according to Faranda. China wants to control all brand names and eventually make all its products itself. If it means stealing intellectual property from Western companies, so be it, Faranda said.
Cisco Systems Inc. found that out. The computer systems maker sued the Chinese government for intellectual property losses in a Chinese court, Faranda said. It verged on the comical. China doesn't have what we'd call a fair and equal justice system. They might as well have sued on People's Court. Case dismissed.
Qualcomm Inc. tried making cell phones in China.
Now, Chinese companies plan to make their own, using a similar (ahem) design. It's no small market; about 270 million Chinese use the mobile phones.
The country even wants to take over the piano market. A Ghangzhou company, Pearl River Piano, already is making 250 pianos a day, Faranda said. By next year, it will have a quarter of the Asian market.
“They don't give a rip about anything Western,” Faranda said. “They plan to supplant you with them. They are very nice but they don't care about you.”
We are in a battle for our economic lives, Faranda said. And China is quickly winning. The country's largest computer chip maker is readying for an initial public offering that will hit the New York Stock Exchange. It will soon dwarf the size of some of the West's largest technology firms, he said.
The country is using World Trade Organization standards to force lower trade barriers. It is vying to become the center of the Asia-Pacific market, he said. With such a massive market to feed in Asia, who needs the West?
Yet, a Chinese meltdown could be coming. There are disturbing things going on. In China, the water is foul, loaded with human and animal waste. The air quality smells and is getting worse.
China could become a country in crisis. Yet, by the time they reach that point in China, what is left of our economy?
China is at the crest of what investment banker Tim Burns of Cranial Capital Inc. called the economic Axis of Evil. The other two axes are Wal-Mart, which is driving companies out of business, and extreme purchasing practices that allow this to happen, said Burns, based in Solon, Ohio.
Wal-Mart is just as insidious as China, Burns said. Workers cannot make a reasonable wage, leading to a downward spiral in earning power. And suppliers cannot afford to do business with Wal-Mart, yet cannot always break the company's market stranglehold and survive, he said.
And, of course, Wal-Mart takes a large percentage of its goods from China. There is one solution: Retailers should open unbranded stores, similar in scope and layout to Wal-Mart, that only sell North American products. It is a dream for now, Burns said.
“In five years, China will be our mortal enemy,” Burns predicted at the packaging conference. Faranda would not have argued.
So what to make of globalization? According to Faranda, most of Western Europe is in economic chaos, while Brazil is poised for another financial collapse. Japan needs to rebuild its banking system from scratch before it can compete.
Which leaves North America to make a stand, if the alarm bells are truly being rung. Yet, other heads are cooler on the subject. Jerry Jasinowski, president of the National Association of Manufacturers, said at the conference that outsourcing to China and India is greatly exaggerated.
The trade playing field might not be level. But neither should one panic. “You want to be careful what you believe,” he said.
Only if we're too careful, we might also be too late.
Pryweller is an Akron, Ohio-based senior reporter for Plastics News.