With increasing regularity, your colleagues — not to mention your competitors — are walking through international terminals, boarding jets headed for China. To be sure, lots of these trips are about outsourcing, moving manufacturing and other business functions from the United States to China's enormous lower-cost labor pool. For critics and proponents alike, outsourcing is a passionate topic, one that will likely emerge as a major flash point during the 2008 U.S. presidential election.
Recently I finished reading Thomas L. Friedman's The World Is Flat: A Brief History of the Twenty-First Century, which declares, not very originally, that computer and telecommunications networks have enabled both global commerce and the movement of work around the globe.
While I can't possibly settle the globalization debate in this column, let me make the following observation: Some portion of the business people flying to Beijing today aren't looking to cut overhead with factories or workers based in China. Instead, they are exploring China as a market for their own goods and services. China, a member of the World Trade Organization since Dec. 11, 2001, has an economy that has seen a quadrupling of gross domestic product since 1978. In 2004, its GDP grew 9.1 percent, according to the CIA's The World Factbook.
It's also notable that although China's workforce (760.8 million strong in 2003) is still primarily agricultural (49 percent), industry and service workers represent 22 percent and 29 percent, respectively, according to 2003 CIA estimates. Those statistics suggest higher-wage workers, with growing buying power and, we hope, a hunger for U.S. consumer and industrial products.
Friedman writes that if China can reform politically, “I think it could become not only a bigger platform for offshoring but another free-market version of the United States. ... Think about how many new products, ideas, jobs and consumers arose from Western Europe's and Japan's efforts to become free-market democracies after World War II.”
On the flip side, there's a change in the air regarding the type of Chinese companies entering the U.S. market.
To be sure, there are still plenty of low-cost items — think balloons, coffee mugs and baseball hats — with a “Made in China” imprint. But now there are high-value, high-cost products, too. The poster child of this activity is Lenovo, the Chinese company that acquired IBM Corp.'s personal computer division earlier this year in a deal valued at $1.75 billion.
What's fascinating about the Lenovo story is how many challenges the company faces as it seeks to put ThinkPad and other well-known IBM PC brands under the Lenovo umbrella. Will Lenovo become an emerging global brand? We will be watching how this story unfolds in the coming years.
Booker is editor of BtoB, a sister publication of Plastics News.