Chinese close to buying Volvo

[bright]

Most of what you buy is indeed from China. It might not appear on the outside of the label, but often the internal parts are from China (cranks, arms, cams, etc.) Just remember this little ditty:

Made in Japan was considered a mark of trash. Then the mantle was passed to the Taiwanese, who later gave it to the Koreans. The Koreans then gave the shame to the Chinese who are almost done passing the torch to the Indians and Vietnamese.

The reality is that as manufacturing moves to a cheaper labor pool. Cheap Labor=Cheap Prices. But there's a catch. You have problems with quality control as your workers are poorly educated. You need a LOT more workers to do the job of a better educated person.

So what happens is that the locals become better educated (listen up America, stop the race to the bottom of the Western Educational Scale.) The amount of technology used increases as well as salaries.

At that point companies scout out for cheap labor to keep prices down. The locals are left with a great deal of knowledge about that particular process. They then tend to buy the leftovers of a plant and start their own companies.

Knowledge, education and health care is what equalises the world.

A classic example was the textile industry moving from the UK to India and Bangladesh. The British companies stayed briefly, but a lot of people learned a great deal of skills. They learned everything from advanced management, engineering, chemistry and infrastructure development. The companies left town pretty early on (collapse in the cost of textiles) and these areas had all of these machines and human capital sitting around. They quickly picked up the pieces and became heavyweights in the field.

GM recently bought into China not to produce American cars for Americans but rather to produce Chinese cars for the Chinese.

Also, as far as Saab was concerned it use to buy American cars and assemble them in Sweden as it lacked the technical knowledge and educated labor base. That changed over time. Education and health care levelled the playing field.

And for the record, I am an American who taught at both the University and secondary school levels.

[polskamafia mjl]

Very good points. I have always felt the same way.

[bright]

Technology has always been transferred this way. Back in days of olde you didn't want to let your skilled labourers leave a city or village for that reason. They could give an advantage to someone else, or even compete against you. Sometimes you were bound for life in a kingdom upon death.

There is a modern equivalent called a "Non Compete" clause in highly skilled technical jobs. The idea is that you can work for Mega-Corp Engineers for however long, but when you leave you can't use your new found knowledge in competition directly by your company or another company who hires you without getting clobbered in a lawsuit.

http://en.wikipedia.org/wiki/Non-compete_clause

This transfer of skills and technology is how the US gained much of its tech know-how. It also makes for a great foreign policy tool. Foreign governments send their citizens for college education in the US to transfer knowledge back home. The US gets three things out of it:
1) Cash. Foreign students pay out of the nose for a US education with no subsidy.
2) Foreign Policy and Relations. Long term exposure between citizens of different cultures tends to moderate viewpoints between all parties.
3) Business ties. You do business with who you know. You do politics with who you know

I've had a chance to live in several countries and really had my perspective changed in life. Some of it was for the better and other parts were for worse. But in the end I understood those cultures better and am more tolerant of any cultures "unusual" behavior.

[turbotim2]

All good points, however I will again point out the differences between the Japanese, Taiwanese, Koreans and you should include Mexicans in this too. All of those countries went through some serious changes and quality improved, you are right. The difference with China is all of their industry and exports are subsidized by the communist government. Therfore there is no incentive to get better, only remain cheap. There are also way more people in China then all of the other countries combined. That means all of that wealth and knowledge the workers are receiving is much watered down therefore taking a long, long time comparably for the quality to improve to the standards of the other countries.

Also, just because a car is still on the road after 20 years doesn't mean its reliable. It only means the owner cared enough about it to continue fixing it.

[marginal]

I think you are forgetting to include India ...

[bright]

As far as the government goes...China is not a communist nation. It was designed to be a socialist nation, which is an entirely different beast. Sure, there are the political trappings but that is not important. Much of industry was privatized in the 90's. Government has shown a commitment to private industry, so much so that you have the paragons of capitalism buying into China (Walmart, GM, Ford, Honda, Nikon and many, many other industries.) Political stability means that government will not willy-nilly revoke a company's assets for their own government. It takes confidence by foreign business to spend massive amounts and build into China.

I'm going to miss most of a political debate here, it's not the best place for it but I will say this. All of the world subsidizes industries. Think about it. I live in Tampa and we regularly offer tax credits and training to lure new businesses in. That is a subsidy. We are forgoing intake of taxes (or in other words, giving money that usually would be taken) back to that company they just recruited.

Fossil Fuels live in the largess of government subsidies. They regularly get breaks to fund exploratory drilling for oil and natural gas while making 10s of Billions in profit per quarter.

So if subsidies bother you look no further than the US. We subsidize more industry than most other nations in the world. Lobbyists can pull huge amounts of cash out of a representative. It's just not recognized. It's really one of those public secrets that we ignore.

And we were the first Nation that allowed a socialized benefit aid in the growth of industry. The US has the proud distinction of universal education. Any child has the right (if not the legal obligation) for a K-12 education.

However, privatization of Public Universities has started and it is beginning to hurt our economy. The yearly double digit tuition price increases drives out the poor. A poorly trained work force makes high tech workers more difficult to find. It lowers the economic capacity of the US, as well as shortens our life spans.

Sweden, by the way, has free college education for everyone. Even outsiders, non-Swedes have free access to a college education. Hello Sweden! Bad food but great education.

Another interesting tidbit of info is another vaunted capitalist nation was the first to offer Universal Health Care. The Japanese started in the early 1900s. It wasn't done out of compassion, but rather the need for a healthy work force. And more specifically a population that would be fit to fight for an empire. Pretty amazing stuff.

And to wrap things up, it was a Chinese premier in the late 70s who started the changes for a private market. Mao was dead and the country laid in ruin. There was a struggle for the future of the nation. A man named Xiaoping Deng rose to the top. He famously said the following about the need to improve the future of the Chinese.

There is a strong pragmatic perspective in the culture. Xiaoping looked around and saw what worked pretty well. He said:

"I don't care if it's a white cat or a black cat. It's a good cat so long as it catches mice."

I guess what I am trying to say is that things are far more complex and far more alike than what a newsbit would make one believe. In the end, a Chinese family needs to eat as much as an American family.

[mindshadow]

Made in Japan was considered a mark of trash.

He's been quite helpful. Next you're going to be saying bad things about people from the Ozarks.

[turbotim2]

I guess I missed the declaration that China is no longer a communist nation. Yes it operates under a semi capitalist economic structure but the government is communist no matter how you dance around the subject. You can fund them if you would like, I will choose not to as best I can.

[marginal]

I was born and grew up in a communist country.
There were no private businesses (forbidden), no talking against the government (forbidden) and no going out of the country (forbidden too).
In today's China, all those are not forbidden, so, it is no longer a communist country to me.

[marginal]

Talking about communist nations, former Yugoslavia was once one too (about 30 years ago), but what a communist nation it was, you could do all the three I mentioned before no problem.