Why China is going to kick your butt

[andrewducker]

If you have a cigarette lighter in your pocket or your handbag the chances are it comes from Wenzhou, and there's a fair chance it comes from Mr Feng's factory.

Mr Feng's formula for success is simple.

Learn how to make something, then make it cheaper than anyone else.

The first part was easy, he bought samples of the best lighters from Japan, took them apart and copied them.

But it's cheap that Mr Feng really excels at.

He took a sleek red lighter from his pocket and gave it to me.

"In Japan this costs about $25," he told me. "I can make it for $1!"

The world's first magnetic levitation train for commercial use in Shanghai
Mr Feng's secret is his work force. In a large hanger I found 600 of them sitting behind rows of desks assembling lighters.

Most were young women.

"They're better at the fiddly work" Mr Feng told me.

But men or women, they all have one thing in common, they are all migrants from China's countryside.

And they'll all work for virtually nothing. Mr Feng pays his workers about $90 a month.

China today is like 18th century Manchester, only much, much bigger.

There are now thousands of Mr Fengs all over southern China, setting up factories and churning out goods.

And there are 900 million poor farmers in China's countryside, all just waiting to up sticks and move to a factory.

The implications for the rest of the world are troubling.

"Just think of it this way," one Chinese economist told me recently.

"If all the industrial jobs in Europe and America moved to China tomorrow, we'd still have plenty of people left over!"

More here.

Personally, I think it's a good thing - it takes millions of chinese people out of poverty. Well, via a generation or two of crippling work. But the solution is to deal with the business practices, not to complain about them taking your jobs.

Comments

[derumi.livejournal.com]

Plus, after a while, labor costs will rise in China like it has in Japan and Korea, and some other country will become the source of cheap industry labor.

[spaj.livejournal.com]

I think you're missing the ground-shaking economic impact this can have. The world is working rather shakily on my very own model of economics. (Well, Adam Smiths!) Demand and Supply curves pretty much work.

If you think about how dramatic a shift along the supply curve you're looking at in the lighter above... a 25:1 movement... 2,500%

Well, China will do that, in varying degrees to the world economy. And in terms of output capacity... it's a superpower.

I can't possibly comment on what exactly will happen. There are numerous theories... all I know is that it will mean big change!

Adam

[andrewducker]

I'm not missing the economic impact this will have. 1/3 of the population of the planet is about to enter the 20th century. It's going to be immense.

China's currently ramped up to 20% of the planet's oil production, while oil output has been flat for the last 5 years and the amount of new oil being discovered has been dropping for about a decade.

All sorts of interesting things are ahead of us.

[spaj.livejournal.com]

You should read about peak oil theory... That's some scary stuff...

Can't find a link, other than to the "buy my book" site... but the question is asked: how will we find an alternative source of energy without oil to manufacture it? The answer seems to be: the oil companies won't let us...

Adam

[opusfluke.livejournal.com]

Aristotle once wrote "Man shall not be free until th loom can work itself". Automation is the key to long-term survival. Most high civilizations have functioned on the back of slave labour (e.g. Greek, Roman, Aztec etc). Cheap labour is modern slavery ("wage slavery"). Cybernetics and synergetic systems are the way forward and people will eventually try it. There will be trouble at the start as a technocratic Mr. Feng has his fully automated factory working round the clock producing things even cheaper than non-technocratic rivals until the transition to full automation occurs. This wil lead to a massive upsurge in the membership of the "leisure" class, many of whom will escape poverty and use their brains to solving problems. That's if we don't blow ourselves up or get killed by big space rocks, supervolcanos, tidal waves, etc first.