Shanghai Tan

[draft]

This question must be in the mind of many Chineses these days, and probably in many westerners’ mind also. But I’m going to ask you some different questions:

• Would you go to MacDonald’s to have a French cuisine diner?

• Would you buy Coca Cola’s fine red wine if they make it?

• Would you go to Walmart to shop for Hermès haute couture or Louis Vuiton purse?

Essentially, what people are looking for from China today is low cost products and cheap labor, they don’t come here for top quality, and probably won’t welcome it neither, at least not now yet. For example, if China produces the best clothes of the world, would you buy it? Actually China already produces much of the apparels of the world, but under western labels, exactly because people are not willing to pay fair price for made-in-China goods, even if they know the reality. And behind this are the well known corporations who make huge profits out of the equation, so if there’s anything they could do to lobby, they would do it so that China will remain the cheap labor poll for as long as possible.

There is simply no market currently for China to produce top quality goods, that’s dominated by western Europe and Japan. If a smart guy at Guangdong figure out how to make excellent toys or watches at half the current market price, he probably won’t attract much attention, because he might be eating somebody’s market segment. But if he can make those at 1/20^th of the market price, that’s a new market segment (no label, fake stuff, etc) and everybody will be jumping all around him and he’ll make fortune in no time! This is how we end up with millions of Chinese enterpreneurs who only focus on making very very cheap stuff at very very low cost. Basically that’s the slot that the powerful countries kinda place China in, and it’s filling that role perfectly well.

If China become the Japan of 21^st Century, who will make cheap goods for the Americans and Europeans to enjoy? Who will give them the illusion that their buying power is increasing, while in fact Americans’ buying power remains flat since the time of Ronald Reagan? If China is not supplying them with cheaper and cheaper goods, they will have to go somewhere else and start over again, diplomacy, aids, trainings, threats, and so on.

So, how can a country get out of this vicious circle of producing low quality goods and bearing that reputation by consequence? Historically this would require some sort of catalyst event, such as WWI and WWII have pretty much ruined the entire Europe, especially the mighty British Empire which was outreaching to every corner of Earth, leaving a power vacuum for the United States and the Soviet Union to fill the void. Today, if there’s a major war where muslims destroy much of the western Europe and US, where would people go to shop for luxurous goods and top quality cars? Maybe China will have an opportunity then to upgrade itself, so does Japan of course. But no one wishes such event to ever occur in the future, except, ironically, the very country that has the most to loose is working so hard to accelerate this cause.

Are there happier alternatives? I think yes, but that takes time. The westerners will not easily accept the idea of China producing top quality goods, even Japan is still struggling with that in some domain, like luxury cars. So the ones who will have to make the first step should be Chineses, they should collectively embrace the spirit of quality in everything they do, in order to get out of this cheap labor reputation. But those who have been at China know, Chineses themselves only trust western brands, they have a clear distinction of goods made locally or imported, for sell locally or for export. By the way, in Vietnam, the word local (pronounced as in French) is commonly used as low quality (or when stuff is broken).

The first step is to make Chinese appreciate what they have, and hopefully one day will appreciate what they make and sell. The current government is making some effort in promoting China’s past legacy as an asset, with some success I must admit. Combined that with soft power diplomacy and world class athletes and superstars, they might actually be able to help Chineses not looking at themselves with a westerner’s mirror, but be truely proud of who they are. And when that time comes, Chinese innovations will happen on its own.

As a people, Chineses does not lack intelligence and have no whatsoever religious constraint that prevent them from innovating or doing things differently. As a matter of fact, Chineses living abroad are as successful as any other people in any fields, except politics and military. There is no reason the same people living in China can’t do the same, if there’s a market for them.

But wait, how about the science of management that Americans are so strong at? Where does that fit in this world competition theater? I personally think that, the day when Americans and Europeans stop to manufacture goods for two generations, management will no longer have that much influence. When they depend totally on imported stuff for everything they need, I don’t think the power is so much at their side. Obviously being a large market has some inherent power, but China does not lack market. So here the law of demand and supply will still apply. When the entire world depends on manufactured goods from China, the power will be in the supplier’s hand!

As for now, I think doing cheap stuff isn’t bad, it’s a collective learning experience and market share expansion. The day where everyone stop doing it long enough, Chineses will be the only one who know how to make clothes and bags and electronics and cars and everything else. After all, a country can not live solely on management or design skills, knowledge without practice. By that time, I suspect the current superpower will have very little things to leverage, beside their military superiority. Therefore, it won’t surprise me that, in 50 years, the country that is more likely to provoke war will be the civilized and democratized one, and that pattern is taking shape already anyway…