Jack Welch: China losing competitiveness. Must Create '10,000 Apples'

http://www.bloomberg.com/news/2011-09-07/china-won-t-lose-competitiveness-for-3-5-years-welch-says.html

by chugger • 15 years ago

29 32 15 years ago

noahl• 15 years ago

I found some data on this here: http://www.bls.gov/fls/china.htm

It has a table of cost per hour of Chinese manufacturing workers from 2002 to 2008. They went from $0.57 (2.1% of US wages) to $1.36 (4.2% of US wages) over that time.

If this is in fact what he's talking about, then wages in China are still incredibly low. Does anyone know what wages in Vietnam or Africa are like?

Hyena• 15 years ago

The problem is that a wage-to-wage comparison with their export markets isn't important. China's advantage is stacking low wages + large staff against high wages + machines.

chugger5• 15 years ago

I found this.

Why Factories Are Leaving China http://www.businessweek.com/magazine/content/10_21/b41790110...

Fan is expanding his factory in Vietnam, where wages are $100 a month, one-third what he pays in China.

$100 a month. that's amazing.

tsotha3• 15 years ago

How much does it cost to live in Vietnam, though?

pnathan• 15 years ago

In a race to the bottom, we all lose.

ajross• 15 years ago

No, that's just wrong. The people at the bottom certainly don't lose.

Japan was at the bottom (of industrial economies) in the post war world and leveraged those low wages to re-industrialize and get to the top. China did the same thing in the 80's and 90's, and is now seeing upwards wage pressure as they approach a first-world level of economic activity.

Next up will be the Indias and Vietnams of the world. Hopefully eventually subsaharan africa will get there.

This is a good thing, overall. Yes, working conditions at "the bottom" are often huge problems (though again: remember the comparison is to abject poverty). And yes, rapid change causes people to lose jobs elsewhere faster than they can be replaced, and that sucks for those people.

But to argue that chasing cheap wages is inherently bad is isomorphic to arguing that poor people should always be poor, and that's much less palatable to me.

ippisl• 15 years ago

The % of US wages doesn't make sense. many manufacturing workers in the US earn minimum wage , which is between $5.15-$8.5 per hour.

So the figure should be 15%-20% of US wages.

ww520• 15 years ago

Total cost? Health benefit, Social Security, Medicare, Unemployment insurance, etc?

wmeredith• 15 years ago

I find the premise of this article (the 10,000 Apples thing) laughable-maybe that's the point. Every business in the world is struggling to create 1 Apple right now (except maybe Exxon-which is bigger today?). The chances of 10,000 Apples coming out of China's me-too business culture is too much of a long-shot to be overstated.

danmaz743• 15 years ago

Me-too business culture? Wasn't it what was said about Japanese business culture when it started to really grow after the war?

chugger5• 15 years ago

And look at Japan now. They're currently in 2 decade-long recessions and they're in even worse shape than us.

http://en.wikipedia.org/wiki/Lost_Decade_(Japan)

http://www.washingtonpost.com/wp-dyn/content/article/2008/10...

VladRussian• 15 years ago

from the modern ferret-attention-span point of view such dismissal may be a valid one.

Looking at the other time scales - there were periods when the world around China was striving to and happy to be "me-too of China" and there is nothing that precludes that from happening again, even more - China seems to have learnt the lesson about the limits on trusting to Western civilizations, and their current "me-too" is manifestation of shrewd practicality as it is the fastest way to get the humongous country from being mostly agricultural 10-20 years ago to the leaders of the world. You just may not like the "Apples" that will come out of China :)

saraid216• 15 years ago

So the news was that Jack Welch reads the news, just like the rest of us?

hcack• 15 years ago

From a bloomberg (business more than tech) point of view, Apple may be just another "global brand."

Apple created the first successful personal computer, and personal computing has since come to define the the we live in. That's slightly harder to replicate.

There's more to Apple than their present bottom line.

jisaacstone2• 15 years ago

There has always been countries with lower wages than China, so this can not be the issue.

China has better infrastructure and lower levels of graft than other low-cost countries, this is what has kept it competitive.

Not sure what the point of China needing to create '10,000 apples' is. If manufacturing jobs are needed better to work for the existing Apple, maybe?

Or maybe the point is that China needs to create global brands to stay competitive? This may or may not be true but without metrics it is just one person's opinion.

And China has already started creating global brands.

"In 2010 the Haier brand had the world's largest market share in white goods, with 6.1 per cent" http://en.wikipedia.org/wiki/Haier

"In Q2 2011, Lenovo was the third largest vendor of personal computers in the world." http://en.wikipedia.org/wiki/Lenovo

... etc

chugger5• 15 years ago

That is exactly the issue, and it's already happening.

Why Factories Are Leaving China http://www.businessweek.com/magazine/content/10_21/b4179011

Fan is expanding his factory in Vietnam, where wages are $100 a month, one-third what he pays in China.

Once it becomes too cost-prohibitive to manufacture products in China due to inflation, HP, Samsung, Sony, Dell, Apple,etc. has no choice but to move their operations to Vietnam, India, etc. China's main competitive advantage is being eroded by inflation. They need to move up the supply chain from being a manufacturer to seller/marketer, where they can charge more money based on their brand (Apple/BMW/LV/etc.).

jisaacstone2• 15 years ago

Just I'm not sure that higher wages == no manufacture. Germany still makes things sometimes?

The real challenge for China would be increasing the quality of their products and/or manufacturing innovation.

r00fus• 15 years ago

> "In 2010 the Haier brand had the world's largest market share in white goods, with 6.1 per cent" http://en.wikipedia.org/wiki/Haier

When talking about brand strength, it's not market share that counts, it's profit share. Sometimes (often) it's coincident (read: Microsoft, Intel, Cisco, etc)... sometimes it's not (BMW, etc).

johnohara• 15 years ago

Apple has about 50,000 employees worldwide. Creating 10,000 Apples in China would in theory create 500,000,000 jobs -- or about 30% of the total population.

Jack Welch's comment might not be too far off the mark.

Jack Welch: China losing competitiveness. Must Create '10,000 Apples'

Related Stories