Tectonic Economics? Robyn Meredith has written a must read book, The Elephant and the Dragon: The Rise of India and China and What It Means for All of Us. Take a look at Wall Street lately? Then think about oil, the environment and the post cold war shift in the global economy. Its time for business and education to take note…and fast.
Tectonic Economics is about the impact of the two fastest growing economies who have embraced capitalism AND globalization at the same time.
And by the way America and Europe have been left out of this economic growth spurt since 9/11.
Actually at the rate China and India are rising you just need to look at both countries since 9/11 to see their immediate impact.
Meredith has done a great job of helping understand these two transformations. There is no more waiting for a new generation they have arrived and instituted global change in less than a decade. For most Americans they still do not see changes occurring at this speed affecting the global economy.
Meredith makes the hard salary figures easy to understand why companies around the globe have jumped to China and India. But this will not be easy for IT professionals in America. India’s InfoSys hires computer science graduates (some also have an MBA) to be a VoIP specialist in Bangalore with an annual salary of $5,000. Yes, five grand a year for a VoIP specialist. This similar type job in California via InfoSys pays $120,000.
This should be really easy to understand why hundreds of tech companies including Cisco, Apple, IBM and HP have moved operations (some larger than others) to Bangalore. Remember you have to please your stockholders. The changes already underway (and under the radar) will continue to add stress to America’s middle class.
And its not just in technology related jobs that you see such a dramatic difference in India. Full time restaurant cooks earn $55.00/month. You can also work as a personal auto driver for $125.00/month. Regardless of the current Wall Street crisis now entering week three, if you have a mortgage with GreenPoint Mortgage, Inc. in Novato California….your mortgage contacts are actually Indian contractors working in Bangalore who earn $3,600/year. In China the blue collar jobs pay even less. Surprised? The Elephant and the Dragon puts the numbers right upfront to help understand why dramatic global change is underway:
China opened its communist economy to the west in 1978.
Since that time over 600 Billion has been invested mainly in factories.
America has lost millions of blue collar jobs as a result.
India opened its democratic economy to the west in 1991.
Since this time over 7.5 Billion has been invested mainly in people.
America is quietly losing millions of white collar jobs as a result.
So while China’s economy has been soaring like a rocket, India has been slow and steady. For many American companies today the only way to please stockholders is to move production to China and operations to India. Walmart is the biggest example of engaging China for blue collar production of cheap products, while India is the source of the new wave of offshoring: white collar workers. Americans will be losing middle management jobs to India’s well educated workers who are willing to accepting to considerably lower wages to secure employment. China and India produce more white collar graduates (MBAs) than America + Europe combined. There is a new era upon already in affect today. Understand its impact or simply get run over by it:
19th Century: Farmers lost jobs to the Industrial Revolution
20th Century: Sweatshops lost jobs to assembly line workers
21st Century: US Factories lost jobs to Mexico and China
Post 9/11: US white collar workers are losing jobs to India and China
As Meredith suggests this element is the dark side of globalization for the American middle class. This is how our world is being shaped. We need to understand how we must adjust to survive. Meredith provides this understanding and much more.
In Chapter 1: Where Mao Meets the Middle Class, Meredith shares one of the most common success stories of China: Toys. Have you been to toy store since 9/11? Seems like almost every toy in the store is made in China. In Quandong China alone there are over 5,000 toy factories. China is now the home to the world’s $85 Billion toy industry. Other examples of the post 9/11 global economy moving to China:
Shoes: 75% of all shoes are made in China.
Bicycles: 90% of all bicycles are made in China.
DVD Players: 90% of all DVD players are made in China
Autoparts: 30% are made in China.
Electronics: 180 Billion annual revenue (before 9/11 it was $20 Billion)
Multinationals (companies) are making huge profits off the backs of Chinese workers. In 1978 an average person in China lived on $3.00/year. So naturally companies moved entire factories to China. Why not if you can hire someone (insert imperialism here) and pay them $.50/month. Its still an enormous amount to their families.
Chapter 3:Made by America in China, focuses on multinationals including Philips. Before 9/11 Phillips’ annual revenue in China were $200 Million – today its $4.5 Billion annually. Philips manufactures all light bulbs in China and ships to Los Angeles in only 11 days. Even in China’s delegated “Economic Zones” Philips has been able to move 8,000 jobs to China while building 32 factories. As a result Philips closed their plants in Spain and Canada laying off thousands.
Before 9/11 there was a slow stroll to invest in China. Since 9/11 US companies are sprinting to China, and just keeping pace with the rest of the world. Its no longer a surprise to see your new Nike shoes and your Apple iPod both shipping from China. Actually Apple’s product even is known in the city of Longhua China as “iPod City.”
Chapter 6: India’s Cultural Revolution, is a wonderful review of the vast changes occurring today inside India as a result of opening their economy and their people to the world. Change in their culture is one area India may not have forecasted at the same pace that globalization has helped their three leading IT outsourcing companies, Tata, InfoSys and Wipro.
For India’s top IT tech firms, big American companies have already moved portions of their business operations to Bangalore. Their list of clients shouldn’t surprise you: Pepsi, Gap, Apple, Cisco, Amazon, Reebok, Milwaukee’s own Johnson Controls, Nordstrom, IBM, Mercedes Benz, Bank of America, DHL, AirBus, Toshiba, Kraft Foods, Nortel and even the country of Kazakhstan.
India seems to be the best knowledge-based nation today hands down. As a result of their success InfoSys received over 1.5 million applicants in 2006. They are the top desired employer for students as Google is today in America.
Simply put, if your job is connected to the wire (the internet) there is a good chance it will be moving to India or China sooner than you think, want and pray. Why? Because India has revolutionized their educational systems. India places emphasis on education that most Americans do not understand. In the US we have come to the conclusion that after you achieve your education at the high school or college level you’ll be set for life. Your interests and focus move to buying a house, an SUV that is terrible on gas mileage, a flat screen television and even the gaming consoles. Indians continue to pursue additional education to help them secure in their lifetime solid employment.
According to the University of Chicago: America is too busy trying to satisfy too many agendas that are slowing much needed school reform. Meredith’s book is just another wakeup call for America’s business and educational leaders.
Are we listening?