The power and reach of today’s internet makes our world dynamically and digitally connected. During the dotcom boom telecommunication companies dropped high speed fiber around the globe. Networks and ecommerce merged and as a result China is as close to America as Mexico. Face facts, the fast broadband internet places China just three seconds away from any company seeking to expand their business to a billion new customers.China’s economy is growing annually at 9% and is projected to be the second largest economic power within the next 15 years. China’s large population is adapting technology. More Chinese citizens connect wirelessly to the web than the total American population in our own country.
American business are beyond looking into China for business potential, just to remain competitive companies must begin to see the benefits in expanding operations as China begins to ramp up preparation for the upcoming Olympic games, giving the Chinese a new view to the world…and an invitation many will be looking at for the first time. That’s quite an opportunity….
Take a close look and you will learn that not only are foodstuffs, but technology and engineering research. Microsoft is opening development offices in China. They are tapping China’s best and brightest for future software projects. Did you remember how much criticism IBM took for selling it’s laptop division (lock, stock and battery) to China’s Lenovo? Remember when the government announced it was buying computers from Lenovo and all the heat about getting systems from our communist competitors? Lets not leave out American companies, including Dell who ship major components from China for simple assembly in America either.
The cost of doing business in China is much cheaper than the same American company keeping the process here with American jobs. For example, some American poultry companies are shipping chickens to China and returning those birds cooked and canned to be placed on the shelf at your local food-store. With its large population (and really cheap labor) its easy for an company to move a factory from Canton Ohio…to Canton China. The cost of doing business has even sent the Lego company to cease all operations in American while they build new factory lines in China.
How healthy is the US automotive industry? Even the thought of GM entertaining talks with foreign car manufacture Nissan should be the wake-up call we have been dreading because as GM goes, so goes the country’s economic health. GM’s latest round of layoffs teach us that more Americans are being displaced. As Microsoft, Dell, Apple and many others ship jobs to China, how much pain do we have to feel before something changes?
In 2006 GM workers accepted buyouts just as Chinese companies ramped up production to began selling cars in the US. Ultimately this will be shifting production away from American factory workers. So how does GM respond? Well one headline indicates they are bringing back the Dodge Charger muscle-car. Hmmmm…..$30K and only 14 miles per gallon?
But as competition continues to shift away from America, China is also beginning to feel the pressure of new challenges as Panasonic announced it was building new production facilities in Vietnam. At the same time India is planning a small car priced under $5,000 and should be available on US soil within five years.
May you live in interesting times.
Technorati Tags: globalization, China, trends, nissan, lenovo, auto
One reply on “The Rise of a New Power”
China is certainly appealing right now. Don’t forget to take into account the 4-2-1 problem that will most likely result in a severe economic collapse for China in the not too distant future. Half of the population in China is over 40.
I’d say India is a better long term bet for overseas business expansion.