Sunday, November 24, 2013

More on China




·         Corruption: Chinese and Americans.

The difference is we can criticize our government openly. I consider it our strongest strength.

When we examine the recent Chinese history, you can see that Chinese corruption is quite natural.

1.       The current decision makers are raised by the parents who lived in the Cultural Revolution era. They are not educated comparatively to the West, and they passed their wrongful preaching (such as everyone for himself first) to the next generation. Refer to the chapter Education by Example (Chapter 27).

2.       In Qing Dynasty, the last dynasty of China, many paid to get their official jobs with money (part of it went to the Empress for her enjoyment) with the primary purpose of making money.

3.       Chinese in the last 300 years suffered a lot. They cannot be 'nice' as the Americans. I donated my entire proceeds on the first month selling this book to charities and it is a negligible part of my total income. However, a starving author cannot.

4.       Chinese have not set up the complete legal system to prosecute violators. It took Hong Kong a while to do this. It is not easy as it has been wide spread to many levels and the culture is: Do it if you can get away. [Update: Surprisingly and thankfully, it is changing fast with the current leadership.]



·         China is stealing our secrets.
Not only the Chinese. The Japanese, the Koreans and even the US in the colonial days did the same. Charles Dickens did not come to the US due to his books were copied freely. Did we pay royalty to Germany to use their A-bomb and jet technology at the end of WW2?

It is a phase moving from a developing country to a developed country.

We have to protect our secrets first. All companies steal others’ secrets. If you believe CIA is am information gathering organization, you believe in fantasy.

·         Wake up, my fellow Americans.
In 10 years or less, most phones especially the low-ends will be produced in China along with other higher-valued products for the following reasons:

1. Cheap labor. It is rising. With the infrastructure (such as steady electricity and roads to transport finished goods) and pro-business attitude, the overall environment is still better than India.

2. Huge internal market. Well, India’s population could be larger eventually, but most are broke. Tariffs will give some breathing room for its own high-end products from Apple and Samsung.

3. All the phone components are readily available in China. When you produce a phone, you need all the OEMs close-by (ideally in the same industrial park).

4. Research. By comparing the high school quality between the US and China, it will not take a generation for Chinese to catch up. The gap in higher education between the two nations is closing fast. When you compare how many hours the Chinese engineers and researchers work, you will definitely give them an edge.

5. China has passed the copycat phase of being developed to a developed country. It has experience and expertise to produce a world-class product. China is learning how to attack the global market.

I hope I will be wrong, but it serves an alarm clock to us. By the time China reverses the roles by opening a factor to build its phones in the USA, it would be too late for us!

·         Surprisingly, the low-end products are still captured by China even China has not been the cheapest labor country for YEARS! If you do not believe me, just go to any Wal-Mart store.

China does have a big gap within itself between the middle class and blue collar class.

China’s advantage is due to many factors including political stability. India cannot copy the successful Chinese model for over a decade. Mexico is next door (free tax and low cost in transportation) and cannot compete with China. Data do not lie and tell us a lot.

·         Is China a victim or an aggressor?

·         A very good article on modern China.


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