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China Overtakes US as Supplier of IT Goods
Ant writes "CNET News.com is reporting that 'after almost a decade of explosive growth in its electronics sector, China has overtaken the United States as the world's biggest supplier of Information Technology goods, according to a report by the Organization for Economic Cooperation and Development.' From the article: "The most spectacular demonstration of China's ambition to become a consumer electronics heavyweight came in May this year when Lenovo, the Chinese computer maker, paid $1.75 billion to buy IBM's personal computer unit."
...is pretty straightforward, actually. Thanks to unions, US labor costs are WAY more than the market ever could bear. A similar situation is happening in the US automotive industry; the only reason it's not in the same boat yet is that industry moves so much more slowly than tech.
The really amusing bit (I guess, if you're not living in a country where you can't get good jobs anymore) is that if a group of companies got together and used the same tactics against the people who paid them (i.e. consumers) that unions use against the people who pay them (i.e. employers), the companies would get slapped down so hard with anti-trust, collusion, etc. suits so fast the press would barely have time to breathlessly report the victory for the people. I'm at a complete loss to explain how unions get away with it.
From a manufacturing base with huge exports of cars, military goods, computers, electronics and so on, to a services based economy.
Companies like GM, Ford, boeing are all being overtaken by European and Asian counterparts such as Airbus, Mercedes (who of course, recently took over Chrysler), Toyota and so on. Traditional industrial areas such as Arms manufacturing have been undercut by the European weapons giants FN and Heckler and koch, (the designers and makers of the next gen US army replacement rifle that will soon be replacing the M16.
IBM going to China, Chrysler going to Germany, Ford and GM opening plants in Mexico and Canada. America does not actually make that much stuff anymore (Germany remains the number one exporter in the world with China a close second).
But does that matter, is it no longer profitable for companies like IBM or GM to make product in America? Is the real money in IP, like with Microsoft, or with American Pharma giants like Pfizer? Or how does that explain companies like toyota opening up manufacturing plants in America? How does a service based economy provide the jobs necessary for 300 million people?
Sadly, Lenovo now having IBM's computing line is making me look at ordering an old Thinkpad off Ebay rather than a brand-new shiny silver one (yes, they no longer come in just matte black, unfortunately)
It's not because a Chinese company is building this computer line, and we've all heard the cliches and stereotypes of Asian-quality products so I won't go further into that. It's the fact that IBM gave all the work on their Thinkpads and Thinkcenters to someone else, period. I know it was part of their big paradigm shift or whatever buzzword it is, but they made the choice for themselves. I'm all for China's economy and tech economy improving, but IBM selling out leads me to question the quality of their future products.
I'm surprised we were even #1!
I've NEVER seen ANY piece of computer equipment say "Made in the USA" in the past few years. In fact, I can't even recall any that said "Assembled in the USA". Ditto for Canada (our 51st state, eh?).
Everything you buy seems to be made somewhere in Asia. Usually China, sometimes (for slightly higher-quality stuff) Taiwan, or (for the GOOD stuff) Japan. Occasionally Korea, Malaysia, etc.
With spending like this, exactly what are "conservatives" conserving?
We still lead the world in developing new technology. And China has some serious growing problems that they wont be able to alleviate for many years. There is a serious inequality in the number of women for men, there are going to be a lot of lonely men in China. The gobi desert is growing rapidly in the western border of the country and the Chinese government is throwing billions to try and stop the spread. The US and our allies still hold the material cards, as China despite its vastness has to import a lot of material just like Japan does to sustain its manufacturing based economy. China is a growing force to be reckoned with but they are not the juggernaut that the US has been since WWII
It's just scary to realize how similiar the Chinese economy is to the Japanese economy of 20 years ago, and how China is pretty much guarenteed to hit the wall within the next decade, just like Japan did. Remember, Japan started off the same way as China did, with a fixed currency, starting with the "low hanging fruit" so to speak of labor intensive manufacturing, had a central government that plays a huge role in the economy(Japan's government, at least pre-Koizumi, was democratic in name only pretty much), as well as growth that seems focused soley on exports and constructing stuff to export more. Hell, you even have at first a blatant disregard for the environment at first until some major events really wake you up(in Japan events like the mecury poisining in Kagoshima, in China the Haribin chemical spill). Hell, they even have the same demographic issues, China is just about 20 years later than Japan. However, Japan hit the wall when it turned out they couldn't export any more than they were already exporting. Now Japan is finally posting above 1% growth for the first time in about 15 years, but even then exports to places such as China play a large role. Japan's consumer spending is still depressed compared to places like the richer EU countries(everyone's spending is depressed compared to US consumers) I foresee China hitting such a wall as well. Already there are more factories than there is demand for their products, and signs of speculation are increasing rapidly.
Of course the big difference is China has 10x the population and nukes....
Monstar L
"Just imagine how much cheaper servers could be if companies didn't have to pay a huge processor cost"
Not that much, really. A quick quote on a Dell PowerEdge 2850 with a pair of dual-core Xeons, 4GB of RAM, a pair of 73GB 10K SCSI drives, and SUSE presinstalled, reveals that the processors only represent approximately 8% of the up-front system cost, and that's at retail prices for the processors, obviously ignoring whatever sweetheart deal Dell has with Intel.
Cutting the cost of the processors from $250/each to $100/each saves you $300 off a $6,000 system. Hardly meaningful in any way.
Dont forget that our entire society is setup to mock intelligence, and tries to teach children that intelligence/education are somehow "bad" .. kids hear jokes about school as if to suggest not being there is the desired state of being, and smart people are always portrayed as nerds with thick glasses while football stars are portrayed as heros of virtue (rather than rapists and drug abusers... ahem ...).... I was involved with schoolboard in my local town and while we have a great program for disadvantaged students ("special education"), that special-ed program only covers kids who have a -dis-advantage rather than gifted students... Also consider that our town buys each kid on the football team $1500 in equipment NEW every year, but the kids on the chess club have to buy thier own chess sets and there is no funding for a computer team. I live in New Hampshire, in one of the more conservative towns, so its not a matter of the rich town giving football a budget, its a matter of where they put the priority.... Given how hard our society tries to actively discourage education and intelligence, can we be suprised in the slightest?
Engineers in Bangalore for instance have seen their salaries skyrocket over the last 5 years, and as a result they are becoming less competitive and companies are increasingly looking at other parts of India to outsource to, and to cheaper countries.
But it has also meant that many companies that might have considered offshoring at the prices 5 years ago don't see that high an incentive any more.
Eventually there will be an equilibrium. These kinds of positions simply aren't comparable to minimum wage manufacturing jobs that require little to no training and can be done by anyone, and so they contribute to massively drive up salary levels in the areas companies outsource to.
The trickle down effects may even get sufficient to start driving up overall prices in these countries - it certainly has driven up prices for housing for instance in many outsourcing hotspots.
The net result is that while I can understand that some people are concerned for their jobs, this won't cause an implosion of the job market for engineers in industrialised countries - for that the cost of engineers in the main outsourcing locations is rising too fast, and most alternatives have "problems" such as lack of people with sufficient skills in English.
Ultimately, for the right people this is also an opportunity: While the Indian software industry is still mostly offshoring based, for instance, the growing IT sector in India also means the opportunities for Indian based software houses are increasing. Ultimately we'll be seeing increasing amounts software exports from companies that will need people to work on site with customers in the west - there's always work that can't be done remotely.
Yes, but Japan has also had a very large influx of Japanese-speaking Koreans and Chinese over the past twenty years; there's a reason that Japan Town in San Fransisco has more signs in Korean than in Japanese.
The Japanese 'labor shortage' was never a problem; what fucked the Japanese, as the parent poster noted, was that they lost their currency edge, and then the inefficency of Japanese business practices caught up with them. The yuan is currently at an 8:1 ratio with U.S. dollars, much the same as the Yen was back during the early 70s, and the situation is indeed quite similar.
The difference on the U.S. side is that we still had an edge on the Japanese back during the 80s -- IT. Japan may have been making the cars and appliances more cheaply, but we were turning out engineers at a very brisk pace, and managed to build one hell of a computer software industry.
Unfortunately, we've by-and-large sold this out, crippled our educational system in a number of ways, and have made it almost impossible to start a company in the same way one would in the 1970s, because of all the new IP laws designed to protect big business.
Of course, time will tell one way or the other, but I'm happy that I'll be near-fluent in both German and Japanese by the time I get done with school, because I sure as hell don't want to limit my work options to the U.S. alone.
--
I Hit the Karma Cap, and All I Got Was This Lousy
Funny or dead-on? I see someone else agrees with me that the US is fast becoming the international leader in lawsuits and nothing else. =(
We're (and by we I mean the folks making the laws -- and yes, I did vote) so busy with things like the DMCA, broadcast flags, and creating new and more invasive DRM that we're quickly falling behind in other areas of innovation.
So, since IANAL, can you tell me which part of RICO lets you lock people up indefinately without a court date? I think the patriot act has stripped at least one very basic right - you know, the bit where you're innocent until proven guilty, and get to be tried by a jury of your peers, and get a day in court to defend yourself...
If granting that state dictatorial powers is not a shocking change, then i suggest that your sense of shock has been well dulled.
I'll leave you with a note from the past:
Those who would give up Essential Liberty to purchase a little Temporary Safety, deserve neither Liberty nor Safety.
-Benjamin Franklin
If you think imaginary property and real property are the same, when does your house become public domain?
of course not. I mean, why blame the group that ruthlessly gutted a country of all its natural resources for years and upon leaving, took everything they could of any value and left nothing in place. Of course India should have been able to industrialize as fast as Japan. I mean, there are only minor differences when compared to the US policy of pumping money and supplies into the Japanese economy and attempting to speed development.