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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."
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?
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?
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
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.