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December, 2014
China’s Key Opportunities and Threats O
By Philip Stoten (@philipstoten)
n-the-ground inquiries and in- terviews with businessmen and industrialists in China
have led to some uncomfortable con- clusions. Many of my enquiries have been about the challenges China might face in retaining its “factory of the world” status. There are certain key opportunities and threats facing China — a nation that has done such a good job of grasping this mantle of the world’s factory, that most believe little or nothing can be done to loosen that grip.
Civil unrest, labor rights and the transition to democracy. Perhaps this is the biggest threat brought in- to focus by recent protests in Hong
are started on their course, they take a long time to stop or turn around. But as wealth in the nation grows, so will the demand for more freedoms. The Communist Party leader-
ship has done a good job of control- ling change thus far, managing the introduction of capitalism and mov- ing away from complete state owner- ship, but it will have its work cut out doing the same with the introduction of democracy. I feel that the political stability achieved as a byproduct of totalitarian governance has helped China immensely and that political instability has hindered nations like Mexico and India. For me it is no co- incidence that the world’s largest democracy has not been able to com-
I feel that the political stability achieved as a byproduct of totalitarian governance has helped China immensely and that political instability has hindered nations like Mexico and India. For me it is no coincidence that the
world’s largest democracy has not been able to compete with the world’s largest single-party regime.
Kong. China has gone through phe- nomenal change over the last 25 years and that change will continue. It is like the hundreds of heavily- laden freight-carrying ships that leave Shanghai every day; once they
pete with the world’s largest single- party regime.
History repeating itself, or les- sons learned from the past. I spent a week listening to people tell
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me that China is ready to accept los- ing some of the lower-value, lower- technology manufacturing in the ex- pectation that they can retain the higher-technology, higher-value work. Surely that’s exactly what Europe and the US said 25 years ago? When I look back on discussions
I listened to in Europe and USA in the 1980s and 1990s, I remember clearly people talking about China only taking the lower cost business, only being good for high volume, long runs and low-to-medium-technology. Now they’re as good as anyone and better than most at the higher tech- nology products, at new product in- troduction, fast turnaround and the lower-volume high-mix work that Europe and the USA had expected to retain and increase. What’s more, the Chinese are beginning to be more creative, more entrepreneurial and more agile. China has been good at learning
from the mistakes made in other countries, studying history and ap- plying controls to avoid the repeti- tion or errors. China used low cost to open the doors through which most of the business flooded in. They have to ensure they don’t open the doors again and allow that business to leave just because another country is
Philip Stoten is an internation- ally recognized EMS industry
expert. Known for his skills as an inter viewer, reporter and
panel moderator, Philip is a fea- tured multi-media contributor to U.S. Tech on a regular basis.
offering lower costs.
Low-cost competition. The Philip- pines, Indonesia, Cambodia, Viet- nam, and India are all up-and-com-
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