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China, INC.: How The Rise Of The Next Superpower Challenges The America And The World (Paperback)
by Ted C. Fishman
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China, Development, Policy & Economy |
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| MSL Pointer Review:
Veteran journalists Ted C. Fishman paints a vivid picture of the megatrends radiating out of China, and shows how China will force all of us to make big changes in how we think about ourselves as consumers, workers, citizens, and even as parents. |
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Author: Ted C. Fishman
Publisher: Scribner International
Pub. in: April, 2006
ISBN: 0743257359
Pages: 368
Measurements: 8.2 x 5.4 x 1 inches
Origin of product: USA
Order code: BA00781
Other information: ISBN-13: 978-0743257350
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- Awards & Credential -
"If the twentieth was the American century, then the twenty-first belongs to China. It's that simple, Ted C. Fishman says, and anyone who doubts it should take his whirlwind tour of the world's fastest-developing economy." -The New York Times
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- MSL Picks -
China today is visible everywhere - in the news, in the economic pressures battering the globe, in our workplaces, and in every trip to the store. Provocative, timely, and essential - and updated with new statistics and information - this dramatic account of China's growing dominance as an industrial superpower by journalist Ted C. Fishman explains how the profound shift in the world economic order has occurred - and why it already affects us all.
How has an enormous country once hobbled by poverty and Communist ideology come to be the supercharged center of global capitalism? What does it mean that China now grows three times faster than the United States? Why do nearly all of the world's biggest companies have large operations in China? What does the corporate march into China mean for workers left behind in America, Europe, and the rest of the world?
Meanwhile, what makes China's emerging corporations so dangerously competitive? What will happen when China manufactures nearly everything - computers, cars, jumbo jets, and pharmaceuticals - that the United States and Europe can, at perhaps half the cost? How do these developments reach around the world and straight into all of our lives?
These are ground-shaking questions, and China, Inc. provides answers.
Veteran journalist Ted C. Fishman shows how China will force all of us to make big changes in how we think about ourselves as consumers, workers, citizens, and even as parents. The result is a richly engaging work of penetrating, up-to-the-minute reportage and brilliant analysis that will forever change how readers think about America's future.
(Quoring from The Publisher)
Target readers:
Any readers who are interested in china's current developing, past or policy trends, especially for American business people who operate in, buy from, or compete with China.
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- Better with -
Better with
The Chinese Century: The Rising Chinese Economy and Its Impact on the Global Economy, the Balance of Power, and Your Job
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Ted C. Fishman's essays and reports have appeared in The New York Times Magazines, Money, Harper's, Worth, Esquire, USA Today, CQ, Chicago Magazine, and Business 2.0. A former floor trader and member of the Chicago Mercantile Exchanges, he ran his own trading firm until 1992. He lives in Chicago.
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From Publishers Weekly
A lively, fact-packed account of China's spectacular, 30-year transformation from economic shambles following Mao's Cultural Revolution to burgeoning market superpower, this book offers a torrent of statistics, case studies and anecdotes to tell a by now familiar but still worrisome story succinctly. Paid an average of 25 cents an hour, China's workers are not the world's cheapest, but no nation can match this "docile and capable industrial workforce, groomed by generations of government-enforced discipline," as veteran business reporter (and Chicago Mercantile trading firm founder) Fishman characterizes it. Since Mexican wages were (at the time) four times those of China, NAFTA's impact has been dwarfed by China's explosive growth (about 9.5% a year), and corporations and entrepreneurs operating in China have few worries about minimum wages, pensions, benefits, unions, antipollution laws or worker safety regulations. For the U.S., Fishman predicts more of what we're already seeing: deficits, declining wages and the squeezing of the middle class. His solutions (revitalize education, close the trade gap) are not original, but some of his statistics carry a jolt: since 1998, prices in the U.S. have risen 16%, but they've fallen in nearly every category where China is the top exporter; a pair of Levis bought at Wal-Mart costs less today, adjusted for inflation, than it did 20 years ago—though the company no longer makes clothes in China.
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Not all China's own economic experts are as blithely confident that sheer desire for growth can insure it. To the contracy . Recently, Chinese economic planners have worked hard to throw ice on their countrymen's most heated exoectations. Overenthusiasm, they know, leads to ecnomic bubbles. If history were predictive of China's present, the country's economy would have burst long ago. If bubbles burst when investors chase too many projects that have no reaL economic value - too many factories chasing the same hot market, too many construction projects for the local market to fill, too many bad bank loans to unsound enterprises, too many high-flying stocks in companies with history - then China deserves to be in shambles.
Instead, everytime the worst is predicted for China's economy, it seems to grow faster, create stronger industries, import and export more, and attract more foreigh investment money.
Since China set about reforming its economy a generation ago, it has grown at an official rate of 9.5 percents. Countries on the early stages of economic reform often come up fast, but not like China. The country is closing in on a thirty-year run during which its economy has doubled nearly three times over. The surge has no eaqual in morden history. Neither Japan's nor South Korea's postwar booms come anywhere close. Given the United States' recent rates of economic growth, it will take the U.S. twenty five years to double. If the United States, which boomed in the eighties and nineties, had grown at China's rate since 1978, the U.S. economy would noe be roughly it's current size plus two Japanese economies added on. Nicholas Lardy, an economist at the Institude for International Economic doldrums of 2001-2.
Thus does China's growth give it a place in the world economy that is far greater than its size. China still only makess one -twentieth of everything produced in the world, but on the world stage it plays the role of a new factory in an old industrial town. It can spend, it can bully, it can hire and dictate wages, it can throw old-line competitors out of work. It changes the way everyone does business.
Americans tend to focus the huge inequality in trade between the two countries. It is a worry Americans help to create by buying ever more from China's humming factories. In 2003, the Chinese sold the United States $152 billion more in good than they bought. Contrary to common wisdom, the trade deficit with China does not mearn that Americans are spending down the national wealth at a much faster pace than ever before. So far, most of China's gains with American buyers have come at the expence of the other countries. Americans - and the world - get more stuff in the bargain. China is winning because it can make what others did for less money. It turns once expensive expensive items, such as DVD players, power tools and leather jacket, into affordable impulse items that call out from store shelves. Many of us who feel our homes are running out of closet and floor space because of piles of cheap toys, sonsumer electronics, tools, shoes, phones, and clothes don't realized
that although these items may once have come to America from other coutries, the current glut is because China is now the leading manufacturer of those goods and beating everyone on price. The U.S. garment industry, for example, was fading long before China started winning orders the expence of other Asian and Latin American factories.
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Izaak VanGaalen (MSL quote), USA
<2007-03-05 00:00>
China Inc reminds me of the Japan Inc of the 1980's. The Japanese business model, at the time, was very successful and feared by many as superior to our own. Since then, we've had the longest economic expansion in our history and Japan has had the longest recession since the end of World War II. Should we feel complacent? Definitely not. The economic juggernaut that is emerging in China is different and it will be more difficult to compete against. Our present government policies and our patterns of consumption are feeding the beast. We are a primary component of China Inc.
Ted C. Fishman is a veteran journalist and former commodities trader who has traveled widely in China and interviewed many workers, managers, and exucutives of Chinese and American companies. He gives us an avalanche of facts detailing the incredible growth that the Chinese economy has experienced in the last 20 years (averaging about 10% annually as opposed to our meager 3%). Can this growth rate be sustained. Fishman doesn't have the answer but he gives us a multitude of statistics to draw our own conclusions.
There is, in retail and manufacturing circles, something known as "the China price." Goods manufactured in China cost anywhere from 30% to 50% less than what they could possibly be made for in the US, in many cases it is less than the cost of materials. American multinationals - such as GM and Wal-Mart - are telling their suppliers to meet the China price or else - which means that the suppliers either set up shop in China or go out of business. Never mind trying to compete on price, China has an abundance of production workers that are willing to work for 40 cents an hour. Even at the high end they have chip designers that are willing the work for $2,000 a month, overtime included. The supply of labor is almost endless, keeping wages at a minimum. Anywhere from 100 to 300 million people migrated from farms to factories in the last two decades. China also graduates more scientists and engineers than the US, making the high-tech industries increasingly more competitive. And among the scientists and engineers that graduate from Americian universities one will find a large percentage are Chinese that will go back to China to work, even at a lower salary.
By meeting the China price multinationals are accelerating the industrialization of China by moving production there and, by the same token, they are deindustrializing here. It has been a major factor in the 2.7 million jobs lost in manufacturing since 2000. Even many small and medium size companies have no choice: move to China or go out of business.
Multinationals alone are not to blame, the American consumer has a seemingly endless appetite for low-cost goods. Low-cost Chinese goods have saved the American consumer more money than last year's tax cuts. What this leads to is a gigantic trade deficit with China of about 150 billion a year - and climbing (the US balance-of-payments deficit is nearly a record 6% of GDP). Add this to the record federal budget deficit and it should come as no surprise that the value of the dollar is in decline. If this situation is not rectified the global financial system will be in for a shock.
The Chinese are benefiting from our relationship in the short and the long term, the US is benefiting in the short term because they are receiving low-cost goods, however the long term outlook for the US is grim. Not only do the Chinese buy up many of the T-bills that finance our federal budget deficits, they buy up mortgages on the secondary market in order to keep us supplied with low-cost money. They are, in effect, lending us money to buy their products. The burgeoning trade and federal budget deficits are a serious problem. It is, however, not a Chinese problem, it's an American problem. The only legitimate complaint that we can make is that they keep the yuan tied to the dollar. No matter how low the dollar goes it won't help close the trade deficit with China.
Fishman has an excellent chapter called "Pirate Nation." He describes how setting up production in China is a double-edged sword for American companies. Everyone knows that these products are studied, analyzed, and reproduced perhaps with a few minor differences for local color. For example, GM spent billions of dollars producing a car for the local market. It was exhibited at the Shanghai Auto Show with a sticker price of $9,000. At the same show a Chinese auto company had basically the same car - called the Chery - for only $6,000. The Chinese auto company was owned in part by Shanghai Auto, GM's local joint-venture partner. Similarly, Microsoft is well aware of the fact that only about 10% of its software is actually purchased and the other 90% is pirated; they have no choice but to stay in the Chinese market. Indeed, at the World Economic Forum, Bill Gates seemed more optimistic about the Chinese economy than the American economy.
China contiues to develop at a frantic pace. They add 4 to 6 million cell phone subscribers every month - over a year they would be adding as many as the entire cell phone market of Germany. The Chinese are adding infrastructure every month that is the equivalent of a Houston, Texas. They are in fact lifting more people out of poverty than any country in the history of the world. We can all applaud their achievements.
While I was reading this book, I kept thinking this is good news for China, bad news for the US. This book should be read by those who are concerned about America's place in the 21st century, because it might well be known as the Chinese Century. China, too, faces some daunting challenges but they seem to have the edge in optimism and dynamism - that which America had at the beginning of the 20th century.
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Steve Koss (MSL quote) , USA
<2007-03-05 00:00>
I spent most of the period from 2001 - 2004 living and teaching in Suzhou, China, a smallish city by Chinese standards that, in the last decade, has come out of nowhere to have the fourth largest GDP in the country. I have also read dozens of books attempting to describe what's going on in China. Most get parts of the picture right, but many are badly dated. Regardless, no one has done as good a job as Ted Fishman in describing the business and economics of today's China. If you truly want to understand how China's business engine works and how it is changing the rest of the world in ways we have barely begun to recognize, CHINA, INC. is an essential read, and easily the best book published on the subject.
Mr. Fishman approaches his subject matter from a wide variety of informative angles, supporting his arguments with factual data, statistics, and numerous anecdotes, any number of which I recognized from Chinese news reports. He begins with a look at Shanghai's transformation into one of the world's leading cities. He next steps back in time to present an historical perspective on how China's peculiar brand of "rule-breaking" capitalism came into being, illustrated by a fascinating look at the city of Wenzhou. He traces the rise of Shenzhen in southern China and the growth of the real estate and personal automobile markets. Chapters 6 through 9 are the strongest in the book, detailing China's impact on business in Pekin, Illinois and Rothenburg, Germany, the role of Wal-mart, the global impact of the "China price," technology transfer, and product counterfeiting and piracy. Throughout, these topics are illustrated with plentiful stories, specific examples, and commentaries from executives in the effected industries.
Fishman makes it clear that China has become a formidable global competitor, with the potential to become an economic juggernaut. The numbers are enormous, the entrepreneurial drive is remarkable, the educational system is extraordinarily focused a single goal, and the speed of adaptation and ability to capture market share in every industry they tackle are frightening. Combine this with massive government subsidies and a laissez faire attitude with regard to patent and intellectual property rights, and you have the makings of a country in which anything is possible, at the least cost imaginable. China's steady capture of manufacturing jobs from the West, its enormous build-up of American dollar and Treasury bond holdings, its thirst for oil and natural resources, and its steady production of science and engineering graduates create the distinct possibility of a huge international power shift over the next 30 - 50 years. CHINA, INC. presents these arguments clearly and forcefully, in an engaging and very readable manner.
CHINA, INC. is at its best describing the country's entrepreneurial spirit, springing from peasants, small villages, and hungry neo-capitalists starting on a shoestring. Their no-holds-barred drive for economic success and quick payoff leads tens of thousands into every corner of the business world. For example, Fishman illustrates effectively how migrant peasants struggling for a toehold in Shanghai have discovered eBay and the Internet. More significant, he shows how entire Western industries like furniture, buttons, socks, shoes, and Christmas ornaments have been rocked by competition from small-scale Chinese entrepreneurs. No State agency planned and studied these industries, no management consultants prepared market potential reports or competitive analyses, and no governing body stepped in to create rules and regulations. They happened because small businessmen smelled opportunities and pursued them ruthlessly. That's the competition America faces for the next fifty years. CHINA, INC. draws a clear picture of what it looks like and what it portends.
My biggest criticism of CHINA, INC. is that I believe Mr. Fishman has somewhat overstated his case by downplaying China's negatives, of which there are many beyond the obvious ones of rural poverty, wealth imbalance, and industrial pollution (sounds like the U.S. prior to 1940, doesn't it?). First, the country has a totally dysfunctional banking system, burdened by weak controls, massive frauds and embezzlements, and non-performing loans on the order of 40% or more. Second, China's stock markets are nothing more than poorly regulated casinos - it's no coincidence that their stock markets are off by nearly half over the last 3-4 years while their GDP has skyrocketed. Third, the same lack of intellectual property rights protection that enables China to copy almost anything will inhibit its own best talents from creating anything new out of the same fear of counterfeiting. Fourth, China's form of capitalism almost completely lacks a rule of law - contracts are meaningless, courts are unhelpful, and connections matter far more than right or wrong as defined by law. Finally, China stands one day to find itself repeating Japan and Korea's experience once its labor rates begin to rise and manufacturing jobs begin to migrate once again, perhaps to India, or maybe Africa. History has a way of repeating itself in this regard.
Although I found CHINA INC.'s organization a little loose and the material wandering occasionally, I heartily commend Mr. Fishman for pulling a wealth of information and analysis together to draw an appropriately alarming picture of a country we understand too little and ignore too often (just as we once did with Japan). CHINA, INC. is an excellent, fact-filled study of how China is playing the global economic game today, and it is right on target. This book deserves to be read by anyone trying to understand the world economy today, and it should be required reading for everyone in Congress and the White House.
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Shalom Freedman (MSL quote), USA
<2007-03-05 00:00>
This work is not only a description of the emerging Chinese supereconomy it is a well- written portrait of one of the world's most dynamic and rapidly - changing societies. Ted Fishman is a veteran journalist with a first- rate economics background , and he marshalls a tremendous amount of evidence to show how Chinese is working toward replacing the U.S. as the world's number one economic superpower. The vast Chinese labor pool can undercut in labor price Mexico and Malaysia and workers being paid twenty- five cents an hour can produce products at one- third the price they would be produced anywhere else. The vast influx of foreign capitol to China is helping this booming nine percent a year growth rate sustain itself. The Chinese do not rest on their laurels but continue entering new economic areas. They have a tremendous hunger for learning whatever they need in order to produce the products that will provide them with dominance of world markets. Fishman provides a wealth of statistics and charts to show just how powerful and pervasive the new Chinese economy is.
He also, for instance in his description of the revived Shanghai gives a splendid portrait of the society as a whole. For the person like myself who knows little about Chinese society and culture the work provides a basic education in everyday Chinese reality.
But with all the great value of the book, with all its appreciation of Chinese energy and industry I would still nonetheless caution about one of its central thesis. There are many negatives regarding the Chinese push for such rapid economic growth. One is the enormous pollution problems being caused in the society. Secondly , is the vast energy appetite that China has developed, and which promises to be a constant force pushing world energy prices upward in the future. Thirdly, is the prognosis of many economists regarding the mistaken extrapolation of the present growth trend into the indefinite future. China most believe is going to slow down. And when it starts to grey , it is according to many experts going to face a problem even greater than that of the US. and Europe in regarding to providing decent lives for its elderly generation. There are many other problems, including the one caused by 'child sex selection' leading to a population imbalance in favor of males which effects younger cohorts of the population.
Nonetheless Fishman's warning it seems to me is in place especially vis- a- vis the United States. And it seems to me that the deficit problem of the United States does cast a shadow over the American future.
And this leads me to a dimension of the Chinese- US relationship that Fishman does not really cover, a dimension which needs a whole other book, or perhaps many other books, - and that is the military - political dimension. China is not playing the nation- state game according to US rules. Take one notable instance with Iran arguably the most dangerous terror state in the world. China has become Iran's biggest trading partner. It is also its defender in international forums. It has bucked the US effort to prevent Iran from attaining nuclear weapons. China too has weapons programs of its own which constitute a growing danger to the U.S. And this without speaking of Taiwan, or other areas in which Chinese and American interests diverge.
There are those such as Niall Ferguson who have been urging the US to convert its present hegemony into a more permanent status as benign imperial power. But as I understand it the danger that is emerging with the new Chinese economic superpower is that it will too come to dominate the world- system politically. And here one essential value distinction must bring us back to a fundamental truth about the new miraculous China. The United States is not simply a free- market capitalistic society it is a true democracy and the flagship of freedom in the world. China is still bound to its Marxist ideology. And its political reality does not give the human spirit for liberty much joy. Should China come in place of the United States as dominant power the whole world's struggle for greater freedom, liberty and democracy will suffer greatly.
So again Fishman's work is excellent on the economic side but it needs to be complemented by more in - depth political studies which will indicate to us where China is going , and what must be done if possible by the free world, to shape its direction and if necessary, restrain it.
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Craig Matteson (MSL quote), USA
<2007-03-05 00:00>
This is book provides solid information that I think every American would be better off knowing. It is decidedly not an alarmist banging of a jingoist drum as some have claimed. Ted Fishman provides us with fine reporting of a broad view of the new China and the way its prodigious growth simply realigns its place in the world by force of its gargantuan scale. This is a scale we in America have not yet grasped because we have become so used to being the largest economy in the world and the dominance that generates.
We all know that China has over a billion people. The official count is something like 1.2 or 1.3 billion. However, many authorities on the subject believe there is a huge uncounted transient population that goes uncounted. They put the population at 1.5 or 1.6 billion. That means that a population as large as the United States is going uncounted in China. Staggering. The United States has dozens of cities of a million people or larger. China has hundreds of cities with more than a million people.
China's furious growth has implications on the pollution other countries experience. We add cost to our economies and worry about quality of environment, yet how much of it is undone in developed Asian economies and our west coast because of the pollution falling from the atmosphere that originated in China. It seems that the environmental groups should focus real effort putting pressure on Beijing.
It is not that America cannot cope with a China whose economy passes ours in size, we have adapted in the past. We beat off the Japanese threat. However, Japan is half our size, without resources, and is not militarized. China has a population four to five times our size and one that is hard working and becoming increasing well educated. China is also rich with resources or has them nearby. Australia has entered into huge long term contracts to provide all kinds of natural resources to China and is in many ways becoming more aligned with them than with us. We have a huge task of seriously rethinking our focus as a nation, the level of education we expect from our citizens, and the kind of innovation we can foster and maintain.
Mr. Fishman provides many interesting stories illustrating the present chaotic growth within China and the effects it is having on China's neighbors. The way this massive explosion of industrial growth is hollowing out our manufacturing base is treated late in the book, which provides a convincing context because we see how even jobs from Mexico are going to China. Jobs went from the US to Mexico because wages there were one seventh of those here. They are leaving Mexico for China because Chinese workers make one quarter of the Mexicans.
Surely, China could implode. Or their rising internal demand and the rising (relative) wealth of their citizenry will erode their labor cost advantages. However, there is also the reality of a similarly huge population in India. Our world is changing rapidly. We cannot count on our primary position in the world continuing from the inertia of the past century. This book is a wonderful primer on what we are facing and we need to summon our energies and confidence and face this future expecting success because we will pay the price rather than simply sinking passively into a second rate status.
One of the interesting ironies is that the lower prices we experience on our goods from China help offset some of the losses of manufacturing base. They also help the purchasing power of those workers displaced to poorer jobs because of that same migration of work overseas.
However, China isn't simply about loading up Wal-Mart with cheap goods. It is taking on the very highest ends of technology as well. From complex industrial machinery and software to the exploration of Space (and a promised mission to the Moon), China is reaching to become dominant in every aspect of the world economy. We simply must take this seriously.
I certainly don't have any pat answers, but I am confident we have everything we need to meet the challenge if we have the will to do it. The existence of that will is what we have to demonstrate. As always, time will tell.
Recommended with a bit of urgency.
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