Re: Article in CIO magazine

From: Ian Gibson (
Date: Sat Oct 05 2002 - 05:21:59 EEST

Dear All

Since there has been much discussion about China and Chinese labour, I feel
that I have to put in a few cents worth.

Those of you who read the Wholers report will note that I have written
about this issue for a few years now. I think there is a need to mention a
few points: -

- China is endeavouring to clean up its act. The WTO agreement, the
Olympics, and other factors indicate that China is trying very hard to
change from this idea of a sweat-shop oriented, cheap market. With China
coming more and more into the limelight we note that the pressure is both
without and within. Note the recent furore regarding North Korea and their
special economic region, joint venture with China. As soon as there was a
whiff of corruption, the director was in a Chinese jail. Sure the
experience mentioned in the CIO article is happening all the time, but
these pressures are having an effect. It will become more and more
difficult to find China companies who are willing to absorb all the costs
because they can find other routes to making their money.

- Quality of life in China is improving. 10 years ago, hardly anyone in
China drove a private car. Now Beijing is littered with BMW, Mercedes, VWs
(strange that they are all German - actually not true, its just I tend to
notice German cars more) and traffic problems are rife. How can the Chinese
afford all these luxuries? Their salaries are on the increase and costs are
as well. Don't wait too long or else there will be no such thing as cheap
labour in China.

- Exploitation goes both ways. It amuses me to hear that companies in the
US and Europe go over to China to take advantage of the low cost and then
find themselves being ripped off when the tool manufacturer copies the
blueprints. What can you expect? You have no control, you are miles away...
Yet you still keep coming. Why?

- Manual labour is fighting an uphill battle. The technological miracle
that is CADCAM, RP, Rapid Manufacture, etc., allows us to make products
that are highly complex in geometrical form and structure. This makes it
increasingly more difficult for John Henry Hwang to compete and eventually
he will die trying. However, let me tell you that if you think China is all
sweat shops that rely primarily on manual labour, think again. There are
towns in China that are based on single factories, with acres of high
technology machinery. Talk to any of the vendors of machining technology in
US and Europe and ask them how important China is as a market (and I mean
now, not as a potential market), and I'm sure they will tell you that
whilst it is shrinking elsewhere, it is still thriving in China. That
includes RP technology. The big advantage of China labour is that it is
cheap yes, but also highly skilled and well equipped. Surely this cannot
continue for ever because of the cost/standard of living, but it will do so
for some time yet.

- There are many more Chinas around the corner. They are all waiting to
take over when the Chinese steam runs out. Just as Japan was the major
semiconductor producer, now it is Taiwan, Korea. The same will apply to
China. A good friend of mine who makes injection moulding machines has been
targeting South America for a number of years now. I'm not so sure, but
certainly Brazil and Mexico have been steadily importing manufacturing
technology for quite some time now.


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