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China's Copycat Economics
by Valerie Sartor
2008-03-19 10:20:26
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North American factory workers are fuming as China taps into more and more industries, almost effortlessly gaining the market share majority. “They copy us and sell cheaper!” irate laid-off American workers shout. But China experienced copycat economics long before employing it as a current economic strategy.

China’s currently booming economic situation, like her overwhelming population, astounds, impresses and even frightens the world. From millionaire tycoons from multi-national corporations to curious groups of down home entrepreneurs everyone from everywhere is flocking to China. They’re all looking for investments, places to stash venture capital, locations for out sourced factories and a chance to hire low earning but highly diligent employees.

The country has just experienced a thirty-year period of doubling its economy nearly three times over after hundreds of years of lying dormant while their far off western neighbors prospered. Significantly, China’s amazing boom remains unprecedented globally and historically. The economic boom is happening faster and at a larger scale than anywhere and than any other nation on earth. Not surprisingly, foreigners view the entire country: its people, its natural resources and its geographical territory, as a magnificent natural reserve for capitalism. In 2003 foreign entrepreneurs built more businesses in China than anywhere else on the globe.

The entire world is feeding China capital. Since Deng’s Open Door Policy officially began in 1978 rivers of experts have steadily flowed into Beijing and Shanghai. Many disperse into the far reaches of the countryside, all perusing the seemingly lucrative, available opportunities at the behest of their smiling Chinese hosts. The Chinese government has welcomed them all, and is evolving a policy of not only gathering technology and information to promote manufacturing but also the wherewithal to help preserve the Chinese environment and effectively manage their own ecological problems that have been induced by this incredible economic growth.

How did it start? The Chinese themselves will tell foreigners that the economic boom began with eighteen farmers who defied government dictates. They signed a loyalty pact to start up a clandestine business in 1978. The authorities noticed their shocking success, understood and approved. Ever since that time the Chinese government has, at first discreetly and later with mounting enthusiasm, begun utilizing the farmers and peasants who surged toward the cities in search of a better life. Currently the government is enacting new laws to help these migrant workers receive and protect their rights on the work site.

This is because the authorities realize, like that rest of the world that behind China’s economic ascendancy stands her huge population. They are not the cheapest workforce on the globe– parts of Africa and SE Asia hire children for twenty-five cents an hour – but Chinese factory workers are stable; they willingly obey government dictates. In some areas, such as Shen Zhen, the majority of factory workers are females under thirty-five. All of them, regardless of sex, are also diligent employees, and desperate to earn wages that US and European workers scorn.

This Chinese workforce, laboring away in massive factories, has created an enormous trade inequality between the US and China. Currently the situation is not yet dire because the US is buying more from China and less from other manufacturing countries. Moreover, the Chinese RMB is pegged to the US dollar, thus helping both countries. American anxiety has remained manageable, and by shading the real value of the RMB on the global market China continues to excel. But every fiscal quarter the disparity widens.

Consequently, North American factory workers are fuming as China taps into more and more industries, almost effortlessly gaining the market share majority. “They copy us and sell cheaper!” irate laid-off workers shout as the bottomless Chinese labor force trudges on. New factories receive government subsidies; environmental hazards are blithely ignored. Many Chinese nationalists blatantly refuse to buy Western imports.

Indeed, China has taken over the US furniture industry, the Japanese TV industry, the Italian fine silk fashion industry, the German Christmas ornament industry…the list continues. But this economic trend is not unique to the Chinese. When people first started trading with each other copycat economics was born.

Significantly, China experienced copycat economics long before employing it as a current economic strategy. In the second century AD Europeans first learned of beautiful Ming porcelain wares and coveted them greatly. But Chinese Imperial charters jealously guarded their manufacturing secrets with violations punishable under law. Goods were heavily taxed and strictly regulated under the tribute system. Carried by caravan these often heavy, fragile works of art did not always survive their journey.

In the late 7th century sea Zhang He, the famous admiral/eunuch, made eight sea expeditions and greatly promoted the trade of Ming porcelains. Ship transport proved much safer than overland. Later in the late 15th century the Portuguese sea routes initiated the direct participation of Europeans in the East Asian maritime trade.

After the Portuguese settled in Macau in 1553 Portuguese ships carried new Ming pottery designs, Kraak (after the Portuguese ships Carracks), to the Western countries. But trade continued to be filtered and restricted by the Imperial dynasty.

The Dutch followed suite by establishing the Dutch East India Company in 1602. Their fortunes rose even further when the Spanish Armada was defeated in 1588, helping them to gain complete control over the ceramic exports from China to Europe. Not content with limited exports some Dutch pirates in 1634 looted 107,300 porcelain cups and 10,451 porcelain plates stored as ballast from two captured Portuguese ships.

The exquisite porcelain had caused long a sensation in Europe. The wily Dutch, eager for profit, assiduously attempted to copy Chinese techniques. By 1720 they had perfected their imitation, first selling clunky, crude versions to the middle classes and later perfecting an exquisite, elegant version directed at wealthy Europeans. Later, this same copycatting emigrated to Germany and the U.K, creating offshoots and even cheaper markets independent of China and the Netherlands.

China instills fear admiration euphoria and resentment in the world for her flourishing economics. The Chinese government can spend, bully, dictate wages, and has entered the WTO, the FATF, and countless other influential organizations connected with international business. They have already changed the way the world does business. But remember: the Chinese are utilizing no strategies that the Western nations have not already used themselves in Asia and the world.

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Emanuel Paparella2008-03-19 10:26:23
Interestig article. That last statement is a mouthful. Indeed, Communism is a Western ideology which has been copied quite well in China. The question then is: is everything worth imitating?

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