China, Inc.: How the Rise of the Next Superpower Challenges America and the World

"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

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 econom

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

Many thanks to the thoughtful reviewers and to those reading over the comments. Please note that there is more info, some entertaining notes and reviews on the book's website www.chinainc-book.com.

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 bi