Good Luck Getting That Phone Excise Tax Back

Chinese Factories Moving On Up

from the adding-value dept

Tue, Aug 1st 2006 10:49am — Joseph Weisenthal

Yesterday we discussed the surprising story that many Indian outsourcing firms were rejecting call center work in favor of higher-value activities. Now China's industry, which is more known for its manufacturing prowess, is taking a similar path. Faced with higher labor costs, Chinese factories are ramping up their investments in software and other technologies in the pursuit of advanced manufacturing. They're realizing, as the Indian firms have, that lower labor costs are not a sustainable competitive advantage. Some may worry that this only means more American workers and companies will be threatened by China, but the trend should be viewed the other way: if Chinese factories aren't competing on the basis of lower costs, there's little they can do that American companies can't either. Put another way, if American industry, with access to a very skilled workforce and the latest in high technology, can't be competitive, then there's something wrong that's bigger than just high labor costs.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

31 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Anonymous Coward, 1 Aug 2006 @ 10:59am

Outsourcing for food
So if we (the first world leaders) were to outsource all of our "dirty work" to those starving third world nations... they would all earn enough money to become second world nations that arent starving.

An interesting effect of outsourcing. We are helping to improve their impoverished lives by having them perform HARD WORK to move up in life.

And we do that without dropping bombs on them? Besides the fact that the first world nations will go broke in the process, what's wrong with this?
[ link to this | view in thread ]
Anonymous Coward, 1 Aug 2006 @ 12:23pm

"... they would all earn enough money to become second world nations that arent starving. "

Umm... you do know that "second world" doesn't necessarily mean better than "third world", right?

These terms came out of the Cold War. "First World" was essentially the U.S. and it's allies.

"Second World" referred to the Soviet Bloc and it's allies, (basically all the Communist countries).

"Third World" were all the countries not allied with either group. So China's already "second world".

Whoops.
[ link to this | view in thread ]
Abbey Normal, 1 Aug 2006 @ 12:26pm

Re: Outsourcing for food
First world nations won't necessarily go broke. If you consider the money multiplier effect on a global, instead of national, basis you can see that by generating a larger middle class of citizens, their demands for your own products will also go up.

For example, Chinese consumers don't just buy chinese goods. In fact, rampant consumerism has given them the desire for many American products because they think our stuff is better.
[ link to this | view in thread ]
Anonymous Coward, 1 Aug 2006 @ 12:28pm

Re:
Yes, but the world has moved on and those terms are no longer used in that context.

Thanks tho.

You got a better term for impoverished nations? (well.. er... besides impoverished nations....)
[ link to this | view in thread ]
Dan, 1 Aug 2006 @ 12:28pm

Good job techdirt
Alright, you guys get a gold star from me today.

You are right on target. Fact is companies want things done. Cheaply? Yes. But above all they want them done.

That usually means they're willing to pay for it. If us high-skilled first world types can supervise the up and coming second world types (I personally think the description is valid... we are talking about India, China, and Russia here), we all win.

Those with inflexible economies and rigid labor laws lose. Period.
[ link to this | view in thread ]
Anonymous Coward, 1 Aug 2006 @ 12:28pm

re: outsourcing for food
Many of these "third world" countries are poor because they lack many of the natural resources that make first and second world countries rich.. water, land, minerals, etc..

outsourcing work to those countries would definately improve the local economy which would then begin demanding goods and services from all over the world so I highly doubt in the long term that your projections of the first world becoming poor because they provide for the 3rd world would stand up.

In fact it seems more plausible that by investing money in poor areas, and by helping them build a sustaining local economy the entire world would benefit....
[ link to this | view in thread ]
Dan, 1 Aug 2006 @ 12:30pm

All hail Bill Gates, the WTO and the one-world government!
[ link to this | view in thread ]
Whatever he said, 1 Aug 2006 @ 1:00pm

Odd -- I expected nasty posts here, instead it looks like most posters get it. How does it go.... Novus Ordum Seclorum!
[ link to this | view in thread ]
Xcetron, 1 Aug 2006 @ 1:07pm

Once they earn enough money to become better than what they are now who would do the work for us then?

Just wondering.
[ link to this | view in thread ]
Lay Person, 1 Aug 2006 @ 1:15pm

Sighhhhh...
#8, I think you mean "Novus Ordo Seclorum" loosely translated as "new world order" a more accurate translation: "A new order for the ages." Anyway, why am I writing this or why am I even concerned about correcting this?

Sorry, OCD I guess...

China as well as India cannot afford to employ low wages forever because these workers still require natural resources that would otherwise be used for people is now used for industry. Which is more important the people or the industry. This is the very beginning of the haves and have-nots and this is what causes the beginnings of all divisions within society.
[ link to this | view in thread ]
Anonymous Coward, 1 Aug 2006 @ 1:27pm

Re: re: outsourcing for food
I have to call BS on this. Most third world countries are RICH in natural resources. Just look at Mexico for example, lots of oil, rich farm land and fantastic tourist-y locations. So why are they poor. Their government, pure and simple.
[ link to this | view in thread ]
Whatever he said, 1 Aug 2006 @ 1:32pm

Well Xcetron, here in the US we have lots of underacheivers on welfare and other folk who would rather do a monotonous days work for a low wage, than use their reason to reach greater heights, but those jobs are all currently outsourced. We have the workforce right here.

Let's suppose the United States of Planet Earth comes one day -- would it be so bad? That everyone has a chance to succeed or fail by their own effort?

There will always be the unambitious to work in the factories, regardless of the country, but if the entire globe practiced capitalism the advances in techology would make everything to date look like we are still in the industrial age.
[ link to this | view in thread ]
UniBoy, 1 Aug 2006 @ 1:37pm

Divisions within society...
Is that bad?

Humans are naturally competitive. I have met few young men whose goal was to date the ugliest gal, have the least amount of money, or wind up the least educated. But, ultimately, someone has to fill those holes.

It's in our genes to compete. If it were not, would we somehow all be better???
[ link to this | view in thread ]
Whatever he said, 1 Aug 2006 @ 1:42pm

sorry #10
Okay, I got the quote wrong, but you got the idea.

As far as the 'haves' and 'have nots' are concerned, the latter wants what the former has mostly because they don't have it, yet aren't willing to work for it.

I have, and F ANYONE who wants it without working for it, and F ANYONE else who thinks I should share with the 'have nots' simply because they don't have.

Divisions in soceity happen because too many lazy @$$ people think the world owes them something for nothing.

Choose your side; Capitalism or Communism.
[ link to this | view in thread ]
Dan, 1 Aug 2006 @ 1:52pm

Re: Re: re: outsourcing for food
#11 I agree.

Poor countries are not poor in natural resources, generally speaking. In fact, because they have been poor for so long, and their resources remain completely untapped, the opposite is actually true.

The problem is the government... exactly right. The gov't holds onto power and places restrictions on economic forces.

Whole markets understand what any one person cannot. Flexible economies always win.
[ link to this | view in thread ]
Lay Person, 1 Aug 2006 @ 1:58pm

Re: sorry #10
Uhhh...

CAPITALISM!
[ link to this | view in thread ]
Lay Person, 1 Aug 2006 @ 2:06pm

Competition, no...Population, yes
What we need to do is step on the brakes of population growth.

It can all work out if we limit our birth rates well below our death rates.

If we carefully control our resources just as a business would, we may have a future worth living for. Problem is alot of egos need to be on the same page.
[ link to this | view in thread ]
Anonymous Coward, 1 Aug 2006 @ 2:11pm

Re: Competition, no...Population, yes
I say we need the rebirth of Darwinism.

Who needs freedom when instead we can control who has kids and how many??

Good genes, Have as many as you like!

Bad genes, I'm sorry, but you may only have one child (but we're messing with your food to make it hard for you to concieve). And we won't provide for anything but he most basic of education for your child.

Why have freedom if we need to save the future?
[ link to this | view in thread ]
Whatever he said, 1 Aug 2006 @ 2:14pm

Re: Competition, no...Population, yes
.... and you chose Capitalism? Controlling birth rates? All the egos on the same page? Wholly crap are you upside down -- that is the antithesis of Capitalism, in fact that's the most Chinese thing I've read today.
[ link to this | view in thread ]
Lay Person, 1 Aug 2006 @ 2:26pm

Re: Re: Competition, no...Population, yes
Uhhh YEAH!

This is capitalism in it's truest sense!

"The function of regulating the economy is then achieved mainly through the operation of market forces where prices and profit dictate where and how resources are used and allocated."

See, we have the problem of allocating resources. If we follow the true form of capitalism we wouldn't even be discussing this because it wouldn't be a problem. We have a problem because we aren't allocating properly.

Got it?
[ link to this | view in thread ]
Whatever he said, 1 Aug 2006 @ 2:33pm

Atttention Comrade Lay Person
The Peoples State of Ridiculous would like to commend you for your fine contributions to our society.

As you know, we need all egos on the same page -- no one should strive to be better than another.

We would like to reward you: you are hereby permitted to have a child, but no more than one, and it must be a male.
Furthermore, said child will not be allowed an ego greater than anyone else's.

That is all Comrade.
[ link to this | view in thread ]
Lay Person, 1 Aug 2006 @ 2:39pm

Funny
Actually, "The Peoples Republic of Rediculousness" is more fitting...and funnier.
[ link to this | view in thread ]
Whatever he said, 1 Aug 2006 @ 2:47pm

Re: Re: Re: Competition, no...Population, yes
I get it -- you are nuts. The basis of Capitalism is liberty and freedom. Restricting the ego and the right of anyone to bear children is the opposite -- we would generally call you a facist, socialist, or communist, but never a capitalist.
[ link to this | view in thread ]
Lay Person, 1 Aug 2006 @ 2:51pm

Now you bore me...
Liberty?...Freedom?

Where in hell did you go to school?

Anyway, now you bore me...enough!

Back to school with you!
[ link to this | view in thread ]
Whatever he said, 1 Aug 2006 @ 3:12pm

Re: Now you bore me...
My professors were all like you -- facists at heart, and able to quote dogmatic verse without any abilty to apply it.

That's why most of them teach, because they can't earn a plug nickel in the real world.

My ego is free to acheive what I want -- yours is shackled by limiting it to go no further than your neighbors.
[ link to this | view in thread ]
Name, 1 Aug 2006 @ 8:11pm

The realities and rewards of globalism
Copy and paste into web browser: http://www.nam.org/s_nam/bin.asp?CID=69&DID=236628&DOC=FILE.PDF Quite possibly the best speech I've heard about globalism and the U.S.
[ link to this | view in thread ]
Name, 1 Aug 2006 @ 8:13pm

The realities and rewards of globalism
Copy and paste into web browser:

http://www.nam.org/s_nam/bin.asp?CID=69&DID=236628&DOC=FILE.PDF

Quite possibly the best speech I've heard about globalism and the U.S.
[ link to this | view in thread ]
ebrke, 2 Aug 2006 @ 6:57am

Re: sorry #10
What a stunningly Christian attitude--me first and F you. You're a truly admirable person.
[ link to this | view in thread ]
ebrke, 2 Aug 2006 @ 6:58am

Re: Re: sorry #10
On rereading my own post, I do hope the sarcasm is evident.
[ link to this | view in thread ]
Lay Person, 2 Aug 2006 @ 9:21am

Re: Re: Re: sorry #10
Oh yeah.

Like a neon sign!
[ link to this | view in thread ]
Swatch Hustler, 2 Aug 2006 @ 10:21pm

how to get ahead of China
There is one thing that is universally NOT UNDERSTOOD by the Chinese, and its CUSTOMER SERVICE.

If all things are equal in terms of costs, North American companies need to differentiate through customer service. It will take the Chinese YEARS to figure it out. Its not in their blood.
[ link to this | view in thread ]