February 2011

Is China still the first choice? 危机

The word “crisis” is in Chinese composed of two signs; one has the meaning of “danger”, the other of “chance”. 危机
The so-called “yellow danger” has been a slogan some decades ago, which is definitely today no more a big slogan. Except, for example the automotive industry has to be careful and well aware that there will grow up a serious competitor within the next 10 years. And the word “chance” has been taken by many companies within the last years, when moving their production to China and building-up factories either to export the products or for the local market. From a publication of Eurostat we can learn that China is still, after Ukraine, the second cheapest production place, related to the gross monthly salaries in €. Regrettably, there are no data of the Mediterranean countries like Algeria, Tunisia, Egypt and Morocco. There is no doubt that China is today one of the most important growing markets of the world and will stay as a very attractive production place for European companies, especially for the huge home market in China. According to the newest plans of the Chinese government, it is the plan of the government to develop China also to the biggest research and developing place of the world. Therefore, they try to move all the factories, which at present are located on the East cost, to the West of China, this is the region which is completely undeveloped and on the status of an agricultural country of 20 or more years ago. China does not want to stay any longer as a cheap factory place for all the world. Now they want to become an important research and developing place. That means that the mass production of cheap goods (like toys, textiles, shoes) should be produced in the West of the country and on the East coast there should settle innovative and research intensive companies.
Target of the new development are high tech products in the field of environmental, alternative energies, car industry and similar.
Since some weeks, we are now paying attention to the Mediterranean countries like Tunisia, Egypt, Morocco and Algeria, because of the people revolutions, but they also could be inter-esting industry locations. There are some big suppliers of the automotive industry located in Tunisia and Egypt, but definitely they are too few to employ all the unemployed well-educated young people of these countries. That means that the basis of well-educated work-ers is locally available for the settlement of all kinds of industries. One may ask what is the reason that there are not more industries, as Egypt, for example, has 80 million citizens. There would be a lot of advantages due to the geographical vicinity to Europe - advantages against locations in China. It is also possible that an intensive settlement of the industries would be a protection against a strong Islamist tendency in these countries. Most probably, the former dictators have only had a big interest to fill their personal pockets, but not in the development of their countries by industry. That this is possible has been shown to us by China that has changed from an agricultural to an industrial country within 20 years. Of course, there is the political will necessary, which may not have been existing at the former dictators which had enough income by “commissions” and other friendly gifts filling their accounts sufficiently. I think that it would make a lot of sense if our European Community would think about the question how to help and industrialize these countries, which have a lot of unemployed population, no jobs, sometimes no food. People having satisfying jobs and enough to eat will not protest on the streets and also not be so radical in their thinking, for example with regard to Islam. Sorry to say that the power plays of the governments are not always full of wisdom, logic and economic knowledge. They make short-time decisions which will be absolutely wrong in the long term. As soon as the situation has changed in these countries, it will not be enough to send them professors of legal matters who will design new constitutions for these countries. It should also be looked for serious possibilities to build-up a flourishing industry and maybe also agriculture.
A good example might be the state of Israel.

With best regards
W. ENDRICH