Machinedesign 6294 Chinese Manufacturing Revisited 0

Good buys (byes?) — Another look at what Chinese manufacturing means

Oct. 1, 2004
A hundred and sixty years ago, the market in Europe and America for tea, silk, and porcelain was booming, but preindustrial China needed few products from the West
A hundred and sixty years ago, the market in Europe and America for tea, silk, and porcelain was booming, but preindustrial China needed few products from the West.

To remedy this disparity the British began third-party trading — swapping their merchandise in India for raw materials more in-demand in China. Soon opium, though illegal by imperial decree, became a staple British import into China. In particular, the East India Company — of Boston Tea Party fame — benefited from this trade. To curb the nation’s drug addiction, in 1839 the Chinese government finally cracked down on opium dealers, but the British retaliated with the Opium Wars, defeating China, taking Hong Kong, and allowing the opium trade to grow unfettered.

Once again China is a growing manufacturing and trading center, with an unhealthy dependency linking it to the West. But this time around, it isn’t Chinese addicted to opium. It’s Americans addicted to low prices and import houses like Wal-Mart and others feeding the habit.

For its part, Wal-Mart is in no hurry to break the cycle. As the world’s largest private employer and retailer, the store accounts for 10% of Chinese imports into the U.S. That might be okay — after all, ours is a global economy now — but the store has been accused of reducing American employee healthcare coverage, undercutting American-goods prices, and taking advantage of government subsidies for quick returns. (The last one is doubly offensive because taxpayer moneys could be used for schools, and successful participation in capitalism requires educated communities.)

Also, one report by the National Labor Committee states that Wal-Mart regularly pays some of its Chinese workers only 13 cents an hour, far below China’s minimum-wage pittance of 31 cents. The point here is that Wal-Mart plays by the same rules in whatever country, or neighborhood, it happens to be operating in, and it will not change as long as it’s profitable. In fact, by current standards — pun intended — Wal-Mart isn’t doing anything wrong. Corporations are meant to make money, not do good works.

About the only thing we can hope from the retail giant is that it starts playing more nicely. Focused community involvement isn’t a common pastime — it’s nobody’s paid job to make easy — but it might be one way to keep Wal-Mart’s actions center stage and help the company remember its civic duties.

At the very least, if we want to break the cycle of cheap products and jobs, the American public can be more selective about where we shop. If spending is indeed a patriotic activity as some say, wouldn’t it follow that it should be carefully thought-out and executed with restraint? That said, exercising our mammoth purchasing power and “just buying American” is obviously simplistic, and downright impossible at times. Further, not even every American company is always fair. As Adam Smith lamented in 1776, “national interest” is largely a delusion because within any nation there are always conflicting interests. If you don’t believe this, read up on real wages, the shrinking American middle class, and how the average CEO pay now exceeds average worker pay a hundred-fold.

Doing the research and going out of one’s way to support fair companies (those that make profits by being innovative and efficient) is a better approach because it rewards useful businesses while setting the bar for treatment of workers everywhere.

One American CEO and founder of the “Support America” program, David LaCook, says he subscribes to the old adage Texas Longhorns coach Darrell Royal used to defend his choice of plays: “Dance with the one who brung ya.” The reasons? “I believe in my workers. While profits might be higher if we took advantage of lower labor wages elsewhere, we achieve levels of productivity and quality that couldn’t be exceeded anywhere.”

Consumers would do well to return the favor and patronize only companies with this approach — those that recognize trade as a mutual arrangement. After all, few of us can claim we have too little “stuff” in our (increasingly mortgaged) homes. Taking it another step, if average Americans can’t truly afford the American lifestyle, as statistics suggest, it would serve us all better to examine the political causes behind that fact. One thing is certain: Whatever satisfaction we seek won’t be found in items manufactured in sweatshops, here or elsewhere.

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