Re: Chinese products

On Sun, 05 Aug 2007 04:36:16 +0900, Gernot Hassenpflug
<gernot@xxxxxxxxxxxxxx> wrote:

PaPaPeng <PaPaPeng@xxxxxxxxx> writes:

On Sat, 04 Aug 2007 09:08:43 -0700, Frogwatch <dbohara@xxxxxxxxxxxxxx>
wrote:

For PaPeng, I am a real fan of japanese engineering, good design all around.

Up till the 70s Japanese products were your whipping boys. Being just
next door the Japanese have a better appreciation of the Chinese
juggernaut. For a start the Japanese consumer electronics industry is
now a shadow of its former self. Remember any Japanese brand names
outside SONY that used to populate the shelves? To address your
rebuttal before you utter it, no there are no recognizable Chinese
brand names. But a flood of cheap perfectly useable products will
suck the oxygen out from the fancy pricey stuff every time.

Let's not forget how huge is the local market in Japan. The number of
models of stuff that is made solely for the home market and never sees
the outside world is mind-boggling. Considering that there are only 3
companies making some of the stuff like LCD screens, that are the
world's best, quality is something that is unsurpased in Japan. You
can't beat that here, because Japanese consumers don't buy junk.

Of course, for a free software person like me, I am disgusted by
Japanese business tactics, but that is another story. For instance, I
would never buy a Sony item unless someone gave one to me for free. Or
NEC, or Fujitsu....


The discussion so far raises quite a few issues and we are coming to a
stage where the issues have become distinct enough to be recognized as
apples and oranges. The original argument was about product safety.
It has now wandered to product quality, superiority. and
competitiveness.

I believe we are making quite different assumptions on how things are
done in China as compared to the West or in Japan. As good place to
start will be to read the June '07 article on China's Boomtown in the
June National Geographic
http://www7.nationalgeographic.com/ngm/0706/feature4/ The author
gives a good idea of the kind of cutthroat competition Chinese
manufacturers face in their home territory. But that kind of
competition is what gets you the take no prisoners "China Price".
You will note that the ambitious Chinese entrepreuner is totally
ignorant of the intricacies of the latest technology or how export
markets work. All he wants to do is to find a product niche he can
make money in. If he succeeds his workers and his neighbors jump into
the bandwagon too because the barriers to entry are minimal. The NG
article describes the process far better that iI can ever do.

This article describes a development model where no one in China is
out to be the biggest or the best in anything. Its the enormous mass
of participants in any endeavor that gives China the momentum to be a
world beater. This mass also make it impossible for foreign companies
to come up with any strategy that can defeat a rival for there is no
single entity one can focus on.

Ted Fishman's book "China*Inc" give an even more detailed treatment of
this phenomen where all the rules are being rewritten and how some
western companies are dealing with it.
http://www.alibris.com/search/books/qwork/8704138/used/China,%20Inc.:%20How%20the%20Rise%20of%20the%20Next%20Superpower%20Challenges%20America%20and%20the%20World


So we come to Jack's

If China were smart they would supply their own consumer market first,
larger than all of the U.S. population, and worry less about
surpassing the Japanese in quality than making equipment and food that
is viable.

Fishman has a chapter on the DVD industry that turned an expensive
product into a conveinence store promo and changed the whole recorded
media entertainment industry in just half a dozen years. China didn't
invent the key technologies. The key technology is a single chip
solution from Motorola. All the Chinese did was to use the reference
design and manufacture the hardware to use that chip. This is the
harbinger of every area of manufacturing and of market penetration.
Buy the key components and get the products out of the door at the
cheapest price. There will be a few winners and lots of losers along
the way. But the end result will still be an anonymous Chinese
factory.

In this kind of environment there is no room for brand building or
long term development strategies. Things change too fast and no one
has the smarts to look into the future for the next big thing. But
when one pops up and it is something that needs a factory floor and
many skilled hands, China is the place to do it. What is little known
and little discussed is that for every 100 dollars the Chinese get
perhaps only 10 dollars for the product the rest going to the American
size for the intellectual property, the design, the marketing, etc.
And from that 10 dollars a razor thin profit. Fishman's book gives
the details. Its an arrangement no American entrepreuner can afford
to change or to end.

There are many societal, social and economic issues and consequences
in Fishman's book. Do read it.


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