An American Engineer’s Observations in China
by Emil Bandriwsky – June 2013
Chinese computer programmers are skillful and plentiful. Yet, our small company just completed a contract for a Chinese machine builder that paid premium rates to bring our team from the USA and Canada. Some factors related to this transaction illustrate major accelerating trends in engineering, manufacturing, and the global economy.
Specific technical expertise. Our company is among a small group with expertise in advanced Siemens Step 7 PLC programming for automotive engine and transmission manufacturing. Even though General Motors, Ford, and German automakers have standardized upon this platform there has been no rush to develop a pipeline of skilled engineers, thereby reflecting America’s indifference to both engineering and manufacturing.
Rapid response and short life cycle. Less than a week after receiving a purchase order we had a team in place literally half-way around the globe. The trend is clearly toward faster, more flexible, more nimble companies that can assemble ad-hoc teams that combine long term core personnel with contractors.
- Giant multi-national corporations have spread a common base of standardized work practices, terminology, metrics and attitudes around the world. The McDonalds or Starbucks in Shanghai or Kiev are essentially the same as their counterparts in Buffalo or Seattle. A Ford Motor factory in China uses very similar specifications and equipment to Ford in France or Brazil, or even GM in Tonawanda.
Anglicization. The English language is ubiquitous in Chinese advertising and public signage including transportation, airports, and street signs. Although the Chinese often translate English in rather amusing ways, it has been said that there are more English speakers both in China and India, than in America. The clever Chinese have developed a “work-around” to fit their unwieldy number of written characters onto a computer or smart phone keyboard; a phonetic system called “Pinyan” is typed in English and is automatically converted into one of the 20,000 Chinese characters.
Internationalization. I was reminded of the cliché about “the world getting smaller and smaller everyday” as I sat in a Brazilian restaurant with Chinese, Canadian, American and Ukrainian engineers, who drank European beer while the American cartoon “Tom and Jerry” played on a Japanese flat screen TV in the background. Just last month, our small company, which employs Engineers from all over the world, worked in four separate countries at one time. America is still a world leader in many ways, but the era of American supremacy in everything under the sun is over with. China is now the source of more international tourists than any other country; and for the past two years China has overtaken the top spot as the worlds’ largest automotive market. China has moved past both Germany and Japan with the world’s second largest economy, and in all likelihood will eclipse the total output (GDP) of America in a few years.
Higher Quality Goods and Services. My first surprise at a Chinese shopping mall was that many common consumer and electronic goods, like TVs, iPads, and Smart Phones, cost 10% to 15% more in China, despite being manufactured there. This was explained as the result of trade finance peculiarities, and the Chinese government’s encouragement and financial incentives for its export driven economy. The second surprise was that China’s crowded shopping malls are filled with premium priced, name brand, imported goods; and a large number of Chinese consumers prefer higher priced imported goods, especially name brands, rather than cheaper, domestically manufactured goods. Smart American consumers know that paying a premium price, strictly to cover brand marketing, does not translate to choosing the best value goods. However, the easy movement of manufactured goods to or from any point in the world, and the instantaneous transfer of product information means that essentially anyone on earth can tell the difference between a high quality product and a shoddy product. Chinese teenagers greatly prefer authentic Apple iPhones to knock-offs, and luxury hotels being built in formerly god forsaken corners of the globe are a sure sign that quality standards are becoming universal.
What Does it Mean for Us?
China’s phenomenal growth over the past generation has been fueled by cheap labor, export mania, free market capitalism supported by a one-party Communist state, and an artificially low currency exchange rate. But due to rising wages in China, and high transportation and transaction costs, there are predictions that that China’s “low wage manufacturing advantage” versus the USA will disappear by 2015. Does this mean that America will shortly thereafter regain its hegemony over the world economy? Almost definitely not. New low wage countries will fill the vacuum at the bottom of the economic totem pole. But more importantly, there will be global competitors using every other advantage available to them : technology, raw materials, education, proximity to markets and so on. Ultimately for the American consumer these global economic trends will produce an even broader array of more and cheaper goods; as long as consumer can afford them. And that is the problem. For American workers, producers and manufacturers these economic trends point to an even faster and fiercer battle for the consumer’s dollars, and ultimately for the survival our domestic companies, jobs, and the prosperity of future generations.