Speaking at AmCham Shanghai Spotlight Session:
Outsourced Engineering Services – What Is It and How Will It Benefit Me?
Come check out my presentation on outsourced engineering services on Aug 1st, 2013 in Shanghai. Follow the link below:
Automation in China – the Devil’s tongue?
Not anymore…. When I left China in 2009, automation was one of those words to never be uttered in a public business setting. Just too many people to employ – I mean, why else would street cleaners in Shanghai be using tree-branch broomsticks when street-sweeping vehicles were readily available? Got to keep that 1.5b (?) people working. I returned to Shanghai in Feb. 2013 and in just this short time, I don’t think I’ve gone a week without hearing talk of automation – things have certainly changed in a very short time!
Having attended the recent China (Shanghai) International Technology Fair, automation abounded. During the Wednesday afternoon Innovation Forum, the reasons became clear – labor rates are rising faster than the value add, real-estate accounts for 20% of the Chinese GDP (think about that for a second!), and utility rates are on the rise (this is a trend that will likely continue if the central government continues its apparent commitment to green energy).
So how to stay competitive?
Human productivity has its limits, sure, there are always opportunities for small incremental improvements, but that is not going to keep the pace with the rising costs. If China is going to maintain its manufacturing edge and manage world-leading economic growth, the options are as clear as they are limited – AUTOMATE. I see great opportunity in the coming years for instrumentation, process control and other related manufacturers as well as integrators – now is the time.
Doing Business in China
Check out my recent interview with IT Decisions (News, Analysis And Comment On Brazil IT; itdecs.com). This started as a discussion on LinkedIn regarding IP protection in China, and after some communications with Mark, he asked if I was interested in contributing to his site.
BRIC or IC?
Having now worked in two of the BRIC countries; Brazil and China, I am not sure BRIC is the correct acronym. From my point of view, China and Brazil have little in common – other than both being lower income countries.
Before I go into details, I should explain that I am working on a government project in Brazil and may therefore have a different perspective than someone in the private sector. However, while work ethics may differ, the economics are the same. Here is what I mean. In China if someone works harder today in order to make a little more money tomorrow, goods and services are cheap enough that the little increase in income can make a measurable difference in buying power and standard of living, thus fueling the drive to get more…. But in Brazil, if one does the same thing (works harder today to get a little more money tomorrow), the same payoff is not there – goods and services are costly enough that the incremental change is insignificant. There is no “flywheel” effect in Brazil, leading me to believe it will be a very long time before Brazil can really compete with the likes of China and India.
Taking the above into account, and adding what little I know about Russia (I had several Russian classmates from my International MBA in Beijing), I would argue that BRIC should be more appropriately coined IC – but I guess that doesn’t sound nearly as nice…..