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Day: August 21, 2002

Superpower in the Making!

Superpower in the Making!

China is the biggest and most popular ground for investment, right now. In all the foreign companies, little committees have been specially set up, to look into the working culture and the value of investment in the country. However, whether it is feasible or not, companies from all over the world clamour for a piece of the pie. There is a fierce competition going on, on which company has the most number of subsidiaries and has stepped onto the Chinese soil first.

Short interview with a foreigner from a prominent MNC spearheading the operations in China :

AhWei : Good morning! I am reporter Ah Wei calling from the Daily Blab. I have read from the newspapers that your company is transfering key personnels from parts of Asia to your newly established office in Shanghai. Is this true?

Mr. X : Yes, you are very right. We are building up the headquarters, which will overlook all the operations in the China. Our key managers have already moved up to this office and all our functional units will be consolidated here.

AhWei : If it is convenient, can you give me a brief note on the reason of this relocation?

Mr. X : Well, right now, China has the biggest domestic market and its labour cost is one of the cheapest in the world. Besides this, our competitors have already established their Asia office there. We plan to move the labour intensive operations from other parts of Asia and consolidate them in one country. Since everyone is there, we have to be there in time for a slice of the pie.

AhWei : Mr. X, have you ever considered the possiblity that this pie may not be as ideal as everyone thinks it is?

Mr. X: I understand what you mean, but even if the pie is not ideal, we need to be there to monitor the market, in any case. A bad slice is better than no pie at all.

AhWei: China is currently benefiting from the huge amount of investment poured in by the foreign investors. The Chinese are intelligent people and their technology has increased by leaps and bounds within the last few years. Are you not afraid that once your techonology is transferred to China, the Chinese would improved it and claim it as their own?

Mr. X: There is always a danger that they will do that and I am 90% sure about that. But these are the little sacrifices that you have to make to penetrate its market. They are the biggest domestic market in the world and is edged on getting larger everyday as the spending power of the people increases.

AhWei : Some of the companies commented that China’s technology is still far behind Europe and USA. What is your opinion on this comment?

Mr. X: I think these foreigners are underestimating the Chinese. I have just returned from Shanghai. A few years ago, there were only a few high rise buildings around and now, there are skyscrapers everywhere. Many local companies have been set up, with links to the research institutes all over China. Not only that, the Chinese government is actively funding these institutes. 5 years ago, their technology was 15 years behind the western countries‘. But now, they have caught up with an alarming speed and it is only 5 years behind us right now. At the rate it is going and the investment injected by the government and the investors, they pose a very big threat to the foreign companies and other Asian countries. Therefore I would like to urge my fellow countrymen not to underestimate them. I think that is all I have to comment about growth of China.

AhWei: That was a great interview. Thank you very much for taking time off your work and sharing your insight with us.

With the growth of China, many companies have shifted their Asia regional headquarters from countries lke Singapore to Hong Kong or Shanghai. The local people in the offices only draw one-third the amount of what their Singaporean counterpart earns. Not only that, they understand their own local market very well.

The South East Asian countries which were riding on the wave of the electronics industry are now trailing behind the wake of China, after the crash of the Asian market in 1997. The largest country in SE Asia is Indonesia. Although the labour cost there is way lower than in China, the political unstablity frightens investors away. All the SE Asia countries depend on this giant to wake up and cease its internal turmoils. However, looking at this country, everything does not look very promising. Within a span of 2 years, 3 presidents have stepped up and down the Parliament. The present one has a difficult task to pacify the dissatisfied people, fight off the opposition parties, which jumped at every possible opportunity to dethrone her, restore law and order in her country.

After clearing the smog, which was created by the combination of the unusually dry spell and the clearing of land using fire, the country has pledged to solve this problem if it ever happened again. The smog is hazardous to the health of the people and it not only affects Indonesia, but also the neighbouring countries. Tourism was badly affected, billions of dollars was spent trying to get rid of it and on the medical services. People collapsed from respiratory problems and the tourism industry simply fell apart. However, with this freak weather across the world (USA is having the worst drought of all times and Europe and Asia are experiencing life threatening floods.), this smog problem arises again. Today, the government of Indonesia issued an apology to its neighbours, for the environmental issue that it was unable to solve. Reasons cited were :

1. Lack of funds

2. Lack of manpower

3. Lack of education for the small farmers.

4. Oppositions from the farmers and many other problems.

According to the experts, this smog will be as terrible as the one in 1997 and countries are expected to spend a comparable amount of money to solve this problem. Tell me, if the government is unable to even combat the smog and its source, how is it going to attract the investors to settle in the country again? This is not only Indonesia‘s own problem, but the headache of the region, for while the Indonesians are indulging in their inefficient firefighting, China is pulling the investments and market away from SE Asia. With the upward trek of China, the 5 tigers, so called tigers, of SE Asia will find that it is a tremendous efforts to rule the region again, or probably never.

Although it will make the ethnic Chinese people (e.g. my father) proud that China will rule the world one day, but it also means that business is getting scarcer in Singapore by that time. The foreign companies will shift their offices and investments to China, people will be retrenched, jobs will be scarce. Is it worth to exchange that for pride? Besides being an ethnic Chinese in Singapore, does not entail special provisions in business making in China, so what is the whole lot of point?