 |
And then there are the cars. Over 120 companies make passenger cars in China, a number that far exceeds the roster of any other country and that signifies both China’s nascent industry and long history as a nation of automotive tinkerers. At the turn of the last century, before the advent of real mass production, the United States had roughly the same number of carmakers as China today. Kissel in Hartford, Wisconsin, was one. Dozens of these Chinese manufacturers are just small firms cobbling together cars any way they can.
Some make models based on old Soviet cars and European compacts several generations past. Others paste together the parts and designs of multiple manufacturers depending on which parts can be had—often dubiously—in the market.
“Many Chinese consumers are so hungry for cars that they don’t care what they look like if the price is right,” says Michael J. Dunne, whose Bangkok firm, Automotive Resources Asia, helps Western car companies navigate their Chinese businesses. “Right now, there is a large volume of demand on the low side of the market, and upstart Chinese companies are building knockoffs that buyers who just want transportation can settle on.”
Among these many car manufacturers are a small number of larger, thriving ones that in many cases were started with the pooled resources of local governments. These wholly domestic firms play a role in how much a Chinese economy car built for export will eventually cost and what it will look like.
The Wanfeng automotive factory is a good place to see these gathering forces of China’s automotive might. Morning there begins with a neat line of employees doing calisthenics to martial music over a PA system. The blue-uniformed workers, nearly all of them young men, make for a clean-cut, well-pressed company line. The Japanese introduced courtyard exercises and company songs to the world back in the 1970s when that nation seemed to have the world’s best industrial jobs. Today, Japan is stumbling out of malaise, and its dwindling pool of young laborers lack the compulsion to work like hell. That striving Japan of old still sets a good example for would-be world-beaters, as Wanfeng’s management knows, but the Chinese manufacturer goes one better. Its employees regularly have their spirits revved at company boot camps run by People’s Liberation Army drillmasters, who inculcate the twin virtues of patriotism and hard work.
The results are impressive. Nine years ago Wanfeng started hammering out motorcycle wheels by hand in a Chinese garage; a few years later it was the number one seller of aluminum-alloy motorcycle wheels, first in China and then the world. The company soon became a top national and global seller in alloy automobile wheels too.
Wanfeng may well have received some help on the way up: the company’s video that describes its rapid ascent does not identify the early contracts that enabled it to grow so fast, nor whether Wanfeng had insider connections to government companies in the motorcycle and car businesses. Nor is there anything in Wanfeng’s literature about how the private company secured its financing, despite the fact that national banking laws have all but prohibited state banks—every bank, in effect—from lending to the private sector. Wanfeng today is nonetheless scrappy, aggressive, and capable. In year eight, it set up its automotive works in a large new factory in an industrial stretch outside Shanghai; now it annually turns out sixty thousand vehicles that look great, come with every modern luxury, including leather seats and full Chinese-made DVD video systems, and purr when driven. And if you squint just a little, these new cars look remarkably like Jeep Cherokees.
In contrast, Wanfeng’s factory itself is a bare-bones machine. Most tellingly, not a single robot is in sight. Instead, hundreds of young, low-paid men newly turned out from China’s burgeoning technical schools man the assembly lines with little more than large electric drills, wrenches, and rubber mallets. Engines and body panels that would, in a Western, Korean, or Japanese factory, move from station to station on automatic conveyers, are hauled by hand and hand truck. This is why Wanfeng can sell its handmade luxury Jeep tributes in the Middle East for $8,000 to $10,000. The company isn’t spending money on multimillion-dollar machines to build cars; instead, it’s using highly capable workers who cost at most a few hundred dollars a month, which means that the yearly pay of seasoned Chinese workers is less than the monthly pay of new hires in Detroit.
Wanfeng is growing quickly, but its survival is in no way guaranteed, for the car business in China today is arguably one of the most competitive in the world, as manufacturing capacity explodes along with demand. Chinese and foreign automakers have invested $12 billion over the last decade in building automobile factories, with half of that amount spent just since 2002. One-third of the global growth in vehicle sales is coming from China, and within the next fifteen years, perhaps sooner, China is destined to emerge as the largest auto market in the world. China bought just over 2 million new cars in 2003, while the mature U.S. market has long been stable at roughly 17 million cars a year. Even with periodic sputters, China’s long-term growth will be huge. China is on track to surpass Germany as the number three auto producer before 2010, to pass Japan by 2015, and then be just 4 million sales a year shy of the U.S. market, which it will pass in due course too. The country’s domestic market potential, like every-thing else in China, is mind-boggling. The Chinese middle class, a group expected to spend heavily on cars, will soon top 100 million.
If You Teach a Man to Fish
|
|
 |
Ted C. Fishman: I would trace the earliest genesis of the idea of China’s effect on the rest of the world to the late ’70s, when I lived and worked in Japan for Matsushita Electric. Even at that time the Japanese were talking about China emerging on the world scene in a way that I had not heard Americans express.
In Indonesia my life had been filled with extremely, implausibly low-cost consumer goods that were manufactured in China— including a brand-new bicycle I bought in my first month there for $12. What struck me the whole time was, “When will these incredibly low-priced goods arrive in the United States? And when they do, how much will they disrupt economic life at home?”
SKY: You lived and traveled in China during 2003 and 2004 to write the book. What was a key observation?TCF: The massiveness of China. You can’t help [noticing] it, because the cities are so densely populated. I’d walk out onto a street, and it would seem like Fifth Avenue in New York times 10.
When I returned home to Chicago, it felt small. But it’s interesting that the Chinese don’t think of Chicago as a small city, because they measure cities by economic might. For all the size of China, we forget how mighty we are. The economic activity in a year in the Chicago region is about equal to a quarter of all the economic activity in the entire country of China.
SKY: How do you view the future?TCF: Our future with China can be very promising for a few reasons. One is that Americans really like to work with Chinese people. The Americans I met who are working there enjoy their colleagues, enjoy their company, enjoy the way that social life, family life and work life mix.
The way China works, it’s the Thing Economy. It’s very possible for the Thing Economy to sharpen our Knowledge Economy. Because great ideas can be executed in China, even if they’re thought of here. And if we figure that out, we’ll prosper.
SKY: Thematically, what was the genesis of China, Inc.?TCF: The whole project of the book was to collect stories in China that I could follow around the world. The idea of the book was, how is this enormous change in China changing life for the rest of us?
I was very interested in, first of all, China’s cities, its urban industrialized present. So of course I went to what, in my mind, are the two great cities of China, Beijing and Shanghai. That was where I spent my first trip in 2003, which took two months.
SKY: How were you able to arrange appointments in China?
TCF: Usually as a reporter I just call people and say, I write for these prestigious places. And my association with those prestigious places gets me a meeting. It did not happen in China. When I called around China saying I was reporting a story for The New York Times and for a book, people did not want to talk to me, and especially not Chinese people. Because press attention there is not a good thing.
Those connections really started with me complaining how badly my reporting had been going. And I would complain to my family and my close friends. And what I learned was that I should have started the reporting there. People who are engaged in almost any kind of business these days—there is a road to China. I have family in finance, in retail, in the scrap steel business, in the garment business, the fashion accessories business. I have family who are educators. Because China’s reach is getting so broad, I found that when any of these people heard my complaints, they could either refer me to somebody who had just struck a connection in China or somebody who could lead me there. So when I got to China I actually had many introductions that came from a lot of kitchen-table conversations.
SKY: You made a second, similar trip in the spring of 2004. What were some of your principal impressions as a traveler?
TCF: When you get to China and you walk along any of the main drags of a city, you are immediately struck by the density and variety of consumer goods of all sorts. When I got to Beijing, one of the first things that I did was walk through a market. There were knockoff goods, shirts, wallets, underwear, suits, ties. I’d found a magazine of premium watches for collectors and fetishists. Which ones could I find knockoffs for? It turned into quite an adventure.
When you start doing something like that, you’re taken into the confidence of all kinds of people at a deeper level than you might otherwise. They draw you in, they talk to you more, they try to suss you out. They tell you what their background is, on occasion. One of the watch-sellers had a People’s Liberation Army badge on, and I asked him whether he was still in the army. And he told me no, but he told me all about his army experiences.
For some of the watches I’d be delivered down multiple back alleys, up rickety stairs. Out would come half a dozen valises filled with every variety of watch that knocked off all the latest styles. It might just seem like a garden-variety illicit trade, but it’s hardly that. What it is is a demonstration of how quickly the Chinese could produce goods to satisfy fashion and how expertly anything could be copied.
They’re absolutely expert at creating objects of desire. And when you mix that quality with that craftsmanship, what you create are goods that scream to consumers, that say, “Here is vastly affordable luxury.” And that’s of course emblematic of what they’re doing in the world now.
SKY: Were you traveling with an interpreter?
TCF: Every moment of every day. I had a choice to make: Did I want to spend my time learning Chinese, or did I want to spend my time acquiring people’s stories? And for me it was much more important to focus on people’s stories than stumble in whatever infant Chinese I could have.
When I first got there, I got a Chinese interpreter whose English was very formal and whose manner was very formal. He seemed a great ambassador to me at first. But it turned out that nobody was opening up in the way that I wanted. So I went and I got a real down-to-earth American who wore a frumpy shirt and a baseball jacket and a beat-up baseball cap, who happened to speak expert Mandarin—and had a great sense of humor which reflected mine. He actually went to the University of Chicago, so at some point he lived four blocks from my house, although I didn’t know him.
SKY: You’re often called upon to comment on “the threat of China.” Will you provide more perspective?
TCF: One mistake Americans make is that they base [their idea of] our future upon our present practices. And when you do that, you can’t help but see this incredible mismatch between the American economy and the Chinese economy in which most of the advantages seem to go to the Chinese. For example, they’re unsaddled by the kinds of rules Americans have to face. They have vast supplies of workers willing to work at wages that are one-fortieth those of an American. We are stymied when we try to comprehend the size of their population.
But to me it’s really important to see our relationship with China as part of a dynamic in which the present may have very little to do with the future. And our future with China can be very promising, for a few reasons: One is Americans really like to work with Chinese people. The Americans I met who are working there enjoy their colleagues, they enjoy their company, they enjoy the style of the way that social life, family life and work life mix. They enjoy the prestige of being a person who makes something. In the United States, people who are in the idea or experience economy get the prestige. At a cocktail party you get much more attention if you’re somebody who works on a McDonald’s ad than if you’re somebody who makes a fryer that McDonald’s buys. In China, people respect you more if you make the fryer. And they wouldn’t quite understand what you do if you were the advertiser. Men and women who make things and go to China really enjoy working there. That kind of enthusiasm is going to serve us really well as we march forward with China.
SKY: A final thought?
TCF: As important as it is to look at the world’s biggest economies, it’s also important to look at the world’s smallest economies. If you look at Holland, Finland, Switzerland, Ireland, Taiwan, Hong Kong, Singapore—these are all the places in the world that have the closest and sometimes higher standards of living than the United States. But they’re teeny-tiny. And that’s because they “get” globalization, and they understand the value of intellectual capital.
—Ed Choix
