The Asian Superpowers are Back--China and India: RP, compete or cooperate?

[uls]

Unfortunately I am only an employee otherwise I would.
The reason the company is in China is because the manufacturing factories are Chinese owned. The design, sales and marketing is based in USA.

So in short, that Chinese-owned company u are working for is a contract manufacturer for a US company.

The US company sends u the design specs, u manufacture it and ship it to the US.

Now, my question is, why was the Chinese company chosen by the US company as it's contract manufacturer?

Why not a Filipino company?

As u have said earlier, we have more talent and skill than the chinese...

So why did thousands of US companies choose to have contract manufacturers in China?

[Fozzie Bear]

So in short, that Chinese-owned company u are working for is a contract manufacturer for a US company.

The US company sends u the design specs, u manufacture it and ship it to the US.

Now, my question is, why was the Chinese company chosen by the US company as it's contract manufacturer?

Why not a Filipino company?

As u have said earlier, we have more talent and skill than the chinese...

So why did thousands of US companies choose to have contract manufacturers in China?

There are basically 2 reasons.
1 - The (American) boss of the sales and marketing has been personal friends with the (Chinese) owner of the manufacturing factories for over 20 years, hence the association.
2 - Capacity. We are the largest manufacturer of our product (outdoor furniture) in the world and only China (at the moment) has the factries capable of supplying in the quantities that are needed.

.....but it's not all bad news. We actually use a Cebu based company to manufacture stone top tables for us, and as i said in my earlier post, I am currently looking to the Philippines as a source for other items as well.

[wildthing]

IMO there are a few things that China have an edge...they offer a lot INCENTIVES to these foreign businesses and investments.

Examples would be tax-holiday for several years, "unlimited lands" to develop, possible infrastructures (like road).

Most of these could not be offered by our country ...

[uls]

IMO there are a few things that China have an edge...they offer a lot INCENTIVES to these foreign businesses and investments.

Examples would be tax-holiday for several years, "unlimited lands" to develop, possible infrastructures (like road).

Most of these could not be offered by our country ...

Yes. The Chinese officials give investors what they want. Like if u need a certain size of land, they will give u that size of land. Hindi ka makakalusot. Hindi ka makakadahilan kung baket ayaw mo mag invest sa kanila. Lahat ng kailangan mo, ibibigay nila.

That's how China attracted capital. They created an environment where businesses can do nothing but grow. It's like providing water, sunshine, fertilizer, and classical music to plants. It's like exposing inanimate objects to Energon.

Jan sila magaling.

[wildthing]

during marcos regime, that was what he did too...he attracted a lot of foreign investors (my dad use to work at BF Goodrich)...their plant in marikina was made thru this arrangement (similar to the chinese). They moved out (BFG) after the agreement expired...it coincide with our new CONSTI that no longer allows these types of agreement.

overall, it was our own laws which prohibited these types of agreements that would attract foreign investors.

but there are modified versions of these rulings that are similar to the chinese strategy inside the eco-zones (like subic and clark) and that is why there are setup like fedex, ups, yokohama, and another thai clothing company that are funded by foreign investor/companies.

[jpdm]

China can attract lots of foreign investors mainly because though capitalism is allowed--the Communist politburo is still in complete control of the economy. Thus, to attract investors they make it sure that there must be cheap labor, no union- no strike policy, cheap electricity, good infrastructure, cheap lands (state-owned lands. in communist China private ownership is non-existent).


The Philippines on the other hand, has one of the highest power rates and wages in Asia.

[uls]

China can attract lots of foreign investors mainly because though capitalism is allowed--the Communist politburo is still in complete control of the economy. Thus, to attract investors they make it sure that there must be cheap labor, no union- no strike policy, cheap electricity, good infrastructure, cheap lands (state-owned lands. in communist China private ownership is non-existent).


The Philippines on the other hand, has one of the highest power rates and wages in Asia.

The Chinese govt is one factor that makes China attractive to investors.

It's coz the Chinese govt is stable and totally immovable.

Investors would rather do business with a govt that wont get toppled the next day.

[Fozzie Bear]

You have got to remember that with China, you are dealing with a political system which completely controls the population.
If they need a new road system, they build it. If there are homes in the way - TOUGH! You are forcefully moved! Same with factories - no arguments, no puplic enquiry or residents associations....you are moved!
For example do you know that in preparation for the 2008 olympics that EVERY factory is being or has been moved from within the city limits to new sites 10 miles outside?

Can you imagine trying to do this anywhere else?

There are also huge tax benefits given by the government to outside manufactureres to re-locate there such as tax-free trading for several years.

There is also virtually ZERO corruption! Very recently a Chinese government official was executed for taking bribes (apparantly about $15000 dollars worth), so you can see the penalties even for relatively minor amounts (in relation to the billions of $ being spent) are severe.
In Philippines I couldn't even get my wife's passport changed to my (English) family name without a 2 YEAR wait and numerous 'considerations'. One guy in the passport office actually openly told my wife she had to give him Php25,000 or the application would go to the bottom of the (very large) pile of paper...and stay there!

This is why nobody wants to invest here!

[uls]

Finally, Sir Fozzie Bear, u said it...

that's entirely my point.

[jpdm]

from business mirror august 2, 2007


[SIZE=3]China is no model for the Philippines[/SIZE]

‘THE Philippines should emulate China by posting a 9.5-percent growth continuously for 25 years. Maybe then, it would become a First World country,” said an official from the Asian Development Bank (ADB).

That ADB official is right about the need for a sustained high growth rate to achieve progress in the Philippines. What he didn’t tell us is that we can’t emulate the strategy of China in achieving our development goals.
China, or even India, for that matter, is a unique experience that could never be replicated by anyone else. The Philippines should evolve its own strategy.
But surely, we need an investment-driven growth strategy à la China. In the last several years, China has been growing at 10 percent to 11 percent, courtesy of about $60-billion to $70- billion worth of annual foreign direct investments. These dollars are channeled to manufacturers using cheap labor and repressed laborers.
It would be hard to follow the China route. For one, we don’t have an authoritarian form of government that could impose a Chinese-style “political stability.” We have already rejected that route when we toppled Marcos in February 1986, spurned the continuing offer for a “dictatorship of the proletariat” by the local communists.,
And more basically, we no longer have the cheap labor to dangle to multinationals—thanks to long years of minimum-wage legislations and a more progressive regulatory framework in industrial relations.
China has enough of these investments within her shores. Lately, there is an increasing trend toward “innovation offshoring,” or the internationalization of product research and development (R&D) by multinational corporations (MNCs). In reality, most of what the MNCs are doing in these R&D centers is more of “development” rather than high-end research.
The R&D centers are intended largely to tailor-fit existing products and technologies for the local Chinese market. It means that those investments are intended to take advantage of the huge Chinese market.
We don’t have such a huge market to attract those innovation-type investments. That explains why we can’t seem to attract the level of investments the way that our neighbors are getting.
You probably wonder why Vietnam, Laos and even Cambodia (Communist countries)are registering 7-percent growth rates or higher these days. It’s because of their advantage in labor arbitrage, or the tendency for jobs to move in areas where labor is inexpensive.
MNCs are there for that reason—cheap labor. And why is India, or at least an urban-based segment of its economy, booming? It’s because—just like China—it has a huge domestic market (1.3 billion Indians), a growing middle class and millions of engineers that MNCs could tap for having innovation-type operations. On both counts, labor arbitrage and market size, the Philippines doesn’t have those advantages.
So what’s the best model for the Philippines? We may have to get back to the old model: Japan. Why Japan? Because it has a low population base and yet, was able to grow fast and become First World in just a few decades.
Its open secrets are three things: education, education and education. According to Nobel laureate Amartya Sen, this is the same secret being followed by the tiger economies of South Korea, Taiwan and Singapore—and look where they are now.
When society produces lots of scientists and talents, it would be easy to generate products, services and intellectual properties that entrepreneurs could sell to the rest of the world—and whose competitive advantage depends less on labor cost and more on knowledge content and other intangibles (like branding).
There is a gold mine of Filipino scientific talent in the Philippines and abroad, doing great and innovative products, but their operations are hard to scale up to make a difference because we don’t produce hundreds of thousands of engineers or scientists at the scale that China and India are churning out each year.
Investing in education, especially in primary, is a long-term social investment. However, while reforming education, we could actually hasten progress by just tweaking existing economic policies.