Rising Giants: Industrial Clusters Are Changing the Face of Chinese Manufacturing
The thesis of this article is that China's industrial sectors are geared towards clusters, a theoretically strong driver of industrial and economic growth, and foreign investors might just want to take advantage of clusters. But the authors warn that you better do your research on region the cluster is located in, and the specific cluster itself.
China's Growing Talent for Innovation
The thesis of this article is that companies can do their R&D in China, but they face some specific challenges. The main benefit includes a lot of raw and inexpensive engineering talent. Challenges include:
- Research capabilities are still weak compared to other areas.
- Inflationary pressure on wages might exceed growth in productivity.
- IP protection is still to weak.
Raising the Bar: Can China Meet the Quality Challenge?
The thesis of this article is that the quality "issue" is really just "misplaced assumptions and perceptions on both sides." Dude, the Chinese build iPods. The real issue is that parties on both sides just aren't understanding the quality specifications in the manufacturing contracts. I've only had the pleasure of working on contracts with tight specifications, but the report says that too often MNCs are using the exact same sourcing contracts in China that they use in the rest of the world.
Chinese Manufacturing in an Age of Resource Price Volatility
The thesis of this article is that expected future volatility in the energy market will have a positive effect on competition. As manufacturing becomes more expensive, low-value WILL move inland and abroad, and China's manufacturing sector MUST move up the value chain.
The Dragon Turns Green: China's Manufacturers Adapt to a New Era
The thesis of this article is that China will be promulgating and enforcing tougher environmental regulations, and foreign companies will be scrutinized more early and more often. The article suggests ways to start going about complying.
The Special Report is nice. Maybe a bit too optimistic, shying away from the controversy and negativity. Oh, well, there are still things to learn.
2 comments:
Always remember that when you are reading these sorts of reports that you are reading marketing literature. They are the business equivalent of travel brochures and new car sales brochure. Not that there is inherently anything wrong with that.
If you want to go on vacation, travel brochures are useful, but you have to keep in the back of your mind that they are trying to sell you something.
(Look at all these business opportunities in China!!!! Look at how much money you can make if you give us money to help you take advantage of these business opportunities in China!!!! Look at how smart we are!!!! Don't you want to give us money to help you make money in China!!!!)
Again, it's not a bad thing to do this. The core of business after all is selling, but when reading this sort of thing you have to somewhat cynical and skeptical. Curiously, I've found that being a little cynical and skeptical leads to better business relationships. What's also fun is to read the disclaimer a lot of these reports have.
These sort of reports can backfire in a big way. A few years back Ernst and Young published a bit of marketing literature that was promoting their expertise at resolving NPL's. The tone of the brochure was "There is big, big money to be made in Chinese NPL's!!!!" Unfortunately, the press got this, and that story got turned into "Chinese NPL's are HUGE!!!"
It was really embarrassing because if you look at the report, they double counted NPL's, and worse yet, another part of the company had signed off on the auditing accounting statements of ICBC saying that NPL's weren't a huge problem. So legally they were in some serious, serious hot water, and they had to withdraw the consulting brochure.
Though produced in conjunction with a consultancy group, the marketing aspects of this report are tempered by the publisher being an academic organization. Besides, it is free information, and it is easy to see that it is full of success stories. But there is still plenty to learn from success stories. And there was no disclaimer on this report that I could find.
Cynicism and skepticism can only get you so far in business. You also need to paradoxically round it out with optimism and some risk taking. There's no point in seeing the glass as half empty unless you're gonna figure out a way to fill 'er up, and sometimes the only way to fill 'er up is to ricochet a bullet off of a couple walls into the side of a barrel 10 yards over your glass.
As for E&Y, it is unreasonable to rely on anything they give you for free. I've seen what you get if you pay for their transaction advisory services, and it is pretty dang impressive.
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