China's prowess has been overrated?

China's prowess has been overrated?
Feb 27, 2008 02:23
ICEBERG Points: Join Date: Sep 10, 2007 Status: offline	With rapid economic growth in recent years, China has been regarded as one of the most powerful countries in the world. Some people even claim that China will surpass US in 20 years. However, some people don't think so. Here is an interesting report from FT. MANUFACTURER SLAMS CHINA'S INDUSTRIAL GLOBAL PROWESS By Peter Marsh in London Wednesday, February 27, 2008 China's prowess as a global economic power has been severely overrated by the west, according to a leading US-based industrialist, who says that many Chinese companies are over-reliant on copying rivals' products and have employees who do not work hard enough. Martin Richenhagen, chairman and chief executive of Atlanta-based Agco, the world's third-biggest maker of tractors, also says corruption “remains a big burden” in China while the country suffers from opaque laws and having an over-protectionist government that hinders technological progress. “I'm not aware of a single world-class product that has been developed in China, apart perhaps from in the textiles industry,” Mr Richenhagen told the Financial Times. He added that Beijing should do more to allow overseas companies to take majority stakes in domestic companies, if they wanted to avoid these businesses being left behind technologically. “It is not possible to be an important exporter to other places but close your borders to others [taking controlling stakes in Chinese companies],” said Mr Richenhagen, whose company had sales last year of $6.8bn, with just 22 percent of this figure coming from North America. Mr Richenhagen has grown frustrated over the past 18 months with Beijing's refusal to allow Agco to take a majority stake in First Tractor, a state-controlled company that is the country's biggest tractor maker. “A lot of Chinese are not hardworking at all,”Mr Richenhagen said, while, frequently, their employers were obsessed with copying other companies' parts and products instead of leading innovation themselves. “This has been the practice in the past and it's not getting any better,” Mr Richenhagen said, who added that many Chinese companies went down this route since copying was “cheaper and easier” than developing new products and also did not require them to hire the most talented engineers. Mr Richenhagen, a German executive with a background in the steel, lifts and flooring industries, said he based these views on about 30 visits made to the country over the past quarter- century.

Feb 27, 2008 02:23

ICEBERG
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With rapid economic growth in recent years, China has been regarded as one of the most powerful countries in the world. Some people even claim that China will surpass US in 20 years. However, some people don't think so. Here is an interesting report from FT.

MANUFACTURER SLAMS CHINA'S INDUSTRIAL GLOBAL PROWESS

By Peter Marsh in London
Wednesday, February 27, 2008

China's prowess as a global economic power has been severely overrated by the west, according to a leading US-based industrialist, who says that many Chinese companies are over-reliant on copying rivals' products and have employees who do not work hard enough.

Martin Richenhagen, chairman and chief executive of Atlanta-based Agco, the world's third-biggest maker of tractors, also says corruption “remains a big burden” in China while the country suffers from opaque laws and having an over-protectionist government that hinders technological progress.

“I'm not aware of a single world-class product that has been developed in China, apart perhaps from in the textiles industry,” Mr Richenhagen told the Financial Times.

He added that Beijing should do more to allow overseas companies to take majority stakes in domestic companies, if they wanted to avoid these businesses being left behind technologically.

“It is not possible to be an important exporter to other places but close your borders to others [taking controlling stakes in Chinese companies],” said Mr Richenhagen, whose company had sales last year of $6.8bn, with just 22 percent of this figure coming from North America.

Mr Richenhagen has grown frustrated over the past 18 months with Beijing's refusal to allow Agco to take a majority stake in First Tractor,
a state-controlled company that is the country's biggest tractor maker.

“A lot of Chinese are not hardworking at all,”Mr Richenhagen said, while, frequently, their employers were obsessed with copying other companies' parts and products instead of leading innovation themselves.

“This has been the practice in the past and it's not getting any better,” Mr Richenhagen said, who added that many Chinese companies went down this route since copying was “cheaper and easier” than developing new products and also did not require them to hire the most talented engineers.

Mr Richenhagen, a German executive with a background in the steel, lifts and flooring industries, said he based these views on about 30 visits made to the country over the past quarter- century.

Feb 27, 2008 02:23

ICEBERG
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While it is rare for foreign business executives to voice such remarks publicly, Mr Richenhagen's views will carry weight with other company managers who have also privately expressed frustrations about some aspects of the business environment in China.

In certain key industries such as power, cars and steel, Beijing has placed barriers in the way of allowing non-Chinese companies to acquire
majority stakes in local businesses, even if the authorities have been happy to allow non-Chinese companies to set up joint ventures or build their own factories in the country that operate without any Chinese partners.

What do you think of this article?

Feb 27, 2008 10:50	#2
GRIZ326 Points: Join Date: Jun 12, 2006 Status: Offline	It sounds like sour grapes to me. Richenhagen wants things to progress on his time table and does not have the patience for China's time table. China has plenty of learning and growing to do, but you cannot over-estimate China as an economic powerhouse - but you can easily misjudge when China will assume the #1 powerhouse title.

Feb 27, 2008 19:44	#3
LEOPOLD219 Points: Join Date: Feb 7, 2007 Status: Offline	Yes, the copyright infringement is a big issue in China and the government doesn't do a good job in this aspect. Invention is very important. China ia growing as an economic powerhouse but not the No.1 in the world.

Feb 29, 2008 06:00

APAULT
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On Iceberg's article: China's power comes from its mass and pace of growth. China is generating NEW demand which is fuelling the world.

So China has a copycat economy...who cares if that is the nmost efficient way of doing things. In fact, market principles recommend the most cost effective approach. Japan used to be criticised for the same thing, but it became wealthy. It faltered because it didn't adjust from being copycat and having many business inefficiences. China has corruption, so do all other countries, but in china the costs of production are so low the corruption costs can be absorbed for now.

So Richenhagen is frustrated - well I can understand that having moved from business process improvement in Australia to teaching in a private uni here. There is little desire to change in many organisations, why should there be when they are reaping such vast profits. Also remember that this is an overheated economy, the governement want s to slow it. It is overheated because there is a shortage of resources, one of which is skilled management. In private uni's pensioned beaurocrats have been dusted off and made heads of departments. They are good at old protocol and filling forms (but don't mention the dreaded C word (computer..oh I said it!)).

Japan failed to change when it could no longer rely on copying and having cheap labour and the economy slumped. China has the possibility of failing too. It must beocme innovative, it must increase employee skilll levels and welfare for staff; in general, it must adopt 'world's best practice' instead of saying we do it the Chinese way (that is only valid if it is the best way).

Feb 29, 2008 11:52	#5
JCNILE123 Points: Join Date: Mar 30, 2006 Status: Offline	China's prowess has been overrated? Yes, Mr Richenhagen is right. Chinas lack of oil and water are a dark cloud on the futuristic dream of extreme power, plus the reaction of the west to China's property rights infringements. Follow by the expansion of the Russian state, and India.

Mar 2, 2008 20:36	#6
JIMMYB Points: Join Date: Feb 7, 2007 Status: Offline	I agree with JC. With the rapid development, more and more problems are gradually appearing such as energy crisis, environment pollution and huge gap between rich people and poor people. China is strong now but not the most powerful one. On the other hand, China should take praises from the western media calmly. Being proud is not a good sign.

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