From derivatives expert Satyajit Das of Traders, Guns & Money fame:
In the 1980s, the Japanese were taking over the world. In the 1990s, it was going to be an ‘Asian’ century. These days the pundits are betting on the ‘Chinese Age’. Like all such glib predictions, despite their superficial appeal, they mask complex undercurrents and issues that require careful study.
Michael Schuman, a business journalist, in ‘The Miracle: The Epic Story of Asia’s Quest for Wealth’ tries to describe the transformation that has taken place in Asia over the last 30 years. Schuman covers the post-war reconstruction built on electronics and heavy industry through to the age of outsourcing. The story is personalised and ‘The Miracle’ is at its best when recounting rich anecdotes about the politicians, such as Deng Xiaoping and Park Chung Hee, and business leaders, such as Sony’s Akio Morita and Wipro’ Azim Premji. Schuman’s snappy journalistic style adds colour and insight to the stories.
The Miracle traces the importance of globalisation of trade and capital flows as well as the role of America in the development of Asia. It perhaps understates the less than benign role played by the state in fostering economic development. The Book also is very forgiving of the political repression, social in-equalities and environmental degradation that underpin Asian development.
The defence would probably be that there are always costs to dragging millions out of poverty. In truth, the average business book reader would not be particularly concerned about those issues.
Paul Midler’s ‘Poorly Made in China’ offers a different perspective that is loquaciously captured in the lengthy sub-title ‘An Insider’s Account of the Tactics Behind China’s Production Game’ (obviously a Twitter marketing ploy!). A businessman who has worked in numerous factories in China, Midler provides interesting and, at times, scarily funny insights into a system that produces products that fail basic safety and manufacturing standards.
Midler identifies the process by which buyer demand for cheap products and the Chinese manufacturers willingness to meet the requirements lead to what he characterises in the chilling anodyne term – ‘quality fade’. This is the process by which manufacturers take increasing liberties with quality to eke out profits from unprofitable contracts. This entails cheaper components, altering chemicals, lower hygiene standards and, in general, lower everything.
Midler describes the process whereby manufacturers compete to gain unprofitable contracts to make sought after products. The sole reason is that access enables Chinese manufacturers to gain access to intellectual property allowing the manufacture of lucrative ‘knock-offs’ in places where patents and trademarks cannot be enforced.
Midler acutely records the tensions between buyer and manufacturers and the entire flawed system where ultimately the only true product control and testing is by the final consumer, sometimes, as in the case of the melamine contaminated milk, with tragic consequences
‘Poorly Made in China’ provides an interesting alternative to the hagiographic view of globalisation and trade much favoured by the Thomas Friedman’s of the world.
Underlying both ‘The Miracle’ and ‘Poorly Made in China’ is a view of the emerging world best captured by the term ‘Orientalism’, associated with Edward Said. A Palestinian academic, Said’s writings on colonialism explored the caricatures, cliches and pre-conceptions that shaped Western perception and therefore relationships with Eastern nations. Said’s argument was that the West’s view of the East was shaped by political power and unequal commercial exchange.
Said’s work built on George Orwell’s criticism of colonialism. Writing in 1939, Orwell provided a vivid and stark view of the developing world that has rarely been equalled: “When you walk through a town like this – two hundred thousand inhabitants, of whom at least twenty thousand own literally nothing except the rags they stand up in – when you see how the people live, and still more, how easily they die, it is always difficult to believe that you are walking among human beings. All colonial empires are in reality founded upon the fact. The people have brown faces – besides they have so many of them. Are they really the same flesh as yourself? Do they even have names? Or are they merely a kind of undifferentiated brown stuff, about as individual as bees as coral insects? They arise out of the earth, they sweat and starve for a few years, and then they sink back into the nameless mounds of the graveyard and nobody notices that they are gone. And the graves themselves soon fade back into the soil.”
The unwritten sub-text is that the East is there as a resource for the West. Developments are read and interpreted through the cultural lens of Western literary and economic tradition. ‘The Miracle’ and ‘Poorly Made in China’ are books in the ‘Orientalist’ tradition, which sees Asia as little more that a vast market, a cheap manufacturing base, (recently) a source of money and an opportunity for developed nations. The books never quite see the world from the point of view of the nations and people that they describe.
‘Prisoner of the State’, the secret journal of former Chinese Premier Zhao Ziyang, provides something of an antidote to a Western view of East Asia.
Remembered now mostly for his disastrous role in the Tiananmen Square student protests and subsequent massacre, Zhao Ziyang was Premier of the People’s Republic of China from 1980-1987, and General Secretary of the Communist Party from 1987-1989. He was involved, with Deng Xiaopeng, in the economic reform of China. Produced from smuggled tapes during his house arrest after being removed from power as a result of his role and handling of the Tiananmen Square protests, Zhao produced a memoir covering details of the crackdown, the intricate manouverings of China’s leadership, and the economic reform program.
While the focus around the book has been on the sensational events around the protests and subsequent crackdown, ‘Prisoner of the State’ provides interesting insights into the rationale behind China’s economic reforms.
Anecdotes of Zhao’ overseas trips, where he begins to gain exposure to the glittering riches of overseas economies, provides a vivid backdrop to the changes in economic policy. The interest in reforms appears driven entirely by pragmatic rather than ideological concerns, such as declining living standards, concern about food security, observed inefficiencies in productivity and fear that economic failure would mean political ruination.
Zhao’s notes were clearly predicated on ‘his’ version of history. His commentary on leadership struggles and the complex interplay of different individuals and camps are difficult to verify to those without a deep understanding of the inner workings of China. His views on the weaknesses of the system, especially the issue of corruption and the sheer difficult of political and economic management of vast complex country, are extremely relevant. They show the difficulties of making simple predictions about the evolution of China.
The book is illuminated by the hidden tragic sub-text that this is ultimately the story of a man who finds himself a victim of a system that he entirely understands and helped create. In the end, Zhao does not quite understand this irony.
Unlike other books on Asia, ‘Prisoner of the State’, despite its flaws, provides insights not found in traditional perspectives on emerging nations grounded in the simplistic world of ‘El-dollardo Economics’.
Thanks for the book recco- didn’t know Zhao’s diaries were available in print. Got a “LOOKING FOR AN ASIAN BRIDE?” ad at the end of this article, complete with overweight, glasses-wearing white dude clinging to a beautiful asian woman. Kind of hilariously appropriate for an article about orientalism and western cultural attitudes toward the east.
Some excellent points. I am presuming that your problem with poorly made in China is that it only gives lip service to where the root of the problem is: very aggressive sourcing by Western companies?
You seem to be hedging around the issue that a number of countries (most not Asian) are stuck on the wrong end of a Malthusian trap. While the first tier economic countries take advantage of that the best that they are able, it is hard to see where any sort of silver lining comes from without their economic inputs. When you are in a difficult position you cannot always be as choosy about your options as you like.
I dunno. Calling books that highlight weakness in the Asian development model “el dollardo economics” is not convincing. “Poorly Made in China” book is a litany that many expats actually working in China aim at C-level executives in the West(whose Asian fantasies run amok in ways elided over by this piece), not a work of Orientalism.
I think the passage needs a equivalent response: perhaps Paul Kennedy can write on regulation of OTC Derivative Regulation Proposals!
That’s a great quote from Orwell!! (BTW, his Shooting the Elephant essay ought to be required reading in MBA programs.)
Said had a point and made quite a splash, but is hardly the definitive word on this matter. He set up quite a few straw men and ignored a lot of history in his book–something to be aware of when citing his work. Besides, even if his thesis is true, is it any different vis-a-vis Chinese views of the West, which surely must be shaped by political power and commercial exchange? To say that a society carries inherent prejudices and preconceptions about distant lands is neither relevatory nor prescriptive.
Anyway, thanks for the thought-provoking and interesting post.
This review is so muddled and so detached from historical objectivity I really don’t know where to begin.
Orialentalism is an ideology that originally jutified conquest and colonialization and more recently more subtle forms of economic exploitation. China has never been conquered and colonized by an Occidental power as were, for example, India, the Phillipines or present-day Iraq. And looking back over the past few decades, most Asian countries resisted the neoliberalism (read neo-colonialism) foisted on less fortunate Latin American countries like Argentina and Mexico. China never threw open its doors and allowed Western interests to dominate internal politics or economics as Latin American countries did.
China has retained its sovereignty. If it has gone along with globalization, it is because its leadership class saw fit to do so.
And it’s not at all clear who is exploiting who here. Is China exploiting the US? Is the US exploiting China? Or are the elites of both countries exploiting their lower classes?
“China has never been conquered and colonized by an Occidental power as were, for example, India, the Phillipines or present-day Iraq.”
You really should brush up a bit on your Asian history, DownSouth. Somehow I don’t think that’s quite the way the Chinese tend to see things.
«“Poorly Made in China” book is a litany that many expats actually working in China aim at C-level executives in the West(whose Asian fantasies run amok in ways elided over by this piece)»
The C level executives could not care less. Their goal is strictly to make the numbers. Quality is an irrelevant concern. The average tenure of a C level executive is a few years, and then it is someone else’s problem. For C level executives just about any company is a cash cow, with the installed base to be milked mercilessly in the pursuit of bonuses and option cash-ins. For many companies outsourcing to China also has the strategic advantage of swapping a unionized, voting worker base for a non-union, non-voting base. As to consumers, by and large USA consumers are totally non-discriminatory, as long as it looks like bling, quality does not matter.
There are some exceptions, but they do not set the trend.
I believe this is what John C. H might be referring to–
[snipped from: http://en.wikipedia.org/wiki/Opium_wars%5D
China was defeated in both wars leaving its government having to tolerate the opium trade. Britain forced the Chinese government into signing the Treaty of Nanjing and the Treaty of Tianjin, also known as the Unequal Treaties, which included provisions for the opening of additional ports to foreign trade, for fixed tariffs; for the recognition of both countries as equal in correspondence; and for the cession of Hong Kong to Britain. The British also gained extraterritorial rights. Several countries followed Britain and sought similar agreements with China. Many Chinese found these agreements humiliating and these sentiments are considered to have contributed to the Taiping Rebellion (1850-1864), the Boxer Rebellion (1899-1901), and the downfall of the Qing Dynasty in 1912, putting an end to dynastic China. The Opium Wars forcefully and suddenly opened China to the world.
This review is so muddled and so detached from historical objectivity I really don’t know where to begin.
Orientalism is an ideology originally used to justify conquest and colonialization, and more recently more subtle forms of economic exploitation. China has never been conquered and colonized by an Occidental power as were, for example, India, the Phillipines or present-day Iraq. And looking back over the past few decades, most Asian countries resisted the neoliberalism (read neo-colonialism) foisted on less fortunate Latin American countries like Argentina and Mexico. China never threw open its doors, or was forced to throw them open, to allow Western interests to dominate internal politics or economics as was the case in many Latin American countries.
And quite opposite of what Das says, Midler’s book seems to be more of a criticism of orientalism than an endorsement of it. The dismantling of consumer protections, and all societal safeguards that entail regulation or taxing of big business, is a key tenet of neoliberalism, which the West has done everything within its power to enforce upon countries in the southern hemisphere.
Furthermore, it’s not at all clear who is exploiting who here. Is China exploiting the US? Is the US exploiting China? Or are the elites of both countries using globilization as an excuse to exploit the lower classes of both countries?
Ah, yes, but what the insects do to each other, the heirarchies of brown, the gnawing, the biting, the clawing, the pradation, festooned monuments of misery erected to placate the gods of the field and cannon built with the ground up skulls sacrificed for totems and taboos, centuries before any Orwell walked down a street and millenia before even a casual glance or thought. Ha ha. What a tableaux. What is it with these folks like Said and now Das, the master of the epistle of assembled paragraphs? They see the mote but not the beam. Thus saith the Lord of Hosts, ye are your brother’s keeper, whether ye know it or now, and all of life and all of history is to teach you stiff necked morons that one simple lesson, whether you are brown, black, white, yellow, red or green. The face of god in every face and it is the great mystery why you can’t see it.
China was defeated in both wars leaving its government having to tolerate the opium trade. Britain forced the Chinese government into signing the Treaty of Nanjing and the Treaty of Tianjin, also known as the Unequal Treaties, which included provisions for the opening of additional ports to foreign trade, for fixed tariffs; for the recognition of both countries as equal in correspondence; and for the cession of Hong Kong to Britain.-great list
john c. halscz, Steven V., canada business,
Would it have been better if I would have said “conquered, occupied and ruled,” as happens in colonialsim? I don’t see how anyone can compare what happened to China in the 19th century with what happened to, let’s say, Mexico in the 16th century or Iraq in the 20th century.
What China suffered beginning with the signing of the Unequal Treaties is what I call neo-colonialsim, described here by Carlos Fuentes:
“In the phase immediately after independence, Britain managed Latin America’s foreign trade; in the latter part of the nineteenth century, the United States came to be the principal partner. However, they employed the same instruments of economic power, namely favorable agreements for their merchants, loans and credits, investment, and the handling of the export economy of minerals, agricultural produce, and natural products required by Anglo-American expansion. A highly privileged local minority served as intermediaries, both for these exports and for the imports of manufacured European and North American goods, which were in demand among the urban population in the interior.”
However, can we all agree that, regardless of semantics, the West’s domination of China came to a definitive end in 1949 with the defeat of the US-backed Chiang Kai-shek and the rise to power of Mao Zedong? And is it safe to say that Western domination of China has not been restored to this day?
Which brings me right back to the point I was trying to make. Over the past few decades, China and most Asian countries resisted the neoliberalism (read neo-colonialism) that was foisted upon less fortunate countries like Argentina and Mexico. China did not open its doors, nor was it forced to open them, to Western interests so they could run roughshod over the economic and political machinery of the country. China has very much maintinaed its sovereignity, and is therefore hardly a poster child for the abuses of orientalism.
And quite opposite to what Das says, Midler’s book seems to be more of a criticism of orientalism than an embrace of it. The assault on consumer protections, as well as any and all social safeguards that entail regulation or taxation of big business, are very much a part of neoliberalism, a Western invention being aggressively peddled by the West. So Midler’s criticism of something as Occidental as neoliberalism hardly seems to qualify as orientalism.
I concur with Downsouth on this issue,
The Western expansionist neoliberalism/colonialism is but a footnote in Chinas long history and it relevance is only in its historical immediacy. For the sake of appearances and good taste Corporate neoliberalism does not like to occupy Territory’s just force them to comply with their free market based ideology’s as hand maidens and not full partners. I fear the reason for this is that with out expansion Corporate neoliberalism is dead (see ponzi scam). Hence much of our problems to date are a direct result of the beast not getting a full feed, the larger it becomes the more it must devour in order to slack its hunger. This is why I find it so funny that anyone can use the word equilibrium with regards to this construct, it is by designed an engine of consumption, with every bite its mass increases and therefore requires even more and bigger bites to sustain its mass. Even now it must create new and improved (see quantum accounting ie. thin air accounting, synthetic investments etc. ) products.
This little parable has played out many times before historically but as a local event, but now under the blind faith of corporatism its gone global, they really don’t have any other plan but to grow, expand and consume till nothing is left. This simple mathematical equation is building mass and speed_to the point_its results are felt globally in the now (see increasing global poverty) and not so much generational (see global bag holders of tomorrow).
Skippy….Live it up today….for tomorrow many never come. Neoliberalism = every mind is an Island, so get off my beach, you bloody idealogical castaways.
PS. If things ever went boom in America it would make the Tutsi-Hutu conflict look like a backyard BBQ, BTW it wasn’t all racial, there was plenty of in-family neighborhood payback too (see not enough land for all), Germans started the hole thing way back any-who, proclaiming one to be more Superior than the other (see conversion to religion), sheez. Wiki link: http://en.wikipedia.org/wiki/Tutsi
So I have to start calling my Chinese financial engineer by his real name and stop giving him 20 hours of verbose programming work per day? Blasphemy!
A relevant developing story(Caijing):
China’s SOEs May Terminate Commodities Contracts
“China’s state-owned enterprises may unilaterally terminate commodities contracts as they try to cut massive losses from financial derivatives, an industry source told Caijing on August 28.
According to the source, China’s State-owned Assets Supervision and Administration Commission (SASAC) has sent notice to six foreign financial institutions informing them that several state-owned enterprise will reserve the right to default on commodities contracts signed with those institutions.
Keith Noyes, an official with the International Swaps and Derivatives Association, a trade organization, confirmed that he is aware of the matter, but provided no further comment.”
I would welcome commentary by the nakedcap crew on this