Book Review/Notes: China INC. – by Ted C. Fishman

This was a pretty interesting book – I feel like I learned a lot (which is something of the point of a non-fiction book – to learn something).  This book gave me a better insight into the world of china – how different their culture is – and how that works for their benefit in the world economy.  They are an economic powerhouse – but a different one than America is.  I learned of the strengh of their nearly unlimited labor pool – as well as how intertwined their economy is with ours.  This book was was published in 2005 – so it’s a few years out of date – as it doesn’t address the recession of 2008-2009.   That said, I think there are a lot of items to learn from this book:

  1. The government owns everything – you can’t own your own land in China.  This is in contrast to most other countries where personal property is at the heart of their economies.
  2. Much of the economic growth of China is centered among its cities – instead of around national companies.  The government got smart enough to recognize capitalism bringing prosperity and let it happen (despite it kinda going against communist ideology).
  3. One of the primary drivers of the Chinese economy is cheap labor – that is the rural population migrating to the cities – providing what seems to be a nearly unlimited cheap labor pool.
  4. Things happen fast and big in China – there is a lot of optimism and energy to build – and build big.
  5. The American economy and China’s is very inter-related now:
    • American consumers are hungry for cheap goods.  American companies are eager to find cheaper and cheaper sources – with China being the a major source of cheaper goods.
    • American (as well as other parts of the world) see China as the next big things – companies are aggressively investing in China – not just for the cost savings but to get into a younger and larger market.
    • China produces cheap goods that American’s want to buy – so they get American dollars as a result of that.
    • Of course Americans really don’t have that much money – especially the federal government.  Therefore we borrow money – principally with Treasury bonds
    • China has lots of dollars – and they spend them buying America’s debt.
    • China pegs it’s currency to be the same as the dollar.
  6. Even if a company doesn’t move it’s production to China – the price pressure affects everyone.  The entire world economy is influenced by the potential competition from China.
  7. They don’t have the same concept of intellectual property – items are copied like crazy over there.  In fact -the legal environment is kinda murky – as much of what goes in that would be legal in the United States (free markets) is illegal or semi-legal over there.  Therefore it’s a murky environment in terms of law enforcement – in fact the government is directly involved in some of the enterprises as they are often regional or city affairs.
  8. The political environment is not so free – the government still tightly controls the media, the internet – even the message of the country.  Rights are not the same as in most of the Western world – and it’s not talked about much in China….

Overall I’m glad I read the book – I think I learned a lot from it.  Put into perspective I think it’s something of a wakeup call to America.  I’m concerned we’ve gotten a little self-indulgent and lazy.  People in other countries not only have a lower standard of living (though that does go up over time) but they work very hard.  I’m not advocating for America to be workaholics – but for us a country to look hard at who we are and who we are in the world.

In terms of the writing and the flow of the book I think it was good.  The book started out with some stories – to put things into perspective before digging into the details.  The writing wasn’t dry – but it was engaging.  So I would recommend this book to others.  I’m going to read another book about China so I may have a different opinion after I learn some more.

« »