The Chinese aren’t coming, they’re here

The NY Times recently published an article that should give everyone in the western world pause for thought. It documents the story of why Apple make the iPhone in China, not the USA.

The key points:

  • The Chinese factory that won the bid to produce the iPhone’s glass screen were building a factory, hiring engineers, and building worker housing, before they even knew if they’d won the work.
  • China is producing appropriately-qualified engineers (note, not necessarily highly-qualified engineers) at a scale the US (and I suspect, the whole western world) cannot match.
  • Those engineers (and workers in general) are lean, eager and controllable. They are willing to work crazy hours and be manipulated to a degree that western workers will not. (We would have done so 100 years ago, maybe even 30 years ago in some places, but not any more.)
  • Apple (and I suspect, most large multinational companies) feel no obligation to solve anyone’s economic woes except their own. They feel no obligation to hire people from their own town, country, ethnic group, race, or tribe. (Should they? I’m not sure.)
  • They do feel an obligation to be faithful to their own purposes. (Which might be as simple as producing the best possible piece of art that moonlights as a smartphone.)

Factors not mentioned in the report (because they were out of the article’s scope, perhaps, but which should nevertheless colour our thinking):

  • Western companies have ever-growing pension fund burdens.
  • Western companies with significant numbers of soon-to-retire baby-boomers will struggle to retain or replace the skills those baby-boomers take with them , but will still have to fund those baby-boomers’ pensions.
  • Even without a retiring baby-boomer problem, Western companies have for some time now been complaining about their inability to hire suitably-skilled employees. (At salaries that fit their systems and expectations, they neglect to add, but of course that is what they want.)
  • Western nations have a back-breaking mountain of debt to manage, and their politicians have not, to date, demonstrated the tough-mindedness to tackle it.
  • Companies don’t vote. Employees do. And Western employees (including those retiring baby-boomers) tend to vote in favour of what benefits Me, Now. Let some energetic youngster, somebody richer than me, somebody else, anybody else, pay off those debts. Don’t you dare touch my pension, my benefits, my pet whatever. I’ve paid my dues.

How is this all going to work out? Here’s my personal forecast:

  • It is going to be impossible for Western governments to avoid raising taxes on domestic corporations. They will be the only tax revenue target that can’t vote the government out of office.
  • Those companies will have the choice of moving work to where they can recruit more easily and produce better and more easily, or go bust. Easy choice. Whoopee, you say, This isn’t news, this has been happening for a decade already, and we’re still coping. True, but the NY Times article shows that this  has been happening for high-complexity, highly-engineered products for at least 5 years (and probably longer). And as for whether or not we’re coping, just ask Eric Saragoza (the highly-skilled engineer, please note) in the NY Times article. I don’t think he’d say he’s coping.
  • The trend will spread to other economic sectors on which  Western nations still think they have a lock. Banking. Financial services. Aerospace. Transport. Nanotech. I don’t see any limitations yet.
  • The Chinese may eventually be victims of their own success. Other nations historically even poorer (e.g. African nations – wouldn’t that be great?!) will start to beat them at their own game. I see this as a positive thing. Too many people in the world have allowed themselves to have a Victim Mentality. For too long, the Chinese people have suffered at the hands of oppressive government policies. They are now hungry for a share in the West’s prosperity (which we in the West never had any business claiming as a birthright), as they should be. Other nations will eventually do the same.

How should you plan for the future? Well, I guess everyone has to make up their own mind, but here are my ideas:

  • Look at what most everyone else is doing. Do the opposite.
  • Keep a weather eye on the horizon. If iPhones can be outsourced to China, then your company’s products eventually will too. Take corrective action now, If necessary, jump before you’re pushed.
  • Give up any idea of retirement at 65, or 70, or 75, or any age. the moment you retire, you place control over your  future income in the hands of someone who doesn’t really care, and will have bigger fish to fry than providing for you in your old age.
  • Instead, retire now. Work at what really floats your boat right now, in an environment of people who share your values. If one doesn’t exist, then maybe that’s what you should do – create an environment for other people of similar values. The upside is, it will feel a little (maybe a lot) like retirement.
  • If you’re young and starting out, or older and unemployed, give up the idea of finding a job. That’s what everyone else is trying to do, and you are just one in a crowd of similarly desperate people. Get out of there. Instead, look for a way to give, give, give. To someone who really wants what you know how to give. Get your mind off yourself.
  • Stop thinking of yourself in term of your trade or profession. (This is difficult. I was raised by a chemistry PhD father, who considered scientists and engineers the cream of society. My engineering training reinforced that view, so it is difficult for me to not think of myself as an engineer.) Rather, define yourself in wider terms. Consider adjectives like craftsman, artist, entrepreneur, visionary, coach, evangelist, guru, rabbi, happiness dealer  . . . . . yeah, I know, some of those are a little corny, but they’re what comes to mind at the mo, and they’re probably more radical than what you’re used to. And the ones who will succeed in this chaotic future ahead will be the radicals.

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