Some Assembly Needed: China as Asia Factory

Although a wealth of products pour into the US, bearing the label “made in China,” few are made completely in that nation at all. These days China is just the last stop in the complex global production networks run by multinational companies in Japan, South Korea, Taiwan and the US. By confusing between what really is assembled in China with the common label of “made in China,” one overestimates China’s power in its trade relationships with other countries, notably the US. While a trade deficit suggests that China reaps most benefits from the exported goods, US multinational corporations and other foreign interests have become the “invisible hands” behind the Chinese factories that produce mass quantities of inexpensive goods. As a result, overseas countries apply huge markups on products, taking advantage of both consumers and Chinese workers. A Barbie doll costs $20 and the Chinese only get 35 cents of that. China might be blessed with the “wage benefits of globalization,” but is largely excluded from the profits markups, explains MIT’s Yasheng Huang. In truth, foreign companies control nearly 60 percent of China’s exports, and the biggest beneficiary, according to experts, is the US. Chinese businessmen understand this crucial difference between their own country’s economic rise and that of Japan during the 1980s – and have the goal to create and export products on their own. Yin Mingshan, a multimillionaire who wants to export cars to the US, characterizes the dilemma: “One who earns money in China is a winner; one who earns money overseas is a hero.” –YaleGlobal