Monday 8 June 2009

China and the concept of "speed intensity"

The remarkable growth of China and before that Taiwan and Hong Kong was based on exports. This much is clear. The nature of these exports is however worth looking at more closely.

A recent World Economy paper puts Asian growth in context by considering the concept of "speed intensity". This makes a lot of sense.

The demand for fast and disposable fashion in the West has lead to need for cheap goods that can be made quickly to hit the shops shortly after the catwalk shows.

Speed Intensity and the Rise of the Chinese Economies

Kelly B. Olds 1

National Taiwan University

ABSTRACT

Producers of speed-intensive goods, e.g. clothing or electronics, face markets that are in constant flux due to changing fashion or technology. Throughout the twentieth century, Chinese business networks have had a comparative advantage in producing speed-intensive goods due to their quick reaction time. This comparative advantage was of relatively little value prior to the Second World War, but since the war, international telephone and air services have made international trade in speed-intensive goods practical. This has caused the demand for speed-intensive goods on the international market to grow at an extremely rapid pace. This growth in demand can explain the post-Second World War economic booms experienced by Hong Kong, Taiwan and finally China.

1 comment:

JOSE LUIS REVILLA ESCUDERO said...

CHINA, ready to lead...?


I have spent the last month travelling around ASIA to try to find an answer to this question. Just now, when we are in the middle of a global crisis, with almost all foundations of economy in danger, I wanted to answer myself about the role that each country is going to take to lead the world out of this recession period.
I travelled to Hong Kong, Shanghai, Taipei and Seoul. I spent a certain time reading the local press, involving myself with their domestic issues, and watching and asking about the role of Hong Kong, China, Taiwan and South Korea in the future recovery process.
China latests are focused on the opening of Shanghai Stock exchange listings to foreign companies, but still with the limitation of doing it only with yuan currency, and still being not convertible.
Hong Kong, who belongs to China, but with a S.A.R. ( special administrative regime ) is deciding now its own future, since Shanghai and itself must now compete to become the financial centre of the "new" China.
Taipei celebrates that for the first time in six decades, a mainland company, China Mobile is due to acquire a 20% stake in a local communications carrier, breaking with this step, the so long disputes among these 2 asian states. Nevertheless, some old nationalists from Taiwan see into this movement from mainland, the challenge of a new adhesion process, similar to the one carried with Hong Kong.
And finally, Seoul is focused on recovery the way they best know. That is, working tough and smart to become again what two years ago it really was... an still unknown, but highly effective and productive capitalist economy.
China strategy along the years has been to manufacture goods at a low work labour cost, and sell them mainly to the US and Europe. Now, with 1,3 billion people living in the mainland, they realise that their real market may be inside, may be domestic. But to go along with this change in the way exports are handled, is not an easy task... but you can see already some interesting movements, such as the recently signed collaboration with India, to get a chunk into the OUTSOURCING market, as well as, the already mentioned opening of Shanghai Stock index to foreign companies.
My opinion resides on the idea that in a not so long future, we will start looking at Shanghai index closings the same way we do it with Wall Street now.
If China converges into a more open performance, USA supremacy as the first economy in the world may be in danger.
China will try to joint Hong Kong current power and international presence, with Shanghai newest challenges. At the same time, it will break old and stupid disputes with Taiwan and even South Korea, to walk along a new asian world, capable of assuming the role of leading it.
India will have to decide if it goes alone in this new era, with its 1,1 billion people and therefore, their impressive economic and social potential... or decides to take part with the US or with CHINA. That decision is going to become critical for India in the very near future.
But, for sure, we do not expect China president to become a worldwide "prime time TV star" the same way the US does with its presidents. We will never know if China president has bought a dog called "Bob" to his daughters... we even won´t know if he has kids at home,... or if his wife is dating another men ...
If the US unveils its secret CIA files, ... China will continue with its secrecy in domestic critical matters.
If the US continues fighting muslims in Afghanistan, China will stretch its ties in a peaceful way with its long time disputed neighbors, trying to consolidate its presence in Asia.
If the US continues with prime time interviews, China will present only specific topics of its politicians activities.
This does not mean OPEN economies vs CLOSED ones, but it means, to be focused on real issues and leave marketing or branding for others.


Jose Luis Revilla Escudero
President
WW Shares, Inc
-Global Wealth Management-
www.worldwideshares.blogspot.com