Twofish's Blog

October 9, 2007

Not short sighted at all….

Filed under: china, economics, globalization — twofish @ 4:24 am
No one I know in business is being short-sighted at all here. Everyone is doing what they are doing with full knowledge of the consequences. If low end manufacturing is moving toward China and India then why lose money by fighting the flow rather than make money encouraging it? The only two reasons that come up are sentimental national loyalties and fears of a protectionist backlash.

The trouble with national loyalties is that while a Swede can reasonably be expected to site factories in Sweden over China, there’s no reason why a Swede would want to site a factory in the United States over China or any reason why an American would want to site a factory in Germany over China. Multi-national corporations are increasingly multi-national which makes arguing for political siting difficult. The Americans on the board of directors might want the company to do things that especially benefit the American economy or American national interest, but that’s not going to convince the Swedes, Italians or Brazilians in the room, and over time you are going to find more and more Chinese and Indians in the board rooms.

The trouble with protectionist backlash is that the fundamental driving forces behind globalization don’t have much to do with trade law. They have to do with the fact that I can instant message someone in Hong Kong at no cost. As long as you can have people talk between Hong Kong and New York City, people will find ways around the barriers.

People in finance and business have seen the writing on the wall, perhaps a bit earlier than people in politics or main street. If world economic and political power is moving from Western Europe and the United States to China and India, then you have lots of people who have seen the writing on the way, and figuring out how to get in good graces with the new people with power.

That’s being realistic and far-sighted, not blind and short sighted……..


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