Ed Conway wrote an interesting article in The Times this week pointing out that, while the numbers might suggest that China is the "world's greatest manufacturer", the truth is less straightforward.
Your smartphone might have been made in China, but "the real technological wizardry, including the display, the processor, the battery and the storage chips, were probably made elsewhere." China is currently the world's assembly point, not its "factory and design house" some 36% of total Chinese trade consists of goods made entirely from foreign components.
Before China can make the transition from low-wage manufacturing economy to the high-wage mixed economy its leaders are always talking about (the China 2030 plan), that has to change. Conway reckons that is beginning to happen.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
He points out that the latest iPhone has a battery that was made in China rather than in Taiwan, and that "the most interesting new smartphone manufacturer" around at the moment,OnePlus, is "actually Chinese".
He may be right, but before China can really move on from being an assembler of goods for export to being a creator of goods to export it has one more major hurdle to overcome brand perception.
You mayhave read over the last few years about Chinese tourists buying baby milk and nappies to take home with them, and last week I pointed you to the odd story of Okamoto, a little-known firm with a grubby head office in back street of Tokyo. Okamoto makes condoms. And despite its unprepossessing office, says CNBC.com, it is a $1bn company by market capitalisation, with world-class materials technology, shares at a 22 year high, a transitional marketing push in the works, and a name synonymous across much of Asia with "better sex".
You see, Okamoto condoms are made in Japan. And as such they are trusted by the Chinese (it's all about quality) in way that Chinese condoms just aren't. So nearly every Chinese tourist that comes to Japan (and 2.8 million have gone this year so far) buys Okamoto condoms at the same time as they buy Japanese nappies (less likely to cause rashes) and watches (if you buy them in Japan you know they aren't fake).
This matters. If the Chinese don't trust their domestically designed products, why should the rest of us? But it is also something that can change very quickly: remember when everything made in Japan was considered to be unusable rubbish? It wasn't that long ago. And remember when the same was true for Korea? According to the JD Power quality rankings, Kia now makes the second-best quality cars in the world (after Porsche).
Perhaps Conway's admiration for the OnePlus suggests the tide might soon turn in China too.
-
Four AI ETFs to buyIs now a good time to buy AI ETFs? We examine four AI ETFs that investors might want to add to their portfolio
-
Chase boosts easy-access interest rate - savers could earn 4.75%Chase is offering a boosted interest rate which is fixed for six months, on top of the standard variable rate
-
Beating inflation takes more luck than skill – but are we about to get lucky?Opinion The US Federal Reserve managed to beat inflation in the 1980s. But much of that was down to pure luck. Thankfully, says Merryn Somerset Webb, the Bank of England may be about to get lucky.
-
Rishi Sunak can’t fix all our problems – so why try?Opinion Rishi Sunak’s Spring Statement is an attempt to plaster over problems the chancellor can’t fix. So should he even bother trying, asks Merryn Somerset Webb?
-
Young people are becoming a scarce resource – we should value them more highlyOpinion In the last two years adults have been bizarrely unkind to children and young people. That doesn’t bode well for the future, says Merryn Somerset Webb.
-
Ask for a pay rise – everyone else isOpinion As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why you should do that too.
-
Why central banks should stick to controlling inflationOpinion The world’s central bankers are stepping out of their traditional roles and becoming much more political. That’s a mistake, says Merryn Somerset Webb.
-
How St Ives became St Tropez as the recovery drives prices sky highOpinion Merryn Somerset Webb finds herself at the epicentre of Britain’s V-shaped recovery as pent-up demand flows straight into Cornwall’s restaurants and beaches.
-
The real problem of Universal Basic Income (UBI)Merryn's Blog April employment numbers showed 75 per cent fewer people in the US returned to employment compared to expectations. Merryn Somerset-Webb explains how excessive government support is causing a shortage of labour.
-
Why an ageing population is not necessarily the disaster many people think it isOpinion We’ve got used to the idea that an ageing population is a bad thing. But that’s not necessarily true, says Merryn Somerset Webb.
