Sunday, 19 September 2010

Made in China

I don’t profess to be a master of economics. I accept that the world’s financial systems are in turmoil and that Countries have to make cut-backs in order to balance the books in the longer term. What never ceases to amaze me is how we accept goods from China in greater and greater quantities and put ourselves further in the ‘red’ in the process.

Buying any goods on the High street whether its clothes, electrics or household items in general you will find that most of them bear the mark ‘Made in China’ or ‘Made in the PRC’. Some goods from Chinese owned companies are shipped from elsewhere either because they have been re-packed or just finished off using cheap labour forces. Vietnam is a typical example.

Of course we like these goods because they are cheap. Often, although not always, the quality is more than a bit questionable. Many bear familiar brand names of British or European companies. They have been tempted by the low cost of labour in China and associated countries and can market goods at a much lower price than if they had been manufactured in the West. Alternatively they can be selling the goods at similar prices, but making bigger profits in the process.

Then we have the issue of pirated software to consider. It is estimated that 80% of the software used in China is copied from legitimate manufacturers such as Microsoft. A lot of this fake software inevitably leaves the country and is distributed abroad. Much of this software includes malware programs which leave an insecure backdoor for those who install and run it on their systems. Much of the fake software is packaged in such a professional way that many people think they are using the real thing. The loss to the legitimate world marketplace is estimated as being in the hundreds of millions of Dollars.On top of this there is the piracy of DVDs, CDs and television transmissions. All this is done so openly, and on such a huge scale, that one suspects the Chinese Government is in on the act. They certainly make very few attempts to stop it whilst they do seem to have plenty of power when it comes to firewalling their countrymen against the World Wide Web.

Take a trip to Felixstowe or any major British, or European, container port and look at the size of the ships bringing in this stuff. They are taller and longer than many blocks of flats. They are packed to the gunnels with containers bringing in all sorts of goods. It is killing, or has already killed, the European manufacturing business.

Take a look at the origin of this stuff. China lacks anything in the way of human rights. The wage levels are low and many people are working long hours. Child labour is not unusual. At basic street level the average worker is not reaping the reward for the Chinese economic miracle. Manufacturers who transfer their production facilities abroad have to spend a lot of time and money in order to prevent their products being faked and sold on alternative market places. Just about anything and everything is faked including watches, designer clothing, cigarettes, and any number of household goods. Even medicines are being copied or simply manufactured as useless facsimiles. These fakes are often very difficult to identify from the genuine article. Cigarettes emanating from China are often sold in pub car parks from the backs of vans. Apart from being fakes they have toxins not found in the real brand which can do even more damage than genuine cigarettes. Often these brands fall into the hands of children and people on low incomes.

The Chinese also have an appalling record as far as pollution is concerned. With no shortage of fossil fuels their goods are made using electricity from polluting power stations. Health and Safety is not something that your average Chinese factor would recognise. Raw materials are brought in from Countries with similar records. Africa is a particular source, and rare material resources a bought in with bribes to the ruling fraternity who keep the profits to themselves.

We saw the Beijing Olympics which were contrived to attract the West. What is forgotten is that thousands of people were turned out of their homes to make way for the stadiums. Huge labour forces were commandeered to build the facilities at almost slave labour costs. The reduction in pollution was only achieved by banning cars from using the roads. Now things have returned to their pre-Olympic levels. The ages of some Chinese athletes were in some doubt. Some were too young to be competing. Programmes have shown the harsh regimes that children are subjected to in training for athletics and the world renowned Chinese State Circus. Far from ‘cultural differences’ these would amount to child abuse in any western country. In order to boost the number of spectators the Chinese operated a ‘rent a crowd’ at some of the lesser events. Doors were apparently opened to allow the Chinese to converse with foreign journalists and others. However, in reality such meetings were watched by the hundreds of ‘security’ staff covering the event. People were very careful who they spoke to, and what they said. The restrictions on the internet were lifted for a few weeks, but soon went back to their normal status of being heavily restricted from access to western thought.

Where does one stop? The ‘one child’ policy frequently leads to families aborting or killing female children in some of the poorest communities. Now that the Chinese want to increase their labour force this policy may be lifted. They treat animals in a way that is totally unacceptable in many countries. The Chinese eat anything that moves or crawls and care little for its welfare.

We cannot stop this onslaught. China is a nuclear nation and would not hesitate to use this force on its enemies. They associate themselves with volatile regimes like that of North Korea.
What we can do is to heavily tax all goods imported from China or Chinese companies. A 10% tax on all goods as they enter the western countries would certainly raise the price of goods on the high street, but the revenue raised should then be turned back into European industry in order to re-instate a manufacturing infrastructure that we have all but lost. After 10 years this tax should be progressively raised until it reaches a level of around 20%.

The Chinese have the largest population in the world. If they were paying realistic wages to the workforce there is plenty of potential for their manufactured goods to be sold on the home market. Of course people will argue that such a policy could harm exports to China where they might find similarly imposed restrictions in retaliation. Whilst specialist goods such as manufacturing machinery may be doing good business at the moment remember that similar things happened when the world started to trade with Japan. Within a decade these items were being copied and improved in the Japanese market and being sold back to us. The gain was a short term one.

We need to turn the tide now. Thousands of young people are leaving school and college with no prospect of work. The world’s precious resources are being snapped up by China, thus starving manufacturing elsewhere. This is particularly so in the vital market of electronic components. The alternative is that more and more goods will come from China and we will be totally reliant on them as the only available resource at any price. It may not be war with weapons, but a financial war which the Chinese are set to win. It must be stopped, now.

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