Globalization backs up China’s tech sector

We’re being bombarded by Twitter storms suggesting that globalization is bad, or at least it is for US manufacturing. The outcry against globalization doesn’t hold water, because globalization is an all-encompassing concept that encapsulates both manufacturing as well as its supply chains. It’s especially true in the case of China’s push for green vehicle technology.

I am not in favor of criticizing the US just because President Donald Trump believes in bluster and appears to have a simple view of globalization. But in comparison to many Asian economies, the US is woefully slow to embrace modernity. If it does not do so, and relies on its accumulated economic wealth, it will soon find itself losing its grip on its top spot and Asia will dominate global markets.

Once manufacturing was a local affair with local supply and delivery chains, perhaps not even national in scope. Now, the CEOs of manufacturing companies must look further afield. They must source at the best prices. They may not necessarily buy raw materials directly but accept that other parties might be more effective at creating vital sub-assemblies, which could be bought and sent to third-party assemblers overseas that have lower costs than could be achieved back home.

Ultimately, anyone can buy the final product thanks to global delivery chains. Such dispersal of effort needs to be evaluated on several factors: fewer jobs at home, for example.

Further, intellectual property can be protected at home where inventiveness is still honored while value can be added in several locations ranging from mining to final assembly.

Globally, perhaps, greater social good is upheld, and ultimately the product is sold more cheaply than it might have been, thus benefiting the global population. In the 1930s, protectionism raised costs for everyone and promoted an economic depression.

China and other Asian countries have vastly improved their infrastructure over the past few decades. In so doing, such nations have reduced rural poverty and increased rural health benefits through better transport and digital links. While Asian cities continue to expand, rural people are attracted to new local industries that flourish as a result of better infrastructure.

For instance, the new factory for Lynk & Co manufacturing cars in Zhangjiakou, North China’s Hebei Province. The greenfield site in Zhangjiakou combines technology and manufacturing knowhow from the Geely Auto and Volvo Cars units of Zhejiang Geely Holding Group. Inevitably from the long reach of Geely some automotive knowhow will arrive from the UK, where Geely owns London EV Co, rebranded from London Taxi Co, making robust taxi cabs. Other technology will come from the longstanding Swedish Volvo company that was bought from Ford Motor. Geely also owns Proton of Malaysia, as well as the sportscar group Lotus, once of the UK.

Across Asian supply lines we have seen the deployment of cloud-based testing of delivery control using the power of radio-frequency identification (RFID) labels to note not only the whereabouts of items, but the full details of “supply to assembly” as well as finished product delivery, routing and distribution.

All major global ports were involved in this development and cooperated in port and ship digitization for the control of the thousands of containers that are at sea at any time. Now blockchain technology is expanding in the ports, controlling the shipping of containers. In the past, a port’s software to manage port-side and loading/unloading were the prime movers; now, Blockchain with RFID can create a better environment for traders as it increases reliability, which is the foundation of all businesses.

This combination will enable modernity to proceed, and China is not being slow to embrace it. Asia has nine of the 10 busiest container ports in the world, with only two of the nine being outside of China.

This example of the rapid growth of a new rural industry in China runs counter to the rhetoric of the US administration looking to impose new sanctions on China to protect US industry. Observers might suggest the US is not ready to use the new technologies, some of which it invented, as its industry might is too fragmented and unimaginative. It does not have good transport infrastructure; it is too rule-bound, with practices that may differ from state to state. Its labor unions are unwilling to learn new modes of work.

Asian companies, as shown above, are happy to adopt worldclass techniques and to consider early expansion, even abroad.

The outcry against globalization doesn’t hold water, because globalization is an all-encompassing concept that encapsulates both manufacturing as well as its supply chains.