For Western firms, getting into China seems both obvious and dangerous. So much cheap labor to exploit. The danger? Being co-opted into building up China's own industries, which means the holy grail of capturing the booming domestic demand there will likely be a partial victory.ARTICLE: "Bill Ford Jr.: For Auto Makers, China is the New Frontier," by Gordon Fairclough, Wall Street Journal, 27 October 2006, p. B1.
ARTICLE: "Airbus Move to Build in China May Pose a Longer-Term Risk," by Daniel Michaels and Bruce Stanley, Wall Street Journal, 27 October 2006, p. A6.
EDITORIAL: "America drops, Asia shops: Thanks to the vigour of Asia's consumers, it is a good time for the American economy to slow," The Economist, 21 October 2006, p. 11.
And yet, it is likely to be the only sustainable victory there. A total capture couldn't work, because the CCP would simply lash back eventually, so better to capture some of a huge market than none.
Plus, as Ford points out here, getting in bed with the Chinese will put American firms more in tune with the tastes of Asia and--by extension--Europe. In cars, that means smaller and more fuel efficient.
So accessing China isn't just accessing labor or market, it's accessing the emerging dominant global design mindset. Get left behind and watch the world get very small for you.
Risky? You bet. But either you tolerate the risk or you guarantee yourself failure. Those 3 billion new capitalists will not be denied.
And thank God for them. Now we finally have a decent counterweight to the American consumer. Just in time given all the debt our "fiscal conservatives" have--yet again--built up a huge national deficit.