The compression of time in China

BRIEFING: "Chinese business: Time to change the act; Business in China, like business everywhere else, is being walloped by the global crisis. The slowdown is also exposing some deeper flaws," The Economist, 21 February 2009.

China made a recent career of inserting itself in global supply chains at the top of assembly, but in decidedly low-tech realms by and large, meaning "China is a net exporter of goods with a low technology content and a net importer of more sophisticated wares."

Thus the current crisis will push China harder into higher-margin activities, as the article predicts. China clearly mastered the early Japan model. Now it remains to be see if it can master the more mature Japanese version:

Why, then have Chinese manufactures not done more to improve the quality of their goods? The benign explanation is that China is undergoing the same problems as Japan once did, but in a litigious, consumer-centered age in which every flaw is magnified.

China just lacks, despite the many myths, much long-term thinking in its corporations, which Japan definitely had; the global branding to date has been weak. Taiwan did this well in emulation of Japan, as did South Korea: anonymous producers becoming branded players.

Why less so in China so far? Weakness of IP rights, says the article, and still too much government ownership of many companies.

Point being: the mobilization model of China's rise is nearing its end. What comes next will demand more sophistication, along with more pluralism to deal with the complexity.

That means China's state-directed capitalism hasn't taught us anything new. It's reaching the same limits that every other version has previously bumped into.