Over the last days I have been meeting and talking with different company’s owners and directors about the Asian future. Most of them grew up in Taiwan but currently some are working in China or Japan. I have found they all agree that 20 years ago China was the easiest place to build a company because of the cheap labour; however, today things are changing and they are thinking about different alternatives to survive. Something that impacted me was that they all agree that the quality of manufacturing in China is very bad, so its paradise for manufacturing simple items. I also feel like they are waiting to see the end result of a long and slow process that has been destroying factories.
So, what is the problem with China if it has the cheapest labour in the world? And a simple answer silenced the room “Now workers know how to enjoy life, they have money to spend”. One of the executive started to give examples, a few years ago workers came to work walking, and today they use motorcycles and some even cars. Now workers have money to spend, so defend their holidays because it is their time to enjoy with their families. One of the company owner in China said, we don’t give them weekends, but the increase of holidays and salaries is step by step killing us. One more time I ask, what do you mean with increasing of salaries? Well, he answered me, China’s government increases from 15% to 20 % the minimum salary each year, and we must comply with it. This year 2012, there will be a 15% increase due to the bad economy and in 2011 it was 22%. Another director said "People are changing, we don’t believe in the Chinese, they are different from heart and soul than the other Asian cultures". He explained to me that he supplied many Asian with electronic components and Chinese companies always pay late, which is very very different from Taiwanese and Japanese companies. The director continued arguing that his company "only wants to sell regardless of the reputation they may obtain”.
Chinese manufacturers have a mindset of “produce, produce, produce”; on the other hand, in Taiwan and Japan its “innovate, innovate, innovate so China cannot copy us”. They openly admitted to me. “For us its easy to make plastic toys, car sirens and that stuff, but it is costly to produce outside China, and for them it is difficult to codified our control alarms and systems”. One of the executives who is currently working in China told me, “one of us has to produce a lot to stay in the market and the other one has to create new ideas to be in the market”. Another question arose in my mind, when is the situation in China going to change and which country will be the next China? They said within 2 to 5 years yet the next country is hard to tell. One of them is constantly checking India and Vietnam but the labor is not going to be as cheap, so coming back to Taiwan is an option. The owner in Taiwan said “Once the salary in China equals Taiwan I will produce all their stuff while they sell their old factories and machinery”. One of the more quiet executives said “The economy is pretty bad and it’s going to be worsen year by year. China has to pass the ball and I cannot think of any country who could support such a large market, but at the same time the position that China is difficult to achieve, I mean, all the traders, suppliers, factories are already there. It’s simply easy to produce”.
The Chinese New Year will be this January 22nd 2012, it will be an economically hard year all over the world. These owners came back to Taiwan to pass the celebration with their families. We exchange different points of views and ideas. I still have questions and I’m sure they do as well. “Crisis time is the time to make money”.
