ING201

NON-STOP IMPROVEMENT: CHINA


After the World War II, countries aimed to struggle with each other strategically. Their new strategy was growing their own economy by producing. International commerce started to improve rapidly after the war. The amount of exportation and importation has reduced quickly. All of the countries increased their GDP (Gross Domestic Product) more than 20 times which measures the output produced by factors of productions located in the domestic economy regardless of who owns these factors. China is one of the good performers of the trade owing to its big potential. Industry and electronics are the most important weapons of present Chinese. China is the second big economy after the US in the world and it has been the focal point of World Economy. Most of the powerful countries follow the improvement of Chinese Economy to protect their economy. Although Chinese Economy has boomed lately, it threatens the World Economy due to its poor quality of products and the process of ad-copy.
First of all, cheap input and various products have a big role in the boom of Chinese Economy. The cost of production is very low in China due to its cheap input. In China, labour and electric energy are cheap; besides, Chinese people have no social security (Narin, 2004). This means that they have all opportunities to charge low price for their products. Labour isn’t expensive because many people are waiting for a job. So, people have to accept to work for low salary. Moreover, according to Bajpai (n.d.), China’s great dynamics are based on low rate taxation system that courages firms to invest much more. Most of the big producers have factories in China because of receiving a little amount of tax from them and proximity to the Asian market.
China has a great potential of productivity. In 2000, Yee&Wa stated, ‘Mainland Chinese firms should put more capital and efforts on the products design and package and think of something innovative since Hong Kong consumers like something special and innovative. An attractive appearance of the product can attack more people and hence increase competitive power.’ It makes no difference to consumers if the products are Chinese or not. People cannot become aware of which one is produced in China. In addition, China is the biggest producer as far as vegetables, fruits, textile and electronic instruments are concerned (‘China Rises and Rises’, 2004, ‘The New Competition’ section). China can produce and serve all kinds of products.
Secondly, China threatens the World Economy due to its speedy development and negative effects on other countries. Chinese Economy becomes bigger and this cannot be stopped. Üzülmez (2003) asserts that although the World Economy grew 2.5% in 2003, whereas in China, this ratio was 9.1%. This proportion may increase if China enters the WTO (World Trade Organization). Membership of WTO mostly rescues countries from quota. Additionally, the industrialized countries do not desire to import excessive Chinese products due to fact that their capitalist system which is based on exports may worsen (‘China Rises and Rises’, 2004, ‘The New Competition’ section). Nearly half of consumption is provided from importation; therefore, countries don’t want to export cheap products more from China. Otherwise, it will be a big loss to their producers.
There are serious negative effects of Chinese Economy to other countries. ‘The People’s Republic’s massive production and exports of low priced goods to leading industrial countries have contained inflation’ (‘China Rises and Rises’, 2004, ‘A New Force Propels the World Economies’ section). If cheap products enter the economy, native producers are obliged to decrease their production. The decline in production increases prices which causes inflation. Furthermore, Wickman (n.d., para. 4) stated the problem of high taxes due to inclination to capital and creative labour forces EU countries which make them trade under pressure. Moreover, Üzülmez (2003) thinks that because of lack of quality in products, Chinese manufactures cause troubles for consumers and producers of other countries. Poor quality of products are aged quickly, so although they are cheap, they cause many disadvantages. In addition, As a result of reduction in China’s necessity to raw material such as iron, steel, zinc and copper, the World Economy has been discouraged (‘China Rises and Rises’, 2004, ‘China’s Growth Stimulates Other Economies’ section). China raises the price of raw material by this way. When demand increases, the price increases.
Thirdly, the reasons why China’s products have poor quality are mass production and cheap raw material. Massive production has a vital importance in China to be continued its citizens’ life. Baker (2000, para. 2) indicates that population of China reduces inextinguibly and they must increase their food production to overcome this difficulty. It isn’t an easy job to feed this amount of population or to serve all needs. What’s more, US and EU are afraid of China’s effective production strategy which provides China to compete globally including its huge potential of output (Syed, 2005, ‘WTO Tasks Sour’ section, para. 5). Providing its consumption necessity isn’t enough, countries have to produce more than their need, so they can earn from exportation. For instance, due to low wages and mass production, China competes America in many industries such as textile and bicycle products (‘China Rises and Rises’, 2004, ‘The New Competition’ section).
China has an advantage of providing cheap resources and raw materials. As mentioned in ‘Natural Resources’, China is the third country in the world regarding the mineral resources. All nonferrous metallic minerals exist in China (n.d.). Industries are one of the most important signs of improvement and their own resource provides more advantages for China. Besides, China has its own resources itself such as agricultural, mineral and energy; thus, it can compete with other countries (‘China Rises and Rises’, 2004, ‘The New Competition’ section). Additionally, Ito (n.d., para. 8) emphasizes that the progress in China is one of the good examples in the world concerning the import of cheap goods and services. China generally imports the inputs of products and they sell value added outputs.
Lastly, process of ad-copy resulted in unethically copying of big trade marks and this process has negative effects on them. Chinese can copy all of the products especially the big trade marks’. Tavassoli&Lee claim that ‘Visual cues such as meaningless logos (e.g., Nike’s swoosh), images (e.g., the Michelin baby), and colors (e.g., UPS brown) should be more potent retrieval cues in Chinese’ (n.d., para. 3). Chinese not only copy the big trade marks unethically, but they also sell them all over the world. Moreover, ‘The purchase intentions of consumers have not been affected by the ‘made-in China’ sign’ (Yee&Wa, 2000, p. 14). Their only interest is the trade marks. ‘Since the reason that people like to buy products from positive country of origin is mainly because of their confidence in the products’ quality and design’ (Yee&Wa, 2000, p. 64).
Process of ad-copy causes several negative effects on big trade marks. Şener explains that the design of Turkish products have been copied by the Chinese, so their price decreases in the Turkish Market (2005, p. 20). People usually buy the cheap ones; consumers tendency to products are generally same except the conscious ones. Producers of other countries have to decrease their price and sometimes they don’t make a profit. In addition, Yee&Wa (2000, p. 43) point out that although Chinese products are unattractive, researches show that they have a positive impact on consumers. After the Chinese widened their market, China’s strategy changed to produce quality products with low price.
In conclusion, despite the improvement of Chinese Economy, the World Economy is affected negatively because of less quality of Chinese products and unethical behavior of ad-copy. Consumers don’t make a profit on Chinese products. Countries cannot prevent Chinese products in the global World, because China is getting ready to become member of WTO. This shows that no country can plan to use quota on Chinese products. Only one way remains: taking all preventive measures. Cost reduction and prohibition of copied products are the most important facts that provide producers of countries to compete with Chinese. Cost reduction theories such as six sigma, TQM (Total Quality Management) must be used in all sectors. Governments have to pass new laws to protect their own producers. Making laws isn’t enough, taking precautions and controlling must be done by governments which are the last and the most important stages.