Passage 2
Asia, You Cost Too Much
The Asian economic miracle can be best summed up as the biggest price undercut in history. Asia grew because it was the cheapest source for the low-tech consumer goods that the West craves. Hong Kong and Korea didn't invent new or more efficient manufacturing techniques, they simply bought market share with low wages. But now Asia is beginning to cost too much. If you still think Asia is cheap or even a bargain, compare office rents in Shanghai with those in Chicago and Paris. Or try to hold a qualified manager in China against the almost weekly job offers he receives due to the shortage of Chinese professionals. No wonder companies are voting with their feet in response to Asia's rising cost. Germany's Siemens is dumping Singapore in favor of lower cost locations in the region. The way things are going, Siemens may have to move again before too long.
The competition facing Asia is not going to let up, either Local council representatives from Britain are running all over the world advertising tax cuts, giving away state land and slashing bureaucracy in an effort to attract industry. Technological innovations and cost reduction in communications and transport mean that location isn't as important as it once was. Only Singapore seems to understand that keeping up isn't good enough and that being competitive means forging ahead. The Lion City made a concerted effort to open market, cut government regulations and create transparency. But most Asian government just don't seem to understand the relationship between high costs and low competitiveness. Otherwise why would tariffs on agricultural imports be crippling the Korean and Japanese food processing industries? The oligarchical nature of trucking in Malaysia guarantees that high transport costs will drive business away.

The importance of location is weakened by technology and communication innovations.