Passage 1
The International Monetary Fund recently forecast that East Asia is set to continue its economic boom for the next few years. Yet Sony announced that it will no longer export television sets from Japan because it cannot price them competitively.
Listen to Sony. Even in a growing market such as Asia, costs count. And for many businesses, Asia is beginning to cost too much.
East Asia’s economic miracle is best summed up as the biggest price undercut in history. The region grew because it was the cheapest source for the low-technology consumer goods that the West craved. Hong Kong and South Korea did not invent new or more efficient manufacturing techniques; they simply bought market share with low wages.
But the same market force that led buyers from America and Europe to Taiwan and Japan 30 years ago is now working against Asian nations as they try to upgrade their industries. Years ago, an Asian factory turning out shirts was competing against huge, unionized factories in North Carolina and Manchester. Today, a shirt-maker in south China has to compete with 100 other guys in his own country, 20 factories in India, 5 in the Philippines and reinvigorated and highly efficient new plants in the U.S and Europe.
Sony, Hewlett-Packard and Ford need a competitive business environment that is based on more than cheap pairs of hands. In much of East Asia, inadequate roads, seaports and airports, telecommunications and other infrastructure, high rents, shortage of managers and skilled technicians, corruption and, above all, government interference are now the deciding factors when multinational corporations choose to keep production in North America or Europe rather than switch it to Asia.
Every day, I see costs placing Asian nations at a disadvantage compared with their “cheaper” Western competitors. In shipping, for instance, terminal expenses in Japan and Hong Kong are two or three times higher than those of the U.S.A.’s busiest West coast ports. To truck a container 100 miles down from southern China to Hong Kong costs more than to ship the same container from the United States or Europe to Hong Kong.
43.Asian economic growth was primarily based on their cheap exports rather than high-tech innovations.