Wednesday, November 30, 2011

How China Beats the U.S.

Globalization enabled corporations to cut costs, pay less salaries and pensions and reduce inventories.  Internet age made it much easier to have as low raw material inventory as possible.  The downside of this is that any interruption of the flow of the materials would cause chain-reactions down the pipe and all the way to the end users or consumers.

Take the flooding in Thailand for example.  American Public Media reported that "Thailand was such a key manufacturing base. It is a key point of transit for both computer parts -- hard drives in particular -- but also auto parts. It supplies other parts of the world but it also has assembly plants here; so in both cases in the auto industry.

"But also the parts shortage is causing big problems much further afield. In the United States and in Europe, for instance, Honda has had to cut production. Same with computer hard drives. Looking ahead towards the Christmas rush, there are already worries that they're just not going to be able to get the kind of parts they need. So it is a crucial hub in this region -- not just for Asia, but much further afield."

The earthquake and tsunami in Japan caused similar headache globally as well.

We'd better be prepared for such troubles in the future.  Overtly relying on the foreign suppliers, could be a security risk.

China, with its accumulating wealth, is heading to a clashing course with the U.S. headlong.  If these two countries are engaged in a war, China could beat the U.S. easily by withholding shipments of all those iProducts, such as iPhone, iPad, etc.

The inconsolable American consumers will storm our governments and pledge their allegiance to whoever would deliver their coveted goods and would be gladly to start to sing "The East is Red"!

[East is Red was a folk-song based ode to the great dictator Mao Zedong.]

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