Every morning in Africa , a gazelle wakes up.It knows it must run faster than fastest lion or it will be killed.Every morning a lion wakes up.It knows it must out run the slowest gazelle or it will starve to death.It doesn’t matter whether you are a lion or gazelle.When the sun comes up, you better start running.
Outsourcing means taking some specific, but limited, function that your company was doing in-house and having another company perform that exact same function for you and then reintegrating their work back into your overall operation.
Offshoring , by contrast, is when a company takes one of its factories that it is operating in Canton Ohio and moves the hole factory offshore to Canton, China. There it produces the very same product in the very same way only with cheaper labor , lower taxes , subsidized energy and lower health care costs.
By joining WTO in 2001, China assured foreign companies that if they shifted companies offshore to China ,they would be protected by international law and standard business practices.
Beginning the 80’s many investors start to say ‘’well , if we can’t sell many things to the Chinese why don’t we use China's disciplined labor to make things there and sell them abroad? ‘’ because China has had equal economic and political regulation for all foreigners from WTO , it was more profitable to sell six billion products by manufacturing it in China then selling only one billion product to china.
The American and the western companies thought that , because of Chinas entrance into the WTO, they would benefit from China’s cheap and disciplined labor , low taxes and increasing investment opportunities , they didn’t think of high chance of being defeated by china itself. Because of the same incentives. While they were benefiting from those opportunities and developing their businesses ,china was developing its whole national business power and getting almost impossible to compete.
China joined WTO. American and western companies think they can benefit from the occasion and want to run their business there. But; Pro’s Con’s Cheap labor Cheap labor Low taxes Low taxes Investmens Investment opportunities opportunities SO?
That’s why OdedShenkar from Ohio State University directly sad to the American companies ‘’Shaving 5% and there wont work. You need an entirely new business model to compete , and entrepreneurial zeal to do whatever it takes to please big retailers such as Wall Mart Stores, Target , Best Buy and J.C Penney.’’
“China is a threat, China is a customer, and China is an opportunity.” Kenichi Ohmae
According to Ohmae, businesses should be broken down and some must be done in China , some must be sold the China and some must be bought from China instead of competing with China as an enemy.
According to critics of Chinas business practices Chinas sizes and economic power will soon be leading the global flour to low wages low work place standards and lax labor laws. This is called ‘China’s Price’.
China + 1 =To keep one production leg in china but the other in a different Asian country. Watanabe strictly warns the companies to avoid making a lot investments in China, because China is a tended country for political turmoil. That’s why its important to keep one part of the business away from China to insure it.
Building off shore factories obtain cheaper labor for products they want to sell which are going to be sold in US or Europe. Also it serves that foreign market without worrying about trade barriers and to game a dominant foothold there. To illustrate every dollar a company invests overseas in an off shore factory gains additional exports for its home country . Because today one third of the global trade is within international companies.
For example, If General Motors built a factory off shore in Shanghai, it would create jobs in America by exporting good and services to its own factory in China and benefiting from lower cost in China for it’s factories in America.
Friedmansays that non-transparency is holding back China from being completely flat. According to him; Free press and active non-governmental organization should destroy bribe and corruption. Law should be practiced more systematically. To sum up in china a political reform must be done for china to get over the obstacle which is holding it back from being entirely flat.
Instead of trying to delink China from the developed international business chain , Americans and Europeans have to develop new business models that will in able to take the most benefit from China because today the economy is totally interlinked and removing China might cause economic and geopolitical chaos.
In conclusion, to combine the presentation from the beginning to the end; today the lion of the African story we’ve shown is China and it turns out that it runs pretty fast.