REINTEGRATING GLOBAL INDUSTRY IN CHINA

Publication: China Brief Volume: 2 Issue: 16

by William R. Hawkins

The end of the Cold War seemingly liberated business from geopolitical constraints. The “global factory” disintegrated industrial complexes from their former national homes and scattered facilities across the planet in the pursuit of low-cost labor and efficient subcontractors. Many small states from the Caribbean to the Pacific Rim benefited from this process. But now that process may be turning full cycle as China’s vast resources give it a competitive advantage. New industrial centers are being built in China that will reintegrate technology and production in a setting with major geopolitical consequences.

In the June issue of Harper’s magazine, Barry Lynn, the former executive editor of Global Business magazine, shows how disintegrated the manufacturing process has become. A Dell computer, for example, may be assembled in Austin, Texas but uses 4,500 parts from hundreds of suppliers located from Malaysia to Korea–clustered especially in Taiwan and China. And Dell is more typical of the “global assembly lines” built in the 1990s than not.

The system of disintegrated business could only be built in a world assumed to be safe and stable. Terrorism is only the tip of the geopolitical iceberg that threatens this titanic misconception. Asia, after decades of rapid economic growth, is fraught with possible conflicts. China threatens Taiwan. The Korean peninsula is still divided. India and Pakistan confront each other over Kashmir.

In such a divided and dangerous world, Lynn wonders why “almost no one asks what would happen if just one of the still very sovereign nations that underlie this web were to grab hold of a few of the strands and start yanking.”[1] His concern is that China will be the state that makes the grab.

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