Customer Reviews

The China Price: The True Cost of Chinese Competitive Advantage

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It's simply impossible to keep track of all the China-related books that come out these days. I mean, they're all over the place. I have a strong interest, both personally and professionally, and I try and read what I can, but quite a few of the recently released books seem to rehash the by now well-known theme of China as a manufacturing powerhouse and the correlating threat China may (or may not) pose internationally. This book, however, takes a slightly different take on things.

In "The China Price: The True Cost of Chinese Competitive Advantage" (336 pages), former Finantical Times journalist Alexandra Harney delves into the ramifications, primarily for the Chinese, of the ever-growing demand for cheaper products. Harney focuses her research primarily on Shenshen (a city that has grown from half a million to about 12 million in a matter of 2 decades) and the surrounding Guangdong province. Harney demonstrates how a lot of Chinese companies escape the "social audits" many American companies nowadays insist on simply by keeping parallel/fake records on hours worked by/wages paid to Chinese employees. Indeed, the plight of many Chinese workers is deplorable, and not helped by the weak (if that) enforcement of Chinese labor laws by the Chinese government, and the absence of a strong labor union in China. How ironic is that, China being a (so-called) Communist country. Harney spices the book with lots and lots of personal stories of Chinese individuals she interviewed for the book, and that makes it for even more interesting reading.

Harney ends her book with this great observation: "In the end, as much as the responsability seems to lie with Beijing, it also lies with the global consumer. Our appetite for the $30 DVD player and the $3 T-shirt helps keep jewelry factories filled with dust, illegal mines open and 16-year olds working past midnight." How true! And doesn't it strike you that the people who shop at, say, Wal-Mart every day are the very same people who tend to lament the fact that US manufacturing jobs are off-shored to China every day. We all make a choice, every single day.

China's share of the world's manufacturing output by value-added was 2.4% in 1990, and 12.1% in 2006. In 2006 its biggest exports to the U.S. were electronic machines and equipment; that year the U.S. imported $288 billion from China, vs. $55 billion exported. The Economic Policy Institute estimates a loss of 1.8 million job opportunities since 1981 as a result of this trade deficit with China. Meanwhile, direct foreign investment in China from 2002-2005 totaled almost another $250 billion that didn't go to the U.S. either.

In 1980, American manufacturers produced 70% of apparel purchased in the U.S.; by 1990 it was down to 50%, and only 9% by 2006. America now only produces 1% of its citizens shoes; etc. for numerous other products.

"The China Price" points out that there is intense competition within China - its coastal export regions have over 1,000 clusters producing specific products such as ties, socks, microwaves, etc., and within those clusters manufacturers have hundreds of direct competitors. This is due to ease of entry - available start-up funds and assistance from Chinese officials eager to increase employment.

Chinese law limits overtime hours, requires a number of worker protections. Unfortunately, inspectors are typically overloaded, often corrupt, and frequently deceived by managers hiding factories that don't adhere to the rules. (These managers have also learned to deceive inspectors from American companies seeking to verify compliance with humane employment conditions.) At the same time, many workers will not stay if they don't get enough overtime to make the incomes they desire ("I didn't come here to sit!"), and fear of investing in government-mandated pension plans due to restrictions on their coverage.

And then there is the obvious pollution, especially from coal (producing a greater proportion of electricity than in the U.S.), and liquid effluents.

China's government is under enormous pressure from its citizens to provide jobs, particularly after the state-supplied sinecures have largely been eliminated. This, combined with even lower costs available in other nations (eg. Vietnam, India) do not bode well for America's "China problem" going away easily. (Common sens, plus Economic 101 tell us that it will continue until wage costs in China etc. roughly equal those in the U.S. In turn, that means we can look forward to eg. workers sleeping 12 to a room in factory-provided housing, and much reduced access to pensions and health-care - unless trade restrictions are imposed.)

The "bad news" about "The China Price" is that it often offers questionable or impossible statistics - eg. ". . . saved 80% to 100% . . ." (impossible to cut costs 100% - unless the product is delivered scot-free), "nearly one-third of the air over L.A. and S.F. can be linked to Asia" (what does that mean?) that damage the credibility of the book.

Bottom Line: "The China Price" explains why they are so price-conscious, and warns us that they're next move is likely to be into R&D, branding, and U.S. marketing (the "soft three" dollars of every four dollars spent in the U.S. for Chinese-manufactured products).

Discussions of free trade sing its virtues, while the reality is something different: the unequal terms of that trade, especially vis a vis China and the United States, where two sets of rules are at work. One result is the 'China price' and the growing imbalance in trade relationships. The larger picture shows the other side to globalizaton: the exploitation of cheap labor, disregard of environmental law, and the generally totalitarian nature of this mutant form of capitalism. This book usefully presents the information absent from most public media discussions of the issues of free trade and is an eye-opener. However, the portrait given is of an unstable situation that can't last forever, whatever new mutation lies down the road. Residents of the United States have been caught up in an ambiguous contradiction, the destruction of domestic industry, and the addictive temptations of Walmartization. As the wheel turns from this unstable new development in global capitalism to the next combination, some awareness of the disinformation created by 'economics' discussions in the United States is needed to correct the long-term destructive character of this confused, yet to some very profitable, constellation of capitalist trickeries.

There's so many China books out there. I used to try to keep up, picking up a copy between flights in and out of HK, but after the Olympics it just became impossible. Everyone is a China "expert" these days. Pretty soon there will be a book out called "Everything I Needed to Learn About China I Learned From My Cat." Sad will be that day.

Still, this is a different book, and highly readable. It was recommended by a friend in manufacturing who knows Harney well. The book touches on a common theme, but takes a different approach. Harney dives into only a digestible handful of angles to tell her story and get her point across. It should satisfy scholars, investors, politicians, and anyone wanting a deeper understanding of what makes the economic machine of China tick.

I liked the book overall. There are a few sections where things seem to get repeated over and over, and the balance between statistical reporting and telling a good story seesaws a bit, but Harney manages to be intelligent without getting preachy, and brings enough characters into it to avoid becoming one long newspaper article.

Living in China all these years, you become selective about what you read, and I can say that I definitely learned something from this book, and think that you will too.

A very well written book. Harney manages to illuminate a macro economic topic on a human scale, by virtue of an undeniably honest voice backed by copious and hard-earned research. More numerical data would be a big boost, but that belies the question of whose data to use. I would love to find a book like this but about India, if anyone has suggestions.

This book totally surprised, dismayed, and taught me to understand how miserable the bottom line in price can actually be. A must read!

I read an article in Wired magazine that told a piece of this story, but the toil of tens of millions of migrant Chinese young women workers who voluntarily work 14 to 16 hour days just blew me away. How China is caught in a price war while trying to satisfy workers rights. How pollution can be so bad to save those extra pennies. Thousands of small companies right next to each other making the exact same product and how their fortunes can change in days. A fascinating read! You will never look at the tag "made in China" the same way again.

The China Price does a really good job explaining what goes on in China's factories and, in particular, the whole system that has been built up in China for avoiding monitoring by Westerners. Ms. Harney's thesis is that in many cases, Western companies producing goods in China know the prices they are paying make fair employment and decent environmental standards impossible. I recommend the book to anyone interested in how China has managed to achieve the China price and what the societal and environmental costs of that price has been. I also recommend it to anyone thinking of doing any manufacturing in China, be it on your own or through outsourcing. This book will teach you what really goes on in China manufacturing.

I have read this for one of my political science classes. It gives a more in-depth look at the conditions and story behind the industrial revolution in china. It covers the factories, the managers, the workers, the whole system in which it has been developing. I was really interesting in the peak to the workers lives and how they are starting to recover their rights and things like how Walmart simply seism to overlook certain details of their contracts. I recommend this book to anyone interested in economics or just looking for something to read. Gives you some perspective.

I bought this on an impulse in a dollar store and ended up reading it all within 3 days. Overall, I thought it was a fantastic read, very well detailed and it gives you a narrative that you often won't receive from the media. It seems that most articles about China either make it seem like an unstoppable, perfectly-oiled economic juggernaut lifting 1.3 billion people out of poverty or the human rights abuses taking place across the country.

As someone who has been to china and seen first hand the effect of industrialization on average peoples lives, I think this book demonstrates correctly that the situation is much more complicated. China is not nearly as uniform as we think it is, there are protests going on within and the government acting reflexing to reform the system. However, people still seem to be very optimistic about their prospects; even with the human rights abuses and low pay and terrible pollution, almost all citizens are much happier with the China now than where it was 30 years ago. Still, this book gives some very interesting perspectives on what workers and activists are doing within the country to reform it and how the battle within the country will affect the world marketplace. I would definitely recommend this book.

I am always surprised when a journalist takes the pain to study a subject in depth and uncover insights that are not obvious. This is certainly the case with this book. Its study focuses on the Pearl River delta, which is where I set up my company. I can recognize my everyday reality in the case studies. Things have changed a bit since this book was published, with the inflation issues and then the international crisis, but what it describes is still very true.