News Xina 9

I am grateful for the opportunity given me by my fellow engineers from the Industrial Policy and Technological Innovation Committee to address engineers interested in developments in China. My activity in this country began in 1987 when I spent three months teaching a course in the Master’s program negotiated by the European Communities for a limited number of years in Beijing. Since then I have gone there often, several times a year to work with companies and especially to teach courses in operational management at CEIBS, which has put me in contact with thousands of Chinese managers from whom I have learned much about this great country. Anywhere else, by now I would be an expert, but the country has changed and continues changing so fast that it is impossible to achieve that level.

China is a land of contradictions. In a single factory you can find one of the most advanced automated assembly lines for mobile phones in the world alongside a manual line with hundreds of young people seated in a row throughout the long working day, each one manually inserting a component to assemble another electronic device. Likewise, in a space of a few kilometers (or even a hundred meters in a large city), you can go from a luxury neighborhood to the humblest of dwellings. The China of the 80s was much more uniform, while the growth of the past 30 years has resulted in great improvements for the most humble, but much less than for the more favored.

China has exploited this strong development to become the world’s bank, lending money to other countries to purchase its products, which has greatly upset the equilibrium in its trade balance with nearly everyone. The country has also leveraged economic development to create an enviable infrastructure, to which it has targeted more than 8% of its GDP for many years. It has a network of well-connected ports (such as from Yangshan to Shanghai, some 30 km from the coast in deep water), highspeed trains linking major cities, airports (some 70 new ones in the past 20 years), expressways and motorways (over 40,000 new km), etc.

Along with this, consumption has also grown, although it is not yet like ours. The new middle class is growing and wants to enjoy what we have had for years (social security, a good network of hospitals, vacations, cars and more). The number of cars per person has grown, although it is still low compared to ours. But in some cities it can no longer grow and limitations have been placed on the purchase, registration and use of vehicles. Since the number of automobile manufacturers (and many other products) has grown even more, they can survive only by exporting, and we will be seeing more and more Chinese products coming into our markets.

Of course, this growth has not been without costs. Pollution is very bad in all its forms: air, rivers and lakes, farmland, food, etc. As a result, Chinese people who have the means want to send their families abroad and ask me about residence permits in Spain. Obviously, news travels fast.

From being the factory of the world, China has also become an important world market. The most successful companies in China are no longer the ones that manufacture there to sell to Western countries, because labor and transport costs have risen and are a factor in addition to exchange rate variations. The balance has now tipped in favor of companies that manufacture locally for the Chinese market — a market that wants higher-quality products and believes (rightly so in my opinion) that products designed and made by many foreign companies are still better than Chinese products.

China is still a country of possibilities, but of different kinds than in past decades. The government is interested in making goods with more added value and in seeing local markets grow, which they will accomplish in collaboration with foreign companies or on their own. For example, an agreement was signed recently between Haier and Fagor to build a new plant jointly with Poland for making refrigerators to sell in Europe.

There will also be opportunities in the world of services and environmental management, where China is far behind. China must find a balance in all these areas and it is along these lines where it can offer many opportunities for our businesses, although it may not be by moving the factory from Catalonia to China as in past years. Now it is a matter of determining how to work with Chinese companies that sell to Europe, Africa and Latin America.

I would like to end by applauding the initiative taken by China Engineering News, which can bring this fascinating Chinese world to fellow Catalan engineers and arouse interest in this still little-known country, which alone is home to a fifth of the world’s population (the only world we have for now).

Jaume Ribera
Doctor in Industrial Engineering
Professor, IESE Business School
Port of Barcelona Chair of Logistics, CEIBS, Shanghai

TAKE A LOOK AT NEWS XINA N. 9