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The China Question Part 4: To STAY Rich is Glorious

The China Question Part 4: To STAY Rich is Glorious

By Michael Colligan, Get A Grip On Lighting

The funny thing about racism is that it can actually hurt the people who are racist too. Most people don’t think of it this way, but American foreign policy did not see a threat from China because China wasn’t a Western (white) nation. Most Americans and Westerners (yeah Canadians aren’t any smarter) just assume that all any other country needs are good old-fashioned American values along with the western economic system followed by doing whatever America tells them.

Did anyone ever think that maybe – just maybe – Chairman Mao and his worshippers have no interest in democracy, free enterprise, the rule of law and Kentucky Fried Chicken? Ok, maybe they want to steal the Colonel’s recipe, but the fact is, reader, that China has been playing a long “Art of War” game with America and the West for decades; with no intention of ever entering the stable world order established and maintained by American (and Western) values, might and blood.

Their strategy, straight out of ancient Chinese war and strategy literature, was to slowly and steadily pick off technologies and come to dominate them. Of course, they started with the cheap and easy stuff and the manufacturing of halogen, incandescent and CFL light bulbs were some of the first industries China came to rule. In the beginning it was the contract manufacturing crowd, companies acting as manufacturers but were unknowingly participating in China’s technology transfer strategy and many of them (not all, but most) are nothing more than master distributors of Chinese knock-offs of American and Western lighting technologies. They relied on marketing, branding, and low price but steadily gained market share because they were good at what they did – marketing and selling to distributors. Heck, I bought and buy tons of products from these companies, we all do, and they are good people.

As Chinese product quality steadily increased due to the transfer of American intellectual property and know-how (yes, we showed them how to beat us) combined with low price fueled by cheap wages and Chinese state subsidies, the pressure became so intense that the big dawgs had no choice but to pull the plug on their American factories and set up shop in China. Americans, Westerners, and the fantastic companies that do this are not to blame here. Neither did they do anything wrong because Americans were playing by the rules of the Mao-Nixon initiatives. China never had any intention of playing by “our rules” and as such we are victims of our own naïveté, ignorance, short-term thinking and, well, racism.

And the off-shoring of manufacturing is a trend that has expanded into every industry. Supply chains are now so global and complicated it is literally impossible to disentangle. These complicated supply chains deliver low prices to consumers but is the true cost to the American and Western way of life represented in the low price? What about our values?

Today, the major American and European lighting manufacturers are backing away from our industry and it’s the quality contract manufacturers who feel the pressure. Any guy with fifty to a hundred grand can fly to Shenzhen, private label a package, slap a BS 10-year warranty on the box, get it accredited by you-know-who, and be up and running in 90 to 180 days – no lighting experience necessary. With Alibaba (NYSE: BABA), you can buy consumer level quantities of lights directly from China and the United States Postal Service will subsidize the delivery. Don’t believe me? Search up “Postal Subsidies China Trump” in your favorite search engine.

Could Dick Nixon, Slim Jim Carter or anyone else in 1979 have imagined that a deal with China represented an enormous power shift in less than 40 years? Mix in a little creative disruption (i.e. LEDs, cell phones, dollar stores) and the hegemony of the strongest, most peaceful nation ever to exist in history starts to erode. Ozymandias? Well, we are not there yet but we are largely unaware of the machinations of a foreign nation-state with less-than-savory long-term intentions. Would the U.S. have ever done this deal with the Soviet Union in 1965 or the Third Reich in 1937?  No, no, Europeans are far too sophisticated, we don’t want to hand them the keys to the keep.

The Chinese have set up a giant vacuum from Beijing to Washington that is sucking up wealth, technology and innovation; starting with light bulbs and leading eventually to lifestyle. This is a zero-sum game in the long run. They don’t want to live a lower standard of living then Americans live. Or do they?  Maybe they are happy to stay in a 6 to 1 GDP dynamic – propping up our lifestyle with cheap shit while they live lives of relative poverty? Come on, man, they have social media, too. They can easily view our “Western decadence” and say “why not us?”

Think about this for a second: from 1979 to today, Shenzhen has grown from 30,000 to 12.5 million.  In 40 short years! The GDP growth rate of that region has averaged 40% per year over that period. While America was distracted by the wealth transfer to countries in OPEC (Organization of Petroleum Exporting Countries, i.e. the Saudi Arabia crowd), and fighting wars in the Middle East, an economic monster was emerging in Asia. The world has never seen anything like this from the Sumerian tablets to the Roman Empire to the Industrial Revolution to the post World War 2 economic miracles in Japan and Germany. Nothing in world history compares to the transformation of China from 1979 until today with specific reference to Shenzhen. “Started from the bottom, now we here” states the Canadian hip hop artist Drake. Indeed, China is here, this is real.

Remember, China, as a nation, is more than 4,000 years old. They are in no rush and, quite frankly, China has been the most powerful country, with the most innovation and the largest economy, in the world for the vast majority of that history. They are used to being at the top and are steadily making their way back there. Tricky Dick Nixon and Slim Jim Carter, along with Western racist ignorance, put them on a path towards a new Chinese manifest destiny of world domination. They call it the Belt and Road Initiative – search it up, bro. America’s getting elbowed out, son, and you might as well accept it. Take your licks and make the changes we need to make to protect our way of life—time to start thinking Monroe Doctrine again.

When Hujintao (Chinese President 2003 – 2013) talked about “China’s peaceful rise,” which is something you hear on CNN and Fox News, he was merely uttering what is basically a nation-state marketing strategy tagline – the old bait and switch. They want to win, and what do you think winning means in the China-America long game? If/when China becomes more powerful than the United States of America. Now that is what I call a fucking paradigm shift.

Politics aside for a minute please, President Trump (not Director General anymore) is doing the right thing in erecting trade tariffs. China has been militarizing trade, stealing secrets and operating under a long-term strategy of American and western impoverishment; but only because we let them. Power does not arise from the strength of the challenger but from the weakness of the challenged. And Holy Emperor Wu for the third and final time! The Democrats and Republicans both favor a “tough on China” policy, a place to start rebuilding our political compromise.

But we should tread very carefully. The Chinese may worship the dead iron fist of Chairman Mao, but they are very powerful indeed. A dose of respect and admiration for what they have achieved and the military and economy they are building would be quite useful. And maybe Secretary Pompeo, President Trump and the rest of Congress and the Senate could give the Art of War and the 36 Stratagems a quick read as well. Don’t kid yourself, China has a plan of world domination and America is arguing about gender-free bathrooms. Have you ever seen a Chinese toilet?

What do we do as an industry? The light bulb jockeys could also peruse ancient Chinese war literature and deploy the deep, unquestionable wisdom of those books to win back our industry. Tariffs are a wise initial step, but it is important that the industry as a whole work together to turn this ship around, literally and figuratively. The timing is good because of the rise of automation, artificial intelligence, and 3D printing. But that window has opened and has already begun to close. We have to bring technology, innovation, and factories back to America and the West now. This is an issue of national security and protection of the “American way of life” (Canadian too!). But it should not be done out of spite, resentment, anger or stupid racism. It should be done strategically and from an honest desire to control our own destiny. Sure, to become rich is glorious but STAY rich (and free and safe) is more glorious still.

 

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Discussion (5 comments)

    Jim Blank July 22, 2019 / 9:50 am

    Could have been a better article without the obscene language. I would hope for more professionalism for an article published in TED. Not a great reflection of our industry.

    Michael Colligan July 23, 2019 / 7:51 am

    A lot of people don’t like my writing style. It is designed to point to the deep hypocrisy in the relationship. If it offends it has been crafted to do so.

    Jim Blank August 1, 2019 / 1:22 pm

    You make valid points and provide good insight, but you could have left out the f-bomb and had the same impact.

    Ryan Krueger August 16, 2019 / 2:46 pm

    reading parts 1-4 consecutively has my brain in a glass case of emotion. They may have won the manufacturing war but they are currently dealing with the pollution issues the US faced during the industrial revolution. Were 150 years beyond that and have potable drinking water (at least where I live).

      Scott Costa August 19, 2019 / 7:42 am

      Ryan, you make a great point, and I agree with you. However, we are willing to allow people to live in those conditions because we cannot seem to figure out a way to manufacture those components in the United States at an “acceptable” price point. At some point, we are going to have to stop accepting that we can’t do this, and as the last article explains, rely on AI, automation, and innovation to bring all lighting manufacturing to this country. -S.C.

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