Notes on Intercultural Communication

Posts Tagged ‘chinese economy

China’s GDP in 2013

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Only 30% of the world now has a higher GDP per capita than China (2013)

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In many ways, what we are witnessing is not the ‘emergence of Asia’, but the ‘re-emergence of Asia’

(…) In 1820, Asia accounted for just under 60 per cent of total global output, with China and India together accounting for nearly half of global GDP. This was followed by nearly two centuries of economic decline in Asia, ignited by the European industrial revolution—a trend that has now been reversed. (…)

Jayant Menon, ADB

Read the full article online here of here.

/retrieved 09.06.2013 at http://www.eastasiaforum.org/2013/06/09/asia-yet-to-earn-its-future/)

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batman

(retrieved 09.06.2013 at http://adnanramin.wordpress.com/2013/06/02/racism/)

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China’s economic achievement is so enormous, indeed literally without parallel in human history, that it is sometimes difficult for people to take in its scale. A country which in 1978, when “reform and opening up” was launched, was one of the poorest in the world, has now reached a point where it has a higher GDP per capita than the countries containing the majority of the world’s population. Only 30 per cent of the world’s population now lives in countries with higher per capita GDP than China.

China and the World's GDP

To give absolutely precise numbers, drawing on the newly published data for the world economy in 2012 released by the IMF, the chart shows that by 2012, only 30.2 per cent of the world’s population lived in countries with a higher GDP per capita than China, while 50.2 per cent lived in countries with a lower one. China itself constituted 19.6 per cent of the world’s population at this time.

China is, therefore, now in the top half of the world as far as economic development is concerned, and to avoid any suggestions of exaggeration, it should be made clear that these comparisons are at the current market exchange rate measures usually used in China – although calculations in parity purchasing powers (PPPs), which are the measure preferred by the majority of Western economists, makes no significant difference to the result.

The chart also illustrates China’s extraordinary progress. In 1978, when “reform and opening up” began, only 0.5 per cent of the global population lived in countries with a lower GDP per capita than China, while 73.5 per cent lived in countries with a higher GDP per capita. The transition to a situation where China has overtaken the majority of the world’s population in per capita GDP is the greatest economic transformation in human history, both in terms of the short time frame required and number of people affected.

Given that the data clearly shows China has progressed into the top half of the world economy in terms of economic development, why do some persist with misrepresenting China as being “in the middle” or even more misleadingly dubbing it a “poor” country by international standards?

Such misrepresentations make elementary statistical errors which are familiar to those who analyse income distribution data. For example the following argument is sometimes presented: The IMF World Economic Outlook database gives GDP per capita statistics for 188 countries with China ranking 94th – therefore China is “in the middle”. Another sometimes-cited statistic compares China to the world average – in 2012 China’s GDP per capita was 59 per cent of this average figure – making China appear a “poor” country.

The problem with this “list” method is that it does not take population into account. For example, the Caribbean state St Kitts and Nevis, population 57,000, has a higher GDP per capita than China while India, population 1.223 billion, has a lower one. To say China is “between the two”, as though St Kitts and Nevis and India represent equivalent weights in the world economy, is playing games with words rather than carrying out serious analysis. This elementary statistical rule is particularly relevant given that the number of developed economies with small populations is disproportionately large. The population of countries must therefore be taken into account when calculating China’s real relative position in the world economy.

The second mistake, comparing China to the “average”, makes an error so well known in income distribution statistics that it is somewhat surprising anyone gives it any credence, let alone continues to propose it.

Statisticians know that averages, technically speaking the “mean”, can be disproportionately affected by small numbers of extreme values. It is well known that this applies to incomes within countries as small numbers of billionaires artificially raise average incomes in a way that misrepresents the real situation.

This statistical distortion is clear from international data. Average world GDP per capita, that is world GDP divided by the number of people, is slightly more than $10,000 per year. But only 29.9 per cent of the world’s population lives in countries with GDP per capita above that level while 70.1 per cent live in countries below it. Something with only 29.9 per cent above and 70.1 per cent below is not most people’s idea of an average!

What most people understand by an average, the mid-point, is, in proper statistical terms, not the average but the median. Reputable studies on income distribution, therefore, almost invariably use the median, not averages, to avoid this distorting effect of small numbers of extreme values. Using the statistically misleading average, instead of the mid-point, bizarrely transforms the real situation – that China now has a GDP per capita above that of the majority of the world’s population – into giving the impression that China is a poor country!

There are three main reasons why it is important to accurately present China’s level of development.

First, policy must be based on accurate analysis – in serious matters there is no virtue in either optimism or pessimism, only in realism. As the famous Chinese phrase tells us, it is better to seek truth from facts.

Second, accurate presentation is necessary to clearly understand the real economic challenges China faces. For example China’s GDP per capita is now higher than all developing South and South East Asian countries except Malaysia – clarifying why any competitive strategy for China based on low wages is unviable.

Third, China’s position in the top half of the world in terms of GDP per capita makes clear its technological level – China’s economy is now dominated by medium, not low, technology.

Does an accurate presentation of China’s real level of development endanger its international legal status as a developing economy? The World Bank has not yet published new criteria for the GDP per capita necessary to qualify as an “advanced” economy, but the 2011 criteria and statistical data is available and it tells us that the answer to the question is “no”. To classify as “high income”, an economy must have an annual GDP per capita of slightly more than $12,000. Only 16 per cent of the world’s population lives in such economies. It will take 10-15 years for China to achieve “high income” status – although when it does this will more than double the number of people living in such economies.

Achieving the “Chinese dream” requires that the present reality is accurately understood. China has entered the top half of the world’s level of economic development. Only 30 per cent of the world’s population lives in countries with a higher GDP per capita than China. That is the accurate analysis of China’s relative position in the world economy. To achieve the “Chinese dream” requires eliminating not only any exaggerated bombast but also any systematic underestimation

This article originally appeared in Chinese at Sina Finance and in English at China.org.cn.

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 John Ross

John Ross

Is Visiting Professor at Antai College of Economics and Management, Jiao Tong University, Shanghai

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(retrieved 25.05.2013 at http://ablog.typepad.com/keytrendsinglobalisation/2013/05/only-30-of-the-world-now-has-a-higher-gdp-per-capita-than-china.html)

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Read more about China and it’s economy from John Ross

Key Trends in Globalisation

Seek truth from facts – 实事求是 (Chinese saying originally from the Han dynasty)

http://ablog.typepad.com/keytrendsinglobalisation/

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World Economic Outlook (WEO) – International Monetary Fund – Survey 2013

World Economic Outlook 2013

http://www.imf.org/external/pubs/ft/weo/2013/01/

http://www.imf.org/external/pubs/ft/weo/2013/01/pdf/text.pdf

https://laofutze.files.wordpress.com/2013/05/world-economic-outlook-april-2013.pdf

(above retrieved 25.05.2013 at http://www.imf.org/external/pubs/ft/weo/2013/01/, http://www.imf.org/external/pubs/ft/weo/2013/01/pdf/text.pdf, https://laofutze.files.wordpress.com/2013/05/world-economic-outlook-april-2013.pdf)

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What that dramatic economic shift means to people, describes Onionjuggler in her Force Feeding Duck Style:

A student told me this story as part of a midterm last year, and I thought it was so cute I would share it with you.

For her fifth birthday, Helen’s* mother wanted to make her a special dinner. She lived in the country, and at that time everyone was very poor, so meat was hard to come by. Her mother had to take the day off to travel to a different town to buy some pork, and in the end was only able to afford enough meat for Helen– the rest of the family would have to make due with the usual vegetables and noodles.

That night, Helen was so excited to eat her fancy dinner. But when her mother handed her the bowl, her older brother pointed at it and said, “Look out! There is a spider on the bottom of the bowl!”

Helen tipped the bowl over to look for the spider, and poured her whole dinner onto the dirty floor. Her mother scolded her brother, but she couldn’t salvage the dinner. Poor Helen cried and cried, and she never forgot that birthday.

*Her real name isn’t Helen– that’s just the name she chose for class.

(retrieved 25.05.2013 at http://onionjuggler.wordpress.com/2013/05/20/a-short-story/)

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China in 2050

China in 2050Photo by Benoit Cezard

(retrieved 13.07.2013 at http://de.ce.cn/photo/right/201211/21/t20121121_597748.shtml)

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(reviewed 13.07.2013)

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Structures of International Business (Vertical Disintegration)

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Vertical Disintegration

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Vertical Disintegration in Supply Chain Management (SCM)

(…) Acer’s supply chain management strategy can perhaps best be characterized as a strategy of “vertical disintegration.” In the recent past, Acer sold majority stakes in both Wistron and BenQ. These companies were main providers of manufacturing services in Acer’s supply chains. By selling its majority stake in these companies, Acer clearly demonstrates that it intends to “disintegrate” its supply chains and focus on branding and marketing.

(…) The vertical disintegration of Acer’s supply chain becomes even more evident when analyzing the supply chain of specific Acer products. Components are sourced from many different component manufacturers, while assembly is carried out by a small group of selected contract manufacturers. In some cases, Acer holds a considerable stake in these contract manufacturers, although it almost never owns these companies. The selected contract manufacturers are allowed to manufacture final products for Acer. It does not matter whether a desktop computer or notebook is assembled in China, the Philippines or in the Netherlands. In the end, all Acer products are sold as “made in Taiwan”. The following charts show the supply chains for two Acer notebooks: the Travelmate C110 (…).

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Supply chain for the Travelmate C110

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(…) In most cases, one particular component can be provided by two or three different component manufacturers. A hard disk drive (HDD) for the Travelmate C300, for example, can be supplied by Toshiba or Fujitsu. This is necessary to guarantee continuous supply of critical components. If a supplier fails to provide a particular component just-in-time or on demand, the selected contract manufacturers can rely on other suppliers that are able to provide the same component. For some components, however, the contract manufacturers depend on a key supplier. If these components are out of stock, delays in delivery are likely to happen. (…)

Acer Incorporated / Company profile (Draft Version) Bart Slob Amsterdam, December 2005, SOMO Stichting Onderzoek Multinationale Ondernemingen – Centre for Research on Multinational Corporations http://www.somo.nl / info@somo.nl

Get the whole script here.

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Direct and Indirect Supply Chain Management

Stan Shih, the founder of Acer Computers in an interview in October 1996: (…) beginning in 1992, we developed the fast-food model, which revolves around each of our local businesses doing local assembly from components manufactured here. So today we have 39 assembly lines in 35 countries. We operate these assembly lines globally the way fast-food restaurants operate locally. We airship components from Taiwan — which is cost effective — to the regional business units overseas for assembly into products. This approach provides “hot and fresh” computers to our local customers.

Not only does this provide fresh products, it also accelerates the speed of new-product introduction and it accelerates the inventory turnover rate. This fits with our strategic philosophy. (…)

Read the full interview with Stan Shih (founder of Acer Computers) from October 1996 in the web or here.

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Indirect Supply Chain Management (Fast Food Model)

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Direct Supply Chain Management

The Emerging Global Direct Distribution Business Model – Its Making and Research Opportunities; Shong-Iee Ivan Su, Ph.D.; Professor, Director of Supply Chain and Logistics Management, Research Lab, Department of Business Administration, Soochow University (Taiwan)

Get the full article here.

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International Matrix of Acer Inc.

Source http://www.acer-group.com/public/The_Group/organization.htm

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Innovation in a Modular Network

Learning From Evolution: A Study of Acer’s Corporate Strategy by Anil Kumar Sahai; System Design and Management, Sloan School of Management, Massachusetts Institute of Technology

This work also explains the cultural background of Asian companies. Get the pdf in the web or here.

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Additional Material

Network Structures

Modular network structures appear as a logical consequence of horizontal Supply Chain Management systems.

The modular network form compared to other organizational forms

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Country-specific production network models: where the modular production network model fits

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Modular Network Matrix of Walter W. Powell

Source: adapted from Powell (1990: 300). Italic entries added to original. Powell, W. (1990), ‘Neither market nor hierarchy: network forms of organization,’ Research in Organizational Behavior, 12, 295–336. / Industrial and Corporate Change, Volume 11, Number 3, pp. 451–496, Modular production networks: a new American model of industrial organization Timothy J. Sturgeon

Read the whole article here.

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Links

Links about SCM (Supply Chain Management)

Nice introduction to Supply Chain Management – A REVIEW OF APPROACHES TO SUPPLY CHAIN COMMUNICATIONS: FROM MANUFACTURING TO CONSTRUCTION (2007)

For easy understanding a ppt about supply Chain Management by A.V. Vedpuriswar

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Links about Acer

The Globalisation of Acer 1976 – 2009. Author unknown

Acer Incorporated 2009 Annual Report in the web or here.

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For the history of international trade / globalisation see the post “Learning to do Business in China

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For info about Stan Shih please click here.

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reviewed 13.04.2014