Friday, July 09, 2010

Crystal Ball Glazing - eZendir

In transforming China, policymakers are shifting away from a labor-intensive, export-oriented economic model to higher value added revenue-generating models. Consequently, wages are expected to rise ... Foreign investments are encouraged to move to sectors involving transfer of high technology ( automobile, information technology, healthcare ). With a well-educated workforce, it is par to this task and the middle class will grow, with it also domestic consumption. The push factors are higher labor costs and a huge market.
To ensure a sustainable, balanced growth - and real growth, it will need to ensure that productivity gain outpaces inflation rate. Thus it must invest in education in order to nurture better managers. It will need to groom a pool of local managers that can leverage on domain knowledge, information technology and relationship skills to forge a formidable competitive strategy. It will need managers who understand the market-oriented economy where supply and demand are dictated by market forces. To gain such skills in strategy roadmappng ( competitive advantages ), understanding value creation, risk management and creating innovative products and services, it will need its managers to be bilingual in order to articulate, communicate and execute ( ACE ) in an increasing globalised eco-system.

While shifting factories further inland can mitigate escalating wage cost concerns and exchange rate issue in the short-term, real solutions must be found to achieve sustainable growth.

Since 2007, labor cost in percentage term has been climbing in the teens and this can be seen as a determined policy to transform the economy. Taking a leaf off the Singapore experience where it embarked on this course in the 80s, the transformation is real and tangible. Can this occur for China?

By focusing on education - train, train and train. Chinese managers in order to be effective need to be bilingual so that they can absorb new ideas quickly and hasten the transformation process. Foreign managers, likewise, need to learn Chinese to order to stay engage while the great shift gain momentum.

It may well be that China can reach full employment sooner than later, and in that scenario, the tipping point will be reached. A new paradigm kicks in where the only effective managers are those that are bilingual in English and Chinese - lingua francas for commerce.

Replicating the success of Singapore and India combined, China can and will leapfrog to a higher dimension - with a dynamic private sector competing domestically and internationally. The outcome is a win-win for all like-minded stakeholders.

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