CHINA:
Is the United States Losing Its Competitive Edge?

Gregory P. Smith

When I was a child, my parents used to say: "Clean your plate because there are starving children in Africa and China. My message has changed. Now I tell my kids, "Study, and work hard, because someone in China wants your job."

I recently returned from a business trip to Shanghai and Beijing where I saw firsthand their explosive growth and booming economy. It was an eye awakening experience that left an indelible impression of what's to come.

Ancient mariners and cartographers once thought the world was flat. If you traveled too far, you would fall off the edge of the earth. Years hence, scientists, and some of those same mariners discovered the world was not actually flat, but round. Walls, languages, oceans, distances, and political ideologies separated countries. None of that is true today.

Those barriers and differences are evaporating. We are living in a global world now where barriers are meaningless -- and the world, in a business sense is flat.

The Great Wall was designed to keep people out; but now the hotels I stayed in were brimming with Americans, Australians, and Europeans who were there on business trips.

It doesn't matter what kind of business you are in -- whether you are a multi-national corporation, or a "mom and pop" business -- you will be affected by what is happening in China. China is like this huge vortex consuming both human and natural resources at an amazing rate.

I am proud to be an American, but the things that make us the most powerful nation in the world are slipping away fast.

Here are some of the things I noticed during my trip to China:

Pay scales: Although the pay scales are improving rapidly in China, they are still way below American levels. An industrial engineer in China earns about $20,000 a year, while a software engineer is paid about $40,000. A Silicon Valley software engineer with the same skills was paid $300,000 in 2001.

Work ethic: It depends on the job, but what I saw was go, go, go. In the industrialized cities, it was as if everyone was on steroids -- very competitive.

Education: The competition for higher paying jobs is fierce. This fuels the drive for higher education--more people stay in school. The country is importing training and knowledge -- colleges and universities are popping up everywhere.

Employment level: At most places of business, there are ten more employees per job than at American businesses. Low labor costs allow employers to hire more people.

What does this country need to do? We must insure our kids get the hard skills to compete in an ever-tightening job market. Traditional college degrees and high school are not preparing our kids for higher paying jobs. Right now, certain technical and healthcare related jobs are in more demand than other jobs. Mechanics, truck drivers, and oil rig drillers are becoming scarce. To think you will make $40,000 right after college with a soft-skill degree is unrealistic in light of global competition. We need to improve this country's work ethic to become more competitive.

All businesses must make their workforce as productive as possible. Old, traditional businesses are struggling to stay alive. They are hamstrung by union rules, obsolete practices, and salaries out of proportion when competing against China. HP just announced they were cutting 14 thousand people, partly due to costs. All the while General Motors and Ford Motor Company are losing money hand over fist while competing against foreign automakers.

In Beijing, l met an American who commutes to a manufacturing plant in China two weeks a month. He said he felt good because the productivity and attitude of his workers was improved. So he gave them a pay raise to $340 a month. Does this country need to adjust its standard of living to stay competitive in the global market? Only time will tell.

It's not all bad news for America. We are still the most powerful country in the world. We have the freedom to choose. We have the lowest unemployment rates when compared with France, U.K., and Germany. Our economy is healthy and growing. We have the best universities and colleges too. Foreign students still want to come here. Other countries admire U.S. businesses.

But this is a wake up call. At this moment, China needs the U.S. and the U.S. needs China. In the not too distant future all that could change. All businesses today better start preparing for this competitive dragon that will change the balance of power in the world.

Greg Smith helps create high performance organizations that attract, keep, and motivate their workforce. As President of Chart Your Course International he has designed and implemented professional development programs for hundreds of organizations globally. As a business growth consultant, he has helped business owners reduce turnover, increase sales, deliver better customer service, and reach long-term prosperity. He is also the author of Here Today, Here Tomorrow: Transforming Your Workforce from High Turnover to High Retention, the New Leader, and several other books. For more information, visit www.chartcourse.com or call (800) 821-2487 or (770) 860-9464.

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