CHINA SPOTLIGHT
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Made in China
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or all the attention paid recently to political change in China, a more fundamental shift occurred when China joined the World Trade Organization in December 2001.
The entry of the world's largest nation into the WTO catapulted an already surging economy into a new era of global trade -- one that's remaking the world map for industrial manufacturing facilities.
If you thought "Made in China" was a label found only on clothing, toys and cheap electronics, you might want to think again. Many of the world's largest public companies -- General Electric, Microsoft, Exxon Mobil, Motorola, Toyota, Nissan, Ford, General Motors, Shell -- are pledging billions of dollars toward new factories that will make everything from high-end software and computers to petrochemicals and automobiles destined for world markets.
Promised foreign direct investment into China totaled US$68.4 billion between January and September of 2002 -- an increase of 38.4 percent from the same period a year earlier. China's national economy grew at an annual rate of 8.1 percent in the third quarter of 2002, running against the tide of a global economic slowdown. And despite deflation, retail sales in China increased 9.1 percent from 2001 to 2002.
"The fundamental shift is that China began liberalizing its foreign direct investment environment in the late 1970s, and that has accelerated since its entry into the WTO," says Nicholas R. Lardy, senior fellow in foreign policy studies and a longtime China expert for The Brookings Institution in Washington, D.C. "By the early 1990s, China had become a major player in electronics. Now China is one of the largest markets in the world for simple semiconductor products that go into electronics. A single company in China makes most of the chips that go into the world's microwave ovens."
The result of this shift in electronics production -- coupled with the liberalized trade laws required for WTO admission -- is that more American manufacturers are turning to China and its population of 1.3 billion people for their work force.
"Things are really hot in China right now for industrial manufacturing," says Larry Larsen, manager of treasury operations for Houston-based Powell Industries, a $250-million-a-year manufacturer of electrical machinery, switching gear and circuit-breaker equipment. "China is in the real world now."
Larsen says that his company is negotiating a deal with a Chinese company to find a site and build a plant for Powell in metropolitan Shanghai. This follows the announcement last March that Powell Electrical Manufacturing had won a $5-million contract from Shanghai Metro to supply pre-packaged traction power substations.
"Shanghai, China is one of the most densely populated cities in the world with more than 12 million residents," says Thomas Powell, chairman and CEO of Powell Industries. "Shanghai has perhaps China's most aggressive development program for transit with more than 220 kilometers of light rail lines being planned for construction in the next five years. This contract represents the successful conclusion of literally years of sales development efforts and will be our basis for further significant opportunities in the China transit market."
The entry of the world's largest nation into the WTO catapulted an already surging economy into a new era of global trade -- one that's remaking the world map for industrial manufacturing facilities.
If you thought "Made in China" was a label found only on clothing, toys and cheap electronics, you might want to think again. Many of the world's largest public companies -- General Electric, Microsoft, Exxon Mobil, Motorola, Toyota, Nissan, Ford, General Motors, Shell -- are pledging billions of dollars toward new factories that will make everything from high-end software and computers to petrochemicals and automobiles destined for world markets.
Promised foreign direct investment into China totaled US$68.4 billion between January and September of 2002 -- an increase of 38.4 percent from the same period a year earlier. China's national economy grew at an annual rate of 8.1 percent in the third quarter of 2002, running against the tide of a global economic slowdown. And despite deflation, retail sales in China increased 9.1 percent from 2001 to 2002.
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"The fundamental shift is that China began liberalizing its foreign direct investment environment in the late 1970s, and that has accelerated since its entry into the WTO," says Nicholas R. Lardy, senior fellow in foreign policy studies and a longtime China expert for The Brookings Institution in Washington, D.C. "By the early 1990s, China had become a major player in electronics. Now China is one of the largest markets in the world for simple semiconductor products that go into electronics. A single company in China makes most of the chips that go into the world's microwave ovens."
The result of this shift in electronics production -- coupled with the liberalized trade laws required for WTO admission -- is that more American manufacturers are turning to China and its population of 1.3 billion people for their work force.
"Things are really hot in China right now for industrial manufacturing," says Larry Larsen, manager of treasury operations for Houston-based Powell Industries, a $250-million-a-year manufacturer of electrical machinery, switching gear and circuit-breaker equipment. "China is in the real world now."
Larsen says that his company is negotiating a deal with a Chinese company to find a site and build a plant for Powell in metropolitan Shanghai. This follows the announcement last March that Powell Electrical Manufacturing had won a $5-million contract from Shanghai Metro to supply pre-packaged traction power substations.
"Shanghai, China is one of the most densely populated cities in the world with more than 12 million residents," says Thomas Powell, chairman and CEO of Powell Industries. "Shanghai has perhaps China's most aggressive development program for transit with more than 220 kilometers of light rail lines being planned for construction in the next five years. This contract represents the successful conclusion of literally years of sales development efforts and will be our basis for further significant opportunities in the China transit market."