US Consumers Changing China?
Interesting and thought provoking article in the LA Times the other day by Nathan Gardels, editor in chief of New Perspectives Quarterly (a/k/a NPQ). Gardels' article is entitled, "China's new revolutionaries: U.S. consumers. Beijing must yield to market forces demanding the rule of law and an end to corruption." Grossly simplified, its thesis is that US consumers are changing China's governance. This is a sort of a twist on the seemingly age old question of the ability of capitalism to effect governmental change.
Gardels asserts that "China's export reliance on the U.S. market has imported the political demands of the U.S. consumer into the equation" as a sort of trojan horse:
Americans won't hesitate to cut the import lifeline and shift away from Chinese products that might poison their children or kill their pets.Unlike organized labor or human rights groups, consumers don't have to mobilize to effect change; they only have to stop spending. And their bargaining agents -- Wal-Mart, Target, Toys R Us -- have immensely more clout than the AFL-CIO and Amnesty International in fostering change in China.
Ironically, the United States' "most favored nation" trade treatment for China (and its later entry into the World Trade Organization), which labor and human rights groups so virulently opposed in the past, has become a Trojan horse. China's future is now so linked to the American consumer that Beijing will be forced to curb corruption and strengthen regulation through the rule of law or face the certain doom of its export-led growth.
According to Gardels' theory, "no sanction is more devastating than consumer choice" and those who "live by the market, die by the market.' For consumers to trust products, they must trust the regulation of those products and regulation "cannot be trusted without the rule of law, which doesn't bend to bribery, fraud and quanxi (connections)." Globalization "has accelerated this process by forging a kind of objective coalition of the growing Chinese middle class and the American consumer in favor of the rule of law."
Gladdels' does not see "savvy consumers" buying into "China's response of prosecuting or executing high-level officials -- 'killing the chicken to scare the monkey.'" "They simply want the lead removed from their children's toys or they will take their purchases elsewhere.'
Gladdels wisely notes, however, that a "move toward the reliable rule of law is not democracy, but it is a big step on the long march in that direction."
He may be right.
http://www.chinalawblog.com/cgi-bin/mt/mt-t.cgi/2100
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Comments
Consumer clout is an integral part of the cost-benefit equation done by marketing organizations. American and other foreign corporations are giving Chinese manufacturers plenty of rope, and if those manufacturers wish to place chairs underneath their own feet while attaching the rope, then it's their own funerals. I think practical sense will steer the Chinese back on track. More problematic is the range of choices for the burgeoning Chinese middle class, since it is American marketing organizations who lead the way in product development. Our corporations can go back to Taiwan, HK, South Korea, or blaze new trails in other places (hey, how about back in the pricey USA?) to secure production as they wish, but who will supply the Chinese domestic market? Maybe two-track production/branding, using our local Chinese manufacturing sources to supply sectors of that market, while offshoring off China to supply sectors of our market? Diversification in an MNC is common, and can accomplish numerous objectives at once. While satisfying the American consumer's sensitivities, the MNC can still profit on all sides. The Chinese middle class's sensitivities? Let's wait and see how they voice their concerns. But don't hold your breath waiting for the BJ glacier to move, or for the Chinese middle class to coalesce into . The influence of our MNCs may have greater immediate impact in influencing change than BJ's byzantine machinations. Self-policing in order to keep foreign orders flowing in may become the more expedient path to product quality improvement.
Posted by: Law Office of Todd L. Platek | August 23, 2007 11:38 AM
Apology: left out some words from third sentence from the end. Should read: "But don't hold your breath waiting for the BJ glacier to move, or for the Chinese middle class to coalesce into a single-minded, single-purposed force for change."
Posted by: Law Office of Todd L. Platek | August 23, 2007 2:02 PM
Having read the article I'm not nearly as sanguine as Mr. Gardels about what will compel permanent change in China.
The general conclusion I have to come to is that there will be some sort of equilibrium arrived at between a tolerable level of consumer kvetching, defective product returns, and lowest/best cost for WalMart and the like. Rather than the dawn of a new day, the current contretemps over poison doggie treats and lead painted toys will fade in memory-the attention span of the American consumer can be measured in minutes. And at the end of the day we will still have from China very low priced manufactured goods ($12 coffemakers) that in my case discharged their contents all over my kitchen floor because the guy who put those little QC stickers all over it wasn't really checking anything. That's really the takehome I think.
What will work change, I think, is someone telling China "No. You can't sell that stuff here and until you meet our standards you won't." and make it stick. That takes money that we're not willing to spend as yet.
Posted by: Robert Luedeman, attorney at law | August 23, 2007 6:52 PM
Posted by: Steven Blayney | August 23, 2007 8:11 PM
"Just say No" has worked it wonder for the drug. Let's extend this to the those poisons from China as well! ;)
Posted by: David Li | August 24, 2007 1:37 AM
"Trade is the natural enemy of all violent passions" (Alexis de Tocqueville)
Posted by: Paul Johnson | August 25, 2007 1:37 PM
First, thanks for the add to your blog list. Second, what do you do when you get to the point (one that the US is almost at), where you choose between a, b, and c, but all are "Made in China." In the US, boycotting "Made in China" goods really isn't a realistic option for anyone beyond the middle/upper class who have the income to back up their choice.
Posted by: b. cheng | August 28, 2007 10:54 PM
Paul, every dollar you spend is a vote for the kind of world you want your kids to inherit. Brother Dave of the National Catholic Rural Life Conference says that eating is an inherently political act, but I'd have to say consuming is a political act.
Charity starts at home and not half a world away among strangers. Supporting your local economy is good business. So how is this implemented?
Simple. Buy from your friends and neighbors when you can. Know what's in the food you eat. If you can't buy locally, buy off the secondary market, the damage is already done and you can't make things much worse. If you can't do that shop smart and kill Walmart on the loss leaders they use to bring people in.
Live light on the planet and always insist on good value for the money.
Overhaul your engine instead of sending the Toyota to the junk pile. Learn to fix things instead of tossing them in a landfill. Learn how to make pottery. Sharpen a pencil.
Read a book to your child or go to the library with the kid. Make them something good to eat so that when they go to school and some kid's telling about the latest expedition to McDonalds your kid can say "My dad cooks for me-it's good."
Posted by: Robert Luedeman, attorney at law | August 29, 2007 11:40 AM
"Overhaul your engine instead of sending the Toyota to the junk pile. Learn to fix things instead of tossing them in a landfill. Learn how to make pottery. Sharpen a pencil."
@ Robert:
Great words, and taking care of what you already own, no matter how outdated it is, is how much of the rest of the world saves so much money.
Posted by: nanheyangrouchuan | August 29, 2007 9:15 PM