In love with 'Made in China'

Asia File

Every time I visit my daughters in the US, we get into the same debate we've been arguing for years: whether it's ethical to shop at places like Wal-Mart, Target, Kmart and Walgreens.

My daughters and many socially-conscious Americans regard these outfits as the rogues of the American retail industry who are said to buy their products from sweat-shops around the world and follow unfair labour practices at home to drive up revenues and profits. They should, therefore, be strictly boycotted.

But the thing is, the overwhelming body of the American buying public doesn't care. These stores give them the best bargains they can get anywhere, and that's what matters to them. The average American consumer is so used to looking for and getting low prices at these places that he or she won't go anywhere else.

Take Wal-Mart. People call it the Beast of Bentonville "" after its home base in the state of Arkansas "" and have been running hate campaigns against it for years. But its revenues have been rocketing ever upwards and reached a whopping $ 245 billion in 2002.

Every week, some 138 million shoppers visit Wal-Mart's 3,400 stores in the US in search of "everyday low prices," and 82 per cent of American households are known to make at least one purchase at an Wal-Mart outlet. No wonder, Wal-Mart alone accounts about 8 per cent of all non-automotive retail sales in the US.

Now look at the other side of the coin. Wal-Mart's "everyday low price" business strategy has set such a consumer trend that all big-time American retailers are obliged to follow in its footsteps and look for low-cost goods in the Third World countries, especially in Asia.

The US may be losing out on its manufacturing jobs "" 2.7 million jobs were shed during this decade alone "" but Asia is gaining them and at a rate that can no longer be reversed. As Ken Eaton, Wal-Mart's senior vice-president for global procurement, says, "There are certain businesses where you just can't buy domestically anymore to the scale and value we need."

One country that benefits most from this is China. Everybody talks of China's sizzling exports to the US, but never until my latest trip did I realise how sizzling they actually are. China's dominance of the American consumer psyche is almost overwhelming.

My two-year-old grandson, growing up in Albuquerque, New Mexico, plays with toys made in China, solves puzzles made in China, hugs a teddy bear made in China, and reads board books printed and manufactured in China.

The other day his dad walked in with a 2004 Ladybugs calendar and, as expected, it was made in China. The Halloween pumpkin decoration that glows on their front porch every night is made in China. The case my son-in-law uses for his eyeglasses is made in China, too.

Over 71 per cent of all toys sold in the US come from China, and Wal-Mart now sells one out of every five toys that Americans buy. I wouldn't be surprised if these figures applied to children's books as well and to other everyday things that make up an American household.

Global demand for made-in-China products has never been so high as it is now. Over 3,00,000 qualified China suppliers and more than 1.2 million China manufacturers are working their guts out to keep fuelling this demand. There's no guarantee that there aren't any sweat-shops among them.

But who cares? Americans certainly don't. China is cheap and that's a huge attraction. Wal-Mart alone bought $ 12 billion worth of Chinese goods in 2002 "" 10 per cent of all US imports from China "" and its worldwide purchasing headquarters is now located in that country.

But if China is selling itself cheap, there must be a purpose behind it. One consideration, obviously, is to get into the consumer psyche, which, at least in the US, it has been wonderfully able to do.

Beijing's second consideration is to acquire technology from whatever sources it can and use it to upgrade its own manufacturing capability and product designing skills. The Koreans did it with tremendous success, and the Japanese before them. So why can't the Chinese?

And this leads to the third element in the Chinese purpose "" to take the "Made in China" tag to a level of respect where it can eventually stand its own even if its costs tend to rise.

One can see this already happening. Last year, Chinese-made DVDs sold like hotcakes in the American market, outselling all other brands but Sony. For less than $ 50 a piece, American buyers couldn't have a better bargain.

Chinese-made TVs, refrigerators and air-conditioners, selling for less than $ 100, are now among the most popular items at Wal-Mart, Target, and Walgreens, and Apex, Haier and Norcent are becoming as well known Sony, Panasonic or Philips.