Sunday, June 17, 2007

The Way We See It

We have all witnessed the incredible story of the development of China unfold over the last two decades, a story fueled by the affects of westernization. But westernization’s affects on the culture, business practices and the natural resources over time have varied. Consider its affects on three critical components of any developing country: human capital, manufacturing and the environment.

Human Capital
Thanks to western traditions, in the world of human capital, multinationals uncovered an early weak link in Chinese culture: an unfortunate lack of innovation and creativity among its people. Long known for their ability to replicate with great precision and efficiency, the ability to create and develop was virtually non-existence. Until now.

The Chinese are well aware of their “innovation gap” and have made the introduction of innovation into the culture a national priority, matched with vigorous initiatives designed to transform the Chinese workforce from a reactive, execution-orientation to one of creativity and innovation.

But this should be no surprise to the world. If you know any history of Chinese culture, innovation is not a new phenomenon. China is the birthplace of navigation and other world-altering innovations. Combine history with the will of the Chinese government and economic incentives for corporations to join in and the innovation priority is certain to be met.

The blog post entitled “Westernization’s Impact on Human Capital: Uncovering a Weak Link” discusses the specifics of westernization’s powerful impact on Chinese workforce issues.

In the beginning of China’s industrialization and development, most any observer would find an inadequate infrastructure coupled with a culture deeply rooted in the 19th century. How could best in class manufacturing ever find a home in such a setting?

Thanks to western influence, the infrastructure and the culture have changed over time. Processes typical of some of the best run factories in the world run rampant in manufacturing facilities in China. The result of this development? The quality of Chinese products have improved while remaining a relatively inexpensive place to manufacture, making what is produced in China truly globally competitive.

But why has this happened? Westernization has played a major role in the development of sound manufacturing practices. However, we find a culture eager to instill high standards and best practices into their manufacturing centers. Not every company has this desire – creating a continued risk inside of China – but over time many believe the desire to instill high quality practices will persevere.

For more on the westernization influences in manufacturing, visit the blog post entitled “Manufacturing in China: Too Cheap or Too Good? Is the Westernization on Manufacturing a Good Thing?”

While improvements in Chinese Human Capital and Manufacturing processes have resulted from heavy western influences, the environment in China has suffered. Some argue that western firms desiring cheaper manufacturing practices with lesser environmental regulations in China are partly to blame for the country’s dismal environmental record. Consider the data:
-China suffers from significant water, energy, soil erosion and air pollution issues.
-Five of the world’s 10 most polluted cities are in China.
-400,000 Chinese people prematurely die from air pollution every year, suffering from heart and lung related diseases.

Perhaps the greatest effect of westernization on the Chinese environment is that westernization has indeed had a negative impact on the environment. And the world, fortunately is beginning to notice. Fortunately, the Chinese government is responding. The government’s current 5 Year Plan invests $175 billion in infrastructure and technology geared to assist local political officials in environmental regulatory enforcement.

Read “China’s Environmental Response to Westernization: The Right Trade-Off or a Long Term Deal Breaker” for more context around this important subject.

In Summary
One thing is clear. Westernization has been a catalyst for change in China. For good or bad, it has caused the national government to take notice and make significant changes in some areas. Westernization has also opened the country to the scrutiny of the rest of the world. And for issues like human capital, manufacturing and the environment, world standards are becoming more critical and essential for countries – developing or developed – to operationalize should they hope to remain a relevant player in the global economy. This is the way we see it.

-Alyssa Williams, Laura Alvarado and Harris Vaughan