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Last Updated: Monday, 9 May 2005, 23:41 GMT 00:41 UK
The view from Qingdao

By Peter Day
Presenter, BBC Radio 4 and BBC World Service

It was in the bustling Chinese sea port of Qingdao, looking out over the Yellow Sea, that I had my revelation a year ago.

Qingdao port
Work in Progress is the title of this new exploration of the big trends upheaving the world of work as we steam further into the twenty-first century.

And it is a work in progress, influenced and defined by my encounters as I report on trends in business and organisations all over the world.

Peter Day

Qingdao was a tiny fishing port 100 years ago when it became a German concession.

The Germans built up the town, and taught the locals brewing, so that Tsingtao beer is now one of China's few famous brands.

But it was not just the beer that took me to Qingdao, and the flash of recognition came in the port itself.

There on the left hand side were rusty-coloured mountains of iron ore, brought in from Brazil by ships that queued for 12 days to get an unloading berth.

Gaze to the right, and the containers were piled up nine storeys high, ready to carry abroad the consumer goods made in the factories, which have sprouted in China in the past 10 years and which nobody can ignore.

Inflation and deflation

There in Qingdao in one extraordinary panorama was a picture of China's economic impact on the world today.

Qingdao port
Demand from China has forced global energy prices higher...

On the left loomed the huge inflationary effects of increasing demand from China for the raw materials to power the greatest industrial revolution the world has ever seen.

Coal, iron ore, oil and soybeans have all shot up in price as China's demand for energy and raw materials balloons, forcing up global prices and sending oil to its highest level for decades.

That's the great inflation impact on the world economy, not forgetting the fivefold rise in shipping freight rates caused by Chinese demand for sea transport in the single year of 2003.

But offsetting that is the impact of the piles of manufactured goods carried by the container ships as they stream out in convoy across the world.

The great deflationary impact of China.

The China Price

This country, which currently produces 20% of the world's garments, is set to see it soar to 40% over the next few years following the end of 30 years of restrictions on the global clothing trade, according to projections from the World Bank.

Qingdao port
... while China's exports have forced down prices of consumer goods

The store chain Wal-Mart of the USA already buys Chinese goods equal to nearly 10% of the US trade deficit with that country; how much more will it take in the future?

The Wal-Martisation of the world is happening before our very eyes. One of the most terrifying phrases in the American business vocabulary is: "The China Price".

It is the price (less than the cost of production in the West) that forms the main competition for many stoical American manufacturers.

"What's your China Price?" is a pretty hair-raising question for many established western manufacturers, a jolt to the system, the worst thing a negotiator can brandish at a seller.

Shuttered plants

It is a question that can be applied to more than just manufacturing. Do not imagine that manufacturing is the end of it.

To the northeast of China, bordered by North Korea and Russia, is the rustbelt region that used to be called Manchuria.

Dongbei as the Chinese call it was the industrial powerhouse of the Communist era, its cities thriving on huge and inefficient state owned industrial plants employing millions of workers to make ships and trains and machines.

But now many of the plants are shuttered and decaying, the workers thrown out of jobs with minimal compensation.

"Off post" is still the military phrase the Chinese laid off worker uses to describe unemployment; awaiting another state assignment.

Workers' strife

But state jobs are dwindling. There are big protests, put down by the police.

Even in the northeast, privatisation is happening everywhere. And even in this heavy industrial area, there are glimpses of how China is learning to go up the ladder of added value in just the same way as India has already learnt in the outsource centres of Bangalore and Mumbai.

Start-up computer companies in cities such as Shenyang and Dalian are already supplying online software processing to companies in Japan; they say demand is increasing at 25% or more a year.

Raw brainpower

In other words, what I missed in my glimpse of the future in the port of Qingdao is China's triangular push into every area of business life.

It is not only fast becoming a global manufacturing centre and a mighty consumer of raw materials.

Its businesses are also already pushing up the hierarchy of human needs into services, and brainpower.

It is time for the world's current top dogs to move over, and that means a new role for business in Europe and America that few companies seem capable of envisioning or embracing.

This need for a new kind of economy is the continuing theme of this column; it is why it's called Work in Progress.

Wherever we work, whatever we do, all our jobs are likely to be affected by the huge shifts in technology which are sweeping the business world, for richer for poorer, for better or for worse, as the marriage vows put it.

Work in Progress is the title of this new exploration of the big trends upheaving the world of work as we steam further into the twenty-first century; and it is a work in progress, influenced and defined by my encounters as I report on trends in business and organisations all over the world.


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