30 years is true cause for celebration
16 August 2010
Assuming the intervening years have been kind, and that one’s memory hasn’t been addled to the extent that momentous events of 30 years ago are as alien as, well, an alien invasion of Alien-land in Alien-shire, there may well still be some fond thoughts of important and/or enjoyable happenings of yesteryear floating around the grey matter.
Yes, back in 1980, Electronic Product Design magazine (sister title to Electronics Manufacture & Test) was launched, no doubt to much fanfare and bunting, in the offices at launch publisher Techpress Publishing at the very least.
Back in the day, music was being increasingly listened to on the revolutionary Sony Walkman personal music device, then barely a year old and, as the coolest electronics device on the planet, playing a role as the groundbreaking iPod of the period.
Cellphones were not only expensive, but literally the size (and shape) of a brick; if one had the energy, and lack of self-consciousness, to carry one around with its associated battery-in-a-briefcase power supply, it could be used to make and receive phone calls, but little else, with SMS messaging and the Internet not even in their infancy to Joe Public back then.
Commentators of the day were no doubt swaying between ‘next big thing’ and ‘will never take off’ scenarios for the technology, but history has obviously shown how quickly and pervasively it did take off, with consumers not only jumping onto the mobile telecommunications bandwagon with gusto, but most of them keeping pace with new functions and innovations like never before, and typically owning and discarding not insignificant numbers of handsets, as features and technologies made handsets virtually redundant at an ever-increasing rate. But I digress…
Apart from the launch of the Walkman, history will show that another event took place in 1979 that has had a significant impact on the global electronics industry; China’s ‘open-door’ policy. The opening up of the world’s most populous nation’s economy to foreign direct investment has seen China grow at a phenomenal rate over the past 30 years.
The electronics industry has been a pillar of China’s economic success and is now the country’s largest industry, growing at a rate of nearly 20% annually. Factors such as government policies, science and technology development, improving education and a cheap labour force have all contributed to the growth and performance of the industry. The China government offered attractive incentives to electronics firms from around the world, enticing them to relocate manufacturing operations to the county’s high-tech zones. Targeted funding in electronics R&D and entry into the World Trade Organisation in 2001, which led to economic liberalisation, simplification of the licensing and foreign investment policies, also helped boost the local industry.
More than ten years ago, Beijing realised that industrialisation and the prosperity that China’s Eastern coastal provinces were enjoying were bypassing the country’s inner provinces, and as a result the China government launched the Great Western Development Strategy. It targeted billions of dollars at key infrastructure in the hinterlands such as new highways, railways, and telecom links, and built new international airports, high-tech industrial zones, and power plants.
More recently, the China government’s US$590 billion economic stimulus package, which included The Rural Household Appliance Purchase Subsidy Programme, has had a significant impact on boosting China’s domestic market as the country’s growing middle-class exhibit an insatiable demand for consumer electronics.
Today, China has emerged not only as a major manufacturer, and in some sectors often the world’s main manufacturer of consumer goods, ranging from clothes, toys and cars to a full range of electronics devices, but is also the world’s largest consumer market. The China market has attracted nearly every multinational company on the planet, and thanks to its rapidly-emerging and newly cashed-up middle class, China is the world's hottest consumer market right now.
Notably, according to Professor Michael Pech, author of ‘China’s Electronics Industry’, the country is the number one producer of TVs, DVD players, telephones, PCs, refrigerators, and air conditioners, the number one IC consumer and cellular phone market, and has a rapidly growing leading-edge semiconductor industry.
All of this is impressive, considering that within a mere three decades, the country’s ability to manufacture quickly and cheaply and to meet product quality requirements has seen China disrupt national markets around the world. Competitors based in the US, the European Union, and elsewhere, whether in the electronics industry or most other industries, have been faced with a new economic reality: match the China price or perish. That said, China buys almost as much as it sells. However, a large percentage of its imports are materials and components that it uses to assemble goods it then exports.
Other the past few years, another development has emerged that underlines the rapid rise of China and the new global economic balance and that lies in the increasing number of cash-rich Chinese companies purchasing Western firms. The most spectacular and symbolic acquisition was when Chinese computer maker Lenovo picked up the iconic US computer brand IBM's PC division for an estimated US$1.75 billion. When Guangdong-based TV maker TCL purchased the TV division of France's Thomson, it became the world’s largest TV maker overnight. In business terms alone, this is seriously heavyweight stuff.
The Global Financial Crisis, natural disasters, claims of currency manipulation, safety recalls and, most recently, worker unrest, have meant that China’s rise has not been all plain sailing. During the 1980s and early 1990s, foreign investors were concerned that China's leaders would roll back economic reforms or that political infighting would give rise to a conservative backlash from the old guard.
The Communist Party still makes all the decisions that matter in China, whether through central government edicts or through party leaders at the regional or local level. In its most recent Five Year Plan, the party emphasised its commitment to continuing market reforms and commentators have remarked that it would be unlikely that we’d ever see the economic clock turned back. Perhaps reflecting the fact that all nine members of the Communist Party's ruling Politburo are engineers by training, the plan also stressed the need for China to continue its technological advancement and to move up the manufacturing value chain away from the low cost manufacturing that has been the basis of China’s economic success so far.
When EPD first hit the publishing market and Deng Xiaoping opened China’s economy to market forces, no one could have predicted that 30 years later China's fortunes would be the way they are today. In other words, what happens in China today matters not just for the Chinese, but for everyone.
I wish EPD and EMT all the very best in the future, and many more successful years ahead.
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