Reflections from China

Last updated on May 13th, 2019 at 02:28 pm

As the president and managing director of Corporate Financial Advisors LLC, Milwaukee, Joe Sweeney is aware that Wisconsin manufacturers have been pummeled by competition from China, where labor is cheap, working conditions are abusive, the environment is contaminated and intellectual property is violated.
Yet, somehow, someway, Wisconsin’s manufacturers are going to have to find a way to compete. Or they will perish.
With that realization in his back pocket, Sweeney boarded the jet with Wisconsin Gov. Jim Doyle in March and embarked on the state’s trade mission to the Land of the Rising Sun.
Sweeney returned from the journey with eyes wide open and perhaps more questions than answers about how Wisconsin companies can compete with China.
Sweeney kept a written journal of the trade mission and shared some of his observations and photographs with Small Business Times.
¥ He visited the Chinese operations of several Wisconsin-based companies, including Brady Corp., GE Health Care, A.O. Smith Corp. and Harley-Davidson. In general, the working conditions for the laborers at the Wisconsin companies’ plants exceeded those at the sweatshops operated by many corporations in China, Sweeney said. "These women at the Brady Corp. labeling plant in Beijing were working for $5 a day. But they only work eight hours a day," Sweeney said.
¥ Intellectual property rights are violated. Daily. "Their respect for trademarks is zero. They even take an American company’s trademark and put the little ‘TM’ underneath it," Sweeney said.
¥ China’s largest cities, including Beijing and Shanghai, are filled with huge skyscrapers forming cityscapes of new architecture to rival any in the world. "There are more cranes in Shanghai than anywhere else in the country right now," Sweeney said.
¥ As more American companies have outsourced jobs to China, large industrial parks are forming throughout the Chinese eastern seaboard. "There was one industrial park, the Suzhou, that was 10 miles by 10 miles. That’s 100 square miles. Imagine that. And it was all filled and busy," Sweeney said.
¥ Those goods being produced in those industrial parks aren’t being consumed by Chinese workers, who don’t earn enough with their paltry wages to buy the products they are producing. Those goods are being shipped by American companies in China back to the United States. "I saw hundreds of ships, just lined up," Sweeney said.
¥ The aforementioned pollution is stifling, as seven of the 10 most polluted cities in the world are in China. "I had a bloody nose every morning I woke up from the pollution. It was terrible," Sweeney said.
¥ The Chinese people are accustomed to making do with less, and they’re not exactly overfed or lazy. "I never saw one fat person in China," Sweeney said. "My largest reflection is how they’ve been able to live on so little. I kind of had Catholic guilt there. A lot. I’ve got four kids and a nice house …."
¥ The Chinese culture is not infatuated with sex. And families that have more than one child are penalized, as the additional children are not entitled to state-provided health care. Furthermore, boys are valued more highly than girls. "Women are really looked down on in that society. They give girls away (for adoption)," Sweeney said.
¥ The Chinese business people and governmental officials responded well to Doyle. "They really respect other countries’ government people more than business people," Sweeney said. "I think that’s because they respect and fear their own government so much." Tanks will do that.
¥ One Chinese official told Sweeney that the Chinese government ultimately plans to sell 200,000 businesses that have been subsidized by the government. When that happens, Sweeney, who specializes in mergers and acquisitions, wants to be there. "I came back with 70 business follow-up (calls) to make," Sweeney said.
¥ Communism is being modified with a dash of capitalism in China, and decisions are being made quickly and efficiently, Sweeney said. When something is needed to be built, when decisions are needed to be made, it is done. No mamby-pamby zoning boards in China. "One of the things to really watch for is how is this whole thing is going to shake out. The Chinese businesses, the government and the legal system are changing so fast, they don’t even know where they are going."
¥ The success of the trade mission should not be gauged on how many Chinese contracts Wisconsin companies are able to land. The success is enabling dozens of Wisconsin government and business leaders to gain personal insight into the world’s most populous nation, Sweeney said. "What was accomplished and what the media wants to report are two different things. I think it was an exploratory trip. I think what was accomplished is a realization of what was over there from a government, environmental and legal standpoint," Sweeney said.
* Sweeney gained a newfound respect for Doyle as the leader of his state. "I talked to the governor a lot. I give Jim Doyle a lot of credit for putting together this trade mission. Going over there first-hand, Gov. Doyle really can open doors there for Wisconsin companies," Sweeney said. "We have companies in Wisconsin that have been absolutely devastated by China. Wisconsin manufacturing is getting the crap kicked out of it. We need to figure out how to manage it. It’s scary. It almost forces you, it hits you so hard in the face that we’ve got to redefine who we are."
April 16, 2004, Small Business Times, Milwaukee, WI

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