Doomed! We’re all doomed… are we outsourcing our futures to China?

So, are we heading into double-dip recession in the western economies (except Germany of course)? And can those economies thrive given the huge growth we're seeing in the BRIC countries, with China leading the way?

There have been some interesting debates rolling around the procurement blogosphere recently.  Jason at Spend Matters US takes what you might define as a fairly robust stance on China, laying into them for theft of intellectual property in particular.  Then there was a great debate started by Paul Teague at Procurement Leaders - a debate I helped to provoke a little - around outsourcing activities and jobs from the US to China.

While there are infinite variations, there appear to be three camps in terms of how people feel we should be dealing with China from an economic point of view - with knock on implications for procurement of course.

1. Go for it - offshore, look to partner with firms in China, see it as a huge market opportunity and a source of low cost supply.

2. Work with China but be cautious, protect your IP diligently where that's relevant

3. See China as an 'enemy'

I've always been a believer in free trade. The theory of competitive advantage says that each country should focus on what it is good at - and we'll all be richer.  But as I said in my comment on Paul Teague's piece,

I'm a total believer in the benefits of a fully open global economy. As long as everyone plays by the same rules. But if you look at game theory, if one party starts gaming in an 'unfair' manner, they will win short term over parties who play 'fair' (till they catch on). ... The UK and the US have global competitive advantage in areas such as entertainment, pharma, defence equipment, whiskey.  But if other countries just knock off cheap copies of our stuff or steal the IP then perhaps that negates your - and my - free market university economic theory. (My sister and family live in Jakarta. When do you think they last bought a genuine Hollywood DVD or Rough Trade indie band CD?)

My point is that global free trade is I'm sure best for everyone IF it is truly fair and free. (And we're not blameless in the west; agricultural markets are hugely distorted by EU and US subsidies).

Anyway, however it is happening, it feels like we're in an environment where times are good only for the very rich (and big companies) in the Western economies, and it's hard to see that changing.  Meanwhile, more of our citizens perceive that other countries take 'our' jobs, with the connivance of the corporates, and steal our IP... and don't actually reciprocate by buying the stuff we're good at producing.

Difficult times ahead I fear.

First Voice

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