Beyond grass-eating men and meat-eating women

I've been doing some research on Japanese social trends, and came across a fascinating article that I thought was worth sharing. The piece, by the astute social commentator Maki Fukasawa (who coined the term "grass-eating men"), is in Japanese, so I will summarize it here.

Fukasawa's piece, part of a column she does for Nikkei BP's Associe, a smart Japanese website aimed at working women, is ostensibly about the gap in male and female views on marriage, but it covers a lot more territory that has relevance to anyone interested in the Japanese economy. (As an aside, why are so many women's sites in America so trivial and fluffy?)

It won't be surprising for anyone who has been to Japan and been served tea by a female secretary before meeting with a male executive that Japanese women earn, on average, just over half of what men make. What was new to me was that Japanese women's average income peaks in their early 30s at just under US$34,000, and falls for the rest of their lives. By their early 50s, women are earning just US$30,000. Japanese men, by contrast, see their income rise over the same period. Men's income peaks in their early 50s at more than twice what women the same age earn, at almost US$75,000. Unsurprisingly, women represent just 10 percent of Japanese managers, compared with more than 40 percent in the US, according to Fukasawa.

These data reflect the "M-pattern" of Japanese female workforce participation, which climbs in their 20s, falls in their 30s and picks up again in their 40s. Lest you think that this is changing, Fukasawa reminds us that the M-pattern has been in place, essentially unchanged, since the 1980s. While clearly women in many countries struggle to balance work and home life, Japanese women are handicapped in their advance in the workforce by local prejudices (many carried by women themselves) but also the ridiculous shortage of nursery school places. There are 20,000 children on waiting lists for day-care centers in Japan. Only 28.5 percent of women with children under three work; by the time these kids are 6, 48.2 percent of their mothers work.

And I'd be willing to bet that many of those women aren't working full time. Women, like young men, are much more likely to be on non-staff contracts. Women accounted for 30 percent of Japan's non-staff workforce in the 1980s. Today, they account for more than 50 percent. I suppose you could argue that this reflects a higher total workforce participation for women today.

Fukasawa argues that these data support why men and women in Japan are so far apart on marriage. Women, including the "meat-eating" hunter women Fukasawa talks about, are very keen to get married, but men are shying away from this rite of passage. (This might explain why 25 percent of first children in Japan are conceived out of wedlock, according to Japanese government data, and why wedding planners now cater to pregnant brides, something that would have been unheard of as a business model a decade ago.)

The problem isn't hidden, Fukasawa says. It's obvious. That's why women care so much more about marriage - it's their best shot at financial security. And it's why men, concerned about being laid off, are even more reluctant to get married, since that means supporting another person (and likely a child as well) economically for the rest of their lives.

China will be having the red, thank you

As I write, my piece on New Zealand wine is running at the second most read on the New York Times' Global Business section. I'm sure this won't last, but I did want to add a few things for anyone interested in the China market, one of the future growth opportunities New Zealand is targeting for its wines.

I did some research on Hong Kong's wine market as part of this piece, and learned that a whopping 78 percent of wine imported into Hong Kong is red. Japanese wine drinkers, I was told recently by a well known wine writer, apparently also prefer red, in part because it's obvious to passerby what it is in their glass - the whole point of conspicuous consumption. I don't know if Japanese (or Chinese) wine drinkers are that facile, and I haven't done any specific research on wine in the mainland, but I'd be willing to bet there is a similar preference for red, and probably (at least once you get out of the weeds of mainland-produced wines) for famous French red in China.

All of this makes New Zealand's attempt to transition out of sauvignon blanc, which accounted for 81 percent of exports last year, that much more important. New Zealand's pinot noirs are not well known in Asia, though to me at least, many are excellent (she says as though she knows anything about wine!). There is a long marketing and brand-building road ahead, and maybe one conclusion is: as New Zealand's wine industry looks to the Chinese market, the more boutique, the more exclusive, the more expensive, the better.

For evidence that the New Zealand wine industry is hungry for better international exposure, see here.

The risks of remaking ourselves in China's image

In the wake of the financial crisis, there has been a lot of justified hand-wringing in America about our economic prospects. Some of this criticism has pointed to China, and particularly China's industrial policy, as an example we should follow. “In China, shovel-ready means shovel ready,” James Owens, Caterpillar’s chief executive, said in April, lauding the country’s quick mobilization of resources. Fareed Zakaria, editor of Newsweek, declared China “the winner of the global economic crisis.” While it's clear that China's political system allows it to respond more quickly in a crisis, it isn't clear to me that China's industrial policy is the reason for its prolonged and rapid economic growth. Other factors - foreign investment, a cheap renminbi, zealous local governments where officials are promoted on the basis of how much economic growth they can chalk up - these seem more important in driving growth than the policy of propping up a few industries with state bank loans. There are plenty of lessons we can learn from China, as Bill Powell of Time argues articulately here, but they aren't in the realm of big, unwieldy policies to stimulate development (and sometimes overdevelopment) in certain sectors. China has changed the competitive landscape. Revaluing its renminbi, while long overdue and important for addressing some global imbalances, is not going to bring back any significant number of manufacturing jobs. America needs to look carefully at preserving and building on what has made our economy so competitive in the past, and how we can ensure that our future growth trajectory brings as many people as possible into the fold. For more of my thoughts on this, see my piece on Foreign Policy's website published this week here.

Kicking America while it's down?

More than a year after the product scandals that shook China's international brand image, Beijing has paid for a TV advertisement intended to put the record straight. The 30-second ad, now playing on CNN and commissioned by the Ministry of Commerce with "participation" (=money) from four industry groups, is already stirring up debate in China. International debate, I'm sure, is not long behind.

Created by DDB Guoan and hailed by unnamed experts in the China Daily as "a PR breakthrough", the ad shows how widespread Chinese-made goods are in everyday Western life. An Ipod is "Made in China with software from Silicon Valley"; a pink dress is "Made in China with French designers", an airplane is "Made in China with engineers from all over the world", running shoes are "Made in China with American Sports Technology".

The ad is fascinating on multiple levels. For one, it's the first attempt I've seen by a Chinese government ministry to defend Chinese products to the English-speaking world using a TV advertisement. I remember covering CNOOC's bid for Unocal and seeing how the Chinese failed to make their case to the Americans. So at first glance, this ad might suggest China had learned its lesson.

But the timing and message of the ad could well be unfortunate. While it's absolutely accurate to say that the world is bringing more of its design and manufacturing to China, I wonder if viewers in America will feel like China is kicking America while it's down. Americans are understandably anxious about our economic prospects right now, and to me at least, this ad seems to touch that nerve. Made in China with American technology? Factually, totally accurate. But to the average American, could it be a reminder of what America no longer does, of the fading of our own industrial glory. And could it even bring to mind some of the less savory ways that China was able to win this business? Its poor track record on the protecting the environment, labor and intellectual property rights and its management of its currency to keep its exports competitively priced, to name a few?

The most disturbing part might well turn out to be the airplane - given the national significance and economic importance of companies like Boeing and Airbus, the obvious military carryovers from the aircraft industry, and China's recent product safety scandals, I'm not sure how comfortable ordinary Americans would be with the idea that China wants to dominate airplane manufacturing the same way it has shoe making. Again, what the ad says is right: China is playing a larger role in airplane manufacturing, and it is doing it with help from foreign engineers.

Still, the commercial demonstrates the challenge China faces in crafting an intelligent message about its products, and the inherent mutual suspicions that lurk within China's relations with its major trading partners. China can speak the truth, as it does in this ad, and it can still strike the wrong chord with some people. China should be able to promote its own products without seeming to do so at the West's expense.

The ad is here and here. What do you think?

China Quality Issues

The University of Southern California's US-China Today has a piece out yesterday on product safety issues in China quoting me and a range of other non-Chinese people. I wish the reporter had talked to an actual factory manager or an actual Chinese person involved in global supply chains to get their perspective. Anyway, the piece is here.

Coming to a neighborhood near you

What do the Chinese want? This simple question has roiled global commodity and equity markets for years. The macro answer is found in places like Newcastle, Australia, where China’s appetite for coal created a port-side traffic jam. The micro answer can be found in Causeway Bay, my neighborhood and one of Hong Kong’s busiest shopping districts.

As one of the most popular spots for visitors from mainland China, hosting some 15 million tourists in 2007, Causeway Bay is a leading indicator of what Times Square in New York, Paris’s Champs Elysees or Leicester Square in London might look like in 10 years’ time.

If my neighborhood is anything to go by, mainland Chinese want luxury watches, branded cosmetics, and skin creams. Maybe a little jewelry, and of course medicine and baby milk powder. Almost every day, shops that sell anything else are being replaced by those that cater to the mainlanders. And it's not just my neighborhood: IFC, a big shopping mall in central Hong Kong connected to two office buildings filled with investment banks, is gradually converting its tenants to stores that absorb the maximum amount of mainland money. It wouldn't surprise me one bit if the reason Pret a Manger, the UK sandwich chain that filled each day with suited financial drones, closed its convenient IFC branch recently was because a jewelry store that catered to mainland visitors could pay a higher rent.

Mainland shoppers are here to stay in Hong Kong, and they are heading overseas. As increasingly wealthy Chinese tourists fan out around the world, they will have a similar impact on the shopping landscape of big cities, just as the Japanese did before them. Already, there are lines most days outside the Louis Vuitton shop in Causeway Bay. And it's a safe bet the big luxury groups all now design with Chinese shoppers in mind.

As the Chinese shoppers head your way, here are a few things I've noticed that have changed in Causeway Bay that you might observe eventually in New York or London: signs have cropped up on cosmetics saying "fixed price" (no bargaining!), stores have started to promote payment in renminbi, stores install ropes outside to give the impression of exclusivity, and of course, every possible store gets turned into a watch or cosmetics shop.

By 2020, the World Tourism Organization is predicting 100 million Chinese will travel overseas. When they come, the Chinese will leave their mark. While they may be shy about spending at home, the Chinese are shopaholics overseas, spending $6,000 per trip to the US, more than visitors from any other country.

Tell that to the economists and politicians who complain about the Chinese not spending enough. They'd just rather shop overseas.

Shell, Nestle and Motorola's dirty secret

Greenpeace has a new report out this week about big companies, including Nestle, Samsung, Motorola, Shell and Kraft Foods, that are failing to comply with China's environmental disclosure regulations. What's great about the report (called "Silent Giants") is that it only asks if companies (both foreign and Chinese) are complying with Chinese regulations - it's not demanding they adhere to a higher international standard. In particular, Greenpeace investigated companies' compliance with a 2008 regulation that said companies blacklisted by local governments in China for spewing pollutants into the environment must disclose precisely what they are spewing. What Greenpeace found was "[n]one of the 25 factories belonging to the 18 companies that were required to disclose environmental information for exceeding discharge standards disclosed information within the stipulated time limit." Interestingly, all of the eight multinationals cited in the report regularly disclose information about emissions at their plants OUTSIDE China. What do you think?

Notes from my career crypt

I'm always fascinated to hear about the short cuts people take to do their jobs better. I don't mean cutting corners on health and safety or anything pernicious - not today. I mean the ways that people do their jobs better ... like the Silicon Valley entrepreneur who said that he never helped anyone above him in the dotcom hierarchy; he always helped people junior to him. Anyway, partly because I've had to deal with a public relations executive recently (I say "had to" because I basically swore off dealing with PR after I left the FT because so many were unhelpful, poorly informed, or just liars), I have been thinking about the ways people screw up their relationships with journalists, sometimes to the detriment of their employers or clients. I've also been cleaning out my contacts file. Looking through the notes I kept, most people merited a "nice" or no note at all. But a good number got freaked out by just meeting a foreign journalist - not even doing an interview. I share some of these notes here, if not for your amusement, then for insight into how journalists (or maybe it's just I) think:

"A little scary" (human rights activist)
"Sucks. Never around. Never returns phone calls." (can't recall who this was)
"Beautiful eyelashes. Great English. Kind of cute." (senior police officer)
"Allegedly does not have an email account" (Steve Wynn, gambling mogul)
"Condescending. Ex-Goldman. Yuck." (banker)
"[Has a] pet pig." (news assistant)
"Didn't eat anything or say anything." (financial PR)
"'If it rusts, pollutes, or you can eat it, it's mine.'" (Morgan Stanley banker)
"Anal about quotes, but in a good way." (consultant)

The photo is of me in a classic pose from my days as a reporter: juggling too many notebooks and material on the street in Tokyo.

Japan vs China, take one

I've been in Shanghai and Tokyo this week giving speeches and presentations, and moving between these two cosmopolitan but very different cities has left me with plenty of food for thought. To start: while Japan has in many ways become an easier place for foreigners to navigate than it was a decade ago, it still has a long way to go. For example: unless you have a business here that can keep a mobile phone contract rolling over every month in someone else's name, you have to rent a phone on arrival at the airport. To get a local mobile number as a foreigner in Japan, you have to have a foreigner registration card. (By contrast, in China, like most of the world, you just show up, buy a local SIM card, and pop it in your phone - in China, SIM cards are sold at newspaper kiosks on street corners.) I'm going to go out on a limb on this one and blame Japanese bureaucrats for this situation. Another problem: Japanese banks, not so friendly to foreign cards. American friends visiting Tokyo this summer could not believe how difficult it was to find an ATM machine that would accept their cash cards. Because I used to live here, I know where the Citibanks are, so I don't normally spend much time thinking about this problem, but it's silly. It's much easier to find a place to withdraw money in Shanghai than Tokyo. Finally, getting paid for services rendered in Japan without a Japanese bank account is not easy. Like a street performer, I am paid in cash for my speeches and TV appearances. Wiring overseas is too complicated at Japanese banks, or so my clients tell me. Banking and telecoms, two service industries that should, in theory, be more international in the country with a longer experience with capitalism and global commerce, illustrate perfectly how Japan has been happy to keep itself at arm's length from the rest of the world. Granted, accessibility to foreigners is not a perfect index for measuring a country's prospects - but how could being more open to skilled foreigners be a bad idea for Japan?

Changing of the guard?

I met up with a friend yesterday who teaches business to graduate students here in Hong Kong. These kind of programs have grown in popularity while I've been living in Hong Kong, presumably because they are extremely profitable for the universities. They draw students from around the world - India, the US, the UK, and the mainland. Because I'll be giving a talk to a class of these students again this year, I asked the professor whether there was anything different about this class. Yes, he said. This year, the mainland students have arrived much more confident and even nationalistic. The financial crisis has emboldened them to feel that China's system is superior, and they could be very vocal in response to what you say about their country. Putting aside for the moment the question of system superiority, we all know that the environment you graduate into (whether from high school, college or grad school) affects how you see the world: graduating into Japan's big bang permanently altered the expectations of a generation of Japanese my age, for instance. And for Brits who graduated around the time my husband did, their troubles finding work dimmed their views of their country. What I hadn't considered is how the humbling of America, Inc over the past year will affect the way young Chinese see themselves - not just university students, but also middle class people like Lu Yuan, the woman in this photo. It's been a matter of hot debate among academics and business people here over the last few weeks: the shifting of the world order. While I haven't seen a definite rise in swagger among the Chinese students I know, this financial crisis has no doubt affected their views of the world and how they fit into it. I'm interested to see what, if anything, that means for China's policy and economy five, 10, 20 years down the line.

Rise of the $1 censors?

There's been a lot of talk on some China blogs lately about China's so-called public opinion crisis, where public opinion spirals out of the government's control. To Western readers, this is a natural part of civil society - people express their views openly. But not so in China, where Rebecca MacKinnon has dubbed the government's strategy to control public debate "cybertarianism". The Chinese government pays bloggers to weigh in on online debates in Chinese - these so-called "50-cent censors" advance the government's view of situations without declaring who is paying them to do so. I haven't yet heard of 50-cent censors operating in the comment sections of English-language websites, but I wonder if they already exist. I have met some incredible English speakers in my travels in rural China, people who asked me about George W. Bush's frequent use of certain words like "robust" to describe the economy because they spent so much time on Whitehouse.gov. The initial responses to the always excellent Arthur Kroeber's piece on FT.com about the Rio Tinto case made me wonder whether there weren't $1 censors (surely they get paid more for posting in English) at work. Arthur's piece actually comes out fairly positive for China, saying it's not as bad as Russia; the piece doesn't directly address the question of what crimes were at stake, as commentators immediately pointed out. I'm assuming (as perhaps Arthur does, though I haven't asked him directly) that bribery is widespread in China, among both foreigners and locals, and that the larger issue at stake is the consistent application of the rule of law. As the public debate (see Niall Ferguson's piece in Newsweek, as one example) continues to heat up about China's rise and the resulting shifts in the world order, it will be interesting to see how the online chatter develops.

The China Daily on The China Price

Much to my surprise, the China Daily has reviewed my book in a favorable light. The review, published in today's China Daily, argues that "Harney's book certainly has plenty of grim material providing grist for the China-critic mills. But Harney has too much integrity and objectivity as a reporter to altogether ignore the positive side of China's export economy." William Daniel Garst, the reviewer, liked the story of the girls of room 817 (pictured on my Twitter page) and agrees with my argument that the China price is unsustainable. He does take a more sanguine view than I do in the book, where I argue that while China is changing and worker expectations are rising, not much will change until Western consumers do. If anything, the financial crisis has deepened Western consumers' appetite for cheap goods. But recent books like Ellen Ruppel Shell's Cheap, which generated good press coverage, suggest that at least coastal American pundits are willing to discuss the question that lies at the heart of The China Price: are we really okay with prices this low, even if they mean unsafe working conditions, unsafe products and the decampment of our entire manufacturing sector to cheaper locales abroad?

Whither rule by law for China?

The detention of respected Chinese lawyer and member of the Beijing People's Congress Xu Zhiyong has left me deeply concerned about the direction China is moving. Several years ago, I had the opportunity to meet and spend some time with him. Xu (pictured here in this month's Chinese Esquire magazine) is soft-spoken and modest; it wasn't until someone told me about his ground-breaking work after the Sun Zhigang case to help change the policy on custody and repatriation that I realized just how extraordinary and important a person he is. Here is a man who wants to work through China's own legal system for the benefit of its people. His representation of victims of the Sanlu milk scandal and his efforts to expose black jails testify to his convictions. Much has been written with great eloquence about the tragedy of Xu's detention and its potential significance for China. The detention of someone who was still playing well within the system (or so it would seem) suggests that it will become even more difficult for other lawyers to take on potentially sensitive cases, including, perhaps, labor cases. Is China setting itself up for further social instability? Thanks to excellent promotion of last year's labor laws, Chinese workers know now they can use the courts to redress grievances. Labor-related lawsuits rose 95% last year, the fastest increase of any category. Disputes are up a further 30% this year from last year's high base. If the door to the courts closes, where will workers, newly educated about their rights, turn?

Chemicals at any price?

In the wake of the Tonghua Iron and Steel Group labor dispute/murder case, another horrific story emerges from China's hinterland. According to the South China Morning Post, at least five people are dead and more than 500 sick as a result of cadmium poisoning from toxic waste freely released by Xianghe Chemical, a plant in Liuyang city, Hunan province. Employees of the plant, which has been closed, told the SCMP a familiar story of officials from the environmental protection bureau who came to "drink tea" but never saw the production line. On the one hand, you have to give China credit for at least meting out punishment: the director of the environmental protection bureau has been fired, and the deputy mayor arrested. But on the other hand, this is neither an isolated event in China nor new to this area - the previous director of environmental protection was arrested on suspicion of bribery. On the one hand, the China Daily's coverage and Xinhua's commentary have been more frank about problems with local governance; but on the other hand, this is not about "emergencies" or "incidents" - this is about a systematic, nation-wide pattern that, if unaddressed, will threaten the very stability it seeks to preserve. China's government and others rightly cite the fact that other nations polluted their way to industrialization. What they don't mention is that it was only bitter protests, followed by laws and policies considered radical at the time that finally put pressure on local officials to change.

China's looming demographic challenges

I've been catching up on China's demographics lately, and have been fascinated to read a presentation Richard Jackson, a senior fellow at the Center for Strategic & International Studies' Global Aging Initiative, gave in May. It's well known that China's one child policy has had a profound effect on the country's development, that the country will get old before it gets rich. But the numbers Jackson cites are staggering: in 1972, when Japan's elderly comprised the same proportion of its population as China in 2005, its per capita income (in 2005 PPP) was nearly $15,000. America hit that share in 1943, when its per capita income was more than $15,500. China? Just over $4,000. The number of dependents (children and elderly) per 100 working age people will rise from 47 in 2010 to 87 in 2050. With a public pension system that Jackson estimates only covers one in three people, and smaller families meaning fewer children to support their parents, something has to give. He argues for pension reform. I agree. But as Japan, the US and other developed countries confront their own aging societies, it's worth asking how these social challenges will affect countries' foreign policy. I think we should expect rapidly aging countries to be more inwardly-focused, for profits of companies to decline as they are expected to shoulder more of the retirement burden, and for countries to revise their economic models based on a shrinking, not a growing, labor force.

Japan's herbivores

I'm interested in Japanese youth - particularly how they consume (see my Atlantic piece on that subject), but also how they think. The social changes in Japan are fascinating right now - young Japanese I talk to have a completely different approach to life than their parents. What kind of country does that create? Is it one where people are more free to pursue whatever lifestyle they want, where they feel less judged not following the traditional path of cram school-university-job-marriage-children-30 years of long hours-retirement? I'm also interested in how this generation is pursuing more inwardly-focused hobbies - a lot of online games, of course, but also Japanese traditional crafts, and domestic travel rather than the status-trip to Honolulu. One Japanese man told me that he and his friends have no interest in holding down regular jobs - their parents will support them, and any extra money they need they can earn easily, by working at convenience stores or in Japanese pubs. Another swathe of young Japanese earn their keep by selling manga to each other in Akihabara and elsewhere. Anyway, I've written a piece about part of this phenomenon for Slate here. I'd be interested to hear your thoughts. (Image by Robert Neubecker courtesy of Slate.)

K Lunch

And now for some lite fare: it turns out that Hong Kong people have been disappearing into karaoke rooms on their lunch hours - singing and eating their hearts out for less than five US dollars. K Lunch, as it's known, is not news to most Hong Kongers, but was completely new to me when I heard about it a while back. Check out my piece on the subject in Time here.

How green is your bamboo keyboard?

One of the issues that has captivated me (and let's be honest, lots of other people) for a while is how green products that say they're green really are. A lot of products marketed as green don't actually provide us the information to prove it, and green products are so in fashion these days that suppliers in China, Taiwan and elsewhere go to very un-green lengths to create "green" products. And just because a product carries a green label doesn't mean it's actually good for you. Over on the excellent New Energy and Environment Digest, my friend Elizabeth Balkan wrote about bamboo keyboards earlier this month. Her post reminded me of the debate on bamboo flooring, and my overall interest in building materials (stifle that yawn!). Bamboo materials, it has been pointed out, do not yet carry any certification like the Forest Stewardship Council. That's before we discuss quality and safety problems such as those raised in the recent lawsuits about Chinese drywall and Paul Midler's excellent book Poorly Made in China. I'm not suggesting that children are going to spent their days licking the keys, but given the above, I do wonder what else is in that bamboo keyboard.

Go Patagonia!

A while back, a woman I met who works in corporate social responsibility at Patagonia told me that their customers were asking so many questions about working conditions in its supply chain that they had to educate their customer relations representatives about what they were doing to address these issues. If only more companies had that kind of problem! Patagonia has always been associated with environmental causes, but they are also quietly honest about the challenges they face on the labor side. Their multimedia presentations about the origin of products raise the bar for transparency. Sure, we could quibble about how honest they really are with themselves and with us, but it's a huge step in the right direction, one I wish more companies would take. Now, Patagonia has put together an excellent video in which their executives and outside observers discuss some of the challenges and complexity in ethical sourcing. It includes interviews with Michael Posner of Human Rights First, Auret van Heerden of the Fair Labor Association, Richard Applebaum of the University of California at Santa Barbara, and moi. Click on "Digging Deeper" here.

China-Japan relations

Last night in Hong Kong, I went to a dinner sponsored by the Asia Society where Cui Tiankai, China's ambassador to Japan, spoke about China-Japan relations - a topic that interests me personally and professionally. Seats were assigned beforehand; I was seated between a US diplomat and an older Japanese businessman, a man whose informality betrayed his long experience overseas (or his lack of interest in me). Ambassador Cui was seated next to Sato Shigekazu, Japan's consul general in Hong Kong. Around the table were several other consul generals from the US, South Korea, Malaysia and Singapore. Despite the close economic ties, and Consul General Sato's insistence that the foreign ministries of both countries were on good terms, what was remarkable to me was how often Ambassador Cui raised the issue of history, specifically "the war started by Japan." In the Q&A, one Canadian guest, who told me later his wife is Japanese, insisted that there was no need to teach the minutae of war in Japanese schools and that the free press in Japan would allow people to educate themselves about history when they were adults. That didn't sit well with Ambassador Cui, and it doesn't sit well with me either. After the ambassador's prepared remarks, I asked the American diplomat to my right what he thought, and he said, basically, nothing new, that's what I would have expected him to say. But when I asked the Japanese businessman to my right, he had heard it in a completely different way: he said the speech had been "tough". He wished the ambassador had started his speech with the fact that Japanese rescue teams were the first foreign groups to reach victims of the May 2008 Sichuan earthquake. And while he admitted Japan had made plenty of mistakes in the past and its discussion of the war, he wished that the speech hadn't focused so much on politics. Better to discuss ways to expand economic cooperation, he said.

On migrants returning home

I've been arguing for a while now that in this economic downturn, China's migrants will not be a source for instability - despite warnings from authorities in Beijing and fear-mongering from China-watcher friends of mine. Pieces like this one in last week's Financial Times echo my views. But I have also argued that many migrants will not be excited about returning home during this crisis because the Chinese countryside is a step back developmentally to people accustomed to life in the big cities. The second generation of Chinese migrants - the generation born in the 80s - is not in it so much for the money as for the experience. This is why a blog written by one of these young migrants and translated into English by China Labor Bulletin is so fascinating. It's important to remember that the writer, Xiao Sanlang, is the only person from his village to go to graduate school - so he's not typical. But his comments are sympathetic and fascinating. They raise an interesting question about the transformation of the China price from a coastal China price to an inland China price: Will workers who have been working in Shenzhen and Shanghai really want to live in the same basic conditions they fled to work at an export factory near their home, particularly if the conditions are no better and wages are lower than on the coasts?

Yunnan and more

Just back from three weeks away, most recently in Lijiang, in China's southern Yunnan province. I could write an entire post on the need for rudimentary nighttime noise pollution rules in Lijiang's beautiful (if unabashedly commercial) old town, in order to help promote that often undervalued leisure activity: sleeping. But I won't. I will, however, note that it was nice to visit a part of the Chinese countryside that hadn't been completely drained of working-age humanity in pursuit of exports - not, of course, because of the global downturn, but because Lijiang (photo courtesy of GGBerry Travel Blog) has a booming tourism-based economy. And to refer to the second-most hackneyed source of insight (the first being taxi drivers), a blind masseur who helped put Colin back together again (and who spent 10 years working in Shenzhen) mentioned that prices for basics - food, clothing - are now about the same in Lijiang and Shenzhen. I guess I shouldn't be surprised, given how many Chinese tourists there were in Lijiang, but I still thought it had to be cheaper than Shenzhen, one of China's most expensive places to live. Anyway, before I post anything substantive, I wanted to link to a couple sites that relate to interviews and talks I gave over the past few weeks. The first is a podcast with two impressive American interns at Caijing, China's leading business magazine. The second is a blog post by the Daily Telegraph's Beijing correspondent, Peter Foster, about a talk I gave on how China's second-generation factory workers are not a source of organized social unrest. Peter does a great job of summarizing my points, arguably better than I could have.

Thoughts on China from Japan

I've been speaking to Japanese groups (a company, a government agency, and a group of ordinary people) this week and have found some comments from the audience really interesting. After my presentation, one man asked a really great question: when will most ordinary Chinese feel as concerned about these issues - of occupational disease, for instance - as you do? He argued that Japan was only able to deal with its own occupational diseases that resulted from its rapid industrial growth when a majority of ordinary Japanese outside the factories became concerned about their fellow Japanese suffering from these horrible diseases. When will more Chinese start to care enough about this to demand better conditions in factories? Another question came from a man who was concerned about product safety, in particular the safety of China's food exports. He said he understood that improving the food supply chain would take time, but he asked: while China works on this problem, what should we do? We can't afford to wait for safer food. My view was that one thing Japan could do was to offer to share more of its experience in regulating and inspecting the food supply chain (of course, Japan, like every other country, doesn't have a perfect track record in food safety). Another thing we can all do is to press companies to be more up front about exactly where our food and other products are coming from, and under what conditions they are made. Still, the question remains about China's path toward resolving these issues.

Library Journal Best Business Book

A good friend has called my attention to the fact that Library Journal has put The China Price on its list of Best Business Books of 2008. The book made the list in LJ's web addendum under the category "globalization". "Harney’s no-nonsense work of investigative journalism examines the factors that contribute to the unbeatably low “China price,” including a lack of environmental regulations, labor abuses, Western consumption and willful ignorance," Library Journal writes. Check out the full list here. How cool is that?

The price of a life in China

In this morning's South China Morning Post, under the headline "250,000 cameras watching you in Guangzhou", the unidentified SCMP "staff reporter" describes a report from the city's Public Security Bureau, or police. The report discusses the 2008 Chinese New Year snowstorms, when at least half a million people were stranded at the Guangzhou train station. During that event, a recent Guangzhou police report "said that given that only one female worker was trampled to death in the days of huge crowds, the surveillance system had been a great aid to the government's handling of the emergency." I often cite the relative calm of the Guangzhou train station crowds when I argue that China's migrant workers are not rabble rousers. Can you imagine half a million people in America or France stranded at a train station (or a football stadium) for days on end without things getting violent? I hadn't realized that a woman died at the train station. That would have been big news in the US (and it was covered by the Chinese press), but in China, the fact that only one woman died is viewed as a qualified success.

Watch this space

This morning's papers carry a fascinating story: a senior Chinese official has suggested that the people who benefit from its ultra-cheap factories and lack of environmental protection (ie, Western countries) should be held responsible for the pollution they leave behind. Li Gao, director of China's Department of Climate Change, said at conference sponsored by the Pew Center for Global Climate Change: "About 15 percent to 25 percent of China's emissions come from the products which we make for the world, which should not be taken by us." I have to admit that I am so out of the China-climate change debate that I didn't even know China had a Department of Climate Change, and I have never heard of Li Gao, but it's an interesting remark. Negotiators are grumbling that this is unworkable, a "logistical nightmare", but China has a point. That said, it's also interesting because it comes at a time when Pan Yue, the country's most outspoken environmental champion, has reportedly been pushed aside in favor of Beijing's push for growth. The China Environmental Law Blog, a much better authority on this issue than I, has an intelligent post on this issue here, echoing the view that the proposal is impractical, certainly not ahead of the United Nations Climate Change conference in Copenhagen in December. To me, the larger question is: is this a line of argument that China is going to take in other areas? For example, it might say, Western countries, you accuse us of labor and human rights violations? Let's have a look at how your country's factories, or the factories that supply your retailers, are treating their employees in China, and then let's talk.

Chinese New Year in Jiangxi

These are some pictures from my recent trip to the Chinese countryside for my friend's engagement party. It's my first foray into making videos out of photos, so please forgive the rough edges. But at least the pictures give you a sense of what life looks like in rural China, and how different it is from the cities where these migrants (and most every able bodied person in these photos is a migrant) work.

Chinese migrants are not rabble-rousers

As some of you might have noticed, I've been peeved by some of the media coverage of China's migrants as a force for instability recently. I don't believe migrants are a destabilizing force for China; just the reverse. Revolutions are rarely started by people like China's migrants. I vented about this in a piece in the Wall Street Journal Asia today.

China: export-led or consumption-deficient?

Back in Hong Kong, I had breakfast this morning with a very smart economist friend whose name and employer I will leave out since those were the terms of our discussion. We were talking about Asian economies (sounds dry, but it wasn't) and he made an excellent point that is relevant to today's debate about China: by the numbers, China's economic model has never been export-led. According to this economist, 40% of China's growth in recent years has come from investment (private and public - that's everything from building roads to putting equipment in factories). An equal amount has come from consumption. Only 20% of growth has come from net exports. That export share has risen since the turn of the century, and the "tentacles" of the export sector extend into other industries, but it's still hard to argue that China has been "export-led". A better way to describe China, by his argument, is "consumption-deficient". This is certainly something everyone agrees on, including the Chinese government. (Good news for Wal-Mart and Carrefour!) As we know, there are lots of reasons why Chinese people are big savers, but one comment from my most recent visit to rural China sticks in my mind: driving around on the back of a motorbike with this young guy who had opened a little restaurant in Foshan, outside Guangzhou, he told me that he prefers to shop in the cities. Why? It's more expensive to shop in the countryside. A coat that costs RMB100 in the city might cost him RMB180 in a rural store. Why is that? Is it just logistics and distribution costs?

Yomiuri TV Wake Up! Plus

This morning, I had a great time appearing on Yomiuri TV's Wake Up! Plus - a refreshingly substantive, balanced program that airs nationally in Japan every Saturday from 8-9:30am. The first half of the program focused on Japan's latest political scandal - the arrest of the top aide to Ozawa Ichiro, the most powerful opposition politican, on suspicion of accepting bribes from a construction company. The timing of this arrest is spectacularly bad for both Japan and Ozawa's party, the Democratic Party of Japan (now ironic motto: "People's Lives First"). Not only was the DPJ on the verge of snatching power away from the old guard Liberal Democratic Party, but the country is facing its greatest economic crisis in decades. Things are only going to get a lot worse - Japan's 4.6% unemployment rate, slightly more than half of America's, looks like a one-way bet. The second half of the program focused on China's economy. My esteemed fellow guests were quite concerned about the demands for greater democracy. There are certainly more demands for accountability and transparency than ever before, and my research into labor lawsuits suggests that once you tell people they have rights under the law, they don't forget.

Congressional testimony and The Swan

I'm in Osaka this weekend to appear on Yomiuri TV's Wake Up! tomorrow morning. My wandering around the business district near my hotel this afternoon produced lots of thoughts about Japan (do I really need three people doing my hair simultaneously in a country with relatively high wages?) but more on that later. Back in my hotel, in between watching snatches of a Japanese version of The Swan (where it's okay for the host to tell a fat guest who was bullied into adulthood for her weight and looks "don't you think you should just lose some weight?"), I have realized I never posted my Congressional testimony before the US-China Economic and Security Review Commission. In case you missed it in the last sentence, here it is. More on Wake Up! tomorrow after I finish the show.

Niseko!

This is totally unrelated to China, manufacturing, or anything else I normally write about here, but I had to post this picture. This is me and Colin in Niseko last week.

Japan's downward spiral

Tamamoto Masaru, a senior fellow at the World Policy Institute, has a great op-ed in yesterday's New York Times. He argues that Japan has become a pyschological mess, touching on some of the issues that have most fascinated me recently - the country's failure to develop its own vision of its future, the reliance on Western models, the deeper malaise affecting ordinary Japanese. The point he makes about people's reliance on government to solve their problems is one that I hear often from Japanese friends, and one that came up in my conversation with a taxi driver in Sapporo over the weekend (I know, the taxi driver conversation is such a cliche, but this guy was unusually interesting, I swear). I've posted a link about this on my LinkedIn page and got a surprising amount of interest, so to summarize his argument: Hokkaido's financial resources have been severely depleted - remember Hokkaido Takushoku Bank, which went bust 12 years ago). Companies from the main island of Honshu that had branches in Hokkaido are shutting them down in this recession. And pillar industries like agriculture and commercial fishing are not faring well. The government's response for years has been to launch big expensive projects, particularly in tourism, but in this man's opinion, they never followed up effectively. They left them half-done. What is needed, this man said, was private investment, good corporate leaders who have a vision and are motivated to follow through. This lack of leadership is certainly something I remember from my days in Japan. And it's an interesting comment as people hope for public spending to arrest, if not reverse, the global economy's spiral.

Consumer behavior

It's clear that people are a lot tighter with their money these days, but how will consumers spend once the economy recovers? It's a relevant question to all of us who care about the well-being of workers and the health of the environment. Grant McCracken has an interesting post on this on The Atlantic Monthly's website. He proposes a few scenarios, including one where we trade down on some things in order to trade up on others, and seems to come to the conclusion in the end that we should all be thinking more about the environment when we consume. The nightmare scenario he describes is Japan, where people become permanently miserly. Especially after my recent trips to Japan to write my Atlantic piece and on research trips, I take exception to this, as, I believe, would economist Jesper Koll. In comments that sadly didn't make it into the piece, Jesper argued to me that Japanese consumption has actually been stable as a portion of incomes, and that one big factor driving down Japanese consumption has been the end of the consumer finance industry at the government's behest. In discussion of consumers in Asia in particular, I think we should be all be looking a lot more closely at the spending patterns of different generations, particularly as countries like Japan are aging a lot faster than other countries.

Migrants, the NYT, and social stability

The New York Times has another piece on the potential for migrant unrest in China this year. While there are clearly many migrants out of work, all this reporting on migrants as a brewing pot of discontent is starting to get on my nerves. Nowhere in the piece does Andrew Jacobs quote any migrants who are actually angry, or even talking about stirring up trouble. The strongest quote probably comes from Tan Liangsheng, a 52 year-old man who lost his construction job. "We have no savings," Jacobs quotes Tan as saying. "All our hard work and bitterness is invested in this house." The piece quotes an academic saying that these guys have very low expectations, and makes the fair point that there is little land for many to go back to. But what Jacobs misses is that the migrants he interviews don't seem to be angry - that there is a real gap between what the government is saying and what he is hearing in his interviews. Sure, these migrants are worried. But they're not angry, not now. All this talk of migrants as potential sources for unrest makes me think back to the old discussion of migrants as the floating population, creating problems for people in the cities. For more on this, see Dorothy Solinger's excellent book, Contesting Citizenship in Urban China. Totally unrelated to this, check out this piece on my recent speech at the University of Delaware. (Picture courtesy of TaylorMiles.net via Flickr)

C-SPAN's Washington Journal

I can't bear to watch it (who likes watching themselves on television?) but if you're interested, you can watch me take calls from around America about "the China price" and what it means to all of us here. On the right side of the page, there is a box that says "Watch" - click there and it will call up a screen. Yikes!

Adorable Grace, Fox News and more

Back in Hong Kong, I am slowly posting links from my trip to the US. I will post my testimony before the US-China Economic and Security Review Commission shortly, but for now, click here for the press release and federal register notice. Click here for my appearance on Fox News radio. The very cute Grace Manalo (see the photo I snagged from her blog) blogged about my speech here. Back in Hong Kong talking to people, I'm struck by the amount of uncertainty that is stalking every industry I encounter. With so many surprises in the last six months, everyone is reluctant to commit, whether it is buying advertising space or placing a large order with a Chinese factory. That can't be good for business, whether you're an investor or a steel maker or anyone else.

China Price on the radio

Do you live in Fort Myers, Florida, Hartford, Connecticut, Minnesota or Tulsa? If so, tune in this morning to hear me talk about Chinese factories. I'll be doing a series of radio interviews starting in the next few minutes on stations like WGUF, WHJX, and KFAQ, which you can probably pick up later online. I'll put it all on the calendar below as well.

What is "good value"?

I'll blog a bit about my testimony before Congress today later on, but the University of Delaware paper has already posted their article about my speech on campus there last night (hard to believe that was only 24 hours ago). I spoke to a full house about what "good value" really means, and whether the prices we expect to pay for our everyday products are now too low. Read the article here.

Everything in moderation

I'm in Ann Arbor, Michigan to give a speech at the University of Michigan and it's certainly a thought-provoking place to be. Kyle, the kind man who picked me up from the airport, is a former designer for GM who was laid off three years ago when his job was moved to Mexico. Before my speech last night, a man walked up to me and told me he had just been laid off as a business development executive at University Bank. No wonder so many people turned up for the food and drink at the reception beforehand! As I've been preparing my Congressional testimony, I've been thinking about my earlier post about what China needs to do, and actually, I think we should give Beijing credit for paying attention to the needs of workers - retraining, loans - in the middle of this economic downturn. Talking to workers, they're not angry, at least not the ones I'm meeting. They have very positive views of the government, and are strangely optimistic about their own prospects. I think living in such insecurity for so long - not ever knowing where their next job might be - has better prepared them for this downturn than Americans accustomed to a steady job with benefits. (Photo credit: Flickr, maskofchina.com)

China's migrants and 毎日新聞

I'm just back from Bejiing, where everyone is very concerned about China's 26 million unemployed migrant workers. More to come, but I will say this: instead of temporary handouts, China needs to help create long-term job opportunities outside the factories for these hard-working people. It's not just that many have lost or sold their land. These workers have been an engine of economic growth for China for the past 20 years, but still have too few options beyond factory work. They need education and retraining, which the Chinese government has acknowledged. They also need security, in the form of a social safety net - another point Beijing has sagely realized. Most of all, they need to be treated equally to China's permanent urban residents. They must not be treated as second-class citizens. 日本語が読める方、毎日新聞の「中国貧困絶望工場」についての記事はこちらにあります。

NYT Letter on Sweatshops

Following Nick Kristof's disturbing Oped in the New York Times last week arguing that the world needs more sweatshops - an Oped that left me feeling like I had spent the night in a bed of fleas - Adam Neiman, the founder of Boston-based No Sweat Apparel, has written a fabulous letter in response. Neiman writes beautifully, as in "when jobs aren’t a pathway out of poverty, they create an asymmetric, unsustainable global economy of producer countries and consumer countries that can stand on its head only so long." The letter makes a superb case against sweatshops, and I could not agree more strongly. Read the letter here.

Companies: Employment is your #1 job

I'm in Tokyo this week, and it's fascinating to see how the Japanese are responding to the global economic downturn. This morning, one of the Japanese Sunday morning talk shows was focused on the social consequences of Japan, Inc's decision over the past several years to reduce labor costs. With nearly 40% of Japanese employees now working in non-staff jobs (including my graceful, thoughtful new doctor friend, Sugiyama Saiko), Japan has broken the social contract it once had with its workforce. The businessman they interviewed on the show said emphatically that Japanese companies, under pressure from globalization, had started to care too much about shareholders, but that this era was now over. Companies needed to care about their employees, their customers AND their shareholders, he said. A primary duty of a company should be to employ people, he said. I have never known Japanese companies to care much about their shareholders, but in this era of mass layoffs, when our consumption-driven model has collapsed into a paradox of thrift, it's certainly food for thought.

A Best China Book of 2008

Access Asia has named The China Price one of its best books of 2008. "Perfectly timed to deal with the rising costs of production, the moves inland, the recession and factory closures and the stupidity of companies who claimed they were effectively auditing their suppliers," the research group noted. "Harney gets it all down in a readable fashion and nails her subject." The nomination prompted a fiery debate on Danwei.org, which is interesting in itself. Read the review and the debate here.