China Tightens its Steely Grip

The Financial Times Weekend Supplement has a lead story [not online] that is impressive/scary of just how rapidly and imaginatively China is displaying entrepreneurial flair and strategic brilliance in its business sector.

The first half of the story centers on the acquisition, dismantling, shipment, and reassembly of an entire steel plant from the Ruhr valley town of Dortmund to the mouth of the Yangtse River. The story is a paradigm of just how agile, organized and free of claptrap the Chinese business climate can be.

The 1200 Chinese workers arrive in Dortmund, live in dormitories, work 12 hr days 7 days a week and cause local consternation because this breaks local laws about labor down time [The local German steel unions were clamoring for a 35-hr work week, one of the reasons ThyssenKrupp sold the plant for scrap prices to a Chinese entrepreneur.

Switch to the Yangtse River, where the entrepreneur, a local peasant farmer named Shen Wenrong who started a backyard foundry in 1975, gives an interview to the FT reporter. He has erected the newly reassembled plant, which he bought for about half the price of a new plant to catch the burgeoning domestic steel market in China, which has pushed world steel prices, in a slump when he bought the plant in 2001, to levels undreamed of five years ago. He explains that ThyssenKrupp had no way of knowing their plant would experience a rebirth [the plant, destroyed during WWII bombing raids, was named "Phoenix" by the Germans] of high steel prices because the Germans were not thinking globally.

James Kynge, the author, makes the story a cautionary tale on how a smug and complacent Europe is having its lunch eaten, and manhole covers stolen, to satisfy China's gigantic appetite for growth.

The story reminds me of the consternation the Saudis evinced while I was at the Embassy because the South Koreans had erected a facility in about one-third the time the Saudis had projected. The Saudis were terrified that the long hours worked by the Koreans, who asked to work seven days a week and 12 hours a day, was frightening the local population whose lassitude and general lack of a work ethic is legendary.

The Chinese had a two-year contract to disassemble the plant, but ThyssenKrupp did not believe it could be done in less than three years.

The Chinese did the whole job in one year flat, and reassembled the plant in Yangtse just in time for the coming boom.

BTW, the peasantfarmer entrepreneurial genius explained his whole business plan to the astonished FT reporter, while sitting at a schoolchild's desk in the middle of an unfurnished office with no pictures nor any other furniture. His office is separated by a glass wall from the rest of the adminsitrative front office, who are enclosed by cubicles.

No private jets, yachts, cushy golden parachutes and other impedimenta of capitalism on this entreprise, which is part of James Kynge's new book: "China Shake The World: The Rise of a Hungry Nation" [Weidenfeld and Nicolson]

I get the impression that after China [and perhaps India] have Europe for hors d'oeuvres, the USA will be the main course as three-hundred million hypertrophic consumption addicts make an irresistable entree.