Friday, September 9, 2011
Why is Surrendering Manufacturing Prowess Cause of Economic Demise?
Our generation needs an ENTREPRENEURIAL REVOLUTION.
It was an observation made that countries that did not outsource are still strong economically and those that did no are still strong. We know for a fact that in the value chain, manufacturing does not have the biggest value added; marketing does. And yet why is surrendering the manufacturing to China and other offshore countries cause of weakening of developed countries. USA which outsourced many of its manufacturing is not the once mighty USA; but Germany, France, Switzerland, Japan which are very timid on the outsourcing thing are still going on strong. (Japan does have overseas plants but not much outsourcing; companies maintains its network of Japanese manufacturers and suppliers)
I thought about it for a long time as an economic and micro business puzzle until I conversed with a geophysicist friend - supplier. He says its all about the balance of payments. If you outsource and do not have goods to export (and you import mostly your outsourced products) then eventually you run out of currency to pay for your imports; its the trade imbalance that eventually weakens you. And among other things like culture, politics, leadership, faith in God (Faith and Freedom book)
It was an observation made that countries that did not outsource are still strong economically and those that did no are still strong. We know for a fact that in the value chain, manufacturing does not have the biggest value added; marketing does. And yet why is surrendering the manufacturing to China and other offshore countries cause of weakening of developed countries. USA which outsourced many of its manufacturing is not the once mighty USA; but Germany, France, Switzerland, Japan which are very timid on the outsourcing thing are still going on strong. (Japan does have overseas plants but not much outsourcing; companies maintains its network of Japanese manufacturers and suppliers)
I thought about it for a long time as an economic and micro business puzzle until I conversed with a geophysicist friend - supplier. He says its all about the balance of payments. If you outsource and do not have goods to export (and you import mostly your outsourced products) then eventually you run out of currency to pay for your imports; its the trade imbalance that eventually weakens you. And among other things like culture, politics, leadership, faith in God (Faith and Freedom book)
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