Word: china
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Dates: during 2000-2009
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...when the corporate world's enthusiasm for China was at its peak, I spent a few days in Beijing in the company of a bunch of top business executives from the U.S. and Europe. The occasion was a conference sponsored by my then employer, Fortune, and as I sat through the speeches and panels and dinners, I was repeatedly struck by the almost puppy-like devotion to the Middle Kingdom voiced by Western CEOs...
This can't possibly last, I remember thinking. I had no real idea how it would end, though, just a vague sense that the Chinese mix of economic freedom and political repression might eventually prove combustible. Well, we're still waiting on the combustion - China is already motoring out of the global economic downturn, and its government seems as cohesive and entrenched as ever. But the economic romance between the world's most populous nation and the biggest multinational corporations is nonetheless on the rocks. (Watch TIME's video of Peter Schiff trash-talking the markets...
...Chinese government has begun turning a cold shoulder to Western corporations hoping to cash in on its consumers. Meanwhile, corporations are paying much closer attention to the risks and hidden costs of supplying their home markets with stuff made thousands of miles away in China. None of this necessarily means an end to the extraordinarily co-dependent economic relationship that China and the U.S. in particular have built up over the past decade. But it does mean big changes...
...understand why, let's go back to May 2005. Back then, CEOs loved China because it had become the world's low-cost, increasingly high-quality manufacturing hub. They loved its vast and growing ranks of middle-class consumers. Most of all, the capitalist bosses loved working with officials of the nominally communist Chinese government, who were far easier to deal with than the politicians back home. And why not? On one side, you had autocrats who feared losing their grip on power if the economy didn't keep growing; on the other were autocrats who feared losing their grip...
Over the past couple of years, though, the China equation got unbalanced. First came a spike in shipping costs that led manufacturers in the West to take a closer look at all the costs - time to market, quality control, etc. - of stringing their supply chains across oceans. While shipping rates have since subsided, the shift in mind-set among executives has stuck, says John Ferreira, head of the manufacturing practice at Archstone Consulting. No longer is there a herd mentality pushing them to China and other faraway places, he says. When Ferreira surveyed U.S. and European manufacturing execs late last...