May 14, 2008

Jack Covert Selects: Jack Covert Selects -The China Price

By: 800-CEO-READ @ 3:15 PM – Filed under: Management & Workplace Culture

The China Price: The True Cost of Chinese Competitive Advantage by Alexandra Harney, Penguin Press, 336 pages, $25.95, Hardcover, April 2008, ISBN 9781594201578
Many of the books written about business in China in the past few years have come at the situation from a "half full" perspective. As a thinking person, you know there is another side to all these products we are buying so cheaply. This is the book that addresses that "half empty" side.
Alexandra Harney reveals the damage our seemingly insatiable need for cheap goods causes. She explains that "as much as the responsibility seems to lie with Beijing, it also lies with the global consumer. Our appetite for the $30 DVD player and the $3 T-shirt helps keep jewelry factories filled with dust, illegal mines open and 16-year-olds working past midnight. We all pay the China price" (289). The China Price compiles an impressive list of some serious infractions in the international code of conduct. For example, the author joins a Wal-Mart representative as she audits a factory for compliance to the company's ethical standards with regard to child labor, factory safety and pay. Unethical factory owners, she is told, often carry a separate set of books with fake time sheets and fake pay stubs to satisfy the standards large American companies demand.
These practices are driven by the desire of the factory owner to make more money, but, as Harney explains, it is also driven by the "race to zero" where the customer is demanding a reduced cost for the product. Because of the size of the country and the number of factories, customers can shop and demand better prices. This demand puts huge pressure on the environment, labor costs and safety issues. Harney also digs into the troubles China has gone through during its evolutions from a state-controlled economy to a country trying to cope with one of the largest migrations in human history. These conditions are simply not conducive to a rational growth policy.
This book tells sobering stories with the quality you can expect from a Financial Times reporter. To fully understand our relationship with China and the internal state of that country, The China Price is a must-read.