Thursday, February 24, 2011

Is China's Growth Rate Sustainable?

Other countries [than China] and companies understand that building product value through innovation is how long-term economic growth typically is sustained. Switzerland made almost 22 million watches in 2008, for example, roughly 4 percent of China’s sales of 559 million watches. China’s average price was a mere $2 per watch, whereas Switzerland’s price was $528. As a result, Switzerland received over ten times as much revenue as China, $11.5 billion versus $1.1 billion. The Swiss understand how to create value out of more than the sum of parts. Along with a reputation for high quality, they have established a brand by law for the entire country. Swiss Made appears on the face of every Swiss watch. Chinese watches, or other products for that matter, have no such identity.

-from "Is China's Growth Rate Sustainable?," a Research Report by Craig J. Richardson, PhD, Visiting Research Fellow at AIER.

His answer to the question the title poses is "probably not."

(Forget Chinese, teach your kids high German and French.)

No comments: