'Made in China' labels don't tell whole story
By David Barboza (The New York Times)
Updated: 2006-02-09 11:50

"I don't think the developed world shifted that much work to Asia," said Vincent Chan of Credit Suisse. "The places that have seen the most manufacturing disappear are Hong Kong and Taiwan."

To be sure, American and European companies are moving more of their manufacturing to China. Dell and IBM computers used to be primarily made in the United States. Now, most of their PCs are assembled in China.

Bigger multinationals could be on the way. Airbus is now considering building passenger jets in China. And General Motors is considering exporting some of the cars it makes in China.

Thousands of Chinese factories have created millions of jobs for the country's low-wage migrant laborers, who earn about 75 cents an hour. But so far, Chinese companies in these industries have not been able to climb from basic manufacturing into design work and beyond. China's rise is in striking contrast to that of Japan in the 1980s, when Japan was producing brands like Toyota, Honda, Mitsubishi and Sony. China, by contrast, has few if any global brands beyond Lenovo and Haier, which are still struggling to build name recognition.

"The biggest beneficiary of all this is the United States," said Tao, the UBS economist. "Look, a Barbie doll costs $20 but China only gets about 35 cents of that."

Chinese officials rarely miss an opportunity to argue that the trade statistics showing huge surpluses for China are misleading indicators of the country's prosperity.

"What China got in the past few years is only some pretty figures," said Mei Xinyu of the Ministry of Commerce Research Institute. "American and foreign companies have gotten the real profit."

Still, China's economy is booming, and an aggressive class of entrepreneurs is emerging at home that resembles the overseas Chinese who built business empires in exile during the 20th century. These are people like Yin Mingshan, a 68-year-old multimillionaire in the central city of Chongqing, who is fashioning himself as a Chinese Henry Ford.

"We are the biggest exporter of motorcycles in China," Yin said.

Yin started out selling books in the 1980s, then engines and motorcycles in the 1990s. Today, his company, Lifan Group, has just opened a huge factory. Yin says his next goal is to export cars to the United States.

Don Brasher, who operates Global Trade Information Services, said this about the Chinese transformation: "That's how the Japanese got started. Remember, in the 1950s, the Japanese started exporting motorcycles. And 20 years later, it was cars."