What happens when the foreign outsourcing labor providers decide to make a go on their own?
For a few minutes, I held the future in my hand. The third-generation cell phone in my palm made a BlackBerry look like a Model T Ford. Looking down at the color video screen, I could see the person on the other end of the line. The gadget, which fit easily into my pocket, could check local traffic, broadcast breaking television news, and play interactive computer games across continents. Internet and e-mail access were a foregone conclusion. So were downloading music and watching video clips.
None of this would be all that surprising were it not for where I was standing. I wasn’t visiting Apple Computers in Cupertino, California, or Nokia headquarters outside Helsinki. It was January 2005, and I was in Taiwan, standing in the research lab of High Tech Computer Corporation (HTC). The innovative Taiwanese company employs 1,100 research engineers…
MyWire | Foreign Policy: Industrial Revolution 2.0.
This is unsettling. The US and other first-world countries have outsourced a lot of technology production to third-world tech companies. So, basically the marketing, some operations, and distribution is in the US and the technology goes offshore.
Well, third-world companies have gotten smart and have created world-class R&D labs of their own. One day they may decide to “lift the veil” and come out with their own superior products from these labs. They can then work out the marketing on their own and basically compete on the world market with their own products.
They already play a large role in business, most people just are not aware.
Most people are blissfully unaware that companies from emerging markets already play a major part in their lives by making much of what they eat, drink, and wear. One reason that these new multinationals have flown below the radar of so many executives, as well as the general public, is that companies such as Taiwan-based Yue Yuen and Hon Hai remain deliberately hidden in the shadows. Even though Yue Yuen produces the actual shoes for Nike and Hon Hai makes much of what can be found inside Dell computers, Apple iPods, and Sony PlayStations, the bigger brands continue to control the distribution and marketing. When will they remove their veil? These firms’ prevailing invisibility—a conscious stealth strategy in some cases—does not mean that they are powerless, less profitable, or that they will be content to have a low profile forever. It won’t be long before the biggest companies you have never heard of become household names.
MyWire | Foreign Policy: Industrial Revolution 2.0.
American consumers may think that they are “buying American” when they buy a Nike, iPod or a Dell. Ultimately, these companies could come out of “stealth mode” and compete directly.
Yet in the West, business leaders and government officials cling to the notion that their companies lead the world in technology, design, and marketing prowess.
Increasingly, that just isn’t so.
MyWire | Foreign Policy: Industrial Revolution 2.0.
This is an interesting strategy that I have often thought of since outsourcing became more prevalent.
If US companies are using foreign companies do more and more of the work of manufacturing, service, and even R&D. This allows these foreign companies to do business more easily in the US. Then we are increasingly supplying them with more that just the money we pay for labor. We are supplying valuable “how to” skills in the business of making products for the world.
These companies are gaining skills that they can build real products and businesses on. American companies are specializing in Marketing and Distribution, but if they lose touch with, say R&D, or efficient manufacturing, will that put them in an awkward position if some of these companies come out with competing, perhaps superior, products? Maybe they will outsource some of their jobs to the US.
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