Solo Know-It-All 2.0CN

Author: Lin Ronghang / Country: Mainland China
Publisher:
Publish Date: 2005-11-01
Features: Earn virtual wealth
A management expert once said: First-class enterprises do the internet, second-class enterprises build brands, and third-class enterprises produce products. This view is not without reason. Since the reform and opening-up, China has indeed become wealthier, with many people becoming millionaires and billionaires. But how did this wealth come about? This is a question worth considering. The wealth earned is hard-earned—perhaps the current state of most Chinese enterprises. Our enterprises are still producing products, and most are still labor-intensive. After the reform and opening-up, most foreign investments introduced were also labor-intensive.
In the Hoover Institution's Weekly Essay Collection①, there is an article titled "The Decline in Manufacturing Jobs Is a Sign of Economic Health." The article states: "In July of this year, manufacturing employed 146 million Americans. This was a decrease of 17% from the peak of 176 million in March 1998. However, during this period, manufacturing output actually rose slightly, with a significant increase in output per worker. Has the share of manufacturing in the gross domestic product (GDP) decreased? Yes. This ratio has been steadily declining since 1947. The reason is that the substantial increase in manufacturing productivity has led to a relative decline in the price of manufactured goods compared to healthcare, education, and other services. The history of economic growth is a history of producing more with fewer resources, shifting to new jobs that previous generations had never heard of. Because Henry Ford produced millions of cars using assembly lines, workers in the horse-drawn carriage industry lost their jobs. However, a decade later, many of them might have been happy about it. Some job losses are due to our purchasing goods from China and other low-wage countries. But that only means we are using our labor more efficiently. We buy large quantities of low-wage, mass-produced goods from China while providing high-end services and intellectual property products in the U.S. Our lives have actually become better."
What does this article leave us to think about? Can the Chinese only earn hard-earned money? Are the easy, effortless profits only available to Americans? No! In the coming years, China will undergo industrial restructuring, and many enterprises will face a transition from labor-intensive to knowledge-intensive models. The most important part of this adjustment and transformation is the electrification and networking of enterprises, shifting from focusing on physical assets to focusing on knowledge assets, so that our enterprises can also earn easy profits, not just hard-earned money.
From the above example, we see that Americans have at least three points worth learning from: First, reduce the proportion of manufacturing in the GDP; second, improve manufacturing technology to produce more with fewer resources; third, provide high-end services and intellectual property products. From these three points, the smart Americans no longer produce resource- and energy-intensive products, fully utilize new technologies, especially information technology, to improve manufacturing efficiency, and derive most of their income from services and knowledge assets. This is essentially a transition from a physical industrial economy to a virtual knowledge economy, reducing the country's natural resource consumption and environmental pollution to their lowest levels. The knowledge economy almost does not consume natural resources or pollute the environment while significantly increasing income.
An article from the UK titled Exploring Birmingham's Deindustrialization① writes: "Birmingham, the second-largest city in the UK, once enjoyed a century and a half of fame as the 'world's factory' but was long called the 'ugliest city in England' by the British. Located in the heart of England, Birmingham transformed from a livestock and agricultural market into the UK's second-largest city and 'world's factory' second only to London since the early 19th century. From the 19th to the 1970s, the coalfields near Birmingham were shrouded in smoke and dust all day, earning them the nickname 'Black Country.' In the last three decades of the 20th century, manufacturing shifted to low-labor-cost overseas regions. According to the UK National Statistics Office, from March 2000 to this March, the manufacturing employment population in the Birmingham-centered Central England region fell from over 1 million to less than 900,000. The Brin Building, completed in May 1964 and located in the heart of Birmingham, is like Beijing's Wangfujing. After a ￡500 million renovation in September 2003, it marked the transformation. The reopening of Brin alone created 8,000 service jobs in Birmingham, and it is expected to bring ￡180 million in annual revenue to the city."
Birmingham, once the birthplace of the Industrial Revolution and a global manufacturing center, is now gradually moving away from industrialization and transforming its industrial structure toward services. It is also shifting from the operational model of the industrial economy to the operational model of the knowledge economy. In contrast, China, having not yet completed its industrialization process, is still heavily investing in manufacturing and striving to become the world's manufacturing center. Our entrepreneurs are also using industrialized thinking models, expanding their physical assets, and striving to "grow bigger and stronger," essentially following a path that others have already taken.
Although the process of industrialization cannot be skipped, can we not accelerate our entry into the new economy and gain the advantage of a latecomer? "Henry Ford produced millions of cars using assembly lines, and workers in the horse-drawn carriage industry lost their jobs. However, a decade later, many of them might have been happy about it." If we do not carry out informatization, e-commerce, or enter the knowledge economy, will these workers be happy a decade from now? Today, if a business truly wants to "grow bigger and stronger," it should not just focus on physical resources and assets but more on virtual resources and knowledge assets. We must learn to cross the physical industry and directly enter the knowledge industry.
Today, our country faces the dual tasks of industrialization and informatization, but there is no need to wait until the industrial economy is fully completed before entering the knowledge economy. If we do, we would need to follow developed countries for over a hundred years and never catch up. Therefore, if businesses truly want to "grow bigger and stronger," they should cross the physical realm and industrialization, adopt network technology and e-commerce to directly enter the knowledge economy, and learn to earn virtual wealth, becoming "first-class enterprises" rather than "third-class enterprises." P27-30