The End of Cheap MIC Goods

Nope, the MIC I refer to in the subject line is not Malaysian Indian Congress. It means Made in China.

There were two big news for Apple fans recently – one good and the other bad. The good news was Apple had announced the much-awaited iPhone 4. The bad news was that Foxconn, the company which made iPhone in China, had agreed to raise the wages of its workers by as much as 66%.

Foxconn’s factory in China had been criticized as sweatshop following spates of suicide attempts among the workers. To appease the workers, and to repair image, the contract manufacturer was forced to hike the wages. This essentially means the cost for making iPhone will increase. Ultimately the higher cost will be passed on to the consumers. Expect higher price for iPhone.

But Foxconn was not the only company to have faced with higher cost issue. Honda also had to increase the wages of its employees in China after they staged a walkout. Eventually, factories workers in the Middle Kingdom will demand better pay and better working condition. In the next few years, expect everything made in China – from iPhones to DVD players to fridge magnets – to sell for higher price.

In long run, multi-national companies may move their production lines to still cheaper countries such as Vietnam or Cambodia. Until then, tighten your belt.

Links:

Foxconn to pass on China wage rise to customers

Striking Honda China workers hold out for pay, union

Super Fast Trains

Last December, China unveiled the world’s fastest train on the newly opened Wuhan-Guangzhou line. Running at top speed of 350km/h, the train completed the journey from Wuhan to Guangzhou – a distance of over 900km – in just 3 hours!

Wuhan-Guangzhou High Speed Rail

(Just a matter of reference, Malaysia’s North-South Expressway is merely 772km long.)

Oriental Daily News （东方日报）, a Malaysian tabloid, published an article of 2 pages long detailing China’s high speed rail. Chinese media of the country is generally pro-China. As you might expect, Oriental Daily hailed China’s achievement, saying that the Middle Kingdom had already surpassed Japan.

It should be noted that China has worked together with foreign companies, most notably Kawasaki of Japan and Siemens of Germany, in building its high speed rail. The train which runs on Wuhan-Guangzhou line, for example, is based on Siemens’s model. However, China has got technology transfer from its foreign partners. Sifang, the Chinese train-maker, modifies Siemens’s train and manufactures it locally.

There are many factors which affect the speed of a high speed rail, such as the train itself, the track, wear-and-tear, and noise pollution. Generally, the straighter the track, the faster a train can run. I think this is where China has an edge over its competitors. While Japan, France and Germany can upgrade their trains, it is more difficult to upgrade the tracks which were laid decades ago.

Japan has been experimenting with the Fastech 360 train for the last few years. As its name implies, the train was designed for a top speed of 360km/h. While this speed was reached easily during testing, the train has failed in terms of noise control. As a result, the ‘operational model’ of the train will only run at a commercial speed of 320km/h. As far as I know, Europe’s noise control standard isn’t as stringent as Japan’s. China is probably more lax.

As a conclusion, I would say that China’s achievement in high speed rail is definitely astonishing. No doubt about that. However, this does not mean, technology-wise, the Middle Kingdom has left Japan and Europe in the dust.

P/S Beijing has proposed three international high speed rail lines linking China to Europe and South-East Asia. Presumably a passenger can travel from the Chinese capital to London or Singapore in 2 or 3 days. However, for journeys longer than 1000km, air travel is still more practical.

Alstom AGV: successor to TGV

Fastech 360: The ‘cat-ears’ are used to slow down the train during emergency braking.