The crisis is not over yet!

by Markus Schaefer, December 2009

Christmastime is over and I had my shocking moments when I assembled some of the toys my kids got. Everything, and when I am saying everything I mean everything was made in China. Even well known western brand toys were made in China. I was questioning myself where this trend is leading us.

To me it is clear who will dictate the industry in ten years from now. China found its niche – low cost items. I don’t want to say that all which is manufactured in China or Far East is low quality, even worst the quality is getting better every year. These are alarming signals to the western industry, or at least should be identified as such. The example of Geely, a Chinese car manufacturer, who is taking over the well known European Car Manufacturer Volvo is a shock to me, but it’s a logic consequence of a well thought out strategy. Soon we will see more of this kind of takeovers. The strategy is easy. Phase one: Establish free trade agreements with western countries to ensure a smooth market entrance. Phase two: Flood the market with low cost products. Phase three: Destroy your competitors with extremely cheap products. Phase four: Once they are down, take over former key players in the market for a red coin. Phase five: Suck out their know-how. Phase six: Transfer the production to a low cost country. Phase seven: Use the well established brand name and the lessons learned to sell your own products. The last phase should be clear to everybody and doesn’t need further explanations here.

A difficult year is coming to its end and another challenging year is waiting for us. The world economic crisis which required all business leaders to come up with innovative ideas to survive will have to do more next year. This crisis is no longer just an economical crisis; it is the beginning of a global consolidation of winning and losing countries and industries. It’s high time to take action.

As a consultant I want to give you one free advice. Think good where you want to positioning your company for the future.