By taking advantage of technology and the Internet, China has moved from being a third-world country to growing faster than any other modern economy. In 2001, China joined the World Trade Organization (WTO) — a significant event because it signaled that China was willing to acknowledge and follow global rules of trade.
So, how did China begin growing so fast? It opened the floodgates for offshoring moving manufacturing plants from their home sites (for example, Europe or the United States) and plopping them down, lock, stock, and barrel, in China. Why? Because in China, you can (for now at least) produce products using cheaper labor, lower taxes, lower healthcare costs, lower energy costs, and far-less restrictive environmental regulations. Because China is such an attractive place to offshore, countries are clamoring to jump on the bandwagon and offer similar incentives — countries such as Malaysia, Thailand, Brazil, and Mexico.
If you’re in business today, you have some important objectives: Figure out what you can outsource to China, what you can do in China via offshoring, and what you can buy from China in terms of low-cost goods and services. In a flat world, you can no longer afford to do business on your own, and you can’t ignore your neighbors.
