Chinese Boycott Against Cheap American Goods

From the New York Times, July 20, 1905.

Chinese Boycott Begun

Now in Force Against American Goods in Five Big Ports

The State Department has been informed by its counsuls that the Chinese boycott against American Trade Goods, organized by the trade guilds in five ports: Shanghai, Canton, Tien-Tsin, Han-Kow, and Niu-Chwang began today.

It is believed that the boycott will not be successful or do any particular injury to American Goods, except in Canton and Shanghai, where the guild are stronger than elsewhere.

There is no official action which the United States government can take as long as it remains a simple boycott or a refusal to purchase American goods, but it is thought the boycott will be discourage by the Chinese Government as far as possible.

Talk about the shoe being on the other foot, just 100 years ago today, it was the Chinese who were worried about our cheap trade goods flooding their country. The modern situation is arguably different, in terms of both quantity and quality, and I think our economists are all wet on the idea that America's vaunted "service economy" can truly replace our shrinking manufacturing base. In another 100 years, we'll have the answer to whether outsourcing was driven by global competition or by CEO compensation tied to stock option (ie, short term profits). In the meantime, I'll break my usual pattern of only posting articles with expired copyrights since the following was written by myself ten years ago for the Dailey International Newsletter:

Way, Way Outsourcing

The outsourcing avalanche of the Eighties has taken on the momentum of a religious movement in the Nineties. The ultimate result of this terribly flawed model for industry gives rise to a new paradigm, which I call Way Outsourcing. As you might guess, Way Outsourcing refers to sending manufacturing overseas. How did outsourcing win so many converts in industry? Simple. Through an unholy marriage with downsizing, outsourcing has transitioned from being a strategic choice to a grim necessity.

Originally, outsourcing won adherents through the process of business re-engineering, Focus on your strengths, management was advised, and improve efficiency by outsourcing your non-core activities. This approach never went over well with middle managers who saw this process as a threat to their career expectancy. They were proven correct, and downsized as a reward for their acuity. At the same time, a funny thing was happening on the technical side in many American corporations. The hiring and "bringing along" of fresh graduates in engineering disciplines, the time honored approach to securing technical expertise for the future, was also discontinued. This clever move reduced staffing requirements for both trainees and trainers. As long as nobody retired, expired, or otherwise abandoned their post, great savings could be achieved.

Well, a few years went by, and a new problem crept up. Upper management retired too, and nobody was left who knew the names and phone numbers of all the ex-middle managers and retired engineers who had been coming in as contractors to maintain plant infrastructure. Top management was left with one choice. Outsource upper management to consulting houses, which had proven their worth by remaining focused on their own core business, billing a many hours as possible. Now there was no way to transition back to the old business model, and no real motivation for anyone involved to try.

The next step I call Way, Way Outsourcing. This is where top management and stock ownership are outsourced overseas as well. This business model has the added attraction that nobody left in the United States has to pay any income tax. If you see any holes in this model, please post a comment. I've outsourced my secretarial support and I want to see if the new blog guys are worth the beating I'm taking on exchange rates.

Morris Rosenthal