Equality in World Trade
There has been much activity in recent years to move labor intensive processes to emerging nations in Asia. But what happens when the standard of living in these countries is equal to that of our own countries? We could:
a) Suppress the people of a continent so that they remain cheap labor for us just as the Eloi keep the Morlocks as slaves in HG Wells' Time Machine
b) Stick our heads in the sand
Sadly we have tried suppression and it doesn't work. So now we are working on ignorance. Let me tell you that will not work either. There will come a time when no one will work for less than you do. There will be no great economic advantage based solely on developing economies. Advantage will come from different, less tangible, directions.
The world is changing quicker than you think.
In 25-50 years China and India will no longer be working for us for $1 per hour. In 50-75 years Africa will be as affluent and stable as much of the E.U.
Take some time to imagine a world where no manufacturer can create a product that has significant labor-based advantage. No company can rely on cheap goods made overseas to pump profits. As a consumer your TV and car are made for the same wages as you earn. Your dollar is effectively worth the same as everyone else's.
Initially it is a bit of a challenge isn't it? Now please understand I am not talking about some socially-engineered, bleeding-heart, communist plan here but cold, hard, hard, rational common-sense. When everyone has the same basic standard of living then trade has to be equal. Our world is a small and limited place. If we attempt to buy and sell as we do now when our economies operate in a flat-world model then others will simply refuse to trade with us. Cue image of smiling Somali woman with perfect teeth and a genuine Dior suit refusing to work for $1 per hour because she already earns $30 per hour.
One great upside here is that as we trade more then war will decrease further. War and trade cannot co-exist (excepting weapons but that is a limited market).
What do you do now?
Business will have to be undertaken on a merit basis beyond price alone. While at the moment every good or service can easily be commoditized and then offered for a lower price based on using cheap labor the future cannot offer that option.
Where current sales efforts are mostly based around price and discounting (taking advantage) the future will see effective sales processes based around genuine forms of differentiation. Differentiation must come from factors based more around brainpower. Features, know-how, passion and reliability will be the new black. Price sensitivity (which is a current aberration in the market) will be replaced with value sensitivity based on fitness for purpose.
You can still take 'option b' and stick you head in the sand because 25 years is forever away and only today's profit matters BUT you would be doing yourself a great disservice because tomorrow is not so far away and others are already preparing. Those who are preparing now will have a head-start because they will have made the mistakes now that you will make later when you can least afford to make "rookie" mistakes.
In Short: Know that every time you try to take advantage of others you are hurting yourself more than you will ever profit. See every transaction as part of a symbiotic and mutually beneficial life that is lived in the long-term. This builds trust which is key to success now and in the future.
If you want me to work with your business then please visit BRM Web Consulting
