Monthly Archives: September 2011

GE Tech Transfers

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The President of China, has recently just signed a contract with GE, securing the import of jet engines for its C919 airliner. The plane produced by China’s Aviation Industry Corporation of China, planned for launch in 2016, is designed to compete directly with the Boeing 757 and AIrbus 320 narrow body jets. However, there’s a catch: under the deal is a technology transfer which will allow China to manufacture state-of-the-art avionics. This may comes a shock to many in the US government, but GE has accepted it with open arms as it predicts China’s aviation market will generate more than $400 billion over the next two decades. Furthermore, the plague of technology transfers into AVIC’s military division, has been remedied by data center and employee security measures.

This in my opinon is the correct decision by GE. The reason is simply that China has many other replacements, including Britain’s Rolls-Royce, and France’s Snecma. At this point, Chinese commercial aviation tech is far behind the US and EU, which means this deal will provide GE with a huge funding, strengthing its position against European competitors while not doing any harm to itself.

Rare Earth

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What do products from fluorescent light bulbs to Iphones to green energy products have in common — they are manufactured using the so-called rare earth metals. The main reason why the price of several sophisticated electronics are rising is partially due to a hike in the price of rare earth. Contrary to what professor Gateman would like, the rise in price of these raw materials is not due to its scarcity and hardly its rising demand, but government intervention by the world’s dominant producer: China. By not extending permits to companies, cracking down on illegal miners, setting export quotas and nationalizing multiple competitors in the field, the Chinese government is now in a monopolizing position to cut supply and thus increasing world prices.

But why is China, the host of only 30% of the world reserves selling 95% of the world’s supply? The answers are cost and lax environmental regulations. But what we should focus on, is to reduce our demand for fancy gadgets. I personally have 6 portable digital devices, which overlap in functionality; those unnessessities will only bite into the prices for energy-saving products like wind turbines, and increase polluted rare earth mining elsewhere in the world.

US Solar Shadowed

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A slew of bankruptcies plauged the American solar industry last month. The panel manufacturer bankruptcies, namely SpectraWatt,  Evergreen Solar, Solyndra and the manufacturing stoppage of BP solar represented a 20% reduction in America’s solar capacity. The reason, a few said was Solyndra and Evergreen’s pursue of tech that incoporated polysilicon in their products, however, the prices of the material had dropped by more than 80%, making the tech investment a game-ending failure.

So who’s the main culprit? Many analysts have expressed concerns that Chinese companies don’t have a labor cost advantage, as the expense is miniscule in such high tech industries but cheap state capital. These nearly interest-free capital and subsidized land, provides incentives for mass production capacity expansion. This significantly reduces the marginal cost of each solar panel.

For low cost, to overwhelm tech advantages held by retrenching German and American competitors is not a unseen phenomenon, as exemplified by Japan in the late 1960s. But the rate at which China is expanding its solar, wind and other green tech industries through state aid, should prompt us to do the same.

Foxconn: Our Robots

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An year ago, a slew of suicides were commited at the Chinese city of Chengdu. The company responsible, a Taiwan-based subcontracting giant, Foxconn had this to say:

“The suicides were due to personal issues, not work.”

This blasphemous response infuriated me and immediately dissolved my impressions of the company. It was clear, from accounts of the victims’ close working peers that they had lost their sense of “life.” The over-time hours and 6-work-day weeks had warped the workers’ minds, cultimating in the deaths of a dozen lonely and powerless youths. It is this very indifference companies like Foxconn and Apple demonstrate to its workers that will ultimately come back to haunt them. As consumer awareness gains momentum, I am confident that we can prevent such conducts, and treat production line workers akin to those in China as humans, instead of human capital — that can we can penalize Foxconn and Apple severely instead of forcing them to pay petty compensations to the victim’s families. We need to stamp out unethical labor practices by supporting communities like “Sweatfree,” which at a marginal price, evaluates the supply chain for labor abuse. This is our world and hopfully a progressively slave-free world.