July 2011
Products are shipped all over the globe to make use of cheap labor. But why not produce the goods where they’re needed. Cheaply of course.
Because of the low labour costs in China, many manufacturing processes are outsourced by European companies to the other side of the globe. The price difference so large that it becomes economically viable to ship commodities to the far east, have a product manufactured there, and ship the finished product back to the consumers in Europe or the United States.
An example I recently came across is the production of secondhand cartridges for printers. Empty cartridges are collected in European schools, offices and supermarkets and sorted by specialized companies. These companies ship the empty cartridges to China. In China the cartridges are cleaned and refilled with ink, then shipped back to Europe. Although the cartridge is transported over water from Rotterdam to Hong Kong and back, the costs of the finished product is still lower than any Lexmark or HP cartridge. And chipping them to China is cheaper than having them cleaned and filled by European employees.
So every cartridge travels to and fro China, just because labour costs are so much lower in the far east. There will probably be better examples of useless transportation, and China might well be economically outbid by another country in the near future, but the fact that it’s cheaper to ship a product across the globe than to have it produces where it is needed will probably remain for some time.
Shipping products around the globe is an industry in itself, but for the environmental challenges this planet faces it would be better if we could find a more eco-friendly solution to this economical necessity. Let’s assume there will always be regions where production is significantly cheaper than in the area where the product is needed. And let’s call these cheap-production-region China for now. To get rid of the transportation we would have to move China to the consumer area or the other way around. Now that is something we can do!
We cannot physically move China, nor Europe, nor shrink the globe. But what we can do is create a Little China somewhere in the EU. We could appoint a certain area or different areas within Europe where the Chinese or other countries with similar advantages can build there factories, house their workforce and create the product like they would in China. This would mean that the designated area would legally have to function as a part of China, with Chinese law, prices, working conditions etc. This area would need to be separated by borders from the rest of the EU to operate as an independent little slice of China in the middle of the EU.
Of course the designated area doesn’t have to be actually Chinese. It would work just as well if it was a zone where companies from China or another inexpensive producing country could rent grounds or factories to accommodate their production process. The differences between this little China zone and the surrounding EU would be enormous. Housing conditions for workers would not be up to the western standards, nor would working conditions, working hours or payment. The differences between Chinese and European working conditions would become rather visible with the factories on EU territories. But the process of having our goods produces under these circumstances is of course no different from the current situation where we outsource the process to China.
With Little China in (or next to) the EU, the same low production costs could be established without the downside of environmental damage as a result of transportation. Some might argue that placing a low-cost workforce in the middle of the EU would be false competition, but remember that the products produced in this new zone would otherwise be produced in China, not in the EU.
We could even place some discarded airplanes at the entrance of Little China and make all management personnel traveling to and fro Little China sit in an airplane cabin for 10 hours to eliminate every possible advantage over production facilities on the China mainland. All we want to eliminate is the transportation of the product.
Little China in the EU zone would mean that Chinese workers would have to travel from China to the factories in Little China to do their work and make their Chinese income. The movement of these workers will be of lesser impact on the environment than the movement of all the goods they produce, especially when the workers are housed in Little China and work for several weeks or months before returning to China. Much like life on an oil rig, but placed in Rotterdam, Hamburg, Valencia or Marseilles.
Because now that the cheap production can take place next door, we can move the product immediately to the consumers, eliminating the container transport from Rotterdam to Hong Kong and back to Rotterdam. It would of course be fair to place the described area’s of low-cost production near the seaports that handle the bulk of container transportation to China nowadays. This would prevent excessive damage to the local economies of the main-port area’s.
Apart from pollution as a result of the transportation of goods, Little China would save transportation costs. After deduction of transportation cost for workers and essentials such as food etc, this might leave some financial room for a Little China tax. This tax could fill the gab between the price of products manufactured on the China mainland and products manufactured in Little China. For the benefit of the environment the tax level should ensure that products from China’s mainland turn out slightly more expensive.
The income generated with this tax could be used to finance research projects for sustainable energy or other initiatives that contribute to a more healthy environment.