China and Us: Are We Toast?

Discussions about China’s encroachment on U.S. competitiveness often end
with the comforting idea that we’ll be OK because China is several
economic transformations behind us. They’re moving from agriculture to
industry, the argument goes, while we’re moving up the economic ladder
from industry to services.

Don’t get too cozy with that notion says Oded Shenkar, Ford Motor
Company Chair of Global Business Management at Ohio State University at a PopTech! Session called “The Chinese Century: Are We Toast?” “We’re in uncharted territory,” he says. “There is no precedent for any major economy based solely on services.”

Our only hope, he says, to continue to be the most innovative country in the world –- a status that’s increasingly in peril, given our sad
rankings in global math and science competitiveness and the increased
pace of repatriation of Asian and Indian PhDs to their own countries
after graduation from American universities.

What’s more, the recent acquisition of IBM’s ThinkPad division by Lenovo is but the first in what Shenkar thinks is the first of a wave of such deals, which will effectively transfer US technological expertise to China. It’s an easy way for Chinese companies to acquire technology and knowledge without having to invent it from scratch. “It’s a case of the student learning from its teacher,” he says. Both Dephi and Bridgestone would have suffered the same fate had their parent companies not been worried that the sale would destroy any competitive potential they had left.

Speaking before a group of governors recently, Shenkar asked what they
were doing to prepare the people in their states for a global economy.
The response: silence.