Tonight I had a very pleasurable dinner with two former colleagues of mine, Caroline and Rene, both Singaporean citizens working and living in Singapore. Over an excellent dinner at the hotel we discussed business, business culture and international companies. Even Singapore and Hong Kong are feeling the low-cost pressure from China. Singapore having like Hong Kong have to maintain a good infrastructure, a well functioning administration and constantly increasing living-costs. Singapore's strategy, according to Rene, is to attract foreign companies that want to do business in Asia with low taxes, a forthcoming administration and a pool of English speaking workers. It baits foreign companies also with security, a nice lifestyle and an easy set-up of companies. But the questions remains: What are the competitive advantages of, as it seems, the rest of the world, compared to China. For one, China has no legal system as such and it uses any means to gain foreign knowledge. It is also short of team-work, marketing- and language-skills and innovation. But its sheer size of the market and low costs are a competitive threat to everyone.
So how should Europe compete? With a common currency and market two important steps have been made. Europe can offer versatility, security, tradition, culture and innovation. It also has now a lower-wage industry through the newly joined Central European countries.
What seems to be obvious by now, is that one cannot compete with China on goods that are easily to copy, ship and are needed in huge quantities.
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