Recently two pieces of news grabbed headlines in the mainland: one is that a state-owned enterprise based in Shanxi province has succeeded in producing the first 100 percent homemade ballpoint pen in China, and the other is that the unrelenting smog hanging over the skies across the country has continued to worsen.
The two pieces of news seem to be unrelated, but in fact they represent two sides of the same coin, which is, China’s sluggish progress in facilitating the development of high value-added manufacturing industries.
Despite the fact that China is now the “world’s factory” and the largest manufacturer of ballpoint pens, it wasn’t until recently that the country was finally able to produce on its own the two key parts of this common item: the tiny metal ball that rotates freely at the tip of a pen so as to deliver ink, and the steel casing that surrounds that tiny ball.
Even though China produces over 40 billion ballpoint pens a year, and accounts for 80 percent of the world market share, manufacturers in the country simply don’t have the kind of machines with the precision that can cut a tiny ball-bearing accurately, nor can they produce specialized steel of high enough quality to make the socket into which the tiny ball is fitted.
As a result, all of the metal balls, the casings and even the ink had to be imported from Japan and Germany over the years.
It is estimated that every year China imports an average thousand-plus tons of specialized steel from Japan just for ballpoint pens, costing US$15 million.
The inability of China to produce that tiny metal ball which costs no more than a dime each reflects a profound problem the Chinese manufacturing industry is facing: the majority of mainland manufacturers have been so obsessed with short-term profits and minimizing costs that they have been reluctant to invest in high value-added production technology, because it would require a lot of time and money, with no guaranteed profits.
The problem is also compounded by the fear that even if you invest a lot and invent something, it could be stolen and copied by your rivals immediately.
As a result, most manufacturers prefer to play it safe by continuing to stick to labor-intensive production and low-end products while relying on the cheapest energy of all: coal-fired electricity, and hence the rampant smog across mainland cities.
It is estimated that 40 percent of the deadly PM 2.5 particles floating in the atmosphere across China come from coal-fired power plants in the country. Unless the Chinese manufacturing industry changes its mindset, the smog will never disappear.
This article appeared in the Hong Kong Economic Journal on Jan. 16
Translation by Alan Lee
[Chinese version 中文版]
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