Watching Asia Take Its Place

Singapore is small. In fact, it’s really small. It’s only about 270 square miles. When you compare that to the smallest of the 50 states that make up the U.S.A., you really see how small Singapore is.

Rhode Island is around 1500 square miles in total area. That’s almost 5 times the size of all of Singapore. Crazy!

So, when you think about how much impact a small place like Singapore has on the world economy in this modern era, it’s pretty amazing. But, in regards to what’s really been happening, one must look to bigger Asian economies.

Enter China.

China is a giant in many ways. First, it’s a huge country. Second, it has a massive population. And third, its economy is booming.

Many of the biggest world economies, like the U.S.A. and Brazil, and India, source products from Chinese manufacturers. A large part of this is due to the enormous cheap labor force that China has.

This does lead to a couple of questions though. For one, doesn’t a country like India also have a very large cheap labor force?

They indeed do. But what India lack that China doesn’t is a very organized top down government structure with a major focus of improving the economy through infrastructure.

That focus has resulted it an unimaginable boom of giant well-built factories all over China, and as stated earlier, there’s no shortage of cheap labor to work within these large factories.

The countries mentioned earlier don’t have all of those aspects. The U.S.A. is big and can create very sophisticated factories, but they have a smaller and much more expensive labor force. India and Brazil have large populations and cheap labor, but they have not had the leadership to steer them into upgrading their infrastructure to become a global manufacturing powerhouse.

The next question though usually is about logistics. While labor is cheaper in China than it is in the U.S.A. for example, there is the added cost of getting products sourced from China into American warehouses and retail outlets.

That need has spawned a boom in yet another industry: shipping and logistics.

Aside from a long-lived Chinese manufacturing boom, there has been a boom for logistics companies focused on shipping from China to the U.S.A. This is truly a result of industry blossoming due to a market need.

What’s amazing is that while this extra expense of shipping cheap products half way around the world might very well erode any financial benefits of using the cheap labor from that region, the competition that this industry need has created has made the shipping costs more affordable.

With those affordable shipping costs, and the cheaper labor from China, along with other Asian countries like Indonesia, the bottom line ends up working itself out for Western re-sellers and retailers.

The big economic boom in many parts of Asia was birthed not from the need of their own people as far as luxury goods, but from sound economic growth plans by their leaders to target the needs of other large economies and then create affordable competitive solutions.

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