Hard Recall Lessons

The recent recalls of Chinese food products and toys in the US and other countries must provide hard lessons for Chinese manufacturers and government alike. Lesson number one, being a low-cost producer is risky because low-cost leads to cutting corners on quality. Lesson number two, being a volume producer is risky because one or two problems cause a wide-spread consequence. Lesson number three, being an export-driven economy is risky because the proper functioning of the economy depends on unloyal and even hostile customers in other countries. From the above chart, we can see the Chinese economy depends heavily on trade. That's not a good thing. China's trade must reduce to a level of 20 to 30% of the GDP, a similar proportion of the US and Japanese trades to their economies.