China’s Olympic venture

By Joe Nowlan, Associate Editor -- Industrial Distribution, 8/7/2008 8:14:00 AM

For the next couple of weeks, worldwide attention will be focused on China and the Olympic Games.

Once the athletes go home, though, many challenges the country has been facing will remain. And many of those are affecting the country’s reputation as the center of global manufacturing.

Despite recent price drops, fuel costs are still high, and that has meant shipping costs are making the cost of globalization higher than ever.

Tesla Motors is an American manufacturer of electric cars. Their process, until recently, included having car batteries manufactured in Thailand and then shipped to Britain for installation. After that, the nearly-completed cars would be shipped to Tesla’s California headquarters for completion.

Due to soaring shipping costs, though, Tesla recently decided to about save 5,000 miles, and considerable expenses, by making the batteries and assembling the cars in California. And Tesla is not alone, as other U.S. manufacturers are looking into staying closer to home.

However, it’s not clear yet whether that will mean a manufacturing rush back into North America. This month’s Industrial Distribution talks to representatives of companies doing business in Mexico. While all speak of many advantages to being south of the U.S. border, avoiding the rising cost of shipping to and from China is only one of the advantages to being in Mexico, they say.

When all is said and done, will the Olympics prove to be a boon to China and its global image? Time will tell, but New York Times sports columnist George Vecsey reminds his readers that the 1988 Olympics in Seoul, Korea, “helped bring in a new era” ... for that country.

China has spent some $43 billion dollars to prepare the country for the Olympic events, the Los Angeles Times reports.. Will there be any economic hangover as a result? Morgan Stanley told the paper that all but one of the last 11 host nations experienced a negative economic impact, post-Olympics.

As the Games play on, it will be interesting to see, all things considered—political turmoil, air quality, financial risks—how well China does as the host country.

—Joe Nowlan, Associate Editor