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Trip reveals China syndrome

By   /   Saturday, November 22nd, 2008  /   Comments Off on Trip reveals China syndrome

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Conventional wisdom has it that China is destined to become the world’s next superpower. But one Westlake Village financial expert warns that the consensus view can turn out to be wrong.

In late October, Arkady Milgram, a partner at Thousand Oaks-based Walker Financial Partners, took a nine-day trip across China. He and about 80 members and non-members of the Thousand Oaks-Westlake Village Chamber of Commerce talked to business leaders, toured factories and observed everyday Chinese life.

For Milgram, who was born and raised in Russia and moved to the United States in 1989, the trip was an eerie reminder of the Chinese government’s similarities to his home country. In particular, he saw first-hand Beijing’s command and control structure that constantly interferes with the free market.

“This is like a Chinese version of KGB,” Milgram said. “I see the way those guys walk around, it’s a different uniform but you can very clearly determine…everything is being observed and they are very, very much in control.”

While he said China is able to produce vast amounts of products at inexpensive prices – mainly because labor is so cheap – its inattention to quality and its inability to adapt to changing conditions ultimately will prevent it from surpassing the United States as the world’s economic leader.

“We’re still No. 1 by far, and I think we’re always going to be because of primarily what I call the culture of labor,” he said.

That culture of labor, Milgram noted, has to do not only with extremely low wages, but also the working conditions and hours Chinese employees must endure. With “practically no middle class,” he said Chinese society is polarized between the very rich and the very poor. For that reason and others, Milgram said the country as a whole will have a tough time overtaking the United States’ political clout.

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