China to Design the Rope, Too

As Alan Greenspan would tell you, Capitalism is better than Communism.  That's because even a really dumb CEO is smarter than all non-executive proletarians combined.  However, true that may be, the Reds have the best quote:  "Them Stinkin' Capitalists will design, manufacture and sell us the rope with which we will hang them."  More or less, and attributed to Marx, Lenin, Trotsky, The Big O or anyone else who would actually use "with which" in a pithy quote.

Don't we wish it were still so.

Which brings us to Applied Material, its CEO, Mark Pinto, and some really high tech "rope",  microprocessor and solar fabrication equipment.  Don't quibble; it's an analogy to be wrapped up at the end of this piece.

Applied Materials is setting up a major league lab in China.  Not just any lab, but one of the most advanced in its high tech field and one that comes complete with serious Silicon Valley corporate overhead.

The city of Xi'an, the New York Times tells us, has landed the newest and largest Applied Materials research labs, including its top solar lab; its annual shareholders meeting; and its CEO, Mark Pinto.  Mark is moving his whole family to China next year.

Xi'an is not as fluky as that name, which means some sort of "peace", like the kind that comes after you've lost a war, either.  It is an old city and was a capital various dynasties if not the current Communist (you already forgot it's still Communist) version.  The very first Chinese Emperor set a ludicrously high standard for Xi'an from day one.  He fabricated 8000 Terracotta soldiers, fitted out with chariots and horses, to amuse himself and terrify any invading statues. 

Xi'an didn't sit still, even if its army did.  It was at the eastern end of the historic east-west trade route, the Silk Road, which was either paved with silk, traveled slowly by worms or carried silk negligees and matching rope for bedposts off to the west. 

The city now has 47 schools of higher education and cranks out armies of real, fast moving engineers quite happy to make less than your Wal Mart greeter.  Are Chinese smart enough to be good design engineers?  You haven't been on a US college campus lately or you would know who teaches most of our engineering students their math and physics. 

Applied Research has no qualms and has bet big money on Chinese expertise.  Each of the Xi'an Applied Research labs is huge.  Each is designed to be bigger than two football fields, a measurement totally lost on the Xi'an Chinese who are more used to watching Team Terracotta playing FoosBall for the last 2200 years.

Pure coincidence?  Applied Materials is cutting its workforce in the Capitalist countries of America and Europe by at least 10% over eighteen months.

Mark Pinto's Applied Research isn't alone in putting top research facilities in China.  Intel has done it for all of its three mainline research programs.  GM has done it (I know, I know).  IBM's been there for 15 years already.  Get used to it.  High Tech design and other intellectual property jobs are heading over to China now that all the other jobs are already there. 

You may be too young to recall Ross Perot's Giant (Job) Sucking Sound caused by NAFTA, but this China thing barely makes any noise at all any more.

But, hey, you will always have our jobs at Wal Mart.  If you are tri-lingual.

Okay, the rope, which you can buy at Wal Mart on your break.

The famous rope quote may be really good, but it's an antique.  We haven't made the rope for years.  The Communists in China have been making the rope and shipping it back to us.  At least, we used to design the rope that our CEO's would sell.  Well, it looks like that part is almost over.  Once the Chinese design the rope, too, they won't need a Mark Pinto, either.  They'll just sell the rope, that they designed, manufactured and warehoused directly to themselves.

Where do Capitalists fit in that scenario?  It's all neatly tied up.  Except for the hanging.