I just finished up my report on China and Renewables, in which 200 survey respondents did what I thought was a masterful job in answering the question: Why Is China Investing So Heavily in Clean Energy? I’ll have the report available for download shortly – certainly within the next day or two.
But no sooner did I hit “save” for the final time and send the report off to the proofreader did I realize that there is another factor that affects the calculus that, as far as I can recall, not a single person mentioned: the Chinese culture is not dominated by lawyers.
When Steve Jobs was asked why he had the iPad manufactured in China, he didn’t point to labor rates. In fact, he said specifically that labor represented a very small difference in his overall cost and profit projections. To paraphrase his answer: “I want them NOW. While my Chinese partners were erecting the second floor of the facility, they were already building the iPad on the first floor. The legal process took a couple of weeks, not a few years.”
That’s sobering, isn’t it? Maybe part of the reason we’re so ridiculously uncompetitive in critically important global markets is that our business processes are mired down with legal regulations and paralyzed by litigation.
Another quick story: As it turns out, three-wheeled cars are every bit as stable as their four-wheeled counterparts, and have a range of advantages in terms of cost and performance. Recently, Volkswagen went through extensive design and test of such a vehicle, and was very close to launching the product – until their lawyers realized what was happening.
“You think you’re going to sell that in the United States?” they responded, quite astonished that anyone – let alone a team of smart people – could be so stupid. “Forget it. The engineering calculations have nothing to do it with it. The first time it rolls over, the American attorneys will be fighting each other to sue, and we’ll be in court for a decade.”
This phenomenon is utterly pervasive in our lives, and it’s getting worse. Of the five best friends I had when I was growing up, two became doctors. Both quit years ago, largely due to the strain brought about by medical malpractice claims and the outrageous expense of the insurance.
It’s a shame we’re so entirely powerless to do anything about this. It sure would be nice to be building tens of millions of iPads here in the US, or to be driving better, more efficient cars, or to have our best and brightest treating us when we’re sick or injured — but it’s just not in the cards.