Fifteen years ago, when Americans went shopping and came across the  phrase “Made in China” it usually was on small, inexpensive trinkets, toys and souvenirs.  Ten years ago we started to see these words on apparel.  Five years ago we started to see these words seemingly everywhere.  During the last five months, if we saw these words it might have meant the death of our pets, food borne illness or perhaps poisoning. [My favorite editorial cartoon on this subject showed two people holding the same product.  One was saying “A great dessert topping!”  The other saying “Cleans even the toughest stains”].

The Chinese government of course has taken this issue very seriously as the avalanche of billions of dollars of exports is being put at risk.  Doing what they have historically done, they executed the former government official who had been the head of the State Food and Drug Administration for taking bribes and looking the other way on issues of safety and product production. In the last week they have also closed down the companies that have shipped poisonous products overseas. We certainly need to hold the Chinese accountable for any and all defective and life threatening products that make it to the U.S.  The historical levels of government oversight in the production of goods, be it labor conditions or product quality is much lower in China, and many other developing countries for that matter, than in the U.S.

The larger context through which this issue must be viewed is that China is going through a process that has never occurred with any country in history, at least with any major international power.  China is going from being a basically agricultural society to becoming both an industrial and information powerhouse.  The agricultural age started 10,000 years ago.  The industrial age started 300 years ago and the information started 30 years ago.  China is collapsing a 300 year long cultural transition into 25 years.  In 1975, China was an insular, agrarian society with a third world economy.  Now they are one of the most economically dominant countries in the world.  They are dealing with issues and new situations in years that most other countries took decades to pass through.  No wonder there is horrendous pollution and environmental degradation, slave labor, unhealthy products and an extreme difference between abject poverty and incredible wealth. It is going to take some years to bring a level of stability and government oversight to this exploding economy.

While doing research for a recent speech I was looking at the historical trends of trademarks and patents.  I discovered a treasure trove of interesting numbers, which I will most likely comment on in future columns.  However, three things jumped out at me regarding China.

First, in 1975 they were not even on the radar in terms of the number of patents issued within the country.  In 2000 they issued some 13,000 but in 2005 they issued more that 53,000 [by comparison the U.S. numbers were 157,000 and 144,000].  This now puts them in fourth place after the U.S., Japan and South Korea, and moving up fast.

Second, in terms of trademarks, which are more related to business creation than intellectual property creation, the numbers are nothing less than amazing.  In 1975, China was not even on the list of the top countries.  By 2000 they were the number one country with 151,000 and in 2005 the number of trademarks had jumped to 260,000.  By comparison the numbers for the U.S. were 109,000 and 132,000, in both cases second place.

Third, after the U.S., China is now the second largest country in the world in term of manufacturing.  In 1975 they were fifth in the world.  An interesting historical footnote that completely surprised me is that in 1750, and again in 1800, China was the number one manufacturing country in the world.  In both cases India/Pakistan was second.  Since this was before the industrial age took root, these numbers largely reflect agricultural production and trade.  In 1850 China was tied with the United Kingdom for first place.  Of course, from 1900 through 2006, the U.S. is far and away number one, with a 45% share of all global manufacturing in 1950 and 29% in 2006.  Predictions are that in 2015, China will surpass the U.S. when both countries will each have about 20% of the global manufacturing output.  What was old is soon to be new.

It occurred to me that there is another way to compare the U.S. and China.  In the U.S., it was basically the time from the Civil War to WW1 that the country fully moved from being an agricultural country to an industrial one.  [After all it was the industrial North that defeated the agricultural South in the Civil War].  That was a span of 50 years.  During that time all the oversight and legislation regarding production began to be put in place, thanks in large part to the muckrakers and their campaigns.  China is going through this same process in less than 20 years.  This means that the governmental oversight of this exploding production engine of a country is going to constantly have to struggle to keep up.

Yes, China is going to be one of the most dominant economic powers in the decades ahead.  We all know that.  It is how they manage this historically unparalleled speed and magnitude of growth that will determine if “Made in China” becomes a respected and valued brand.