The race to the top

By Alex Singleton | 21 September 2005

As part of getting a new telephone line put in at home I picked up a telephone for some tiny sum from my local supermarket. It was made in China. Chinese production was great for me, but perhaps not such good news for ATL Telecom, the British telephone manufacturer. ATL manufacturers phones in Cardiff where wages are significantly higher than in China.

Maybe ATL will move production from the UK to China, keeping the R&D; in the UK. But the company's strategy seems OK - for now. Instead of competing in the consumer market, it targets the business market and produces phones built like tanks, designed for heavy use, where margins are higher.

Some traditional manufacturers have worked out, though, that they are better off doing the design and marketing in the UK and taking advantage of Chinese factories to make the products. Audio Partnership plc, owned by the cult hi-fi retailer Richer Sounds, has gone round buying up lagging and bankrupt British hi-fi equipment manufacturers, relocating the R&D; and marketing to their base in London and moving production to China, Taiwan and Malaysia. It seems to be a successful model.

Yet some people worry that it is all very nice for shareholders to make extra money from moving jobs overseas, but what about the ordinary British worker? Isn't all this going to lead to mass unemployment - or to low wages for ordinary people?

That's a fair question. What I would say in response is that we've been going down the process of liberalizing since World War II, and the total number of jobs in the British economy keeps rising. Wage rates have been rising too. We talk about Chinese workers taking our jobs, but it wasn't long ago we were fearing the Japanese, or those in Hong Kong. I remember buying a disk drive in about 1990 and the advert proudly boasted that the drive was Japanese, not cheap Taiwanese. Well, you wouldn't be worried if something was made in Taiwan any longer. Asian countries have been climbing up the economic ladder, and yet we continue to have jobs in the UK. Jobs have disappeared in UK manufacturing, but other, on the whole better paid ones, have sprung up in their place - if you had said you were going to be a "web designer" in 1988, who would have had the slightest idea what you were talking about?