ABSTRACT
China’s recent and rapid export driven growth has led the governments of East Asia to increasingly question whether China represents a threat or an opportunity. The growth in China’s trade with the world has been impressive. In 2005, China’s total trade was $1,422.1bn, up from $280.9bn in 1995 (Dean et al. 2007). The main fear of East Asian governments is that their domestic firms will find it increasingly difficult to compete with China’s relatively low wage economy. The perceived wisdom is that if countries such as Malaysia, Singapore and Indonesia are to continue to compete successfully in the global market they will need to move existing production up the value chain, that is, to improve the quality of their manufacturing goods relative to those produced in China. Haddad (2007) writes, ‘In East Asia, industrialization tends to go hand in hand with an expansion in the varieties of goods industries produce by moving up a quality ladder of production’ (p. 1). Likewise, Tongzon (2005) concludes that ASEAN nations should not attempt to compete on cost but should concentrate on improving quality, service, efficiency and reliability. 1
