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You're right, it's really complicated and the problems could be sourced in a variety of areas. One thing is that China needs to improve infrastructure to the interior so that operations that do not need the labor resources particular to coastal cities or large internal cities with, as you point out, higher levels of education can be effectively outsourced to the less developed interior.
Another is that it's not clear that Chinese car companies are good at designing around their production capabilities. For example, when Chery produced the QQ, it was a part for part copy of the Spark/Matiz. I don't want to get into a copy debate right now, but from a productivity standpoint, the problem with doing this is that the car was designed around GM/Daewoo manufacturing systems, not Chery's. GM/Daewoo can produce these, ex labor costs, more efficiently than Chery can because the design of the car matches up with the existing capacities of their plants and workforce. I don't think this point is as well-followed in Chinese engineering management, primarily because of examples like the QQ.
I'm not sure how much technical education adds to labor force capacity because much of it can be achieved, when the labor force doesn't require too much flexibility, by on-the-job training programs. It would be worthwhile for the major heavy industry manufacturers to explore a joint venture in worker education--this is often handled by unions or industry groups--which would provide enhanced training. This might mean taking a big risk up fron--paying people a relatively low wage for a few to several months while they gain technical skills--but it does pay off when you have good enforcement for employment contracts.
On technical training, though, I totally agree that there is an underemphasis in China. Everything I read is geared towards people going to college and getting a university degree and this does hurt skilled trades. This happens in the US as well, with predictable results: manufacturing is not up to the levels seen in Europe or Japan. However, the US cannot take the steps necessary to correct this because they are cultural anathema: Europe and Japan both rely on rigid educational hierarchies which create a literal work-based class system divided between an intellectual elite and pro.letarian working class. Though these lines blend in a complex economy, the dynamic is the same and it is simply not acceptable to Americans and, I suspect, it would not be acceptable to the Chinese as it implies a return to the bad old days of Imperial governance.
[ Last edited by interesting at 2008-4-26 10:07 PM ]