American businessman and founder of the Foundation for Economic Education, Leonard Read, wrote an essay in 1958 titled “I, Pencil”. Told from the perspective of a common item—the pencil—Read pointed out that there was not a single person on the planet that had the complete knowledge and ability to make even one pencil.
A pencil brings together wood, lacquer, a printed label, graphite lead, a bit of metal and an eraser. But no one person individually and alone could bring all the components from the raw material together to make this finished product, an item made yearly in the billions around the globe.
This essay was update to “I, Mouse”, another common item that no one has the ability to produce without the inputs of literally millions of people.
We step back and look in awe at the way Chinese manufacturing and its product output dominates the global markets in everything from electronic gadgets to shoes and machinery. Chinese factories are able to produce everything from iPhones, aircraft carriers, high-speed railways to spacecraft.
However, there is not a single manufacturer in China that can produce a single ball pen on its own. The only reason that China can make 38 billion ball pens each year is because it is able to import the one vital component that it cannot make from Germany, Switzerland or Japan.
Costing just a few cents, China cannot manufacturer the most important part—the tiny rotating ball at the tip of the ball pen that puts the ink on the paper.
China does not produce the high-quality brass, steel or tungsten carbide that this little ball is made from. In fact, China must import the specially made high-quality steel alloy to build its bridges, railways and submarines.
Further, it does not build the machinery and computerized measurement equipment to turn the metal into a ball-pen ball. The margin of error to make the ball is zero, because any imperfection would make the pen useless.
No individual ball pen-manufacturing company is willing to spend for the research and development because they know their competitors will just steal the design. These companies also refuse to import the high-tech state-of-the-art manufacturing machinery because they have problems with their technicians properly operating and maintaining this equipment.
China’s Premier Li Keqiang recently raised this issue of poor manufacturing development because “unless they are able to achieve technological breakthroughs and step up investment in high value-added production rather than continuing to play safe and rely on labor-intensive manufacturing, it won’t be long before the country completely loses its growth momentum.”
If a nation cannot make its own ball pen without relying on its manufacturing competitors for basic materials, it is not yet the industrial powerhouse that it thinks it is.