China needs to build global brands and companies similar to Apple Inc. to stave off a possible loss of competitiveness in as few as three years, said Jack Welch, former chief executive officer of General Electric Co.
Rising wages in China are fueling inflation and may spur more global manufacturers to move production to Vietnam and countries in Africa, Welch told reporters in Shanghai.
China is a “long way from losing its competitiveness,” he said. “It’s going to happen. Three years or five years, it will happen.”
China can no longer rely on exports and low-cost production for economic growth and must innovate by building global brands and creating “10,000 Apples,” he said. Steve Jobs, who transformed Apple into the world’s largest technology company before resigning as chief executive officer last month, is “absolutely” the world’s best business leader, he said.
“Right now China is missing global brands,” Welch said. “That won’t be for long.”
Premier Wen Jiabao is seeking to raise wages and boost investment in social housing to help sustain growth in the world’s second-largest economy as a faltering U.S. recovery and Europe’s debt woes cap demand for Chinese-made goods. China’s export orders contracted for the first time in more than two years, the China Federation of Logistics and Purchasing said on Sept. 1.
A total of 13 provinces raised minimum wages in the first quarter of the year by an average 20.6 percent, the official Xinhua news agency reported in April, citing a spokesman for the labor ministry.
China’s inflation rate jumped to a three-year high of 6.5 percent in July. Consumer-price gains may have slowed to 6.2 percent last month, according to the median estimate of 26 economists surveyed by Bloomberg News. August inflation data are scheduled to be released Sept. 9.
Welch said the U.S. economy is in a “precarious” position and is struggling under too much debt.
“The U.S. economy is bumping along at a modest rate,” said Welch, who is also an adviser to JPMorgan Chase & Co. “You can’t predict a double dip or if it will stay bumping along.”