Why China cannot develop its own iPhone - Forbes


Within this institutional framework, entrepreneurship begins with the supply side of the market, with resources, rather than the demand side, with consumers, as is usually the case in market economies. Such an approach may be rational from the perspective of Chinese planners who are in command of enormous resources and are anxious to find some quick uses that will produce short-term growth. But it is irrational from the perspective of fast-moving global markets where consumers rather than central planners are at the center of the economic universe.

To be fair, not all American companies understand and apply this mind-set. A number of technology companies from Eastman Kodak (NYSE:EK) to CiscoSystems (NYSE:CSCO), Hewlett-Packard(NYSE: HPQ), Research in Motion (NASDAQ:RIMM) and Bank of America(NYSE:BAC) have regressed from a consumer-driven entrepreneurship to supply-driven entrepreneurship with dire consequences for their stakeholders.

The bottom line: The iPhone is an American, not a Chinese product. Americans shouldn’t be blindsided by China’s 19th century manufacturing success. America should be the home of companies like Apple that create high-paying jobs in a modern capitalist environment, rather than the home of Foxconns that create low-paying jobs in an outdated capitalist environment.

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