Competition in China

For all we hear about how American companies can't compete abroad, I think it is funny to read stuff like this. (also see this picture)

New Balance, a leading US-based athletic shoe brand that has been suffering from severe counterfeiting in China for more than a decade, yesterday announced the re-establishment of its brand in the world's most populous country.

"We will re-launch our China strategy and hopefully by the 2008 Olympic Games we will be the second largest (athletic footwear) brand," said Jim Davis, chairman and chief executive officer of New Balance, currently the No 2 athletic shoe brand in the United States.

Why is this funny? Because those of you who are serious runners probably know that New Balance are primarily manufactured in the U.S. (I think they claim to have 70% domestic content, or something like that). If you go to their website, you can see that they are "committed to their domestic workforce." Because New Balance is privately held, there isn't that much information about their operations, but I would love to know how their financials stack up against Nike.** By making shoes here, yet selling worldwide, they are doing what some people believe is impossible. I've said this before, but I'll repeat myself – sometimes you have to move a factory to another country to be competitive, but the U.S. has some of the best trained, hardest working, most educated workers in the world. If you can't compete using American labor, you might be doing something wrong. Sometimes, I think companies close plants as a quick fix because it is easier than addressing the deeper business model issues that make them inefficient.

**New Balance may have only made $1000 profit last year, who knows? In that case, this post is full of crap.