More Groves, not Graves.

When folks like Andy Grove lobby the U.S. Congress for educational funding and immigration relief, we all should lend an ear. The Intel cofounder, after all, embodies the American success story: A Hungarian immigrant displaced by World War II and anti-Semitism, he came to the U.S. with few possessions except intelligence and desire, and then proceeded to build one of the best recognized and life-changing companies in the world.

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Plus, he's entertaining. Consider these comments made to Business Week last November: "The state of vocational education in this country is abysmal. Vocational education, job training, and retraining do not exist. A well-organized federal program would lubricate the Schumpeterian engine." (Joseph Schumpeter was an Austro-Hungarian economist who theorized that entrepreneurship is the essential engine that propels the world and makes economic evolution possible.) Innovation is the heart of entrepreneurship. And few companies in our lifetime have innovated like Intel, be it via technical or marketing means.

In its rawest terms, innovation means change. So when a factory closes in America--even a longstanding plant like Fujitsu Ten , which announced in May it would move most of its Indiana operations to Mexico--it doesn't bother me. OK, it does, but only a little. That's the nature of business. Things get taken down in one place and put up somewhere else. While Sanmina-SCI and Solectron struggle, it opens a door for many other, perhaps less-publicized, companies to spring up in their place.

Furthermore, even as Manufacturing U.S.A. relocates to China, or Mexico, or Brazil, it's not a one-way street. One wonders whether the Japanese are irked that native sons like Toyota and Honda are erecting facilities in the U.S. to--sound familiar?--take advantage of lower-cost labor and gain access to a large and growing market for their products.

Despite much ballyhooed complaints about an uneven playing field, governmental interference, onerous environmental laws, a questionable education system--all of which have merit, by the way--the U.S. manages to retain its edge. In truth, the root of the problem isn't wage rates; it's management ability.

We hail from immigrants, the nation's original entrepreneurs. I am reminded of this every time I trek to China. Be it the signage, the spoken language, the cuisine, the dress, or the culture itself, Shanghai is becoming more American by the day. Visiting an industry friend in Pudong last month, I was welcomed with a smile and a statement, "Welcome to California." It was tongue-in-cheek, but in her little enclave--complete with lush and neatly manicured lawns, ponds, a neighborhood pool and clubhouse, an Irish bar, and houses that would fit in well from East Bay to Marin County--it was hardly off base. In 20 years, we won't have to worry about manufacturing being "overseas"; Shanghai will resemble San Jose or Los Angeles or Chicago or any of a host of places.

(Not all the imitations are welcome, of course. The West should vigorously resist the vast number of equipment knockoffs, many of which continue to be prominently displayed at trade shows like Nepcon China; see report, page 8.)

The issues China worries about are in many respects the same as the West's. "Oil Stock Boost for Emergency," The China Daily headline reads, indicating China's concern over skyrocketing energy demand and its need for alternative, clean power. The citizenry and government are locked in a mighty struggle over environmental, educational, wage and other much-needed reforms. Faced with a growing inability to supply basic necessities like clean water to its people, Beijing is selling off public assets. In Changzhou, for example, locals pay the French MNC Veolia Water up to $10 a month. Their average salary: $20 to $30 per month. Employee turnover is rampant: 25% or more at some manufacturers. Meanwhile, the giant appliance retailers--Gome, Suning, and Yolo--fight for Wal-Mart-style dominance, opening hundreds of stores and squeezing out the little guys in the process.

Back in the U.S., we may not feel like we did when we worked for GM or IBM or Digital Equipment, but unemployment here is nearing historical lows and most companies are in great shape, Sarbanes-Oxley be damned. So when Intel announces, as it did in May, pending cuts of up to 1,000 jobs from an obsolete flash memory chip plant in New Mexico, I take that as a lesson that Grove's successors have learned, albeit the hard way, not to wait until after the shoe has dropped to take the measures necessary to stay profitable and competitive. The occasional diet is good, provided it wards off an early grave.

None of this is designed to make readers feel better about what's happening in the U.S., only to add some context and perspective, and bust any

myths that the Chinese have somehow struck gold without even drilling. It's a nation with unlimited potential, sure, but a long, long way still to go. What goes around comes around. America, as always, will adapt and prosper.

Mike Buetow, Editor-in-Chief

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