From ‘Made in China’ to ‘Created on Earth’

Door Ilse Hoenderdos,
op 21 maart 2014

Why do we accept air pollution until it pierces our eyes and limits our air supply? And why do we then fight the symptoms rather than the problems that underlie them? Increasingly, we are coming to the conclusion that the model of our society is not sustainable in the long term and we are working hard to find solutions. Many of these solutions are short-term quick fixes. A possible breakthrough lies in a model in which long-term solutions – collective interest – comes first in action. But how do we make that happen?

A good example of such a short-term approach is the fuss that arose last year over the Chinese solar cells and the increase of European import taxes. Chinese (industrial) growth has become dependent on a toxic mix of conditions: low margins, high volumes and a large (and growing) internal and external market. In October 2012 it became apparent that this model was untenable, as the Chinese solar industry was hit hard by factors including increasing import duties in the United States. Large Chinese manufacturers were forced to halt production and to save. Thousands of people lost their jobs.

China now fears a second blow when import tariffs in Europe go up, and is trying to counter this aggression. It’s understandable. On the other hand, the EU’s message is defensible. US and European solar cells are often more advanced, of higher quality and are produced more sustainably, but they can’t compete on price. The consequences of this structure: the supply of solar cells that makes sustainable energy feasible for a large group of people, but at the same time creates technology stagnation by providing a semi-developed product as the market standard, offered below market price in high volumes.

In other words, there are no winners in a one-sided approach to this problem, only losers. China loses its market and employment. Europe is losing a potential scaling up of renewable energy. In addition, it is questionable whether increasing import tax boosts the sale of EU-produced solar cells. We all know that in the current climate ‘price’ is a deciding factor in the purchasing decision of consumers. But is the import duty the problem, or is there something else at the root of this?

The core of the problem lies in the system that is guiding this development: China is copying precisely the market model of North America and Western Europe, which went (morally) bankrupt in 2008. In China low margins are already under pressure from rising wages and raw material prices. Supply exceeds demand on more and more levels, making the production of extremely high volumes less relevant. The internal Chinese market also no longer offers a solution. Purchasing power is burdened by relatively high inflation and the lack of a social safety net, which is forcing people to save a lot. Continuing in the same system, with the same international (trade) relations, is suicide.

Now that even China is about to bend under the growing pressure of this system, now more than ever it’s time for cooperation. In this new era, in the words of Herman Wijffels, “competition is outdated.” In this crucial transition phase it is up to the EU to show that it is able to export not only products and services, but also concepts such as what Wijffels mentions in his Lowlands lecture (in Dutch only) “a new relational ethic that makes us all wonder what impact our actions will have on other people and the planet in general.” Right now, China should be talking about issues such as circular business models and innovative product and service structures in which (for example) the notion of ownership is replaced by usage.

The core of the solution is cooperation. The challenges we face are too large to solve alone. Indeed, adjusting our thinking or acting is not enough for the step we need to take; it requires a fundamentally different approach. It’s about creating a system in which individual parties are encouraged to make the choices that mean the collective – including them – benefit. Collective interest is brought together with a party’s own interest. An example of such a structure is the movement that is starting slowly in the lighting world. Parties are increasingly offering hours of light as a service, rather than a lamp as a product. The customer receives its light and the lamp manufacturer gets its revenues and is simultaneously incentivized to deliver a product that is damaged as little as possible and is energy efficient; the more often the lamp breaks, or the more energy it consumes, the less the producer earns. This also eliminates the need for unhealthy growth, and the producer needs to use fewer raw materials for the production of new lamps. If we are able to make a difference with new models and really different approaches on a small scale, why shouldn’t we do the same everywhere?

Competition is outdated; the new economy is based on cooperation. It should no longer be about “Designed in San Francisco” and “Made in China”. We must work towards “Created on Earth”.

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